Citizens Ins. Co. of Am. v. Thermoflex Waukegan, LLC

Citizens Ins. Co. of Am. v. Thermoflex Waukegan, LLC

Opinion

MEMORANDUM OPINION AND ORDER

Citizens Insurance Company of America and Hanover Insurance Company (the "Insurers") sold Thermoflex insurance policies (the "Policies") that, among other things, obligate the Insurers to defend and indemnify Thermoflex in suits arising out of privacy violations. When Gregory Gates—an employee of Thermoflex—brought a purported class action against Thermoflex in state court under the [*2]  Illinois Biometric Information and Privacy Act (BIPA)—a law that protects against privacy violations—Thermoflex sought coverage under the Policies. After denying Thermoflex's request, the Insurers brought this suit, asking the Court to declare that they owe no duties to defend or indemnify Thermoflex in the Gates Lawsuit. (Dkt. 18.) Thermoflex brought counterclaims, seeking declarations as to the Insurers' duties to defend it and bringing breach-of-contract claims against each insurer for their failures to meet their obligations under the Policies. (Dkt. 19.) The parties filed separate motions for judgment on the pleadings as to all counts except Thermoflex's breach-of-contract claims. (Dkts. 23, 29.)

For the reasons that follow, Thermoflex's motion is granted, and the Insurers' motion is denied as to their duties to defend Thermoflex in the Gates Lawsuit. Under Illinois law (which governs the Court's interpretation of the Policies), any ambiguity in the Policies is resolved in favor of the insured; all that Thermoflex needs to establish the Insurers' duties to defend is to show that the Gates Lawsuit is "potentially or arguably" within the scope of coverage. Because the Policies "arguably" cover the BIPA claims in the Gates Lawsuit, [*3]  and because none of the exceptions in the Policies unambiguously precludes coverage, the Insurers are obligated to defend Thermoflex. Judgment on the pleadings is granted as to Counts I and II of Thermoflex's amended counterclaims.

Separately, the Insurers' claims that they owe no duties to indemnify Thermoflex are not ripe because there has not been any determination of liability in the Gates Lawsuit. Accordingly, those claims are dismissed without prejudice.

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