from the Circuit Court of Cook County No. 17 CH 8425
Honorable Diane Larsen Judge Presiding.
PRESIDING JUSTICE GRIFFIN delivered the judgment of the
court, with opinion. Justices Hyman and Walker concurred in
the judgment and opinion.
GRIFFIN PRESIDING JUSTICE.
1 This is an insurance coverage action in which plaintiff
Evergreen Real Estate Services, LLC sought a declaration that
defendant Hanover Insurance Company has a duty to defend
Evergreen in a class action case. Evergreen also sought
damages for a bad faith denial of its claim under the
Illinois Insurance Code (215 ILCS 5/1 et seq. (West
2016)). Hanover Insurance filed a counterclaim against
Evergreen and against the building's owner Martin Luther
King Partners, LP who sought coverage as an additional
insured. The parties filed cross-motions for summary judgment
on all claims.
2 The trial court found that the claims asserted in the class
action case arguably represented subject matter covered by
the policy that Hanover Insurance issued to Evergreen and
were not specifically excluded from coverage, so the court
ordered Hanover Insurance to provide a defense. The trial
court, however, found that Hanover Insurance's refusal to
provide a defense did not constitute bad faith under section
155 of the Illinois Insurance Code (215 ILCS 5/155 (West
2016)). Each party appeals the ruling that was adverse to it.
4 Plaintiff Evergreen Real Estate Services manages a rental
property located at 3325 West Madison Street in Chicago
called Martin Luther King Jr. Plaza. The building is owned by
Martin Luther King Partners, LP ("MLK Partners").
In connection with its business operations, Evergreen secured
insurance coverage from defendant Hanover Insurance Company.
The policy that Evergreen purchased is called a Private
Company Advantage Policy.
5 Under the Private Company Advantage Policy that Evergreen
purchased from Hanover Insurance, Evergreen secured coverage
under a variety of different policies, coverage parts, and
insuring agreements. Important to this appeal, Evergreen was
entitled to coverage for corporate entity liability and for
professional liability. The "entity liability insuring
agreement" broadly covers" [l] oss which the
Insured Entity is legally obligated to pay due to a Claim
first made against the Insured Entity during the Policy
Period." The entity liability insuring agreement,
however, contains a professional services exclusion. That
exclusion provides that coverage is removed under the entity
liability insuring agreement for claims arising from the
provision of professional services. The "miscellaneous
professional liability insurance policy" provides
coverage for "any claim made against [Evergreen] arising
from a wrongful act in the rendering or failure to render
professional services by [Evergreen]." The professional
liability policy, however, contains an exclusion for claims
arising from "unfair or deceptive business
practices" including "violations of any local,
state or federal consumer protection laws."
6 Tenants of Martin Luther King Jr. Plaza, Lottie Berry and
Derrick Owens, filed a class action complaint against
Evergreen, MLK Partners, and Martin Luther King Jr. Plaza in
the Circuit Court of Cook County under Case No. 17 CH 5458.
In the class action complaint, the tenants allege that
Evergreen and MLK Partners committed several violations of
the Chicago Residential Landlord Tenant Ordinance (Chicago
Municipal Code § 5-12-010 et seq.)
("RLTO"). Evergreen tendered the defense of the
case to Hanover Insurance.
7 Hanover Insurance responded to Evergreen's letter
tendering the claim by stating that it would not defend or
indemnify Evergreen under the policy. Hanover Insurance's
reasons for refusing coverage were that: (1) it does not owe
coverage under the entity liability insuring agreement
because the underlying claims are based upon Evergreen's
performance of a professional service which are excluded from
coverage, and (2) it does not owe coverage under the
professional liability policy because the underlying claims
are for a willful violation of the RLTO and breach of
contract which are excluded from coverage.
8 Evergreen filed this complaint seeking a declaration that
Hanover Insurance has a duty to defend it in the class action
case. Evergreen additionally alleged that Hanover Insurance
is liable under section 155 of the Illinois Insurance Code
(215 ILCS 5/155 (West 2016)) for its bad faith denial of
Evergreen's tender of the claim.
9 Hanover Insurance subsequently accepted Evergreen's
defense in the underlying class action case under a
reservation of rights. Hanover Insurance reasserted its
position that the underlying claims involved acts in
furtherance of the provision of professional services.
Hanover Insurance also reasserted that the underlying claims
were for unfair or deceptive business practices in violation
of the RLTO.
10 In the trial court in this case, the parties both moved
for summary judgment. Hanover Insurance moved first for
summary judgment arguing that it has no duty to defend
Evergreen in the underlying lawsuit and that it is not liable
under section 155 of the Illinois Insurance Code for the bad
faith denial of a claim. Evergreen moved for summary judgment
arguing that Hanover Insurance has an obligation to provide a
defense in the underlying class action case and that it is
liable for the bad faith denial of an insurance claim under
section 155 of the Illinois Insurance Code.
11 After the cross-motions for summary judgment were filed,
Hanover Insurance filed a counterclaim. In its counterclaim,
Hanover Insurance made claims against both Evergreen and MLK
Partners. The counterclaim, insofar as it is against
Evergreen, is basically a recitation of its other documented
assertions that it has no duty to defend Evergreen in the
underlying class action. The counterclaim, however, also
seeks a declaration that Hanover Insurance has no duty to
defend MLK Partners. MLK Partners had requested coverage from
Hanover Insurance as an additional insured under the policy
for the first time a couple days after Evergreen filed its
cross-motion for summary ...