Docket No. 108285.

IN THE

SUPREME COURT

OF

THE STATE OF ILLINOIS

WEST AMERICAN INSURANCE COMPANY, Appellee, v.

YORKVILLE NATIONAL BANK et al., Appellants. 

Opinion filed September 23, 2010.

JUSTICE BURKE delivered the judgment of the court, with

opinion.

Chief Justice Fitzgerald and Justices Thomas, Kilbride, Garman,

and Karmeier concurred in the judgment and opinion.

Justice Freeman dissented, with opinion.

OPINION

The issue in this case is whether the insured violated its liability

insurance policy by failing to give timely written notice to the insurer

as specified in the policy, thereby relieving the insurer of its duties to

defend and indemnify. The appellate court held that the insured

breached the policy’s notice provision and was therefore not entitled

to coverage. 388 Ill. App. 3d 769. For the following reasons, we

reverse the appellate court. 

BACKGROUND

On September 24, 2001, Sheryl Kuzma filed a defamation lawsuit
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in the circuit court of Will County against Yorkville National Bank

(Yorkville) and its vice president,BernardWiegmann.Kuzma alleged

that Wiegmann uttered certain false statements in his official capacity

which damaged her professional reputation. At the time of the alleged

defamation in November 2000, Yorkville was covered by a

commercial general liability policy and commercial umbrella policy

(collectively, the Policy) issued by West American Insurance

Company (West American) for the period of September 17, 2000, to

September 17, 2001. West American is owned by the Ohio Casualty

Insurance Company (Ohio Casualty). The Policy lists the ZeiterDickson Insurance Agency (Zeiter-Dickson) as the agent. ZeiterDickson, at all relevant times, was an approved insurance agent of

Ohio Casualty and West American.

On March 9, 2004, West American filed a declaratory judgment

action denying coverage under the Policy based on late notice.

Yorkville did not submit written notice of a claim for coverage until

January 19, 2004, approximately 27 months after the defamation

lawsuit was filed. The Policy’s notice provision states:

“SECTIONIV–COMMERCIALGENERALLIABILITY

CONDITIONS

* * *

2. Duties in the Event of Occurrence, Offense, Claim or

Suit.

* * *

b. If 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.

c. You and any other involved insured must

(1) Immediately send us copies of any demands,

notices, summonses or legal papers received in

connection with the claim or ‘suit’ ***.”

In its answer, Yorkville alleged that West American received oral
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notice of the Kuzma suit on several occasions prior to receiving

written notice on January 19, 2004. Yorkville contended that the oral

notices to West American constituted “actual notice” triggering West

American’s duty to provide coverage. 

At a bench trial, James Liggett, Yorkville’s president, testified

that in late 2001 or early 2002, he met with Richard Dickson, the

Zeiter-Dickson insurance agent who had placed the Policy with

Yorkville. Dickson was an agent for Zeiter-Dickson until 2003.

Liggett told Dickson that Yorkville was “involved in a defamation

lawsuit in Ottawa,” that it was a “he said/she said sort of thing,” and

that it was not covered by the bank’s directors & officers (D&O)

insurance policy. According to Liggett, he asked Dickson if the

Zeiter-Dickson Policy would cover the suit. Dickson replied,

“Probably not. Most all of those policies are written the same

anyway.” Dickson did not testify at trial. 

Liggett testified that he met with Joel Ottosen, another West

American agent, sometime during the same time period. Liggett

stated he told Ottosen that Yorkville was involved in a defamation

liability case and asked if the Policy would cover it. According to

Liggett, Ottosen gave “basically the same response” as Dickson,

stating that the Policy probably would not cover the lawsuit. In his

testimony, Ottosen denied having anyconversationwith Liggett about

the defamation lawsuit before January 16, 2004. Ottosen testified that

he first learned of the lawsuit on January 15, 2004, when Weigmann

contacted him to find out whether his homeowner’s policy covered

the suit.

The defamation lawsuit was discussed at three meetings of the

Yorkville board of directors in 2002. Dickson was in attendance at

the meetings because he was a member of the board. According to the

minutes, at the September meeting, Liggett reported to the board that

“Attorney Cheryl Kuzman” was suing Yorkville and Wiegmann for

allegedly derogatory comments made by Weigmann. At the

November meeting, Liggett reported that expenses were high at the

Ottawa bank branch as a result of legal fees related to the Kuzma

litigation. Finally, at the December meeting, the board reviewed and

approved the minutes from the November meeting.

In January 2004, Yorkville was advised by an unrelated insurance

company that the Policy “should cover” the defamation lawsuit.
 

1On cross-appeal to the appellate court, Yorkville argued that the circuit

court erred in determining that Yorkville was not entitled to sanctions under

section 155 of the Insurance Code (215 ILCS 5/155 (West 2004)). The

appellate court affirmed. 388 Ill. App. 3d at 781. Yorkville has not appealed

that part of the appellate court’s judgment. 

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Liggett informed Ottosen of the lawsuit, who submitted the requisite

claim forms and copy of the complaint to West American on January

19, 2004. The parties stipulated that on January 22, 2004, Carolyn

Maher, a litigation specialist for West American, informed counsel

for Yorkville that “there was insurance coverage for most of the

allegations in the Kuzma complaint.” 

The trial on the Kuzma suit was set for March 15, 2004. On

March 5, 2004, West American decided to deny coverage under the

Policy based on late notice. Yorkville later settled the case with

Kuzma on July 28, 2004, for $1.75 million. West American did not

participate in any trial proceedings or settlement negotiations. 

The circuit court found for Yorkville and against West American

in the declaratory judgment action and awarded stipulated damages

in the amount of $1,982,778.78. The court found that the

conversation between Liggett and Dickson took place as described by

Liggett and was “unrefuted.” The court found that Liggett and

Ottosen had a “passing conversation” in the bank, but the court made

no finding as to the content of that conversation. Based on the

conversation between Liggett and Dickson and the reports of the

board meetings, the trial court found that West American received

actual notice of the lawsuit in 2001 or 2002. The court further found

that the written notice in 2004 was given within a reasonable time

because Yorkville was told in 2001 or 2002 that the lawsuit was not

covered. 

The appellate court affirmed in part, reversed in part, and

remanded.1 388 Ill. App. 3d 769. Citing to Country Mutual Insurance

Co. v. Livorsi Marine, Inc., 222 Ill. 2d 303 (2006), the appellate court

held that Yorkville breached the Policy’s notice clause as a matter of

law by waiting until 27 months after the lawsuit was filed to submit

a written claim for coverage and a copy of the complaint. The court

found the late notice was unreasonable in light of the fact that
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discovery had closed and the case was scheduled to proceed to trial

in eight weeks. The court held that actual notice had “no bearing” on

the issue of whether Yorkville breached the written-notice provision.

To hold that actual notice “trumps” the plain language of the policy,

the court found, would “render the policy’s written notice provision

meaningless.” 388 Ill. App. 3d at 777. Justice Schmidt specially

concurred, noting that there was no reason not to enforce the contract

language, which had been approved by the Department of Insurance.

Justice Lytton concurred in part and dissented in part, contending that

West American had a duty to defend and indemnify Yorkville

pursuant to Cincinnati Cos. v. West American Insurance Co., 183 Ill.

2d 317 (1998), since it had received actual notice of the suit. 388 Ill.

App. 3d at 783-84 (Lytton, J., concurring in part and dissenting in

part). We granted Yorkville’s petition for leave to appeal to this court.

210 Ill. 2d R. 315. We granted leave to the Complex Insurance

Claims Litigation Association to file a brief on behalf of West

American as amicus curiae.

ANALYSIS

In construing an insurance policy, we must ascertain and give

effect to the intentions of the parties, as expressed in the policy

language.Country Mutual Insurance Co. v. Livorsi Marine, Inc., 222

Ill. 2d 303, 311 (2006). The policy must be construed as a whole,

giving effect to every provision. Country Mutual, 222 Ill. 2d at 311.

Unambiguous words in the policy are to be given their plain,

ordinary, and popular meaning. Country Mutual, 222 Ill. 2d at 311.

Where the policy language is ambiguous, courts are to construe the

policy liberally in favor of coverage. Country Mutual, 222 Ill. 2d at

311. 

Insurance policy notice provisions impose valid prerequisites to

insurance coverage. Country Mutual, 222 Ill. 2d at 311. The policy

language in the notice provision at issue states that an insured must

“see to it that we receive written notice of the claim or ‘suit’ as soon

as practicable.” A policy provision requiring notice “as soon as

practicable” means notice must be given “within a reasonable time.”

Country Mutual, 222 Ill. 2d at 311, quoting Barrington Consolidated

High School v. American Insurance Co., 58 Ill. 2d 278, 281 (1974).

Whether notice has been given within a reasonable time depends on
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the facts and circumstances of each case. Country Mutual, 222 Ill. 2d

at 311-12. An insured’s breach of a notice clause in an insurance

policy by failing to give reasonable notice will defeat the right of the

insured to recover under the policy. Country Mutual, 222 Ill. 2d at

312, citing Simmon v. Iowa Mutual Casualty Co., 3 Ill. 2d 318, 322-

23 (1954).

The timeliness of an insured’s notice to its insurer generally is a

question of fact for the trier of fact. Northbrook Property & Casualty

Insurance Co. v. Applied Systems, Inc., 313 Ill. App. 3d 457, 465

(2000); University of Illinois v. Continental Casualty Co., 234 Ill.

App. 3d 340, 363 (1992). A reviewing court should overturn a trial

court’s factual findings only if they are against the manifest weight of

the evidence. Addison Insurance Co. v. Fay, 232 Ill. 2d 446, 452

(2009). 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. Country Mutual, 222 Ill. 2d

at 313. 

The parties agree that Yorkville sent written notice of the

defamation lawsuit and a copy of the complaint on January 19, 2004,

approximately 27 months after the underlying lawsuit was filed. The

circuit court held that the 27-month delay was reasonable under the

facts and circumstances in this case. The appellate court concluded

that Yorkville breached the notice clause “as a matter of law.” 388 Ill.

App. 3d at 777. We hold that the trial court’s finding was not against

the manifest weight of the evidence.

Under the firstCountry Mutual factor, the specific language in the

Policy’s notice provision does not aid in our reasonableness analysis

because it does not identify a specific time frame for giving notice.

Instead, it requires Yorkville to “see to it that [West American]

receive written notice of the claim or ‘suit’ as soon as practicable”

and to “[i]mmediately send us copies of any demands, notices,

summonses, or legal papers received in connection with the claim or

‘suit.’ ” The term “immediate,” in the context of insurance policy

notice provisions, has been interpreted in a similar manner to the
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phrase “as soon as practicable.” See Zurich Insurance Co. v. Walsh

Construction Co. of Illinois, Inc., 352 Ill. App. 3d 504, 512 (2004)

(“ ‘Immediate’ in this context ‘has been uniformly interpreted to

mean within a reasonable time, taking into consideration all the facts

and circumstances’ ”), quoting Kenworthy v. Bituminous Casualty

Corp., 28 Ill. App. 3d 546, 548 (1975).

The second factor mentioned by Country Mutual is the insured’s

sophistication. Yorkville is a bank presumed to be sophisticated in the

areas of commerce and insurance. Accordingly, this factor weighs in

favor of finding that Yorkville’s delay in sending written notice was

unreasonable.

Next, we consider the insured’s awareness of an event which may

trigger insurance coverage. Liggett testified that he learned about the

Kuzma matter in November 2000, when Weigmann informed him

that Kuzma complained about defamatory remarks made by

Weigmann. Liggett advised the bank’s attorney that he would

investigate the matter because Kuzma was “threatening a suit with the

bank.” Two weeks later, Liggett telephoned Kuzma to inform her that

he had checked with the parties involved and that none of the people

at the meeting felt that Weigmann had behaved inappropriately.

Liggett then heard nothing from Kuzma for 10 months until Kuzma

filed her lawsuit in September 2001. Thus, Yorkville was aware in

November 2000 of the potential for a lawsuit and aware in September

2001 that a lawsuit had been filed. This factor also weighs on the side

of unreasonableness.

With regard to the insured’s diligence in ascertaining whether

coverage is available, a lengthy delay in providing notice is not an

absolute bar to coverage provided the insured’s reason for the delay

is justifiable under the circumstances. See Northbrook Property &

Casualty Insurance Co. v. Applied Systems, Inc., 313 Ill. App. 3d 457,

465 (2000); McFarlane v. Merit Insurance Co., 58 Ill. App. 3d 616,

619 (1978). Courts have recognized that an insured’s reasonable

belief of noncoverage under a policy may be an acceptable excuse for

the failure to give timely notice, even where the delay is lengthy. See,

e.g., Allstate Insurance Co. v. Carioto, 194 Ill. App. 3d 767, 780

(1990) (2 1⁄2-year delay excused because 19-year-old insured could

not have reasonably known that the occurrence would have been

covered by his mother’s homeowner’s policy); Grasso v. Mid-
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Century Insurance Co., 181 Ill. App. 3d 286, 290 (1989) (two-year

delay excused because insured did not reasonably believe that an

accident in her boyfriend’s Jeep was covered by her father’s excess

coverage insurance policy); Brotherhood Mutual Insurance Co. v.

Roseth, 177 Ill. App. 3d 443, 449 (1988) (two-year delay excused

because insureds did not reasonably believe that an accidental

shooting which occurred outside their home would be covered by

their homeowner’s policy). Whether the insured, acting as a

reasonably prudent person, believed the occurrence or lawsuit was not

covered by the policy is a question of fact, which we review under the

manifest weight standard. Farmers Automobile Insurance Ass’n v.

Hamilton, 64 Ill. 2d 138, 142-43 (1976).

Liggett testified that in “late 2001 or early 2002,” he spoke with

Dickson, the West American insurance agent who had placed the

Policy with Yorkville. During an informal meeting at the bank,

Liggett told Dickson “that we were involved in this defamation

lawsuit in Ottawa. That it was kind of a he said/she said sort of thing

and the D&O insurance didn’t cover that type of suit.” When Liggett

asked Dickson whether the West American Policy covered the suit,

Dickson replied, “Probably not. Most all of those policies are written

the same anyway.” Dickson did not ask Liggett for a copy of the

complaint, nor did he offer to verify whether a complaint for

defamation was covered under the Policy. The trial court found that

it was “undisputed” that the conversation between Liggett and

Dickson took place as described by Liggett because Dickson did not

testify at trial.

The trial court found that Liggett’s conversation with Dickson,

coupled with the mention of the lawsuit at board meetings, “tips in

favor of the insured as to diligence” and thus the delayed written

notice was reasonable. That finding was not against the manifest

weight of the evidence. After being informed by its agent that the

Policy probably did not cover the lawsuit, Yorkville reasonably

believed that sending written notice to its insurer would be futile. It

was not until January 2004 that Yorkville discovered the lawsuit was

covered by the Policy. At that time, Yorkville promptly sent written

notice to West American. A reasonably prudent party in the position

of the insured would not have continued to pursue coverage under the

policy having been informed by its agent that the policy afforded no
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coverage.

Finally, we consider whether West American suffered prejudice

as a result of Yorkville’s written notice in January 2004. See Country

Mutual, 222 Ill. 2d at 317 (“the presence or absence of prejudice to

the insurer is one factor to consider when determining whether a

policyholder has fulfilled any policy condition requiring reasonable

notice”). No testimony was presented at trial as to whether West

American was prejudiced by the delay in receiving written notice.

The trial court further found that there was no evidence that West

American investigated the defamation complaint or made any efforts

to delay trial during the two months between receiving written notice

and the scheduled trial date. 

Moreover, the trial court held that West American received actual

notice of the lawsuit in late 2001 or early 2002, within a few months

of the lawsuit being filed and approximately two years before the case

was scheduled for trial. Contrary to the appellate court’s statement

that actual notice has “no bearing” on whether notice was given

within a reasonable time, actual notice to an insurer is relevant to

whether the insurer has been prejudiced by a delay in receiving

written notice as specified by the policy. “[W]here the insurance

company has actual notice of the loss or receives the necessary

information from some other source, there is no prejudice to the

insurer from the failure of the insured to give notice of the claim.”

McLaughlin v. Attorneys’ Title Guaranty Fund, Inc., 61 Ill. App. 3d

911, 917 (1978) (citing Wehner v. Foster, 331 Mich. 113, 117, 49

N.W.2d 87, 89 (1951), and United States Fidelity & Guaranty Co. v.

Church, 107 F. Supp. 683, 689 (N.D. Cal. 1952)). 

An insurance company is deemed to have “actual notice” of a

lawsuit where it has sufficient information to locate and defend the

suit.Cincinnati Cos. v. West American Insurance Co., 183 Ill. 2d 317,

329 (1998); Progressive Insurance Co. v. Universal Casualty Co.,

347 Ill. App. 3d 10, 22 (2004); Federated Mutual Insurance Co. v.

State Farm Mutual Automobile Insurance Co., 282 Ill. App. 3d 716,

726 (1996). “[I]n order to have actual notice sufficient to locate and

defend a suit, 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 the coverage of one of its policies.”Cincinnati Cos., 183 Ill.

2d at 329-30; Employers Insurance of Wausau v. Ehlco Liquidating
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Trust, 186 Ill. 2d 127, 143 (1999). 

The trial court held that Liggett’s “in passing” conversation with

Dickson as well as the reports at the board meetings provided West

American with sufficient information to “locate and defend” the

defamation lawsuit. We agree. Through its authorized agent, the

insurer knew both: (1) that a lawsuit had been filed against its

insured; and (2) that the defamation suit potentially fell within the

scope of coverage of the Policy. Although no details were given as to

when the alleged defamation took place or where the lawsuit was

filed, Liggett conveyed that the bank had been sued for defamation

and that the alleged events took place in Ottawa, Illinois. Dickson

was the authorized agent who had placed the West American Policy

for Yorkville and thus should have been aware that the Policy

provided coverage for defamation. West American was put on notice

at an early stage in the litigation that Yorkville was a defendant in a

lawsuit that was potentially covered under the policy. At the very

least, the agent could have followed up with Yorkville by requesting

to see a copy of the complaint before advising it that the lawsuit

probably was not covered.

After considering all relevant factors, we find that, under the

circumstances in the present case, Yorkville’s written notice of the

lawsuit to West American was given within a reasonable time and did

not violate the notice provision in the Policy. Therefore, we reverse

the appellate court’s judgment that Yorkville is not entitled to

coverage and affirm the circuit court’s finding that West American

had a duty to provide coverage under the Policy.

CONCLUSION

For the foregoing reasons, we reverse the judgment of the

appellate court and affirm the judgment of the circuit court. 

Appellate court judgment reversed;

 circuit court judgment affirmed. 

JUSTICE FREEMAN, dissenting: 
 

2The Kuzma action was also brought against an additional defendant,

James B. Clarage. Clarage, however, is not a party to the instant action. 

 

3

I note that Will County is in the Twelfth Judicial Circuit, and its

courthouse is located in Joliet. The underlying occurrence took place in

La Salle County, which is in the Thirteenth Judicial Circuit, and its

courthouse is in Ottawa. The instant declaratory judgment action was also

filed in La Salle County.

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I disagree with today’s opinion on several levels. Although the

majority initially sets forth a framework within which to analyze the

notice provisions of the insurance policy issued by West American to

Yorkville, it neither applies that framework nor construes those

provisions. Instead, my colleagues depart from our well-settled rules

of insurance policy construction and analyze this appeal in a manner

which tacitly undercuts our precedent and will engender confusion for

the bench and bar. In addition, the majority unduly expands the

concept of “actual notice” absent explanation or reason for doing so.

Accordingly, I dissent.

BACKGROUND

This dispute has its genesis in an underlying defamation action

brought by Sheryl H. Kuzma (Kuzma) against Yorkville National

Bank (Yorkville) and its vice president, Bernard Wiegmann.2 Kuzma

filed her complaint on September 24, 2001, in the circuit court of

Will County.3

Kuzma, an attorney, sued Wiegmann in his capacity as an agent

of Yorkville, for making false and defamatory statements about her

in November 2000 to a group of local businessmen in connection

with her representation of a client. A jury trial took place in March

2004, shortly after West American filed the declaratory judgment

action that is the subject of this appeal. The jury returned a $2.2

million verdict in favor of Kuzma and against Yorkville and

Wiegmann. The parties subsequently settled for the reduced amount

of $1.75 million. Based upon its belief that Yorkville had breached

the notice provisions of the insurance policy, West American did not

participate in either the trial proceedings or in the settlement

negotiations of the Kuzma action. Instead, West American filed the
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suit at issue today.

West American filed its declaratory judgment action on March 9,

2004, in the circuit court of La Salle County. West American attached

to its complaint a copy of the commercial general liability policy

issued by it to Yorkville, which required compliance with the

following notice provisions as a condition of coverage:

“SECTIONIV–COMMERCIALGENERALLIABILITY

CONDITIONS

* * *

2. Duties In the Event of Occurrence, Offense, Claim or

Suit.

a. You must see to it that we are notified as soon as

practicable of an ‘occurrence’ or an offense which may

result in a claim. To the extent possible, notice should

include:

(1) How, when and where the ‘occurrence’ or

offense took place; 

(2) The names and addresses of any injured

persons and witnesses; and

(3) The nature and location of any injury or

damage arising out of the occurrence or offense.

b. If 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.

c. You and any other involved insured must:

(1) Immediately send us copies of any demands,

notices, summonses or legal papers received in

connection with the claim or ‘suit’;

(2) Authorize us to obtain records and other

information;

(3) Cooperate with us in the investigation or
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settlement of the claim or defense against the ‘suit,’

and

(4) Assist us, upon our request, in the enforcement

of any right against any person or organization which

may be liable to the insured because of injury or

damage to which this insurance may also apply.”

West American contended that Yorkville breached these notice

provisions by waiting nearly 28 months after a lawsuit was filed

against it before providing the insurer with written notice.

Accordingly, West American maintained that it had no obligation to

defend Yorkville in that action. 

Declaratory Judgment Testimony

During the trial on West American’s declaratory judgment action,

Yorkville’s president, James Liggett, testified he first learned of the

Kuzma matter in November 2000 when Wiegmann stated that Kuzma

had accused him of making false statements about her. Liggett met

with Kuzma, whom he described as being “very upset.” After this

meeting, Liggett informed Yorkville’s attorney, Daniel Kramer, that

Kuzma was “threatening a suit with the bank.” After Liggett

“investigate[d]” Kuzma’s claims, he told her that he believed

Wiegmann had done nothing improper. Liggett next heard of this

matter 10 months later, when Yorkville and Wiegmann were named

as defendants in the Will County defamation lawsuit filed by Kuzma

in September 2001. Kramer, who was retained to defend the action,

asked Liggett for a copy of Yorkville’s directors and officers

insurance policy, which was issued by an insurer other than West

American. However, Kramer did not ask for a copy of the West

American policy. Liggett stated that as the litigation with Kuzma

progressed, Kramer “reported to us that he had contacted the

insurance companies.”

Liggett also testified regarding the alleged instances of “actual

notice” of the Kuzma lawsuit to West American. Liggett stated that

in “late 2001 or early 2002” he spoke with Richard Dickson, a

principal of the Zeiter-Dickson Insurance Agency, who had placed the

West American policy with Yorkville. According to Liggett, Dickson

had “stopped in [the bank] as he often did,” and in the midst of
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“discussions about other things” Liggett told Dickson “there was

something I needed to ask him about.” Liggett told Dickson that “we

were involved in this defamation lawsuit in Ottawa. That it was kind

of a he said/she said sort of thing and that the [director and officer]

insurance [policy] did not cover that type of suit. Then I asked if the

[West American] policies would cover the suit.” According to

Liggett, Dickson replied “probably not,” because “[m]ost all of those

policies are written the same way anyway.”

Liggett testified that he had a nearly identical, “in passing”

conversation with Joel Ottosen, another agent of Zeiter-Dickson,

during the same time frame–“late 2001, early 2002.” Ottosen

“stopped by” the bank and Liggett “told him I had an insurance

question I wanted to ask him about.” Liggett informed him that a

defamation lawsuit had been filed against Yorkville, that it was not

covered by the director and officer insurance, and asked whether the

West American policy would provide coverage. According to Liggett,

Ottosen replied with the exact words as had Dickson by stating

“probably not,” as “most all of those policies are written the same.”

Liggett did not direct Ottosen to notify West American as to the

existence of the Kuzma lawsuit.

Liggett further testified that two conference calls occurred

between himself, Ottosen and Kramer “in the second or third quarter

of 2002,” the first being made from his office and the second made

from Kramer’s office. Liggett told Ottosen that Kuzma’s lawsuit was

still pending, and asked again if the West American policy would

provide coverage, to which Ottosen again replied “probably not.” 

According to Liggett, in January 2004 another insurance agency

opined that the West American policy should cover the Kuzma suit.

This prompted Liggett to call Ottosen on January 15, 2004, and ask

again about coverage under that policy. According to Liggett, Ottosen

stated, “ ‘I’ll report it’ or something to that effect.”

Finally, Liggett testified regarding meetings of Yorkville’s board

of directors during the fall of 2002. It was not until September 2002

that Liggett first informed Yorkville’s board about the Kuzma

litigation. Liggett stated that he prepared the minutes of the board

meetings, and he read into the record a portion of the minutes of the

September 2002 meeting which first referenced the Kuzma lawsuit:
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“President Liggett reported to the Board that Attorney

Cheryl Kuzman [sic] of Ottawa was suing the bank, Ben

Wiegmann and James Clarage in a counter suit ***. The basis

of the suit is alleged derogatory comments made by Mr.

Wiegmann *** [and the] remarks have been denied ***.” 

Liggett also read a relevant portion of the minutes from the November

2002 Yorkville board meeting, which simply stated that there were

“additional legal expenses involved with the Clarage–Yorkville

National Bank–Kuzman [sic] law suit.” Liggett stated that Richard

Dickson was a member of the Yorkville board and was present at

both the September and November 2002 meetings. However,

insurance coverage of the Kuzma lawsuit was not discussed during

any of the board meetings.

Daniel Kramer’s testimony at trial often conflicted with that of

Liggett. Although Liggett told him in November 2000 that Kuzma

came to his office and that she was upset, he did not also tell him that

she threatened legal action. After Kuzma filed suit, Kramer asked

Liggett for copies of Yorkville’s insurance policies and was given

only the policy providing director and officer coverage. Kramer

tendered a defense to that insurer within 60 to 90 days after the bank

was sued, but coverage was declined because that policy had an

exclusion for intentional torts. Kramer was initially unaware of the

West American policy until Liggett mentioned it to him in early 2002.

At no time did Kramer independently contact West American about

coverage of the Kuzma matter. 

Kramer’s testimony regarding the alleged instances of “actual

notice” also largely conflicted with that of Liggett. Kramer stated his

first contact with the Zeiter-Dickson agency was by way of

conference calls placed from Liggett’s office in 2001 or 2002. During

these calls, Liggett asked Ottosen whether Yorkville had coverage

under the West American policy. Ottosen asked Liggett for a copy of

the Kuzma complaint, and Liggett replied that he would get it to him

“right away.” Because they did not hear back from Ottosen, Liggett

and Kramer placed another call to him in late 2002 from Liggett’s

office. Ottosen stated he had forwarded the claim to West American

and that they would hear from a West American attorney. Kramer

testified that he prepared no documents to memorialize the

conversations with Ottosen.
-16-

The testimony of both Liggett and Kramer further conflicted with

that of Ottosen, who testified on behalf of West American. Ottosen

did not receive calls from Liggett and Kramer in 2001 and/or 2002

regarding the Kuzma matter. Instead, his first discussion regarding

that action occurred on January 15, 2004, when Wiegmann called to

inquire whether his personal homeowner’s insurance policy could

provide coverage. Ottosen advised Wiegmann that ifthe lawsuit arose

in the course of his employment as Yorkville’s vice president, it was

likely that he was covered under the West American policy. Ottosen

called Liggett the following day and told him that if the lawsuit arose

out of Wiegmann’s bank employment it should be covered. When

Liggett replied, “they say we are not covered,” Ottosen asked who

informed him that there was no coverage under the West American

policy. Liggett responded: “I don’t know. Kramer is handling it.”

Ottosen asked Liggett to speak with Kramer, obtain that information,

and then contact him again. After calling Liggett, Ottosen asked his

secretary to contact Kramer’s office to obtain a copy of the lawsuit,

and he then looked up Yorkville’s policy in the agency’s old files.

After concluding that there was potential coverage, he called Liggett

back and told him that although it would be a late submission, once

he received a copy of the Kuzma complaint he would submit a claim

to West American, which he did on January 19, 2004. Ottosen’s

testimony was supported by documentation of his actions in

connection with the filing of the claim.

Circuit Court’s Findings and Ruling

The circuit court found it undisputed that although Liggett was

aware of potential litigation from Kuzma in November 2000, Liggett

“satisfied himself that this was no big deal.” Therefore, he did not

notify West American of a potential claim at that time. When Kuzma

filed suit in September 2001, Liggett notified Kramer, who began the

defense. Yet, despite the insurance policy’s notice requirements, the

court found that a copy of Kuzma’s complaint was not tendered to the

Zeiter-Dickson agency or to West American. 

The circuit court further found it undisputed that a conversation

between Liggett and Dickson took place at the bank. However, the

court determined that the “only contents of the conversation was that

there was a lawsuit in Ottawa, kind of a he said/she said thing on
-17-

defamation. No testimony as to when this defamation took place.

There was no copy of the complaint. There was no request for any of

that information. It was sort of an in passing conversation, do we have

any coverage on that.”

In addition, the circuit court found that information regarding the

Kuzma matter was presented to Yorkville’s board of directors on two

occasions, and both times Dickson was in attendance in his capacity

as a director. However, because the evidence consisted only of what

was set forth in the minutes, the court further found that “[t]he

minutes don’t contain any information about where the suit was filed,

when the incident allegedly took place, who the parties to the lawsuit

were.”

 Finally, with respect to Liggett and Kramer’s testimony regarding

conversations with Ottosen, the court believed that “at some point

Mr. Liggett said something to Mr. Ottosen but the content of which

is very hard to determine, [as is] the context of when it was [said].”

The court, however, flatly rejected the testimony of Liggett and

Kramer that they participated in two conference calls with Ottosen,

finding that their statements were not credible and that these calls did

not take place. The court found support for this conclusion in the fact

that when Wiegmann contacted Ottosen in January 2004 regarding

whether his personal homeowner’s policy could provide coverage for

the Kuzma lawsuit, Ottosen immediately took action and documented

the steps taken in the process. Ottosen’s quick actions with regards to

Wiegmann’s inquiry stood in contrast to the testimony of Liggett and

Kramer that although Ottosen took “phone calls from the bank

president and a lawyer” he did “not even document that *** and

ignore[d] it completely.” The circuit court judge concluded, “I don’t

find that to be credible.”

The circuit court then applied the law to these findings of fact.

Although the court acknowledged that “a gap” existed in the

conversation between Liggett and Dickson to the extent that Dickson

was “not given all the details” of the Kuzma lawsuit, the court

nevertheless held that Liggett’s conversation with Dickson was

sufficient to place West American on “actual notice” that a lawsuit

had been filed against Yorkville, providing it with adequate

information to locate and defend the action. When this conversation

was combined with the additional information regarding the Kuzma
-18-

lawsuit provided during theYorkvilleboard of directors meetings that

Dickson attended, the court concluded that “[t]he totality of the

situation is that there is notice.” Although the court found “some

evidence” of prejudice to West American due to notice being given

to it after discovery was closed and the case was set for trial, because

the Kuzma action had been mentioned several times and Yorkville

was told that there was no coverage, “the fact that they were late

reporting it, I don’t know that that’s unreasonable.” Thus, the circuit

court held that West American owed a duty to provide coverage to

Yorkville and directed West American to pay stipulated damages in

the amount of $1,982,778.78.

ANALYSIS

In Country Mutual Insurance Co. v. Livorsi Marine, Inc., 222 Ill.

2d 303 (2006), we recently reaffirmed that an insured’s breach of a

policy’s notice provision “will defeat the right of the insured party to

recover under the policy.” Country Mutual, 222 Ill. 2d at 312, citing

Simmon v. Iowa Mutual Casualty Co., 3 Ill. 2d 318, 322-23

(1954).This result is grounded in the principle that notice clauses

“impose valid prerequisites to insurance coverage” (Country Mutual,

222 Ill. 2d at 311, citing Barrington Consolidated High School v.

American Insurance Co., 58 Ill. 2d 278, 281 (1974); Imperial Fire

Insurance Co. of London v. Coos County, 151 U.S 452, 38 L. Ed.

231, 14 S. Ct. 379 (1894)) and is rooted in decades of precedent,

which has long recognized: 

“Contracts of insurance are contracts of indemnity upon

the terms and conditions specified in the policy ***,

embodying the agreement of the parties. *** The terms of the

policy constitute the measure of the insurer’s liability, and in

order to recover, the assured must show himself within those

terms; and if it appears that the contract has been terminated

by the violation on the part of the assured, of its conditions,

then there can be no right of recovery. The compliance of the

assured with the terms of the contract is a condition precedent

to the right of recovery.” Imperial Fire Insurance Co., 151

U.S. at 462, 38 L. Ed. at 235, 14 S. Ct. at 381.

Based upon this rationale, our courts have repeatedly held that
-19-

notice provisions in an insurance policy are not merely technical

requirements but, rather, conditions precedent to the triggering of the

insurer’s contractual duties. Northbrook Property & Casualty

Insurance Co. v. Applied Systems, Inc., 313 Ill. App. 3d 457, 464

(2000); see also, e.g., Aetna Casualty & Surety Co. of Illinois v.

Allsteel, Inc., 304 Ill. App. 3d 34, 41 (1999); Kerr v. Illinois Central

R.R. Co., 283 Ill. App. 3d 574, 582 (1996); American States

Insurance Co. v. National Cycle, Inc., 260 Ill. App. 3d 299, 311

(1994); Mitchell Buick & Oldsmobile Sales, Inc. v. National Dealer

Services, Inc., 138 Ill. App. 3d 574, 581 (1985); International

Harvester Co. v. Continental Casualty Co., 33 Ill. App. 2d 467, 471

(1962).These decisions note the several important purposes served by

notice provisions, which include “afford[ing] the insurer an

opportunity to make a timely and thorough investigation and to gather

and preserve possible evidence.” Barrington Consolidated High

School, 58 Ill. 2d at 281; see also P. Kalis, T. Reiter & J. Segerdahl,

Policyholders Guide to the Law of Insurance Coverage §24.02(A), at

24–3 (1997) (“[t]imely notice ensures that an insurer will have the

opportunity to interview witnesses while they are available, and to

marshall evidence relevant to the defense of the underlying action

before it is lost or destroyed”). In addition, a notice-of-suit provision

allows the insurer to “control the litigation,” including options for

settlement.14 Couch on Insurance §199.84, at 199–140 (3d ed. 1999).

Notice provisions, like those here, generally provide that an

insured must give an insurer notice “as soon as practicable.” The

notice provision in Yorkville’s policy is identical to that found in

Country Mutual, where we explained that “[a] policy condition

requiring notice ‘[a]s soon as practicable’ is interpreted to mean

‘within a reasonable time,’ ” and held that “[w]hether notice has been

given within a reasonable time depends on the facts and

circumstances of each case.” Country Mutual, 222 Ill. 2d at 311-12,

quotingBarrington Consolidated High School, 58 Ill. 2d at 282.Thus,

for an insured to satisfy this type of notice provision, two

requirements must be met: first, “notice” must be provided to the

insurer within the meaning of the policy; and, second, such notice

must be timely. See Country Mutual, 222 Ill. 2d at 311-12.

Although the majority recites many of these well-settled legal

principles at the outset of its analysis (see slip op. at 5-6), it fails to
-20-

apply them to the instant appeal. For example, although the majority

readily acknowledges that “[i]nsurance policy notice provisions

impose valid prerequisites to insurance coverage” (slip op. at 5), it

fails to set forth all of the relevant notice provisions contained within

the policy and does not construe these provisions under the very rules

of analysis contained in its opinion. I submit that if the majority

actually performed such an analysis, it would be compelled to reach

a contrary result.

The majority states that in construing an insurance policy, “we

must ascertain and give effect to the intentions of the parties, as

expressed in the policy language.” (Emphasis added.) Slip op. at 5.

As the majority further observes, we must “giv[e] effect to every

provision,” keeping in mind that “[u]nambiguous words in the policy

are to be given their plain, ordinary, and popular meaning.” Slip op.

at 5. Under this framework, the logical next step is to examine the

words used in the policy provisions.

Pursuant to section IV(2)(a) of the policy, the insured must “see

to it that [West American is] notified as soon as practicable of an

‘occurrence’ or an offense which may result in a claim.” Once this

provision is triggered, the policy further requires the insured to

transmit several specific items of information to the insurer: (1) “how,

when and where the ‘occurrence’ or offense took place,” (2) “the

names and addresses of any injured persons and witnesses,” and (3)

“the nature and location of any injury arising out of the occurrence or

offense.”

The majority neither references these policy provisions nor

construes them under the analytical framework set forth in its

opinion, despite its clear statement that the language of the policy

controls. See slip op. at 5 (“we must ascertain and give effect to the

intentions of the parties, as expressed in the policy language”). It is

my view that, pursuant to the plain language of this provision, once

Kuzma contacted Liggett in November 2000 regarding her claim that

Wiegmann had made false statements about her and that it appeared

that a future lawsuit was possible, Yorkville was required to provide

West American with information regarding this “occurrence ***
 

4

I note that in the course of its opinion, the majority itself states that

“Yorkville was aware in November 2000 of the potential for a lawsuit.”

Slip op. at 7.

 

5As stated, we have previously construed this policy language to mean

“within a reasonable time” based upon the facts and circumstances of each

case. Country Mutual, 222 Ill. 2d at 311-12.

 

6The use of the term “immediately” indicates that this action was to be

taken “instantly,” and “without delay.” See Black’s Law Dictionary 816

(9th ed. 2009).

-21-

which may result in a claim.”4 The policy mandated Yorkville to

notify West American of the Kuzma matter “as soon as practicable”5

and to provide West American with specific information regarding

the genesis of this occurrence. Yorkville, however, failed to comply

with any of these policy provisions.

Section IV(2)(b) is the second relevant notice provision within the

policy and provides that when a “claim is made or ‘suit’ is brought

against any insured,” the insured must “immediately record the

specifics of the claim or ‘suit’ and the date received,” and notify West

American “as soon as practicable.” Yorkville was also required to

“see to it that [West American] receive written notice of the claim or

‘suit’ as soon as practicable.”

Again, although the majority states that effect must be given to

the intent of the parties as expressed through the language of the

policy, the majority fails to construe this provision using this

analytical framework. It is my view that, under the plain language of

the provision, Yorkville was required to “immediately”6 record the

specifics of the lawsuit and the date received, and to provide written

notification to West American of this event “as soon as practicable.”

I submit that the policy required Yorkville to have performed these

actions shortly after the time Kuzma filed her complaint in September

2001. Yorkville, however, failed to comply with any of these policy

provisions.

Finally, under section IV(2)(c) of the policy, the insured is

required to “immediately” send to West American “copies of any

demands, notices, summonses or legal papers received in connection
-22-

with the claim or ‘suit,’ ” to “authorize [West American] to obtain

records and other information,” to “cooperate with [West American]

in the investigation or settlement of the claim or defense against the

‘suit,’ ” and to “assist [West American] *** in the enforcement of any

right against any person or organization which may be liable to the

insured because of injury *** to which this insurance may also

apply.” 

Again, the majority fails to apply its purported analytical

framework by not giving effect to the intention of the parties as

expressed in the language of this policy provision. It is my view that,

pursuant to the provision’s plain language, Yorkville had the

obligation to “immediately” send West American copies of any legal

papers related to the Kuzma action, including the complaint. In

addition, Yorkville was required to authorize the insurer to obtain

records and other information connected to this matter and to

cooperate with the investigation or settlement of the suit. Again,

Yorkville failed to comply with any of these policy provisions.

Thus, upon review of the plain and unambiguous language of the

notice provisions contained in the instant policy, it is apparent that

Yorkville breached each and every reporting obligation it agreed to

as a condition of coverage. Had Yorkville fulfilled the policy notice

requirements, West American would have been in receipt of pertinent

and timely information regarding the Kuzma matter, including the

contact information for the parties, the basis for the filing of the

lawsuit, and the correct case caption, file number and location of the

action. As JusticeSchmidt observed in his special concurrence below,

“[m]any of the insurance coverage notice cases involve swearing

contests between the insurance carrier and its insured as to whether

oral notice was given,” and the “obvious intent” of a written notice

provision “is to avoid these ‘he said-she said’ coverage disputes.” 388

Ill. App. 3d at 781-82 (Schmidt, J., specially concurring). Indeed, this

case provides a textbook example of the importance of an insured’s

adherence to the written notice requirement, as Yorkville’s

compliance would have allowed West American to perform a timely

investigation, to gather and preserve evidence, and to allow an

informed decision as to whether to settle or litigate the matter. Due to

Yorkville’s failure to comply with its policy obligations, West

American was deprived of these options, and this litigation ensued.
-23-

It is therefore deeply troubling that despite the majority’s

statements that the language of the policy controls and that an

insured’s compliance with policy notice provisions is a “valid

prerequisite” to coverage, my colleagues fail to apply these wellsettled principles to the matter at bar. As a result, the majority does

not answer the pivotal question of whether Yorkville complied with

the notice provisions as set forth in the policy. Instead, my colleagues

overlook the plain and unambiguous language of the notice

provisions and, in an apparent effort to salvage Yorkville’s claim,

address the subsequent and separate question of whether the notice

given was reasonably timely. I submit that by departing from the

framework set forth at the outset of the “Analysis” portion of its

opinion, the majority tacitly undercuts our precedent absent

discussion or support for doing so, and its opinion will engender

confusion among the bench and bar as to the continued validity of

these previously settled principles.

Departing from our precedent, the majority’s analysis in support

of upholding Yorkville’s coverage claim consists solely of an

application of five factors set forth by this court in Country Mutual,

which provide guidance in determining whether notice given to an

insurer is made within a reasonable time. The dispute between the

parties in Country Mutual centered on whether notice provided to the

insurer 20 months after suit was filed against the insured was

unreasonably late, thereby relieving the insurer of its duty to defend

the insured. Country Mutual, 222 Ill. 2d at 307-08.The narrow legal

issue addressed in Country Mutual was whether an insurer, before

being relieved of its duty to defend, must prove that it was prejudiced

by the delay in receiving notice. We clarified that several factors may

be considered in assessing whether timely notice is given in a

particular case, including whether the insurer was prejudiced; the

specific language of the policy’s notice provision; the insured’s

sophistication in commerce and insurance matters; the insured’s

awareness of an event which may trigger insurance coverage; and the

insured’s diligence in ascertaining whether policy coverage is

available. Country Mutual, 222 Ill. 2d at 313.Significantly, Country

Mutual held that a lack of prejudice on the part of the insurer does not

foreclose an insurer’s contention that notice was untimely (Country

Mutual, 222 Ill. 2d at 316-17), and reaffirmed our long-established
-24-

holding in Simmon that the presence or absence of prejudice to an

insurer is only one factor to consider. Country Mutual, 222 Ill. 2d at

317.

Unlike the matter at bar, there was no dispute in Country Mutual

concerning the adequacy of the notice provided to the insurer or

whether the insured had satisfied its obligations to transmit to the

insurer the information specified under the policy. Thus, Country

Mutual is factually inapposite to the matter before us and provides no

guidance as to the important question presented in the instant appeal:

whether Yorkville complied with the notice requirements of the

policy. The majority nevertheless takes the unprecedented step of

employing the five Country Mutual factors intended to gauge the

timeliness of notice as its sole basis for reversing the judgment of the

appellate court and holding that Yorkville is entitled to coverage.

Because the majority adopts this analysis absent discussion or

explanation for departing from our settled precedent, I cannot join its

opinion.

Moreover, even if I agreed with the majority that this analysis is

appropriate, I still could not join the majority opinion based upon my

belief that the majority errs in its application of these factors. For

example, in assessing whether notice was provided to the insurer

within a reasonable time, Country Mutual directs that the specific

language of the policy’s notice provision be considered. In reviewing

this factor, the majority states that “the specific language in the

Policy’s notice provision does not aid in our reasonableness analysis

because it does not identify a specific time frame for giving notice”

(slip op. at 6) apart from directing that the written notice be sent “as

soon as practicable” and that copies of any legal papers be sent

“immediately.” First, I note that this is the majority’s sole reference

within its analysis to the language of the policy’s notice provisions,

despite its pronouncement earlier in its opinion that the plain

language of the policy controls and that effect should be given to

every provision to fulfill the intent of the parties. Second, I disagree

with the majority’s conclusion that these terms “do[] not aid” in the

reasonableness analysis; to the contrary, they indicate that an insured

must satisfy these provisions with the goal of providing the insurer

with notice at the earliest possible moment under the facts and

circumstances presented. 
-25-

Equally problematic is the majority’s discussion of the Country

Mutual factor that directs a court to assess whether the insured was

diligent in ascertaining the availability of policy coverage. Relying

upon the haphazard encounter between Liggett and Dickson at the

bank “in late 2001 or early 2002” and the vague statements made

during that “in passing” conversation, the majority concludes that

Yorkville displayed diligence in ascertaining whether the policy

would cover the Kuzma lawsuit. In further support, the majority

quotes from the circuit court’s finding that during this conversation,

Liggett told Dickson “that we were involved in this defamation

lawsuit in Ottawa. That it was kind of a he said/she said sort of

thing,” and that Dickson responded by stating that this matter would

“[p]robably not” be covered under the policy. See slip op. at 8.The

majority concludes that “[a]fter being informed by its agent that the

Policy probably did not cover the lawsuit, Yorkville reasonably

believed that sending written notice to its insurer would be futile.”

Slip op. at 8.

The majority’s analysis on this point is flawed in several respects.

First, the record is devoid of support for the majority’s conclusion

that Yorkville was of the belief “that sending written notice would be

futile.” Second, I note that the majority relies upon Dickson’s reply

that the policy “probably” would not cover the vague factual scenario

outlined by Liggett during their informal exchange. I submit that

Dickson’s response is not a definitive denial of coverage, and that his

offhand statement left the question open for further discussion. Thus,

the majority factually errs when it subsequently states that Dickson

informed Yorkville that “the policy afforded no coverage.” (Emphasis

added.) Slip op. at 8. Accordingly, its conclusion that “[a] reasonably

prudent party in the position of the insured would not have continued

to pursue coverage under the policy having been informed *** that

the policy afforded no coverage” (emphasis added) (slip op. at 8) is

called into question. Finally, the majority’s determination that

Yorkville displayed diligence is further undercut by its holding earlier

in its opinion that Yorkville is a “sophisticated” insured, owing to the

fact that it is a bank with experience in the areas of commerce and

insurance. Slip op. at 7. Given that Yorkville is skilled in business

and insurance matters, is represented by counsel, and also is subject

to layers of state and federal regulation as a bank, I find it patently
-26-

unreasonable for such an entity to rely upon an in-passing, off-thecuff informal conversation and an equivocal response as the basis for

its failure to formally pursue the coverage question and leave itself

open to potential liability exposure. Although the majority relies upon

a series of appellate court decisions for the proposition that “[c]ourts

have recognized that an insured’s reasonable belief of noncoverage

under a policy may be an acceptable excuse for the failure to give

timely notice, even where the delay is lengthy” (slip op. at 7-8), none

of these cases involved a sophisticated insured such as Yorkville, and

they are therefore inapposite.

As a final matter, the majority examines the Country Mutual

factor that questions whether West American suffered prejudice as a

result of the 28-month delay in written notice. The majority notes that

the circuit court held that West American received “actual notice” of

the Kuzma lawsuit in late 2001 or early 2002 as a result of the “inpassing” conversation between Liggett and Dickson, as well as the

mention of the matter during two Yorkville board meetings. Agreeing

with the circuit court’s ruling that under our prior decision in

Cincinnati Cos. v. West American Insurance Co., 183 Ill. 2d 317, 329

(1998), Yorkville had “actual notice” of the Kuzma lawsuit in that it

had sufficient information to “locate and defend” that action, the

majority concludes that West American suffered no prejudice as a

result of the 28-month delay.

Not only do I disagree with the majority’s conclusion, but I also

am concerned that the majority today expands the principle of “actual

notice” as it was used in Cincinnati without addressing the

differences between that case and today’s case: there, notice

provisions were not at issue, and policy defenses were not raised by

the parties to that action.

In Cincinnati, a construction accident resulted in a suit for

personal injuries against several subcontractors, including Baird,

which was defended under a policy issued by Cincinnati Companies.

A second subcontractor, B&D, was defended by West American.

Unbeknownst to Baird, it was an additional insured under B&D’s

West American policy; therefore, it had no reason to tender a defense

to West American. However, on the eve of trial, B&D disclosed that

Baird was an additional insured on the West American policy. Baird

then tendered its defense to West American, which rejected Baird’s
-27-

tender. Cincinnati, 183 Ill. 2d at 319-21.

We held that the insurer could not decline coverage on the basis

that there had not been an official tender of defense by the newly

discovered insured when it already had “actual notice” of the action

because it had been actively defending the identical lawsuit for

another insured, B&D. Cincinnati, 183 Ill. 2d at 329-30. Defining

“actual notice” as “ ‘notice sufficient to permit the insurer to locate

the suit and defend it’ ” (Cincinnati, 183 Ill. 2d at 324, quoting Long

v. Great Central Insurance Co., 190 Ill. App. 3d 159, 168 (1989)), we

concluded that the insurer actually knew of the lawsuit at issue for

three years, as it had been defending B&D throughout the pendency

of that action. Cincinnati, 183 Ill. 2d at 330. Accordingly, we held

that an exception to the tender requirement exists–and the insurer’s

duty to defend was therefore triggered–where it was unmistakable

that the insurer was already aware of the suit. In arriving at this

holding, we explicitly stated that because neither party invoked the

specific terms of the policy, “policy defenses have not been a factor

in our decision.” Cincinnati, 183 Ill. 2d at 323 n.1.

Clearly, Cincinnati is neither factually nor legally on point with

this case. The insurer in Cincinnati knew of the lawsuit because it

was already a party to that action; hence the term “actual notice.” The

insurer’s participation in the defense of the suit thereby foreclosed

any question regarding its knowledge of that litigation. In contrast,

West American was not a participant in the Kuzma action and,

therefore, the same level of knowledge cannot be attributed to it.

Further, unlike in Cincinnati, the insurer here is vigorously raising

policy defenses, arguing that the language of the policy controls, and

relying upon long-settled precedent that an insured’s compliance with

notice provisions is a prerequisite to insurance coverage. The

majority’s application of Cincinnati to this case will cause confusion

to both bench and bar, as today’s holding contradicts long-held

notions in Illinois that notice provisions are not simply technical

requirements to be overlooked but, rather, conditions precedent to

coverage. 

Furthermore, the majority’s holding that Yorkville provided West

American with “actual notice” to allow it to “locate and defend” the

Kuzma lawsuit (slip op. at 9-10) is unsupported by the record. The

majority summarily concludes that the circuit court correctly
 

7Although the majority relies upon Liggett’s account regarding this

encounter, I note that the circuit court specifically found that large portions

of his testimony were not credible. 

-28-

determined that Yorkville provided “actual notice” toWest American

of the Kuzma lawsuit, thereby fulfilling its notice responsibilities

under the policy. The majority’s holding is premised only upon the

circuit court’s finding that Liggett and Dickson had a conversation

about the Kuzma action in late 2001 or early 2002, combined with the

brief mention of the Kuzma lawsuit during the September and

November 2002 Yorkville board meetings at which Dickson was

present. 

I note, however, that as part of these findings, the circuit court

also found that the conversation informally occurred “in passing,” and

determined that the “only contents of the conversation was that there

was a lawsuit in Ottawa, kind of a he said/she said thing on

defamation” (emphasis added), with no reference to a time frame

when this defamation took place and no production of a copy of the

complaint.7 Even while candidly acknowledging that “no details were

given as to when the alleged defamation took place or where the

lawsuit was filed” (slip op. at 10), the majority nevertheless concludes

that West American was provided with sufficient information to

locate and defend the lawsuit. I strongly disagree.

Since the Kuzma action was filed in Joliet, and not filed in

Ottawa–as was implied by Liggett’s statement to Dickson–and as it

was mentioned simply “in passing,” it is difficult to understand how

the short informal exchange between Liggett and Dickson would have

provided West American with the information necessary “to locate

and defend the lawsuit.” Under the majority’s view, West American

should have been able to simply contact the courthouse in

Ottawa–which is in the Thirteenth Judicial Circuit–and obtain a copy

of the Kuzma lawsuit. Of course, such action would have been futile,

as Kuzma’s suit was filed over 50 miles away in the circuit court of

Will County–which is in the Twelfth Judicial Circuit–and the

paperwork would have been located in the Joliet courthouse. There

is nothing in the record to show that Yorkville ever informed Dickson

and/or West American that Kuzma’s action was filed in a different
-29-

city, county and judicial circuit prior to sending West American the

complaint in January 2004.

With respect to the minutes of the Yorkville board meetings, the

circuit court found that “[t]he minutes don’t contain any information

about where the suit was filed, when the incident allegedly took place,

who the parties to the lawsuit were.” Given that specific factual

finding, I question how the information in the minutes would have

provided West American with the ability “to locate and defend the

lawsuit,” particularly in light of the fact that the minutes also

misidentify Sheryl Kuzma as “Cheryl Kuzman.”

My review of the record establishes that the circuit court correctly

determined that Liggett believed that the Kuzma matter would simply

go away, to the extent that he “satisfied himself that this was no big

deal.” The circuit court found that this belief accounted for Liggett’s

failure to notify West American of a potential claim after meeting

with Kuzma in November 2000, even though section IV(2)(a) of the

West American policy requires that the insured “must see to it that we

are notified as soon as practicable of an ‘occurrence’ or an offense

which may result in a claim.” Despite this reporting obligation,

Liggett made no contact with West American at that time, even

though Kuzma had “threaten[ed] a suit with the bank.” This may also

explain why Liggett did not inform Yorkville’s board of directors

about the Kuzma litigation until one year had passed from the date it

was filed, even though Yorkville had the potential for significant

exposure if found liable. In addition, this belief may also account for

the fact that, even when the litigation was finally announced to the

board, Liggett downplayed its significance by including very little

about the action in the minutes of the meeting. 

In sum, it is my belief that under our well-established precedent,

Yorkville breached the plain and unambiguous language of each and

every notice provision contained within the policy. Because notice

provisions are not merely technical requirements but, rather,

conditions precedent to the triggering of an insurer’s contractual

duties, Yorkville therefore is not entitled to coverage under the

policy. Although today’s opinion pays lip service to these long-held

principles of insurance law, the effect of the majority’s ruling

undercuts this precedent and creates confusion for both bench and

bar.
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By ignoring the settled rules of insurance policy construction and,

instead, focusing exclusively on the timeliness factors set forth in

Country Mutual, the majority redirects the focus of analysis away

from compliance with policy provisions to an unworkable and

problematic case-by-case examination, requiring swearing contests

between the insurer and insured as to whether and when notice was

provided. The majority’s opinion will undoubtedly engender

additional litigation and place further strain on our courts to sort

through these “he said-she said” situations in lieu of holding insureds

to the terms of their policies.

In addition, today’s opinion summarily extends the principle of

“actual notice” and, by doing so, effectively overrules decades of

precedent establishing that notice provisions are conditions precedent

to coverage under a policy and are not merely technical requirements.

Under this holding, virtually any insured may now prevail on a claim

that because the insurer was provided with “actual notice”–in

whatever haphazard way and despite that information being

incorrect–the plain and unambiguous language of the notice

provisions contained within the policy are irrelevant. This holding

essentially writes out of the West American policy its detailed

requirements regarding provision of notice to the insurer, none of

which were complied with by Yorkville.

For the foregoing reasons, I cannot join the majority opinion.