Onebeacon America Insurance Company v. City of Zion, Illinois et al

Filing 77

MEMORANDUM Opinion: OneBeacon's motion for summary judgment 50 is granted on Count I as to the City of Zion, granted on Count III in its entirety, and otherwise denied. Count II remains. The Court declares that OneBeacon has a duty to defend the Individual Defendants in the underlying state court lawsuit, but does not have a duty to defend, or indemnify, the City of Zion in that matter. Status hearing set for 8/11/2015 at 09:30 AM. Signed by the Honorable Charles P. Kocoras on 7/29/2015. Mailed notice(vcf, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
ONEBEACON AMERICA INSURANCE
COMPANY,
Plaintiff,
v.
CITY OF ZION, ILLINOIS, LANE
HARRISON, DELAINE ROGERS,
GRAND SLAM SPORTS &
ENTERTAINMENT LLC, and
GREEN BAY CROSSING, LLC,
Defendants.

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12 C 4437

MEMORANDUM OPINION
CHARLES P. KOCORAS, District Judge:
This matter comes before the Court on the motion for summary judgment of
Plaintiff OneBeacon America Insurance Company (“OneBeacon”) on Counts I and III
of its second amended complaint pursuant to Fed. R. Civ. P. 56 (“Rule 56”) against
Defendants Lane Harrison (“Harrison”) and Delaine Rogers (“Rogers”) (collectively
the “Individual Defendants”) and the City of Zion (the “City” or the “City of Zion”)
(all Defendants are referred to collectively as “the Zion Defendants”).

For the

following reasons, OneBeacon’s motion for summary judgment is granted on Count I
as to the City of Zion, granted on Count III in its entirety, and otherwise denied.
Count II remains. The Court declares that OneBeacon has a duty to defend the

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Individual Defendants in the underlying state court lawsuit, but does not have a duty
to defend the City of Zion in that matter.
BACKGROUND
I. Facts
The following facts are taken from the parties’ respective statements, responses
and exhibits filed pursuant to Local Rule 56.1 (“Rule 56.1”). We review each Rule
56.1 statement and disregard any argument, conclusion or assertion unsupported by
the evidence in the record. The Court is mindful of its duty to weigh the credibility of
the evidence presented by all parties and only relies on relevant, admissible evidence
when ruling on the motion for summary judgment.
On November 22, 2011, GSSE brought suit against the Zion Defendants, GBC
and others in the Circuit Court of Lake County. On December 6, 2013, GSSE
amended its complaint (the “Underlying Complaint”), seeking recovery, for, inter
alia: (i) fraud against Harrison and Rogers (Count III); (ii) breach of contract against
the City of Zion (Count V); and (iii) civil conspiracy against Harrison and Rogers
(Count XI). After the state court proceedings commenced, the Zion Defendants
attempted to tender the defense of their case to their insured, OneBeacon. OneBeacon
refused to defend the case and subsequently filed this declaratory judgment action on
April 24, 2014.

In OneBeacon’s three-count second amended complaint for

declaratory judgment (the “Federal Court Complaint”) against the Zion Defendants,
Grand Slam Sports and Entertainment LLC (“GSSE”) and Green Bay Crossing, LLC
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(“GBC”), OneBeacon seeks a declaration that it did not owe a duty to defend, or
indemnify, the Zion Defendants with respect to the Underlying Complaint and GBC’s
counterclaim.
OneBeacon alleges in the Federal Court Complaint that it is a corporation with
its principal place of business in Minnesota.
Pennsylvania.

It was recently re-domiciled in

Venue is proper pursuant to 28 U.S.C. § 1391(b)(1) because all

defendants reside in the Northern District of Illinois.

The City of Zion is a

municipality in Illinois. Harrison and Rogers are citizens of Illinois and both City of
Zion officials. Harrison was the mayor of the City of Zion and Rogers acted as the
Economic Development Director.

GSSE is an Illinois limited liability company

whose sole member is a citizen of Illinois. GBC is a Wisconsin limited liability
company in the business of real estate acquisition and development whose members
are citizens of Illinois and Wisconsin.
The parties generally do not disagree as to the facts, which primarily consist of
the terms of the Policy and the pleadings in the underlying state court lawsuit. The
only significant factual disagreement regards whether certain allegations support a
conclusion that all statements made by the Zion Defendants were intentionally false
material representations.

However, it is important to thoroughly reference the

Underlying Complaint and the insurance policy (the “Policy”) OneBeacon issued to
the City of Zion for insurance coverage purposes.

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A. Allegations in the Underlying Complaint
The Court must decide whether OneBeacon had a duty to defend based on the
allegations of the Underlying Complaint as they are currently pled, not based on the
possibility of future discovery and/or amendments to the complaint. Conn. Indem.
Co. v. DER Travel Serv., Inc., 328 F.3d 347, 350-51 (7th Cir. 2003) (“[I]t is the actual
complaint, not some hypothetical version, that must be considered.”
According to the allegations in the Underlying Complaint, GSSE operated a
minor league baseball team known as the Lake County Fielders (the “Fielders”). In
2006, Rogers, as the Director of Economic Development for the City of Zion,
approached GSSE’s manager to ask if he would be interested in providing a start-up
minor league baseball team in the City of Zion because the City was interested in
developing a stadium project (the “Stadium”). At the time, no professional baseball
team was operating, or expected to operate in the City of Zion. During negotiations,
GSSE’s manager allegedly insisted that the Stadium, with its concessions, naming
rights, advertising and other financial advantages was a necessity for the team. GSSE
alleges that City officials, including, but not limited to Harrison and Rogers,
repeatedly agreed to construction of the Stadium in consideration of the Fielders
playing in Zion. As a result, GSSE’s manager agreed to have the Fielders play in
return for the City of Zion’s promise to build the Stadium for the team to use. After a
long and arduous period of temporary facilities, funding issues, and talks of
relocation, on March 21, 2011, the City of Zion Council approved the sale of bonds to
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finance the Stadium project. On March 29, 2011, the City entered into a construction
contract with Olson General Contractor (the “Olson Contract”) to construct the
Stadium in 2011 for $5.6 million dollars, which was agreed upon by GSSE.
GSSE alleges that sometime in the first five months of 2011, Harrison, Rogers
and Richard DeLisle, a real estate developer, determined that the exposure of the
financial flaws in the new proposed site for the Stadium made it too risky to allow
execution of the bond issue for construction of the Stadium. According to GSSE,
Harrison, Rogers and DeLisle then privately determined that the bond issuance for the
construction of the Stadium would not be pursued, and no Stadium would be built in
2011.
GSSE further alleges that during these first five months of 2011, Harrison and
Rogers, along with DeLisle, were on notice that absent the building of the Stadium,
GSSE would not field a team for the 2011 season. GSSE contends that Harrison and
Rogers knew that operating the Fielders in the 2011 season without a completed
Stadium would result in an immediate collapse of the entire project, creating extensive
negative publicity for Harrison, Rogers and DeLisle, in addition to potentially
destroying a possibility of substantial land appreciation for GBC. Accordingly, GSSE
alleges that Harrison, Rogers and DeLisle sought alternative plans to relieve GBC of
its debt obligations on the Stadium’s purported site and agreed to engage in
affirmative and knowing false representations and material omissions to GSSE to
conceal from it that the Stadium would not be built for the 2011 season. GSSE
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alleges that Harrison, Rogers and DeLisle knew that operating the Fielders during the
2011 season without a completed Stadium would result in substantial economic losses
for GSSE, as had occurred in the 2010 season, and could possibly leave GSSE without
financial capital to maintain the team after 2011. They allegedly agreed amongst
themselves to seek to establish a new or relocated baseball team with fresh financial
capital to replace GSSE’s baseball team after the 2011 season. However, Rogers also
allegedly made repeated statements and representations to GSSE and the general
public, by way of the radio, that construction of the Stadium was ready to begin, as
also shown in a written letter from March 10, 2011. In the March 10, 2011 letter,
Rogers represented to GSSE that: (i) the sale of bonds for construction of the Stadium
would occur the following week; (ii) the temporary Stadium facilities would be
completed by the first week of April 2011 for use by GSSE’s team; (iii) the Olson
Contract was signed; (iv) the primary Stadium cement and steel components were
then currently being fabricated off site; and (v) the Stadium would be completed by
early June 2011, all of which GSSE argues were completely false. Additionally, a
construction buffer zone fence was built around the Stadium.

On two separate

occasions in April 2011, the City’s finance director sent written confirmation to
Harrison, Rogers, the City Council and GSSE’s manager that the $7.5 million bond
sale was in a position to commence the following week and that the funds from the
sale of those bonds would be wired to the City within a few days. On two separate
occasions in June 2011, the City’s finance director allegedly sent written memos to
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Harrison, the City Council and GSSE’s manager stating the imperative need to
commence sale of approved bonds in order to commence construction of the Stadium.
According to GSSE, at no time during the months of March through June 2011 did
Harrison or the City indicate to GSSE that the bond sale would not move forward or
that construction of the Stadium was not moving forward. No bonds were ever issued
or sold pursuant to the City Council approval and direction and Stadium construction
never occurred. Two weeks after the start of the 2011 season, the City started to build
some temporary facilities. During 2011, three of the four members of the Zion City
Council allegedly told GSSE’s manager that they were puzzled by Harrison’s failure
to move forward on the bond sale approved by the Council three months earlier. Two
of those Council members allegedly stated to GSSE’s manager that Harrison was not
returning their telephone calls or requests for meetings on the subject.
GSSE claims that it reasonably relied on the Individual Defendants’
misrepresentations and fielded a baseball team for 2011, all while the City never
fulfilled the construction contract to build the Stadium. GSSE alleges that Harrison
and Rogers undermined the financial condition of GSSE, and attacked its reputation,
as additional means of causing the termination of any relationship between GSSE and
the City of Zion. As a result of the inadequate facilities and the missing Stadium,
advertisers and ticket buyers allegedly revoked purchase money commitments to
GSSE for tickets and events in the 2011 season, which created severe financial loss
and critically strained the ability of GSSE to maintain cash flow to operate the
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baseball team during the 2011 season. During the 2010 season, GSSE advanced over
$90,000 on the City’s behalf for expenses at the Stadium site that were the City’s
responsibility, made rent payments totaling approximately $40,000 under the
operating agreement after the 2010 season and allowed the rent to be credited against
the far greater amounts owed by the City to GSSE, all without objection from the
City. During the 2011 season, Harrison allegedly caused the City to publically claim
that GSSE still owed $60,000 rent from the 2010 season, which the City stated caused
the significant delay in Stadium construction. At that time, however, GSSE alleges
that the City still owed it $90,000. GSSE offered to settle with the City, but the City
rejected the offer. Later in 2011, the City reimbursed GSSE $70,000 of the $90,000
that had been owed to GSSE for more than a year, but allegedly ceased all
communications with GSSE regarding the Stadium. GSSE estimates that it lost
approximately $500,000 in operation of the Fielders team during the 2011 season and
is effectively at a standstill based on the City’s alleged actions.
Counts III, V and XI are the claims in the Underlying Complaint that pertain to
the instant matter. In Count III, GSSE alleges a fraud claim against Harrison and
Rogers for engaging in a series of false material representations in connection with the
proposed construction of the Stadium. These misrepresentations include that the City
would build the Stadium, the sale of bonds for construction of the Stadium would
occur in March 2011, the temporary Stadium facilities would be completed by the first
week of April 2011 for use by the Fielders, the Olson contract was signed, the
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Stadium’s construction was in production and the Stadium would be completed by
early June 2011 for home games. GSSE alleges that Harrison and Rogers’ omissions
were material and comprised essential parts of a fraudulent scheme and were intended
to mislead GSSE. It also claims that as public officials engaging in criminal conduct,
Harrison and Rogers had a duty to disclose their conduct and all material omissions of
material facts that would have made their actual statements not misleading.

In

specific reliance upon these material misrepresentations, GSSE fielded a 2011 team
and suffered damages.
In Count V, GSSE states that it is a third party beneficiary of the Olson
Contract. GSSE alleges that the City materially breached the contract by its failure to
engage in reasonable measures to build the Stadium, and effectively abandoned the
construction of the Stadium. In Count XI, GSSE alleges that Harrison, Rogers,
DeLisle and GBC engaged in a civil conspiracy by conducting the “2011 Fake
Stadium Scheme” with the alleged goal of causing GSSE to operate the Fielders team
during the 2011 season by means of fraudulent misrepresentation, material omissions,
bribery, and intentional misuse of public services and public resources. Regarding the
bribery allegations, GSSE claims Harrison illegally accepted bribes that were given to
obtain his cooperation, participation and use of municipal powers in fraud and
conspiracy. Likewise, there is also an allegation that Rogers illegally accepted bribes
to reward her for, and to obtain her participation in, the fraud and conspiracy. These

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alleged agreements were made between January and March 2011 to conceal from
GSSE that the Stadium would not be built.
GBC has brought a counterclaim for breach of contract against the City of
Zion. In its counterclaim, GBC alleges that it entered into a ground lease with the
City, which the City anticipatorily breached by not building the Stadium as the lease
required, and by manifesting an intent not to do so. GBC asks for indemnification by
the City of the claims made against GBC by GSSE, pursuant to an indemnification
clause in the contract. GBC specifically pleads that the City has “clearly, definitely,
and unequivocally manifested an intent not to perform its obligation to build the
Baseball Stadium under the Ground Lease and has therefore [ ] anticipatorily
repudiated and breached the Ground Lease.” GSSE seeks damages against GBC
arising, in whole or in part, from the City’s failure to build the Stadium. GBC alleges
that in the event that GSSE recovers any damages from GBC resulting from the City’s
failure to build the Stadium, GBC is entitled to recover the full amount of any such
damages, plus attorney’s fees and costs of defense from the City.
B. State Court Decision
The parties dispute the admissibility of the Circuit Court of Lake County’s
May 13, 2014 dismissal of Count V of the Underlying Complaint. OneBeacon argues
that this information is extraneous evidence and immaterial to its pending motion for
summary judgment. According to the Circuit Court of Lake County’s electronic
docket, on May 8, 2015, the court entered an agreed order “dismissing cause.” The
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parties failed to supplement the record in this case to reflect this activity in the state
court case.1
C. Policy
1. CGL Section
At the time of the foregoing incident, the Zion Defendants were covered by
Policy number 791-00-03-58-0000, issued by OneBeacon to the City of Zion for the
period of December 15, 2010 to December 15, 2011. The Policy contains a portion
entitled commercial general liability form for government risks (the “CGL Section”).
OneBeacon provided the Court a copy of the Policy issued to the Zion Defendants,
and the relevant parts of the CGL Section are listed below:
COVERAGE B PERSONAL AND ADVERTISING LIABILITY
1. Insuring Agreement
a. We will pay those sums that the insured becomes legally obligated to pay as
damages because of “personal and advertising injury” to which this
insurance applies. We will have the right and duty to defend the insured
against any “suit” seeking those damages. However, we will have no duty to
defend the insured against any “suit” seeking damages for “personal and
advertising injury” to which this insurance does not apply. We may, at our
discretion, investigate any offense and settle any “claim” that may result. But:
(1) The amount we will pay for damages is limited as described in
SECTION III – LIMITS OF INSURANCE; and
(2) Our right and duty to defend ends when we have used up the
applicable limit of insurance in the payment of judgments or settlements
under Coverages A, B, C or medical expenses under Coverage D.
1

Local news media reported that the state court case recently settled for $55,000 in return for a
release of GSSE’s remaining claims pending against the City of Zion.
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No other obligation or liability to pay sums or perform acts or services is
covered unless explicitly provided for under Supplementary Payments –
Coverages A, B and C.
b. This insurance applies to “personal and advertising injury” caused by an
offense arising out of your business but only if the offense was committed in
the “coverage territory” during the policy period.
* * *
In the Policy’s section of definitions, “Personal and advertising injury” is defined as
an injury, including a consequential “bodily injury”, arising out of one or more of the
following offenses:
a. False arrest, detention or imprisonment;
b. Malicious prosecution;
c. The wrongful eviction from, wrongful entry into, or invasion of the right of
private occupancy of a room, dwelling or premises that a person occupies,
committed by or on behalf of its owner, landlord or lessor;
d. “Publication” of material that slanders or libels a person or organization or
disparages a person’s or organization’s goods, products or services;
e. “Publication” of material that violates a person’s right of privacy;
f. The use of another’s advertising idea in your “advertisement”; or
g. Infringing upon another’s copyright, trade dress or slogan in your
“advertisement”.
* * *
Publication is defined as “any method of announcing or disseminating any material to
any third party.”
* * *

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The Coverage B Personal and Advertising Injury liability had specific exclusions,
which are listed below:
2. Exclusions
This insurance policy does not apply to:
a. Knowing Violation Of Rights Of Another
“Personal and advertising injury” caused by or at the direction of the insured
with the knowledge that the act would violate the rights of another and would
inflict “personal and advertising injury”.
This exclusion does not apply to “personal and advertising injury” caused by
malicious prosecution.
b. Breach Of Contract
“Personal and advertising injury” arising directly or indirectly out of, or in any
way related to breach of contract, except an implied contract to use another’s
advertising idea in your “advertisement”, or any “claim” against any insured
arising directly or indirectly out of, or in any way related to tortious
interference with a contract or business relations.
c. Contractual Liability
“Personal and advertising injury” for which any insured has assumed liability
in a contract or agreement. This exclusion does not apply to liability for
damages that the insured would have in the absence of the contract or
agreement.
* * *
n. Material Published With Knowledge of Falsity
“Personal and advertising injury” arising directly or indirectly out of, or in any
way related to “publication” of material, if done by or at the direction of the
insured with knowledge of its falsity.
* * *

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Additionally, Coverage B: Personal and Advertising Injury Liability, Section
II(2)(a), includes Harrison and Rogers as insured officials of the City of Zion “while
performing duties related to the conduct of [the City’s] business.” In Section II(2)(b),
the Policy also insures the City’s “current or previously elected or appointed officials
of [the City’s] operating authorities, boards, commissions, districts or any other
governmental units, but only for acts within of the scope of their employment by [the
City] or while performing duties related to the conduct of [the City].”
2. E&O Section
The Policy also contains a section entitled Public Officials Error and Omissions
Coverage Form Claims-Made for Government Risks (the “E&O” Section). Harrison
and Rogers, as officials of the City, are insured under the E&O Section, “but only for
the conduct of their duties as [City’s] elected or appointed officials.” The relevant
parts of the E&O Section are listed below:
SECTION I – COVERAGES
A. Insuring Agreement – Liability for Wrongful Acts
1. We will pay those sums that the insured becomes legally obligated to pay as
“damages” resulting from a “wrongful act” to which this insurance applies.
This insurance DOES NOT apply to any “claim” resulting from a “wrongful
act” which takes place in whole or in part prior to the Retroactive Date shown
in the Declarations or subsequent to the termination of this policy.
2. We will have the right and duty to defend the insured against any “suit”
seeking those “damages”. However, we will have no duty to defend the
insured against any “suit” seeking “damages” for a “wrongful act” to which this
insurance does not apply. We may, at our discretion, investigate any “wrongful
act” and settle any “claim that may result.
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* * *
The E&O Section also contains specific exclusions:
SECTION III – EXCLUSIONS
This insurance does not apply under either Coverage A or Coverage B or
Coverage C to:
* * *
4. Contracts
Any “claim” arising directly or indirectly out of, or in any way related to
liability assumed under any contract or agreement of breach of contract to
which the insured is a party or a third-party beneficiary, or any representations
made in anticipation of such contract or agreement of any “claim” against any
insured arising directly or indirectly out of, or in any way related to tortious
interference with a contract or business relations. However this exclusion does
not apply to liability the insured would have in the absence of the contract or
agreement.
5. Criminal Acts
Any “claim” arising directly or indirectly out of, or in any way related to a
dishonest, malicious, fraudulent, or criminal act, or the willful violation of any
statute, ordinance or regulation committed by or with the knowledge of the
insured.
However, we will defend the insured for a “suit” subject to the other terms of
this coverage part until either a judgment or final adjudication established such
an act or the insured confirms such an act.
* * *
19. Profit, Advantage or Remuneration
Any “claim” arising directly or indirectly out of, or in any way related to any
insured gaining any profit, advantage or remuneration to which that insured is
not legally entitled.
* * *
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D. Federal Court Case’s Procedural History
In the Federal Court Complaint, OneBeacon first argues in Count I that the
Policy issued to the Individual Defendants did not extend coverage to damages
alleged in the Underlying Complaint. OneBeacon claims it has no duty to defend the
Zion Defendants under the CGL Section because the claims do not allege a personal
and advertising injury, and because the claims are excluded by the “knowing violation
of rights of another,” “breach of contract,” and “the material published with
knowledge of falsity” exclusions contained in CGL Section. OneBeacon further
argues it has no duty to defend or indemnify the Zion Defendants under the E&O
Section because the claims are excluded by the “contracts” and “profit, advantage or
remuneration” exclusions. In Count III of the Federal Court Complaint, OneBeacon
denies it has any duty to defend the City of Zion against GBC’s counterclaim under
the CGL Section because it does not allege a personal and advertising injury and is
excluded by the “breach of contract” and “contractual liability” exclusions in
Coverage B.
On September 9, 2014, this Court denied the Zion Defendants’ motion to
dismiss, or in the alternative, for a more definite statement. On January 29, 2015,
OneBeacon filed the instant motion for summary judgment on Counts I and III of the
Federal Court Complaint for declaratory judgment.

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LEGAL STANDARD
Summary judgment is appropriate when the pleadings, discovery, disclosures,
and affidavits establish that there is no genuine issue of material fact, such that the
movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). The movant
bears the initial burden of showing that no genuine issue of material fact exists.
Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). The burden then shifts to the nonmoving party to show through specific evidence that a triable issue of fact remains on
issues on which the movant bears the burden of proof at trial. Id. at 325. The nonmovant may not rest upon mere allegations in the pleadings or upon conclusory
statements in affidavits; it must go beyond the pleadings and support its contentions
with documentary evidence. Id. A genuine issue of material fact exists when, based
on the evidence, a reasonable jury could find in favor of the non-movant. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In determining whether summary
judgment is appropriate, “[t]he evidence of the non-movant is to be believed, and all
justifiable inferences are to be drawn in his favor.” Id. at 255.
DISCUSSION
OneBeacon argues that it has no duty to defend the Zion Defendants in the
underlying state court case because coverage has not been triggered and various
exclusions apply. The Zion Defendants argue that coverage has in fact been triggered
under both the “Personal and Advertising Injury Liability” portion of the CGL Section

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and the E&O Section. The Zion Defendants also contend that the exclusions do not
permit OneBeacon to avoid its duty to defend.
I. Applicable Case Law
A. Duty to Defend
The parties agree that Illinois law controls the construction and application of
the Policy’s terms. The burden is on the insured to prove that a claim falls within the
coverage of the Policy. Axiom Ins. Managers, LLC v. Capitol Specialty Ins. Corp.,
876 F.Supp.2d 1005, 1008 (N.D. Ill. 2012) (citing cases). The insurer has the burden
of proving that an exclusion applies, while the insured has the burden of proving that
an exception to an exclusion restores coverage. Santa’s Best Craft, LLC v. St. Paul
Fire & Marine Ins. Co., 611 F.3d 339, 347 (7th Cir. 2010).
It is well-settled that to decide whether an insurer has a duty to defend an action
against the insured, a reviewing court must compare the allegations of the Underlying
Complaint to the relevant portions of the Policy. Outbound Marine Corp v. Liberty
Mutual Ins. Co., 154 Ill. 2d 90, 108 (1992). However, “[f]ocusing on the complaint is
necessary because the insurer must determine whether it has an obligation to defend at
the outset of the litigation.” Travelers Ins. Companies v. Penda Corp., 974 F.2d 823,
827 (7th Cir. 1992).2 If the Underlying Complaint alleges facts that fall “within or

2

Since the duty to defend is initiated at the outset of litigation, whether or not the breach of
contract claim against the City of Zion was later dismissed by the state court is irrelevant. See
Atlantic Mut. Ins. Co. v. American Academy of Orthopaedic Surgeons & Scoliosis Research
Society, 315 Ill. App. 3d 552, 567 (2000) (“where summary judgment is sought in the context of
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potentially within” the coverage of the Policy, the insurer is obligated to defend its
insured even if the allegations are “groundless, false, or fraudulent.” United States
Fidelity & Guaranty Co. v. Wilkin Insulation Co., 144 Ill. 3d 64, 73 (1991) (emphasis
in original).

The Underlying Complaint need only set forth sufficient facts to

establish a policy-covered offense. Country Mut. Ins. Co. v. Ticketsnow.com, No. 106-1135, 2007 WL 7595190, at *6 (Ill. App. Ct. June 29, 2007). Also, the duty to
defend arises “even if only one such theory is within the potential coverage of the
policy.” Wilkin Insulation Co., 144 Ill. 2d at 73. An insurer may not justifiably refuse
to defend an action against the 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.” Wilkin Insulation Co., 144 Ill. 2d
at 73 (emphasis in original).
In determining if the allegations in the Underlying Complaint meet the
threshold requirement, both the Underlying Complaint and the Policy must be
liberally construed in favor of the Zion Defendants. Wilkin Insulation Co., 144 Ill. 2d
at 73. Where the words in the policy are clear and unambiguous, “a court must afford
them their plain, ordinary, and popular meaning.” Outboard Marine Corp, 154 Ill.
2d at 108 (emphasis in original); see also Lexmark Int’l Inc. v. Transp. Ins. Co., 327
Ill. App. 3d 128, 135-36 (2001) (“We give little weight to the legal label that
characterizes the underlying allegations. Instead, we determine whether the alleged
a declaratory judgment action to determine whether an insured has a duty to defend, the use of
extrinsic evidence is inappropriate”).
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conduct arguably falls within at least one of the categories of wrongdoing listed in the
policy.”).

If a provision is subject to more than one meaning, it is considered

ambiguous, and all ambiguities and doubts must be resolved in favor of the insured.
Wilkin Insulation Co., 144 Ill. 2d at 74.
B. Exclusionary Provisions
“Once the insured has demonstrated coverage, the burden then shifts to the
insurer to prove that a limitation or exclusion applies.” Addison Ins. Co. v. Fay, 232
Ill. 2d 446, 453-54 (2009); see also Johnson Press of America, Inc. v. N. Ins. Co. of
New York, 339 Ill. App. 3d 864, 871-72 (2003) (burden rests with insurer to
demonstrate applicability of exclusion; courts will liberally construe any doubt as to
coverage in favor of insured and against insurance company, especially when insurer
seeks to avoid coverage based on an alleged exclusion). “Exclusion provisions that
limit or exclude coverage must be construed liberally in favor of the insured and
against the insurer.” Pekin Ins. Co. v. Miller, 367 Ill. App. 3d 263, 267 (2006).
Where the insurer relies on a provision that it contends excludes coverage to reject a
tender of defense, we review the applicability of the provision to ensure it is “ ‘clear
and free from doubt’ that the policy’s exclusion prevents coverage.” Atlantic Mut.
Ins. Co., 315 Ill. App. 3d at 560.

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II. Coverage Under the Policy for GSSE’s Underlying Complaint
A. E&O Section
In the Policy, there are two coverage sections that could possibly trigger
coverage. The Court begins with the E&O Section, which covers “Liability for
Wrongful Acts.” The E&O Section provides that OneBeacon “will pay those sums
that the insured becomes legally obligated to pay as ‘damages’ resulting from a
‘wrongful act’ to which this insurance applies.” The Policy also defines an “insured”
to include the City of Zion and its employees for acts “within the course and scope of
their employment.” Additionally, OneBeacon:
will have the right and duty to defend the insured against any ‘suit’ seeking
those “damages”. However, we will have no duty to defend the insured against
any “suit” seeking “damages” for a “wrongful act” to which this insurance does
not apply.
OneBeacon concedes that the Underlying Complaint alleges wrongful acts on the part
of the insureds, so coverage is uncontested, but insists that two exclusions preclude its
duty to defend. It is OneBeacon’s burden to prove the exclusions apply. First,
OneBeacon argues that it does not have a duty to defend because the contracts
exclusion applies to both the City of Zion and the Individual Defendants. Second,
OneBeacon proclaims that the profit, advantage or remuneration exclusion also
pertains to coverage of both the City of Zion and the Individual Defendants. The
foregoing Policy language allows us to look at whether the Contracts Exclusion
applies separately to the City of Zion and the Individual Defendants. See Williams v.

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Am. Country Ins. Co., 359 Ill. App. 3d 128, 139-40 (2005) (where the court found that
the policy language “allows coverage to be excluded as to one insured and remain in
effect as to the other insured” under the doctrine of respondeat superior).
1. Contracts Exclusion
We will begin with Exclusion 4 (the “Contracts Exclusion”). As a reminder,
the Contracts Exclusion states:
4. Contracts
Any “claim” arising directly or indirectly out of, or in any way related to
liability assumed under any contract or agreement of breach of contract to
which the insured is a party or a third-party beneficiary, or any representations
made in anticipation of such contract or agreement of any “claim” against any
insured arising directly or indirectly out of, or in any way related to tortious
interference with a contract or business relations. However this exclusion does
not apply to liability the insured would have in the absence of the contract or
agreement. (Emphasis added).
Regarding the applicability of the Contracts Exclusion to the City of Zion,
OneBeacon contends that it had no duty to defend because Count V of the Underlying
Complaint is a breach of contract claim against the City of Zion, which the Policy
undoubtedly excludes. Out of all the relevant counts in the Underlying Complaint,
Count V is the only one that is alleged solely against the City of Zion, claiming that
the City of Zion “has engaged in a material breach of the Olson Contract by its failure
to engage in reasonable measures to build the Stadium, and effectively abandoning the
construction of the Stadium.”

In response to OneBeacon’s contention that the

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Contracts Exclusion applies, the Zion Defendants focus on the inapplicability of this
exclusion to the Individual Defendants and not the City of Zion.
After review of Count V in the Underlying Complaint, and construing the
Contracts Exclusion liberally in favor of the City of Zion and against OneBeacon, it is
clear and free from doubt that the breach of contract claim in the Underlying
Complaint would necessarily fall within the Contracts Exclusion so as to preclude
coverage of the City of Zion. Santa’s Best Craft, LLC, 611 F.3d at 348. The alleged
wrongful acts of the City of Zion described in the Underlying Complaint, would not
exist but for the breach of contract. See Axiom Ins. Managers, LLC, 876 F. Supp. 2d
at 1016 (“Illinois case law supports that ‘arising out of’ is ambiguous and, when used
in an exclusion, should be construed as requiring but for causation since that favors
the insured.”). OneBeacon was correct in its assessment that it did not have the duty
to defend the City of Zion under the E&O Section based on the Contracts Exclusion.
As for the Individual Defendants, the applicability of the Contracts Exclusion is
less straightforward. There is not a count for breach of contract in the Underlying
Complaint against the Individual Defendants. However, in Count III, for fraud, and
Count XI, for civil conspiracy, the “Olson Contract” is mentioned in the general
allegations portion and briefly as an “overt act” in Count XI. OneBeacon insists that
the Court read the complaint as a whole and find that the allegations against the
Individual Defendants are enough to negate its duty to defend.

Contrarily, the

Individual Defendants focus on the last sentence in the Contracts Exclusion: “[ ] this
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exclusion does not apply to liability the insured would have in the absence of the
contract or agreement.” This exception to the exclusion did not pertain to the City of
Zion because the only claim in the Underlying Complaint against it was for breach of
contract. The Individual Defendants maintain that if the allegations about the Olson
Contract were removed from Counts III and XI in the Underlying Complaint that
coverage would still exist for wrongful acts unrelated to any contract.
As noted above, the Underlying Complaint alleges numerous other wrongful
acts of the Individual Defendants, including, but not limited to, disparaging
publications about GSSE to the public, the failed bond issue for construction of the
Stadium, and the choice to switch the stadium site, none of which relies on a provision
in the Olson Contract. The Court cannot conclusively determine that such alleged
wrongful acts would not have arisen but for a breach of contract. Accordingly, there
remains sufficient uncertainty as to the applicability of the Contracts Exclusion to the
Individual Defendants, and we therefore, cannot decisively apply the Contracts
Exclusion to the claims against them. Since the Contracts Exclusion only exempts
OneBeacon from defending the City of Zion, we must now look at whether another
exclusion prevents OneBeacon’s duty to defend the Individual Defendants.
2. Profit, Advantage or Remuneration Exclusion
According to OneBeacon, the second applicable exclusion of its coverage over
the Individual Defendants is the Profit, Advantage or Remuneration Exclusion (the
“Profit Exclusion”) because the Underlying Complaint is “saturated with the illegal
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financial motivations of the Individual Defendants.” The issue is whether coverage of
the Individual Defendants is excluded because the Underlying Complaint incorporated
allegations of profit, advantage or remuneration into Counts III and XI, where such
allegations are necessary to maintain those counts. The Profit Exclusion states:
19. Profit, Advantage or Remuneration
Any “claim” arising directly or indirectly out of, or in any way related to any
insured gaining any profit, advantage or remuneration to which that insured is
not legally entitled.
A “claim” is defined as an oral or written demand, including a “suit” for payment of
money “damages,” whereas a “suit” is defined as a civil proceeding alleging
“damages” to which this insurance applies.
OneBeacon supports its assertion that allegations in the Underlying Complaint
fall under the Profit Exclusion because GSSE claims Harrison illegally accepted
bribes that were given to obtain his cooperation, participation, and use of municipal
powers in fraud and conspiracy.

Likewise, GSSE alleges that Rogers illegally

accepted bribes to reward her for, and to obtain her participation in, the fraud and
conspiracy. OneBeacon contends that the Profit Exclusion was triggered because
these alleged bribes were done to enrich the Individual Defendants and create an
opportunity for them to enjoy further bribery.
As observed in McCook Metals, L.L.C. v. Federal Ins. Co., 2007 WL 1687262
(N.D. Ill. 2007), we find Alstrin v. St. Paul Ins. Co., 179 F. Supp.2d 376 (D. Del.
2002) to be persuasive in deciding if the Profit Exclusion applies. In Alstrin, the court
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found “[t]he proper inquiry, therefore, must focus not only on the factual allegations,
but on the elements of the causes of action that are alleged. If an element of the cause
of action that must be proved requires that the insured gained a profit or advantage to
which he was not legally entitled, then, if proved, this exclusion would be applicable.”
Alstrin, 179 F.Supp.2d at 400. In the instant matter, for the Count III fraud claim to
survive, the following elements must be pleaded: (i) a false statement of fact by the
defendant; (ii) made with the knowledge that the statement was false; (iii) the
defendant intended that the statement would induce the plaintiff to act; (iv) the
plaintiff justifiably relied upon the statement; and (v) the plaintiff suffered damages
arising from that reliance. Abazari v. Rosalind Franklin Univ. of Med. & Sci., 2015
IL App (2d) 140952, ¶ 14 (citing Connick v. Suzuki Motor Co., 174 Ill. 2d 482, 496
(1996)). As for Count XI, the elements of a civil conspiracy claim that a plaintiff
must establish are: (i) an agreement between two or more persons; (ii) for the purpose
of accomplishing by some concerted action either an unlawful purpose or a lawful
purpose by unlawful means; (iii) in the furtherance of which one of the conspirators
committed an overt tortious or unlawful act. Fritz v. Johnston, 807 N.E.2d 461, 470
(Ill. 2004), citing Adcock v. Brakegate, Ltd., 645 N.E.2d 888, 894 (Ill. 1994)).
After reviewing the elements of both causes of action, it is evident that GSSE
could still have pleaded fraud and civil conspiracy claims regardless of whether the
Individual Defendants gained a profit, advantage or remuneration in which they were
not legally entitled. Nowhere is profit, advantage or remuneration a requisite element
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of either cause of action. Like in McCook Metals, L.L.C., because the Underlying
Complaint claims do not require an allegation (or proof) that the Individual
Defendants personally profited from illegal conduct, the Profit Exclusion has not been
sufficiently triggered. Id. at *4. We do not find OneBeacon’s contention that at least
some of the allegations in the forty-two page Underlying Complaint fall in the Profit
Exclusion to be very convincing.

There must be more than sporadic general

allegations to convince us to apply this exclusion.

Liberally construing the

Underlying Complaint in the Individual Defendants’ favor, with all doubts also
resolved in their favor, the Court finds that the allegations fall outside the Profit
Exclusion.
3. Criminal Acts Exclusion
The language of this exclusion is as follows:
5. Criminal Acts
Any “claim” arising directly or indirectly out of, or in any way related to a
dishonest, malicious, fraudulent, or criminal act, or the willful violation of any
statute, ordinance or regulation committed by or with the knowledge of the
insured.
However, we will defend the insured for a “suit” subject to the other terms of
this coverage part until either a judgment or final adjudication established such
an act or the insured confirms such an act.
Notably, neither party spends much time arguing for or against the criminal
acts exclusion (the “Criminal Acts Exclusion”). OneBeacon merely claims that the
Criminal Acts Exclusion is “[b]asically” an “indemnification-only exclusion” and

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fails to meet its burden of proving this exclusion applies. Additionally, OneBeacon
does not offer a defense to the second paragraph of the Criminal Acts Exclusion,
which, in the absence of any other applicable exclusions under the E&O Section,
solidifies OneBeacon’s duty to defend the Individual Defendants in the state court
proceeding. Thus, because none of the exclusions asserted by OneBeacon applies,
OneBeacon has the duty to defend the Individual Defendants in the underlying state
court proceeding subject to the general E&O provisions.
B. CGL Section
We must next assess whether OneBeacon had a duty to defend the City of Zion
under the CGL Section. It is unnecessary to discuss the impact of the CGL Section on
the Individual Defendants because the duty to defend the Individual Defendants is
triggered under the E&O Section. Thus, under the CGL Section, the parties’ main
disagreement rests on whether the Underlying Complaint’s breach of contract and
claim alleged a “personal and advertising injury” covered under the Policy, and if so,
whether any of the exclusions apply.
The City of Zion argues that a personal and advertising injury arose based on a
publication (defined in the Policy as any method of announcing or disseminating any
material to any third party) because Rogers allegedly made repeated statements and
representations to GSSE and the general public, by way of the radio, that construction
of the Stadium was ready to begin and would begin shortly. Also, Harrison allegedly
represented to GSSE’s manager that the Stadium would be built for the 2011 season
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and supplied a quote for public distribution about the impending construction, but
then claimed publicly that GSSE still owed the City $60,000 in rent from the 2010
season, which contributed to the delay. OneBeacon disagrees, stating that under the
CGL Section, “[it] will have no duty to defend the insured against any ‘suit’ seeking
damages for ‘personal and advertising injury’ to which this insurance does not apply.”
OneBeacon proclaims that it has no duty to defend the City of Zion because there are
no facts pleaded in the Underlying Complaint to support a recovery based on any of
the causes of action within the definition of personal and advertising injury in the
Policy.
The Policy provides a list of offenses that constitute a personal and advertising
injury: (i) false arrest; (ii) malicious prosecution; (iii) wrongful eviction or entry; (iv)
publication of material that slanders or libels a person or organization or disparages a
person’s or organization’s goods, products or services; (v) publication of material that
violates a person’s right of privacy; (vi) the use of another’s advertising idea in an
advertisement; and (vii) infringing upon another’s copyright, trade dress or slogan in
an advertisement. The City of Zion argues that there are allegations throughout the
Underlying Complaint which clearly allege conduct that falls or could potentially fall
under the category of a personal and advertising injury—specifically, the “publication
of material that slanders or libels a person or organization or disparages a person’s or
organization’s goods, products or services” provision. OneBeacon contends that the

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only cause of action against the City of Zion is the breach of contract claim, which is
not considered a personal and advertising injury.
What OneBeacon must remember is that its duty to defend arises even if only
one theory is within the potential coverage of the policy or the allegations fall within
at least one of the categories of wrongdoing alleged. It is the Court’s duty to look past
the labels attached to the state court claims and focus on whether the factual
allegations as a whole trigger coverage, and if any exclusions apply. Understandably,
the duty to defend is not unlimited, Amerisure Mutual Ins. Co. v. Microplastics, Inc.,
622 F.3d 806, 810 (7th Cir. 2010), because the Court must look at the objective of
contract construction, which is to give effect to the intent of the parties. Gallagher v.
Lenart, 226 Ill. 2d 208, 232 (2007). But OneBeacon’s duty to defend “does not
depend upon a sufficient suggestion of liability raised in the [Underlying Complaint];
instead, [OneBeacon] has the duty to defend unless the allegations of the [U]nderlying
[C]omplaint demonstrate that [GSSE] in the underlying suit will not be able to prove
the [City of Zion] liable, under any theory supported by the complaint, without also
proving facts that show the loss falls outside the coverage of the insurance policy.”
See Am. Econ. Ins. Co. v. Holabird & Root, 382 Ill. App. 3d 1017, 1022 (2008)
(internal quotation marks omitted) (quoting Ill. Emcasco Ins. Co. v. Nw Nat’l Cas.
Co., 337 Ill. App. 3d 356, 361 (2003)); see also Int’l Ins. Co. v. Rollprint Packaging
Prods., Inc., 312 Ill. App. 3d 998, 1007 (2000) (“[T]he duty to defend does not require
that the complaint allege or use language affirmatively bringing the claims within the
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scope of the policy.”).

“The question of coverage should not hinge on the

draftsmanship skills of whims of the plaintiff in the underlying action.” 312 Ill. App.
3d at 1007. Accordingly, although the Court must assess if the Underlying Complaint
sets forth sufficient facts to the policy offenses of: (i) slander; (ii) libel; and (iii)
disparagement, the allegations in the Underlying Complaint do not need to satisfy all
three offenses or each element of a cause of action to establish a policy offense, and
thus the duty to defend.
However, “a consequence is not a claim.” See Nat’l Union Fire Ins. Co. of
Pittsburgh, Pa. v. Mead Johnson & Co., LLC, 735 F.3d 539, 544-45 (7th Cir. 2013)
(“Mead is trying to shoehorn one tort—product disparagement, which the insurance
policy covers—into another—fraud, which isn’t covered.”). As in Mead Johnson, the
City of Zion is trying “to shoehorn” slander, libel and disparagement, which the
Policy covers—into breach of contract, which the Policy does not cover. In any
event, regardless of whether the Underlying Complaint sufficiently alleges a claim for
slander, libel, or disparagement, the breach of contract exclusion would nevertheless
preclude OneBeacon’s duty to defend the City of Zion under the CGL Section. The
breach of contract exclusion in the CGL Section states that coverage is excluded for a:
b. Breach Of Contract
“Personal and advertising injury” arising directly or indirectly out of, or in any
way related to breach of contract, except an implied contract to use another’s
advertising idea in your “advertisement”, or any “claim” against any insured
arising directly or indirectly out of, or in any way related to tortious
interference with a contract or business relations.
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Both the “arising directly and indirectly out of, or in any way related to breach of
contract” and “or any ‘claim’ against any insured arising directly or indirectly out of,
or in any way related to tortious interference with a contract or business relations”
sections apply as exclusions to the instant matter. We note that the Policy’s language
of “arising directly” and “in any way related to” is quite broad, and that the “core
factual allegations” against the City of Zion plainly involve a breach of contract.
Lemko Corp. v. Fed. Ins. Co., No. 12 C 03283, 2014 WL 4924403, at *10 (N.D. Ill.
Sept. 30, 2014) (finding an exclusion for all claims “based upon, arising from, or in
consequence of any actual or alleged infringement” to be “quite broad” and finding
that because the “core factual allegations” involved excluded conduct there was no
duty to defend the noninfringement claims because “they would not have arisen but
for” the infringement claim).

Putting labels of the claims in the Underlying

Complaint aside, it is evident that the claim against the City of Zion, itself, primarily
involves a breach of the Olson Contract.

We can only read the Underlying

Complaint’s allegations as expressly relying on the provisions of the Olson Contract
and necessarily arising from a breach of contract claim. See Axiom Ins. Managers,
876 F. Supp. 2d at 1016-17. Thus, there is no need to decide whether the Underlying
Complaint alleged a “personal and advertising injury” within the meaning of the
Policy because the breach of contract exclusion in the CGL section relieves
OneBeacon of any duty to defend the City of Zion3. Santa’s Best Craft, LLC, 611
3

The Zion Defendants do not assert the exception to the exclusion involving implied contracts.
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F.3d at 348; see also Nautilus Ins. Co. v. 1452-4 N. Milwaukee Ave., LLC, 562 F.3d
818, 821-23 (7th Cir. 2009) (where contractor-subcontractor policy exclusion covered
all “intertwined claims” that provide “an alternative theory of relief” based on the
same factual allegations).
Besides the allegations in the underlying breach of contract claim against the
City of Zion, we must also assess whether the remaining allegations and claims in the
Underlying Complaint incorporate the City of Zion enough to trigger OneBeacon’s
duty to defend. After review, the Court concludes that the remaining allegations in
the Underlying Complaint would not, by themselves, trigger OneBeacon’s duty to
defend the City of Zion because, as to the City of Zion, they explicitly rely on the
breach of the Olson Contract, which we found was subject to the breach of contract
exclusion in the CGL Section. Our decision “does not run afoul of the teachings that
an insurer cannot avoid its duties of defense and indemnification by reference to the
core or dominant character of the plaintiff's allegations, and that the insurer must
defend if any conduct alleged in the complaint falls within the insurance policy, even
if those allegations are only a “subordinate aspect” of the complaint. Lemko Corp,
2014 WL 4924403, at *6 (citing Curtis-Universal, Inc. v. Sheboygan Emergency
Medical Services, Inc., 43 F.3d 1119, 1122 (7th Cir. 1994)). As to the City of Zion,
the remaining allegations in the Underlying Complaint are not a “subordinate aspect”
as they are dependent on the breach of the Olson Contract. See Citizens Ins. Co. of
Am. v. Uncommon, LLC, 812 F.Supp.2d 905, 910 (N.D. Ill. 2011) (holding that IP
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exclusion cannot be avoided “by the mere fact that unfair competition, deceptive trade
practices, tortious interference, and unjust enrichment claims, as a general matter, can
and usually do arise from conduct having nothing to do with trademark
infringement”). Thus, OneBeacon has met its burden of establishing that the claims
against the City of Zion in the Underlying Complaint, including its general
allegations, “[arose] directly or indirectly out of, or in any way related to breach of
contract . . .” as outlined in the Policy. See Citizens Ins. Co. of America, 812 F. Supp.
2d at 9112. It is clear that the breach of contracts exclusion in the CGL Section
applies to all the allegations in the Underlying Complaint that involve the City of
Zion, eliminating OneBeacon’s duty to defend the City.4 Because OneBeacon had no
duty to defend the City of Zion, it also has no duty to indemnify. See Natl. Cas. Co. v.
McFatridge, 604 F.3d 335, 338 (7th Cir. 2010) (“If an insurer has no duty to defend, it
has no duty to indemnify.”).

Accordingly, OneBeacon’s motion for summary

judgment is granted in favor of OneBeacon on Count I as to the City of Zion and
otherwise denied.
III. Coverage Under the Policy for GBC’s Counterclaim
In Count III of the Federal Court Complaint, OneBeacon denies it has any duty
to defend the City of Zion against GBC’s counterclaim under the CGL Section on the
basis that it does not allege a personal and advertising injury and is excluded by the
“breach of contract” and “contractual liability” exclusions in Coverage B. It denies it
4

There is no reason to discuss the remaining exclusions under the CGL Section.
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has any duty to defend the City against GBC’s counterclaim under the E&O Section
on the basis that the counterclaim is excluded under the “contractual liability”
exclusion.

In the City of Zion’s response to the instant motion for summary

judgment, it failed to challenge OneBeacon’s motion regarding Count III and explain
why the Court should not grant summary judgment in OneBeacon’s favor on that
count.
GBC’s counterclaim alleges that it entered into a ground lease with the City of
Zion, which provided that the City “shall use its best efforts to cause a baseball
stadium, parking lots and retail space to be constructed,” but the City failed to plan or
commence building of the Stadium and has no intention of performing its obligation.
As a result, GBC alleges that the City of Zion anticipatorily breached the ground lease
by not building the Stadium as the lease required and asks for indemnification by the
City of Zion for the claims made against GBC by GSSE, pursuant to an
indemnification clause in the ground lease. The clause specifically provides that
“[t]enant hereby agrees to defend, indemnify and hold Landlord harmless from and
against all loss, cost damage and expense (including reasonable fees and costs of
counsel selected by Landlord) arising from a breach of this Lease by Tenant.” The
counterclaim also states that in the event that GSSE recovers any damages from GBC
as a result of the City’s failure to build the Stadium, GBC is entitled to recover from
the City the full amount of any such damages, plus attorneys’ fees and costs of
defending the lawsuit.
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After reading GBC’s counterclaim with the Policy, it is clear and free from
doubt that the counterclaim falls within the scope of the same applicable contractual
exclusions that dismissed OneBeacon’s duty to defend the City of Zion in the
Underlying Lawsuit.

GBC’s breach of contract by anticipatory repudiation

counterclaim against the City arises directly out of the City’s alleged breach of the
Olson Contract, and but for this alleged breach, the counterclaim would not exist.
Consequently, OneBeacon does not have a duty to defend, or indemnify, the City of
Zion against GBC’s counterclaim based on the applicable contractual exclusions in
the CGL and E&O Sections. We, therefore, grant summary judgment as to Count III
of the Federal Court Complaint.
CONCLUSION
For the aforementioned reasons, OneBeacon’s motion for summary judgment is
granted on Count I as to the City of Zion, granted on Count III in its entirety, and
otherwise denied. Count II remains. The Court declares that OneBeacon has a duty
to defend the Individual Defendants in the underlying state court lawsuit, but does not
have a duty to defend, or indemnify, the City of Zion in that matter.

____________________________________
Charles P. Kocoras
United States District Judge
Dated: 7/29/2015

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