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Twin City Fire Insurance Co. v. Permatron Corp.

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

March 30, 2018

TWIN CITY FIRE INSURANCE COMPANY, Plaintiff,
v.
PERMATRON CORPORATION, and HECTOR VILLALOBOS, Defendants.

          MEMORANDUM OPINION AND ORDER

          Jorge L. Alonso, Judge

         Plaintiff Twin City Fire Insurance Company (“Twin City”) seeks declaratory judgment that it does not have a duty to defend its insured, Permatron Corporation (“Permatron”), in an action involving a former employee of Permatron, Hector Villalobos (“Villalobos”). Before the Court is plaintiff's motion for summary judgment. For the reasons set forth below, plaintiff's motion [20] is granted.

         BACKGROUND

         Twin City is an insurance provider that executed two Employment Practices Liability Policies with Permatron. (Compl. ¶ 10, ECF No. 1.) Permatron is an Illinois company that formerly employed Hector Villalobos. (Id. ¶¶ 1, 3.) Villalobos joined this suit solely as an interested party to be bound by the judgment herein. (Id. ¶ 4.)

         On August 27, 2014, Permatron terminated Villalobos's employment. (Compl, Exhibit A, ¶ 16, ECF No. 1-1.) On September 3, 2014, Villalobos filed a charge of discrimination against Permatron with the Equal Employment Opportunity Commission (“EEOC”) and the Illinois Department of Human Rights (“IDHR”) and provided notice of the charge to the president of Permatron, Leslye Sandberg. (Def's LR 56.1(b)(3)(a)(b) Stmt ¶¶ 7-8, ECF No. 28; Compl. ¶¶ 12- 13, ECF No. 1.) Sandberg responded in writing to Villalobos's IDHR charge on September 10, 2014. (Def's LR 56.1(b)(3)(a)(b) Stmt ¶ 9, ECF No. 28.)

         On March 12, 2015, Villalobos filed amended charges of discrimination against Permatron with the EEOC and IDHR, alleging discrimination based on age and national origin and unlawful conduct by his employer. (Compl., Exhibit G, ECF No. 1-7.) The unlawful conduct allegation involved Villalobos exercising his rights under the Workers Compensation Act and being terminated as a result. (Id.) On April 22, 2015, Villalobos received his Notice of Rights to Sue letter from the EEOC. (Id. ¶¶ 10-11.)

         On June 29, 2015, Villalobos filed a lawsuit, Villalobos v. Permatron Corp., No. 15-cv-05748 (N.D. Ill. July 20, 2016) (the “Villalobos suit”), asserting claims of age discrimination, national origin discrimination, and retaliatory discharge. (Id. ¶ 6; Compl., Ex. A, ECF No. 1-1.) On July 8, 2015, Permatron requested coverage for the Villalobos suit; Twin City received the request on or about July 9, 2015. (Pl's LR 56.1(a) Stmt, Ex. A, ECF No. 22-2 at 1-3.) On August 11, 2015, Twin City denied Permatron's request for coverage for the Villalobos suit, citing a lack of notice and Section X of the policy, which bars coverage for Interrelated Wrongful Acts. (Id. ¶ 14; Pl's LR 56.1(a) Stmt, Ex. A, ECF No. 22-3.)

         On November 12, 2015, Permatron learned that Villalobos intended to file an additional charge of retaliation against it. (Id. ¶ 16; Pl's LR 56.1(a) Stmt, Ex. D, ECF No. 22-5.) The additional charge involved Sandberg's alleged refusal to answer questions from prospective employers about Villalobos's employment with Permatron. (Id.) On November 16, 2015, Permatron requested coverage for the additional retaliation charge from Twin City. (Def's LR 56.1(b)(3)(a)(b) Stmt ¶ 17.) On November 23, 2015, Twin City denied the request, stating that Villalobos's additional retaliation charge was an Interrelated Wrongful Act that was not timely reported. (Id. ¶ 18; Pl's LR 56.1(a) Stmt, Ex. E, ECF No. 22-6.)

         On January 14, 2016, Villalobos filed another charge of retaliation against Permatron with the IDHR and EEOC, alleging that Permatron refused to answer questions from potential employers about Villalobos's employment with Permatron. (Id. ¶ 21.) On February 9, 2016, Permatron requested coverage from Twin City for the additional charge of retaliation. (Id. ¶ 22; Pl's LR 56.1(a) Stmt, Ex. F, ECF No. 22-7.) On March 10, 2016, Twin City again denied Permatron coverage for the same reasons it had cited in its August 2015 letter. (Id. ¶ 23; Pl's LR 56.1(a) Stmt, Ex. G, ECF No. 22-8.)

         Permatron had two insurance policies with Twin City to cover liabilities arising from employment practices: one policy was effective from March 17, 2014 through March 17, 2015, and the other policy was effective from March 17, 2015 through March 17, 2016 (collectively referred to as “the Twin City policies” or “the policies”). (Compl., Ex. B-C, ECF No. 1.) Section II of the policies defines an “Employment Practices Claim” as any:

(1) written demand for monetary damages or other civil relief commenced by the receipt of such demand, including, without limitation, a written demand for employment reinstatement;
(2) civil proceeding, including an arbitration or other alternative dispute resolution proceeding, commenced by the service of a complaint, filing of a demand for arbitration, or similar pleading; or
(3) formal administrative or regular proceeding, including, without limitation, a proceeding before the Equal Employment Opportunity Commission or similar governmental agency, commenced by the filing of a notice of charges, formal investigative order or similar document.
by or on behalf of an Employee, and applicant for employment with an Insured Entity, or an ...

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