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State Farm Fire & Casualty Co. v. John

Court of Appeals of Illinois, Second District

June 14, 2017

STATE FARM FIRE & CASUALTY COMPANY, Plaintiff-Appellee,
v.
DAVID JOHN and WHEATON COLLEGE, Defendants David John, Defendant-Appellant; Wheaton College, Defendant-Appellee.

         Appeal from the Circuit Court of Du Page County. No. 16-MR-1331 Honorable Bonnie M. Wheaton, Judge, Presiding.

          JUSTICE ZENOFF delivered the judgment of the court, with opinion. Justices McLaren and Burke concurred in the judgment and opinion.

          OPINION

          ZENOFF JUSTICE

         ¶ 1 State Farm Fire & Casualty Company (State Farm) filed the instant action seeking a declaratory judgment regarding its duties to defend and indemnify its insured, David John, against a lawsuit filed by Wheaton College. John filed an interlocutory appeal from an order denying his motion to stay the action pending the resolution of the underlying litigation. For the reasons that follow, we reverse and remand.

         ¶ 2 I. BACKGROUND

         ¶ 3 On October 19, 2016, State Farm filed its amended complaint for a declaratory judgment, alleging as follows. John was insured under a personal-liability umbrella policy issued by State Farm. In August 2011, John filed a lawsuit against Wheaton College and others for public disclosure of private facts and tortious interference. In May 2012, Wheaton College filed a counterclaim alleging defamation. In December 2012, the trial court in the underlying litigation dismissed John's complaint, and Wheaton College voluntarily dismissed its counterclaim. In December 2013, Wheaton College filed a four-count complaint against John, alleging defamation per se, false light invasion of privacy, civil conspiracy, and malicious prosecution. Subsequently, this court reversed the trial court's order dismissing John's public-disclosure-of-private-facts claim, and that matter was remanded for further proceedings. See John v. Wheaton College, 2014 IL App (2d) 130524-U.

         ¶ 4 According to State Farm's amended complaint for a declaratory judgment, John first notified State Farm of Wheaton College's complaint on December 22, 2015. State Farm accepted John's tender of defense subject to a reservation of rights. State Farm has at all times funded John's defense through independent counsel. On February 9, 2016, the trial court in the underlying litigation sanctioned John for failing to comply with discovery obligations. State Farm attached a copy of that court order to its amended complaint. In relevant part, that order provided that: "the claims of John *** against all parties are dismissed with prejudice"; "default judgment is granted against John on all of Wheaton College's claims against him (in case no. 2013 L 1179)"; and "a prove-up hearing [(on damages)] is set for March 15 at 1:30 p.m." State Farm alleged in its amended complaint that John's liability as to Wheaton College's claims was thus established. When State Farm filed its amended complaint, the prove-up in the underlying litigation was scheduled for April 17, 2017.[1]

         ¶ 5 In count I of its amended complaint for a declaratory judgment, State Farm alleged that John failed to comply with the following notice provisions of the insurance policy:

         "In the event of a loss for which the policy may provide coverage, all insureds seeking coverage must:

1.Immediately notify us of such loss. The notice must give us:
(a) reasonably available information on the time, place and circumstances of the loss; and
(b) names and addresses of any claimants and witnesses; and
(c) the name of the insurer and identification number of any other policy providing insurance;
2.Immediately notify us and any other insurer providing insurance of any claim or suit filed against the insured and send us and such insurer every demand, notice, summons and other process received related to the claim or suit."

         ¶ 6 In count II of the amended complaint, State Farm alleged that John breached the policy's cooperation clause, which required him to:

         "[A]t all times, help and cooperate with us and any other insurer providing insurance, ...


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