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Illinois Casualty Co. v. West Dundee China Palace Restaurant, Inc.

Court of Appeals of Illinois, Second District

December 23, 2015

ILLINOIS CASUALTY COMPANY, Plaintiff and Counterdefendant-Appellee,
v.
WEST DUNDEE CHINA PALACE RESTAURANT, INC., Defendant, (Wellington Homes, Inc., Individually and on Behalf of All Others Similarly Situated, Defendant and Counterplaintiff-Appellant)

          Appeal from the Circuit Court of Lake County. No. 09-MR-844. Honorable Diane E. Winter, Judge, Presiding.

         JUSTICE McLAREN delivered the judgment of the court, with opinion. Justices Jorgensen and Birkett concurred in the judgment and opinion.

          OPINION

         McLAREN, JUSTICE.

          [¶1] This is a declaratory judgment action involving a dispute over insurance coverage for a fax-blast case. The issue is whether plaintiff Illinois Casualty Company's (ICC) policy exclusion (hereinafter Laws exclusion) applies to the allegations in the complaint in the underlying litigation. If the Laws exclusion applies, then ICC's duty to defend defendant, West Dundee China Palace Restaurant, Inc. (West Dundee), was never triggered. On cross-motions for summary judgment, the trial court initially ruled that ICC had a duty to defend. On a motion to reconsider, the trial court ruled that ICC had no duty to defend or indemnify. We affirm.

         [¶2] I. BACKGROUND

         [¶3] A. The Underlying Litigation (No. 09-CH-1577)

          [¶4] The following pertinent facts are taken from the record on appeal. On August 4, 2009, Wellington Homes, Inc., individually and as the representative of a class of all others similarly situated (Wellington), filed a second amended complaint against West Dundee, Zhaowei Li, and Liwen She. On November 18, 2010, Wellington filed a third amended complaint against West Dundee, Ahmad Azmi, and Tehmini Azmi. The complaint's preliminary " Statement" began: " This case challenges [West Dundee's] practice of faxing unsolicited advertisements." The preliminary " Statement" further alleged that " The federal [Telephone Consumer Protection Act of 1991 (TCPA) (47 U.S.C. § 227 et seq. (2000))], prohibits a person or entity from faxing or having an agent fax advertisements without the recipient's prior express invitation or permission. The TCPA provides a private right of action and provides statutory damages of $500 per violation."

          [¶5] The complaint contained three counts: count I alleged a violation of the TCPA; count II alleged conversion; and count III alleged violations of the Illinois Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1 et seq. (West 2010)). Each count incorporated the same factual allegations: on or about May 16, 2006, West Dundee faxed to Wellington an advertisement, which was attached to the complaint as " Exhibit A" ; Wellington had not invited or given West Dundee permission to fax advertisements to it; and West Dundee faxed " the same or similar unsolicited facsimiles" to " more than 39 other recipients without first receiving the recipients' express permission or invitation. [West Dundee's] facsimiles did not display a proper opt out notice as required by 64 C.F.R. 1200."

          [¶6] Count I of the complaint proposed the following class:

" All persons who (1) on or after four years prior to the filing of this action, (2) were sent telephone facsimile messages of material advertising the commercial availability of any property, goods, or services by or on behalf of [West Dundee], (3) with respect to whom [West Dundee] cannot provide evidence of prior express permission or invitation for the sending of such faxes, (4) with whom [West Dundee] does not have an established business relationship, and (5) which did not display a proper opt out notice."

         The class proposed in count II was: " All persons who on or after a date of five years prior to the filing of this action, were sent telephone facsimile messages by or on behalf of [West Dundee]." The class proposed in count III was: " All persons in Illinois who on or after a date of three years prior to the filing of this action, were sent telephone facsimile messages by or on behalf of [West Dundee]."

         [¶7] B. The Declaratory Judgment Action (No. 09-MR-844)

          [¶8] West Dundee and the individual defendants failed to answer ICC's complaint and the trial court entered default judgments in ICC's favor and against them, stating, " this Order is not binding on [Wellington] with respect to any argument they may have regarding whether there is insurance coverage." ICC filed a complaint and an amended complaint for declaratory judgment against West Dundee and Wellington.

          [¶9] On February 3, 2010, Wellington filed a counterclaim for declaratory judgment against ICC, alleging that ICC owed a duty to defend and indemnify West Dundee in the underlying lawsuit. On March 8, 2011, ICC filed the present second amended complaint for declaratory judgment, alleging that it had no duty to defend or indemnify because the ...


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