United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
M. Dow, Jr. United States District Judge
insurance coverage dispute, Plaintiff seeks to impose a duty
to defend on Defendants with respect to a lawsuit filed
against Plaintiff in state court. All parties have moved for
summary judgment in this case. See  and . As
discussed at the February 4, 2016 hearing, the Court directed
the parties to submit responses limited to the estoppel issue
so that the Court could advance the litigation forward by
addressing that threshold issue. For the reasons stated
below, Plaintiff's motion is granted  and
Defendants' motion  is denied solely with respect to
the issue of whether Defendants are estopped from asserting
policy defenses. The other pending motions , , and
 are stricken without prejudice and with leave to refile.
This case is set for further status hearing on October 13,
2016 at 9:30 am.
Court takes the undisputed facts from the applicable policy
provisions and the relevant admissions by the parties. In
this insurance coverage dispute, Caveo LLC,
(“Plaintiff”), seeks to impose a duty to defend
on Citizens Insurance Company of America and Hanover
Insurance Company (“Defendants”) with respect to
a state court lawsuit filed against Plaintiff by Abreon that
has since settled. Plaintiff, a consulting company and
competitor of Abreon, was sued for a range of torts and civil
statutory violations stemming from the alleged theft of
copyrighted material and other confidential information by a
former Abreon employee who later worked for Plaintiff.
Hanover declined coverage, concluding that its policies
either did not provide or expressly excluded coverage for the
events at issue in the Abreon lawsuit.
2013, Caveo renewed its Avenues Business Owners Policy
(“Policy”) with Hanover. The Policy was issued to
Caveo at its principal place of business in Cook County,
Illinois. The Policy was effective from June 20, 2013 through
June 20, 2014. Section II.A.1.a of the Policy provides that
Hanover “will pay those sums that the insured becomes
legally obligated to pay as damages because of * * *
‘personal and advertising injury, ' to which this
insurance applies, ” and that Hanover “will have
the right and duty to defend the insured against any
‘suit' seeking those damages.”  at ¶
17. The Policy defines “personal and advertising
injury” as “injury, including consequential
‘bodily injury, ' arising out of one or more of the
following offenses: * * * (g) Infringing upon another's
copyright, trade dress, or slogan in your
‘advertisement.'” Id. at ¶ 18.
In Section II.F.1, the Policy defines
“advertisement” as “a notice that is
broadcast or published to the general public or specific
market segment about your goods, products or services for the
purpose of attracting customers or supporters, ”
providing that “[n]otices that are published include
material placed on the internet or a similar electronic means
of communication.”  at ¶ 19.
filed the underlying lawsuit against Caveo on May 22, 2014.
In its complaint, Abreon alleged that Caveo and Abreon are
direct competitors in the consulting industry, including in
training for enterprise resource planning software that an
organization can use to collect, store, manage and interpret
data. [1-1] at ¶¶ 2, 9-13. Abreon alleged that
Caveo had “engaged in a scheme and conspired with the
Former Abreon Employees to have them work for Caveo and use
Abreon's confidential, proprietary, trade secret and
copyrighted material to compete with Abreon, interfere with
its customer relationships and grow Caveo's competing
business by capturing Abreon's business.”
the May 22, 2014 filing beginning the underlying litigation,
Caveo tendered the litigation to Hanover on June 10, 2014.
Hanover denied coverage for Caveo in connection with the
Abreon Litigation in its letter of June 27, 2014. Hanover did
not provide a defense to Caveo under a reservation of rights
or seek declaratory judgment that there was no coverage. 
at ¶ 1. Caveo now insists that Defendants are estopped
from asserting policy defenses in this Court.
judgment is proper where “the pleadings, depositions,
answers to interrogatories, and admissions on file, together
with the affidavits, if any, show that there is no genuine
issue as to any material fact and that the moving party is
entitled to a judgment as a matter of law.”
Fed.R.Civ.P. 56(c). “Although intent and credibility
are often critical issues in employment discrimination cases,
no special summary judgment standard applies to such
cases.” Majors v. Gen. Elec. Co., 714 F.3d
527, 532-33 (7th Cir. 2013). Rather as with any case, the
Court “must construe all facts and draw all reasonable
inferences in the light most favorable to the nonmoving
party.” Id. (citation omitted).
avoid summary judgment, the opposing party must go beyond the
pleadings and “set forth specific facts showing that
there is a genuine issue for trial.” Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). A genuine
issue of material fact exists if “the evidence is such
that a reasonable jury could return a verdict for the
nonmoving party.” Id. at 248. The party
seeking summary judgment has the burden of establishing the
lack of any genuine issue of material fact. See Celotex
Corp. v. Catrett, 477 U.S. 317, 323 (1986). Summary
judgment is proper if the nonmoving party “fails to
make a showing sufficient to establish the existence of an
element essential to that party's case, and on which that
party will bear the burden of proof at trial.”
Ellis v. CCA of Tennessee LLC, 650 F.3d 640, 646
(7th Cir. 2011) (quoting Celotex Corp., 477 U.S. at
322). The non-moving party “must do more than simply
show that there is some metaphysical doubt as to the material
facts.” Matsushita Elec. Indus. Co., Ltd. v. Zenith
Radio Corp., 475 U.S. 574, 586 (1986). In other words,
the “mere existence of a scintilla of evidence in
support of the [non-movant's] position will be
insufficient; there must be evidence on which the jury could
reasonably find for the [non-movant].”
Anderson, 477 U.S. at 252.
of the parties' agreement that Illinois law governs the
insurance policies at issue, the Court will apply Illinois
law in its analysis. See Auto-Owners Ins. Co. v. Websolv
Computing, Inc., 580 F.3d 543, 547 (7th Cir. 2009)
(“Courts do not worry about conflict of laws unless the
parties disagree on which state's law applies.”
(internal citation and quotation marks omitted)).
Specifically, the Court will “apply the law that [it]
believe[s] the Supreme Court of Illinois would apply if the
case were before that tribunal rather than before this
court.” Help at Home, Inc. v. Med. Capital,
LLC, 260 F.3d 748, 753 (7th Cir. 2001). Under Illinois
law, “[t]he construction of an insurance policy and a
determination of the rights and obligations thereunder are
questions of law for the court which are appropriate subjects
for disposition by way of summary judgment.” Crum &
Forster Managers Corp. v. Resolution Trust Corp., 620
N.E.2d 1073, 1079 (Ill. 1998).
parties agree that this question of estoppel is governed by
Illinois law. As the Seventh Circuit recently reiterated,
where, as here, “an insurer tries to deny coverage
without seeking a declaratory judgment or
defending under a reservation of rights, ” the court
“is limited to a review of the allegations in the
underlying complaint” (Landmark American Ins. Co.
v. Hilger, -- F.3d --, No. 15-2566, slip op. at 6 (7th
Cir. Sept. 22, 2016) (applying Illinois law)), which the
court must compare with the express language in the insurance
policy to determine whether the insurer's duty to defend
has been triggered. See Pekin Ins. Co. v. Wilson,
930 N.E.2d 1011, 1016-1017 (Ill. 2010); Am. States Ins.
Co. v. Koloms, 687 N.E.2d 72, 75 (Ill. 1997).
“Like any contract under Illinois law, an insurance
policy is construed according to the plain and ordinary
meaning of its unambiguous terms.” Schuchman v.
State Auto Property & Casualty Ins. Co., 733 F.3d 231,
235 (7th Cir. 2013) (quotation marks and citation omitted).
Furthermore, “[a] court must construe the policy as a
whole and take into account the type of insurance purchased,
the nature of the risks involved, and the overall purpose of
the contract.” Id. at 238. Finally, if, after
undertaking the aforementioned analysis and employing the
standard tools of textual interpretation, the Court
determines that the terms of the policy are susceptible to
more than one meaning, then they are considered ambiguous and
will be construed strictly against the insurer who drafted
the policy. Id.
Illinois law, “[i]f the facts alleged in the underlying
complaint fall within, or potentially within, the
policy's coverage, the insurer's duty to defend
arises.” Pekin Ins. Co., 930 N.E.2d at 1017.
An insurer may justifiably refuse to defend the insured only
if ‘it is clear from the face of the
underlying complaint that the allegations fail to state facts
which bring the case within, or potentially within, the
policy's coverage.'” Northfield Ins. Co. v.