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Wesco Insurance Co. v. Regas

United States District Court, N.D. Illinois, Eastern Division

February 3, 2015

WESCO INSURANCE COMPANY, Plaintiff,
v.
SUZANNE REGAS, DIANE GOLDRING NESBITT, AND CONTINENTAL CASUALTY COMPANY, Defendants.

MEMORANDUM OPINION AND ORDER

ROBERT W. GETTLEMAN, District Judge.

Plaintiff Wesco Insurance Company ("Wesco") filed a two-count complaint against defendants Suzanne Regas ("Regas"), Diane Goldring Nesbitt ("Goldring"), and Continental Casualty Company ("Continental"), seeking a declaratory judgment that it has no duty to defend or indemnify Regas against a lawsuit filed by Goldring in the Northern District of Illinois entitled Nesbitt v. Regas, No. 13-CV-8245 (the "Underlying Action"). On April 4, 2014, Continental filed a cross-claim against Regas and Goldring, also seeking a declaratory judgment that it is not obligated to defend or indemnify Regas in the Underlying Action. Having failed to timely answer or appear, Regas is in default. On August 5, 2014, Wesco filed the instant motion for summary judgment pursuant to Fed.R.Civ.P. 56, and on August 7, 2014, Continental filed a motion for judgment on the pleadings pursuant to Fed.R.Civ.P. 12(c). Defendant Goldring is the only party contesting either motion. For the reasons discussed below, Wesco's motion for summary judgment and Continental's motion for judgment on the pleadings are granted.

BACKGROUND[1]

On September 16, 2010, Regas was named as a defendant in a lawsuit filed in the Circuit Court of Cook County, Illinois, entitled Moser v. Regas, No. 10-L-10628 (the "Moser Action"). On September 29, 2010, Regas gave notice of the Moser Action to Continental, requesting that the company defend and indemnify her pursuant to the lawyers professional liability policy she had entered into with Continental. The policy period for Continental's policy ran from October 1, 2009, to October 1, 2010. Pursuant to the policy, Continental defended Regas in connection with the Moser Action.[2]

On November 15, 2013, Regas was sued in the Underlying Action. In response, Regas filed a claim with Wesco, asking the company to defend and indemnify her pursuant to the lawyers professional liability insurance policy issued to Regas on October 13, 2013. Wesco subsequently initiated the instant action, seeking a declaration of rights under the policy.

The Moser Action and the Underlying Action share similar facts and allegations. Both lawsuits allege a widespread and long-lasting conspiracy, in which Regas' father, James Regas, and Christian Nesbitt engaged in a scheme to defraud Western Springs National Bank and Trust ("Western Springs Bank") through the issuance of improper loans. The scheme relied on inflated appraisals of properties and the creation of numerous corporate entities to act as loan recipients. The Moser plaintiffs were Western Springs Bank shareholders who sought to recover losses associated with the scheme. The Moser Action alleged that Regas, Frezados, & Dallas, LLP ("RFD"), of which Regas was associated, [3] concealed material information from Western Springs Bank and its Board of Directors, and assisted in making improper loans in violation of both its fiduciary duties as general legal counsel to the bank and federal laws. As it pertains to the Underlying Action, Goldring guaranteed several of the allegedly illegal loans, and alleges that James Regas and Christian Nesbitt misrepresented the nature of those loans and omitted material facts when soliciting her guarantees. The Underlying Action alleges that while employed at RFD, defendant Regas provided legal assistance that furthered the fraud and helped the conspirators violate section 1962(c) of the Racketeer Influenced and Corrupt Organizations Act ("RICO").

DISCUSSION

I. Motion for Summary Judgement (Wesco)

A. Legal Standard

A movant is entitled to summary judgment pursuant to Fed.R.Civ.P. 56 when the moving papers and affidavits show that there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Once a moving party has met its burden, the nonmoving party must go beyond the pleadings and set forth specific facts showing there is a genuine issue for trial. See Fed.R.Civ.P. 56(c); Becker v. Tenenbaum-Hill Assocs., Inc., 914 F.2d 107, 110 (7th Cir. 1990). The court considers the record as a whole and draws all reasonable inferences in the light most favorable to the party opposing the motion. See Green v. Carlson, 826 F.2d 647, 650 (7th Cir. 1987); Fisher v. Transco Services-Milwaukee, Inc., 979 F.2d 1239, 1242 (7th Cir. 1992).

B. Analysis

Wesco argues that it does not have a duty to defend or indemnify Regas in the Underlying Action because the Underlying Action does not fall within Regas' insuring agreement. As an initial matter, in determining whether Wesco has a duty to defend or indemnify, the court must apply the substantive law of the forum state. Jupiter Aluminum Corp. v. Home Ins. Co., 225 F.3d 868, 873 (7th Cir 2000). The forum state in this case is Illinois; therefore, under Illinois choice of law principles, insurance contracts are construed according to the law of the state with the "most significant contacts" with the policy. Id . Because the parties agree that Illinois law governs interpretation of the policy in question, the court proceeds under the same assumption.

The construction of an insurance policy and any determination of the rights and obligations under it are questions of law for the court and are appropriate for disposition on summary judgment. Cent. Illinois Light Co. v. Home Ins. Co., 213 Ill.2d 141, 153 (2004). When construing the language of an insurance policy, the primary goal is to ascertain and give effect to the intentions of the parties as expressed by the words of the policy. Id . To determine the meaning of the wording of the policy and the intent of the parties, the policy must be construed "as a whole, with due regard to the risk undertaken, the subject matter that is insured and the purpose of the entire contract." Outboard Marine Corp. v. Liberty Mutual Ins. Co., 154 Ill.2d 90, 108 (1992). The construction given to an insurance policy should be natural and reasonable and if the "words in the policy are plain and unambiguous, they will be afforded their plain, ordinary meaning and be applied as written." Valley Forge Ins. Co. v. Swiderski ...


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