Court of Appeals of Illinois, First District, Fourth Division
from the Circuit Court of Cook County No. 11 CH 1535
Honorable Kathleen M. Pantle, Judge Presiding.
JUSTICE ELLIS delivered the judgment of the court, with
opinion. Presiding Justice Burke and Justice McBride
concurred in the judgment and opinion.
1 This appeal involves a dispute over insurance coverage,
after a young woman was killed and a man was injured in a
shooting that took place in a parking lot outside
Dominick's Finer Foods (Domini ck's) on the northwest
side of Chicago. When Domini ck's was sued by the
decedent's estate, it tendered its defense to insurers
Netherlands Insurance Company (Netherlands) and Indiana
Insurance Company (Indiana) and later sought indemnification
as well. The insurers denied coverage, and Dominick's
filed suit for a declaration of coverage and damages for the
insurers' alleged bad-faith conduct.
2 After Dominick's and Netherlands filed cross-motions
for summary judgment, the trial court ruled in favor of
Netherlands and against Dominick's on all counts. The
trial court entered language pursuant to Illinois Supreme
Court Rule 304(a) (eff. Feb. 26, 2010), allowing an immediate
appeal of these claims, while other litigation involving
other parties continued in the trial court.
3 We hold that Netherlands owed Dominick's a duty to
defend and indemnify under the relevant language of the
insurance policy. We thus reverse the grant of summary
judgment in favor of Netherlands and remand this case for the
entry of summary judgment in favor of Dominick's on the
issue of coverage. But we affirm the trial court's grant
of summary judgment in favor of Netherlands on the claims of
bad faith under section 155 of the Illinois Insurance Code
(215 ILCS 5/155 (West 2014)) because even if we ultimately
disagree with the insurers' interpretation of the
insurance policy, we do not find their position to have been
unreasonable, and a bona fide dispute over coverage
4 I. BACKGROUND
5 The entire background of this case is somewhat complicated,
involving a lot of moving parts-various parties and different
insurance policies-so we will limit our background to what is
relevant to this appeal.
6 On September 6, 2004, a shooting occurred in the parking
lot outside of a Dominick's supermarket on the 3300 block
of West Belmont Avenue. The shooting claimed the life of
Crystal Mustafov and injured Jose Ramirez. The shooters
initially confronted the victims inside Dominick's before
following them into the parking lot.
7 The Domini ck's store in question was a tenant of the
Kennedy Plaza Shopping Center, which was owned by a trio of
entities: Kennedy Plaza Associates LLC, Kennedy Plaza BK, and
Kennedy Plaza RL, LLC (collectively, Kennedy Plaza).
8 Less than a month later, a lawsuit was filed by the estate
of Crystal Mustafov, which we will call the "Gallo
litigation" after the named plaintiff. The Gallo
complaint was amended several times, the other individual
injured in the shooting (Ramirez) was added as a plaintiff,
and the litigation was stayed for several years pending the
outcome of criminal proceedings. The defendants ultimately
included Domini ck's, Kennedy Plaza, and security
companies that performed work at that location.
9 In the sixth amended complaint in the Gallo litigation,
both Gallo and Ramirez alleged that Dominick's
"possessed, operated and controlled a food store and
adjacent parking lot" at 3300 West Belmont; that Domini
ck's had a "duty *** to ensure the safety of [its]
patrons and invitees"; and that Domini ck's breached
that duty by negligently failing to supervise or otherwise
protect "store patrons and invitees" such as
Mustafov and Ramirez from harm.
10 Kennedy Plaza had purchased a commercial general liability
(CGL) insurance policy from Netherlands (Kennedy policy), in
effect at the time of the shooting, which insured against
claims for bodily injury, property damage, or "personal
and advertising injury." It is undisputed that Domini
ck's was an additional insured on the policy, and that
the additional insurance covered not only the Domini ck's
store but the adjacent parking lot where the shooting
occurred. The relevant portion states as follows:
ADDITIONAL INSURED-BY CONTRACT, AGREEMENT OR PERMIT
2. Under SECTION II-WHO IS AN INSURED is amended to include
as an insured any person or organization when you and such
person or organization have agreed in writing in a contract,
agreement or permit that such person organization
[sic] can be added as an additional insured on your
policy to provide insurance such as is afforded under this
Coverage Part. Such person or organization is an additional
insured only with respect to liability arising out
a. Your ongoing operations performed for that person or
b. Premises or facilities owned or used by you. ***
2. This endorsement provision I. does not apply:
a. Unless the written contract or agreement has been
executed, or permit has been issued, prior to the 'bodily
injury', 'property damage' or 'personal and
d. To 'bodily injury', 'property damage' or
'personal and advertising injury arising out of any act,
error or omission that results from the additional
insured's sole negligence or wrongdoing.' "
11 Relying on the policy language, Dominick's tendered
its defense of the Gallo litigation to Netherlands, which
12 The Gallo litigation proceeded. The seventh amended
complaint added the various entities we have collectively
referred to as "Kennedy Plaza" for the first time
as defendants, claiming that Kennedy Plaza owned and operated
the parking lot, had a duty to secure and protect that lot,
and breached its duty, resulting in the shootings that
13 Kennedy Plaza settled out of the Gallo litigation in
January 2010 for $40, 000. That left Dominick's and two
security companies as remaining defendants. In March 2013, by
which time a twelfth amended complaint was pending, the
remaining defendants settled the litigation, with
Dominick's contributing $1.3 million to the settlement.
14 About a year after settling, Dominick's sued
Netherlands, claiming that it had a duty to defend and
indemnify Dominick's and asserting a bad-faith claim
under section 155 of the Illinois Insurance Code (215 ILCS
5/155 (West 2014)).
15 After cross-motions for summary judgment, the trial court
agreed with Netherlands that Dominick's was not entitled
to coverage under the policy. The court rejected
Dominick's estoppel argument as well. And the court found
the section 155 claim time-barred. The court thus entered
summary judgment on all counts directed against Netherlands
in its favor.
16 There are other parties, other claims, and other insurance
policies involved in this lawsuit that remain pending below.
None of them concern this appeal. The trial court entered
language pursuant to Rule 304(a), finding no just reason to
delay enforcement of or appeal from this order, and thus the
order is properly before us on appeal.
17 II. ANALYSIS
18 We review the entry of summary judgment de novo. Pence
v. Northeast Illinois Regional Commuter RR Corp., 398
Ill.App.3d 13, 16 (2010). De novo review is
independent of the trial court's decision; we need not
defer to the trial court's judgment or reasoning.
Motorola Solutions, Inc. v. Zurich Insurance Co.,
2015 IL App (1st) 131529, ¶ 114. Summary judgment is
proper only where the pleadings, depositions, and admissions
on file, together with the affidavits, if any, show that
there is no genuine issue of material fact, and that the
moving party is entitled to judgment as a matter of law.
Mashal v. City of Chicago, 2012 IL 112341, ¶
49. The construction of an insurance policy is also a
question of law subject to de novo review. Rich
v. Principal Life Insurance Co., 226 Ill.2d 359, 370-71
19 The first questions relate to coverage-whether Netherlands
had a duty to defend Dominick's in the underlying Gallo
litigation and to indemnify Dominick's for all or part of
the $1.3 million Dominick's paid to settle that
litigation. We begin with the duty to defend.
20 A. Duty to Defend
21 The duty to defend is broader than the duty to indemnify.
Pekin Insurance Co. v. Wilson, 237 Ill.2d 446, 456
(2010). To determine whether an insurer has a duty to defend,
the court examines the allegations in the underlying
complaint. United States Fidelity & Guaranty Co. v.
Wilkin Insulation Co., 144 Ill.2d 64, 73 (1991). If the
underlying complaint alleges facts within or potentially
within the policy coverage, the insurer must defend the
insured. Id. ¶ 22 Both "[t]he underlying
complaints and the insurance policies must be liberally
construed in favor of the insured." Id. at 74.
If a provision is subject to more than one reasonable
interpretation, it is ambiguous, and "[a]ll doubts and
ambiguities must be resolved in favor of the insured."
Id. An insurer cannot refuse to defend "unless
it is clear from the face of the underlying
complaints that the allegations fail to state facts which
bring the case within, or potentially within, the
policy's coverage." (Emphasis in original.)
Id. at 73. This rule holds true "even if the
allegations are groundless, false, or fraudulent."
Id. If there are several theories alleged in that
complaint, the insurer has the duty to defend all of them,
even if only one theory falls within potential coverage.
23 At the time Dominick's tendered its defense of the
Gallo litigation to Netherlands, the sixth amended complaint
was pending. In the general allegations of the complaint, the
plaintiffs alleged that:
* Domini ck's "possessed, operated and controlled a
food store and adjacent parking lot" at 3300 West
* Domini ck's was aware of gang activity and other
criminal activity in the past near that store, including
"armed robberies, assault and batteries, car jackings,
narcotic sales and incidents of gang graffiti;"
* on the day in question, two individuals, who were members
of a local gang, "confronted and threatened"
plaintiff Ramirez while inside the Domini ck's store;
* these two gang members were carrying "a loaded
handgun" inside the store at that time; and
* these two gang members followed Ramirez into the parking
lot area, "where they continued to confront and
threaten" plaintiff Ramirez and plaintiffs decedent,
Mustafov, ultimately resulting in the shooting.
24 In count IV, which adopted those allegations, Gallo
alleged the following against Dominick's:
"16. That it then and there became the duty of
[Dominick's] to ensure the safety of their patrons and
17. That in addition, [Dominick's] voluntarily assumed
the duty to provide safety and security services to its
patrons and invitees by hiring [specific security companies,
also named defendants] to provide security services and