Ohio Security Insurance Co. v. Wexford Home Corp.

2024 IL App (1st) 232311-U
CourtAppellate Court of Illinois
DecidedDecember 2, 2024
Docket1-23-2311
StatusUnpublished

This text of 2024 IL App (1st) 232311-U (Ohio Security Insurance Co. v. Wexford Home Corp.) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ohio Security Insurance Co. v. Wexford Home Corp., 2024 IL App (1st) 232311-U (Ill. Ct. App. 2024).

Opinion

2024 IL App (1st) 232311-U

FIRST DIVISION December 2, 2024

No. 1-23-2311

NOTICE: This order was filed under Supreme Court Rule 23 and is not precedent except in the limited circumstances allowed under Rule 23(e)(1).

IN THE APPELLATE COURT OF ILLINOIS FIRST JUDICIAL DISTRICT

OHIO SECURITY INSURANCE COMPANY and THE ) OHIO CASUALTY INSURANCE COMPANY, ) Appeal from the ) Circuit Court of Plaintiffs-Appellants, ) Cook County, Chancery ) Division. v. ) ) No. 2022 CH 06845 WEXFORD HOME CORPORATION, ) ) Honorable Defendant-Appellee. ) Celia G. Gamrath, ) Judge Presiding.

PRESIDING JUSTICE FITZGERALD SMITH delivered the judgment of the court. Justices Lavin and Cobbs concurred in the judgment.

ORDER

¶1 Held: The circuit court erred in granting judgment on the pleadings in favor of the insured. The insurers had no duty to defend the insured against a class action lawsuit alleging violations of the Illinois Biometric Information Privacy Act (740 ILCS 14/1 et seq. (West 2020)) because the Recording and Distribution exclusion in their policies barred coverage of such claims.

¶2 This declaratory judgment action arises from an insurance coverage dispute between the No. 1-23-2311

plaintiffs, Ohio Security Insurance Company (Ohio Security) and the Ohio Casualty Insurance

Company (Ohio Casualty), and the defendant Wexford Home Corporation (Wexford), regarding

the plaintiffs’ duty to defend and indemnify Wexford in an underlying class action lawsuit brought

pursuant to the Illinois Biometric Information Privacy Act (BIPA) (740 ILCS 14/1 et seq. (West

2020)). After the parties filed cross-motions for judgment on the pleadings (735 ILCS 5/2-615(e)

(West 2020)), the circuit court granted judgment in favor of Wexford, finding that the plaintiffs

owed a duty to Wexford to defend it in the underlying class action lawsuit. The plaintiffs now

appeal, contending that three exclusions from their insurance policies to Wexford bar any coverage

for the BIPA class action claims. For the following reasons, we reverse and remand.

¶3 I. BACKGROUND

¶4 The record before us reveals the following relevant facts and procedural history. In

February 2022, Manuel Marin (Marin), individually and on behalf of a putative class of Wexford’s

current and former employees, filed a class action lawsuit against Wexford (No. 2022 CH 01582)

alleging that Wexford’s biometric employee time-keeping policy violated BIPA (740 ILCS

14/18(a)-(h) (West 2020)). According to the class action complaint, Wexford required its

employees to clock in and clock out by scanning their fingerprints into a fingerprint-scanning

machine, and then used that collected biometric information to confirm its employees’ presence at

work. The complaint alleged that Wexford violated BIPA by collecting, recording, storing, sharing

and discussing its employees’ biometric information without: (1) providing them with any written

notice; (2) obtaining their consent; and/or (3) implementing any of the requisite guidelines on

destroying, retaining, sharing, disclosing, and/or disseminating such data to third parties (740 ILCS

14/18(a)-(h) (West 2020)). The complaint therefore sought statutory damages and injunctive relief.

¶5 At all relevant times to the class action lawsuit, Wexford was insured by the plaintiffs. The

2 No. 1-23-2311

primary insurer, Ohio Security, issued consecutive commercial general liability policies (Nos. BZS

(21) 57 55 23 38 and BZS (22) 63 25 54 15) to Wexford for the policy periods between September

22, 2020, and May 14, 2022 (the primary policy). The umbrella insurer, Ohio Casualty, issued an

umbrella liability policy (No. USO (22) 63 25 54 15) to Wexford (the umbrella policy) for the

policy period spanning between May 14, 2021, and May 14, 2022.

¶6 Relevant to this appeal, Ohio Security’s primary policy details Wexford’s business liability

coverage in the following manner. Ohio Security “will pay those sums that [Wexford] becomes

legally obligated to pay because of *** ‘personal and advertising injury’ to which this insurance

applies.” Ohio Security “will have the right and duty to defend” Wexford against “any ‘suit’

seeking those damages,” but “will have no duty to defend [Wexford] against any ‘suit’ seeking

damages for *** ‘personal and advertising injury’ to which this insurance does not apply.”

According to the primary policy, the insurance applies “[t]o ‘personal advertising injury’ caused

by an offense arising out of [Wexford’s] business ***” if, inter alia, it occurred during the policy

coverage period. The primary policy defines “personal and advertising injury” as injury arising

out of, inter alia, “oral or written publication, in any manner, of material that violates a person’s

right to privacy.”

¶7 Ohio Casualty’s umbrella policy provides Wexford with insurance in excess of the

“Retained Limit,” covered by Ohio Security’s primary policy and any other insurance providing

coverage to Wexford. According to the umbrella policy, Ohio Casualty will pay on behalf of

Wexford “those sums in excess of the ‘Retained Limit’ that [Wexford] becomes legally obligated

to pay *** because of *** ‘personal and advertising injury’ to which this insurance applies” caused

by an “offense” arising out of Wexford’s business, but only if the “offense” was committed during

the policy period. Just as the primary policy, the umbrella policy defines “personal and advertising

3 No. 1-23-2311

injury” as injury arising out of, inter alia, “oral or written publication, in any manner, of material

that violates a person’s right to privacy.”

¶8 The umbrella policy also imposes on Ohio Casualty the right and duty to investigate and

defend any “claim *** seeking damages covered by the terms and conditions of the policy” but

only after Ohio Security’s primary policy’s insurance has been exhausted, or if damages are sought

for an “occurrence” or “offense” covered by the umbrella policy but not covered by Ohio

Security’s primary policy or any other insurance providing coverage to Wexford.

¶9 The umbrella policy’s “Personal and Advertising Injury—Following Form” endorsement

generally excludes coverage for “personal and advertising injury” except to the extent such

coverage is provided by Ohio Security’s primary policy, and for “no broader coverage than is

provided by such policy.”

¶ 10 Both Ohio Security’s primary policy and Ohio Casualty’s umbrella policy include various

insurance exclusions, including, relevant to this appeal: (1) the “Recording and Distribution Of

Material Or Information In Violation Of Law” (the Recording and Distribution exclusion); (2) the

“Exclusion-Access Or Disclosure Of Confidential Information And Data-Related Liability-With

Limited Bodily Injury Exception” (the Access or Disclosure exclusion); and (3) the “Employment-

Related Practices Exclusion” (the ERP exclusion).

¶ 11 According to the Recording and Distribution exclusion insurance does not apply to

“personal and advertising injury” arising directly or indirectly out of any action or omission that

violates or is alleged to violate:

“(1) The Telephone Consumer Protection Act (TCPA), including any amendment of or

addition to such law;

(2) The CAN-SPAM Act of 2003 [(the CAN-SPAM Act)], including any amendment of

4 No. 1-23-2311

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2024 IL App (1st) 232311-U, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ohio-security-insurance-co-v-wexford-home-corp-illappct-2024.