                                     2014 IL App (1st) 140286

                                                                             FOURTH DIVISION
                                                                             November 26, 2014

No. 1-14-0286

SCOTT MARGULIS, Individually and as the                )       Appeal from the
Representative of a Certified Class of Similarly       )       Circuit Court of
Situated Persons,                                      )       Cook County.
                                                       )
       Plaintiff-Appellant,                            )
                                                       )       No. 11 CH 32712
       v.                                              )
                                                       )
BCS INSURANCE COMPANY,                                 )       Honorable
                                                       )       Rita M. Novak,
       Defendant-Appellee.                             )       Judge Presiding.


     JUSTICE EPSTEIN delivered the judgment of the court, with opinion.
     Justices Howse and Taylor concurred in the judgment and opinion.

                                             OPINION

¶1       Scott Margulis, individually and on behalf of a class of similarly situated individuals,

filed a class action petition in Missouri against "Bradford E. Dixon d/b/a Bradford & Associates

a/k/a Bradford and Associates" (Bradford), an insurance agent and/or broker that had

transmitted unsolicited, automated telephone calls advertising its services. The lawsuit alleged

common law invasion of privacy and violation of a federal statute that restricts telephone

solicitations. Bradford's professional liability insurer, BCS Insurance Company (BCS),

declined coverage and did not defend Bradford in the action. With the approval of the Missouri

court, Margulis and Bradford settled for $4,999,999, with such judgment amount to be satisfied

exclusively from the proceeds of the insurance policies and claims against Bradford's insurer(s).

Margulis then filed a declaratory judgment action in the circuit court of Cook County against

BCS, 1 seeking an order declaring that BCS had a duty to defend Bradford in the underlying


         1
         In its answer to the complaint in the declaratory judgment action, BCS denied that its
principal place of business was in Chicago, Illinois, but admitted that it is licensed to conduct
No. 1-14-0286

action and requiring BCS to pay the judgment amount. The circuit court granted BCS's motion

for summary judgment and denied Margulis's motion for summary judgment. Margulis appeals.

¶2     We agree with the circuit court that the automated telephone calls at issue did not

constitute negligent acts, errors or omissions by Bradford arising out of the conduct of

Bradford's business in "rendering services for others" as a licensed insurance agent, general

agent or broker, as required for coverage under the BCS policy. Because there was no potential

for coverage of Margulis's claims, BCS had no duty to defend or indemnify. We thus affirm the

judgment of the circuit court.

¶3                                     I. BACKGROUND

¶4     On February 14, 2008, Margulis, on behalf of himself and "all other persons similarly

situated," filed a class action petition in the circuit court of St. Louis County, Missouri, against

Bradford, assigned case number 08SL-CC00670. Margulis alleged that Bradford engaged in a

"practice of transmitting unsolicited pre-recorded telephone calls to residential telephone lines

advertising its insurance services."

¶5     Count I of the petition alleged violation of the Telephone Consumer Protection Act (the

TCPA), a federal statute that makes it unlawful "to initiate any telephone call to any residential

telephone line using an artificial or prerecorded voice to deliver a message without the prior

express consent of the called party, unless the call is initiated for emergency purposes" or is

exempted by rule or order by the Federal Communications Commission (FCC). 47 U.S.C.

§ 227(b)(1)(B) (2006). According to the petition, "[c]alls made for a commercial purpose which

include or introduce an unsolicited advertisement or constitute a telephone solicitation are

expressly excluded from the exemptions adopted by the FCC." Margulis sought statutory


business in Illinois. BCS has not contested jurisdiction or venue.

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No. 1-14-0286

damages of $500 per violation. 47 U.S.C. § 227(b)(3)(B) (2006). Count II of the petition

alleged common law invasion of privacy; Margulis sought a "fair and reasonable amount of

damages for each violation."

¶6     BCS issued a "claims made" insurance policy to the "Agents of Blue Cross Blue Shield

of Missouri and RightCHOICE Managed Care, Inc., d/b/a Alliance Blue Cross Blue Shield."

The parties agree that Bradford was an insured under the policy. The declarations page is

entitled, "INSURANCE COMPANY COVERAGE FOR INSURANCE AGENTS AND

BROKERS PROFESSIONAL LIABLITY." Section I of the policy provides:

       "COVERAGE. The Company does hereby agree to pay on behalf of the Insured

       such loss in excess of the applicable deductible and within the limit specified in

       the Declarations sustained by the Insured by reason of the liability imposed by

       law for damages caused by any negligent act, error or omission by the Insured

       arising out of the conduct of the business of the Insured in rendering services for

       others as a licensed Life, Accident and Health Insurance Agent, a licensed Life,

       Accident and Health Insurance General Agent or a licensed Life, Accident and

       Health Insurer Broker as respects claims first made against the Insured and

       reported to the Company during the policy period, while there is in effect a

       contract between the Plan and the Insured."

"[I]njury to or destruction of any property, including loss of use thereof," is one of the policy

exclusions. The policy provided for a limit of $1 million per claim, with an annual aggregate

limit of $1 million. The initial policy period was from April 1, 1999 to April 1, 2000 and was

renewed; the parties agree that the policy was in effect between April 1, 2007 and April 1, 2008.




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¶7     In a letter dated May 6, 2008, counsel to BCS stated that the company declined

coverage. Specifically, the letter provided that "[o]ur analysis of the applicable law shows that

the solicitation of business by advertising and marketing directed to members of the general

public with whom one has no established business relationship does not involve the provision of

services for others as licensed life, accident and health insurance agent." BCS's counsel further

stated that "the alleged transmission of unsolicited prerecorded telephone messages appears to

involve actions that are intentional as opposed to negligent in nature and the policy limits

coverage to actions that are negligent in nature." The letter also referenced various policy

exclusions "which may provide independent bases to bar or limit coverage." BCS's counsel

suggested that Bradford may wish to notify its comprehensive general liability (CGL) insurer

"as the allegations in the Petition may fall within the express terms of the coverage provided by

that policy as either advertising injury and/or as property damage (including the loss of use

thereof), or both."

¶8     On July 22, 2011, the Missouri court entered a "Final Approval of Settlement

Agreement and Judgment," approving a settlement between Margulis, on behalf of himself and

the "Class," and Bradford. The class was defined as the "end users of telephone numbers in the

(314) and (636) area codes that were (1) identified in Defendant's prerecorded messaging call

log record, (2) included in the Missouri No Call database and/or the National Do Not Call

Registry, and (3) were sent a prerecorded telephone message advertising the insurance services

of Bradford Dixon between November 15, 2006 and February 4, 2008." Bradford transmitted

921,894 prerecorded calls to 186,711 unique telephone numbers. 2 The settlement order


       2
         The settlement order states that Bradford "purchased a list of telephone numbers from a
third party marketing company, Infinity Marketing, and [Bradford] ran the list of telephone
numbers through the No Call list to eliminate any numbers on the No Call list prior to directing

                                                -4-
No. 1-14-0286

provided, among other things, that (a) Bradford did not "willfully, knowingly, or intentionally

violate" the TCPA, (b) Bradford "tendered the defense of this suit to his insurer and his insurer

declined to defend or indemnify," and (c) judgment was entered against Bradford and in favor

of Margulis and the other class members in the total amount of $4,999,999 on count I of the

class action petition, "said judgment to be satisfied only from the proceeds of the insurance

policies and claims against Defendant's insurer(s)."

¶9     On September 19, 2011, Margulis, on behalf of himself and the other class members,

filed a declaratory judgment action in the circuit court of Cook County against BCS, seeking an

order declaring that BCS had a duty to defend Bradford in the Missouri action and "[d]eclaring

and ordering that BCS Insurance is required to indemnify and pay the judgment entered therein

against Bradford."

¶ 10   In its answer, BCS denied any duty to defend or indemnify Bradford. Bradford also

asserted affirmative defenses, including that: (a) Bradford did not obtain the written agreement

of BCS prior to entering the settlement agreement, in violation of the insurance policy, and thus

Margulis lacked standing; (b) Bradford did not notify BCS of the claims prior to the end of the

policy period; and (c) given that Bradford's acts as alleged in the Missouri class action petition

were intentional and were not performed while Bradford was rendering services for others,

"Bradford's claim for defense and indemnity resulting from the underlying suit is not covered

because it does not fall within the Policy's insurance agreement."

¶ 11   BCS and Margulis each filed motions for summary judgment pursuant to section 2-1005

of the Illinois Code of Civil Procedure (the Code) (735 ILCS 5/2-1005 (West 2010)). At the

time that the circuit court took the parties' cross-motions for summary judgment under


the prerecorded messages to be sent."

                                                -5-
No. 1-14-0286

advisement, the Illinois Supreme Court was reviewing an appellate court ruling that the

statutory damages under the TCPA are punitive and uninsurable as a matter of law. Standard

Mutual Insurance Co. v. Lay, 2012 IL App (4th) 110527. After our supreme court reversed that

portion of the appellate court's decision (Standard Mutual Insurance Co. v. Lay, 2013 IL

114617, ¶¶ 23-34), the circuit court directed BCS and Margulis to file renewed motions for

summary judgment.

¶ 12   In support of his renewed motion for summary judgment, Margulis argued that BCS

breached its duty to defend Bradford and that, based on such breach, BCS "is estopped from

raising coverage defenses." Margulis sought indemnification of the underlying judgment—

which substantially exceeded the policy limits—plus postjudgment interest. BCS claimed that

"nothing about the TCPA violations alleged against [Bradford] involved rendering professional

services to others as an insurance agent. The substance of [Bradford's] actions are nothing more

than the advertising function of any business, which [Bradford] directed to strangers." BCS

asserted that because there was no possibility of coverage under the professional liability policy,

it properly declined to defend or indemnify.

¶ 13   In a memorandum decision and order entered on December 19, 2013, the circuit court

granted BCS's summary judgment motion and denied Margulis's motion. The court concluded

that, applying Illinois or Missouri law, BCS had no duty to defend or indemnify because the

claims asserted in the underlying class action petition would not be covered by the BCS policy.

Given that "there was no possibility of coverage," the court rejected Margulis's estoppel

argument. Margulis filed this appeal.

¶ 14                                    II. ANALYSIS




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¶ 15    On appeal, Margulis contends that the circuit court of Cook County "impermissibly

construed ambiguous policy language narrowly, rather than broadly, such that the possibility of

coverage would be foreclosed." He asks us to "hold that BCS had and breached a duty to

defend Bradford in connection with the Underlying Action." According to Margulis, "[w]hen

this Court reverses the duty to defend issue, it can and should also conclude that BCS is

estopped as a matter of law" and "must indemnify the underlying judgment plus post judgment

interest."

¶ 16    BCS counters that Margulis is "ignoring the key passage" in the policy, i.e., that the

action arise out of the conduct of the business of the insured "in rendering services for others."

BCS further contends that it "cannot be estopped when it never had a duty to defend." Finally,

BCS asserts that even if it was estopped from raising policy defenses, no basis exists for

extending BCS's liability beyond the policy limit because "the entire judgment flows from

Bradford's own conduct, and neither Bradford nor Margulis claims that Bradford suffered a

default judgment or was otherwise left without effective counsel in the underlying action."

¶ 17    We review an order granting a motion for summary judgment de novo. Standard

Mutual Insurance Co. v. Lay, 2013 IL 114617, ¶ 15. Summary judgment is appropriate when

"the pleadings, depositions, and admissions on file, together with the affidavits, if any, show

that there is no genuine issue as to any material fact and that the moving party is entitled to a

judgment as a matter of law." 735 ILCS 5/2-1005(c) (West 2012).

¶ 18                         A. Duty to Defend and Duty to Indemnify

¶ 19    The fundamental question is whether the BCS breached its duty to defend Bradford in

the underlying action. Given that an insurer's duty to defend is broader than its duty to

indemnify, if BCS owed no duty to defend, it owes no duty to indemnify. Crum & Forster


                                                -7-
No. 1-14-0286

Managers Corp. v. Resolution Trust Corp., 156 Ill. 2d 384, 398 (1993); Metzger v. Country

Mutual Insurance Co., 2013 IL App (2d) 120133, ¶ 19.

¶ 20   Both Margulis and BCS agree that Illinois law applies to this issue.3 As the Illinois

Supreme Court recently stated in Bridgeview Health Care Center, Ltd. v. State Farm Fire &

Casualty Co., 2014 IL 116389, a choice-of-law determination is necessary only when the

difference in law will make a difference in the outcome. Id. ¶ 14. The "party seeking the

choice-of-law determination bears the burden of demonstrating a conflict, i.e., that there exists a

difference in the law that will make a difference in the outcome." Id. As neither party seeks

application of the law of another state, i.e., Missouri, we turn our attention to the Illinois law on

the duty to defend.

¶ 21                      i. Duty to Defend and Insurance Policy Interpretation

¶ 22   "Courts look to the allegations of the underlying complaint to determine an insurer's

duty to defend its insured." Illinois Emcasco Insurance Co. v. Northwestern National Casualty

Co., 337 Ill. App. 3d 356, 359 (2003). The insurer has a duty to defend if the complaint alleges

facts potentially within policy coverage. Id. " 'An insurer may not justifiably refuse to defend

an action against its insured unless it is clear from the face of the underlying complaint[] that

the allegations fail to state facts which bring the case within, or potentially within, the policy's

coverage.' " Id. (quoting United States Fidelity & Guaranty Co. v. Wilkin Insulation Co., 144

Ill. 2d 64, 73 (1991)). In other words, "an insurer must defend if the insurance contract might

possibly cover the alleged source of liability." Illinois Emcasco, 337 Ill. App. 3d at 359-60; L.J.


       3
         To the extent that there may be an "outcome-determinative conflict" between Illinois
and Missouri law, Margulis seeks application of Missouri law on the question of whether the
estoppel doctrine could impose liability beyond the policy limits. As discussed herein, we need
not examine the scope or application of the estoppel doctrine given our conclusion that BCS did
not breach its duty to defend.

                                                 -8-
No. 1-14-0286

Dodd Construction, Inc. v. Federated Mutual Insurance Co., 365 Ill. App. 3d 260, 262 (2006)

(noting that "an insurer may justifiably refuse to defend against the underlying action if the

complaint clearly does not allege facts potentially within coverage").

¶ 23    "An insurance policy is a contract, and the general rules governing the interpretation of

other types of contracts also govern the interpretation of insurance policies." Hobbs v. Hartford

Insurance Co. of the Midwest, 214 Ill. 2d 11, 17 (2005). "Accordingly, our primary objective is

to ascertain and give effect to the intention of the parties, as expressed in the policy language."

Id. "If the policy language is unambiguous, the policy will be applied as written, unless it

contravenes public policy." Id.

¶ 24    "Whether an ambiguity exists turns on whether the policy language is subject to more

than one reasonable interpretation." Hobbs, 214 Ill. 2d at 17. "Although 'creative possibilities'

may be suggested, only reasonable interpretations will be considered. [Citation]." Id. Simply

put, we will not "strain to find an ambiguity where none exists." Id. "Although policy terms

that limit an insurer's liability will be liberally construed in favor of coverage, this rule of

construction only comes into play when the policy is ambiguous." Id.; American Country

Insurance Co. v. James McHugh Construction Co., 344 Ill. App. 3d 960, 970 (2003) (noting

that rules of construction such as liberally construing allegations in a complaint in favor of an

insured "do not justify construing a contract against an insurer where no real ambiguity exists").

¶ 25                    ii. The Margulis Class Action Petition and the BCS Policy

¶ 26    Margulis's class action petition, i.e., the complaint, alleged, in part, that Bradford

"developed a promotional scheme utilizing a pre-recorded message sent to telephone lines

including residential telephone line subscribers like Plaintiff" and the "purpose of the scheme

was to advertise [Bradford's] insurance services." Margulis asserted in the petition that


                                                  -9-
No. 1-14-0286

Bradford's actions violated the right to privacy afforded Margulis and the other class members.

Subject to the various limitations and exclusions stated in the policy, Bradford's policy with

BCS provided coverage for "loss *** by [Bradford] by reason of liability imposed by law for

damages caused by any negligent act, error or omission by [Bradford] arising out of the conduct

of the business of [Bradford] in rendering services for others as a licensed Life, Accident and

Health Insurance Agent, a licensed Life, Accident and Health Insurance General Agent, and a

licensed Life, Accident and Health Insurance Broker."

¶ 27   Observing that Bradford's "advertising calls sought to induce the recipients to use

Bradford's specialized services as an insurance agent or broker," Margulis contends on appeal

that "[i]t does not take much effort to move from there to the conclusion that the resulting

injuries arose out of Bradford's business, such that at least a potential for coverage, and

therefore, a duty to defend exists." Margulis also asserts that the " 'arising out of the conduct of

the business of the insured in rendering services for others as [an insurance agent or broker]'

limiting language, on which BCS bases its denial of coverage, is neither definite nor specific."

Claiming that it is "impossible to reconcile an express grant of coverage for a specific type of

activity by an insurer with the insurer's subsequent denial that such activity can ever be

covered," Margulis argues that the policy language is ambiguous and should be construed in

favor of coverage.

¶ 28   Comparing the class action petition against Bradford and the BCS policy, we do not read

the allegations in the petition as falling within the potential scope of the policy's coverage

because the allegedly negligent acts, errors or omissions—the transmission of automated,

unsolicited telephone calls advertising Bradford's services—did not arise out of the conduct of

Bradford's business in rendering services for others as an insurance agent, general agent or


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No. 1-14-0286

broker. We do not agree with Margulis that "all that the BCS Policy requires" is "a negligent

act arising out of the conduct of Bradford's insurance agency business." Such interpretation

effectively deletes the "rendering services for others" language. We will not interpret a policy

in a manner that renders provisions of the policy meaningless. Cincinnati Insurance Co. v.

Gateway Construction Co., 372 Ill. App. 3d 148, 152 (2007). Conversely, Margulis repeatedly

references the "substantial nexus" between Bradford's telemarketing activity and its business as

an insurance agent, but the BCS policy does not mention or require any "nexus." We will not

read into the policy language any additional terms. See Barth v. State Farm Fire & Casualty

Co., 228 Ill. 2d 163, 174-75 (2008).

¶ 29   Margulis asserts that "Bradford's calls provided information that it believed would be

useful to insurance clients or offered to provide information and assistance to the buyers of

insurance to construct insurance based protection for their specific businesses." According to

Margulis, "[t]here is little else that would comprise professional services offered by an

insurance agent or broker." We disagree. As BCS suggests, "[a]ny of the following could

constitute the rendering of professional services by an agent or broker: Meeting with clients to

discuss their insurance needs; counseling clients on the products best-suited to those needs;

obtaining competing bids from insurance companies; completing insurance applications with

clients; procuring coverage; and renewing, cancelling, or consulting about premium charges."

BCS observes, and we agree, that a "client counseled badly in any of those areas could bring a

malpractice suit against Bradford, which would be potentially covered by the BCS policy."

Margulis's assertion that "Bradford's calls provided information that it believed would be useful

to insurance clients" overlooks the fact that, according to the class action petition, there was no

"established business relationship" between Bradford and the members of the proposed class,


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No. 1-14-0286

including Margulis. Simply put, the recipients of Bradford's robocalls were, based on our

review of the petition, not insurance clients of Bradford. Therefore, we conclude that the calls

did not constitute a "negligent act, error or omission by [Bradford] arising out of the conduct of

the business of [Bradford] in rendering services for others as" a licensed insurance agent,

general agent or broker. Bradford was not rendering services for the call recipients as an agent

or broker where, as here, the recipients were not Bradford's clients or customers.

¶ 30   As noted above, "[w]here an ambiguity in an insurance policy is found, we will construe

it in favor of the insured." Hobbs, 214 Ill. 2d at 30-31. However, we will not " 'torture ordinary

words until they confess to ambiguity.' " Id. at 31 (quoting Western States Insurance Co. v.

Wisconsin Wholesale Tire, Inc., 184 F.3d 699, 702 (7th Cir. 1999)). We conclude that

Bradford's policy with BCS is not ambiguous and does not provide coverage for the claims

asserted by Margulis in the class action petition.

¶ 31                             iii. Westport and Landmark Decisions

¶ 32   Westport Insurance Corp. v. Jackson National Life Insurance Co., 387 Ill. App. 3d 408

(2008), an Illinois Appellate Court decision addressing professional liability insurance coverage

and TCPA claims, strongly supports our conclusion. Margulis urges us to rely on Landmark

American Insurance Co. v. NIP Group, Inc., 2011 IL App (1st) 101155, another appellate

decision involving TCPA claims and professional liability insurance coverage. As discussed

below, we agree with the circuit court that "[t]his case is closer to Westport than Landmark" and

that the "policy language in Landmark is distinguishable from the instant case and was the

linchpin for the Appellate Court's holding."

¶ 33   In Westport, a class action lawsuit was filed against an insurance agency alleging that its

transmission of unsolicited faxes advertising group health insurance violated federal law.


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No. 1-14-0286

Westport, 387 Ill. App. 3d at 409-10. The parties entered into an agreed order settling the action

for $2 million in favor of the plaintiff class; the insurance agency assigned the class all of its

rights to indemnity from its insurers, including Westport Insurance Corporation (Westport).

The Westport policy was entitled "Insurance Company Coverage for Insurance Agents and

Brokers Professional Liability" and provided, in pertinent part:

                "[Westport] agrees to pay on behalf of the Insured such loss *** sustained

       by the Insured by reason of liability imposed by law for damages caused by any

       negligent act, error or omission by the insured agent or for damages caused by

       libel or slander or invasion of privacy by the insured agent, arising out of the

       conduct of the business of the insured agent in rendering services for others as a

       licensed life, accident and health insurance agent, a licensed life, accident and

       health insurance general agent or a licensed life, accident and health insurance

       broker while there is in effect a contract between the Named Insured and the

       licensed insured agent." (Internal quotation marks omitted.) Id. at 410.

Affirming the circuit court's grant of summary judgment in favor of Westport, the appellate

court noted that the title of the policy "clearly indicates that the policy provides coverage for

'professional liability.' " Id. at 412. "Although it may not be an operative term of the policy,"

the court reasoned that "the title clearly indicates the type of insurance" that was purchased. Id.

The court thus read the phrase, "rendering services for others as a licensed life, accident and

health insurance agent, a licensed life, accident and health insurance general agent or a licensed

life, accident and health insurance broker," to signify the "agent or broker's professional

services." (Emphasis in original and internal quotation marks omitted.) Id. Because the

insurance agency's faxed advertisement was "merely an overture to potential customers,"


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No. 1-14-0286

coverage under the policy did not extend to the asserted claims. Id. at 414. The court

concluded:

       "Even if [the class representative] is correct that the delivery of this general

       information was an 'act of assistance' and thus, in very broad terms, 'a service,' it

       did not amount to rendering a service as an insurance professional within the

       contemplation of the policy. No expertise was employed to help a particular

       customer purchase a particular product. The mere offer to perform a professional

       service is not a professional service in its own right." (Emphasis in original.) Id.

¶ 34   The policy at issue in Westport is similar to the BCS policy. The two policies are

identically named: "Insurance Company Coverage for Insurance Agents and Brokers

Professional Liability." Such a title, while not dispositive, indicates the parties' intent that the

policy would cover professional services. As the Westport court observed, "the type of

insurance purchased is germane to determining the meaning of policy language." Id. at 412.

Like the faxes in Westport, the robocalls by Bradford were "merely an overture to potential

customers" and "did not amount to rendering a service as an insurance professional within the

contemplation of the policy." (Emphasis in original.) Id. at 414. The BCS policy deductibles

of "$1,000.00 each claim Blue Cross Blue Shield policies" and "$2,500.00 each claim on other

life and health insurance policies & mutual funds" further indicate that claims must arise from

arise from professional services relating to particular policies and funds, as opposed to

marketing efforts directed to strangers. If anything, the policy language in Westport included

"damages caused by libel or slander or invasion of privacy by the insured agent" (emphasis

added), and thus was broader than the language in the BCS policy, yet the Westport court found

no coverage.


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No. 1-14-0286

¶ 35   Margulis contends that the circuit court's reliance on Westport was "misplaced," and

instead urges us to rely on Landmark American Insurance Co. v. NIP Group, Inc., 2011 IL App

(1st) 101155. In that case, the insurer (Landmark) sought a declaration that it had no obligation

to defend or indemnify NIP Group, Inc. (NIP), in a class action lawsuit relating to NIP's alleged

practice of faxing unsolicited advertisements. Id. ¶ 1. The complaint alleged common law

conversion and violations of the TCPA and the Illinois Consumer Fraud and Deceptive

Business Practices Act (the Consumer Fraud Act) (815 ILCS 505/2 (West 2008)). Landmark,

2011 IL App (1st) 101155, ¶ 5. The insurance policy Landmark issued to NIP provided

" 'MISCELLANEOUS PROFESSIONAL LIABILITY COVERAGE.' " Id. ¶ 6. The policy

stated that " '[Landmark] will pay on behalf of the Insured *** all sums that the Insured

becomes legally obligated to pay as Damages and associated Claim Expenses arising out of a

negligent act, error or omission, Advertising Liability or Personal Injury, even if the Claim

asserted is groundless, false or fraudulent, in the rendering or failure to render professional

services as described in the Declarations ***[.]' " (Emphases in original.) Id. The policy

excluded claims based on or arising out of " '[f]alse advertising or misrepresentation in

advertising, but only regarding intentionally false, misleading, deceptive, fraudulent, or

misrepresenting statements in advertising the insured's own product or service.' " Id. The

policy defined " 'Advertising Liability' " as injury arising out of, among other things, " '[o]ral or

written publication of material that violates a person's right of privacy.' " (Emphasis in

original.) Id. Included in the endorsements was a list of NIP's professional services which were

covered by the policy; the list included NIP's role as an "insurance wholesaler, insurance

managing general agent, insurance general agent, insurance underwriting manager, insurance

program administrator, insurance agent, insurance broker, surplus lines insurance broker,


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No. 1-14-0286

insurance consultant, insurance claims administrator, insurance appraiser, and insurance

premium financier." Id. ¶ 7.

¶ 36   The Landmark appellate court recognized that "Illinois law views professional liability

policies to be limited forms of insurance, which generally provide coverage only for those risks

'inherent' in the insured's professional services." Id. ¶ 39 (citing Crum & Forster Managers

Corp. v. Resolution Trust Corp., 156 Ill. 2d 384, 392-93 (1993)). The court stated that

"Landmark and the circuit court essentially read Crum & Forster and Westport to establish that

sending unsolicited fax advertisements can never amount to the provision of professional

services under a professional liability policy–despite any possible differences in the specific

policy language at issue, the services provided by an insured, or the underlying facts."

(Emphasis in original.) Id. Characterizing such interpretation as "much too broad," the

Landmark court, quoting Westport, stated that "it is the actual language of a policy that

ultimately controls the determination of what risks are covered." (Internal quotation marks

omitted.) Id. (quoting Westport, 387 Ill. App. 3d at 412).

¶ 37   Reversing the circuit court's grant of summary judgment to the insurer, the Landmark

court analyzed the "significantly different [policy] language" of the Westport policy.

Landmark, 2011 IL App (1st) 101155, ¶ 39. Coverage under the Westport policy was "only

available for services rendered 'for others' as an insurance agent, general agent, or broker." Id. ¶

40. In Landmark, coverage was provided for liability incurred "in the rendering or failure to

render professional services," which included NIP's lengthy litany of roles—listed above—that

were "left completely undefined by the policy." (Internal quotation marks omitted.) Id. The

Landmark court noted that "whatever the Westport decision may have to say about coverage for

NIP's role as an insurance agent or broker, that case did not concern professional services such


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No. 1-14-0286

as insurance wholesaler, underwriting manager, program administrator, and insurance

consultant." Id. The Landmark court also stated that, unlike the policy in Westport, the

"coverage for violation of privacy in this case is specifically included as only one of a number

of other covered acts contained in the policy's definition of 'Advertising Liability,' " including

injuries arising out of "[o]ral or written publication of material that slanders or libels a person or

organization or disparages a person's organization, products or services" or "[m]isappropriation

of advertising ideas or style of doing business." (Emphasis in original and internal quotation

marks omitted.) Id. ¶ 41. In contrast, the Westport decision "includes no indication that the

policy in question also contained an exclusion that specifically excluded only certain types of

advertising from coverage." Id.

¶ 38   We disagree with Margulis's suggestions that the Landmark court "rejected both

Westport's reasoning and its result" or that the Second District's decision in Westport and the

First District's decision in Landmark represent a district split, requiring us to follow Landmark.

Instead, the Landmark court properly distinguished Westport because, among other things, the

Westport policy language limited coverage to services rendered for others as an insurance agent,

general agent, or broker. The operative language in the instant case is similar to—and, in fact,

narrower than—the operative language in Westport. 4 The Landmark court's discussion of its

policy's " 'Advertising Liability' " coverage is not relevant, as Bradford's policy with BCS



       4
         We are unmoved by Margulis's contention that the Westport court "took a portion of
the [Atlantic Lloyd's Insurance Co. of Texas v. Susman Godfrey, L.L.P., 982 S.W.2d 472 (Tex.
App. 1998)] opinion and analysis out of context." The Westport court acknowledged that
Atlantic Lloyd's addressed a professional services exclusion. Westport, 387 Ill. App. 3d at 413.
The Westport court viewed the Texas case as providing a "more useful analogy" than Crum &
Forster Managers Corp. v. Resolution Trust Corp., 156 Ill. 2d 384, 392-93 (1993), as well as a
"cogent analysis." Westport, 381 Ill. App. 3d at 412. We agree with the Westport court's
assessment.

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contains no such coverage. We agree with the circuit court that "Margulis's reliance on

Landmark is unavailing."

¶ 39              iv. Other Cases Addressing the TCPA and Insurance Coverage

¶ 40   Margulis contends that Illinois courts "have repeatedly held that TCPA claims, like

those at issue in the Underlying Action, are covered by liability insurance policies." While we

agree that Illinois courts have found insurance coverage for certain TCPA claims, we observe

that the policy language at issue in most of those cases—as in Landmark—differs significantly

from the language in the BCS policy.

¶ 41   For example, in Valley Forge Insurance Co. v. Swiderski Electronics, Inc., 223 Ill. 2d

352 (2006), the insured allegedly sent unsolicited fax advertisements; a class action complaint

alleged unlawful conversion of the fax machine toner and paper and violations of the TCPA and

the Consumer Fraud Act. Id. at 355-56. The insured's commercial general liability (CGL)

policy obligated the insurer to defend the insured against any suit seeking damages for "personal

and advertising injury," which included injury arising out of "[o]ral or written publication, in

any manner, of material that violates a person's right of privacy." (Emphasis and internal

quotation marks omitted.) Id. at 356. The policy also obligated the insurer to defend the

insured against any suit seeking "property damage," which was defined to include "[p]hysical

injury to tangible property" and "[l]oss of use of tangible property that is not physically

injured." (Internal quotation marks omitted.) Id. at 357. The insured's policy with an excess

insurer imposed similar obligations. Id. After analyzing the policy language, the Illinois

Supreme Court concluded that the complaint set forth facts that brought the "lawsuit potentially

within the coverage of the policies' 'advertising injury' provision," and thus did not need to

consider whether the insurers had a duty to defend under the " 'property damage' " provision.


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No. 1-14-0286

Id. at 379. Although we recognize that potential insurance coverage for TCPA claims and

related claims is not limited to CGL policies, i.e., Landmark, the CGL policy in Valley Forge

differs from the BCS professional liability policy at issue. Unlike the Valley Forge policy, the

BCS policy does not mention any coverage for "advertising injury" or similar claims, and the

BCS policy expressly excludes "injury to or destruction of any property, including loss of use

thereof[.]"

¶ 42   In Pekin Insurance Co. v. XData Solutions, Inc., 2011 IL App (1st) 102769, the

plaintiffs alleged conversion and violations of the TCPA and the Consumer Fraud Act, based on

unsolicited fax advertisements. Id. ¶¶ 4-5. The insurance policy at issue provided, in part, that

it covered an " ' "[a]dvertising injury" caused by an offense committed in the course of

advertising your goods, products or services.' " Id. ¶ 13. The policy defined " '[a]dvertising

injury' " as an " 'injury arising out of one or more of the following offenses' ": " '[o]ral or

written publication of material that violates a person's right of privacy.' " Id. ¶ 14. The

appellate court concluded, among other things, that the TCPA claim "falls within or potentially

within the coverage of the policy's 'advertising injury' provision." Id. ¶ 15. Again, the BCS

policy differs substantially from the Pekin policy. Where the Pekin policy included coverage

for advertising injury, which was defined to include "publication of material that violates a

person's right of privacy," the BCS policy has no reference to advertising injury.

¶ 43   In Insurance Co. of Hanover v. Shelborne Associates, 389 Ill. App. 3d 795 (2009), the

class action lawsuit, based on the transmission of unsolicited fax advertisements, alleged

violation of the TCPA, common law conversion of the toner and paper of the class members,

and common law trespass to chattels. Id. at 796. The parties did not dispute that the receipt of

the fax advertisements constituted "property damage" which would be covered by the CGL


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No. 1-14-0286

policy, but the insurer argued that the "expected or intended injury" exclusion in the policy

barred coverage for property damage that was "expected or intended from the standpoint of the

insured." (Internal quotation marks omitted.) Id. at 800. The court concluded that it was

possible under the complaint that the insured "was negligent in believing the subject fax

advertisements were authorized and did not intend to convert the recipients' paper and toner or

dispossess them of their fax machines." Id. at 803. Because it was possible that the property

damage was an occurrence that was not "expected or intended," the appellate court concluded

that the insurer had a duty to defend the insured in the underlying action. In contrast to the BCS

professional liability policy, which expressly excludes "injury to or destruction of any

property," the parties agreed that the CGL policy at issue in Shelborne potentially covered the

"property damage" caused by the unwanted faxes.

¶ 44   On remand from the Illinois Supreme Court, the appellate court in Standard Mutual

Insurance Co. v. Lay, 2014 IL App (4th) 110527-B, considered the insurer's argument that even

if there was policy coverage for " 'advertising injury,' " the policy specifically excluded the

rendering or failure to render any professional services, including "advertising services," from

coverage; the insured was a real estate agency that sent a "blast fax" advertisement. Id. ¶ 27.

Citing Westport, the court rejected the insurer's argument, stating that "[f]ollowing [the

insurer's] argument," i.e., an insured advertising its business is an excluded professional service,

"would read the coverage of advertising injuries entirely out of the policies despite the fact that

such coverage is specifically available under the policies." Id. ¶ 28. Citing Valley Forge, the

court further held that the " 'personal and advertising injury' " policy provision provided

coverage given that the policy defined privacy to include the right to seclusion or being left

alone, and the faxes were sent without the permission of the recipient, thus violating the


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No. 1-14-0286

recipient's right to privacy. Id. ¶ 33. Citing Shelborne, the court also rejected the insurer's

argument that the insured's actions were not covered because, although the policy provided

coverage for " 'injury to tangible property,' " the policy excluded coverage for intentional

actions of the insured that injure others. Id. ¶ 30. Because the insured "thought it had

authorization to send faxes to the particular recipients," the court concluded that the insured "did

not intend to injure anyone by sending the fax." Id. ¶ 31. Again, the policy provisions at issue

in Lay differ significantly from those of the BCS policy. The BCS policy, among other things,

does not provide coverage for "personal and advertising injury" or "injury to tangible property,"

as did the policy in Lay. Furthermore, although we recognize the Lay court was analyzing

whether a "professional services" exclusion precludes coverage—as opposed to whether a

professional liability policy provides coverage—we note that the Lay court, citing Westport,

observed that "[t]he claim against Lay was not made because Lay incorrectly performed real

estate services," but was instead "based on Lay's tortious conduct ancillary to the performance

of real estate services." Id. ¶ 28.

¶ 45    As noted above, "it is the actual language of a policy that ultimately controls the

determination of what risks are covered." Westport, 387 Ill. App. 3d at 412. While Illinois

cases have found potential insurance coverage relating to TCPA claims and related claims, the

Westport policy is most similar to BCS policy at issue. Like the Westport court, we conclude

that BCS had no duty to defend—and thus no duty to indemnify—Bradford against the claims

asserted in Margulis's class action petition.

¶ 46                                    B. Estoppel

¶ 47    Margulis states that "[h]aving erroneously concluded that BCS did not breach its duty to

defend, the trial court did not reach the question of the consequences that flow from BCS's


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No. 1-14-0286

breach." Based on the alleged breach of the duty to defend, Margulis contends that BCS is

estopped from raising policy defenses and must indemnify the entire underlying judgment of

$4,999,999, despite the policy's $1 million limit. BCS counters that it "cannot be estopped

when it never had a duty to defend." BCS further asserts that, even if application of the estoppel

doctrine was appropriate, an insured may recover an excess judgment based on an insurer's

breach of the duty to defend only under limited circumstances, i.e., if the insurer acted in bad

faith or, "as a compensatory measure, where the insured's damages are proximately caused by

the insurer's breach of duty." In his reply brief, Margulis argues that there are no exceptions to

the estoppel doctrine for policy limit provisions.

¶ 48    "Generally, where a complaint against an insured alleges facts within or potentially

within the coverage of the insurance policy, and when the insurer takes the position that the

policy does not cover the complaint, the insurer must: (1) defend the suit under a reservation of

rights; or (2) seek a declaratory judgment that there is no coverage." Standard Mutual

Insurance Co. v. Lay, 2013 IL 114617, ¶ 19. An insurer that fails to defend under a reservation

of rights or to seek a declaratory judgment, and is later found to have wrongfully denied

coverage, is estopped from raising policy defenses to coverage. Employers Insurance of

Wausau v. Ehlco Liquidating Trust, 186 Ill. 2d 127, 150-51 (1999). The estoppel doctrine

"arose out of the recognition that an insurer's duty to defend under a liability insurance policy is

so fundamental an obligation that a breach of that duty constitutes a repudiation of the contract."

Id. at 151.

¶ 49    The estoppel doctrine "applies only where an insurer has breached its duty to defend."

Id. Application of the doctrine "is not appropriate if the insurer had no duty to defend, or if the

insurer's duty to defend was not properly triggered." Id. These circumstances include "where,


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No. 1-14-0286

when the policy and the complaint are compared, there clearly was no coverage or potential for

coverage." Id. "Thus, whether estoppel applies necessarily depends on whether the insurer had

and breached a duty to defend." Hunt v. State Farm Mutual Automobile Insurance Co., 2013 IL

App (1st) 120561, ¶ 17.

¶ 50   We have concluded that BCS had no duty to defend Bradford in the underlying action

because the policy at issue could not possibly cover the liability arising out of the facts alleged

by Margulis; the terms of the policy clearly preclude the possibility of coverage. See Illinois

Emcasco, 337 Ill. App. 3d at 360. Because we have concluded that BCS owed no duty to

defend, the doctrine of estoppel is inapplicable. West American Insurance Co. v. Midwest Open

MRI, Inc., 2013 IL App (1st) 121034, ¶ 27.

¶ 51                              III.   CONCLUSION

¶ 52   For the reasons stated herein, we affirm the order of the circuit court of Cook County

granting BCS's motion for summary judgment and denying Margulis's motion for summary

judgment.

¶ 53   Affirmed.




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