Bridgeview Health Care Ctr., Ltd. v. State Farm Fire & Cas. Co.

Decision Date22 May 2014
Docket NumberNo. 116389.,116389.
Citation2014 IL 116389,10 N.E.3d 902,381 Ill.Dec. 493
CourtIllinois Supreme Court
PartiesBRIDGEVIEW HEALTH CARE CENTER, LTD., Appellant, v. STATE FARM FIRE & CASUALTY COMPANY, Appellee.

OPINION TEXT STARTS HERE

Phillip A. Bock and Robert M. Hatch, of Bock & Hatch, LLC, of Chicago, and Brian J. Wanca, David Oppenheim and Jeffrey A. Berman, of Anderson + Wanca, of Rolling Meadows, for appellant.

Michael C. Borders and Rosa M. Tumialán, of Dykema Gossett PLLC, of Chicago, for appellee.

Michael M. Marick, Karen M. Dixon and Timothy H. Wright, of Meckler Bulger Tilson Marick & Pearson LLP., of Chicago, for amicus curiae American Insurance Association.

OPINION

Justice BURKE delivered the judgment of the court, with opinion.

¶ 1 This appeal presents the following question: When a federal district court sitting in a sister state makes a prediction under Erie R.R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), that the supreme court of that state would resolve a legal issue in a way that is at odds with Illinois law, does that prediction, in itself, establish an actual conflict between the two states' laws for purposes of a choice-of-law analysis? For the reasons that follow, we answer that question in the negative.

¶ 2 BACKGROUND

¶ 3 Bridgeview Health Care Center, Ltd. (Bridgeview), an Illinois corporation, filed a three-count, class action complaint in the federal district court of Northern Illinois against Jerry Clark, d/b/a Affordable Digital Hearing. Clark is an Illinois resident who operates Affordable Digital Hearing, a sole proprietorship dealing in the sale and repair of hearing aids, out of Terre Haute, Indiana. Bridgeview's complaint alleged that Clark sent Bridgeview and others across the United States unsolicited faxes in June of 2006. Count I of the complaint sought recovery under the Telephone Consumer Protection Act of 1991 (TCPA) (47 U.S.C. § 227 (2006)). Count II alleged that Clark was liable for common law conversion of Bridgeview's fax machine paper and toner. Count III alleged a violation of the Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/2 et seq. (West 2010)).

¶ 4 Clark was insured under a comprehensive general liability policy issued by State Farm Fire and Casualty Company, an Illinois corporation. The policy was purchased through an agent in Indiana and issued to Clark at his business address in Indiana out of State Farm's West Lafayette, Indiana office. Relevant here, the policy provided certain business liability coverage under both a “property damage” provision and an “advertising injury” provision.

¶ 5 Clark tendered defense of Bridgeview's suit to State Farm, which accepted the defense under a reservation of rights. In March 2010, State Farm filed a complaint for declaratory judgment in the circuit court of Vigo County, Indiana, against Clark and Bridgeview, seeking a declaration that it had no duty to defend Clark in the underlying federal lawsuit under either the property damage or advertising injury provisions of its policy. This action was eventually dismissed for want of personal jurisdiction over Bridgeview.

¶ 6 In June 2010, Bridgeview filed a declaratory judgment action against State Farm and Clark in Cook County, seeking a declaration that State Farm had a duty to defend and indemnify Clark because the unwanted faxes fell within both the advertising injury and property damage provisions of the insurance policy. State Farm, in turn, filed a counterclaim against Bridgeview and Clark, seeking a declaration it had no duty to defend or indemnify Clark.

¶ 7 Both Bridgeview and State Farm moved for partial summary judgment on the question of whether State Farm had a duty to defend. In its motion, State Farm acknowledged that, under Illinois law, coverage was provided under both relevant provisions of the insurance policy. State Farm maintained, however, that Illinois law conflicts with Indiana law on the coverage issues. State Farm conceded there were no Indiana state court cases which addressed whether coverage was provided, but relied on two unreported federal district court decisions from the Southern District of Indiana. These decisions predicted that the Indiana Supreme Court would hold there is no coverage under a general comprehensive liability policy for the claims raised in Bridgeview's complaint. State Farm maintained that these decisions, in themselves, created a conflict with Illinois law. Further, State Farm contended Indiana law should apply in this case because Indiana had the most significant contacts with the dispute. Thus, State Farm maintained its policy provided no coverage.

¶ 8 Bridgeview, in its motion, argued there was no conflict between Indiana and Illinois law. Bridgeview relied on a recent appellate court decision, Pekin Insurance Co. v. XData Solutions, Inc., 2011 IL App (1st) 102769, 354 Ill.Dec. 654, 958 N.E.2d 397, which held that a federal district court decision which merely predicts what state law would be does not, in itself, constitute “state law,” and, further, when there is no state case law on a question, there can be no conflict. Bridgeview also maintained that, even assuming Illinois and Indiana law were in conflict, Illinois had the most significant contacts. Therefore, according to Bridgeview, Illinois law should apply. Clark adopted Bridgeview's position.

¶ 9 On May 17, 2012, the circuit court of Cook County granted Bridgeview's motion for partial summary judgment and denied State Farm's motion. The circuit court agreed with Bridgeview that Pekin controlled the outcome; that there was no conflict between Illinois and Indiana law; and, thus, there was no need to conduct a choice-of-law analysis. Thereafter, the circuit court made a written finding pursuant to Supreme Court Rule 304(a) (Ill.S.Ct. R. 304(a) (eff. Feb. 26, 2010)), that there was no just reason to delay appeal.

¶ 10 The appellate court reversed and remanded. 2013 IL App (1st) 121920, 373 Ill.Dec. 247, 993 N.E.2d 553. The appellate court concluded that Pekin conflicted with the purpose of the choice-of-law doctrine and chose not to follow that decision. Instead, the appellate court held that the federal decisions cited by State Farm were sufficient to raise the possibility of a conflict between Illinois and Indiana law and “that the potential for conflict between Indiana law and Illinois law requires the trial court to engage in a choice-of-law analysis for the case.” Id. ¶ 22. We granted Bridgeview's petition for leave to appeal. Ill. S.Ct. R. 315(a) (eff. July 1, 2013).

¶ 11 ANALYSIS

¶ 12 This case brings before us the circuit court's grant of partial summary judgment in favor of Bridgeview. Summary judgment is properly granted when “the pleadings, depositions, 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.” 735 ILCS 5/2–1005(c) (West 2010). Summary judgment rulings are reviewed de novo. Hooker v. Retirement Board of the Firemen's Annuity & Benefit Fund, 2013 IL 114811, ¶ 15, 378 Ill.Dec. 416.

¶ 13 The parties do not dispute that, under Illinois law, State Farm has a duty to defend the underlying complaint pursuant to the insurance policy's “advertising injury” and “property damage” coverage. See Valley Forge Insurance Co. v. Swiderski Electronics, Inc., 223 Ill.2d 352, 307 Ill.Dec. 653, 860 N.E.2d 307 (2006) (coverage provided under the advertising injury provision); Insurance Corp. of Hanover v. Shelborne Associates, 389 Ill.App.3d 795, 329 Ill.Dec. 138, 905 N.E.2d 976 (2009) (coverage provided under the property damage provision). Nevertheless, State Farm maintains that the circuit court erred in granting Bridgeview's summary judgment motion because Indiana law applies.

¶ 14 [A] choice-of-law analysis begins by isolating the issue and defining the conflict.” Townsend v. Sears, Roebuck & Co., 227 Ill.2d 147, 155, 316 Ill.Dec. 505, 879 N.E.2d 893 (2007); 1A C.J.S. Actions § 45 (2005); 15A C.J.S. Conflict of Laws § 30 (2012). A choice-of-law determination “is required only when a difference in law will make a difference in the outcome.” Townsend, 227 Ill.2d at 155, 316 Ill.Dec. 505, 879 N.E.2d 893; Barbara's Sales, Inc. v. Intel Corp., 227 Ill.2d 45, 59, 316 Ill.Dec. 522, 879 N.E.2d 910 (2007). The party seeking the choice-of-law determination bears the burden of demonstrating a conflict, i.e., that there exists a difference in the law that will make a difference in the outcome. See Chicago Board Options Exchange, Inc. v. International Securities Exchange, L.L.C., 2012 IL App (1st) 102228, ¶ 44, 362 Ill.Dec. 290, 973 N.E.2d 390. Once a conflict between laws is established, the analysis turns to which law should be applied. Townsend, 227 Ill.2d at 157, 316 Ill.Dec. 505, 879 N.E.2d 893. We review de novo a circuit court's decision on a choice of law issue. Id. at 153–54, 316 Ill.Dec. 505, 879 N.E.2d 893.

¶ 15 No Indiana state court has addressed the question of whether the sending of unsolicited faxes falls within a comprehensive liability policy's provisions, either as an advertising injury or as property damage. However, two unreported federal district court decisions, Ace Mortgage Funding, Inc. v. Travelers Indemnity Co. of America, No. 1:05–cv–1631–DFH–TAB, 2008 WL 686953 (S.D.Ind. Mar. 10, 2008), and Erie Insurance Exchange v. Kevin T. Watts, Inc., No. 1:05–cv–867–JDT–TAB, 2006 WL 1547109 (S.D.Ind. May 30, 2006), have predicted Indiana law. These decisions predicted that the Indiana Supreme Court would hold there is no coverage for claims such as Bridgeview's under comprehensive general liability policies. In so holding, the district courts relied on American States Insurance Co. v. Capital Associates of Jackson County, Inc., 392 F.3d 939 (7th Cir.2004). In that decision, the Seventh Circuit looked at Illinois law and predicted that this court would hold that coverage was unavailable under a...

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