Fayezi v. Ill. Cas. Co.
| Decision Date | 30 June 2016 |
| Docket Number | No. 1–15–0873.,1–15–0873. |
| Citation | 58 N.E.3d 830,405 Ill.Dec. 569 |
| Parties | Mortesa “Marty” FAYEZI and American Awning and Window Company, Inc., Plaintiffs–Appellants, v. ILLINOIS CASUALTY COMPANY, Defendant–Appellee. |
| Court | United States Appellate Court of Illinois |
Anderson & Wanca, of Rolling Meadows (Brian J. Wanca, David M. Oppenheim, and Jeffrey A. Berman, of counsel), and Bock & Hatch, LLC, of Chicago (Phillip A. Bock, of counsel), for appellants.
Best, Vanderlaan & Harrington, of Naperville (Lori Vanderlaan and Thomas Costello, of counsel), for appellee.
¶ 1 Plaintiffs-appellants Mortesa “Marty” Fayezi and American Awning & Window Co., Inc. (collectively, plaintiffs), appeal from the circuit court's order dismissing their amended complaint with prejudice in this insurance coverage declaratory judgment action. For the reasons set forth below, we affirm the judgment of the circuit court.
¶ 3 The plaintiffs initiated this declaratory judgment action to determine whether the defendant-appellee, Illinois Casualty Company (ICC), was obligated to defend a class action against ICC's insured, and to indemnify the eventual settlement of that underlying action.
¶ 4 ICC was the insurer for Pat's Pizzeria, Inc. (Pat's), the defendant in the underlying class action. ICC issued a “Businessowners Policy” to Pat's effective September 2, 2005, through September 2, 2006 (the 2005–06 policy). Among other categories of coverage, the 2005–06 policy provides coverage for “Bodily Injury and Property Damage.” That coverage was subject to certain exclusions, including an exclusion for:
The 2005–06 policy separately sets forth coverage for “Personal and Advertising Injury.” That category of coverage also contained an exclusion for “[a]ny liability or legal obligation of any insured with respect to ‘personal and advertising injury’ arising out of” the TCPA or “any amendments to these laws or any similar statutes, ordinances, orders, directives or regulations.”
¶ 5 On or about March 31, 2006, Pat's transmitted unsolicited advertisements by facsimile (fax) to 3636 recipients. In April 2009, one of the recipients, Fayezi, filed a class action complaint (the underlying complaint) in the circuit court of Cook County on behalf of himself “and all other persons similarly situated” who had received such faxes.
¶ 6 The underlying complaint began with a “preliminary statement” that “[t]his case challenges [Pat's] practice of faxing unsolicited advertisements.” The preliminary statement recites that the TCPA “provides a private right of action and provides statutory damages of $500 per violation” and states that the case was initiated “as a class action asserting claims against [Pat's] under the TCPA, the common law of conversion, and the consumer protection statutes forbidding and compensating unfair business practices.” The preliminary statement specified that “[p]laintiff seeks an award of statutory damages for each violation of the TCPA.”
¶ 7 The complaint alleged facts common to all counts that “[o]n or about March 31, 2006, Defendant faxed an advertisement to Plaintiff” and “faxed the same and similar advertisements to * * * other recipients without first receiving the recipients' express permission or invitation.”
¶ 8 The underlying complaint proceeded to plead three causes of action: count I asserted violation of the TCPA; count II pled a common-law count of conversion, alleging that Pat's had wrongfully “misappropriated the class members' fax machines, toner, paper and employee time”; and count III pled a violation of the Consumer Fraud and Deceptive Business Practices Act (Act). See 815 ILCS 505/2 (West 2012).
¶ 9 Count I pleaded that it was brought on behalf of a class including “[a]ll persons who (1) on or after four years prior to the filing of this action, (2) were sent telephone facsimile messages of material advertising * * * by or on behalf of Defendant (3) with respect to whom Defendant did not have prior express permission or invitation for the sending of such faxes and (4) with whom Defendant did not have an established business relationship.” Count II and III contained identical statements, referring to persons who had received such faxes within five years (count II) or three years prior to the filing of the action (count III).2 Each of the three counts explicitly “incorporate [d] the preceding paragraphs as though fully set forth herein.”
¶ 10 Pat's tendered defense of the underlying action to its insurer, ICC. However, ICC refused to defend the action, apparently on the basis of the 2005–06 policy's exclusions for “[a]ny liability or legal obligation” for bodily injury, property damage, or personal and advertising injury “arising out of” the TCPA (the TCPA exclusions).
¶ 11 Pat's and Fayezi subsequently entered into a settlement agreement of the underlying action, by which the parties agreed to an amount of liability that the class would seek to recover only from Pat's insurers, including ICC.
¶ 12 The recitals to that settlement agreement specify that “the Class includes 3,636 persons to whom Defendant faxed advertisements without prior express permission nor invitation” on or about March 31, 2006. The agreement recites that “a finding of liability under the TCPA with statutory damages of $500 per unsolicited fax would result in a damage award of $1,818,000.00 before trebling” and that “such a judgment would bankrupt [Pat's] and cause the dissolution of its business.”
¶ 13 The parties agreed to seek court approval of a judgment against Pat's in the amount of $1,818,000. However, the settlement agreement specified that the plaintiffs would not seek recovery from Pat's but instead would proceed against Pat's insurers. Thus, Pat's agreed to assign to the class its rights under the 2005–06 policy, and the class “agree[d] to seek recovery to satisfy the Judgment only against [Pat's] insurers,” including ICC.
¶ 14 On July 14, 2010, the court in the underlying action approved the settlement agreement. In that order, the court certified a class consisting of “All persons to whom [Pat's] sent advertising facsimiles on or about March 31, 2006 * * * without the recipients' prior express permission or invitation” and determined that Pat's had faxed 3636 such advertisements. The order approved the terms of the settlement agreement and entered judgment “in favor of the Class in the total amount of $1,818,000 * * * said judgment to be satisfied only from [Pat]'s insurers.”
¶ 15 On December 28, 2012, the plaintiffs initiated this action by filing a declaratory judgment complaint in the circuit court of Lake County, alleging that ICC was required to defend Pat's in the underlying action and to indemnify the resulting judgment in favor of the class. The complaint attached the 2005–06 policy, but reserved the right to amend the complaint if discovery revealed the existence of additional policies.
¶ 16 On April 23, 2013, ICC filed a forum non conveniens motion, arguing that Lake County was an improper forum, particularly since the underlying action was litigated in the circuit court of Cook County. Following extensive briefing, the circuit court granted ICC's motion and transferred the action to the circuit court of Cook County on September 6, 2013.
¶ 17 On May 29, 2014, ICC filed a motion to dismiss. Relying on the TCPA exclusions in the 2005–06 policy, ICC argued that it had no duty to defend the underlying class action or to indemnify the resulting judgment. In that motion, ICC relied heavily on the 2014 decision of the Second District of the Illinois Appellate Court in G.M. Sign, Inc. v. State Farm Fire & Casualty Co., 2014 IL App (2d) 130593, 385 Ill.Dec. 70, 18 N.E.3d 70. ICC argued that G.M. Sign had analyzed a “nearly identical” policy exclusion in a separate class action (filed by the plaintiffs' counsel in this case), also based on unsolicited faxes, which had pled the same three causes of action. ICC argued that G.M. Sign presented an “identical scenario” and thus compelled a conclusion that ICC had no duty to defend or indemnify in this case.
¶ 18 On July 14, 2014, the plaintiffs filed a motion to strike ICC's motion to dismiss as improper, claiming that it was not a valid motion to dismiss but “an extraordinarily premature motion for summary judgment.” In the alternative, the plaintiffs requested that any ruling on the motion “should be stayed until an evidentiary record can be developed through discovery.”
¶ 19 On July 21, 2014, the court entered an order staying ICC's motion to dismiss and setting a briefing scheduling on the plaintiffs' motion to strike. However, before those motions were decided, the plaintiffs filed an amended declaratory judgment complaint on August 22, 2014.
¶ 20 Unlike the original complaint, the amended complaint included allegations questioning the validity of the TCPA exclusions in the 2005–06 policy. In particular, the amended complaint alleged, “upon information and belief,” that the 2005–06 policy “was an attempted renewal of a 2004–05 Policy” and that earlier policies did not contain the TCPA exclusions.
¶ 21 The amended complaint further alleged that, since the underlying complaint sought certification of classes that included recipients of Pat's faxes up to five years prior to the filing of the action in 2009, the underlying complaint “raised the potential of claims within the 2003–04 and 2004–05 Policy periods.” In turn, the plaintiffs pled, ICC would be obligated to defend those potential claims pursuant to such prior policies that did not contain the TCPA exclusions.
¶ 22 The amended complaint further...
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