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Altom Transport, Inc. v. Westchester Fire Insurance Co.

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

May 18, 2015

ALTOM TRANSPORT, INC., Plaintiff,
v.
WESTCHESTER FIRE INSURANCE COMPANY and MICHAEL STAMPLEY, Defendants.

MEMORANDUM OPINION AND ORDER

SHARON JOHNSON COLEMAN, District Judge.

Defendant, Westchester Fire Insurance Company ("Westchester"), moves to dismiss plaintiff, Altom Transport, Inc.'s ("Altom"), complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. Westchester argues that the complaint incorporated the insurance policy at issue, and the policy clearly does not cover Altom for the underlying lawsuit. Thus, Westchester asserts that it had no duty to defend and Altom's complaint for coverage, breach of the duty to defend, and attorney's fees or statutory penalty under the Illinois Insurance Code. For the reasons stated herein, the motion is granted.

Background

Altom is a federally licensed interstate motor carrier and hauls liquid commodities in tanker-trailers. Westchester is Altom's insurer. Altom purchased an ACE Express Private Company Management Indemnity Package Insurance Policy ("policy") from Westchester effective from August 3, 2013, to August 3, 2014.

The policy has a Directors & Officers and Company coverage part which applied to allegations that the Company (Altom), its principals, and/or officers are liable for wrongful conduct. The policy is a "claims made" policy, meaning it covers claims made during the policy period. The insuring agreement provision states:

The Insurer [Westchester] shall pay the Loss of the Company [Altom Transport] which the Company becomes legally obligated to pay by reason of a Claim first made against the Company during the Policy Period or, if applicable, the Extended Period, and reported to the Insurer pursuant to subsection E1 herein, for any Wrongful Act taking place prior to the end of the Policy Period.

The policy contains the following relevant definitions:

1. Claim means:

* * *
(c) A civil proceeding against any Insured seeking monetary damages or non-monetary or injunctive relief, commenced by the service of a complaint or similar pleading;
* * *
9. Wrongful Act means any actual or alleged error, omission, misleading statement, misstatement, neglect, breach of duty or act allegedly committed or attempted by:
* * *
(c) the Company, but only with respect to Insuring Clause 3 of this ...

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