{ "id": 3627664, "name": "AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Plaintiff-Appellee, v. CONNIE ROTH, Indiv. and d/b/a Roth and Roth Insurance Agency, Inc., et al., Defendants-Appellants", "name_abbreviation": "American Family Mutual Insurance v. Roth", "decision_date": "2008-03-31", "docket_number": "No. 1\u201407\u20140526", "first_page": "760", "last_page": "768", "citations": [ { "type": "official", "cite": "381 Ill. App. 3d 760" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "105 Ill. App. 3d 1048", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 5471733 ], "weight": 6, "year": 1982, "pin_cites": [ { "page": "1050" }, { "page": "1049" }, { "page": "1049" }, { "page": "1050" }, { "page": "1050" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/105/1048-01" ] }, { "cite": "223 Ill. 2d 352", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 3604683 ], "year": 2006, "pin_cites": [ { "page": "362" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/223/0352-01" ] }, { "cite": "144 Ill. 2d 64", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 5592135 ], "year": 1991, "pin_cites": [ { "page": "73" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/144/0064-01" ] }, { "cite": "327 Ill. App. 3d 128", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 79391 ], "weight": 4, "year": 2001, "pin_cites": [ { "page": "135" }, { "page": "135" }, { "page": "135-36" }, { "page": "135-36" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/327/0128-01" ] }, { "cite": "129 Ill. App. 3d 1089", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 3490015 ], "year": 1984, "pin_cites": [ { "page": "1096" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/129/1089-01" ] }, { "cite": "154 Ill. 2d 90", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 4820940 ], "weight": 4, "year": 1992, "pin_cites": [ { "page": "125" }, { "page": "125" }, { "page": "125" }, { "page": "108" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/154/0090-01" ] }, { "cite": "315 Ill. App. 3d 552", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 980702 ], "weight": 4, "year": 2000, "pin_cites": [ { "page": "559" }, { "page": "559" }, { "page": "559" }, { "page": "559" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/315/0552-01" ] }, { "cite": "15 U.S.C. \u00a76801", "category": "laws:leg_statute", "reporter": "U.S.C.", "weight": 2, "year": 2000, "opinion_index": 0 }, { "cite": "Wis. Stat. Ann. \u00a7134.90", "category": "laws:leg_statute", "reporter": "Wis. Stat. Ann.", "weight": 2, "year": 2001, "pin_cites": [ { "page": "(l)(c)" }, { "page": "(2)(b)" } ], "opinion_index": 0 }, { "cite": "05 C 3839", "category": "reporters:state", "reporter": "Cow.", "opinion_index": 0 } ], "analysis": { "cardinality": 775, "char_count": 18918, "ocr_confidence": 0.837, "pagerank": { "raw": 5.6788868066490165e-08, "percentile": 0.3574706479026383 }, "sha256": "c9280f2dea08d8b81c0d25c06f671b42778b0fc4f42070a744ce5c30851305eb", "simhash": "1:a8f7f5c20121b4f6", "word_count": 2937 }, "last_updated": "2023-07-14T18:23:38.608554+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Plaintiff-Appellee, v. CONNIE ROTH, Indiv. and d/b/a Roth and Roth Insurance Agency, Inc., et al., Defendants-Appellants." ], "opinions": [ { "text": "JUSTICE SOUTH\ndelivered the opinion of the court:\nThis appeal arises from an order of the circuit court of Cook County that granted plaintiffs motion for summary judgment, holding that plaintiff, American Family Mutual Insurance Company (American Family), did not have a duty to defend defendants pursuant to the terms and conditions of the businessowners package policy it issued to defendants. American Family instituted this declaratory judgment action against defendants seeking a determination of its duty to defend the insureds in an underlying federal court action (American Family Mutual Insurance Co. v. Roth, No. 05 C 3839) (hereinafter referred to as the underlying action). The basis of the underlying action was alleged misappropriation of trade secrets.\nAmerican Family is a Wisconsin-based insurer that underwrites a broad base of commercial and personal lines of insurance products. Defendants Bonnie Roth and Connie Roth are the owners of an Aurora, Illinois, insurance agency known as Roth & Roth Insurance. Both Bonnie and Connie worked as exclusive agents of American Family pursuant to the terms of written agency agreements. Connie became an agent in July 1997, and Bonnie became an agent in December 2002.\nThe agent agreements provided in part that the policies, endorsements, policy records, manuals, materials and supplies furnished by American Family to defendants remained American Family\u2019s property and had to be returned within 10 days of the termination of the agency agreements. This included all copies that were in defendants\u2019 possession and control. The agreements also contained nonsolicitation clauses that prohibited defendants from soliciting American Family policyholders credited to their account or from inducing them to cancel or replace their American Family policies for one year following the termination of the agent agreements. The agreements also contained a choice of law provision, which provided they would be governed by Wisconsin law.\nAdditionally, the agent agreements contained a database agreement endorsement that defendants also signed. The database agreements governed defendants\u2019 access to American Family\u2019s proprietary computer system, software, and database, as well as the return of hard files upon termination of the agency relationship. The database also included customer lists and confidential customer information.\nThe Wisconsin Uniform Trade Secrets Act (Wis. Stat. Ann. \u00a7134.90(l)(c) (West 2001)) defines a trade secret as:\n\u201c[Information, including a formula, pattern, compilation, program, device, method, technique or process to which all of the following apply:\n1. The information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use.\n2. The information is the subject of efforts to maintain its secrecy that are reasonable under the circumstances.\u201d\nIt further provides:\n\u201c(2) Misappropriation. No person, including the state, may misappropriate or threaten to misappropriate a trade secret by doing any of the following:\n(b) Disclosing or using without express or implied consent a trade secret of another if the person did any of the following:\n(2) at the time of disclosure or use, knew or had reason to know that he or she obtained knowledge of the trade secret through any of the following means:\n(b) acquiring it under circumstances giving rise to a duty to maintain its secrecy or limit its use.\u201d Wis. Stat. Ann. \u00a7134.90(2)(b) (West 2001).\nThe American Family Web site states that the company can only obtain information from the customers that are to be used in the company\u2019s business; the names and addresses of the customers cannot he shared without their written consent; and the sharing of customer lists with another insurer or agency violates the Gramm-Leach-Bliley Act (GLB) (15 U.S.C. \u00a76801 (2000)). Defendants had access to and notice of the contents of the Web site throughout their agency with American Family.\nOn February 15, 2005, American Family terminated its agent agreements with Bonnie and Connie. At that time, American Family demanded the return of all of its property, including policyholder records. In a letter dated February 17, 2005, American Family reminded the Roths that privacy laws prohibited the disclosure of policyholder information to third parties outside of American Family without the policyholder\u2019s authorization. They further reminded them that they may not disclose policyholder information to other insurers or agencies with whom they may become associated.\nOn or about May 19, 2005, Connie prepared and signed a mailing that solicited at least one American Family customer to conduct business with Roth. The mailing was a letter that contained personal financial information obtained by Connie while she was an agent of American Family. On or about May 21, 2005, the customer contacted American Family to pursue a formal complaint regarding the disclosure of personal information. Following their agency termination, defendants solicited other American Family customers. American Family filed a formal complaint against defendants with the Illinois Division of Insurance. Defendants had not returned to American Family all of the copies of the customer files and information that were in their possession.\nAt the trial level, American Family moved for summary judgment to determine the parties\u2019 rights and obligations under the policy. Defendants filed a cross-motion for summary judgment on the issue of American Family\u2019s duty to defend them in the underlying action. The trial court granted American Family\u2019s motion for summary judgment and denied defendants\u2019 motion for judgment, finding that American Family did not owe a duty to defend in the underlying action.\nDefendants have raised the following issues on appeal: (1) whether the circuit court properly granted summary judgment, finding plaintiff did have a duty to defend the defendants pursuant to the terms and conditions of the businessowners package policy that it issued to defendants, and (2) whether the policy exclusions for breach of contract or trade secret infringement apply to the underlying cause of action.\nIn appeals from summary judgment rulings, we conduct a de novo review. Atlantic Mutual Insurance Co. v. American Academy of Orthopaedic Surgeons, 315 Ill. App. 3d 552, 559 (2000). \u201cThe reviewing court must construe all evidence strictly against the movant and liberally in favor of the nonmoving party.\u201d Atlantic Mutual, 315 Ill. App. 3d at 559. Where the pleadings, depositions and affidavits show there is no genuine issue of material fact, the moving party is entitled to judgment as a matter of law. 735 ILCS 5/2 \u2014 1005(c) (West 2006); Atlantic Mutual, 315 Ill. App. 3d at 559. \u201cIf reasonable persons could draw different inferences from undisputed facts, summary judgment should be denied.\u201d Atlantic Mutual, 315 Ill. App. 3d at 559.\nDefendants maintain that the trial court erred in granting summary judgment to American Family and make the following arguments:\n(1) the underlying complaint contains factual allegations of personal and advertising injury that bring the action within the policy\u2019s coverage;\n(2) American Family had a duty to defend because the underlying action seeks damages in addition to equitable relief;\n(3) count II of the underlying complaint contains allegations that clearly establish a duty to defend;\n(4) the factual allegations of the underlying complaint regarding tortious interference with contractual relationships and tortious interference with prospective business expectations unequivocally create a duty to defend;\n(5) American Family\u2019s duty to defend is established by factual allegations regarding policy provisions that define \u201cuse of another\u2019s advertising idea\u201d as a \u201cpersonal and advertising injury\u201d; and\n(6) American Family must defend defendants even if coverage only exists under a single, discrete cause of action notwithstanding any possible exclusions of other claims or legal theories.\nIn order to determine whether the insurer\u2019s duty to defend has arisen, the court must compare the allegations of the underlying complaint to the policy language. Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill. 2d 90, 125 (1992). \u201cThe allegations in the underlying complaint must be liberally construed in favor of the insured.\u201d Outboard Marine Corp., 154 Ill. 2d at 125. \u201cIf the court determines that these allegations fall within, or potentially within, the policy\u2019s coverage, the insurer has a duty to defend the insured against the underlying complaint.\u201d (Emphasis omitted.) Outboard Marine Corp., 154 Ill. 2d at 125. \u201c[T]he insurer can safely and justifiably refuse to defend only when the allegations clearly show on their face that the claim is beyond policy coverage, for the duty to defend is broader than the duty to [indemnify].\u201d Management Support Associates v. Union Indemnity Insurance Co. of New York, 129 Ill. App. 3d 1089, 1096 (1984). \u201c \u2018Moreover, if the underlying complaints allege several theories of recovery against the insured, the duty to defend arises even if only one such theory is within the potential coverage of the policy.\u2019 \u201d Lexmark International, Inc. v. Transportation Insurance Co., 327 Ill. App. 3d 128, 135 (2001), quoting United States Fidelity & Guaranty Co. v. Wilkin Insulation Co., 144 Ill. 2d 64, 73 (1991).\nIn the instant case, the underlying complaint has five counts: count I \u2014 permanent injunction and other relief for violation of the Wisconsin Trade Secrets Act; count II \u2014 violation of the Gramm-Leach-Bliley Act (15 U.S.C. \u00a76801 (2000)) and Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. \u00a71320D \u2014 6 (2000)); count III \u2014 breach of contract; count IV \u2014 tortious interference; and count V \u2014 tortious interference with prospective business expectations.\n\u201cA court\u2019s primary objective in construing the language of an insurance policy is to ascertain and give effect to the intentions of the parties as expressed by the language of the policy.\u201d Valley Forge Insurance Co. v. Swiderski Electronics, Inc., 223 Ill. 2d 352, 362 (2006). We give the policy\u2019s words their \u201c \u2018plain, ordinary, and popular meaning,\u2019 \u201d Lexmark, 327 Ill. App. 3d at 135, quoting Outboard Marine Corp., 154 Ill. 2d at 108. Little weight is given to the legal label that characterizes the allegations of the underlying complaint; rather, the determination focuses on whether the alleged conduct arguably falls within at least one of the categories of wrongdoing listed in the policy. Lexmark, 327 Ill. App. 3d at 135-36.\nThe American Family policies at issue were effective as of September 15, 2004, and February 22, 2005. The 2004 American Family policy covered both property and liability. Under the liability section, the policy stated as follows:\n\u201ca. We will pay those sums that the insured becomes legally obligated to pay as damages because of \u2018bodily injury,\u2019 \u2018property damage,\u2019 or \u2018personal and advertising injury\u2019 to which this insurance applies. We will have the right and duty to defend the insured against any \u2018suit\u2019 seeking those damages. However, we will have no duty to defend the insured against any \u2018suit\u2019 seeking damages for \u2018bodily injury,\u2019 \u2018property damage,\u2019 or \u2018personal and advertising injury,\u2019 to which this insurance does not apply.\u201d\nThe coverage section of the policy, under liabilities, further indicates that it applies:\n\u201c(2) To \u2018personal and advertising injury\u2019 caused by an offense arising out of your business, but only if the offense was committed in the \u2018coverage territory\u2019 during the policy period.\u201d\nThe exclusions portion of the policy, in terms of \u201cpersonal and advertising injury,\u201d states that it does not apply to the following: \u201cPersonal and advertising injury:\n(1) Caused by or at the direction of the insured with the knowledge that the act would violate the rights of another and would inflict \u2018personal and advertising injury\u2019;\n(2) Arising out of oral or written publication of material, if done by or at the direction of the insured with knowledge of its falsity;\n* * *\n(6) Arising out of a breach of contract, except an implied contract to use another\u2019s advertising idea in your \u2018advertisement\u2019;\n* * *\n(13) Arising out of the infringement of copyright, patent, trademark, trade secret or other intellectual property rights. However, this exclusion does not apply to infringement in your \u2018advertisement,\u2019 of copyright trade dress or slogan.\u201d\nThe policy defines \u201cpersonal and advertising injury\u201d as \u201cinjury\u201d including consequential \u201cbodily injury,\u201d arising out of one or more of the following offenses, in pertinent part:\n\u201ce. Oral or written publication, in any manner, of material that violates a person\u2019s right of privacy;\nf. The use of another\u2019s advertising idea in your \u2018advertisement\u2019; or\ng. Infringing upon another\u2019s copyright, trade dress or slogan in your \u2018advertisement.\u2019 \u201d\nThe 2005 American Family policy only changed the insured\u2019s mailing address and did not alter the terms of coverage.\nThe underlying complaint states two causes of action, i.e., breach of contract based upon alleged violations of the agent agreements and tortious interference arising from defendants\u2019 alleged misappropriation of information which was gleaned from American Family\u2019s customer database. \u201cThe complaint must be read as a whole in order to assess its true nature.\u201d United Fire & Casualty Co. v. Jim Maloof Realty, Inc., 105 Ill. App. 3d 1048, 1050 (1982).\nAlthough the policy indicates it applies to \u201cpersonal and advertising injury\u201d arising from oral or written publication, in any manner, of material that violates one\u2019s right of privacy, it also specifically excludes from coverage any personal and advertising injury that: (1) is caused by or at the discretion of the insured with the knowledge that the act would violate the rights of another and would inflict personal and advertising injury; (2) arises from breach of contract; and (3) arises out of the copyright, patent, trademark or trade secret infringement or other intellectual property rights. Defendants\u2019 alleged written solicitation of American Family\u2019s customers whose personal and confidential information was allegedly extrapolated from the American Family computer database was precisely the type of material that is generally covered under the policy as a \u201cpersonal and advertising injury.\u201d However, the policy exclusions specifically exclude any injury that is caused by the insured, knowing that the act would violate the rights of another and cause such injury, arose from breach of contract, or arose from trademark or trade secret infringement. Each of these three elements is present.\nFirst of all, defendants\u2019 alleged conduct concerning American Family\u2019s computer database was done knowingly because the agent agreements specifically required them to relinquish any American Family property within 10 days of termination of the agency relationship and barred them from soliciting any of their former customers for one year after termination of the agency relationship. These alleged actions of defendants constitute a breach of the agency agreements; and the alleged retention and subsequent use of confidential information that was gleaned from American Family\u2019s database and computer system amounts to trademark and trade secret infringement. As such, the allegations of the underlying action do not fall within, or potentially within, the policy\u2019s coverage. For that reason, American Family does not owe a duty to defend the defendants.\nThis result is consistent with this court\u2019s holding in United Fire & Casualty, 105 Ill. App. 3d 1048. In that case, plaintiffs issued a \u201cReal Estate Agents Errors and Omissions\u201d insurance policy to defendant, who was a real estate broker. The policy provided coverage for any claim against the insured caused by any negligent act or omission of the insured but did not apply to any \u201cdishonesty, intentional fraud, criminal or malicious act, libel or slander.\u201d United Fire & Casualty, 105 Ill. App. 3d at 1049. A lawsuit was filed against the defendant, alleging a breach of his fiduciary duty as a real estate broker whereby he allegedly induced plaintiffs to sell their home at a price grossly below its fair market value to an agent of the defendant, who in turn resold the property at a substantial profit. United Fire & Casualty, 105 Ill. App. 3d at 1049. The defendant tendered his demand to defend to United, which denied coverage and refused to undertake the defense. United then filed a declaratory judgment action seeking a declaration concerning coverage and its duty to defend under the policy.\nThe appellate court in United found the underlying complaint essentially stated one cause of action, that of intentional fraud, and that the complaint must be read as a whole in order to assess its true nature. The court further held that since the factual allegations of the complaint were premised upon only one theory of recovery, that of intentional fraud, and did not fall within the potential coverage of the insurance policy, United had no duty to defend its insured. United Fire & Casualty, 105 Ill. App. 3d at 1050.\nSimilarly, in the case at bar, because the allegations of the underlying action do not fall within or potentially within the policy\u2019s coverage, American Family does not owe a duty to defend defendants in the underlying action.\nNext, defendants contend the policy exclusions for breach of contract or trade secret infringement should not apply to a cause of action that does not sound in breach of contract or trade secret infringement. However, as stated above, the underlying complaint has to be read as a whole in order to assess its true nature, regardless of the label given to characterize its allegations. Lexmark, 327 Ill. App. 3d at 135-36; United Fire & Casualty, 105 Ill. App. 3d at 1050. The underlying complaint specifically alleges breach of contract in count III, seeks an injunction based upon alleged violations of the Wisconsin Trade Secrets Act in count I, and alleges tortious interference based upon defendants\u2019 alleged actions of trade secret infringement in counts IV and V Therefore, we find the underlying action is based upon a breach of contract and trade secret infringement.\nAccordingly, the judgment of the circuit court is affirmed.\nAffirmed.\nHOFFMAN, P.J., and HALL, J., concur.\nCount II was dismissed and is not part of this appeal.", "type": "majority", "author": "JUSTICE SOUTH" } ], "attorneys": [ "Wallace C. Doolittle, of Hayward, California, for appellants.", "Hinshaw & Culbertson, LLP, of Chicago (Joshua G. Vincent and Carol Proctor, of counsel), for appellee." ], "corrections": "", "head_matter": "AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Plaintiff-Appellee, v. CONNIE ROTH, Indiv. and d/b/a Roth and Roth Insurance Agency, Inc., et al., Defendants-Appellants.\nFirst District (2nd Division)\nNo. 1\u201407\u20140526\nOpinion filed March 31, 2008.\nWallace C. Doolittle, of Hayward, California, for appellants.\nHinshaw & Culbertson, LLP, of Chicago (Joshua G. Vincent and Carol Proctor, of counsel), for appellee." }, "file_name": "0760-01", "first_page_order": 776, "last_page_order": 784 }