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Big Bridge Holdings, Inc. v. Twin City Fire Insurance Co.

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

September 15, 2015

BIG BRIDGE HOLDINGS, INC., Plaintiff,
v.
TWIN CITY FIRE INSURANCE COMPANY, Defendant

          For Big Bridge Holdings, Inc., Plaintiff, Counter Defendant: Christopher C. Dickinson, Craig Christopher Martin, LEAD ATTORNEYS, Brienne M Letourneau, Jenner & Block LLP, Chicago, IL.

         For Twin City Fire Insurance Company, Defendant, Counter Claimant: Charles Collins Lemley, LEAD ATTORNEY, Wiley Rein LLP, Washington, VA; Regina A Ripley, Gordon & Rees, Chicago, IL.

Page 983

         MEMORANDUM OPINION AND ORDER

         Robert M. Dow, Jr., United States District Judge.

         This is an insurance dispute regarding whether a certain claim is covered under an insurance policy, or whether that claim falls into a coverage exception within the policy. Before the Court are Defendant's motion for summary judgment [19] and Plaintiff's cross-motion for partial summary judgment [22]. For the reasons set forth below, Defendant's motion for summary judgment [19] is denied and Plaintiff's cross-motion for partial summary judgment [22] is granted. The case is set for a status hearing on 10/6/2015 at 9:00 a.m. to discuss how the parties wish to proceed with the remaining claims.

         I. Background

         The Court takes the relevant facts from the parties' Local Rule 56.1 statements, construing the facts in the light most favorable to the nonmoving party.[1] Here, the identity of the nonmoving party depends on whose motion the Court is considering.

         A. Undisputed Facts

         1. The Insurance Dispute

         Plaintiff Big Bridge purchased a $3 million liability-insurance policy (the " Policy" ) from Defendant Twin City, covering the period from March 1, 2011 to March 1, 2012. The Policy covers the entire Big Bridge organization, including its subsidiary, Sempris, LLC. Sempris sells membership programs that provide discounts at various restaurants and retailers.

         Between July of 2011 and August 2013,[2] Sempris was sued eight times in various federal courts across the country. The claims against Sempris, as explained in

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more detail below, allege generally that Sempris enrolled consumers in fee-based monthly membership programs without their consent. The claims allege a myriad of state- and federal-law violations, brought on behalf of putative classes.

         In accordance with its obligations under the Policy, Defendant confirmed via letter dated September 2, 2011 that it would provide a defense for Sempris with regards to the first-filed lawsuit. By July 3, 2013, the number of cases increased to seven. When the eighth and final case was filed, Defendant informed Plaintiff (by letter dated November 22, 2013) that it was denying coverage for any losses exceeding $1,000,000. And indeed, Defendant did pay $1,000,000 in defense costs to or on behalf of Sempris in connection with these eight lawsuits, with the final payment processed as of September 25, 2014.

         On October 15, 2014, Plaintiff filed this two-count lawsuit, raising (1) a declaratory-judgment claim that Defendant has breached its duty to defend and/or indemnify Sempris, and that Defendant has waived, or is estopped from asserting, Policy exclusions or other coverage defenses, and (2) a related breach-of-contract claim that Defendant has breached the Policy by failing to provide coverage in the full amount of the Policy. In its answer [12], Defendant raised a counter-claim for declaratory relief, seeking (1) a declaration that Plaintiff's claim is barred by Section V(A)(5) of the Policy, and (2) a declaration that Plaintiff's claim is barred in whole or in part on other grounds (not relevant to this motion). Now before the Court are Defendant's motion for summary judgment [19] seeking resolution in its favor on all counts of the complaint and Count I of its counterclaim, and Plaintiff's cross-motion for partial summary judgment [22] seeking only a declaration that its claim is not barred by Section V(A)(5) and thus that Defendant cannot refuse coverage on that basis.[3]

         2. The Underlying Cases

         The Court provides the following overview of the eight underlying lawsuits at issue:

         (1) Dioquino v. Sempris, LLC, No. 11-cv-05556-SJO-MRW (C.D. Cal.)

o Filing Date: July 6, 2011
o Claims Against Sempris: Putative class action alleging violations of (1) California Consumers Legal Remedies Act (Cal. Civ. Code § 1750, et seq. ), (2) California Unfair Competition Law (Cal. Bus. & Prof. § 17200, et seq. ), (3) Electronic Funds Transfer Act (15 U.S.C. § 1693e), (4) Unjust Enrichment, (5) Negligence, and (6) Fraud by Omission.

Page 985

          (2) Daniell v. Sempris, LLC, No. 13-cv-6938 (N.D. Ill.)

o Filing Date: December 13, 2012
o Claims Against Sempris: Putative class action alleging violations of (1) Illinois Consumer Fraud and Deceptive Business Practices Act (815 ILCS § 505/1, et seq. ), (2) Fraud by Omission, (3) Fraudulent Inducement, (4) Breach of Contract, and (5) Unjust Enrichment.

         (3) Valencia v. Sempris, LLC, No. 12-cv-2985 (S.D. Cal.)

o Filing Date: December 14, 2012
o Claims Against Sempris: Putative class action alleging violations of (1) California Consumers Legal Remedies Act (Cal. Civ. Code § 1750, et seq. ), (2) California Unfair Competition Law (Cal. Bus. & Prof. § 17200, et seq. ), (3) Fraud by Omission, and (4) Unjust Enrichment.

         (4) Herman v. Sempris, LLC, No. ...


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