Tews Funeral Home, Inc. v. Ohio Cas. Ins. Co.
| Decision Date | 06 November 1987 |
| Docket Number | Nos. 86-2376,86-2377,s. 86-2376 |
| Citation | 832 F.2d 1037 |
| Parties | 1987-2 Trade Cases 67,749 TEWS FUNERAL HOME, INC., Plaintiff-Appellant, v. OHIO CASUALTY INSURANCE COMPANY, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Paul J. Petit, Betar & Petit, P.C., Chicago, Ill., for plaintiff-appellant.
Robert Marc Chemers, Pretzel & Stouffer, Chicago, Ill., for defendant-appellee.
Before BAUER, Chief Judge, and WOOD and POSNER, Circuit Judges.
The plaintiff in this case, Tews Funeral Home, Inc., an Illinois corporation, was named as a defendant along with thirty-seven other defendants in a nine-count antitrust damage action brought by nine plaintiffs in the Northern District of Illinois. 1 Tews tendered its defense in this underlying Subsequently Tews and Ohio filed cross motions for judgment on the pleadings. Chief Judge Grady of the Northern District of Illinois resolved all issues in a thorough and careful unpublished Memorandum Opinion dated July 17, 1986. Tews's motion was granted in part and denied in part, and Ohio's motion was denied. Judgment was entered accordingly on August 8, 1986.
action to its insurer Ohio Casualty Insurance Company under Ohio's Commercial Umbrella Liability Insurance policy. Because of a dispute which arose between Tews and Ohio about coverage, representation, and the counsel fees that might be generated in Tews's defense, Tews filed this diversity action to obtain a declaration of Tews's and Ohio's rights under the policy.
Because Chief Judge Grady's Memorandum Opinion correctly resolves the issues as we view them, and seeing no need to rewrite his opinion for our purposes, we adopt it as the opinion of this court, and add only a few additional comments. 2
Like Chief Judge Grady, we find that Ohio has a duty to defend, notwithstanding its protestations to the contrary. Ohio argues that its policy does not apply to any of the allegations of the underlying complaint because the complaint alleges only intentional conduct. Intentional wrongful conduct, Ohio argues, is not covered under the policy. Chief Judge Grady's opinion sufficiently answers Ohio's narrow reading of the policy that it drafted.
Since we hold Ohio has a duty to defend Tews we must then consider whether or not a conflict of interest exists between Tews and Ohio so as to justify permitting Tews to conduct its own defense at Ohio's expense. Chief Judge Grady's opinion also sufficiently answers Tews's fears on this score. The possible liability and coverage under the policy of the claims alleged in the underlying complaint cannot yet be determined so as either to permit Ohio to escape its defense responsibilities, or to determine the sure existence of a conflict of interest. We will not anticipate that counsel selected by Ohio at its expense will violate the strict fiduciary duty owed to both Tews and Ohio.
At oral argument before this court counsel for Ohio indicated that Ohio might be willing to modify its position regarding its choice of counsel to defend Tews. Counsel suggested that Ohio might select and submit to Tews a short list of reputable counsel from the area, qualified and competent in cases similar to the underlying Cedar Park case, any one of whom would be acceptable to Ohio. From that list Tews could then select counsel to defend it, and also protect the interests of Ohio as well. That appears to be a reasonable compromise between the positions heretofore taken by both parties.
We fully affirm the judgment of the district court, but remand only for the limited purpose of giving the district court and the parties the good faith opportunity to expeditiously explore this alternate method of counsel selection. Circuit Rule 36 shall not apply.
AFFIRMED AND REMANDED.
APPENDIX 1
This diversity case is before the court on the parties' cross motions for judgment on the pleadings. We grant the motion of plaintiff Tews Funeral Home, Inc. ("Tews") and deny the motion of Ohio Casualty Insurance Company ("Ohio") for the reasons stated below.
The parties agree on the following facts. Ohio issued to Tews a comprehensive general liability policy. On March 14, 1985, within the policy period, Tews was named as a defendant in a case assigned to Judge Marshall of this court, Cedar Park Funeral Home v. Illinois Funeral Directors' Association, No. 85 C 2137. Tews promptly notified Ohio of the suit and asked Ohio The Cedar Park plaintiffs are various funeral homes and funeral directors' associations who are "engaged in virtually all aspects of the funeral, burial and cemetery industry." Amended Cedar Park Complaint, Preliminary Statement at 3. They sell merchandise at wholesale to other businesses and individuals within the industry. They also sell merchandise and services to the general public, both on an "at-need" basis, i.e., sales made at the time of death, and on a "pre-need" basis, i.e., sales made in advance of death. The Amended Cedar Park Complaint also alleges that "[c]ertain of the plaintiffs are participants in joint cemetery/mortuary operations established to provide the general public with innovative cost-saving alternatives to historical ... methods of marketing [funeral and cemetery] merchandise and services." Id.
to indemnify it against all liability. Ohio informed Tews that it had retained an attorney for Tews but was conducting the defense under a reservation of rights, stating that it might later disclaim coverage should Tews be found liable. Tews retained independent counsel who wrote Ohio asking it to acknowledge its duty to pay the fees and costs of the independent counsel in defending the suit, and further asking Ohio to recognize that Tews, through its independent counsel, had a right to control the Cedar Park litigation. Ohio refused both demands. Tews filed this declaratory judgment action regarding its rights and Ohio's duties. Ohio filed a declaratory counterclaim. Both parties moved for judgment on the pleadings. After those motions were fully briefed and while they were under our consideration, Judge Marshall dismissed the Cedar Park Complaint without prejudice. The Cedar Park plaintiffs then filed an amended complaint (the "Amended Cedar Park Complaint"). Ohio amended its counterclaim to address the Amended Cedar Park Complaint. Both Tews and Ohio have filed supplemental memoranda requesting judgment on the pleadings.
Tews and the other named defendants are accused, generally, of conspiring with one another in an attempt to maintain artificially high prices for their "historical" funeral and burial services and products. The Amended Cedar Park Complaint also accuses them of conspiring to discourage or prevent consumers from buying "cost-saving" alternative products and services from the Cedar Park plaintiffs. Tews and the other named defendants are accused of conspiring to make "false, misleading and defamatory" statements "disparaging" the Cedar Park plaintiffs' services and products "with the expressed interest of discouraging" consumers from buying the Cedar Park plaintiffs' products and services. Count I, paragraphs 54(t), (u); Count II, p 57; Count III, paragraphs 53-55; Count IV, paragraphs 52-54; Count VII, p 54; Count VIII, p 54; Count IX, p 54. The Cedar Park plaintiffs allege these statements give rise to liability under Sections 1 and 2 of the Sherman Act, 15 U.S.C. Secs. 1, 2; the Illinois Antitrust Act, Ill.Rev.Stat. ch. 38, Secs. 60-3(2), (3); and under common law for interference "with plaintiffs' right to pursue a lawful business." In addition, Tews and the other named defendants are accused of "wilfully ... disparag[ing] the goods, services or business of plaintiffs by" providing consumers with "false and misleading information" in violation of the Uniform Deceptive Trade Practices Act, Ill.Rev.Stat. ch. 121 1/2, Sec. 312(8); the Conswner Fraud Act, Ill.Rev.Stat. ch. 121 1/2, Sec. 261; and common law for interference with potential and existing contractual relationships. Count V, paragraphs 51(c), (d); Count VI, paragraphs 51(c), (d); Count VII, paragraphs 51(c), (d); Count VIII, paragraphs 51(c), (d). 1 The statements Tews claims that, regardless of whether Ohio has a duty to indemnify Tews for any damages that might eventually arise out of the Amended Cedar Park Complaint, Ohio has a duty to defend Tews because the claims are potentially within the scope of coverage under Ohio's policy. Tews argues that the allegations in the Amended Cedar Park Complaint involving the Uniform Deceptive Trade Practices Act, the Consumer Fraud Act, and the common law claims for interference with existing and potential contracts and the right to run a lawful business are claims for unfair competition based solely on defamation, invoking four different legal theories. Thus, Tews argues that Ohio's policy potentially provides coverage 2 as the allegations constitute an "advertising offense" 3 or a "personal injury" 4 within the meaning of the policy. Finally, Tews argues that Ohio has a conflict of interest with Tews and that Tews should be allowed to appoint independent counsel to control the litigation and to be reimbursed by Ohio.
by Tews and the other named defendants were apparently made in advertisements attached as exhibits to the Amended Cedar Park Complaint.
Ohio argues that the Amended Cedar Park Complaint, like the original Cedar Park Complaint, alleges only intentional conduct. Because its policy insures only against "occurrences," 5 which are defined by the policy as instances of non-intentional conduct, Ohio argues there is no possibility of coverage. 6
In Illinois, an insurer has only three options when its insured requests it to defend a third party action which the insurer believes to be outside the scope of the policy. The insurer can:
(1) seek a declaratory judgment regarding its obligations before or pending trial...
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