West American Ins. Co. v. Yorkville National Bank, ___ N.E.2d ___, 2009 WL 537174 (Ill. App. Ct. (3d Dist.) Feb. 27, 2009)
The court determined that the notice provision of the policy had not been satisfied and thus no duty to defend existed. At issue were six alleged instances of oral notice claimed that could constitute actual notice triggering the duty to provide coverage.
The court recited the pertinent elements:
Defendant's first allegation of “actual notice” involves a conversation in late 2001 or early 2002 between Richard Dickson, who at the time was an agent of Zeiter-Dickson, and James Liggett, who was serving as defendant's president. Liggett states that he told Dickson that defendant was involved in a defamation suit and that the current D & O carrier would not cover the suit. He then asked Dickson whether defendant would have coverage under the Zeiter-Dickson policy. Dickson allegedly responded probably not. The second allegation of “actual notice” involves a conversation in late 2002 between Liggett and Joel Ottosen, another agent of Zeiter-Dickson. Liggett stated that this conversation was very similar to the one he had with Dickson in that he inquired as to whether the policy would provide coverage. Ottosen denies that this conversation ever occurred. The third and fourth allegations of “actual notice” involve two conference calls in 2001 and 2002 between Liggett, Ottosen and Daniel Kramer, who at the time was serving as defendant's in-house counsel. During the alleged calls Liggett again inquired as to whether defendant would have any coverage under the policy. No notes or confirming correspondence exist memorializing these conversations. Ottosen also denies that either of these conversations ever took place. The fifth and sixth instances of claimed “actual notice” occurred during defendant's Board of Directors meetings on September 16, 2002, and November 18, 2002. Dickson was present at both of these meetings. According to the minutes of the meetings, Liggett disclosed to the board that defendant had been sued for defamatory comments made by Wiegmann. He also disclosed the parties to the litigation and that there were some additional legal expenses involved with the lawsuit.
Id. at *2.
Written notice, 27 months after the suit was filed, before the matter was scheduled for trial, does not comply with the policy’s notice provision.
In Country Mutual Insurance Co. v. Livorsi Marine, Inc., 222 Ill. 2d 303, 856 N.E.2d 338 (2006), it was determined that the insurer did not receive reasonable notice of an occurrence or lawsuit, and the insured could not recover, regardless of whether the lack of reasonable notice prejudiced the insurer. County Mutual, 222 Ill. 2d at 311-12, 856 N.E.2d at 342-43. Since written notice was required as soon as practicable, oral notice was of no moment.
The court found that actual notice did not trump the policy’s technical language.
The court characterized the meaning of Cincinnati v. Western American Ins. Co., 183 Ill. 2d 317, 701 N.E.2d 499 (1998) re its discussion of actual notice. It stated:
While Cincinnati does in fact stand for the proposition that the duty to defend arises when the insurer has “actual notice” of a suit pending against its insured, it appears clear that an insurer can be absolved of this duty by obtaining a declaratory judgment that it has no obligation to defend or indemnify under the actual terms of the policy.
Id. at *7.
Because the suit was initiated by the insured against the insurer for coverage, it was the actual language of the notice provision of the policy, not actual notice as discussed in Cincinnati, that was germane.
No sanctions under section 155 were appropriate as the actual notice provision was not satisfied.
