Doctors Direct Ins., Inc. v. Bochenek
| Decision Date | 03 August 2015 |
| Docket Number | No. 1–14–2919.,1–14–2919. |
| Citation | 38 N.E.3d 116 |
| Parties | DOCTORS DIRECT INSURANCE, INC., Plaintiff–Appellee, v. David BOCHENEK, Defendant–Appellant and Beaute‘E'mergente, LLC, doing business as McAdoo Comestic Surgery, Defendant. |
| Court | United States Appellate Court of Illinois |
Daniel A. Edelman, Cathleen M. Combs, James O. Latturner, and Rebecca A. Cohen, Edelman, Combs, Latturner & Goodwin, LLC, Chicago, for appellant.
Charles A. Valente and William D. Nagel, Krasnow Saunders Kaplan & Beninati, LLP, Chicago, for appellee.
¶ 1 Defendant, David Bochenek (Bochenek), appeals from an order of the circuit court that granted the motion of plaintiff, Doctors Direct Insurance, Inc. (Doctors Direct), for judgment on the pleadings pursuant to section 2–615(e) of the Code of Civil Procedure (the Code) (735 ILCS 5/2–615 (e) (West 2012)). The circuit court found that Doctors Direct did not have a duty to defend or indemnify defendant Beaute‘E'mergente, LLC, doing business as McAdoo Cosmetic Surgery (McAdoo), in a federal class action lawsuit filed by Bochenek. On appeal, Bochenek contends that McAdoo's insurance policy with Doctors Direct covers the claims in Bochenek's federal lawsuit. We affirm.
¶ 2 This matter involves two federal complaints apparently filed by Bochenek—an original complaint and a first amended complaint. The two complaints are nearly the same, but the first amended complaint added an allegation that will be noted below. In his original federal complaint, in which McAdoo and others who are not parties to this appeal were named as defendants, Bochenek alleged that in September and October 2013, he received unsolicited text messages on his cellular phone. The text messages read as follows:
“50% off Rockford area Botox,
now $7/unit. Call within 4
weeks (815) 397–3373 McAdoo
Cosmetic Surgery Reply STOP to opt-out.
McAdoo Cosmetic Surgery
815–397–
product, etc. Reply STOP to opt-
out.”
¶ 3 Bochenek further alleged in his original federal complaint that McAdoo was “responsible for making or causing the making of the text message calls,” Bochenek had not authorized the calls, and Bochenek had not provided McAdoo with his cellular phone number. According to Bochenek, the text messages came from an email address associated with SolutionReach, which was “engaged in the business of marketing and selling electronic communication solutions to healthcare practices.” Bochenek stated that on information and belief, the text messages were part of a “mass broadcasting.”
¶ 4 In his original federal complaint, Bochenek asserted that defendants violated the Telephone Consumer Protection Act (47 U.S.C. § 227 (2012) ). In addition, Bochenek alleged that defendants “engaged in unfair acts and practices” that violated section 2 of the Consumer Fraud and Deceptive Business Practices Act (the Consumer Fraud Act) (815 ILCS 505/2 (West 2012) ). According to Bochenek, the text message calls were contrary to Illinois public policy and public policy as established by the Telephone Consumer Protection Act.
¶ 5 McAdoo had medical professional liability insurance coverage with Doctors Direct. The policy included a cyber claims endorsement, which stated:
“Subject to all terms, conditions, definitions and exclusions of the Policy, we agree to reimburse protected parties, up to the applicable limit indicated in this endorsement, for costs protected parties become legally obligated to pay as a result of a Cyber Claim for any Network Security Wrongful Act or Privacy Wrongful Act including Patient Notification Costs and Credit Monitoring Costs incurred for any Privacy Wrongful Act and for Data Recovery Costs incurred due to a Data Interference Act, including Defense Costs of a Government Investigation for a Privacy Wrongful Act.” (Emphases in original.)
¶ 6 The endorsement defined a cyber claim as:
“a demand for money or services as compensation, such as a claim letter, notice of attorney's lien, or a civil suit, administrative proceeding, arbitration or mediation seeking to compel such compensation in which protected parties must participate.”
Additionally, a privacy wrongful act was defined as:
“any breach or violation of U.S. federal, state, or local statutes and regulations associated with the control and use of personally identifiable financial, credit or medical information, whether actual or alleged, but only if committed or allegedly committed by protected parties.”
¶ 7 On October 30, 2013, McAdoo notified Doctors Direct of the federal lawsuit and asserted that Bochenek's allegations triggered Doctors Direct's obligation to defend and indemnify McAdoo. McAdoo further stated that coverage was triggered by the cyber claims endorsement and the definition of a privacy wrongful act.
¶ 8 On November 22, 2013, Doctors Direct filed a complaint for declaratory relief in the Cook County circuit court. Doctors Direct contended that the policy did not cover McAdoo for the claims raised in the federal lawsuit and moreover, the federal complaint failed to allege a privacy wrongful act under the policy. Doctors Direct sought a declaration that it did not have to provide a defense to McAdoo in the federal lawsuit or indemnify McAdoo for any damages awarded.
¶ 9 On January 14, 2014, McAdoo filed a petition for bankruptcy in the United States Bankruptcy Court for the Northern District of Illinois. Ultimately, the bankruptcy court limited Bochenek's recovery against McAdoo to the proceeds of Doctors Direct's insurance policy.
¶ 10 On March 28, 2014, Bochenek filed his answer to Doctors Direct's complaint, stating that his lawsuit constituted a privacy wrongful act under the cyber claims endorsement of the Doctors Direct policy.
¶ 11 On April 4, 2014, Doctors Direct filed a motion for judgment on the pleadings pursuant to section 2–615(e) of the Code (735 ILCS 5/2–615(e) (West 2012)). Doctors Direct contended that Bochenek's claims under the Telephone Consumer Protection Act (47 U.S.C. § 227 (2012) ) and Consumer Fraud Act (815 ILCS 505/1 et seq. (West 2012)) were not based on a privacy wrongful act because neither statute was applied or associated with the control and use of personally identifiable financial, credit, or medical information. Doctors Direct asserted that as a result, the court should enter a judgment declaring that Bochenek's federal lawsuit was not covered under the policy.
¶ 12 In his response, Bochenek asserted that the Doctors Direct policy covered McAdoo for the federal lawsuit because the conduct complained of involved the control and use of personally identifiable financial, credit, and medical information. Bochenek asserted that the Doctors Direct policy was ambiguous as to whether the “ ‘breach or violation’ ” or the “ ‘U.S. federal, state or local statutes and regulations' ” must be associated with the control and use of personally identifiable financial, credit, or medical information. Regardless, Bochenek stated that both the particular conduct at issue and the laws violated were associated with the control and use of personally identifiable financial, credit, or medical information, and that any ambiguity must be resolved in favor of coverage. Additionally, Bochenek asserted that discovery had revealed that McAdoo had acquired customer information, including names and cellular phone numbers, from the owner of a spa. Bochenek contended that “[b]eing identified as someone who might consume cosmetic surgery is as stigmatizing as being identified as part of a group that would participate in, for example, psychotherapy” and that McAdoo's actions implicated privacy concerns. Bochenek further asserted that a list of people “believed to be prospects for medical procedures and their cell phone numbers” was “ ‘personally identifiable financial, credit or medical information.’ ”
¶ 13 In its reply, Doctors Direct asserted that Bochenek had construed the definition of a privacy wrongful act in a way that was at odds with plain, ordinary English. Additionally, Doctors Direct contended that neither the Telephone Consumer Protection Act nor the Consumer Fraud Act were concerned with the secrecy of personally identifiable financial, credit, or medical information. Doctors Direct also stated that the court could disregard Bochenek's reference to information learned from discovery because discovery was irrelevant on a motion for judgment on the pleadings and even if it was relevant, Bochenek had not presented the supposed discovery responses to the court.
¶ 14 Subsequently, in June 2014, Bochenek filed a motion for leave to file a surreply, noting Doctors Direct's claims that the court could not consider discovery in the federal case and that Bochenek's federal complaint did not allege any violation or breach associated with the control and use of personally identifiable financial, credit, or medical information. Bochenek stated that he had filed a motion for leave to file an amended complaint in federal court, and that this amended complaint added allegations that McAdoo “obtained a list of personally identifiable financial, credit or medical information of customers of a spa without their consent and used that information to send spam text messages to them.”
¶ 15 On June 23, 2014, the court denied Bochenek's motion for leave to file a surreply.
¶ 16 The record reflects that on June 30, 2014, Bochenek filed a notice of filing and a copy of a first amended federal complaint (amended complaint). The notice of filing is date-stamped by the Cook County clerk's office. The amended complaint added an allegation that McAdoo “obtained a list of personally identifiable financial, credit or medical information of customers from a spa—including their names and telephone numbers—without the customers' consent...
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