                                  Illinois Official Reports

                                           Appellate Court



          G.M. Sign, Inc. v. State Farm Fire & Casualty Co., 2014 IL App (2d) 130593



Appellate Court              G.M. SIGN, INC., Individually and as the Representative of a
Caption                      Certified Class, Plaintiff and Counterdefendant-Appellee and
                             Cross-Appellant, v. STATE FARM FIRE AND CASUALTY
                             COMPANY, Defendant and Counterplaintiff-Appellant and
                             Cross-Appellee.

District & No.               Second District
                             Docket No. 2-13-0593

Filed                        May 2, 2014
Modified upon
denial of rehearing          September 2, 2014


Held                         In an underlying blast-fax action where plaintiff settled its claim by
(Note: This syllabus         agreeing to satisfy the judgment it obtained against the underlying
constitutes no part of the   defendant, who violated the Telephone Consumer Protection Act,
opinion of the court but     from the insurance policy issued by the defendant insurer in the instant
has been prepared by the     declaratory judgment action, the trial court erred in entering summary
Reporter of Decisions        judgment for plaintiff, since the policy’s specific exclusion of claims
for the convenience of       under the Act applied to the claims for conversion and consumer fraud
the reader.)                 in plaintiff’s amended complaint, especially when plaintiff would be
                             unable to prove defendant in the underlying action was liable on the
                             conversion and consumer fraud claims without also proving a
                             violation of the Act, and plaintiff’s attempt to recharacterize the class
                             action it had already litigated and settled in order to obtain insurance
                             coverage could not be condoned.

Decision Under               Appeal from the Circuit Court of Lake County, No. 11-MR-315; the
Review                       Hon. Diane E. Winter and the Hon. David M. Hall, Judges, presiding.


Judgment                     Reversed and remanded with directions.
     Counsel on              Michael C. Borders and Rosa M. Tumialan, both of Dykema Gossett
     Appeal                  PLLC, of Chicago, for appellant.

                             Brian J. Wanca, David M. Oppenheim, and Jeffrey A. Berman, all of
                             Anderson & Wanca, of Rolling Meadows, and Phillip A. Bock and
                             Robert M. Hatch, both of Bock & Hatch, LLC, of Chicago, for
                             appellee.



     Panel                   JUSTICE ZENOFF delivered the judgment of the court, with opinion.
                             Justices Jorgensen and Birkett concurred in the judgment and opinion.


                                              OPINION

¶1         This is a declaratory judgment action involving a dispute over insurance coverage for a
       blast-fax case. The question is whether defendant State Farm Fire and Casualty Company’s
       policy exclusion (hereinafter Endorsement FE-6655) applied to the amended complaint in the
       underlying litigation. If Endorsement FE-6655 applied, then State Farm’s duty to defend was
       never triggered. The circuit court of Lake County ruled that State Farm had a duty to defend
       and to indemnify. After modifying our opinion upon denial of plaintiff G.M. Sign, Inc.’s
       petition for rehearing, we reverse and remand with directions to enter judgment in State
       Farm’s favor.

¶2                                         I. BACKGROUND
¶3         The facts pertinent to this appeal are taken from the present record and from this court’s
       opinion in G.M. Sign, Inc. v. Schane, 2013 IL App (2d) 120434. The appeal in Schane arose
       out of the underlying blast-fax litigation, in which G.M. Sign pursued a class action against
       Michael Schane and his company, Academy Engraving Company, for sending unsolicited
       fax advertisements. Because Academy was dismissed from the underlying suit, we refer only
       to Schane when discussing the underlying litigation.

¶4                          A. The Underlying Litigation (No. 10-CH-4480)
¶5         On August 12, 2010, G.M. Sign, individually and as the representative of a class of
       similarly situated persons, filed suit against Schane. The complaint began: “This case
       challenges [Schane’s] practice of faxing unsolicited advertisements.” The complaint’s
       preliminary allegations further alleged that G.M. Sign was seeking “an award of statutory
       damages for each violation of the [Telephone Consumer Protection Act of 1991 (TCPA) (47
       U.S.C. § 227 et seq. (2000))].” The TCPA makes it unlawful to fax an unsolicited
       advertisement unless the sender has an established business relationship with the recipient,
       the recipient consents to such a communication, and the advertisement contains an opt-out
       notice. 47 U.S.C. § 227(b)(1)(C) (2000).



                                                  -2-
¶6       The complaint contained three counts: count I alleged a violation of the TCPA; count II
     alleged conversion; and count III alleged violations of the Illinois Consumer Fraud and
     Deceptive Business Practices Act (Act) (815 ILCS 505/1 et seq. (West 2010)). Each count
     incorporated the same factual allegations: on or about September 6, 2007, Schane faxed to
     G.M. Sign an advertisement, which was attached to the complaint as “Exhibit A”; G.M. Sign
     had not given Schane permission to fax advertisements to it; and Schane faxed “the same or
     similar advertisements” to G.M. Sign and more than 39 other recipients without first
     receiving their express permission. All three counts incorporated allegations that the
     unsolicited fax advertisements violated the TCPA.
¶7       Count I of the complaint proposed the following class:
                 “All persons who (1) on or after four years prior to the filing of this action, (2)
             were sent telephone facsimile messages of material advertising the commercial
             availability of any property, goods, or services by or on behalf of [Schane], (3) with
             respect to whom [Schane] did not have prior express permission or invitation for the
             sending of such faxes, and (4) with whom [Schane] did not have an established
             business relationship.”
     The classes proposed in counts II and III were essentially the same except for the time
     periods referenced.1 The class for count II was composed of all persons who received faxes
     on or after a date five years prior to the filing of the action, while the class for count III was
     composed of all persons who received faxes on or after a date three years prior to the filing of
     the action. As in count I, the classes in counts II and III consisted of persons who received
     advertisements, who had not given Schane permission to send them, and who did not have
     established business relationships with Schane.
¶8       Schane tendered the suit to State Farm, his business insurer. On September 10, 2010,
     State Farm, by letters to Schane and to G.M. Sign’s attorney, denied coverage based on
     Endorsement FE-6655:
                 “DISTRIBUTION OF MATERIAL IN VIOLATION OF STATUTES
             EXCLUSION ENDORSEMENT
                 The following exclusion is added to BUSINESS LIABILITY EXCLUSIONS:
                 Exclusions:
                 This insurance does not apply to:
                 Bodily injury, property damage, personal injury, or advertising injury arising
             directly or indirectly out of any action or omission that violates or is alleged to
             violate:
                      a. The Telephone Consumer Protection Act (TCPA), including any
                 amendment of or addition to such law; or
                      b. The CAN-SPAM Act of 2003, including any amendment of or addition to
                 such law; or
                      c. Any statute, ordinance or regulation, other than the TCPA or CAN-SPAM
                 Act of 2003, that prohibits or limits the sending, transmitting, communicating or
                 distribution of material or information.” (Emphasis added.)

         1
          Presumably, the different time periods were meant to reflect the different statutes of limitations
     applicable to the three counts.

                                                    -3-
       Schane thereafter filed an answer to the complaint.
¶9          On October 1, 2010, G.M. Sign entered into a settlement agreement with Schane. In the
       agreement, the parties stipulated to a class consisting of “all persons to whom [Schane] sent
       advertising facsimiles during the period of September 7, 2007 through June 17, 2008.” 2 The
       settlement agreement noted that, during that period, Schane faxed a total of 49,825
       advertisements to the class members without their prior express permission. It further recited
       that “a finding of liability under the TCPA with statutory damages of $500 per unsolicited
       fax would result in a damage award of $24,912,500.00 before trebling” and that “such a
       judgment would bankrupt [Schane] and cause the dissolution of his business.” Schane agreed
       to have judgment entered against him in the amount of $4.9 million, which settled “all
       disputes between [Schane] and the class.” The agreement also provided that G.M. Sign and
       the class would not execute on the judgment against Schane personally, but would satisfy the
       judgment only from his State Farm insurance policy.
¶ 10        On October 5, 2010, G.M. Sign filed a motion for certification of the class and for
       preliminary approval of the settlement. G.M. Sign reiterated the facts outlined in the
       settlement and argued that class certification was appropriate because Schane’s conduct was
       “substantially similar as to each class member.” G.M. Sign further contended in the motion
       that the following questions could be “answered on a class-wide basis”: (1) “[w]hether
       [Schane] faxed advertisements without obtaining the recipients’ prior express invitation or
       permission”; (2) “[Schane’s] manner and method for compiling or obtaining the list of fax
       numbers to which it sent Exhibit A to the Complaint”; and (3) “[w]hether [Schane] violated
       the provisions of [the TCPA] by faxing the advertisements.”
¶ 11        On October 7, 2010, the trial court certified the proposed class and preliminarily
       approved the settlement. The certified class consisted of “[a]ll persons to whom [Schane]
       sent advertising facsimiles during the period of September 7, 2007 through June 17, 2008.”
       The court set December 16, 2010, as the date for final approval of the settlement.
¶ 12        On November 12, 2010, G.M. Sign sought leave to file an amended complaint, the
       admitted purpose of which was to “ ‘plead into possible insurance coverage available under
       Schane’s insurance policies.’ ” Schane, 2013 IL App (2d) 120434, ¶ 7. The motion was
       granted, and G.M. Sign filed the amended complaint on November 18, 2010. It asserted
       largely the same preliminary allegations as the original complaint. However, instead of
       alleging that G.M. Sign had received a fax advertisement and that the class members had
       received “the same or similar advertisements,” the amended complaint alleged that G.M.
       Sign had received an “unsolicited facsimile” and that the class members had received “the
       same or similar unsolicited facsimiles.” Furthermore, although count I of the amended
       complaint incorporated by reference all of the preliminary factual allegations, counts II and
       III (alleging conversion and consumer fraud) incorporated only those factual allegations that
       contained no reference to the TCPA.
¶ 13        Additionally, the proposed classes for counts II and III of the amended complaint had
       been changed. The class for count II was “[a]ll persons who on or after five years prior to the
       filing of this action, were sent telephone facsimile messages by or on behalf of [Schane].”

           2
           It is unclear why the settlement agreement recited that the unsolicited fax advertisements began on
       September 7, 2007, while the class action complaint alleged that G.M. Sign received a fax
       advertisement from Schane on or about September 6, 2007.

                                                      -4-
       The class for count III was “[a]ll persons in Illinois who on or after a date three years prior to
       the filing of this action were sent telephone facsimile messages by or on behalf of [Schane].”
       No longer did the classes for counts II and III consist expressly and exclusively of persons
       who had received advertisements, who had not given Schane permission to send them, and
       who did not have established business relationships with Schane.
¶ 14       Schane’s attorney testified at his deposition that he tendered the amended complaint to
       State Farm on December 10, 2010, but that he did not at that time inform State Farm that the
       case had been settled. When asked why he tendered the amended complaint to State Farm
       even though the case was settled, Schane’s attorney said that he did not know. He recalled
       that he did it upon G.M. Sign’s attorney’s representation that he should. At oral argument in
       the Schane case, G.M. Sign conceded that the tender of the amended complaint to State Farm
       did not include the settlement agreement, even though the settlement had been preliminarily
       approved. Schane, 2013 IL App (2d) 120434, ¶ 17 n.1. State Farm again denied coverage.
¶ 15       On December 16, 2010, the trial court entered an order of final approval of the settlement
       agreement. Although the amended complaint proposed a different class for counts II and III
       than the class the trial court had certified based upon the original complaint, the certified
       class and the settlement agreement remained unchanged.

¶ 16                     B. The Declaratory Judgment Action (No. 11-MR-315)
¶ 17       On February 24, 2011, G.M. Sign filed the present declaratory judgment action against
       State Farm. G.M. Sign claimed coverage under Schane’s insurance policy and argued that
       State Farm was estopped from asserting policy defenses because it did not defend Schane
       under a reservation of rights or file a suit seeking a declaration that no coverage was
       afforded. G.M. Sign concluded that State Farm owed Schane a duty to defend him and to
       indemnify any judgment entered on the amended complaint in No. 10-CH-4480. State Farm
       filed an answer, an amended affirmative defense claiming that the settlement was
       unreasonable, and an amended counterclaim seeking a declaratory judgment in its favor
       based on Endorsement FE-6655, as well as a declaration of no coverage under other policy
       provisions.
¶ 18       State Farm moved for judgment on the pleadings, asserting that it had no duty to
       indemnify the stipulated judgment, based on Endorsement FE-6655. G.M. Sign filed a
       cross-motion for judgment on the pleadings, contending, inter alia, that the amended
       complaint in No. 10-CH-4480–particularly the conversion and consumer fraud
       counts–pleaded claims that were potentially within coverage. The trial court denied State
       Farm’s motion and granted G.M. Sign’s motion in part, finding that State Farm owed a duty
       to defend and to indemnify under the policy. The court reasoned that counts II and III of
       G.M. Sign’s amended complaint in the underlying class action were broad enough to
       potentially include faxes that were not covered by Endorsement FE-6655. On May 3, 2012,
       State Farm filed a second amended counterclaim, which, like its amended counterclaim,
       sought a declaration of no duty to defend or to indemnify based on Endorsement FE-6655.
¶ 19       State Farm then filed a motion for summary judgment regarding the extent of its duty to
       indemnify. G.M. Sign filed a cross-motion for summary judgment, asserting that State Farm
       was liable to indemnify the entire judgment because it was estopped from raising policy
       defenses. On February 27, 2013, the trial court ruled in a written order. It found that the
       judgment was entered against Schane after State Farm denied coverage but before the filing

                                                   -5-
       of the declaratory judgment action. It further found that Judge David Hall, in ruling on the
       cross-motions for judgment on the pleadings, had determined that State Farm had a duty to
       defend Schane and breached that duty. The court ruled that, “[a]ccordingly, State Farm is
       estopped from raising arguments that stem from policy-based defenses to coverage.”
       However, the court ruled that “estoppel in this context does not preclude determination of the
       extent of coverage and the reasonableness of the settlement agreement that was reached.”
       The court then held, inter alia, that the damages were the result of a single occurrence and
       that the settlement was reasonable.
¶ 20       Both parties filed motions to reconsider, which the court denied on May 15, 2013. In its
       order, the court also granted State Farm’s motion to post an insurance policy to stay the
       judgment and denied G.M. Sign’s motion for inclusion of postjudgment interest. State Farm
       filed a notice of appeal on June 4, 2013. With leave of court, G.M. Sign filed a notice of
       cross-appeal on July 23, 2013.

¶ 21                                           II. ANALYSIS
¶ 22        State Farm contends that the trial court erred in finding that it had a duty to defend
       Schane against the underlying amended complaint, because (1) Endorsement FE-6655
       applied to the counts alleging conversion and consumer fraud (the alternative counts); (2) the
       alternative counts failed to allege property damage caused by an occurrence as those terms
       are defined in the policy; (3) State Farm’s duty to defend, if any, arose after the case was
       settled and Schane’s liability was extinguished; and (4) the settlement was unreasonable. In
       its cross-appeal, G.M. Sign contends that (1) the trial court erred in limiting the judgment
       against State Farm to a single occurrence; and (2) the court erred in ruling that State Farm
       need not indemnify postjudgment interest that was actually awarded.
¶ 23        As to State Farm’s appeal, we find its first argument–that it owed no duty to defend
       against the amended complaint, because Endorsement FE-6655 applied to the alternative
       counts–dispositive. Consequently, we need not address State Farm’s remaining arguments or
       G.M. Sign’s arguments on cross-appeal.
¶ 24        The trial court determined that State Farm had a duty to defend Schane in the underlying
       litigation in the context of ruling on the parties’ cross-motions for judgment on the pleadings.
       A motion for judgment on the pleadings is limited to the pleadings. Pekin Insurance Co. v.
       Wilson, 237 Ill. 2d 446, 455 (2010). When ruling on such a motion, a court must consider as
       admitted all well-pleaded facts set forth in the nonmoving party’s pleading and the fair
       inferences drawn therefrom. Wilson, 237 Ill. 2d at 455. Judgment on the pleadings is proper
       if the pleadings disclose no genuine issue of material fact and the movant is entitled to
       judgment as a matter of law. Wilson, 237 Ill. 2d at 455. We review de novo a ruling on a
       motion for judgment on the pleadings. Wilson, 237 Ill. 2d at 455.
¶ 25        Ordinarily, in a declaratory judgment action where the issue is an insurer’s duty to
       defend, a court looks first to the allegations of the underlying complaint and compares them
       to the insurance policy’s relevant provisions. Outboard Marine Corp. v. Liberty Mutual
       Insurance Co., 154 Ill. 2d 90, 108 (1992). Refusal to defend is unjustifiable unless it is clear
       from the face of the underlying complaint that the facts alleged do not potentially fall within
       the policy’s coverage. Outboard Marine, 154 Ill. 2d at 108. In determining whether there is a
       duty to defend, the allegations in the underlying complaint must be construed liberally, and
       any doubts must be resolved in favor of coverage. Scudder v. Hanover Insurance Co., 201 Ill.

                                                  -6-
       App. 3d 921, 925 (1990). An insurer cannot refuse to defend its insured once the duty is
       triggered. Home Insurance Co. v. United States Fidelity & Guaranty Co., 324 Ill. App. 3d
       981, 995 (2001). Rather, the insurer must either defend under a reservation of rights or seek a
       declaratory judgment that there is no coverage. Home, 324 Ill. App. 3d at 995-96. If the
       insurer fails to take either of these steps and is later determined to have wrongfully denied
       coverage, the insurer will be estopped from raising policy defenses to coverage. Employers
       Insurance of Wausau v. Ehlco Liquidating Trust, 186 Ill. 2d 127, 150-51 (1999). However,
       the estoppel doctrine applies only if the insurer has wrongfully denied coverage. Ehlco, 186
       Ill. 2d at 150.
¶ 26        In construing an insurance policy, the court must ascertain the intent of the parties to the
       contract. Outboard Marine, 154 Ill. 2d at 108. Courts construe the policy as a whole with due
       regard to the risk undertaken, the subject matter that is insured, and the purpose of the entire
       policy. Outboard Marine, 154 Ill. 2d at 108. If the words used in the policy are unambiguous,
       courts afford them their plain, ordinary, and popular meaning. Outboard Marine, 154 Ill. 2d
       at 108.
¶ 27        We agree with State Farm that G.M. Sign’s amended complaint did not allege claims that
       potentially fell within coverage. In essence, G.M. Sign offers two arguments for why the
       alternative counts of the amended complaint potentially fell within coverage: (1) the
       alternative counts had different elements and sought different damages than the TCPA count,
       and (2) the alternative counts were premised on different facts than the TCPA count and were
       broad enough to include faxes that did not violate the TCPA.
¶ 28        Regarding G.M. Sign’s first argument, we disagree that, in construing Endorsement
       FE-6655, the pertinent analysis requires comparing the elements of the alternative counts to
       the elements of the TCPA count. Endorsement FE-6655 excludes coverage for property
       damage or advertising injury “arising directly or indirectly” out of any action or omission
       that violates or is alleged to violate the TCPA or any other statute that prohibits or limits the
       sending, transmitting, communicating, or distributing of material or information. The phrase
       “arising out of” is both broad and vague, requiring us to liberally construe it in favor of the
       insured. Maryland Casualty Co. v. Chicago & North Western Transportation Co., 126 Ill.
       App. 3d 150, 154 (1984). “Arising out of” means “originating from,” “having its origin in,”
       “growing out of,” and “flowing from.” (Internal quotation marks omitted.) Maryland
       Casualty, 126 Ill. App. 3d at 154. The proper analysis of the “arising out of” language in
       Endorsement FE-6655 is a “but for” analysis, not an elements analysis. Maryland Casualty,
       126 Ill. App. 3d at 154 (“but for” causation, not proximate causation, satisfies the “arising
       out of” language).
¶ 29        The operation of the “but for” analysis is illustrated in American Economy Insurance Co.
       v. DePaul University, 383 Ill. App. 3d 172 (2008). In American Economy, the plaintiff in the
       underlying suit sued the defendants, including DePaul University, for personal injuries that
       she alleged were caused by their negligent installation of fluorescent lights in the
       construction of a building where she worked. American Economy, 383 Ill. App. 3d at 173.
       DePaul was an additional insured on a policy issued by American Economy to the electrical
       subcontractor. American Economy, 383 Ill. App. 3d at 182. The additional-insured
       endorsement provided coverage for DePaul’s liability “arising out of” the electrical
       subcontractor’s work for DePaul. American Economy, 383 Ill. App. 3d at 182. In determining
       that American Economy owed DePaul coverage, the appellate court looked to the underlying

                                                   -7-
       complaint, which alleged that the underlying plaintiff was injured because of the selection
       and installation of fluorescent lighting without ultraviolet diffusers. American Economy, 383
       Ill. App. 3d at 182. The court held that there was potential for DePaul’s liability because,
       “but for” the electrical subcontractor’s installation of the fluorescent lights without diffusers,
       the underlying plaintiff would not have suffered injury. American Economy, 383 Ill. App. 3d
       at 182. Thus, here, rather than comparing the elements of the various causes of action alleged
       in the amended complaint, we look at whether, but for Schane’s alleged act of sending faxes
       that violated the TCPA, G.M. Sign would have suffered injury.
¶ 30        This brings us to G.M. Sign’s second argument–that the alternative counts were premised
       on different facts than the TCPA count and were broad enough to include faxes that did not
       violate the TCPA. We disagree. Although the alternative counts selectively incorporated only
       those factual allegations that contained no reference to the TCPA, to the faxes being
       advertisements, or to the lack of any established business relationships between Schane and
       the class members, they nevertheless were based on the same facts as the TCPA count. All
       three counts incorporated by reference the allegations that, on or about September 6, 2007,
       G.M. Sign received an “unsolicited facsimile” and that the class members received “the same
       or similar unsolicited facsimiles.” Other than these factual allegations–which were the very
       allegations that formed the basis for the TCPA count–the amended complaint contained no
       allegations referencing any faxes sent by Schane.
¶ 31        G.M. Sign contends that it pleaded in both alternative counts that Schane sent faxes other
       than those covered by the TCPA count. However, the allegations to which G.M. Sign refers
       merely defined the classes of persons covered by the actions, not the events giving rise to the
       actions. For example, paragraph 31 of the amended complaint alleged that count II was
       brought on behalf of “[a]ll persons who on or after five years prior to the filing of this action,
       were sent telephone facsimile messages by or on behalf of [Schane].” This allegation defined
       the class–all persons who received faxes from Schane–but added no factual allegations of
       any specific events.
¶ 32        In essence, G.M. Sign maintains that the vagueness of its amended complaint is the very
       virtue that triggered State Farm’s duty to defend. According to G.M. Sign, “the fact that the
       [amended] complaint does not say one way or the other whether all of the faxes were
       advertisements or whether they all were sent to people without established business
       relationships with Schane *** should establish State Farm’s duty to defend, not the lack
       thereof.”
¶ 33        G.M. Sign argues nothing more than that it should be allowed to avoid application of the
       policy exclusion by deliberately and strategically leaving its complaint so bereft of factual
       allegations that myriad unpleaded scenarios could fall within its scope. This argument
       renders meaningless a court’s duty to compare the “facts” alleged in the complaint to the
       relevant policy language. Illinois is a fact-pleading jurisdiction. Connick v. Suzuki Motor Co.,
       174 Ill. 2d 482, 499 (1996). Even under federal notice pleading, a plaintiff must allege a
       statement of the claim showing that the pleader is entitled to relief (Fed. R. Civ. P. 8(a)(2)),
       which requires more than “ ‘naked assertion[s]’ devoid of ‘further factual enhancement.’ ”
       Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550
       U.S. 544, 557 (2007)).
¶ 34        Under Outboard Marine, an insurer’s refusal to defend is unjustifiable unless it is clear
       from the face of the underlying complaint that the “facts” alleged do not potentially fall

                                                   -8-
       within the policy’s coverage. Outboard Marine, 154 Ill. 2d at 108. A court can rationally
       apply this rule only if the underlying complaint contains sufficient factual allegations to
       constitute a valid pleading. Here, because it did not contain any factual allegations of faxes
       other than those that violated the TCPA, G.M. Sign’s amended complaint did not trigger
       State Farm’s duty to defend.
¶ 35       In arguing that its amended complaint alleged claims that potentially fell within coverage,
       G.M. Sign offers citations to a number of circuit court orders. Stare decisis requires courts to
       follow decisions of higher courts but does not require courts to follow decisions of equal or
       inferior courts. O’Casek v. Children’s Home & Aid Society of Illinois, 229 Ill. 2d 421, 440
       (2008). The cited circuit court orders are either distinguishable from this case or
       unpersuasive, and we decline to afford them any weight in our resolution of this appeal. In
       none of the cited circuit court orders (two of which actually are transcripts of trial courts’ oral
       rulings) does the court construe the phrase “arising out of” in accordance with Maryland
       Casualty. Nor do the courts address the common factual allegations underlying the various
       counts of the complaints at issue. Instead, the courts conclude that, because the elements of
       conversion and consumer fraud differ from the elements of violation of the TCPA, the
       complaints potentially trigger coverage. This is an argument we have rejected for the reasons
       previously explained.
¶ 36       The only other case that G.M. Sign cites is Nationwide Mutual Insurance Co. v. Harris
       Medical Associates, LLC, 973 F. Supp. 2d 1045 (E.D. Mo. 2013). There, the district court
       had before it a policy exclusion similar to the one in our case. However, Nationwide is
       inapplicable, because (1) the district court was bound to apply either Georgia or Missouri
       law; (2) the court specifically rejected Illinois law; and (3) the parties had not furnished the
       court with facts relevant to a choice-of-law analysis. Nationwide, 973 F. Supp. 2d at 1055-56.
       Under those circumstances, the district court concluded that, “[f]or now,” “plaintiffs have not
       established that there is no potential for coverage for the underlying [conversion] claim based
       on the Violation of Statutes exclusion.” Nationwide, 973 F. Supp. 2d at 1056. The district
       court engaged in no reasoning or analysis. Nationwide, 973 F. Supp. 2d at 1056.
¶ 37       State Farm relies on an unpublished decision of the Michigan Court of Appeals. In GM
       Sign, Inc. v. Auto-Owners Insurance Co., No. 301742, 2012 WL 4840592 (Mich. Ct. App.
       Oct. 11, 2012), the court construed the language of an exclusion similar to the one here. The
       court applied Illinois law–specifically, Maryland Casualty–and concluded that the plaintiff’s
       alternative counts, which alleged common-law conversion and a violation of the Act, arose
       from the same acts as the alleged violation of the TCPA. Auto-Owners, 2012 WL 4840592, at
       *4 (“The faxing of the ads constitutes the ‘acts’ that allegedly violated the TCPA.”). Relying
       on Valley Forge Insurance Co. v. Swiderski Electronics, Inc., 223 Ill. 2d 352, 364-65
       (2006)–where our supreme court said that “[t]he essence of a TCPA fax-ad claim is that one
       party sends another an unsolicited fax advertisement”–the court found that the underlying
       defendant’s acts of faxing unsolicited advertisements to unwilling recipients were identical to
       the acts at the heart of the conversion and consumer fraud claims. Auto-Owners, 2012 WL
       4840592, at *4.
¶ 38       We find Auto-Owners’ reasoning persuasive. See Nulle v. Krewer, 374 Ill. App. 3d 802,
       806 n.2 (2007) (this court is free to use the reasoning in an unpublished opinion from another
       state). Thus, we hold that the alternative counts of G.M. Sign’s amended complaint arose
       from the same conduct that was the basis for its TCPA claim. Accordingly, Endorsement

                                                    -9-
       FE-6655 applied, and State Farm had no duty to defend or to indemnify Schane in the
       underlying suit. It follows that State Farm is not estopped from raising policy defenses,
       because its denial of coverage was not wrongful. See Ehlco, 186 Ill. 2d at 150 (the estoppel
       doctrine applies only if the insurer wrongfully denied coverage).
¶ 39        Furthermore, we reject G.M. Sign’s assertion that in Schane we determined that the
       amended complaint alleged claims that potentially fell within coverage. In the underlying
       litigation, after the trial court approved the settlement and entered judgment against Schane,
       State Farm filed a petition to vacate or modify the judgment pursuant to section 2-1401 of the
       Code of Civil Procedure (735 ILCS 5/2-1401 (West 2010)). Schane, 2013 IL App (2d)
       120434, ¶ 1. The trial court dismissed the petition, finding that State Farm was not diligent in
       light of its decision not to accept the defense tender. Schane, 2013 IL App (2d) 120434, ¶ 1.
       State Farm appealed, arguing that it was diligent in defending the underlying suit and in
       bringing the section 2-1401 petition. Schane, 2013 IL App (2d) 120434, ¶ 2.
¶ 40        On appeal, we pointed out that two types of diligence must be shown: diligence with
       respect to the original action and with respect to the section 2-1401 petition itself. Schane,
       2013 IL App (2d) 120434, ¶ 40. In discussing State Farm’s diligence with respect to the
       original action, we set forth the chronology of events:
                    “Here, the trial court specifically found a lack of due diligence in presenting the
                defense or claim in the original action. However, the trial court did not focus on when
                State Farm became aware of the facts prompting its decision to file the section 2-1401
                petition. State Farm had refused the tender of defense by relying on the explicit
                TCPA exclusion in Schane’s insurance policy. G.M. Sign filed an amended
                complaint, which potentially brought the claims within the insurance policy.
                However, the amended complaint was filed after a settlement had been reached.
                Furthermore, when State Farm received the amended complaint, G.M. Sign did not
                attach a copy of the settlement agreement. Given these facts, there was no lack of
                diligence in State Farm’s failure to defend under a reservation of rights, where a
                settlement had already been reached. Therefore, there could be no finding of a lack of
                due diligence in the original proceedings.” (Emphasis in original.) Schane, 2013 IL
                App (2d) 120434, ¶ 41.
       Thus, we assumed, without deciding, that for the purpose of demonstrating State Farm’s due
       diligence with respect to the original action, the amended complaint potentially brought the
       claims stated therein within coverage. We said, in other words, that, even if the amended
       complaint stated claims that potentially would trigger coverage, State Farm’s refusal to
       defend did not indicate a lack of due diligence, because the amended complaint was filed
       only after the case was settled. Nothing in the present opinion conflicts with Schane.
¶ 41        Although we already have rejected G.M. Sign’s argument that the alternative counts in its
       amended complaint were broad enough to include faxes that did not violate the TCPA, we
       must also point out that, in pursuing this argument, G.M. Sign contradicts the position that it
       successfully advanced in the underlying litigation.
¶ 42        A review of the record is useful. All three counts of G.M. Sign’s original complaint in the
       underlying litigation incorporated the same factual allegations: on or about September 6,
       2007, Schane faxed to G.M. Sign an advertisement; G.M. Sign had not given Schane
       permission to fax advertisements to it; and Schane faxed “the same or similar
       advertisements” to G.M. Sign and more than 39 other recipients without first receiving their

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       express permission. Each count also proposed a virtually identical class: all persons who
       received fax advertisements, who had not given Schane permission to send the faxes, and
       who did not have established business relationships with Schane. Although the alternative
       counts of the original complaint alleged different theories of recovery than the TCPA count,
       all three counts incorporated identical facts alleging the sending of fax advertisements in
       violation of the TCPA.
¶ 43       Based on the allegations of its original complaint, G.M. Sign negotiated a $4.9 million
       settlement with Schane. The settlement agreement defined the class as “all persons to whom
       [Schane] sent advertising facsimiles during the period of September 7, 2007 through June 17,
       2008.” (Emphasis added.) The agreement further provided that, during that period, Schane
       faxed a total of 49,825 advertisements to the class members without their prior express
       permission. Moreover, the amount of the settlement was based on the potentially bankrupting
       TCPA damages. Specifically, the agreement recited that “a finding of liability under the
       TCPA with statutory damages of $500 per unsolicited fax would result in a damage award of
       $24,912,500.00 before trebling” and that “such a judgment would bankrupt [Schane] and
       cause the dissolution of his business.” G.M. Sign reiterated these facts in its motion for
       certification of the class and for preliminary approval of the settlement. It emphasized that
       class certification was appropriate because Schane’s conduct was “substantially similar as to
       each class member” and because common questions regarding Schane’s violation of the
       TCPA could be “answered on a class-wide basis.” Based on these representations, the trial
       court certified the class and approved the settlement.
¶ 44       Having obtained the benefit of its settlement agreement in the underlying litigation by
       taking the position that Schane sent unsolicited fax advertisements in violation of the TCPA,
       G.M. Sign should not now be permitted to argue that State Farm owed a duty to defend
       Schane because its amended complaint potentially included faxes that fell outside of the
       TCPA. See American Country Insurance Co. v. Chicago Carriage Cab Corp., 2012 IL App
       (1st) 110761, ¶¶ 35-36 (holding that, where a party had obtained relief against an insured
       based on one position, it was judicially estopped from adopting a contrary position in an
       insurance coverage dispute involving the insurer). Nothing in the settlement agreement, the
       original complaint on which it was based, or the motion for class certification and
       preliminary approval of the settlement referenced any faxes that did not violate the TCPA.
       Although G.M. Sign amended its complaint shortly before receiving final approval of the
       settlement–deliberately excluding from the alternative counts any reference to the TCPA, to
       the faxes being advertisements, or to the lack of any established business relationships
       between Schane and the class members–the settlement agreement was not amended and the
       certified class remained unchanged. The settlement agreement, which resolved “all disputes
       between [Schane] and the Class” (emphasis added), recited that all 49,825 faxes that Schane
       sent to the class were advertisements. Having benefited from that position, G.M. Sign cannot
       now take a contrary position in this declaratory judgment action in an attempt to obtain
       insurance coverage for the settlement. See American Country Insurance, 2012 IL App (1st)
       110761, ¶¶ 35-36.
¶ 45       We cannot rest our discussion here. G.M. Sign’s attempt to pursue a contrary position in
       this declaratory judgment action thrusts into the forefront the larger issue of the role of its
       amended complaint in the underlying litigation. When G.M. Sign filed the amended
       complaint, it had already negotiated a settlement with Schane based on its original complaint,


                                                 - 11 -
       and the trial court had already certified the class and preliminarily approved the settlement.
       G.M. Sign nevertheless filed the amended complaint, significantly altering the counts that the
       settlement agreement purported to resolve, for the admitted purpose of “ ‘plead[ing] into
       possible insurance coverage.’ ” Schane, 2013 IL App (2d) 120434, ¶ 7.
¶ 46        We doubt whether, under these circumstances, any amended complaint could have
       triggered State Farm’s duty to defend. In essence, G.M. Sign was attempting to
       recharacterize, at the eleventh hour, the class action that it had already litigated and
       negotiated to settlement, for purposes of obtaining insurance coverage. This is not a strategy
       that courts should condone. See James River Insurance Co. v. Fortress Systems, LLC, 899 F.
       Supp. 2d 1331, 1335 (S.D. Fla. 2012) (rejecting an insured’s attempt to “reverse course” and
       “change the factual basis” of a settlement reached in the underlying litigation in order to get
       “a second bite at the apple to plead into coverage” in an insurance coverage dispute).
       Moreover, G.M. Sign was attempting to trigger State Farm’s duty to defend even though,
       under the terms of the settlement agreement, Schane was guaranteed not to be personally
       responsible for paying the judgment. Thus, when G.M. Sign filed the amended complaint,
       State Farm’s duty to defend was moot. See Aetna Casualty & Surety Co. v. Coronet
       Insurance Co., 44 Ill. App. 3d 744, 751 (1976) (“The purpose of a duty to defend an insured
       is to protect the insured from the expenses of the litigation as well as the liabilities for which
       he could be held.”). Perhaps this explains why Schane’s attorney tendered the amended
       complaint to State Farm at G.M. Sign’s suggestion only six days before final approval of the
       settlement, conspicuously neglecting to attach a copy of the settlement agreement.

¶ 47                                     III. CONCLUSION
¶ 48      For the foregoing reasons, we reverse the judgment of the circuit court of Lake County
       and remand with directions to enter judgment in favor of State Farm and against G.M. Sign
       on G.M. Sign’s declaratory judgment complaint and to enter judgment in favor of State Farm
       and against G.M. Sign on State Farm’s second amended counterclaim for declaratory
       judgment.

¶ 49      Reversed and remanded with directions.




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