Evergreen Real Estate Servs., LLC v. Hanover Ins. Co., 1-18-1867
| Decision Date | 04 November 2019 |
| Docket Number | No. 1-18-1867,1-18-1867 |
| Parties | EVERGREEN REAL ESTATE SERVICES, LLC, Plaintiff and Counterdefendant-Appellee and Cross-Appellant, v. HANOVER INSURANCE COMPANY, Lottie Berry, and Derrick Owens, Individually and on Behalf of All Others Similarly Situated, Defendants (Hanover Insurance Company, Defendant, Counterplaintiff, and Third Party Plaintiff-Appellant and Cross-Appellee; Lottie Berry and Derrick Owens, Defendants and Counterdefendants; Martin Luther King Partners, LP, Defendant and Third-Party Defendant-Appellee). |
| Court | United States Appellate Court of Illinois |
Jeffrey A. Goldwater, Kelly M. Ognibene, and Darcy L. Ibach, of Lewis Brisbois Bisgaard & Smith, LLP, of Chicago, for appellant.
Richard M. Burgland and Robert Marc Chemers, of Pretzel & Stouffer, Chtrd., of Chicago, for appellees.
¶ 1 This is an insurance coverage action in which plaintiff, Evergreen Real Estate Services, LLC (Evergreen), sought a declaration that defendant, Hanover Insurance Company (Hanover Insurance), 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 a third-party claim against the building's owner, Martin Luther King Partners, LP (MLK Partners), 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 (id. § 155). Each party appeals the ruling that was adverse to it. We affirm.
¶ 4 Plaintiff Evergreen manages a rental property located at 3325 West Madison Street in Chicago called Martin Luther King Jr. Plaza. The building is owned by MLK Partners. In connection with its business operations, Evergreen secured insurance coverage from defendant Hanover Insurance. 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 Residential Landlord and Tenant Ordinance (RLTO) (Chicago Municipal Code § 5-12-010 et seq. ). 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 judgment. Hanover Insurance subsequently filed a motion for summary judgment on its claim against MLK Partners, and MLK Partners filed a cross-motion on the issues pertaining to it.
¶ 12 In ruling on all of the cross-motions for summary judgment, the trial court held that its examination of the underlying class action claims revealed that the claims were not for the type of conduct that would be required for the claims to be excluded for coverage under the provision that excluded from coverage claims arising from "unfair or deceptive business practices" Instead, the court observed that the claims were for violations of the RLTO, which it viewed as not analogous to consumer protection statutes. The trial court also expressed that it was persuaded by Evergreen and MLK Partners' argument that the underlying claims may relate to ministerial or administrative issues that would not fall into the policy's professional services exclusion. Therefore, the trial court ruled in favor of Evergreen and MLK Partners on the duty to defend issue.
¶ 13 The trial court, however, held that Hanover Insurance's denial of the claim did not constitute bad faith under section 155 of the Illinois Insurance Code, so it entered summary judgment in Hanover Insurance's favor on those claims.
¶ 14 On appeal, Hanover Insurance argues that the trial court erred when it found that Hanover Insurance has a duty to defend Evergreen under the entity liability insuring agreement or professional liability parts of the policy. Hanover Insurance also argues that the trial court erred when it found that Hanover Insurance has a duty to defend MLK Partners under the professional liability part of the policy. Evergreen filed a cross-appeal arguing that the trial court erred when it found that Hanover Insurance was not liable for the bad faith denial of an insurance claim under the Illinois Insurance Code.
¶ 16 Summary judgment is appropriate when the pleadings, depositions, admissions, and affidavits, viewed in a light most favorable to the nonmovant, fail to establish that a genuine issue of material fact exists, thereby entitling the moving party to judgment as a matter of law. 735 ILCS 5/2-1005 (West 2016) ; Fox v. Seiden , 2016 IL App (1st) 141984, ¶ 12, 403 Ill.Dec. 368, 53 N.E.3d 1005. If disputes as to material facts exist or if reasonable minds may differ with respect to the inferences drawn from the evidence, summary judgment may not be granted. Fox , 2016 IL App (1st) 141984, ¶ 12, 403 Ill.Dec. 368, 53 N.E.3d 1005. We review a trial court's decision to grant summary judgment de novo . Illinois Tool Works Inc. v. Travelers Casualty & Surety Co. , 2015 IL App (1st) 132350, ¶ 8, 389 Ill.Dec. 331, 26 N.E.3d 421. When, as here, parties file cross-motions for summary judgment, they agree that no genuine issues of material fact exist and they invite the court to decide the case as a matter of law based on the record. Casey's Marketing Co. v. Hamer , 2016 IL App (1st) 143485, ¶ 11, 401 Ill.Dec. 842, 51 N.E.3d 35.
¶ 17 The construction of an insurance policy and the determination of the parties' rights and...
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