GARY FEINERMAN, District Judge.
This insurance coverage dispute pits AU Electronics, Adnan Vadria, and Umair Yasin (collectively, "AU," unless context requires otherwise) against Harleysville Group and Harleysville Lake States Insurance Company (together, "Harleysville," unless context requires otherwise). In the underlying suits, Sprint and T-Mobile, the large wireless network providers, alleged
Well after the underlying suits commenced and before they settled, AU brought this case, which alleges that Harleysville breached its duty to defend and indemnify AU in those suits. Doc. 1. Harleysville answered and counterclaimed for a declaration that it owed no such duty. Docs. 9, 18. The parties have filed cross-motions for summary judgment. Docs. 93, 99. AU's motion is denied, and Harleysville's is granted.
When considering Harleysville's summary judgment motion, the facts are considered in the light most favorable to AU, and when considering AU's motion, the facts are considered in the light most favorable to Harleysville. See In re United Air Lines, Inc., 453 F.3d 463, 468 (7th Cir. 2006) ("With cross summary judgment motions, we construe all facts and inferences therefrom in favor of the party against whom the motion under consideration is made.") (internal quotation marks omitted). On summary judgment, the court must assume the truth of those facts, but does not vouch for them. See Smith v. Bray, 681 F.3d 888, 892 (7th Cir. 2012). That said, many of the following facts are undisputed; any contested facts will be noted.
Vadria founded AU Electronics, a consumer electronics store, in mid-2011; he is the company's president and co-owner. Doc. 105 at 3, ¶ 2; Doc. 128 at ¶¶ 1-2, 6. Yasin's father is the company's other co-owner. Doc. 128 at ¶¶ 3-4. Yasin says that he "assisted" his father with the business "to help him overcome cultural and language barriers," id. at ¶ 5; Sprint's complaint alleged that Yasin was "the sales and purchasing director of AU Electronics," Doc. 100-3 at ¶ 16.
In 2011, AU purchased a business insurance policy from Harleysville. Doc. 120 at ¶ 65; see Doc. 100-1 (copy of the policy). The policy obligates Harleysville to defend and indemnify AU for any "personal and advertising injury" suffered by a third party due to AU's conduct. Doc. 120 at ¶ 69; see Doc. 100-1 at 45-46 (Policy § II.A.1.b(2)). The policy provides liability coverage of up to $1 million per occurrence and $2 million in the aggregate. Doc. 120 at ¶ 69; see Doc. 100-1 at 5.
In late 2012, Sprint and T-Mobile each filed suit against AU Electronics, Vadria, and Yasin, Doc. 128 at ¶ 1, alleging that they engaged in a scheme to purchase cellphones in the United States, reprogram them so that the phones were no longer tethered to Sprint's or T-Mobile's networks, and then resell the phones overseas, usually stripped of all packaging and documentation. Doc. 120 at ¶¶ 13-18, 26-31; see Doc. 100-3 at 1-36 (Sprint complaint); Doc. 100-4 at 1-35 (T-Mobile complaint). The underlying complaints stated various statutory and common law claims, including under the Lanham Act, 15 U.S.C. § 1051 et seq. Doc. 120 at ¶¶ 19-21, 32-34; see Docs. 100-3, 100-4. Sprint alleged trademark infringement under § 32 of the Lanham Act, 15 U.S.C.
Doc. 100-3 at ¶ 165. T-Mobile alleged the same thing with respect to the T-Mobile marks. Doc. 100-4 at ¶ 93. AU denies that it engaged in that misconduct, but does not deny that Sprint and T-Mobile alleged that it did. Doc. 120 at ¶¶ 13-18, 26-31.
As noted, AU's insurance policy covers "personal and advertising injury," a term defined to include "[t]he use of another's advertising idea in your `advertisement.'" Doc. 120 at ¶ 70; see Doc. 100-1 at 59 (Policy § II.F.14.f). The policy excludes coverage for "personal and advertising injury. . . arising out of the infringement of. . . trademark, trade secret, or other intellectual property rights." Doc. 120 at ¶ 71; see Doc. 100-1 at 52 (Policy § II.B.1.p(12)). But the exclusion "does not apply to infringement, in your `advertisement', of copyright, trade dress or slogan." Doc. 120 at ¶ 71 (emphasis added); see Doc. 100-1 at 52 (Policy § II.B.1.p(12)). Thus, trademark claims are excluded from coverage, but trade dress claims are not.
Shortly after Sprint and T-Mobile filed their suits, AU and its counsel "reviewed the Policy to determine coverage" but "concluded that they needed more information to determine whether the Underlying Lawsuits were covered or excluded under the Policy." Doc. 105 at ¶ 11. On July 16, 2013, Sprint and T-Mobile produced in discovery lists of people with whom they claimed AU had conspired. The lists included everyone who—based on the carriers' review of AU's own invoices and purchase orders, which AU had earlier produced in discovery—had sold at least two new Sprint or T-Mobile phones to AU. Doc. 105 at ¶ 22; see Docs. 100-8, 100-9 (the lists).
AU says that after receiving those lists from Sprint and T-Mobile, it "determined that for the first time [it] had a reasonable basis for seeking coverage or indemnification" from Harleysville. Doc. 105 at ¶ 23 (emphasis added). AU sent a tender for defense and indemnity to Harleysville on July 31, 2013. Ibid. AU's letter stated that "it has recently become clear to us through discovery that [Sprint and T-Mobile] are not alleging trademark infringement,
Ibid. (emphases in original).
AU had not contacted Harleysville or told it about the Sprint and T-Mobile lawsuits prior to sending the July 31, 2013 letter. Doc. 105 at ¶ 23; Doc. 120 at ¶¶ 67-68. The policy states that "[i]f a claim is made or `suit' is brought against any insured, you must (1) Immediately record the specifics of the claim or `suit' and the date received; and (2) Notify us as soon as practicable. You must see to it that we receive written notice of the claim or `suit' as soon as practicable." Doc. 120 at ¶ 72; see Doc. 100-1 at 56 (Policy § II.E.2.b). The policy defines "suit" to include "a civil proceeding in which damages because of . . . `personal and advertising injury' to which this insurance applies are alleged." Doc. 100-1 at 60 (Policy § II.F.18).
On August 14, 2013, a Harleysville claims consultant told Vadria that "it does not appear our coverage will respond," meaning that the Sprint and T-Mobile lawsuits were likely excluded from coverage. Doc. 105 at ¶¶ 34-35; Doc. 131 at ¶ 13. AU immediately began negotiating a settlement with Sprint and T-Mobile, and it signed settlement agreements with both of them on August 16, 2013. Doc. 120 at ¶ 44; Doc. 131 at ¶ 17. AU filed this coverage case four days later, seeking both a declaration that Harleysville had a duty to defend and indemnify it in the underlying suits and also damages for breach of the policy. Doc. 1. Harleysville answered and asserted affirmative defenses, which among other things allege that: (1) AU's July 31, 2013 tender was untimely; (2) the carriers' suits did not allege a "personal and advertising injury" under the policy; and (3) even if the suits did allege an advertising injury, one or more of the policy exclusions apply. Doc. 9. Harleysville also counterclaimed for a declaration that, under the policy, it owed no duty to defend or indemnify AU in the underlying suits. Doc. 18. (Another AU insurer brought a separate action for a declaration that it, too, owed no duty to defend or indemnify AU in the Sprint and T-Mobile suits; that case has settled. See Order Dismissing All Claims and Counterclaims With Prejudice, Ohio Sec. Ins. Co. v. AU Elecs., Inc., No. 13 C 6626 (N.D. Ill. June 9, 2014), ECF No. 74.)
AU has moved for summary judgment on its claims, on three of Harleysville's four affirmative defenses, and on Harleysville's counterclaim. Doc. 99 at 1. Harleysville has moved for summary judgment on all claims and counterclaims, including on all of its affirmative defenses. Doc. 93.
Harleysville is entitled to judgment on two separate and independent grounds. First, it had no duty to defend or indemnify AU in the Sprint and T-Mobile suits. Second, even if Harleysville had such a duty, AU's tender to Harleysville was untimely.
Harleysville argues that the Sprint and T-Mobile complaints allege claims that either are not covered by the policy or that fall within an exclusion to coverage. AU counters that the suits allege either the "use of another's advertising idea in [their] advertisement" or, alternatively, a trade dress claim, both of which are covered. Both sides agree that under Illinois law, "[t]he factual allegations of the [underlying] complaint, rather than the legal theory under which the action is brought, determine whether there is a duty to defend." Amerisure Mut. Ins. Co. v. Microplastics, Inc., 622 F.3d 806, 815 (7th Cir. 2010) (quoting Pekin Ins. Co. v. Dial, 355 Ill.App.3d 516, 291 Ill.Dec. 400, 823 N.E.2d 986, 990 (2005)); see also Health Care Indus. Liab. Ins. Program v. Momence Meadows Nursing Ctr., Inc., 566 F.3d 689, 696 (7th Cir. 2009). Illinois courts "give little weight to the legal label that characterizes the underlying allegations. Instead, [they] determine whether the alleged conduct arguably falls within at least one of the categories of wrongdoing listed in the policy." Santa's Best Craft, LLC v. St. Paul Fire & Marine Ins. Co., 611 F.3d 339, 346 (7th Cir. 2010) (quotation marks omitted) (quoting Lexmark Int'l, Inc. v. Transp. Ins. Co., 327 Ill.App.3d 128, 260 Ill.Dec. 658, 761 N.E.2d 1214, 1221 (2001)).
As noted, the policy excludes coverage for advertising injury caused by trademark infringement but not by trade dress infringement. Doc. 120 at ¶ 71; see Doc. 100-1 at 52 (Policy § II.B.1.p(12)). "[T]rade dress infringement and trademark infringement are two different causes of action." Greenwich Ins. Co. v. RPS Prods., Inc., 379 Ill.App.3d 78, 318 Ill.Dec. 79, 882 N.E.2d 1202, 1212 (2008). "[A] product's trade dress is the overall image used to present it to its purchasers; it could thus include, to give a partial list, the product's size, shape, color, graphics, packaging, and label. A trademark on the other hand is thought of as something more specific, such as a logo." Schwinn Bicycle Co. v. Ross Bicycles, Inc., 870 F.2d 1176, 1182 (7th Cir. 1989) (internal quotation marks, brackets, and citations omitted).
The Sprint and T-Mobile complaints allege only trademark infringement, not trade dress infringement. Their allegations involve use of the Sprint or T-Mobile "Marks"—that is, their logos. Specifically, the complaints allege that AU's customers could become confused into believing that they were buying Sprint or T-Mobile cellphones when in fact, by reprogramming them, AU effectively turned them into different cellphones, yet ones still (misleadingly) marked with a Sprint or T-Mobile logo. Doc. 100-3 at ¶¶ 161-177; Doc. 100-4 at ¶¶ 90-99. Nothing in either complaint suggests that Sprint or T-Mobile were concerned that customers might become confused because of the size, shape, color, etc.—the "look and feel"—of the phones. Cf. Wal-Mart Stores, Inc. v. Samara Bros., 529 U.S. 205, 209, 120 S.Ct. 1339, 146 L.Ed.2d 182 (2000) ("`trade dress' [is] a category that originally included only the packaging, or `dressing,' of a product, but in recent years has been expanded . . . to encompass the design of a product"); Lexmark Int'l, 260 Ill.Dec. 658, 761 N.E.2d at 1224 ("The trade dress of a product is essentially `its
In urging the opposite result, AU cites Cincinnati Insurance Co. v. Eastern Atlantic Insurance Co., 260 F.3d 742 (7th Cir. 2001), which holds that "[w]hat is important is not the legal label that the plaintiff attaches to the defendant's (that is, the insured's) conduct, but whether that conduct as alleged in the complaint is at least arguably within one or more of the categories of wrongdoing that the policy covers." Id. at 745 (emphasis added); see also Outboard Marine Corp. v. Liberty Mut. Ins. Co., 154 Ill.2d 90, 180 Ill.Dec. 691, 607 N.E.2d 1204, 1220 (1992) ("If the court determines that these allegations fall within, or potentially within, the policy's coverage, the insurer has a duty to defend the insured against the underlying complaint."). Latching onto the words "arguably" and "potentially," AU says that as long as the Sprint and T-Mobile complaints did not foreclose the possibility of a trade dress claim, there was coverage under the policy. See Pekin Ins. Co. v. Hallmark Homes, L.L.C., 392 Ill.App.3d 589, 332 Ill.Dec. 64, 912 N.E.2d 250, 257-58 (2009) ("The insurer may refuse to defend only if the allegations of the underlying complaint preclude any possibility of coverage.") (internal quotation marks and alterations omitted). Specifically, AU contends that because the carriers brought claims under § 43(a) of the Lanham Act, and because § 43(a) "is the express statutory basis for a claim of `trade dress' infringement," the complaints do not preclude the possibility of a trade dress claim. Doc. 114 at 7-8.
AU's submission is a logical fallacy akin to concluding that because all poodles are dogs, all dogs must also be poodles. "[Section] 43(a) creates a federal cause of action for trademark and trade dress infringement claims," Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 780, 112 S.Ct. 2753, 120 L.Ed.2d 615 (1992) (emphasis added)—not just trade dress claims. So the fact that Sprint and T-Mobile sued under § 43(a) and could have brought trade dress claims against AU under that provision does not mean that they actually did so. To determine what Sprint and T-Mobile actually did, it is necessary to examine their complaints; as AU itself repeatedly stresses, legal labels do not matter—only the alleged conduct does. See Amerisure Mut. Ins. Co., 622 F.3d at 815; Cincinnati Ins. Co., 260 F.3d at 745.
The only alleged conduct that AU's brief opposing summary judgment cites to show that it was subject to a trade dress claim appears in ¶ 47 of T-Mobile's complaint (there is no corresponding paragraph in Sprint's complaint), which reads in full: "The activities discussed herein demonstrate that [AU] sell[s] virtually identical looking, directly competing products and services to the same purchasers through the same channels of trade utilizing the
In its reply brief supporting its own summary judgment motion, Doc. 130 at 10, AU also points to the Sprint complaint's allegation that:
Doc. 100-3 at ¶ 165 (emphasis added); see also Doc. 100-4 at ¶ 93 (same, in T-Mobile). Latching onto the "[p]hone package" snippet, AU argues that the paragraph alleges a trade dress claim. Read in context, however, "package" obviously refers to the collection of items that the carriers sell in a single box: namely, the "warranties, manuals, accessories, and related items" in addition to the phone itself. It does not mean the look and feel of cellphone's metal and plastic body. Cf. Apple Inc. v. Samsung Electronics Co., 735 F.3d 1352, 1358 (Fed.Cir. 2013) (describing trade dress allegations relating to the iPhone's "rectangular" body, including its "four evenly rounded corners; . . . flat clear surface covering the front of the product; . . . metallic bezel around the flat clear surface; . . . [and] substantial black borders above and below the display screen"). The allegation also makes clear that AU's "use of the Sprint Marks" on the resold phones was what confused customers—not that AU was selling imitation phones that, independent of the Marks, happened to look like Sprint (or T-Mobile) phones. AU's out-of-context reading of "package" therefore does not convert this straightforward trademark claim into one for trade dress.
AU further contends that if the question whether the policy covers the underlying suits is open to dispute, Harleysville had a duty to defend in those suits. In support, AU cites only General Agents Insurance Co. of America v. Midwest Sporting Goods Co. ("Gainsco"), 215 Ill.2d 146, 293 Ill.Dec. 594, 828 N.E.2d 1092 (2005), which stated: "Gainsco thus remained obligated to defend Midwest as long as any questions remained concerning whether the underlying claims were covered by the policies." Id., 293 Ill.Dec. 594, 828 N.E.2d at 1104. As an initial matter, Gainsco is inapposite because there is no question here that the Harleysville policy excluded coverage. In
Id., 293 Ill.Dec. 594, 828 N.E.2d at 1102 (emphasis and paragraph break added, quotation marks omitted).
Harleysville did exactly what Gainsco said was permissible: it denied AU a defense from the outset. Ibid.; see also Littlefield v. McGuffey, 979 F.2d 101, 105 (7th Cir. 1992) ("A liability insurer in Illinois may choose from three options when it is asked to defend an insured against claims that it believes might exceed the scope of coverage: (1) seek a declaratory judgment regarding its obligations before or pending trial of the underlying action; (2) defend the insured under a reservation of rights; or (3) refuse either to defend or to seek a declaratory judgment at the insurer's peril that it might later be found to have breached its duty to defend."). In fact, Gainsco's bottom line was that, having chosen to tender a defense, the insurer could not recoup the costs of that defense absent an explicit contractual clause allowing it to do so. 293 Ill.Dec. 594, 828 N.E.2d at 1104. But AU's policy has such a clause. Doc. 100-1 at 64 ("If we initially defend an insured or pay for an insured's defense but later determine that the claim(s) is (are) not covered under this insurance, we will have the right to reimbursement for the defense costs we have incurred."). So even under AU's (mistaken) reading of Gainsco, Harleysville would not have been obligated to bear the costs of AU's defense or liability in the underlying suits.
As a last gasp, AU argues that the Sprint and T-Mobile complaints alleged "[t]he use of another's advertising idea in your `advertisement,'" which is covered under the policy. Doc. 120 at ¶ 70; see Doc. 100-1 at 59 (Policy § II.F.14.f). According to AU:
Doc. 114 at 7. But that is a description of trademark infringement, not the use of another's advertising idea. "Misappropriation of an advertising idea occurs when the insured wrongfully takes a competitor's idea about the solicitation of business." Del Monte Fresh Produce N.A., Inc. v. Transp. Ins. Co., 500 F.3d 640, 646 (7th Cir. 2007). Nothing in the Sprint or T-Mobile complaints alleges that AU stole their ideas about how to solicit customers or business. Quite the contrary: they allege that AU's advertisements improperly induced customers to purchase subsidized phones and immediately resell them—something the carriers discourage, not encourage. Doc. 100-3 at ¶ 39; Doc. 100-4 at ¶ 42.
Because none of the conduct described in the underlying complaints, even generously read, could arguably form the basis for claims of trade dress infringement or
Even if the claims against AU in the underlying suits were covered by the policy, AU would still lose this coverage case because its July 31, 2013 tender to Harleysville was untimely. Untimely notice is an absolute bar to insurance liability in Illinois. See Country Mutual Ins. Co. v. Livorsi Marine, Inc., 222 Ill.2d 303, 305 Ill.Dec. 533, 856 N.E.2d 338, 346 (2006) ("once it is determined that the insurer did not receive reasonable notice of an occurrence or a lawsuit, the policyholder may not recover under the policy"); Kmart Corp. v. Footstar, Inc., 777 F.3d 923, 933-34 (7th Cir. 2015) (same). Notice clauses "are important provisions. If a claim against an insured is covered by the insurance policy, the insurer has a vital interest in supervising the defense against the claim, for its money is riding on the outcome. And so the policies entitle the insurers to control the insured's defense against a covered claim and negotiate a settlement." Nat'l Union Fire Ins. Co. of Pittsburgh, Pa. v. Mead Johnson & Co. LLC, 735 F.3d 539, 543 (7th Cir. 2013).
The Sprint and T-Mobile suits were filed on November 13 and December 18, 2012, and AU did not send its tender to Harleysville until more than seven months later, on July 31, 2013. As noted, § II.E.2.b of the policy required AU to notify Harleysville in writing of a lawsuit "as soon as practicable." Doc. 120 at ¶ 72; see Doc. 100-1 at 56. Faced with a materially identical notice provision, see Country Mutual, 305 Ill.Dec. 533, 856 N.E.2d at 340, the Supreme Court of Illinois held that "[a] policy condition requiring notice `[a]s soon as practicable' is interpreted to mean `within a reasonable time.'" Id., 305 Ill.Dec. 533, 856 N.E.2d at 343 (second alteration in original). "Where the facts are undisputed, the reasonableness of notice to an insurer by its insured is a question of law." Montgomery Ward & Co. v. Home Ins. Co., 324 Ill.App.3d 441, 257 Ill.Dec. 373, 753 N.E.2d 999, 1004 (2001); see also Cas. Indem. Exch. v. Vill. of Crete, 731 F.2d 457, 458 (7th Cir. 1984) ("[I]f there are no disputed material facts, the court may in appropriate circumstances decide the issue of reasonable notice as a matter of law."). "The following factors may be considered in determining whether notice to an insurer has been given within a reasonable time: (1) the specific language of the policy's notice provision; (2) the insured's sophistication in commerce and insurance matters; (3) the insured's awareness of an event that may trigger insurance coverage; (4) the insured's diligence in ascertaining whether policy coverage is available; and (5) prejudice to the insurer." W. Am. Ins. Co. v. Yorkville
Application of these factors preclude a finding of timeliness. First, the policy categorically required that Harleysville "receive written notice of the claim or `suit' as soon as practicable." Doc. 120 at ¶ 72. There is no qualification or condition: if suit, then notice. AU was represented by counsel throughout the underlying lawsuits. No reasonable juror could believe that it was "impracticable" for a competent lawyer to contact Harleysville when those suits were filed and that it remained "impracticable" for seven months thereafter. Illinois courts have found shorter delays to be unreasonably long. See Cas. Indem. Exch., 731 F.2d at 459 (five months); Ill. Valley Minerals Corp. v. Royal-Globe Ins. Co., 70 Ill.App.3d 296, 26 Ill.Dec. 629, 388 N.E.2d 253, 256 (1979) (six months).
The second and third factors also weigh against AU. Vadria and Yasin may have been unsophisticated in legal or insurance matters, but they and AU Electronics were represented by counsel throughout. If their lawyer did not understand the issues, he should have sought help. See Ill. Rules of Prof'l Conduct 1.1 & cmt. 2; cf. Modrowski v. Mote, 322 F.3d 965, 968 (7th Cir. 2003) ("clients . . . must `vigilantly oversee,' and ultimately bear responsibility for, their attorneys' actions or failures"). To be clear, the court does not in any way mean to suggest that AU's lawyer was incompetent for not immediately tendering its defense to Harleysville; in fact, as noted above, the Sprint and T-Mobile complaints did not allege conduct or claims that were even potentially covered under the policy, so the lawyer's decision not to notify Harleysville was reasonable under the circumstances. But the court has assumed for purposes of the timeliness issue that there was coverage, and if indeed there was, AU's representation by counsel gave it sophistication in commerce and insurance matters as well as an awareness of events (the filing of the underlying suits) that might have triggered coverage.
The fourth factor favors Harleysville, too. Although AU and its lawyer reviewed the policy after being served with the underlying complaints, Doc. 105 at ¶ 11, they nevertheless failed to alert Harleysville for more than seven months. AU attempts to excuse its tardiness by claiming that only after it saw Sprint's and T-Mobile's July 2013 disclosures (the lists of people with whom they claimed AU had conspired) did it "determine[] that for the first time, [it] had a reasonable basis for seeking coverage or indemnification" from Harleysville. Doc. 105 at ¶ 23. It is true that "an insured's reasonable belief of non-coverage under a policy may be an acceptable excuse for the failure to give timely notice." W. Am. Ins. Co., 345 Ill.Dec. 445, 939 N.E.2d at 294-95. But note the qualifiers "reasonable" and "may be." The July 2013 disclosures contain lists of AU's customers, culled from AU's own invoices. No reasonable juror could believe that a "diligent" insured would be surprised upon being given information that was already in its possession. Moreover, AU does not and could not plausibly explain how a list of alleged co-conspirators alerted it that what it previously believed to be trademark claims were actually trade dress claims. AU's excuses for failing to notify Harleysville are not only unreasonable, they are absolutely implausible. See Imperial Cas. & Indem. Co. v. Chi. Hous. Auth., 987 F.2d 459, 462 (7th Cir. 1993) ("[T]he CHA's argument that it could not learn of the relationship between the apartment conditions during the policy period and the 1985 incident until the doctors' depositions is ridiculous. The doctors' deposition testimony repeated what the CHA could have, and should have, learned from the letters.").
With four of the five factors strongly pointing Harleysville's way, and with the remaining factor being a draw, AU's July 31, 2013 tender was not within a reasonable time of the Sprint and T-Mobile lawsuits' respective filings—and "once it is determined that the insurer did not receive reasonable notice of an occurrence or a lawsuit, the policyholder may not recover under the policy." Country Mutual, 305 Ill.Dec. 533, 856 N.E.2d at 346; see also Kmart Corp., 777 F.3d at 933-34. Accordingly, Harleysville is entitled to summary judgment on this ground as well, which is offered in addition to the first ground discussed in Section I, supra. Given these two independent and dispositive grounds for granting judgment to Harleysville, the court need not reach any of the additional arguments it has raised.
For the foregoing reasons, Plaintiffs' summary judgment motion is denied, and Defendants' summary judgment motion is granted. Defendants had no duty to defend or indemnify Plaintiffs in the underlying lawsuits. Given this disposition, Plaintiffs' motion for leave to file an amended complaint, Doc. 55, which seeks to add a claim for bad faith/improper claims practice under 215 ILCS 5/154.6 and 5/155, is denied. Because Defendants did not violate their obligations under the policy, they cannot be held liable for engaging in bad faith or improper practices under those statutes. See Westchester Fire Ins. Co. v. G. Heileman Brewing Co., 321 Ill.App.3d 622, 254 Ill.Dec. 543, 747 N.E.2d 955, 968 (2001) ("The fact that we have found that Westchester's filing of its federal declaratory action comported with Illinois law and have reversed the trial court's judgment entered to Heileman conclusively shows that Westchester's actions in denying coverage were not vexatious and unreasonable."); O'Rourke v. Access Health, Inc., 282 Ill.App.3d 394, 218 Ill.Dec. 51, 668 N.E.2d 214, 222 (1996) ("[D]efendant could not have committed the vexatious and unreasonable conduct necessary for section 155 relief where, as here, no benefits are owed."); Windale LLC v. Greenwich Ins. Co., 2003 WL 22089536, at *1 (N.D.Ill. Sept. 8, 2003) ("Under Illinois law a plaintiff must first demonstrate that a defendant insurance company owed benefits before it can prove that defendant acted in bad faith pursuant 215 ILCS § 5/155."). Judgment will be entered in Defendants' favor.
