Sentinel Insurance Co. v. Cogan

202 F. Supp. 3d 831, 2016 WL 4270213, 2016 U.S. Dist. LEXIS 107761
CourtDistrict Court, N.D. Illinois
DecidedAugust 15, 2016
DocketNo. 15 C 8612
StatusPublished
Cited by7 cases

This text of 202 F. Supp. 3d 831 (Sentinel Insurance Co. v. Cogan) is published on Counsel Stack Legal Research, covering District Court, N.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Sentinel Insurance Co. v. Cogan, 202 F. Supp. 3d 831, 2016 WL 4270213, 2016 U.S. Dist. LEXIS 107761 (N.D. Ill. 2016).

Opinion

Memorandum Opinion and Order

Honorable Thomas M. Durkin, United States District Judge

Sentinel Insurance Company, Ltd. (“Sentinel”) filed this declaratory judgment action seeking a declaration of no duty to defend or indemnify Michael Co-gan, John Power, Jon Papin, and Cogan & Power, P.C.1 (collectively, the “Cogan Defendants”) in their state court action (the “underlying suit”) against the McNabola Law Group (“McNabola”). R. 1. Sentinel now moves for summary judgement. R. 21. For the reasons that follow, the motion is granted.

Standard

Summary judgment is appropriate “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). “Under Illinois law, the interpretation of an insurance policy is a question of law that is properly decided by way of summary judgment.” BASF AG v. Great Am. Assur. Co., 522 F.3d 813, 818-19 (7th Cir.2008).

Background

On July 1, 2014, McNabola filed a lawsuit against the Cogan Defendants in Du-Page County Court. R. 23 (PI. SOF) ¶ 6. The original complaint in the underlying suit alleged seven claims arising from the departure of the Cogan Defendants from McNabola in 2011 and 2012, and their formation and administration of a competing law firm, Cogan & Power, P.C. (“the Cogan firm”). Id. ¶ 7.

In August 2014, just before the Cogan Defendants appeared and filed an answer in the underlying suit, Cogan attorney Jon Papin sent an email to the law clerk of a judge before whom McNabola had a pending case. Id. ¶¶8-9. Papin had worked extensively on the case prior to his departure from McNabola. Id. ¶9. The email alleged serious ethical and professional misconduct by a McNabola attorney. Id. It was sent from Papin’s email account at the Cogan firm and suggested to the law clerk that his suspicions should be shared with the presiding judge. Id. Indeed they were, and the judge relayed the content of the email to the accused McNabola attorney in open court. R 1-3 ¶ 76. In September 2014, an attorney for McNabola sent the Cogan Defendants a letter demanding that they “immediately cease and desist from publishing false and defamatory statements] about [McNabola attorneys],” and warning that “the McNabola Law Group will take swift action to protect their legal rights.” R. 23 ¶ 10.

As promised, in October 2014, McNabola amended its complaint against the Cogan Defendants to add two defamation claims based on the content of Papin’s email. Id. ¶¶ 13-20. In support of those claims, they alleged that “Papin sent the email accusing [a McNabola attorney] of unethical behavior in his capacity as a partner, representative, employee, and agent of the Cogan Firm, and on behalf of the Cogan Firm.. .with the intention of harming [the McNabola attorney and firm] and benefit-ting himself and the Cogan Firm.” R. 1-3 [834]*834¶ 110. The Cogan Defendants received notice of the amended complaint on October 30, 2014. Id. ¶ 21.

At that time, the Cogan firm was covered by a commercial general liability (“CGL”) insurance policy issued by Sentinel (the “Sentinel Policy”). Id. 1124. Subject to a number of exclusions, the Sentinel Policy covered “bodily injury” and “property damage” occurring on business premises as well as “personal and advertising injury” arising from the business of the firm. Id. ¶¶ 26-29. The “personal and advertising injury” provision covered, among other claims, those arising from the “electronic publication of material that slanders or libels a person or organization or disparages a person’s or organization’s goods, products, or services.” R. 23 ¶26. The parties agree that the defamation claims potentially fall within the scope of this provision. See R. 22 at 2. However, this coverage is subject to a “professional services exclusion,” which applies to any “ ‘personal and advertising injury’ arising out of the rendering of or failure to render professional services as a lawyer.” R. 23 ¶27. The parties disagree as to whether this exclusion applies.

The Sentinel Policy requires the Cogan firm to promptly notify Sentinel of any duty it may have to defend and indemnify a claim for damages. Specifically, it requires notification “as soon as practicable” of any “offense which may result in a claim” or any “suit brought against any insured.” Id. ¶28. In late June or early July 2015, nine-and-a-half months after the cease-and-desist letter was sent and eight months after the filing of the amended complaint, the Cogan Defendants put Sentinel on notice of the underlying suit. Id. 1122; R. 44 (Def. Resp. to SOF) ¶22. The parties disagree as to whether this delay in tender was reasonable under the circumstances.

Discussion

As alluded to above, Sentinel makes two arguments in support of its motion for summary judgement. First, it argues it has no duty to defend because coverage for Papin’s conduct is carved out by the Sentinel Policy’s professional services exclusion. Second, Sentinel argues that even if the professional services exclusion does not apply, the Cogan Defendants failed without justification to give timely notice of the claims against them. The Cogan Defendants respond that the professional services exclusion should be read narrowly and construed against Sentinel, and that notice was reasonably delayed given their confusion over the scope of the Sentinel Policy’s coverage. The Court addresses each argument in turn.

A. The Professional Services Exclusion

To determine whether an insurer has a duty to defend or indemnify,2 courts are to compare the allegations in the underlying complaint to the relevant coverage provisions of the insurance policy. See Hurst-Rosche Engineers, Inc. v. Comm. Union Ins. Co., 51 F.3d 1336, 1342 (7th Cir.1995). When making this comparison, courts “must focus on the allegedly tor-tious conduct on which the lawsuit is based.” Id. A duty to defend is triggered if the underlying complaint contains allegations that fall, or potentially fall, within the scope of coverage. See St. Paul Fire & Marine Ins. Co. v. Vill. of Franklin Park, 523 F.3d 754, 756 (7th Cir.2008) (citing authority). “The insurer may properly refuse to defend its insured only if it is clear [835]*835from the face of the complaint that the wrongdoing alleged is not covered under the policy.” Hurst-Rosche, 51 F.3d at 1342.

The parties dispute whether the professional services exclusion applies to Papin’s email. The exclusion carves out coverage for all personal and advertising injuries “arising out of the rendering of or failure to render professional services as a lawyer.” R. 23 ¶27.

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Bluebook (online)
202 F. Supp. 3d 831, 2016 WL 4270213, 2016 U.S. Dist. LEXIS 107761, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sentinel-insurance-co-v-cogan-ilnd-2016.