                                                                            FIFTH DIVISION
                                                                            May 21, 2010

No. 1-09-1862

NANCY LORENZO, Individually and a/s/o Persian                   )    Appeal from the
Foods, Inc., d/b/a Reza’s Restaurant,                           )    Circuit Court of
                                                                )    Cook County
                Plaintiff-Appellee,                             )
                                                                )    No. 08 CH 14578
       v.                                                       )
                                                                )
CAPITOL INDEMNITY CORPORATION, PERSIAN                          )    Honorable
FOODS, INC., and MIDWEST COMMERCIAL                             )    James Epstein,
SPECIALTIES, INC.,                                              )    Judge Presiding.
                                                                )
                Defendants-Appellants.                          )



       JUSTICE FITZGERALD SMITH delivered the opinion of the court:

       This cause of action arose out of a food poisoning incident suffered by plaintiff Nancy

Lorenzo (Lorenzo) on March 28, 2006, while at Reza’s Restaurant, located at 40 North Tower

Road, Oak Brook, Illinois (Reza’s Oak Brook). Defendant Capitol Indemnity Corporation

(Capitol) refused to defend Persian Foods Inc., d/b/a Reza’s Restaurant (Persian Foods) in

Lorenzo’s original suit against Persian Foods, and the trial court entered a default judgment in

favor of Lorenzo. Thereafter, Lorenzo, individually and as subrogee of Persian Foods, filed a

complaint for declaratory judgment. Capitol asserted affirmative defenses and counterclaimed

seeking a declaration that it had no duty to defend Persian Foods or indemnify Lorenzo. Capitol

then filed a motion for summary judgment on its counterclaim, while Lorenzo filed her own

cross-motion for summary judgment on her complaint. The trial court granted Lorenzo’s cross-

motion for summary judgment, and Capitol now appeals. For the following reasons, we reverse

the trial court’s grant of summary judgment in favor of Lorenzo and enter judgment in favor of
No. 1-09-1862

Capitol.

                                       I. BACKGROUND

       Reza’s Oak Brook is owned and controlled by defendant Persian Foods, Inc. Lorenzo

filed a personal injury claim against Persian Foods on July 9, 2007. At the time of the incident,

Persian Foods carried a commercial general liability insurance policy (the Policy), with defendant

Capitol Indemnity Corporation, with a $100,000 limit of liability. The Policy ran from May 9,

2005, to May 9, 2006, and extended to 15 of Persian Foods’ premises listed in the Policy’s

schedule. At the time of Lorenzo’s food poisoning, Reza’s Oakbrook was not included in that

schedule.

       On August 9, 2007, Persian Foods, through its agent, Midwest Commercial Specialities,

Inc. (Midwest), tendered Lorenzo’s complaint to Capitol, asserting that Capitol had a duty do

defend and indemnify Persian Foods. Capitol chose not to assume the defense of Persian Foods.

       On December 13, 2007, after Persian Foods failed to appear or answer Lorenzo’s

complaint, the trial court entered a default judgment in favor of Lorenzo and against Persian

Foods in the amount of $100,000. Persian Foods assigned any and all of its rights and interests

under the Policy to Lorenzo.

       On April 21, 2008, Lorenzo, individually and as subrogee of Persian Foods, filed a

complaint for declaratory judgment seeking a declaration that she was entitled to coverage under

the Policy and was entitled to $100,000 plus interest and costs pursuant to the default judgment

entered in the original complaint. Capitol answered Lorenzo’s complaint for declaratory

judgment, asserted affirmative defenses, and counterclaimed seeking a declaration that it had no


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duty to defend Persian Foods or to indemnify Lorenzo with regard to the underlying action.

Specifically, Capitol claimed that Lorenzo’s injury occurred outside of the Policy’s geographic

and temporal coverage because the Policy specifically stated that it applied only to injury arising

out of the ownership, maintenance, or use of the premises shown in the schedule, and operations

necessary or incidental to those premises, or the project of the schedule. At the time of

Lorenzo’s food poisoning, Reza’s Oakbrook was not included in the Policy’s schedule of 15

designated premises. Capitol argued that because Reza’s Oakbrook was not on the schedule of

the Policy, it had no duty to defend. Lorenzo maintained that the language of her underlying

complaint alleged facts potentially within the Policy’s coverage and, thus, Capitol was obliged to

defend.

          On December 29, 2008, Capitol filed a motion for summary judgment on its counter-

complaint, to which Lorenzo responded and filed her own cross-motion for summary judgment

on the complaint. The trial court granted Lorenzo’s cross-motion for summary judgment, finding

that Lorenzo’s language in the underlying complaint was ambiguous as to location because it

contained open-ended temporal language like “on and prior to March 28, 2006,” and also used

words like “storing” and “distribution,” which suggested actions that may have occurred at

several of Persian Foods’ premises, including some of those listed in the Policy’s schedule.

Capitol now appeals, arguing that it was clear from the face of the complaint that the alleged

facts were outside Capitol’s potential coverage.

                                           II. ANALYSIS

          On appeal, Capitol argues that the trial court erred in granting Lorenzo summary


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judgment because it was clear from the face of Lorenzo’s underlying complaint that the alleged

facts were outside Capitol’s potential coverage. Lorenzo responds that the trial court correctly

granted summary judgment in her favor because the language in her complaint brought the

alleged facts within Capitol’s potential coverage.

                                      A. Standard of Review

       Summary judgment is granted when the pleadings, affidavits, and depositions on file

reveal that there is no genuine issue of material fact and that the movant is entitled to judgment

as a matter of law. United States Fidelity & Guaranty Co. v. Wilkin Insulation Co., 193 Ill. App.

3d 1087, 1092-93 (1989). The right to summary judgment must be clear beyond question, and an

order granting summary judgment must be reversed if a reviewing court determines that

questions of material fact exist or that the judgment for the movant was incorrect as a matter of

law. Wilkin, 193 Ill. App. 3d at 1093. We review a grant of summary judgment de novo. Ragan

v. Columbia Mutual Insurance Co., 183 Ill. 2d 342, 349 (1998).

                                           B. Coverage

       Under Illinois law, an insurer has an obligation to defend its insured in an underlying

lawsuit if the complaint in the underlying lawsuit alleges facts potentially within the coverage of

the insurance policy, even if the allegations end up being groundless, false, or fraudulent.

General Agents Insurance Co. of America, Inc. v. Midwest Sporting Goods Co., 215 Ill. 2d 146,

154-55 (2005). To determine if the underlying suit alleges a situation potentially within the

insurance coverage, the court compares the bare allegations of the complaint to the relevant

provisions of the insurance policy. Midwest Sporting Goods, 215 Ill. 2d at 155. If any theory of


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No. 1-09-1862

recovery in the underlying complaint falls within the insurance coverage, the insurer will have a

duty to defend. Midwest Sporting Goods, 215 Ill. 2d at 155. “The threshold a complaint must

meet to present a claim for potential coverage, and thereby raise a duty to defend, is minimal.”

Chandler v. Doherty, 299 Ill. App. 3d 797, 802 (1998); West Bend Mutual Insurance Co. v.

Sundance Homes, Inc., 238 Ill. App. 3d 335, 337-38 (1992). Any doubts about potential

coverage and the duty to defend are to be resolved in favor of the insured.” (Emphasis in

original.) Chandler, 299 Ill. App. 3d at 802; West Bend, 238 Ill. App. 3d at 338. “The duty to

defend is not annulled by the knowledge on the part of the insurer the allegations are untrue or

incorrect or the true facts will ultimately exclude coverage.” Chandler, 299 Ill. App. 3d at 802.

       Thus, “[a]n 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 set forth in that

complaint fail to state facts that bring the case within or potentially within the insured’s policy

coverage.” Midwest Sporting Goods, 215 Ill. 2d at 154. “Absent absolute clarity on the face of

the complaint that a particular policy exclusion applies, there exists a potential for coverage and

an insurer cannot justifiably refuse to defend.” Novak v. Insurance Administration Unlimited,

Inc., 91 Ill. App. 3d 148, 151 (1980). Therefore, the issue before this court is whether it is clear

from the face of Lorenzo’s underlying complaint that the allegations she set forth fail to state

facts which bring the case potentially within Capitol’s coverage, thus justifying Capitol’s refusal

to defend.

       Capitol argues that it justifiably refused to defend because the only location explicitly

referred to in Lorenzo’s complaint was Reza’s Oak Brook, and Reza’s Oak Brook was not one of


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No. 1-09-1862

the 15 premises specified in the Policy’s schedule of covered locations.

       Lorenzo admits that Reza’s Oak Brook is the only specific location referred to in the

complaint, but counters that due to the general language of her complaint any of the 15 locations

listed in the Policy could have been implicated, thus bringing the complaint potentially within

Capitol’s coverage and thereby triggering Capitol’s duty to defend. Specifically, Lorenzo relies

on the fact that her complaint alleges that “[o]n and prior to March 28, 2006,” defendant did

“process, prepare, distribute, sell and/or otherwise place into the stream of commerce certain

foods, including a family style platter which included chicken, for purchase by the consumer

public.”

       Lorenzo contends that such “on and prior” language suggests that the tainted chicken was

handled at one of the other 15 locations before being delivered to Reza’s Oak Brook, where it

was ultimately sold to Lorenzo. Lorenzo points to the fact that the schedule at issue in the Policy

does not indicate what sort of facility occupies each of the 15 listed addresses, and thus it would

be reasonable to presume that one or more of those facilities were used for storage and/or the

preparation of food prior to delivery at Reza’s restaurants. Lorenzo argues that these ambiguities

must be construed in her favor as the insured, and that because it is not absolutely clear from the

face of her complaint that her allegations fail to state facts which bring the case within Capitol’s

coverage, Capitol at least had a duty to defend. See Midwest Sporting Goods, 215 Ill. 2d at 154

(an insurer may not justifiably refuse to defend unless it is clear from the face of the underlying

complaint that the allegations set forth in that complaint fail to state facts that bring the case

potentially within the insured’s policy coverage). We disagree. Rather, we find that the

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No. 1-09-1862

allegations set forth in Lorenzo’s complaint, compared with the relevant policy provisions, did

not trigger Captiol’s duty to defend or indemnify.

       We reiterate that in determining whether there is a duty to defend, an insurer is limited to

comparing the bare allegations of the complaint with the face of the insurance policy. Chandler,

299 Ill. App. 3d at 801-02. The relevant bare allegations of Lorenzo’s complaint state:

                        “2. That at all times relevant herein, Defendant REZA’S,

                was engaged in the preparation, production and processing of

                certain foods, including chicken, for consumption at a certain

                restaurant known as Reza’s Restaurant and Catering, located at or

                near 40 N. Tower Road, in the Village of Oak Brook, County of

                Cook, State of Illinois.

                        3. That on and prior to March 28, 2006, Defendant REZA’S

                did process, prepare, distribute, sell and/or otherwise place into the

                stream of commerce certain foods, including a family style platter

                which included chicken, for purchase by the consumer public.

                        4. That on March 28, 2006, Defendant REZA’S did

                distribute, process and/or sell the aforementioned family style

                platter, including chicken, to the Plaintiff Nancy Lorenzo in the

                Village of Oak Brook, County of Cook, State of Illinois.”

                (Emphasis added.)



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         Those bare allegations must be compared with the face of the insurance policy at issue.

Here, Capitol’s insurance policy states:

                “Description of Premises and Operations:

                ***

                With respect to ‘bodily injury’ or ‘property damage’ arising out of ‘your

       products’ manufactured, sold, handled or distributed:

                       1. On, from, or in connection with the use of any premises

                described in the Schedule, or

                       2. In connection with the conduct of any operation described in the

                Schedule, when conduct by you or on your behalf.

                       ***

                ‘Products-completed operations hazard’:

                               a. Includes all ‘bodily injury’ and ‘property damage’ that

                       arises out of ‘your products’ if the ‘bodily injury’ or ‘property damage’

                       occurs after you have relinquished possession of those products.”

       The Policy then lists a “Locations Schedule,” which includes 15 addresses throughout

Illinois including Chicago, Winnetka, and Wadsworth. Reza’s Oak Brook did not appear on

such schedule at the time of the incident.

       Looking at the above language of Lorenzo’s complaint, compared to the face of the

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No. 1-09-1862

insurance policy, we find that there were no set of facts alleged which would potentially bring

this case within Capitol’s insurance policy. We are unwilling to read the words “processed,”

“stored,” “distributed,” and “sold” so broadly as to encompass any possible location listed in the

insurance policy, especially in light of the fact that Lorenzo specifically identified the location at

which she was injured. We find that it is absolutely clear, based on the allegations of the

complaint, that Lorenzo sustained her injury at Reza’s Oak Brook; and because Reza’s Oak

Brook is clearly excluded from the list of locations covered by Capitol’s policy, Capitol was

justified in refusing to defend the underlying lawsuit.

       The case of Chandler v. Doherty, 299 Ill. App. 3d 797 (1998), is instructive in the case at

bar. In Chandler, the insured was involved in a car accident while driving a “replicar” that he

had fashioned out of parts from other vehicles. Prior to the accident, the insured had attempted

to add the replicar to his existing insurance policy. The insurance company informed the insured

that due to the modifications the insured had made on the replicar, the vehicle was uninsurable.

After the accident, claimant brought a personal injury suit against the insured, alleging that the

insured had been negligently operating his “motor vehicle.” The insurance company knew that

the motor vehicle referenced in the complaint referred to the replicar and thus refused to defend

the suit. However, the court in Chandler found that the threshold for a claim to present a

potential for coverage was minimal and that any doubts about potential coverage should be

resolved in favor of the insured. Thus, the court found that even though the insurance company

knew that the replicar was the car involved in the accident, which was not covered by its

insurance company, it had a duty to defend due to the ambiguous reference of “motor vehicle”


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No. 1-09-1862

which could have referred to the insured’s other vehicle that was covered by the policy.

Chandler, 299 Ill. App. 3d at 801-02. In other words, identifying the specific motor vehicle that

was involved in the accident would have clearly determined whether the insurance company had

a duty to defend. However, because the complaint only referred to a general motor vehicle,

coverage was construed in the insured’s favor.

       Conversely in the case at bar, where the location of the injury determined whether Capitol

had a duty to defend, the complaint unambiguously identified Reza’s Oak Brook as the location

where Lorenzo sustained her injury. Because Reza’s Oak Brook did not appear in the Policy at

the time of the incident, and thus it was clearly excluded from the face of the Policy, we find that

Capitol justifiably refused to defend the underlying lawsuit. See Novak, 91 Ill. App. 3d at 151

(“Absent absolute clarity on the face of the complaint that a particular policy exclusion applies,

there exists a potential for coverage and insurer cannot justifiably refuse to defend”).

                                        IV. CONCLUSION

       For the foregoing reasons, we reverse the judgment of the circuit court of Cook County

and enter judgment in favor of defendant.

       Judgment reversed; judgment entered in favor of defendant.

       TOOMIN, P.J., and LAVIN, J., concur.




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