No. 3-07- 0104

_____________________________________________________________________________ File d February

27, 2009 IN THE

APP ELL ATE C OURT

OF IL LINO IS THIRD DI STRICT A.D., 2009

______________________________________________________________________________ WEST AMERICA

N INSU RA NCE C O., ) Appe al fro m the C ircu it Co ur t of t he

) Th

i rte en th Judi ci al Ci rc ui t, Pl ai n ti f f -A pp el l an t, ) LaSall e County, Illi

nois, Cross-Appel

ll ee, )

) v. ) ) No. 04-MR-57 YOR KVI LLE NAT IO NAL BAN K, ) BERNARD J . WIEGMANN, an d ) SH ER YL H . KU ZMA, ) T he Ho no r ab le ) Ja mes A. La nu t i, Defendan ts-Appellees, ) Judge Presidin g. Cross -Ap pel l an ts. )

______________________________________________________________________________ JUSTICE McDADE d

eli vered the opi ni on of the court:

______________________________________________________________________________ T his a pp ea l ar ise s fr o m a d ec lar at o ry jud gme nt ac t io n file d in t he cir cu it co ur t o f La Sa lle Co un t y t o r es o lve ins ur an ce co ve r ag e is su es . P lain t iff, We st Ame r ica n I ns ur an ce Co mp an y, app eals ar guing t hat t he co ur t er re d in det er mini ng t hat it o wed a du t y to pr ovid e co ver age t o t he de fen da nt , Yo rkv ille N at io na l Ba nk
. De fen da nt cr o ss - ap pe als ar gu ing t ha t t he co ur t er r ed in determi ni ng def endan t is n ot entitled to sanctions un der section 155 of

the Insuranc e Code (215 ILCS 5/155 ( West 2004)) . For t he reasons that foll ow, we reverse the fin

din g that West American ha d a d ut y to pr ovid e co ver age , a ffi rm t he de t er minatio n t hat Yo rk vill e Na t ional Ba nk was not entitled to sanctions f or alleged vex

atious and un

reasonabl e del ay , and rem

and f or further2

procee di ngs . FA CTS The insura nce c ove ra ge c ase has it s ro ot s in an und er lyi ng de famat ion su it br ou ght by Shery l K uzm a (Kuzm a) agai nst def endan t and its v ic e president, Bernard Wi egm ann . Kuzm

a fi le d he r com pl ai nt on Septem be r 24 , 20 01. Spe cif

i cal l y , sh e al l eg ed tha t he r prof es si ona l rep uta ti on had be en i rrepa rab l y dam aged f oll owi ng u tteranc es b

y Wi egm an n i n h i s of f i cial capa ci ty. In Mar ch 20 04, a jur y ret ur ned a $2. 2 mill ion ver dict in favor of Ku zma and aga inst d efenda nt and Wi egm ann . The parties sub sequentl y n egotiated a settleme

nt for the reduced am

ount o f $1.75 million. At t he t ime o f t he d efa mat io n, de fend ant wa s ins ur ed und er a p o licy issu ed by pla int iff, We st Ame r ica n I ns ur an ce Co mp an y. The def endan t was a cl i en t of Z ei ter-Dicks on Insura

nc e Agen cy (Zei ter-Di cks on). Ri ch ard D i ck son

, one of th e f oun di n g p ar tn er s of Ze i ter-D i ck son

, ori gi n al l y pl ac ed de f en da n t wi th t he West American C ommer cial Gene ra l Liabil ity po licy (the po licy). T he po licy ci t es d efenda nt as the nam

ed i nsured an d provides

that plai ntif f wi ll pay certain da

ma ges that the insured becom es leg ally o bliga t ed t o pa y. As a c o ndit io n o f co ver ag e, t he p o licy re qu ire s d efe nda nt t o no t ify plai ntif f of an y l awsuit. Specifi

call y, the policy’ s notice pro vi sion states: "If a c l ai m i s m ade or ‘ sui

t’ is b roug ht a gai ns t an y i ns ure d, y ou
m us t: (1 ) I mmediate ly reco rd t he sp ecifics o f the claim or ‘suit ’ and t he dat e r ece ived; and (2) Not if y us as soon as practicable
. You m us t se e to i

t tha t werec ei ve wri tten noti ceof the cl ai m or3 ‘sui t’ assoon a s practi cab l e." Al though Ku zm a f i l ed h er com plai nt on S eptem

ber 24, 20 01, de f

endan t di d not f orward pla in tif f wri tt en n ot ic e of the sui

t until January 19, 2004. At t hi s tim

e di scovery

was al ready cl osed and the m

atter had b een set f

or a jury trial to begi n on March

15, 2004. On Marc h 9, 2 004, pl

ai ntif f f i l ed a c omp l ai

nt f or decl aratory j udgm en t in the c i rcui t court of La Salle Co unt y. The co mplaint as ser t ed t hat defend ant bre ache d t he no t ice pr ovisio n of t he policy by fai li ng to pro vi

de written notice of

the sui t for more than 27 m

onths af ter t he sui t was f i l ed an d a mere e i gh

t we ek s b ef

oreth e m atte r w as sch ed ul ed f or tri al . Th

us , pl ai n ti f f sou gh t a judg ment t hat it had no o bligat ion t o p ro vide co ver age t o d efenda nt in conne ct ion wit h t he Ku zma su it
. De fen da nt r es po nd ed ar gu ing t ha t pla int iff r ec eiv ed o r al n o t ice o f t he su it o n six sep ar at e o cca sions pr ior t o be ing t ende re d wr itt en no t ice o n Janu ar y 19, 200 4. Defend ant
asse rt ed t hat t hese six insta nces of o ra l not ice co nst itu t ed " act ual no t ice" t her eby tr igger ing plai ntif f ’sduty to provide cov

erage . De fen da nt ’s firs t alle ga t io n o f "a ct ua l no t ice " inv o lve s a co nve r sa t io n in la t e 2 00 1 o rea r ly 2002 between Ri

chard Di ckson, who at the tim

e was an agent of Zei

ter-Dickson, and J

am es Liggett, who was serv

in g as def endan t’s presi dent. Ligge

tt states that he to ld Di

ckson that defend ant was involved in a d efamat ion su it and t hat t he cu rr ent D&O c ar rier wo uld no t co ver t he
sui t. He the n asked Di ck son whether d

ef en da nt woul d have c ove

rag e u nd er th e Z ei ter- Di ck son policy . Dicks on alle gedl

y res ponded probabl

y n ot . The second al

le gation of "a

ctual n ot ic e" i nv olv es a conv ersa tion i n l ate 200 2 be

tween Li ggett an d Joel Ottosen, a

nothe r agen t of Z eiterDic ks o n. Lig ge t t st at ed t ha t t his c o nve r sa t io n w as ve ry similar t o t he o ne he ha d w it h D ick so n in t ha t he inq uir ed as t o wh et he rt he po licy w o uld pr o vid e c o ve r ag e. Ot t o se n d en ies t ha t t his4

conversation ever occurred. The third an d fourth alle gations of

"actual n ot ic e" i nvol ve two
co nfe r en ce ca lls in 2 00 1 a nd 20 02 be t we en Lig ge t t , Ot t o se n a nd Da nie l Kr ame r , wh o at t he t ime
wa s s er v i n g a s def en da n t’s i n -hous e c ounse l . D uri

n g th e a l l eg ed ca l l s Li gg ett a

gai n i n qui re d a s to whet her defend ant wo uld have any co ver age unde r t he po licy. No not es o r c onfirming
corr espondence exi st mem oriali zin g these conversat ions. Ott osen also denies that either o f these conversations ever took place. The f if th and si xth i nstances of clai me d "actual n

ot ic e" occurred duri ng d ef endan t’s B oard of

Di rectors m eeti ngs on Septem

ber 16, 20 02, an

d Nov em ber 18, 20 02. Di ck son wa s pre se

n t at b oth of th es e m eeti n gs . Acc ordi

n g to th e m i n ute s of th e m eeti n gs , L i gg ett disclo sed t o t he bo ar d t hat defend ant had be en su ed fo r d efamat or y comment s made by Wi egm ann . He als o discl

osed the parties to t he l

iti gation an d that t here were som

e addi tional l eg al ex pen se s i n v ol v ed wi th th e l aw su i t. Fol l owi ng a b en ch tri al , th e c i

rcu i t cou rt gran ted a dec l ara tory j udg men t i n f av or of defend ant , r uling t hat plaint iff ow ed d efenda nt a du t y to pr ovid e co ver age in conne ct ion wit h t he Ku zm a su i t. As to def

endan t’s f ail ure to com

pl y wi th the pol i cy ’snoti ce prov

i sion the court stated: "[E ]ve n t hou gh t he po licy says they have t o s ubmit a nd t ende r t he

co mpla int in w r it ing t o be co ve r ed , t ha t [ is] no t t he law
. T he law is
on ce th e i n su ra n ce com pa n y re ce i v es actua l n oti ce of th e l aw su i t, t he y hav e a du t y t o de fen d it
. T he o nly wa y t he y ge t o ut o f t ha t is b y , a cc ordi

n g to th e S up re me C our

t, c on tact[i n g] th e i n su re d to
as ce r t ain wh et he rt he insu r er ’s as sis t an ce is d es ire d. So it wo uld
see m und er Cincinn ati

[ Cincinnati v. West American Insurance5 Co. , 183 Ill . 2d 317, 701 N.E. 2d 499 (1998)] t hat once an in surance com

pany recei ves actual notice that a l awsui

t has been f i l ed the y ha ve an obl i ga ti on to proce ed . To e i

the r de f en d i t or contact the i

ns ured to f i nd out i f they wan t them to def end i t." The court conc l

uded that at l east two, and p ossi

bl y f our, of th e si x a l l egati ons of oral noti ce we

re suf fi ci ent to giv

e plai nti ff "actual notic e" of

the K uzm a sui t. Speci fi cal l y , the court stated:

" Cincinn ati , I th

i nk, an d I d on’ t thi nk you
ne ed ex pert testi mony f or thi s, Cincinn ati

ki nd of indicat es t o me t hat t he bur den is o n Dicks on. The lawsu it has been filed. Yo u’ve been t old abo ut t he law su it
. Yo u d o n’t ha ve t o ha ve it o fficia lly ten de red to ha ve a d uty to de f en d. A t tha t poi nt y ou have an obl

iga tion to foll

ow-up, I thin

k, and say yo u’ ve be en su ed , let me s ee t he co mpla int , t ell me what i t’s a bout. You j ust asked m

e i f you were
covere d i n a l aw sui t, I b etter get the

i nf orm ati on s o I can d ecide . And it’s st ipulat ed in t he r eco rd t hat he
wa s a n a ge nt o f t he ag en cy a t t he t ime t his happ ened . H e wa s t he pe rso n t hey’d bee n do ing business wit h for years . T his happ ened ou t side t he bo ar d o f dir ec t o r ’s mee t ing s. He wa s s pe cific ally questioned i

n the b ank off

ic e about this l

awsui t. He6 fou nd o ut abo ut t he laws uit t wo mor e t imes while he
was at t he bo ar d o f direc t or s meet ings and appa re n tl y n ev er made a n y i n qui ry to th e b an

k to f oll ow-up. I th

i nk u nde r Cincinn ati , the knowledge of Dickson i s i

mputed to t he com

pany and un der Cincinn ati , once t he company knows there’s a l awsui t, they ’ve got an

obl i gation to fol

l ow-up." Upon fi ndi ng pl ai ntif f h ad a duty to pro vi

de coverage, the court directed plai ntif f to pay stipul ated damages

in the am ount o f $1,982,778.78. Whi le this am ount represented the to tal amount o f damages in

cluding any

penalties under sect ion 155, the co urt found t hat plaintiff ’s actions af ter receivi ng notice were not vexati ous and unreas onabl e. Thus, the court denied defen dant’s m ot ion f or sanctions un

der section 155 of

the Insuranc e Code (215 ILCS 5/155 (West 20 04 )). Both

pa rties f i l ed n oti ce s of

appe al f rom th e c i rc ui t cou rt j udgm en t. STAN DA RD OF REVIEW The part ies disagree on t he standard o f revi ew. Plain tiff asserts o ur review i s de novo , calli ng our att ention to the fact that where, as h ere, the material

facts of a case are un

dis puted, the i ns ure d’ s d i l i ge nc e i n f orwa rdi ng the req ui si te n oti ceto the

i ns ure r b ec omessol

el y a q ue sti on of law. See Grasso v. Mid-Century Insurance Co. , 181 Ill . App. 3d 286, 289, 536 N.E. 2d 977, 979 (1989) Defen

dant counters by

arguin g that t he question of whether the s ix alle ged i nstances of o ra l not ice co nst itu t e "a ct ual no t ice" is a fac t ual de t er minatio n and t her efo re will not be
r ev er se d u nle ss su ch de t er minat io n is a ga inst t he man ifes t we igh t o f t he ev ide nc e. While defendant’s asser tion is tr ue, it igno res t he fact t hat we fi rst must det ermin

e whet her defendant’s7

wri tten noti ce27 m onth s af ter th e sui t wa s f i l ed vi ol ate d the p ol i cy ’s

noti ceprov i si on, an d if so, wh at effe ct t ha t ha s o n d efe nd an t ’s r igh t t o co ve r ag e. De fen da nt do es no t dis pu t e t he fac t t ha t it di d n ot prov i de

wri tten n oti ce un ti l 27 mon th s af ter su i t wa s f i l ed . Inste ad , de f

en da n t ar gu es th at "actual n ot ic e trumps techn

ic al policy la nguage." Beca

use thi s argum

ent presents a di sputed question of law, our r eview as to this issue is de novo
. Gines v. Ivy , 358 Ill . App. 3d 607, 609-10, 832 N .E.2d 937 , 938 (2 005). AN AL YSIS Appeal W e n

ote a t the outs et that th

i s a ppe al req ui res usto con si

der th e a ppr opri ateappl i ca ti on of t he su pr eme co ur t ’s de cisions in Cinc innat i Cos . v. We

st Ame rican Ins uran ce C

o., 183 Ill . 2d 31 7, 70 1 N
. E
. 2d 49 9 ( 19 98 ) , an d t he line o f c as es ex emp lifie d b y Country Mutual Insurance Co. v. Livorsi Marine, Inc. , 222 Il l . 2d 303 , 8586 N .E. 2d 338 (2006 ). Cincinn ati add re ssed t he narrow question – on wh

ic h the appel

la te districts were in

confl ict – o f wh

ether the actual “tender” of a

defen se i s neces sary

to trigger an i

nsurer’s duty

to defen d. In resolv

in g that question the suprem

e court co nsi

dered the devel

opmen t o f an in surer’s duty to defen

d without referen ce to po li cy terms an d defen ses. The court concluded that so long as the i nsurer has actual noti ce of the c l ai m , "ten der" i s n ot requi red. B y contras t, Countr y Mutual i

nv ol ve d the q ue sti on of whether a

n i ns ure r cou l d b e h el d to a duty to de f en d w he n th ere ha d b een a f ai l ure of
co ndit ions p re ced ent expr essly dec lared in the p olicy. As in Cincinn ati , the a ctual question be f ore th e c our t wa s a n ar row on e – ca n an i n su re r’ s r i gh t to re l y on th e w ri tten n oti ce ter m of i ts contract be defeated solely by it s ina bilit y t o sho w it wa s p r eju dic ed by t he de lay. T he su pr eme
co ur t he ld t ha t it co uld no t , alt ho ug h p r eju dic e w as o ne fac t o rt o be co nsid er ed
. T he div isio n in8

our panel ref

lects dif ferent in terp retat ions of the i

mpact of those t wo cases. In the i ns tan t ca se , th e p arti

esan d the tri al cou rt f ocu se d al most exc l us i ve l y on w he the r or
no t ce r t ain info rmal c o nt ac t s be t we en ind ividua ls c o nne ct ed wit h We st Amer ica n a nd Yo rkv ille Bank ar os e t o " act ual no t ice" t rigg er ing a du t y to defend . A similar foc us is se en in the briefs and
or al arg ument in this ap pea l. Und er t he sp ecific circu msta nces of t his case , ho weve r, we be lieve that the two rel ev an

t questi ons h ere on appe al regar di ng th e i ssue of wh ethe r the c i rcui t court erred in determi ni ng that pla

in tif f owed a duty to provide cove rage to t he def

endan t are: 1) whether def

endan t’s written notice 27 m

onths af ter t he sui t was fi le d violated the poli

cy ’s n ot ic e pr ovisio n; and if so , 2 ) w hat effect defend ant ’s br eac h has o n defend ant ’s r ight t o c ove ra ge. The i ssue of actual noti ce h as n o bea ri ng on thes e que sti ons. Plai ntif f argues that defenda

nt’s wri tt en n ot ic e 27 m

onths af ter t he sui t was fi le d and a mere eight weeks before t he matte r was sched uled for t rial does not comply wi th t he policy ’s notice provi si on that required def endan t give " written notice of

the cl ai m or sui t as soon as pr ac t ica ble
. " P laint iff t ak es t he po sit io n t ha t t he six in fo rmal c o nt ac t s be t we en ind ividua ls
co nne ct ed wit h We st Amer ica n a nd Yo rkv ille B an k d o no t co nst it ut e “ ac t ua l no t ice ” a nd , t hu s, it h as n o ob l i ga ti on to prov i de

cov erag e to d ef en da n t i n l i gh t of de f en da n t’s al l eg ed f ai l ur e to compl y w ith the pol

ic y’ s notice provisi on. Defen dant responds argui

ng that pla

in tif f recei ved oral notice of the s

uit on si x separate occasions prior to bein g tendered written notice on J anuary 22, 200 4. Defend ant asse rt s t hat t hese six insta nces of o ra l not ice co nst itu t ed " act ual no t ice" t her eby trigge ri ng pl ai nti f f ’s duty to prov i decovera

ge . De f en da nt, l i kethe ci rcu i t cou rt, re l i esupon Cincinnati v. West American Insurance Co. , 18 3 Il l . 2d 317 , 70 1 N .E.2 d 49 9 (1 998 ) i n s upp ort of thi s proposi

tion
. Even though pl

ai ntif f h as dili gently pursued i ts clai m that wri

tt en n ot ic e was9

required to trigger its obl iga tion to pro vi

de coverage, it has al so proceeded o n appeal as though Cincinn ati

stated t he onl

y l aw that was relev

ant in this case. Our sup re me co ur t in Country Mutual Insurance Co. v. Livorsi Marine, Inc. , 222 Ill . 2d 303, 856 N.E.2d 338 ( 2006) addressed the proper construct ion of in surance pol

ic y n ot ic e provisi ons i n the context of decl

arator y judgme

nt actions as sertin

g policy defen ses. The i nsureds in Country Mutual

sued each ot her all

egin g tr ademark vi

olations related to the use of a busin ess
n am e. The i n su re r sub se qu en

tl y f i l ed a c om pl ai n t f or d ec l arator

y j udgm en t. Th e i n su re r s oug h t a judg ment t hat it had no o bligat ion t o d efend o r inde mnif y either insure d in co nnect ion wit h t he trad em ark l aw sui t. The i ns ure r ar gue d that the i

ns ure dsbr each ed the i r pol i ci es ’ n oti ceprov

i si on by f ai l i ng to i nf orm i t i n w ri ti ng of the l aw sui ts f or m ore th an 20 m onth s. The noti ceprov i si on stated: "If

a c l ai m i s m ade or ‘ sui

t’ is b roug ht a gai ns t an y i ns ure d, y ou
m us t: (1 ) I mmediate ly reco rd t he sp ecifics o f the claim or ‘suit ’ and t he dat e r ece ived; and (2) Not if y us as soon as practicable
. You m us t se e to i

t tha t werec ei ve wri tten noti ceof the cl ai m or ‘sui t’ assoon a s practi cab l e." While the C ou nt ry Mut ual insur eds co nced ed t hat t heir no t ice wa s lat e, t hey co nt ende d t hat t he del ay did n ot prejudi ce the i nsurer, as the i

nsurer would h

ave h ad to pay for i

ndepen dent counsel fo rbo t h p ar t ies r eg ar dle ss o f wh en it r ec eiv ed no t ice
. T hu s, t he insu r ed s a r gu ed t ha t t he de lay in notice sh ould not reli

eve the i nsurer of i

ts duty to pr ovide

coverage. The trial

court granted a10

de cla r at o ry jud gme nt t o t he insu r er an d t he ap pe llat e c o ur t affir med
. T he insu r ed s s ub se qu en t ly sough t fur ther re vi ew. In a ffi rming t he judg ment o f the app ellate co ur t , o ur sup re me co ur t not ed t hat t he pr ese nce o r a bsenc e o f pre judice t o t he insur er was only o ne fact or t o c ons ider when d et er mini ng whether the i

nsured f ulf il le d a poli cy condi tion requi rin g reasonabl

e notice. Country Mutual , 222 Ill. 2d at 317 , 8 56 N .E .2 d at 346 . H ow ever , t he co ur t held t hat onc e it w as d et er mined t hat t he i ns ure r di d n ot rec ei ve reason ab l e n oti ceof an occurren ceor a l aw sui t, th e i ns ure d c oul d n ot
recover, reg ardl

ess of w hether the lack of

reas onab l e notice

prej udiced th

e i ns urer. Country Mutual , 222 Ill . 2d at 312, 856 N. E.2d at 343. Speci fi cally , the court stated: “W hen c onstrui

ng th e languag e of

an i ns uran ce pol i cy, a court is to ascertain

and gi ve ef fect to t he i

ntentions of the parties as expres sed by

the words of the policy . [Citation.] An in surance pol i cy m ust b e con strued

as a whole , gi vi ng e f f ect to eve ry provision. [Ci

tation .] If

the words us ed i

n the pol i cy are
unam bi guous, t hey

are giv en thei r plai n, ordina ry, an d popular
me ani ng. [Ci tation.] Although i

nsuran ce poli ci es are construed l i b eral l y i n f av or of cov erag e, th i s r

ul e of con str uc ti on com es i n to play onl y wh en the p oli cy l anguag e i s am

bi guous. [ Ci

tation .]
** * [ I ] nsu r an ce po licy no t ice pr o visio ns * ** impo se va lid prerequisi tes to in surance cove

rage. [Citations.] A pol

ic y
con di ti on re qui ri n g n oti ce ‘as s oon as pr acti ca b l e’ i s i n ter pr ete d to
me an ‘wi thin a reasonabl

e tim e.’ [Ci tation.] Whether n

ot ic e has11 been g iven within a r eas ona ble time de pend s o n t he fact s and ci rcum stan ces of e ach cas e. [Ci tation .] Brea chin

g a pol icy’s notice clause by failing to give reasonable notice w ill defeat the right of the insured party to recover under the policy
. ” ( E mph as is adde d.) Country Mutual , 222 Ill . 2d at 311-12, 856 N.E.2d at 342- 43. The not ice pr ovisio n at issue he re is ident ical to t he no t ice pr ovisio n fou nd in Country Mutual . Bot h poli

ci es condi tioned coverage upon recei vi ng "wri tt en n ot ic e" of the l

awsui ts "as
soo n as pr acti ca b l e. " Th i s c on di

ti on ensu re s th at th e i n su ra n ce ca rri er i s a l l owe d th e op por tun i ty t o a deq uat ely investiga t e t he fact s o f the oc cur re nce, t ake par t in disco ver y and se t t lement
ne gotia tions an d also def end the sui t if the m atter procee ds to tri al
. Zurich Insurance Co. v. Walsh Constr

uction Co. , 3 52 I ll. App. 3d 5 04, 509 , 8 16 N .E .2 d 80 1, 806 (2 004 ). While the
co ur t in Countr

y Mutual did no t re ach t he issue of w het her t he insur eds ’ wr itt en no t ice 20 mont hs after sui t had been

fi le d was i n f act reasonable, Ill

in ois courts have h

el d that a delay

of even a few
m onths i n gi vi ng n otice bre ach es the pol i cy as a matter of l

aw an d def eats c overa

ge. Montgom ery Ward Co. v. Home Insurance C o. , 324 Il l . Ap p. 3d 44 1, 449, 7 53 N.E.2 d 999, 1 005 (2 001); Equity Gen eral Ins urance Co. v. Pati

s , 119 Il l . Ap p. 3d 23 2, 237, 4 56 N.E.2 d 348, 3 52 (19 83); Illinois Valley Minerals Corp. v. Royal-Globe Insurance Co. , 70 Ill . App. 3d 296, 300, 388 N.E.2d 2 53, 256

(1979 ). In t he pr ese nt cas e, it is und isput ed t hat 27 mo nt hs pa ssed bet wee n t he initiat ion o f the de f am ati on su i t b y K uz ma a n d def en da n t’s wri tten n oti ce of th e s ui t. We do n ot b el

i ev e th at a del ay of 2 7 m onths constitutes

noti ce wi thi n a reas onab l e ti

me i n l i ght of the f act tha t di scovery12

had al ready c losed an

d the case was s chedul

ed to pr oceed to trial

in ei ght weeks. Upon caref ul
rev i ew , we f i nd no a uthori ty tha t has i nte rprete d a 27 m onth de l ay to sa ti sf y the l an gua ge"a s s oon as p ra ct icable. " Mo re ove r, defend ant has failed t o p ro vide us wit h any suc h aut hor ity. G iving the langua ge o f the not ice pr ovisio n its p lain and o rd inary meaning, we c onc lude t hat defend ant bre ach ed th e notice

claus e as a m atter of l aw. In comi ng to t hi s concl

usi on, we reject def

endan t’s assertion that "actual

notice trumps tec hn i cal pol i cy l an gua ge ." Thi s a ss erti on off ends the wel

l-se tt le d prin ci ple of contract
constructi on tha

t each provision of

a con tract m ust b e gi ven i ts f ull ef f ect. Country Mutual , 222 Ill . 2d at 311, 856 N. E.2d at 343. We accom pli sh this task by

giv in g the terms used i

n each provisi on their pl

ai n, ordina ry an d popular m

eani ng. Country Mutual , 222 Ill . 2d at 311, 856 N. E.2 d a t 34 3. H ere, th e c i

rc ui t cou rt’ s a cc ep tan ce of wh at i t de em ed "a ctual n oti ce " a cte d to render the poli

cy ’s wri tt en n ot ic e provis ion m

eani ngless. In ess ence, the court rewro te the notice provision by

sub sti tutin g the term "actual noti ce" f or the term

"wri tten n otice ." The parti

es h ere bargain ed for a pro mise of coverage in exch ange for "written not ice *** as soon as pract icab le." The circu it co ur t her e failed t o g ive effect t o t hese intent ions a s una mbiguo usly expr esse d by t he words of the policy . See Country Mutual , 222 Ill . 2d at 311, 856 N. E.2d at 342- 43. Moreover, wedi sa

gre e w i th b oth th e p arti es ’ a nd the ci rcu i t cou rt’ s i nte rpreta ti on of Cincinnati v. West American Insurance Co. , 18 3 Il l . 2d 317 , 70 1 N .E.2 d 49 9 (1 998 ). U pon review, we do not r ead Cincinn ati to stand f

or t he proposition tha

t "actual notice" trumps tech ni cal pol i cy l anguag e. In stead , Cincinn ati i nv olv ed a c onf l i ct am ong the app el

l ate court dist rict s co ncer ning whet her an insur ed ha d a d ut y to "t ende r" t he de fense o f a lawsu it t o t he i ns urer ( Institute of London Underwr iters v. Hartford Fire Insurance Co. , 234 Ill . App. 3d 70,13

599 N. E. 2d 1 311 (1 992 )) or whet her "ac t ual no t ice wit hou t t ende r" is s ufficient t o t rigg er t he duty to defend (Federate

d Mutual Insurance Co. v. State Farm Mutual Automobile Insurance Co. , 282 Ill. App. 3d 71 6, 66 8 N.E .2d 6 27 (1 996) ). While the co urt det ermin ed t hat an insurer’s duty to defend i

s triggered sol el

y b y i ts havi ng "actual notice" of

a cl ai m a gai nst i ts insured ( Cincinn ati , 183 Ill . 2d at 325, 701 N. E.2d at 503) , the court acknowledged that poli cy defen ses did no t fact or in its de cision ( Cincinn ati , 1 83 I ll. 2d a t 323 , 7 01 N .E .2 d at 502 ). Sp ecifically, the court observed i

n Footnot e 1: "We n ot e that nei

ther Cin ci nna ti nor Wes

t Ame rica a rgues gov er n an ce of th e te rm s of th e p oli cy

wi th re sp ect to wh

en th e d uty t o d efend a rises . C ons equ ent ly, po licy defenses ha ve no t been a f actor [i n] our d ecision." Cincinn ati , 183 Ill . 2d at 323, 701 N.E.2d at 502. T he co ur t we nt o n t o find t ha t t he qu es t io n o f wh et he ran insu r er ha s a du t y t o de fen d u su ally depe nds on the al l egati ons of the c omp l ai

nt an d the scope of the pol

i cy . Cincinn ati , 183 Ill . 2d at 323, 701 N.E.2d at 502. Specif ic ally , the court stated: "In order to determi

ne wh ether [an] i

nsurer’s duty

to defen d [an insure d] has a risen, t he co ur t must co mpar e t he allega t ions o f the und erl y i ng c omp l ai

nt to the pol

i cy l anguag e. [Ci

tations.] ** * If the c ourt determ

i ne s tha t these al l egati ons f al l wi thi n or potentiall

y
within t he po licy’s cove ra ge, t he insur er has a dut y to defend [a n] insu r ed ag ain st t he un de r lying c o mpla int
. [ Cit at io ns. ] " ( E mph as is i n ori gi na l) Cincinn ati , 183 Ill . 2d at 323, 701 N. E.2d at 502,14 quot in g Marine Corp. v. Liberty Mutual Insurance Co. , 154 Ill . 2d 90, 125, 607 N.E. 2d 1204, 1220. Wh il e Cincinn ati

does in fact stand f

or t he proposition tha

t t he duty to defen d aris es when the in surer has "a

ctual n ot ic e" of a sui

t pendin g agai nst i ts insured, it appears cl

ear that an i

nsurer
ca n b e a b sol v ed of th i s d uty b y ob tai n i n g a de cl arator y j udgm en t th at i t h as n o ob l i ga ti on to defen d or indem

nify under the actual

terms of the pol

ic y. See Country Mutual , 222 Ill . 2d at 312, 856 N.E.2d at 343. In the present case, pl ai ntif f ex ercis ed i ts preempti

ve ri ght to seek a de term i na ti on of i ts re sp ons i

bi l i ti esun der th e p ol i cy . Sp ec i f

i cal l y , pl ai nti f f ’s com pl ai nt f or decl arator y judgme

nt asked whethe

r defen dant’s wri tt en n ot ic e 27 m

onths af ter t he sui t was fi le d
v i ol ate d th

e p oli cy ’s n oti ce prov i si on , a n d if so, wh at e f f ect th at h as on de f en da n t’s ri gh t to coverage. Thus, i

t is the actual

la nguage of the

notice provi si on that is at i ssue -- not "actual not ice" a s discu ssed in Cincinn ati . We t her efo re find tha t ou r c ase st ands in po st ur e wit h Country Mutual and it is its a nalysis and t hat of o t her cas es c ons t ru ing po licy not ice pr ovisio ns, no t t he
re as o ning o f Cincinn ati , t hat cont rols. Il l i n oi s l aw i s c l ea r that i n su ra n ce pol i cy n oti ce prov i si on s i m pos e v al i d p re re qui si

tes to in surance cove

rage ( Country Mutual , 222 Ill . 2d at 311, 856 N. E.2d at 343) , and a del ay of even a few months in giv in g notice b reaches the pol

ic y as a m atter of law (

Montgom ery Ward, 32 4 I ll. App. 3d at 449, 753 N.E. 2d at 1005; Equity General Insurance , 119 Ill . App. 3d at 237, 456 N.E .2d at 352 ; Illinois V

alley Mine

rals , 70 I ll. A pp . 3d at 30 0, 38 8 N
. E
. 2d at 25 6)
. Ou rsu pr eme court specifi

cally found that breach

in g a poli cy ’s n ot ic e cl ause by

fai li ng to give reas onabl

e notice wil l def eat the ri ght of the i ns ured p arty

to covera

ge un der the pol

i cy . Country Mutual , 22 2 I ll. 2d a t 312 , 8 56 N .E .2 d at 343 . We find tha t Yo rk vill e Ba nk’s w rit t en no t ice 27 mont hs aft er fil ing15

of the l aw sui t doe s n ot sa ti sf y i ts ob l i ga ti on to prov

i dewri tten noti ceof the cl ai m or s ui t “ assoon as practicable .” Because def endan t breached the polic

y’ s notice provisi on to provide wri tt en notice as s oon as practicabl e, plai ntif f is relie ved of an y duty it had to provide def

endan t coverage
un de rt he po licy. We ackn owledge the m

any cases ci ted by the dis sent i

n support of its posi

tion that Cincinn ati

r eq uir es us t o affir m t he t r ial c o ur t . While we be lieve mo st o f t he m ar e d ist ing uis ha ble beca use t he co nt ra ct s do not re quir e wr itt en no t ice, t wo do sup po rt t he ar gument of t he disse nt
even where wri

tt en n ot ic e i s dem

anded i n the contract. See American Home Assurance Company v. The City

of Granite C

ity , 59 Ill . App. 3d 656, 375 N.E. 2d 969 ( 1978) and McLaughlin v. Attorneys’ Title Guaranty Fund, Inc. , 6 1 I ll. App. 3d 9 11, 378 N. E. 2d 3 55 ( 197 8) . B eca use t he
ca se law ap pe ar s t o be in c o nflic t , we be lieve t his is a ma t t er t ha t ne ed s t o be r es o lve d, ho pe fully
soo n er ra th er th an l ate r, b y th e s up re me c our

t. Be ca us e w e h av e d et er mined t ha t de fen da nt br ea ch ed t he po licy’ s no t ice pr o visio n a nd is therefore not entitl ed to co verage un der the policy , we need n

ot reach the question of whether defen dant’s si x al le gations of

oral notice pri

or t o forwardin

g written notice cons

tituted "actual not ice." Thus, we expre ss no o pini on as t o whet her plaintif

f had "actua l notice" of Kuzma’s la wsui t. Instead, we o nl

y f in d that plai ntif f di d not receive

notice as requi

red by the policy

whi ch the pa rt ies bargained for and ent ered into voluntar il y. Accord ingl

y, we reverse the circuit cou rt ’s fi ndi ng that defen

dant is entitled to a declaratory j udgme nt that plai

ntif f owes a duty

to provide
co ve r ag e ( de fen se an d in de mnifica t io ns) t o de fen da nt an d r ema nd t o t he La Sa lle C o un t y Cir cu it Cou rt f or f ur th er proce ed i n gs . We n

ote th at th e c i rc ui t cou rt’ s or der re qui re d W est A meri ca n to als o ind emn ify de fen da nt s, ap pa r en t ly o n t he ba sis t ha t it ha d a du t y t o de fen d. We be lieve t his16

i ssue also ne edsto be re- ex am i ne d on re mand. Cross Appeal On cr o ss ap pe al, de fen da nt ar gu es t ha t t he cir cu it co ur t er r ed in d et er mining de fen da nt is not en titl ed to san cti ons u nde r section 155 of the In sura nc e Code (215 IL CS 5/1 55 (W

est 200 4)). Section 155 o f the Insurance Code pro vides, in pertinen t par t, as foll

ows: "(1) In any

action b y or agai nst a compan

y w herei n there i s i

n i ssue t he liabili t y of a co mpany on a po licy or p olicies o f insura nce o r t he
am ount o f the l

oss payabl

e thereunder, or for an unreas onabl e del ay i n s ettl i ng a c l ai m , an d i t appe ars to the cou rt th at such a

cti on or de l ay i s v exati ousan d un rea son ab l e, th e c ourt m ay al l ow a s p art of the taxable costs in the action reasonable atto rney f ees, ot her cost s, plus an am

ount not t o exceed any one of the followin g amounts: (a) 60% of the amount whi ch the court or jury

fi nds suc h pa r t y is e nt it led t o r ec o ve rag ain st t he co mpa ny, ex clu sive o f all cost s; (b) $60,000; (c) the excess

of the am

ount whic h the court o r jury

fi nds
suc h par t y is entit led t o r eco ver , e xclusive o f co st s, o ver t he
am oun t, i f an y , wh i ch the com pa ny of f ere d to pa y i n s ettlem en t of the c l ai m prior to the action. 215 ILCS 5/155 (We st 2004 )." A t the outs et, w e h

ol d that the q

ue sti on c onc ern

i ng se cti on 1 55 r el i ef i s m oot. A moot
cas e is o ne which s eek s t o d et er mine an abst ra ct que st ion – one which do es no t re st upo n exist ing17

f acts or ri ghts
. Pasqu inelli v. V

illage of Mundele in , 257 Ill . App. 3d 1057, 1067, 630 N.E. 2d 1113, 1 20 (19 94). Se cti on 155 provi desa rem edy f or an i ns ured w ho en coun ters un ne ces sary di f f i cul tie s wh en an i ns urer wi thholds pol

i cy bene f i ts. Bedoya v. Founders Insurance Company , 29 3 I ll. A pp . 3d 66 8, 67 9, 68 8 N
. E
. 2d 75 7, 76 4 ( 19 97 )
. Ho we ve r , a d efe nd an t ca nno t be liable f or secti on 155 rel

i ef wh ere n o ben ef i ts are owe d. Martin v. Country Mutual Insurance Company , 31 8 Ill. App. 3d 7 51, 764 , 74 2 N. E. 2d 8 48, 857 (20 00) ; O’Rourke v. Access Health, Inc. , 282 Ill . App. 3d 394, 406, 668 N.E. 2d 214, 222 (1996). T hus, be cause we h ave al ready de t er mined t ha t no be ne fit s a r e o we d u nd er t he po licy, t he qu es t io n o f se ct io n 1 55 sa nc t io ns is
moo t . E ven if we we re t o c ons ider t his que st ion o n its mer its, how ever , w e wo uld find t hat t he tria l court did not err i

n de term i ni ng th at plai ntif f ’scond uct was not ve xa tious or unre ason

ab l e. The question of whether t he i nsurer’s action and delay

is v exatious and unreasonable i s a factual one co mm

itte d t o t he discretio n of the circuit c our t. Thus, t he circuit co urt ’s det er minatio n will not be dist ur bed o n re view unles s an a buse of d iscre t ion is de monst ra t ed in t he record. Dark v. United States Fidelity & Guaranty Co. , 175 Ill . App. 3d 26, 30-31, 529 N.E .2d 662 , 6 66 ( 198 8) . T he co ur t must co nsider t he insur er ’s co nduc t in the t ot ality o f the ci rcum stan ces . Estate of Price v. Universal Casualty C o. , 322 Ill . App. 3d 514, 518, 750 N.E. 2d 739, 743 (2001). Specifi

cally , a court should look to the in surer’s attitude, whether the i nsured
wasf orced to f i l e su i t to recover, a

nd w hether the i

ns ured was depri

ve d of the u se of

i ts property . Estate of Price , 322 Il

l . Ap p. 3d a t 517, 750

N.E.2d a t 742. A bona fide dispu t e o ver co ver age exist ed in t his case . As a lread y explained, defend ant b re ach ed th e p oli cy ’s

wri tten n oti ce prov i si on , w h i ch l ef t pl ai n ti f f i n dou b t ab out i ts d uty to provide cove

rage. As a resul

t, plai ntif f f il ed i ts declaratory j udgme

nt action. We h

ave al ready18

de t er mined t ha t de fen da nt did no t pr o vid e it s ins ur er wit h w r it t en no t ice wit hin a r ea so na ble t ime
as r equ ired by the c ont ra ct . T her efo re , t he ea rliest t ime West American w as leg ally on not ice and requi red to cons i der i

ts duties a nd ob l i gations u

nde r the p oli cy wasJan uary 19, 200 4, (or Jan

uary 22 wh en t he no t ice wa s a ct ua lly re ce ive d)
. Ac co r din gly w e r ev iew t he t r ial c o ur t ’s de cis io n in li ght of Wes

t Ame rican ’s conduct durin

g the 59 days between J

anuary 19 and March

9, 2004, when it fil ed it s de clara t or y judgment act ion. We find no mo re su pp o rt in t he r ec o rd t han did t he t ria l co ur t fo r c o nclu ding t hat pla int iff acted vexatiously

or unreasonabl

y i n determi ni ng i ts course o f action. On Jan uary 22, 2004, three day s af ter receivi ng wri tt en n ot ic e, Caroly

n Mah er, a li tigation s peci alis t for plai ntif f, contacted defend ant aft er a cu rso ry re view o f defend ant ’s claim for co ver age . Ma her informed defend ant that the Kuzma suit wo uld be covere d under the po li cy. Maher, ho wever, instruct ed defendant ’s
co unse l to co nt inue r epr ese nt ing defend ant in the lit igat ion. Fo ur t een d ays lat er Mahe r se nt defendan t a lett er on March 5, 2 004, indicating to d efendan t t hat plai ntif f was stil l i n the proce ss of e va l uati ng th e cl ai m . Pl ai ntif f f i l ed i ts com plai nt f or decl aratory j udgm en t on Mar ch 9, 2004
. W h i l e def en da n t tak es sp ec i f i c iss ue wi th Ma h er ’s Ja n ua ry 22 n d te l ep h on e c al

l an d M arch 5th l ette r, w e do not v

i ew the se ac ti ons asve xa ti ousor un

rea son ab l e g i ve n th e re l ati ve l y sh ort pe riod of ti me b etween de f

endan t’s f orwardi ng of wri tten n otice and the i m pen di ng K uzm a lawsui t. Mo r eo ve r , Ma he r ’s init ial e rr o rin ju dg men t as t o wh et he rpla int iff wo uld pr o vid e c o ve r ag e d id not in an y way compromise or aff

ect defen dant’s def ense i n the K uzm a sui t. Again, Maher spe ci f i cal l y i nstructed de f

endan t’s c ouns el

to conti nue repre sen tin g def endan t in the l i tig ati on. Thus, when

viewi ng the tot ality

of the ci rcumstances we can

not say that the ci

rcuit court abused i ts di scre tion i n de term i ni ng d ef endan t is not en titl ed to san cti ons u nde r section 155.19

Accordin gly , we aff irm the ci rcuit court’s fi

ndi ng that defen

dant is not entitled to sanctions under
section 155 of the In sura nc e Code (215 IL CS 5/1 55 (W

est 200 4)). For the above reasons, the ci rcuit court’s order is reversed on the i ssue of cove

rage, af f i rm ed on th e iss ue of sa n cti on s, an d th e c au se re man de d f or f ur th er proce ed i n gscon siste n t wi th thi s order. Rev erse d i n pa rt, af f i rmed i n pa rt, and rem anded. JUSTICE SCHMIDT, specially concurring: I concur but write separately to point out what I think should be obvious. Many of the insurance coverage notice cases involve swearing contests between the insurance carrier and its insured as to whether oral notice was given. This case was decided below on just such a contest. The contract of insurance contained a valid condition precedent which required written notice of a claim. The obvious intent of this condition is to avoid these "he said-she said" coverage disputes. There is nothing either draconian or unfair about this condition. The written notice provision is valid. The contract language has obviously been approved by the Department of Insurance. There is no reason not to enforce it. The underlying lawsuit was filed September 24, 2001. Written notice was not given to West American until January 19, 2004, 21⁄2 years later and less than 2 months before a jury trial was to begin. "Under Illinois law, a delay of even a few months in giving notice breaches the policy as a matter of law, defeats coverage, and justifies the entry of summary judgment for the20

insurance company." Montgomery Ward & Co. v. Home Insurance Co. , 324 Ill. App. 3d 441, 449, 753 N.E.2d 999, 1005 (2001), citing Equity General Insurance Co. v. Patis , 119 Ill. App. 3d 232, 237-38, 456 N.E.2d. 348, 352 (1983). (involving less than a fivemonth delay in fire loss notification); Illinois Valley Minerals Corp. v. Royal-Globe Insurance Co. , 70 Ill. App. 3d 296, 300, 388 N.E.2d 348, 256 (1979) (involving a six-month delay of notice from the date of the river barge accident). The bank had lawyers. It waited until less than two months before a jury trial in the defamation case to give written notice. Under these circumstances, I do not know how any reasonable person could find that the written notice was given "as soon as practicable" as required by the contract of insurance. There is no justification in law or equity for not enforcing the written notice provision of the contract. The dissent in this case misconstrues the import of the Cincinnati case. The Cincinnati case relied upon by the dissent did not deal with a written notice provision. Furthermore, in Cincinnati , there was absolutely no issue as to whether West American actually had notice. In the case before us, all the bank had to do was send a copy of the complaint to the insurer. As contemplated by the contract between the parties, this would have obviated any swearing contest as to whether the insurer had notice and would have clearly given the insurer the kind of notice necessary to locate and defend the claim. JU STI CELYTTO

N c on cu rri n g i n pa rt, d i ss en ti n g i n pa rt:21

I di ss en t f rom the maj or ity ’s co nclusio n t hat plaint iff did no t have a dut y to defend and inde mnify Yor kvil le National Bank. T hus, I a lso disagree wit h the majority’s holdin g t hat de fendant’s request f or san cti ons i s m oot. Neverth

eless , I conc

ur wi th the maj ority ’sf

i ndi ng th at the tri al court did not ab use i ts di scre tion by den y i ng d ef endan t san cti ons. I. DUT Y TO DEFE ND AND IND EMN IFY I wou ld aff

irm the trial cour t’s ru ling t hat pla int iff had actual

notice of the K

uzm a l awsui t and, thus, h ad a d uty to de f en d a n d i n dem n i f y Yor kv i l l e N ati on al Ba n k. I n re ach i n g the op pos it e concl usi on, the maj ority h

as (a) di sreg ard

ed the arg um en ts of the pa rti esan d the a ppl i ca bl e ru l e of la w, (b) m is applie d t he law t hat it claims t o r ely upo n, and ( c) igno re d I lli nois p re ced ent . Ap plying t he appro pri at e law t o t he fact s o f this ca se, I find t hat plaint iff bre ache d it s du t y to defend and i nde m ni f y Yorkvi l l e Nati

onal Ban k. A. A ctual Notic e Un

der Ci n ci n n ati The maj ori

ty poi n ts o ut th at p l ai n ti f f n ev er dispute d th

e a pp l i ca ti on of actual n oti ce to t his
case. Ne ve r t he les s, t he majo r it y, on its o wn, dec ided t hat act ual no t ice wa s irr elevant . S uch a ru ling is contrar y to Ill i noi s law. See Ci

nc i nn ati Cos . v . W es t Am

eri ca n I ns ura nc e C o. , 183 Ill . 2d 317, 328, 701 N.E.2d 499, 504 (1 998 ). In Ci n ci n n ati, the supreme c ourt cl early stated t hat actual n

ot ic e o f a clai m triggers an i ns ured’ s duty

to def end. Ci n ci n n ati, 183 Ill . 2d at 328, 701 N. E.2d at 504. The courtadopted th

i s rul e f or anu mbe ro f r ea so ns: ( 1) t he insu r er is in a better position than

the in sured to kn ow the s cop e of the in

surance contract and i

nsuran ce l aw; (2) the i

nsurer, hav

in g recei ved
consi derati on for including t he i

ns ure d on i ts p ol i cy , sh oul d n ot be al lowed to avoid i

ts responsibil

ities
as a r esu lt o f the insure d’s igno ra nc e; and ( 3) th e st at e has an inte re st in having insure d pe rso ns adeq uatel y repre sen ted i n l i tig ati on. Ci

n ci n n ati . 183 Il

l . 2d at 32 8-29, 7 01 N.E.2 d at 504 -05.22

The major ity at t empt s t o limit ap plicat ion o f the sup re me co ur t ’s r ule in Ci n ci n n ati onl y to
casesinv o lvin g w r it t en t en de rr eq ui r eme nt s c o nt ain ed in t he po licy. Ho weve r, t he cou rt’ s dec i si on in Cincinn ati doe s n

ot su ppor t such a l i m i tati on. Th e re as ons

set f orth by the su pre me c ourt f

or ado pt ing the actual n

ot ic e rule a

pply not o nl y to cases wh

ere a written

t en de rr eq uir eme nt is at issue , but als o t o cases in which a poli cy has a wri tt en n ot ic e requirem

ent. In both si

tuations, the in

surer "requi res an i nsured to jum

p through mean

in gle ss hoops toward an absurd end: tel li ng the insu

rer
so mething it al

ready kn ows." See Fe dera

ted Mu tual In su ra n ce Co. v . Sta

te Fa rm Mu t ua l Au t o mo bile In su ran ceCo. , 282 Il

l . Ap p. 3d 71 6, 725, 6 68 N.E.2 d at 627 , 632-3 3 (199 6). No ot her Ill in ois court has rul ed, as the m aj ority does here, that t he Ci n ci n n ati cou rt’ s dec i si on sh ou ld be limit ed t o ca se s inv o lving a w r it t en t en de rr eq uir eme nt , r at he rt ha n a wr it t en no t ic e
re qui re men t. In f act, c our ts h av e a pp l i ed th e a ctu al

notice rule to cases in

volv in g written notice requiremen

ts. See Il l i n oi s F oun dersIn su ra n ce Co. v . B ar

n ett , 304 Ill . App. 3d 602, 609, 710 N.E.2d 28, 33 ( 199 9); Empl

oyers Rei nsuran ce Corp. v. E. Mil

le rInsuranc e Agen

cy , Inc. , 33 2 I ll. App. 3d 326, 339, 773 N.E.2d 707, 717 (2002). T hus, the m aj ority h as carved outan ex

ception to the actual noti ce rul e tha t is not recogn

ized or s upported b

y Ill i noi s law. B. Majo rit y’s Reliance o n Country Mutual 1. I n appl i ca b i l i ty o f Country Mutual De sp i te the cl ear applic ation of the ac tualno t ice rule to thi s c as e, th e m aj ori ty contends that
we shoul d ignore Cin ci

n n ati and inst ead re ly on Country Mutual Insuranc e Co. v. Liv

orsi Mari ne, Inc. , 222 Ill . 2d 303, 856 N.E. 2d 338 (2 006). Ac cordi

ng to the maj ority , thi s ca se " stan

ds i n posture wit h Country Mutual

* * *." We

di sag ree. In Country Mutual , the parties sti pula ted that t he i

nsurer did not receive

actual not ice o f the23

law su it until

the insureds provided written not ice m ore t han 20 m

onths af ter th e sui t was fi le d. Coun try Mutual , 222 Ill . 2d at 307, 856 N. E.2d at 340 . B eca use t her e wa s no co nt ent ion t hat t he in surer recei ved actual notice of the l

awsui t before the i

nsureds provi

ded thei r written notice , Coun

try Mutual ha s n o rel ev ance h

ere. The co ur t in Country Mutual did n ot dis cuss actual

notice b ecause i

t was not anis sue i

n that
ca se. On the other ha nd , I llino is c as es ha ve he ld t ha t an insu r ed may r ely o n a ct ua l no t ice in det er mini ng the reasonabl

eness of the notice gi

ven . See Un ive r sit y o f I llino is v . C on ti n en tal Ca sual ty Co. , 234 Ill . App. 3d 340, 365, 599 N.E. 2d 1338, 1355 (199 2); Illinois Valley Minera ls Co rp . v. Ro yal-Glo be In su

ran ceCo. , 70 Ill . App. 3d 296, 301, 388 N.E.2d 253, 257 (1 979 ). Thu s, by igno ring t he actua l not ic e plaint iff re ceived , a nd fo cus ing exclus ively on t he wr itt en no t ice t hat defend ant provided, th e m

aj ori ty has come to a conclus ion un supported by Il

li nois la w. See Un

i ve rs i ty of I llino is , 234 Ill. App. 3d at 365 , 59 9 N. E. 2d at 135 5; Ill in ois Val le y Min erals Corp. , 70 Ill . App. 3d at 301, 388 N.E .2d at 257.

2. Ma jo rit y’s M isap plica t io n o f Country Mutual Even if Cou nt ry M utualsom ehow appl

i ed to thi s ca se, the m

aj ority ha s m i sap pli ed i t. In Coun try Mutual , the c ourt held t hat a po licy condit ion, like t he o ne i n th i s ca se, re qui

ri ng n otice "[a]s
soon a s pra cti ca b l e" mea n s " wi th i n a rea son ab l e ti me. " 2 22 Il

l . 2d at 3 11 , 85 6 N .E. 2d

at 3 43
. Wh ether noticehas be en given w ithin a r eas ona ble time de pend s o n t he fact s and ci rcu m sta nc esof each cas e. Country Mutual , 222 Ill . 2d at 311-12, 856 N.E.2d at 343. To det ermi ne wh ether notice is reasonabl

e, court s m

ust anal yze several

facto rs, including (1) t he specifi c language o f the po li

cy’s noticepro visi

on, ( 2) t he insured ’s sophi stication in comm erce and insurance matt ers, (3) the insured’s
awareness of a

n event wh

i ch may trigger i ns uran ce c overa

ge, (4) t he i nsu r ed ’s dilig en ce in24

asc er t aining

whether policy co ver age is available, a nd ( 5) t he pr ese nce o r a bsenc e o f pre judice t o t he i ns ured. Country Mutual , 222 Il l . 2d at 31 2-13, 8 56 N.E.2 d at 343 -44. T h e m aj ori ty concl udes that sin

ce pl ai ntif f di d not receive

written no t ice o f t he law su it un t il 27 months af

ter suit was fil

ed, such not ice was per se un rea son ab l e. S uc h a

con cl us i on i s n ot supported by Country Mutual , where the suprem e court specif

ic ally refuse d to ex

pre ss an opi ni on
re gar ding wh ethe

r a 20-month del

ay was unreasonab le . See Country Mutual , 222 Ill . 2d at 321, 856 N.E.2d at 34 8. T he len gt h o f t ime in g iving no t ice is ju st o ne fac t o rt o co nsid er in d et er mini ng whether notice is reasonab le . See A meri ca n Hom e Ass ur an ce Co. v . C i ty of Gr an i te C i ty , 59 Ill . App. 3d 656, 659, 375 N.E. 2d 969, 972 (1978). T here i s no rule that a le ngthy del ay in providi ng notice ab so lut ely bars recovery

under a poli

cy requiri ng notice . See American C ou nt r y I nsur ance Co . v. Bru hn , 289 Ill . App. 3d 241, 248, 682 N.E. 2d 366, 371 (1997). In fact, court s hav e found that

de lays of two y ea rsan d l onger a ren ot per se unreasonab le
. See, e .g., A l l sta te In su ra n ce Co. v . C ari aoto , 194 Ill . App.3d 767, 551 N.E.2d 382 ( 1990) (2 1⁄2 year de lay); Grasso v. Mid-Century Insurance Co. , 181 Ill . App. 3d 286, 536 N.E.2d 977 (19 89) (t wo -year d elay ); Broth erh ood M utua l In su ran ceCo.
v . Rose th , 177 Il l . Ap p. 3d 44 3, 532 N .E.2d 354 (1988 ) (two-year de l ay

). The majo r it y fails t o an alyz e t he nu mer o us fac t o r s o ut lined in Country Mutual to det er mine t he rea son

ab l en es s of

th e n oti cei n th i s c as e. Ins

tead, i t con si ders onl y the l en gth of ti me i t took defend ant to pr ovid e wr itt en no t ice. Again, t he major ity’s d ecisio n is not sup po rt ed byIll in ois l aw, i nc l udi ng th e ca se i t reli es u pon to reac

h i ts conc l usi on. C. Il l i n oi s P re ce den

t Fi nal ly , I disagree wi

th the ma jori ty’s s uggestion that appl

yi ng the actual

noticeru l e to t his
case would be

a depart ure from well-establi shed l aw. For decades, Ill

in ois courts have h

el d that25

noti cetha t doe s n ot str ictly comply wi

th an insurance po li

cy’s n oti ce prov i si on may sti l l con sti tute noticeadequat e to trigger an insurer’s duties. See Si m mon v . Iow a M

utua l Ca sual ty Co. , 3 Ill . 2d 318, 121 N.E.2d 509 (1954) ( notice gi ven by someo ne o t her t han insur ed w as e ffect iveeven though policy r eq uir ed no t ic e to be g iven by insured) ; Ba

rnett , 304 Ill . App. 3d at 612, 710 N.E .2d at 35 (insured’s fai

lure to forward acop y of suit and summ ons t o insurer as requ ired by i nsured’s policy did not ab sol

ve i ns urer of duti es to def

end an d i nde m ni f y i ns ured). In Si mmo n , t he in surance pol ic y a t issue requi

red the in sured to give wri

tt en n ot ic e of an
acc ident t o t he in

surer or any of

it authorized age

nts as soon as practic abl

e. Si m mon , 3 Ill . 2d at 320- 21, 121 N .E.2d at 51 1. The poli cy also provided that no action would lie agains t t he i nsurer unless t he insured co mpl

ied wi th all of the policy ’s terms. Si

m mon , 3 Ill . 2d at 321, 121 N. E.2d at 511 . T he in sured was i nvol ved in an autom obi l e ac ciden t. Si m mon , 3 I ll. 2d a t 319 , 1 21 N .E .2 d at 510 . T he i ns ure d never gave n

ot ic e to his i

nsuran ce compan

y of the accident, but the insurance compan y recei ved a letter f

rom th e i nj ured p arty ’sattorney

three m onths af ter the a cci den t. Simm on , 3 Ill.2d at 319-20, 121 N.E.2d at 510. The appellate court held that the insurer had no duty to defend the insured because he failed to give reasonable notice to the insurer. 3 Ill. 2d at 321, 121 N.E.2d at 321. The supreme court reversed, holding that as long as reasonable no tice is given to the insurer it does not matter who gives the notice. Simmon , 3 Ill.2d at 323, 121 N.E.2d at 512. Since the supreme court’s ruling in Simmon , courts have held that notice is effective even if it is not provided by the insured. See Illinois Valley Minerals Corp. v. Royal-Globe Insurance Co. , 70 Ill. App. 3d 296, 388 N.E.2d 253 (1979); McLaughlin v. Attorneys’ Title Guara nt y Fund, Inc. , 61 Ill. App. 3d 911, 378 N.E.2d 35526

(1978); Rivota v. Kaplan , 4 9 Ill. App . 3d 910, 364 N.E.2d 337 (1977 ). Simmon and its progeny demonstrate that an insured’s failure to strictly comply with a notice provision will not defeat coverage when the insurance company receives actual not ice of a claim. D. Trial Court Ruling Should be Affirmed Here, the trial cou rt f ound that plaintiff received actual notice of the Kuzma suit, thereby triggering plaintiff’s dut y to defend and indemnify. I agree. "Actual notice" is "notice sufficient to permit the insurer to locate and defend the lawsuit." Cinc innati , 183 Ill. 2d at 329, 701 N.E.2 d at 505. In order to have actual notice to locate and defend, the insurer must know both that a cause of action has been filed and that the complaint falls within or potentially within the scope of coverage of one of its policies. Cincinnati , 183 Ill. 2d at 329-30, 701 N.E.2d at 505. In this case, the trial court made fact findings that Dickson,
an agent of plaintiff, received oral notice of the Kuzma lawsuit fromLiggett in late 2001 or early 2002, when he told Dickson about Kuzma’s defamation lawsuit and asked Dickson if its insurance policy would provide coverage for the suit. This notice was sufficient to permit plaintiff to locate and defend t he Kuzma lawsuit. Because plaintiff failed to do so, it breached its duties under its policy and should be liable to Yorkville National Bank. Thus, I would affirm the trial court’s decision on this issue. II. SANCTIONS27

The majority held that the issue of sanctions was moot because plaintiff owed no benefits under the policy. Because I would find that plaintiff owed Yorkville National Bank a duty to defend and indemnify , I disagree that the issue of sanctions is moot. Nevertheless, I concur with the majority’s decision to affirm the trial court’s denial of sanctions because I believe that there was
a bona fide dispute over coverage in this case.