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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

ARCH INSURANCE COMPANY, a Missouri 

corporation,

Plaintiff,

v.

MICHAELS STORES, INC.; a Delaware 

Corporation, and DOES 1-50, inclusive,

Defendants.

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Case No.:

COMPLAINT FOR DECLARATORY RELIEF

Plaintiff Arch Insurance Company (“Arch”) brings this complaint for declaratory relief 

against Michaels Stores, Inc. (“Michaels”), and Does 1-50, and alleges as follows:

NATURE OF THE ACTION

1. This is an insurance coverage action for declaratory relief under 28 U.S.C. §§

2201 and 2202, requesting judgment declaring the respective rights of the parties with respect to 

an actual controversy arising under liability insurance policies issued by Arch to Michaels (the 

“Policies”), as more specifically described below.

2. Arch brings this action to obtain a declaration that it has no duty to defend or 

indemnify Michaels in underlying putative class action lawsuits (the “Underlying Lawsuits”) 

which allege that criminals tampered with PIN pad terminals in Michaels stores, allowing the 

criminals to capture customers’ credit and debit card information. Plaintiffs’ claims in the 

Underlying Lawsuits are based on Michaels’ alleged failure to safeguard the PIN pad terminals 

and alleged failure to provide prompt and adequate notice of the security breaches. 

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3. Disputes exist between Arch and Michaels regarding whether the Policies provide 

coverage for the claims alleged in the Underlying Lawsuits. Arch has agreed to participate in 

Michaels’ defense of the Underlying Lawsuits. However, Arch denies that it has any duty to 

defend or indemnify Michaels in the Underlying Lawsuits under the Polices. By this action, 

Arch seeks a declaration that the Policies do not provide coverage for the Underlying Lawsuits, 

that it has no duty to defend Michaels in the Underlying Lawsuits, and that it owes no duty to 

indemnify Michaels in the Underlying Lawsuits. 

THE PARTIES

4. Arch is a Missouri corporation with its principal place of business in New York, 

New York.

5. Arch is informed and believes, and on that basis alleges, that Michaels is a 

Delaware Corporation with its principal place of business in Irving, Texas. 

6. The true names and capacities, whether individual, corporate, associate or 

otherwise, of defendants Does 1 – 50, inclusive, are unknown to Arch at this time, which 

therefore sues said defendants by such fictitious names. Arch will seek leave of the court to 

amend this complaint to show the true names and capacities of those defendants when they have 

been ascertained. Arch is informed and believes and, on that basis alleges, that each of the 

fictitiously named defendants claims an interest or may claim an interest in the Policies. 

JURISDICTION AND VENUE

7. This declaratory judgment action is brought pursuant to 28 U.S.C. §§ 2201, 2202 

and Rule 57 of the Federal Rules of Civil Procedure.

8. An actual justiciable controversy exists between Arch and Michaels within the 

meaning of 28 U.S.C. § 2201 regarding the scope and extent of insurance coverage provided for 

the Underlying Lawsuits under the Policies.

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9. This Court has diversity jurisdiction pursuant to 28 U.S.C. § 1332 because the 

matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is 

between citizens of different states.

10. Venue is proper in this Court under 28 U.S.C. § 1391(a) because a substantial part

of the events or omissions giving rise to this lawsuit occurred within this judicial district, because

Michaels operates retail stores in this judicial district, and because the Underlying Lawsuits are 

being litigated in this judicial district or are pending transfer to this judicial district.

THE UNDERLYING LAWSUITS

11. Michaels has tendered the following Underlying Lawsuits to Arch for defense and 

indemnity under one or more of the Policies:

a. In Re Michaels Stores Pin Pad Litigation, United States District Court,

Northern District of Illinois, Eastern Division, Case No. 1:11-cv-03350

(the “Consolidated Action”).

b. Ramundo v. Michaels Stores, Inc., United States District Court, Northern 

District of Illinois, Eastern Division, Case No. 1:11-cv-03350 (the 

“Ramundo Action”). On June 3, 2011, Plaintiff Brandi F. Ramundo 

moved to consolidate the Ramundo Action with the Allen and Siprut

Actions (described below), and for leave to file a consolidated complaint 

with plaintiffs in the Allen and Siprut Actions. On June 8, 2011, the Court 

granted that motion. On July 8, 2011, the Consolidated Amended Class 

Action Complaint (“CAC”) was filed in the Consolidated Action.

c. Allen v. Michaels Stores, Inc., United States District Court, Northern 

District of Illinois, Eastern Division, Case No. 1:11-cv-03579 (the “Allen 

Action”). On June 3, 2011, Plaintiff Mary Allen moved to consolidate her 

lawsuit with the Ramundo and Siprut Actions, and for leave to file a 

consolidated complaint as alleged above. On June 8, 2011, the Court 

granted that motion and on July 8, 2011, the CAC was filed. 

d. Siprut v. Michaels Stores, Inc., United States District Court, Northern 

District of Illinois, Eastern Division, Case No. 1:11-cv-03725 (the “Siprut

Action”). On June 3, 2011, Plaintiff Kimberly M. Siprut moved to 

consolidate her lawsuit with the Ramundo and Allen Actions, and for leave 

to file a consolidated complaint as alleged above. On June 8, 2011, the 

Court granted that motion and on July 8, 2011, the CAC was filed. 

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e. Williams v. Michaels Stores, Inc., United States District Court, Northern 

District of Illinois, Eastern Division, Case No. 1:11-cv-03883 (the 

“Williams Action”). On June 8, 2011, Plaintiff Jeremy Williams moved to 

consolidate the Williams Action with the Consolidated Action. That 

motion was granted on June 14, 2011. Arch is informed and believes that 

the complaint in the Williams Action remains separate from the CAC. 

f. Rosenfeld and Soffer v. Michaels Stores, Inc., originally filed in Superior 

Court of New Jersey, Passaic County, Law Division, Case No. L-3086-11 

(the “Rosenfeld Action”). On August 5, 2011, Michaels removed the 

Rosenfeld Action to the United States District Court, District of New 

Jersey. On September 12, 2011, the Rosenfeld Action was transferred to 

the United States District Court, Northern District of Illinois, Eastern 

Division. On September 26, 2011, Michaels moved to consolidate the 

Rosenfeld Action with the Consolidated Action. That motion was granted 

on September 29, 2011. Arch is informed and believes that the complaint 

in the Rosenfeld Action remains separate from the CAC. 

g. Sherry v. Michaels Stores, Inc., United States District Court, Northern 

District of Illinois, Case No. 1:11-cv-05900 (the “Sherry Action”). On 

September 26, 2011, Michaels moved to consolidate the Sherry Action 

with the Consolidated Action. That motion was granted on September 29, 

2011. Arch is informed and believes that the complaint in the Sherry 

Action remains separate from the CAC. 

h. Wilson v. Michaels Stores, Inc., originally filed in Superior Court of New 

Jersey, Morris County, Law Division, Case No. L-2336-11 (the “Wilson 

Action”). On September 9, 2011, Michaels removed the Wilson Action to 

the United States District Court, District of New Jersey. On October 13, 

2011, Michaels filed a motion to transfer the Wilson Action to the United 

States District Court, Northern District of Illinois, Eastern Division. Arch 

is informed and believes that Michaels’ motion to transfer is still pending. 

12. Plaintiffs in the Underlying Lawsuits allege Michaels failed to safeguard PIN pad 

terminals in its stores, thereby allowing criminals to gain access to their financial information 

and to make unauthorized withdrawals and unauthorized purchases from their bank accounts. 

Plaintiffs further allege that Michaels failed to provide them with prompt and adequate notice of 

the security breaches.

13. The Consolidated Action alleges a putative class and subclass defined as:

All persons residing in the United States who made an in-store purchase at 

a Michaels store in the United States using a debit or credit card that was 

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swiped through a PIN pad at any time from December 1, 2010 to the 

present (the “Class”).

***

All Class members who reside in the State of Illinois or made an in-store 

purchase at a Michaels store in the State of Illinois using a debit or credit 

card that was swiped through a PIN pad (the “Illinois Subclass”).

14. The Williams Action alleges a putative class defined as “all persons who made an 

in-store purchase at a Michaels store affected by payment card tagging using a debit or credit 

card that was swiped through a PIN pad at any time from February 8, 2011 through the present 

(the ‘Class’).” The Williams Action alleges a subclass consisting of class members whose 

transactions occurred in Illinois.

15. The Rosenfeld Action alleges a putative class defined as “All citizens of New 

Jersey who made an in-store purchase at a Michaels store in New Jersey using a debit or credit 

card that was swiped through an in-store PIN pad at any time from January 1, 2011 through the 

present.” 

16. The Sherry Action alleges a putative class defined as: 

All persons who used an electronic payment method that required them to 

enter a PIN number at the point of sale at a Michaels owned store in the 

states of Illinois, Colorado, Delaware, Georgia, Iowa, Massachusetts, 

Maryland, Nevada, New Hampshire, New Jersey, New Mexico, New 

York, North Carolina, Ohio, Oregon, Pennsylvania, Rhode Island, Utah, 

Virginia or Washington (“Class States”) during the period February 8, 

2011 through May 6, 2011 (“Class Period”).

17. The Wilson Action alleges a putative class defined as “All residents of New Jersey

who made an in-store purchase at a Michaels store in New Jersey using a debit or credit card that 

was swiped through an in-store PIN pad at any time from January 1, 2011 through the present.”

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18. Arch has agreed to participate in Michaels’ defense of the Underlying Lawsuits. 

However, Arch denies that it has any duty to defend or indemnify Michaels in the Underlying 

Lawsuits under the Polices and seeks judicial declarations to that effect by this action.

THE POLICIES

19. Arch issued policy nos. 41GPP4944600, 41GPP4944601, and 41GPP4944602 to 

Michaels for successive policy periods from June 1, 2008 to June 1, 2011 (i.e., the Policies). The 

Declarations pages in the Policies describe Michaels’ business as “Retail Crafting Store.”

20. The Policies provide limits of $1 million per “occurrence” for Bodily Injury and 

Property Damage Liability (Coverage A) and $1 million for “any one person or organization” for 

Personal and Advertising Injury Liability (Coverage B), subject to a $10 million General 

Aggregate Limit. 

21. The Policies provide Commercial General Liability coverage pursuant to form 

CG 00 01 12 07 which provides (as modified by an endorsement amending the definition of 

“bodily injury”), in part, as follows: 

SECTION I – COVERAGES

COVERAGE A BODILY INJURY AND PROPERTY DAMAGE 

LIABILITY

1. Insuring Agreement

a. We will pay those sums that the insured becomes legally obligated 

to pay as damages because of “bodily injury” or “property 

damage” 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 “bodily injury” or 

“property damage” to which this insurance does not apply. ...

***

b. This insurance applies to “bodily injury” and “property damage” 

only if:

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(1) The “bodily injury” or “property damage” is caused by an 

“occurrence” that takes place in the “coverage territory”; 

[and]

(2) The “bodily injury” or “property damage” occurs during 

the policy period....

***

2. Exclusions

This insurance does not apply to:

p. Electronic Data

Damages arising out of the loss of, loss of use of, damage to, 

corruption of, inability to access, or inability to manipulate 

electronic data.

As used in this exclusion, electronic data means information, facts 

or programs stored as or on, created or used on, or transmitted to or 

from computer software, including systems and applications 

software, hard or floppy disks, CD-ROMS, tapes, drives, cells, 

data processing devices or any other media which are used with 

electronically controlled equipment.

***

COVERAGE B PERSONAL AND ADVERTISING INJURY 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. ...

***

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.

2. Exclusions

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This insurance does not apply to:

***

c. Material Published Prior To Policy Period

“Personal and advertising injury” arising out of oral or written 

publication of material whose first publication took place before 

the beginning of the policy period.

***

f. Breach Of Contract

“Personal and advertising injury” arising out of a breach of 

contract, except an implied contract to use another’s advertising 

idea in your “advertisement”.

***

p. Distribution Of Material In Violation Of Statutes

“Personal and advertising injury” arising directly or indirectly out 

of any action or omission that violates or is alleged to violate:

(1) The Telephone Consumer Protection Act (TCPA), 

including any amendment of or addition to such law; or 

(2) The CAN-SPAM Act of 2003, including any amendment of 

or addition to such law; or 

(3) Any statute, ordinance or regulation, other than the TCPA 

or CAN-SPAM Act of 2003, that prohibits or limits the 

sending, transmitting, communicating or distribution of 

material or information. 

***

SUPPLEMENTARY PAYMENTS – COVERAGES A AND B

1. We will pay, with respect to any claim we investigate or settle, or any

“suit” against an insured we defend:

***

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e. All costs taxed against the insured in the “suit.” However, these 

payments do not include attorneys’ fees or attorneys’ expenses 

taxed against the insured.

***

SECTION V – DEFINITIONS

***

3. “Bodily injury” means physical or mental injury, sickness or disease, 

including death resulting from any of these; or the following when 

accompanied by physical injury, sickness or disease: mental anguish; 

shock; fright; or emotional distress.

***

13. “Occurrence” means an accident, including continuous or repeated 

exposure to substantially the same general harmful conditions.

14. “Personal and advertising injury” means injury, including 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. Oral or written publication, in any manner, of material that 

slanders or libels a person or organization or disparages a person’s 

or organization’s goods, products or services;

e. Oral or written publication, in any manner, 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.”

***

17. “Property damage” means:

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a. Physical injury to tangible property, including all resulting loss of 

use of that property. All such loss of use shall be deemed to occur 

at the time of the physical injury that caused it; or

b. Loss of use of tangible property that is not physically injured. All 

such loss of use shall be deemed to occur at the time of the 

“occurrence” that caused it.

For the purposes of this insurance, electronic data is not tangible property.

As used in this definition, electronic data means information, facts or 

programs stored as or on, created or used on, or transmitted to or from 

computer software, including systems and applications software, hard or 

floppy disks, CD-ROMS, tapes, drives, cells, data processing devices or 

any other media which are used with electronically controlled equipment.

22. Each of the Policies includes a “Commercial General Liability Deductible 

Endorsement,” form 00 GL0356 00 09 07, with a deductible amount of $500,000 applicable to 

Coverage A on a “per occurrence” basis and applicable to Coverage B on an “each person or 

organization” basis. That endorsement provides, in part, as follows: 

A. DEDUCTIBLE

Our obligation to pay damages, costs, expenses, benefits, or medical 

payments, subject to the Limit of Insurance as shown in the Declarations, 

will be reduced by the Deductible shown in the Schedule. Our Limit of 

Insurance includes, and is not in addition to, the Deductible.

***

C. ALLOCATED LOSS ADJUSTMENT EXPENSES

You must reimburse us for “Allocated Loss Adjustment Expenses” 

incurred by us as part of Supplementary Payments in defending a claim or 

“suit” as indicated by one of the options below:

X 1. Option 1 – “Allocated Loss Adjustment Expenses” Are 

Included In The Deductible Shown In The Schedule. Your 

total reimbursement for damages, costs, expenses, benefits, 

medical payments and “Allocated Loss Adjustment 

Expenses” combined shall not exceed the Deductible shown 

in the Schedule.

***

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Your obligation to reimburse us for “Allocated Loss Adjustment Expense” 

applies separately to each occurrence, claim, “employee”, common cause 

or person or organization.

“Allocated Loss Adjustment Expenses” means such claim adjustment 

expenses directly allocated by us to a particular claim. Such expenses 

shall include, but not be limited to, attorney’s fees for claims in suit; court 

costs; pre- and post judgment interest; undercover operatives and detective 

services; employing experts; medical examination, medical cost 

containment expenses, laboratory, x-ray, and autopsy; stenographic, 

witnesses, summons, and copies of documents and transcripts; or expenses 

reasonably chargeable to the investigation, negotiation, settlement or 

defense of any claim or “suit” against you or for the protection and 

perfection of your or our subrogation rights.

23. The Underlying Lawsuits do not allege claims within or potentially within the 

coverage of the Policies. Hence, Arch is not obligated to defend Michaels with respect to those 

claims and Arch has no obligation to satisfy any judgment that may be entered or to pay any

settlement that may be reached in the Underlying Lawsuits.

FIRST CAUSE OF ACTION

(Declaratory Relief Against All Defendants –

No Duty To Defend – Consolidated Action)

24. Arch incorporates by reference the allegations set forth at paragraphs 1 through 23

as though fully set forth herein. 

25. An actual and present controversy has arisen and now exists between Arch and 

Michaels concerning their respective rights and obligations under the Policies with respect to the 

Consolidated Action. Arch contends it has no duty to defend the CAC filed in the Consolidated 

Action under the Policies for at least the following reasons:

a. The lawsuit does not allege “bodily injury” or “property damage” under 

Coverage A (“Bodily Injury And Property Damage Liability”) in the 

Policies;

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b. To the extent the lawsuit alleges “bodily injury” or “property damage” 

under Coverage A, such “bodily injury” or “property damage” did not 

occur during the policy period of one or more of the Policies;

c. To the extent the lawsuit alleges “bodily injury” or “property damage” 

under Coverage A, such “bodily injury” or “property damage” was not 

caused by an “occurrence”; 

d. To the extent the lawsuit alleges “bodily injury” or “property damage” 

under Coverage A, any coverage for such “bodily injury” or “property 

damage” is eliminated by the “Electronic Data” exclusion;

e. The lawsuit does not allege “personal and advertising injury” arising out 

of any of the defined “personal and advertising injury” offenses as 

required under Coverage B (“Personal And Advertising Injury Liability”) 

in the Policies;

f. The lawsuit does not seek damages “because of ‘personal and advertising 

injury’” as required under Coverage B in the Policies;

g. The lawsuit does not allege “‘personal and advertising injury’ caused by

an offense arising out of your business” as required under Coverage B in 

the Policies;

h. To the extent the lawsuit alleges “personal and advertising injury” caused 

by an offense under Coverage B, the offense was not committed during 

the policy period of one or more of the Policies;

i. To the extent the lawsuit alleges “personal and advertising injury” under 

Coverage B, any coverage for such “personal and advertising injury” is 

eliminated by the “Material Published Prior To Policy Period” exclusion;

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j. To the extent the lawsuit alleges “personal and advertising injury” under 

Coverage B, any coverage for such “personal and advertising injury” is 

eliminated by the “Breach Of Contract” exclusion;

k. To the extent the lawsuit alleges “personal and advertising injury” under 

Coverage B, any coverage for such “personal and advertising injury” is 

eliminated by the “Distribution Of Material In Violation Of Statutes” 

exclusion;

l. Plaintiffs’ claims for relief in the lawsuit do not constitute “damages” 

covered under the Policies; and 

m. Michaels has not satisfied its deductible obligations under the Policies.

26. Arch is informed and believes, and on that basis alleges, that Michaels contends 

Arch owes a duty to defend the Consolidated Action.

27. Arch seeks a judicial declaration, pursuant to the Federal Declaratory Judgment 

Act, 28 U.S.C. § 2201(a), et seq., of the respective rights and duties of the parties under the 

Policies and, specifically, that Arch has no duty to defend the Consolidated Action. Arch has no 

adequate remedy at law and a judicial declaration is necessary and appropriate at this time.

SECOND CAUSE OF ACTION

(Declaratory Relief Against All Defendants –

No Duty To Indemnify – Consolidated Action)

28. Arch incorporates by reference the allegations set forth at paragraphs 1 through 27

as though fully set forth herein.

29. An actual and present controversy has arisen and now exists between Arch and 

Michaels concerning their respective rights and obligations under the Policies with respect to the 

Consolidated Action. Arch contends it has no duty to indemnify in connection with the 

Consolidated Action for the reasons set forth in Paragraph 25.

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30. Arch is informed and believes, and on that basis alleges, that Michaels contends 

Arch owes a duty to indemnify in connection with the Consolidated Action.

31. Arch seeks a judicial declaration, pursuant to the Federal Declaratory Judgment 

Act, 28 U.S.C. § 2201(a), et seq., of the respective rights and duties of the parties under the 

Policies and, specifically, that Arch has no duty to indemnify in connection with the 

Consolidated Action. Arch has no adequate remedy at law and a judicial declaration is necessary 

and appropriate at this time.

THIRD CAUSE OF ACTION

(Declaratory Relief Against All Defendants –

No Duty To Defend – Williams Action)

32. Arch incorporates by reference the allegations set forth at paragraphs 1 through 31 

as though fully set forth herein.

33. An actual and present controversy has arisen and now exists between Arch and 

Michaels concerning their respective rights and obligations under the Policies with respect to the 

Williams Action. Arch contends it has no duty to defend the Williams Action under the Policies

for the reasons set forth in Paragraph 25. 

34. Arch is informed and believes, and on that basis alleges, that Michaels contends 

Arch owes a duty to defend the Williams Action.

35. Arch seeks a judicial declaration, pursuant to the Federal Declaratory Judgment 

Act, 28 U.S.C. § 2201(a), et seq., of the respective rights and duties of the parties under the 

Policies and, specifically, that Arch has no duty to defend the Williams Action. Arch has no 

adequate remedy at law and a judicial declaration is necessary and appropriate at this time.

FOURTH CAUSE OF ACTION

(Declaratory Relief Against All Defendants –

No Duty To Indemnify – Williams Action)

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36. Arch incorporates by reference the allegations set forth at paragraphs 1 through 35

as though fully set forth herein.

37. An actual and present controversy has arisen and now exists between Arch and 

Michaels concerning their respective rights and obligations under the Policies with respect to the 

Williams Action. Arch contends it has no duty to indemnify in connection with the Williams

Action for the reasons set forth in Paragraph 25.

38. Arch is informed and believes, and on that basis alleges, that Michaels contends 

Arch owes a duty to indemnify in connection with the Williams Action.

39. Arch seeks a judicial declaration, pursuant to the Federal Declaratory Judgment 

Act, 28 U.S.C. § 2201(a), et seq., of the respective rights and duties of the parties under the 

Policies and, specifically, that Arch has no duty to indemnify in connection with the Williams 

Action. Arch has no adequate remedy at law and a judicial declaration is necessary and 

appropriate at this time. 

FIFTH CAUSE OF ACTION

(Declaratory Relief Against All Defendants –

No Duty To Defend – Rosenfeld Action)

40. Arch incorporates by reference the allegations set forth at paragraphs 1 through 39 

as though fully set forth herein. 

41. An actual and present controversy has arisen and now exists between Arch and 

Michaels concerning their respective rights and obligations under the Policies with respect to the 

Rosenfeld Action. Arch contends it has no duty to defend the Rosenfeld Action under the Policies

for the reasons set forth in Paragraph 25. 

42. Arch is informed and believes, and on that basis alleges, that Michaels contends 

Arch owes a duty to defend the Rosenfeld Action.

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43. Arch seeks a judicial declaration, pursuant to the Federal Declaratory Judgment 

Act, 28 U.S.C. § 2201(a), et seq., of the respective rights and duties of the parties under the 

Policies and, specifically, that Arch has no duty to defend the Rosenfeld Action. Arch has no 

adequate remedy at law and a judicial declaration is necessary and appropriate at this time.

SIXTH CAUSE OF ACTION

(Declaratory Relief Against All Defendants –

No Duty To Indemnify – Rosenfeld Action)

44. Arch incorporates by reference the allegations set forth at paragraphs 1 through 43

as though fully set forth herein.

45. An actual and present controversy has arisen and now exists between Arch and 

Michaels concerning their respective rights and obligations under the Policies with respect to the 

Rosenfeld Action. Arch contends it has no duty to indemnify in connection with the Rosenfeld 

Action for the reasons set forth in Paragraph 25.

46. Arch is informed and believes, and on that basis alleges, that Michaels contends 

Arch owes a duty to indemnify in connection with the Rosenfeld Action.

47. Arch seeks a judicial declaration, pursuant to the Federal Declaratory Judgment 

Act, 28 U.S.C. § 2201(a), et seq., of the respective rights and duties of the parties under the 

Policies and, specifically, that Arch has no duty to indemnify in connection with the Rosenfeld 

Action. Arch has no adequate remedy at law and a judicial declaration is necessary and 

appropriate at this time.

SEVENTH CAUSE OF ACTION

(Declaratory Relief Against All Defendants –

No Duty To Defend – Sherry Action)

48. Arch incorporates by reference the allegations set forth at paragraphs 1 through 47 

as though fully set forth herein. 

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49. An actual and present controversy has arisen and now exists between Arch and 

Michaels concerning their respective rights and obligations under the Policies with respect to the 

Sherry Action. Arch contends it has no duty to defend the Sherry Action under the Policies for 

the reasons set forth in Paragraph 25. 

50. Arch is informed and believes, and on that basis alleges, that Michaels contends 

Arch owes a duty to defend the Sherry Action.

51. Arch seeks a judicial declaration, pursuant to the Federal Declaratory Judgment 

Act, 28 U.S.C. § 2201(a), et seq., of the respective rights and duties of the parties under the 

Policies and, specifically, that Arch has no duty to defend the Sherry Action. Arch has no 

adequate remedy at law and a judicial declaration is necessary and appropriate at this time.

EIGHTH CAUSE OF ACTION

(Declaratory Relief Against All Defendants –

No Duty To Indemnify – Sherry Action)

52. Arch incorporates by reference the allegations set forth at paragraphs 1 through 51

as though fully set forth herein.

53. An actual and present controversy has arisen and now exists between Arch and 

Michaels concerning their respective rights and obligations under the Policies with respect to the 

Sherry Action. Arch contends it has no duty to indemnify in connection with the Sherry Action

for the reasons set forth in Paragraph 25.

54. Arch is informed and believes, and on that basis alleges, that Michaels contends 

Arch owes a duty to indemnify in connection with the Sherry Action.

55. Arch seeks a judicial declaration, pursuant to the Federal Declaratory Judgment 

Act, 28 U.S.C. § 2201(a), et seq., of the respective rights and duties of the parties under the 

Policies and, specifically, that Arch has no duty to indemnify in connection with the Sherry 

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Action. Arch has no adequate remedy at law and a judicial declaration is necessary and 

appropriate at this time. 

NINTH CAUSE OF ACTION

(Declaratory Relief Against All Defendants –

No Duty To Defend – Wilson Action)

56. Arch incorporates by reference the allegations set forth at paragraphs 1 through 55 

as though fully set forth herein. 

57. An actual and present controversy has arisen and now exists between Arch and 

Michaels concerning their respective rights and obligations under the Policies with respect to the 

Wilson Action. Arch contends it has no duty to defend the Wilson Action under the Policies for 

the reasons set forth in Paragraph 25. 

58. Arch is informed and believes, and on that basis alleges, that Michaels contends 

Arch owes a duty to defend the Wilson Action.

59. Arch seeks a judicial declaration, pursuant to the Federal Declaratory Judgment 

Act, 28 U.S.C. § 2201(a), et seq., of the respective rights and duties of the parties under the 

Policies and, specifically, that Arch has no duty to defend the Wilson Action. Arch has no 

adequate remedy at law and a judicial declaration is necessary and appropriate at this time.

TENTH CAUSE OF ACTION

(Declaratory Relief Against All Defendants –

No Duty To Indemnify – Wilson Action)

60. Arch incorporates by reference the allegations set forth at paragraphs 1 through 59

as though fully set forth herein.

61. An actual and present controversy has arisen and now exists between Arch and 

Michaels concerning their respective rights and obligations under the Policies with respect to the 

Wilson Action. Arch contends it has no duty to indemnify in connection with the Wilson Action

for the reasons set forth in Paragraph 25.

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Page 19 of 19

62. Arch is informed and believes, and on that basis alleges, that Michaels contends 

Arch owes a duty to indemnify in connection with the Wilson Action.

63. Arch seeks a judicial declaration, pursuant to the Federal Declaratory Judgment 

Act, 28 U.S.C. § 2201(a), et seq., of the respective rights and duties of the parties under the 

Policies and, specifically, that Arch has no duty to indemnify in connection with the Wilson 

Action. Arch has no adequate remedy at law and a judicial declaration is necessary and 

appropriate at this time. 

PRAYER FOR RELIEF

WHEREFORE, Arch prays for judgment as follows:

1. For a judicial declaration that Arch has no duty to defend Michaels in the 

Underlying Lawsuits under the Policies;

2. For a judicial declaration that Arch has no duty to indemnify Michaels in the 

Underlying Lawsuits under the Policies;

3. For costs of suit; and

4. For such other relief as the court deems just and proper.

Dated: February 3, 2012 Plaintiff Arch Insurance Company

By: s/ Ryan T. Brown

Ryan T. Brown

Ryan T. Brown, ARDC #6269256

GORDON & REES LLP

One North Franklin, Suite 800

Chicago, Illinois 60606

Tel: (312) 565-1400

Fax: (312) 565-6511

Email: rtbrown@gordonrees.com

Counsel for Plaintiff Arch Insurance Company

ARPL/1073516/11630036v.1

Case: 1:12-cv-00786 Document #: 1 Filed: 02/03/12 Page 19 of 19 PageID #:19