Westport Insurance Corporation, as Successor-in-Interest to Coregis Insurance Company v. Board of Education of J. Sterling Morton High School District #201, Hector Garcia, Manuel Isquierdo, and John Doe

District Court, N.D. Illinois·Decided August 28, 2026·No. 1:25-cv-04185·Unknown

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

WESTPORT INSURANCE CORPORTION, AS SUCCESSOR-IN- INTEREST TO COREGIS INSURANCE COMPANY

Plaintiff Case No. 25-cv-04185 v. Judge Mary M. Rowland BOARD OF EDUCATION OF J. STERLING MORTAN HIGH SCHOOL DISTRICT #201, HECTOR GARCIA, MANUEL ISQUIERDO, and JOHN DOE

Defendant

MEMORANDUM OPINION AND ORDER Plaintiff, Westport Insurance Corporation, as Successor-in-Interest to Coregis Insurance Company (“Westport”), seeks a declaratory judgment against the Board of Education of J. Sterling Morton High School District # 201 (the “District”), Hector Garcia, Manuel Isquierdo, and John Doe. Westport brings this action to resolve a controversy regarding the parties’ rights and duties under primary and umbrella insurance policies issued from 1998 to 2000 by Westport’s predecessor, Coregis Insurance Company (“Coregis”). Westport and the District bring cross motions for partial judgment on the pleadings with respect to their rights under the primary policies.1 For the reasons stated herein, Westport’s motion is denied and the District’s motion is granted in part and denied in part. I. Background

Coregis issued primary insurance policies to the District for annual periods from August 15, 1998 to August 15, 2000. [21-1] at ¶ 4. The primary policies provided liability coverage with an annual limit of $1 million for each “occurrence.” Id. at ¶ 55. Under the policies, Coregis agreed to “pay those sums that the [District became] legally obligated to pay as ‘damages’ because of ‘bodily injury’ . . . caused by an ‘occurrence.’” Id. at ¶ 56. “Bodily injury” is defined under the policies as including

“bodily injury, sickness, disease, disability, shock, mental anguish, mental injury and humiliation, sustained by a person, including death resulting from any of these at any time.” Id. An “occurrence” is defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” Id. The policies also provided coverage for “sums that the [District became] legally obligated to pay as ‘damages’ because of ‘personal injury.’” [22] at ¶ 98.2 “‘Personal injury’ means injury arising out of one or more of the following offenses,” including, but not

limited to, “[m]ental [a]nguish, mental injury and humiliation.” Id. at ¶ 102. The policies contained an “Expected or Intended Injury” exclusion, which stated: “This insurance does not apply to . . . ‘[b]odily injury,’ . . . or ‘personal injury’

1 Copies of the umbrella policies have not been located. [21-1] at ¶ 4. As such, any potential coverage under the umbrella policies is not at issue in these motions. 2 Unless otherwise noted, citations are to the original complaint [21-1] or the counterclaim paragraphs of the District’s answer and counterclaim. [22] at ¶¶ 1- 181. arising, in whole or in part, from any dishonest, fraudulent or criminal act of any insured.” [21-1] at ¶ 56. The policies further provide that the insurer must be “notified as soon as practicable of an ‘occurrence’ or an offense which may result in a claim,”

and “immediately notif[ied] of any ‘occurrence,’ claim or ‘suit’ that involves . . . [r]ape and/or serious physical assault.” Id. In 2022, John Doe, a former student at Morton East High School (“MEHS”), sued the District, former Vice Principal Hector Garcia, former Principal Manuel Isquierdo, and music teacher Jane Reynolds. [21-1] at ¶¶ 10-11, 18-19. Doe alleged that Garcia, Isquierdo, and the District failed to prevent and report sexual abuse

perpetrated by Reynolds while Doe was a student. Id. at ¶2. Westport was notified about the lawsuit and agreed to retain defense counsel chosen by the District subject to a complete reservation of rights under the primary policies. Id. at ¶ 70. Reynolds settled with Doe and the case proceeded to trial with respect to the remaining defendants. [22] at ¶ 78. The following facts derived from the underlying lawsuit are not in dispute. Doe was a freshman at MEHS in August 1998. [21-1] at ¶ 19. In August 1999, during his

sophomore year, Doe enrolled in Reynolds’ music class. Id. at ¶ 20. At some point during either his freshman or sophomore year, Doe also joined Reynolds’ piano club. Id. Doe’s complaint alleged that, beginning in December 1998 and continuing through May 2000, Reynolds sexually assaulted Doe in her vehicle and at her home. [22] at ¶ 32. At some point, Doe’s mother met with Garcia and Isquierdo and told them that she was “highly concerned” about Reynolds “behavior” toward Doe, and that “she had observed Doe and Reynolds making intimate physical contact.” Id. at ¶¶ 33-34. Doe alleged his mother told Garcia and Isquierdo that she believed Doe’s relationship with Reynolds was “improper” and sexual in nature. Id. at ¶¶ 35-36.

Isquierdo testified that he met with Reynolds and a union official on April 14, 2000, and asked if she had engaged in any improper behavior towards Doe during school hours. [21-1] at ¶ 25. According to Isquierdo, Reynolds denied having an inappropriate relationship with Doe, and Isquierdo “took her word at face value.” Id. Isquierdo asked Reynolds to meet again on May 23, 2000, after Doe’s mother made another complaint, but the meeting was promptly ended because Reynolds brought

counsel and no lawyer for the District was present. Id. at ¶ 30. Reynolds, on the advice of counsel, sent a letter to Isquierdo and other administrators to memorialize the meeting. Id. at ¶ 32. In the letter, Reynolds said she told Isquierdo during the meeting that Doe called her home a few days earlier and told her his father was beating him, so she reported the alleged abuse to the police. Id. at ¶ 33. The letter also advised Isquierdo that after the meeting Doe came to her home and told her that several family members were physically and sexually

abusing him. Id. at ¶ 34. Reynolds apparently took Doe to the hospital and alerted the Department of Children and Family Services (“DCFS”). Id. According to further testimony, Reynolds was reprimanded in writing by the assistant superintendent for calling DCFS without notifying the District, as the allegations of family abuse involved a “very sensitive situation for which [she] had not been trained.” Id. at ¶ 35. Isquierdo, who was copied on the letter from the superintendent, did not direct anyone to call DCFS about Doe’s mother’s reports against Reynolds. Id. at ¶¶ 36-37. Ultimately, Doe alleged the District and its agents knew, or should have

known, that his relationship with Reynolds was improper and that he was the victim of multiple sexual assaults by Reynolds between 1998 to 2000. [22] at ¶¶ 38-39. On March 11, 2025, the jury returned a $15 million dollar verdict against the District, including $6.43 million for past loss of a normal life, $4.29 million for past emotional distress, $1.71 million for loss of a normal life in the future, and $2.57 million for future emotional distress. [21-1] at ¶ 52. On March 25, 2025, the District demanded

that Westport pay indemnity of $2 million under the 1998-2000 primary policies. Id. at ¶5. Westport refused to indemnify the District under the 1998-1999 and 1999-2000 primary policies and filed this suit seeking a declaration that it has no duty to indemnify the District for the underlying lawsuit. [22] at ¶ 9. Westport filed a motion for partial judgment on the pleadings seeking judgment in its favor on Counts II, III, and IV of the complaint. [42] at 1. The District also filed a motion for partial judgment on the pleadings as to Counts I and II of its

counterclaim.3 [29] at 2. II. Standard

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Westport Insurance Corporation, as Successor-in-Interest to Coregis Insurance Company v. Board of Education of J. Sterling Morton High School District #201, Hector Garcia, Manuel Isquierdo, and John Doe, (N.D. Ill. 2026).

Westport Insurance Corporation, as Successor-in-Interest to Coregis Insurance Company v. Board of Education of J. Sterling Morton High School District #201, Hector Garcia, Manuel Isquierdo, and John Doe (Westport Insurance Corporation, as Successor-in-Interest to Coregis Insurance Company v. Board of Education of J. Sterling Morton High School District #201, Hector Garcia, Manuel Isquierdo, and John Doe) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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