Docket No. 108285.



### IN THE SUPREME COURT OF THE STA TE OF IL LINOIS

WEST AMERICAN I

NS U RANCE COMPANY, Appellee, v. YORKVIL

LE NATI ONAL BANK et al. , Appellants.

Opinion filed September 23, 2010.

JUSTICE BURKE deliver ed th e judgme nt of the c ourt, with opinion. Chief Justice Fitzgerald and Justices Thomas, Kilbride, Garman, and Karmeier concurred in the judg ment and opinion. Justice Freeman dissented, with opinion.

OPINION

The issue in this cas e is whether the insured violated its liabilit

y insurance policy

by failing to give timely

written notice to the insurer

as specifie d in

the policy , thereby r

elieving the insur er of its d uties to defend and indem nify. T he 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 OnSeptember 24, 2001, Sheryl Kuzma filed a def amationlawsuit-2- inthe circuit court of Will County ag ainst Yorkvi lle Nat ional Bank (Yorkville) and its vice president
, Bernard Wiegmann. Kuzma al leged that Wiegmann uttered

certain false sta tements in

his offic ial capa

city whichdamaged her professional re putation. At the time of the alleged defamation

in November 200 0, Yo rk vi ll e w as co ve re d b y a commercial gener

al liabilit y policy and commerc ial umbrella policy (c ol le ct iv el y, the Pol icy) i ssued by West American I nsurance Company (West American) for the p eriod of Septembe

r 17, 2000 , to September

17, 2001. We st

American is owned by

the Ohio Casua

lty Insurance Company

(Ohio Cas

ualty ). The Pol i c y lists the Zeiter

DicksonInsurance Ag ency (Z eiter-Di ckson ) as the agent. Zeiter

Di ckson, at all relevant times, was an approved insurance ag ent o f Ohio Casualty and West America n. OnMarch 9, 2004, West American filed a declaratory

judgment actiondenying

coverage u

nder t he Policy based on late notice

. Yorkville did not submit written notice of a cla im for cov erage

until January 19, 2 004, ap proximately 27 months after the defa mation lawsuit wa s filed. T

he Policy ’s notice

provision

states:

“ SECT ION IV–COMMERCIA L GENERAL LIABILIT Y CONDITI ONS * * * 2. Duties in the Event of Occurrence , Of fense, Claim or Suit. * * * b. If a claim is made or ‘suit’ is br ought agai nst any insured, you

must: (1) Imme diately

record the spec ifics of t

he claim or ‘suit’ and the date received; and (2) Notify us as soon a s practicable.
You must see to it that we receive written notice of the claim or ‘suit’ as soon as practicable.
c. You an d any other inv olved insu

red must (1) Imme diately

send us co

pies of a ny d emands,

no tices, summonses

or lega l papers receiv ed in connection with the claim or ‘suit’ ***.”
Inits answe

r, Yorkv ille alle ged tha

t West American received oral-3- notice of the

Kuzm a sui t on several occasions prior to receiving writtennotice onJanuary 19, 2004. Yorkville contende d that the oral notices to West American constituted “actual notice”trigg ering We st American’s duty

to provide coverage. At a bench trial, Jame s Lig gett, Yorkville’s president, testified that in late2001 or e arly 2002, he met with Richar d Dickson, the Z eiter-Dickson

in su ra nc e a ge nt wh o h ad pl ac ed th e P ol ic y w it h Yorkv ille. D ickson was an agent for Z eiter-Dickson until 2003. Lig gett told Dicks on that Yo rkville w as “ inv olved in a defamation lawsuit in Ottawa,” that it was a “he said/she said sort of thing,” a nd that it was no t covered by the bank’s directors & officers ( D&O) insurance policy. Accor

ding to Ligg ett, he asked D ickso n if the Zeiter-Dickson

Policy would cover

the suit. Dickson replied, “Probab ly not. Most all of thos e p olicies a re writte n the same anyway .” Dickson did not testify at trial. Lig gett testifie d that he m et with Joel O ttose n, anoth er West American agent, sometime during the same t ime period. L

iggett stated he told Ottosen that Yo rkville was involved in a defamation liability case an d asked if

the Policy

would cov er it. Ac cording to Lig gett, O ttosen gave “basically the same response” as Dickson, stating that the Policy probably would not co ver t he lawsu it. In his te st im on y, Ottosen denied h aving any conversation w ith Liggett about the defamation lawsuit before January 16, 2004. Ottosen testified that he first learne d of the la

wsuit on January 15, 2004, when Weig mann contacted him to find out whether his homeowner’s policy covered the suit. The defamation lawsuit wa s di scussed at three meetings of the Yorkville board of directors in 2002. D ickson was in attendance at the meetings because he was a membe r of the board. According

to the minutes, at the September meeting, L iggett reported to the board

that “Attorney Cher

yl Kuzman” was suing

Yorkville and Wiegmann for allege dly derogatory

comments made b y W e igmann. At the Nov ember

meeting, Ligg ett reported that expenses were high a t th e Ottawa bank branch as a result of lega l fees rel ated t o the Kuzma litigation. Finally, at the

December meeting, the board r eviewed and appro ved th e minu tes fr om th e Novem ber mee ting.
InJanuary 2004, Yorkville was advised by an unrelated insurance company that the Pol icy

“sh ould cove

r” the de famation

lawsuit.1 On cros s-ap peal to the app ellate c ourt, Y orkv ille argue d that t

he circu it court erred in determinin

g that York

ville was not entitled to sanctions u nder section155 of the I nsurance Code (215 ILCS 5/15 5 (West 2004)). The appella te court affirmed. 3 88 Ill. Ap p. 3d at 781. Yorkville has not appealed that part of the appellate cou rt’s judgment.

-4- Lig gett informed Ottosen of the lawsuit, who submitted the requ isite claim forms and copy of

the complaint to West American on January 19, 2004. The parties stipulated that on January 22, 2 004 , C ar ol yn Maher, a litiga

tion spec ialist for

West Ame rican, informed counsel for Yorkville that “there was insurance co verage for most of the allegations in the Kuzma complaint.” The trial on th e Kuzma su it was s et for March 15, 2004. On March 5, 2004, West

Ameri can dec ided t o deny cov erage under the Policy based on late notice. Yorkville later settled the ca se wi th 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 inthe declaratory

judgment action and awarded stipulated damag es inthe amount of $1,982 ,778 .78. The court found that the conversation

between Ligg ett and

Dickson took

place as described by Lig gett and was “unrefuted.” The court f ound t hat Ligg ett and Ottosenhad a “passing conversation” in the bank, but the court

made

no finding

as to the c onte nt of t hat conversation. Based on the conversation

betwe en Li g gett and Dickson and the reports of the b oard meeting s, the tria

l court fo und that We st Americ an rece iv e d actual notice of

the lawsu

it in 2001 or 2002. The court further found that the written notice in 2004 w as given w ithin a re asonable

time because Yorkville

was told in 2001 or 2002 that the lawsuit was not covered. The appellate court af

firm ed 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 cour t held that Yorkville breached the Policy ’s notice clause as a matter of law by waiting until 27 mon

ths after the lawsu

it was file d to submit

a written claim for coverage a nd a copy of the co mplaint. The court found the late n

otice wa s unreas onable in li ght o f the fact that-5- discovery had close d and the c ase was schedule d to procee d to trial ineight w eeks. Th e court h eld 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 la ng ua ge of

th e p ol ic y, the court found, would “render the policy ’s written notice provision meaningless.” 388 Ill. App. 3d a t 77 7. Justice Sc

hmidt spec ially concurred, noting that there was no reason not to enforce the contract language, which had been approved by the Department

of Insurance. Justice Ly tton concurr

ed in par t and disse

nted in pa rt, contending that West Ame rica n had a du

ty to defend a

nd indemni fy

Yorkville pursuant to Cincinnati Cos. v. West American Insurance Co. , 183 I ll. 2d 317 (1998), since it had received actual notice of the suit. 3 88 Ill

. App. 3d at 783- 84 (L

ytton, J., conc

urring in part a nd disse ntin g in part). We granted Yorkville’s petition f or leave to appea l to this court. 210 Ill. 2d R. 315. We granted leave to the Complex Insuranc e Claims Litigation Association to file a brief on be half of West America n as amicus curiae

.

ANA LYSIS
Inconstruing an insurance policy, we must ascertain and g ive

e ffect 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). T he policy must be constr

u ed as a whole, giving effect to every

provision. Country Mutual
, 222 Ill. 2d at 311. Unam biguous words in the policy are to be given their pl ain
, or di na ry, and popular meaning. Country Mutual , 222 Ill. 2d at 311. Where the policy lang

uage is ambiguous, courts are t o co nstrue the policy liberally in favor of

coverage. Country Mutual , 222 Ill. 2d a t 311.
Insurance policy notice provisions impose va lid prereq uisites to insurance coverage. Co untry Mutual , 222 Ill. 2d at 311. The policy langua ge in the not ice prov ision at iss

ue state s that an in sured mus t “see to it that we receive written notice of the claim or ‘suit’ as soon

as practicable.” A policy provision re q uiring 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-6- the facts and circumstances of eac h case. Country Mutual , 222 Ill. 2d
at 311-12. An insured’s breach of a n otice cl ause in an insurance policy by failing to g

ive reasonable notice will defeat the right of the in sur ed to recover under the policy

. Country Mutual , 222 Ill. 2d at 312, citi ng Simmon v. Iowa Mutual Casualty Co. , 3 Ill. 2d 318, 322- 23 (1954). The timeli

ness of a n insured ’s notice

to its insur

er generally

is a question of fact

for the tr ier of fa ct. Northbrook

Property & Casualty Insurance Co. v. Applied Systems, Inc. , 3 13 Ill. App. 3d 457, 465 (2000); Univers ity of Illinois v. Continental Casualty Co. , 234 I ll. App. 3d 340, 363 (1992). A revi ewing court should overturn a trial court’s factual findings only if they are

agains tthe manifest weight of the evidence. Addison Insurance Co. v. Fay , 232 I ll. 2d 44 6, 452 (2009). The following fa ctors m ay b e considered in determining whether notice to an insurer has been g iven withi n a reasonable time: (1) the specific language of the p ol icy’s notice provision; (2) the insured’s sophisticationincommerce and insurance matters; (3) the insured’s aware

ness of an event that may

trigger insurance c overage; (4) the insured’s diligence inascert aining w hether p olicy

covera ge is available; and (5) prejudic e to the insurer. Country Mutual , 222 Ill. 2d at 313. Th e parties a

gree t hat York ville sent written notice of

th e defamation

lawsuit and a copy of

the complaint on January 19, 2004, approxima

tely 27 months after the underlying lawsuit was filed. The circuit court he ld that the

27-month d

elay was r easo nable under the facts and circ

umstance s in this ca se. The appellate court concluded that Yorkville

breached the not

ice cla use “as a ma

tter of la w.” 388 I ll. App. 3d at 777. We hold thatthe trial court’s finding was not a gainst the manifest weight of the evidence. Under the first Country Mu tual factor, the specific language in the Policy’s notice pr

ovision doe s not aid

in our re asonable

ness analy

sis because it do es not ident ify a speci fic ti me fram e for gi ving noti c e. Inste ad, it requires Yorkville to “see to it that [West Amer ican ] receive written n otice of t he claim or ‘suit’ as soon as practicable”

a nd to “[i]mmediately send us copies of any demands, n otices
, summonses , or legal papers rece ived in connection with the claim or ‘suit.’ ” The term “immediate,” in the context of insurance policy notice provision s, has bee n in te rpreted in a similar manner to the-7- phrase “as soon as pra cticable.” See Zurich Ins urance Co . v. W alsh Co nstruction Co. of Illinois, Inc. , 352 Ill. App. 3d 504, 512 (2004) (“ ‘Immediate’ in this co nt ext ‘has be en unifor mly i nterpre ted to

mean within a r easonab le time, ta

king into consider ation all the fac ts and circum stanc es’ ”), quot ing Kenworthy v. Bitumin ous 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 sophistica t ed in the

areas of commerce and insur

ance. A ccordin

gly , this factor weig

hs in favor of finding that Yorkville’s delay in sending written

notice was unreasonable. Next, we consider the insured’s awarene ss of an event which

may trigger insuranc e cover

age. L iggett testified that he learned about the Kuzma matter in Novembe

r 2000, when Weigmann infor med him that Kuzma

complained about defamatory remarks made by Weigmann. Ligge

tt advised the bank’s attorney that he woul d investig ate the matte

r becau se Kuzma w as “thre atening a suit with the bank.” Two weeks later, Lig gett te lephoned Kuzma to inform her that he had checked with the parties involved and that none of the pe ople
at the meeti

ng felt tha t W ei gm an n h ad be ha ve d i na pp ro pr ia te ly. Lig gett the

n heard n othing f rom Kuzma f

or 10 month s until Kuzma filed her lawsuit in September 2001. Th us, Yorkville

was awa re 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 unrea sonableness. Withr egard

to the insured’s diligence in ascertaining whether

covera ge is available, a len gthy de l ay in providing notice is not an absolute bar to coverage provide d the insured’s reason for the delay is justifiable under the circumstances. See North brook 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). C ourts hav e recog nized that a

n insured ’s reas onable belief of noncoverage under a policy may be an a

cceptable excuse for the failure to give timely notice , even where the delay

is lengthy. See,
e.g. , Allstate Insuranc e Co. v. Ca rioto , 194 Ill. App. 3d 767, 780 (1 990) (2 1⁄2-yea

r delay e xcused because 19-y

ear-old insured

coul d nothave reasonably

known that the occurrence would h ave been covered by his mother’ s hom eowner ’s policy ); Grasso v. Mid--8- Century Insurance Co. , 181 Ill. App. 3d 286, 290 (1989) ( two-year delay ex cused because insured did not reasonably believe that an accident in her bo yfriend’s Jeep was c overed by he r fathe r’s exce ss

covera ge insuranc e policy ); Brot herhood Mutual Insurance Co. v. Roseth
, 177 Ill. App. 3d 443, 449 (1988) (two- year de lay excused be cause insureds did not reasonably be lieve that an acci denta l shooting which occurred outside their home would b e covere d by their homeo wn er’s pol icy

). Whethe

r the insu

red, acting as a

reasona bly prudent person, believ ed the occurr ence or lawsuit was not covered by the policy

is a question of fact
, which we review under the manifest weight standard. Farmers A uto mobile Insurance Ass’n v. Hamilton , 64 Ill. 2d 138, 142-43 (1976). Lig gett te stified th at in

“late2001 or e arly

2002,” he

spoke with Dickson, the West American ins ur ance agent who had place d the Policy with Yorkville. Du ri ng an informal meeting at the bank, Lig gett told Dicks o n “th at 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 insuranc e didn’t c over tha t typ e of suit. ” When Liggett asked Dickson whether the West American Policy covere d th e suit, Dicksonreplied , “Proba

bly not. Most all of those policies are written the same any

way .” Dicks on did not a sk Liggett for a copy of the

co mplaint, nor did he

offer to verify whether a compla

int f o r defamation was covered under the Policy . The trial court found that it was “undisputed” that the conversation between L igg ett and Dicksontook

place a s descri

bed by Lig gett be cause D ickson did not testify at trial. The trial cou

rt f oun d that Ligge

tt’s conversation with Dickson,

cou pled with the me

ntion of th e lawsuit

at board meeting s, “tips in f av or of the insured as to diligence” and thus the delay ed written notice was rea sonable. That finding w as not ag ainst the manifest weight of the evidence. After being inf ormed by its age

nt that the Policy probably did not cover the lawsui t, Yorkville

reasona bly believed th at s end in g wr it ten not ice to it s i nsu rer wou ld be f ut il e. It

was notuntil January 2004 that Yorkville discovered the lawsuit was

co ve re d b y th e P ol ic y. At that time, Yorkville promptly sent written notice to West Amer

ican. A r easonab ly prudent pa

rty inthe position of the insur ed would n

ot have c ontinued t

o pursue coverage under

the policy having been informed by its agent that the policy aff

orded no-9- coverage. Finally , we cons ider whe

ther West American

suffered prejudice

as a result of Yorkville’s written notice in January 2004. See Country Mutual
, 222 Ill. 2d at 317 (“the presenc e or absence of prejudic e to t he insure r is one factor to consider when determining w hether a policyholder

has fu lfil led any

policy condition

requirin g reas onable notice”). No testimony was prese nted at trial a s to whethe r West American was prejudiced by

the delay in re ceiving wri tt en notice. The trial cou

rt furthe r found that there

was no ev

idence t h at Wes t 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 la

wsuit in la

te 2001 or early

2002, within a fewmonths of the lawsuit being filed and approximately two years be fore the case

w as scheduled for trial. Contrary to the appellate court’s statemen t that actual notice has “no bearing ” on whe ther notice was given within a reasonable time , actual notice to an insure

r is rele vant to whether the insure r has been prejudiced by a delay in re ceiving writt ennotice as specified by the policy. “[W]here the insuran c e

co mpany has actual notice of the loss or receives the nec essary informationfrom some other source, there is no preju dice to the insurer from the f

ailure of the insured to give notice of the claim.” McLaughli

n v. Attorneys’ Title Guaranty Fund, Inc. , 61 I ll. App. 3d 911, 917 (1978) ( citi ng We hner v. Foster , 331 Mich. 113, 117, 49 N.W.2d87, 89 (1951), and United States Fidelity & Guaranty Co. v. Church , 107 F. Supp. 683, 689 (N.D. Cal. 1952)). Anin su ra nc e c om pa ny i s d eemed to have “actual notice” of a lawsuit where it has sufficient information to locate and de fend th e suit. Cincinnati

Cos. v. West American Insurance Co. , 183 Ill. 2d 317, 329 (1998); Progressive Insurance Co. v. Uni vers al 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 (199 6). “ [I]n

order to have actual notic e suffic ient to locate and defend a suit, the i nsurer m ust 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 I ll. 2d at 329- 30; Employers Insurance of Wausau v. Ehlco Liquidating-10- Trust , 186 Ill. 2d 127, 143 (1999). The trial court held that

Ligge tt’s “in passi

ng” conversat

ion with Dicksonas we ll as the r

eports a t the boar d meeting s provide d West American with sufficient information to “locate and de fend” the defamation

lawsuit. We

agree . Throug

h its a u thorized agent, the insurer knew both: (1) that a lawsuit had been filed ag ains t its insured; and (2) that the d efamat ion suit potentially fell within the scope of coverage of the Policy . Although no details were given as to when the al leged defamation took place or where the lawsuit was filed, Ligge

tt conveyed that the ba

nk had bee n sued for defamation and that the alleged events took place in Ottaw a, 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 def

amation. West American was put on notice at an ea rly stage i n the litig ation tha

t Yorkvill e was a defendant in a lawsuit that was p otentiall

y covere d under the policy. At the ve ry least, the agent could have followed up with Yor

kville by requesting
t o see a copy

of the complaint before advising it that the lawsui t probably was not c overed. After cons iderin g all relevant factors, we find that, unde r the circumstances in the present case, Yorkville’ s w ritten notice of the lawsuit to West American was given within a r easonab le time an

d did notviolate the notice

provision

inth e P ol ic y. Theref

ore, we revers e the appel late c ourt’ s jud gm ent that Yorkville is not entit

led to

covera ge and aff

irm the ci rcuit co urt’s fin ding tha t West Ameri can ha d a du ty t o p ro vi de co ve ra ge un de r t he Po li cy.

CONCLUSIO

N For the foregoing reasons, we reve rse the judgment of the appellate court and affirm the judgment of the circuit court.

Appellate court judgment reversed; circuit court judgment affirmed.

JUSTICE FREEMAN , dissentin

g:2 The Kuzma action was als o broug ht aga inst an additio nal defe

ndant, James B. Clarage. C larage, however, is n ot a party to the instant action.

3 I no te that W

ill Co unty i s in the

Twelfth Judicial C ircuit, and its

co urthouse is loca

ted in Jol iet. The underly ing oc currenc e took

place i n LaSalle County, which is i n th e Thirtee nth Judic ial Circ

uit, and its courthouse is in

Ottawa. The instant declarato ry judgmen

t action was also filed in La Sal le Coun ty.

-11- Idisagree with today ’s opinion on several levels. A ltho ugh the majority initially sets forth a

framework within which to analy ze the notice provisions of the insurance policy issued by West American to Yorkville, it neither

applies that frame

work nor construe s those provision s. Inste ad, my

colleagues depart

from our well-settled rules of insurance policy

construction and

analyze this appeal in a ma nner whic h tacitly

undercuts our precedent and will eng ender confusion for the bench and bar. I

n addition, the majority unduly expands th e concept of “actual notice” absent explanation or reason for doing so. Accord ingly , I dis sent.

BACKGROUND This dispute has its genes is in a n underlying defamation action brought by Shery l H. Kuzma (Kuzma) against Yorkville National Bank (Yorkville) and its vice preside nt, Bernard Wiegmann. 2 Kuzma filed he r compl aint on September 24, 2001, in the circuit court of Wi ll Co un ty. 3 Kuzma, an attorney, sue d Wiegmann in his capacity as a

n agent of Yorkville , for mak

ing fal se and de famator

y st atements about her inN ove mber 2000 to a group of local businessmen in connection with her representation o f a client. A jury trial took place in March 2004, shortly after West Amer i can filed the declaratory judgment actionthat is the subject of this appeal. The jury returned a $2.2 million verdict

in favor

of Kuzma a

nd aga inst Yorkvil le and Wiegmann. The parties subsequently settled f or the reduced amount of $1.75 mil lion. Based upon its belief that Yorkville had breache d the notice provisions of

th e i ns ur an ce po li cy, West American did not particip ate in either the trial pr oce edings or in the settlement negotiations of the Kuzma action. Instead, West America n filed the-12- su it at is su e t od ay. West America n filed its declaratory

judgment action on March 9, 2004, in th e ci rcu it cou rt o f La Salle County. West American attache d to its complaint a copy of the commercial general liability pol ic y issue d by i t to Yorkville, which required compliance with the following notice provisions as a condition of coverag e:

“SECTION IV–COMMERCIA L GE NERA L LIABILIT Y CONDITI ONS * * * 2. Duties I

n the Eve nt of Occ urrenc e, Offe

nse, Cla i m or Suit.

a. Yo u must see to it that we are notified as soon as practic able of an ‘ occ urrence’ or an offense w hich may result in a claim . To the e xtent possib le , notice should include: (1) How, when and wh ere the ‘occurrence’ or offense took plac e; (2) The names and addresses of any inj ure d persons and witnesses; and (3) The n ature and location of any injury or damage arising out of the occ urrence or offense. b. If a claim is made o r ‘suit’ i s brought against any insured, you

must: (1) Imme diately

record the spec ifics of t

he claim or ‘suit’ and the date received; and (2) Notify us as soon a s practicable.
You must see to it that we recei ve written notice of the claim or ‘suit’ as soon as practicable.
c. You an d any other inv olved insu

red must: (1) Imme diately

send us co

pies of a ny d emands, notices, summonses or legal papers rece iv ed in connection with the claim or ‘suit’; (2) Authorize us to obtain rec ords and other information; (3) Cooperat e with us in the investigation or-13- settlement

of the cl aim or de fense a gain st the ‘suit,’ and (4) Assist us, upon our r equest, in the enforcement of any right a gainst 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 breache d these notice provisions by waiting nearly 28 months after a la

wsuit was fil ed again st it b efore providing the insurer with written notice. Ac co rd in gl y, West American maintained that it had

no obliga tion to defend Yorkville in that action.

Declaratory

Judgment Testimony During the trial on West American’s declaratory judgment action, Yorkville ’s presid

ent, James L

iggett, testified

he first learned of the Kuzma matter in Novembe

r 2000 whe

n Wiegma

nn stated that Kuzm a had accuse d him of mak

ing fal se stateme nts about her. Ligg ett met with Kuzma, whom he described as being “very upset.” A fter this meeti ng, Ligge

tt informed Yorkville’s attorney , Daniel Kramer, that Kuzma was “thr eatenin

g a suit w

ith the ba

nk.” Aft er L iggett “inv estig ate[d

]” Kuzma’s claims, he told her that he believed Wiegmann

had do ne not hing impr

oper. L iggett next hear

d of this matter 10 months later, when Yorkville and Wiegmann were na med

as defenda

nts in the Wil l County

defamation lawsuit filed

by K uzma in September 2001. Kramer, who was retained to defend the action, asked Ligge tt for a copy of

Yorkville’s directors and office rs ins urance policy , which wa s issued by an insure

r other than West American. Howeve

r, Krame r did not a sk

for a c opy

of the Wes t American po li cy. Lig gett s tated tha t as the lit

igation with Kuzma progressed, Kramer “reported to u s that he had contacted the insurance companies.” Lig gett also testif

ied regarding the alleg ed instances of “actual notice” of the Kuzma lawsuit to West American. Ligg ett stated that in“lat e 20 01 or early

2002” he spoke with Richard Dickson, a principal of the Zeiter -Dickson Insu rance Agency

, who had placed the West American

policy with Yorkville. According to Lig gett, Dickson had “stopped in [the bank] as he often did,” and in the mi dst of-14- “discussions about other things” Lig gett told Dickson “there was something I needed

to ask him about.” Ligge

tt 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 offi cer] insurance [p ol ic y] did not cover that type of suit. Then I

asked if the [West American] policies would cov er the su it.” Acc ording t

o Lig gett, Dickson r

eplied “ probably not,” bec ause “[m]os t all of tho se policies are written the same way anyway .” Lig gett testified that he had a nearly identical, “in passing ” conversation

wi th Joel Ottosen, another agent of Zeiter-D ickson, during the same time frame–“late 2001, early 2002.” Ottosen “stopped by” the bank a

nd Lig gett “t old him I had an insurance question I wanted to ask him about.” L iggett info rmed him that a defamation lawsuit had been filed against Yorkville, that it was not covered by the director

and officer insurance, and aske d whether the West American policy

would provide cover age. A ccordin g to L iggett, Ottosenrepli ed w ith the exact words as had Dickson by stating “probab ly not,” as “

most all of those policies are written the same.” Lig gett did not direct Ottosen to notify West America n as to the existence of the Ku

zma lawsui

t. Lig gett further testified that two confer ence c alls occurred between himself, Ottosen and Kramer “in the second or third quarter of 2002,” th e first

b eing made from his office and the sec ond made fromKramer’s office. Ligg ett told Ottosen that Kuzma’s lawsuit was still pending, an d asked again i f the West A merican policy would provide coverage, to which Ottosen again replied “probably not.” According to Liggett, in January 2004 another insurance agency opined that the We st Americ an policy should cov er the Ku

zma suit. This prompted Ligg ett to call Ottosen on January 15 , 2004, an d ask again ab ou t c ov er ag e u nd er th at po li cy. Accord ing to Ligge

tt, Ottosen stated, “ ‘I’ll repor

t it’ or something to that effect.” Fi na ll y, Ligge

tt testified regarding meeting s of Yorkville’s board of directors durin

g the fa ll of 2002. It was not until September 2002 that Lig gett fir

st in formed Yorkville ’s board about the

Kuzma litigation. Ligge

tt stated that he prepared the minutes of the board meeting s, and he read into the record a portion of

the minutes of the Septembe r 2002 mee

ting whic h first re ferenc ed the Ku

zma lawsui

t:-15- “President

Ligge tt reported to the Board

that Attorney Ch er yl Kuzman [ sic ] of Ottawa was suing the ba nk, Ben Wiegmann

and James Clarag e in a cou nter suit * **. The ba sis of the suit is alleged derogatory commen t s made by Mr. Wiegmann *** [and the] remarks have been denied ***.” Lig gett also read a relevant portion of the minutes from the November 200 2 Yorkville board meeting, which simply stated that there were “addi tion al legal e

xpenses inv olved with

the Clara

ge–Yor kville National Bank–Kuzman [ sic ] law suit.” Lig gett stated that Richard Dicksonwas a member of the Yorkville board and was pr e sent at both the Septe

mber and

Novembe

r 2002 mee

ti ngs. H owever, insu rance coverage of the Kuzma lawsuit was not discussed d urin g any of the boa

rd meetin gs. Daniel Kramer ’s testimo ny a t trial of ten conf licted wi th that o f Lig gett. Although Ligg ett told him in November 20 00 that Kuzma

cameto his office and that she was upset, he did not also tell him that she threatened legal action. After Kuzma filed suit, Kramer asked Lig gett for copies of Y orkvi lle’s insurance policies and was given only the policy pr

ov iding director and officer cove rage. Kramer tendered a defense to that insurer

within 60 to 90 days after the bank

was sued, but

coverag e was declined because that policy had an exclusion for inten

tional t orts. K ramer was initially una ware of the West America n policy until L iggett mentione d it to him in early 2002. At no time did

Kramer independ ently contact West American about coverage of the Kuzma matter. Kramer’s testi mony regard ing the alleged instances of “actual notice” also larg ely

conflicted with that of Ligg ett. Kramer stated his firs tco nt ac t w it h t he Ze it er -D ic ks on ag en cy w as by w ay o f conferencecalls placed from Liggett’s office in 2001 or 2002. During thesecalls, L

iggett asked O tto se n whet her Yor kvil le had covera ge under th e W es t A me ri ca n p ol ic y. Ottosen a sked L iggett for a copy

of the Kuzma complaint, and Ligge tt replied that he would g et it to him “right away.” Because they

did noth ear bac

k from Ott

osen, Liggett and Kramer placed another call to him in late 20 0 2 from Ligg ett’s office. Ottosen stated he had forwarded the claim to West American and that th ey would hear from a West American attorney . Kramer testified that h e prepared no documents to memorialize the conversations with Ottosen.-16- The testimony of both L iggett and Kramer fur ther conflicted

with that of Ottosen, who testified on behalf of West American. Ottosen did not receive calls fro m Ligg ett and Kramer in 2001 and/or 2002

re gar ding the Kuzma matter. Instead, his first discussion reg arding that action oc curred

on January

15, 2004, w

hen Wieg mann cal led to inquire whethe r his per sonal home owner’ s insurance policy c ould provide coverage. Ottosen advised Wiegma nn tha t if the law suit arose inthe course of his employ ment as Yorkville’s vice president, it was likely that he was covered under the West American policy . Ottosen called Ligge tt the following day

and told him that if

the lawsu it arose outof Wiegman

n’s bank employment it should be cover ed. When Lig gett replied, “they say

we are not covered,” Ottosen asked who informed him that t

here was no coverage under the West Americ an po li cy. Ligge

tt respond ed: “I don’t know. Kramer is handling it.” Ottosenasked L

iggett to speak with Kramer, obtain that information, and then contact him again. After calling L iggett, Ottosen asked his secretary t o contact

Kramer ’s offic e to obtai

n a copy of the la wsuit, and he then lo oked up Yorkville’ s policy in the ag ency ’s old file s. After concluding that there was potential coverage, he called L iggett back and told him that although it would be a late submission, once he received

a copy of the Ku zma complain t he would

submit a cl aim to Wes t Am eri can , which he d id o n Ja n uary 19, 2004. Ottosen’s testimony was supported by doc umen tat ion of his a

ctions in

connec tion with th e filing of the cl aim.

Circuit Court’s Findings and Ruling The circuit c ourt foun

d it undispu

ted th at alth ough Ligg ett was

aware of potent

ial litig ation from Kuzma in November 2000, Lig gett “satisfied himself that this was no big deal.” Therefore, he di d not notify West Amer

ican of a potentia l claim at that time. When Kuzma filed suit in September 2001, Ligge tt 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 age

ncy or to West America

n. The circuit court further found it undisputed that a conversation between Ligge tt an d D ickson took place at the bank. However, the court determined that th e “only contents of

the conversation was that there was a lawsuit in Ottawa, kind of a he said/she s aid th ing on-17- defamation. No testimony as to when this defama tion took place. There was no copy of

the complaint. There was no request for any of that in for mat io n. It was sort of an in passing conversation, do we have any cove rage on that.”
Inaddition, 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 attend ance in h is capac ity

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

was set forth

in the minut

es, the c ourt f

urther fou nd that “[t]he minutes don’t contain any infor mation about where the suit was filed, when the incident

allege dly took plac e, who the

parties t o the lawsu

it were.” Finally, with respe ct to L igget t and Kramer’s testimony

regarding conversations with Ottosen, the court believed that “at some point Mr. Ligge

tt said something to Mr. Ottosen but the content of which is very hard to de

termine, [as is] the context of when it was [said].” The court, however, flatly reject edthe testimony of L iggett and Kramer that they participa

te d in two conference calls with Ottosen, finding that their

statemen ts were n ot credi ble and that these

calls did nottake place. The court found support for this conclusion in the fact that when Wie gmanncontacted Ottosen in January 2004 r egarding whether his personal homeo wner’s poli cy could p rovid e cover age for the Kuzma lawsuit, Ottosen immedia tely took action and docume nted the steps taken in t

he proce ss. Ottosen’ s quick ac tions with r

egard s to Wiegmann’s inquiry

stood in contras tto the testimony of Liggett and Kramer that altho

ugh Otto sen to ok “ phone calls from the bank president and a lawyer” he did “not eve n docum ent 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 la w to these

finding s of fac t. Alth ough the court ack nowle dge d that “a gap” existed in the conversation

between Ligg ett and

Dickson to the extent that Dickson

was “not given all the details” of the Kuzma lawsuit, t he cou rt neverth eless held th at Ligge tt’s conversation with Dickson was sufficient to place West Amer

ican on “ actual not ice” tha t a lawsui t had been filed against Yorkville, providi ng it with adequa te informationto locate and defend the action. When this conversation

was combined

with the additional information regarding the Kuzma-18- lawsuit provi ded du ring the Yorkville b oard of directors meetings that Dicksonattended, the court concluded that “[t]he totality of the situation is that there is notice.” Although the court found “some evidence” of pre

judice to West American due to notice being given to it after discovery

was closed

and the c ase was

set for tr ial, bec ause the Kuzma ac tion had bee n mentione d severa

l times and

Yorkville

was told t hat ther

e was no c overag e, “the f act that t hey were la t e reportingit, I don’t know that that’s unreasonable.” Thus, the circuit

co u rt held that West Amer

ican owe d a duty

to provide

covera ge to Yorkville and directed West American to pay stipulated

damage s in the amount of $1,982,778.78.

ANA LYSIS
In Country Mutual Insurance Co. v. Livorsi Marine, Inc. , 222 I ll. 2d 303 (2006), we recently

rea ffirme d that an insured’s breach of a policy’snotice provision “will defeat the right of theinsured p arty to

recover under the policy.” Country Mutual
, 222 Ill. 2d at 312, citing Sim mon v. Iowa Mutual Casualty Co. , 3 Ill. 2d 318, 3 22-2 3 (1954).T his result is g

rounded inthe principle that notice clauses “impose valid prerequisites to insurance coverage” ( Country Mutual
, 222 Ill. 2d a t 311 , citi ng Barrington Consolidated High School v. America n Insurance Co. , 58 I ll. 2d 278, 2 81 (1974) ; Imperial F ir e Insurance Co. of London v. Coos County , 151 U.S 452, 38 L. Ed. 231, 14 S. Ct. 379 (1894)) and is root e d in deca des of pr eceden t, which ha s long re cognize d:

“Contrac ts of i nsurance are contracts of indemnity upon the terms and conditions specified in t he policy ***, embodying

the agreement of the parties. *** The terms of the policy constitute the measure of the insurer’s liability

, and in order to recove r, the as sured mus t show himse lf within thos e terms; and if it appears that the contract has been terminated by the vi ol ation on th e part of the assur ed, of its condition s, thenthere 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 u p on this rationale, our courts have repeatedly held that-19- notice provision s in an insu rance p olicy

are not mere ly technical require ments but, rather, conditions precedent to the trigg ering of the insurer’s contractual duties. No rthbrook P roperty &

Casualty Insurance Co. v. Applied Systems, Inc. , 313 Ill. App. 3d 457, 464 (2000); see also, e.g. , Ae tna Casualty & Surety Co. of Illinois v. Allsteel, Inc. , 304 Ill. App. 3d 34, 41 ( 1999); Kerr v. Illinois Central R.R. Co. , 2 83 Ill . App. 3d 5 74, 582 (1 996); American States Insurance Co . v. Nat ional Cycle, Inc. , 260 Ill. App. 3d 299, 311 (1994); Mitchell Buick &

Oldsmobile Sales, Inc. v. National Dealer Service s, Inc. , 138 Ill. App. 3d 574, 581 ( 1 985); International Harvester

Co. v. Continental Casualty Co. , 33 Ill. App. 2d 467, 471 (1962).T hese decision s note the several important purposes served by notice pro visi ons, which include “afford[ing] the insurer an opportuni ty to make a timely and thorough inve stigation and to gather and preserve possible evidence.” Barrington Consolidated High School , 58 I ll. 2d at 281; see also P. Kalis, T. Reiter & J. Sege

rdahl, Policyho lders Guide to the Law of Insurance Coverage§24.02(A), at 24–3 (1997) (“[t]imely notice ensures that a n insure r will have the opportuni ty to intervi ew witne sses while they are ava ilable, a nd to marshall evide nc e relevant to the defense of the underly ing action before it is lost ordestroyed” ). In addition, a notice-of-suit provision allows the insurer to “control the litigation,” i ncludin g options for settlement.14 Couch on Insurance §199.84, at 199–140 ( 3d ed. 1999). Notice provisions, like those here, generally provi d e that an insured must give an insurer notice “as soon as p racticable.” The notice provision in Yorkville’s policy is identical to that found i n Country Mutual , where we explained that “[ a] policy condition requiringnotice ‘ [a]s soon as p ractica ble’ is int

erpret e d t o mean ‘within a reasonable time,’ ” and held that “[w]hether notice has been given within a r

easonab le tim e depends on the facts and circumstances of

each case.” Country Mutual , 222 I ll. 2d at 311-12, quoting Barrington Consolidated High School , 58 I ll. 2d at 28 2.Thus, for an insure d to satisf

y th is ty pe of noti ce provi si on, tw o require ments must be met: first, “notice” must be provided to the insurer within the

meanin g of

the policy; and, second, suc h notice must be timely. See Country Mutual , 222 Ill. 2d at 311-12. Alth ough the majority rec ites many of the s e well-settled legal princip les at the ou tset of its analy sis (see s lip op. at 5 -6), it fa ils to-20- apply them to the

instant ap

peal. F or example , althoug h the majo rity readily acknowl edges

that “[i]nsu

rance p olic y no tice provisions impose valid pre

requisite s to insura

nce cov erage ” (slip op . at 5), it fails to setforth all of the relevant notice pr ovisions c ontained

within the policy and does

notconstrue these provisions under the very rules of analysis contained in its opinion. I s ubmit that i f the majority actually per

formed such

an analysis, it would be compe lled to reach a contra ry result. The majorit

y states that in construing an insurance policy, “we must ascertain and give effe ct to the intentions of the parties
, as expressed in the policy language. ” (Emphasis added.) Slip op. at 5. As the major

ity f urther o bserves , 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, a nd popular meaning.” Slip op.
at 5. Under this framework, the logical next step is t o examine the words use d in the pol icy

provision s. Pursuant t

o section IV( 2)(a) o f the polic

y, t he insure d must

“see to it that [West American is] no tified as soon as practicable of an ‘occurren ce’ oran offe

nse which may

result in a

claim.” Once this provision is triggered, the policy further requires the insur ed to transmit several specific items of information to the insurer: (1 ) “ho w, when and where the ‘occurrenc e’ 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 r

e ferences these policy

provisions nor constr ues them unde

r the ana lyti cal fra

mework se

t forth in i

ts opinion, d esp ite its clear statement that the language of the policy controls. See slip op. at

5 (“we must ascertain and give e ffect to the intent io ns of the pa

rties, as expresse d in the pol icy

langua ge”). It is my view that , pursuan

t to the pla

inlangua ge of this provision, once Kuzma contacted Ligg ett in November 2000 regarding her c laim 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 “occurre nc e ***4 I note that in the course of its opinion, the majority itsel f state s that “York ville was aware in November 20 00 of the potential for a lawsuit.” Slip op. at 7.

5 As stated, we hav

e prev iously constru ed thispolicy langu

age to me an “within areasonable time” based upon the facts an d circumstances of

each

case. Country Mutual , 222 Ill. 2d at 311-1 2.

6 The 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- whichmay result in a cla im.” 4 The policy mandate d Y o rkville to notify West American

of the Kuzma matter

“as soon as practicable” 5

a nd to provide West American with specific information rega rdi n g the genesis of this oc curren ce. Yor kville, however, failed to

comply with any of these policy provision s. Se ction IV( 2)(b) is t

he secon d releva nt notice provision wit hin th e policy and provides that w

hen a “c laim is made or ‘suit ’ is brought again st any insured,”

the insured must “immediately re cord the specifics of the cl aim

or ‘suit’ and the da

te rece ived,” a

nd notify West American “as soon as practica

ble.” Yorkville

was also r

equired to “see to it that [West A

merican] receive

written notice of

the claim or ‘suit’ as soon as practicable.” Again, al though th e majorit y st ates tha t effect must be g iven to the intent of the parties as expressed through the langua ge of the po li cy, the majority fails to construe this provision us ing this analytical framew ork. I

t is my view that
, under

the plain language of the provision, Yorkville was required to “i mm ed ia te ly” 6 record the specifics of the lawsuit and the date received, and to provide w ritten notificationto West

America n of this event “as soon as practicable.” I submit that the policy required Yor kville to have performed

thes e actions shortly

after the time Kuzma

filed her complaint in September 2001. Yorkville , howeve

r, faile d to comply

with any of these policy provision s. Fi na ll y, under se ction I

V(2)(c ) of th e pol icy , the insur ed is required to “immedi ately” send to West Americ an “copies of any demands, notices, summonses or legal papers rece ived in connection-22- with the claim or ‘suit,’ ” to “authorize [West Am erican] to obtain records and other

informat ion,” to “ coopera

te with [West American] inthe investigation

or settle ment of the

claim or d

efense agains tthe ‘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 whic

h this insur

ance ma y a lso apply.” Again, the major

ity f ails to app ly

its pu rported analy

tical framework

by not giving

effect to the int ention o f the parties as expressed in th e langu age of this policy provision . It is

my view that, pursuant to th e prov isio n’s pl ain la nguage , Yorkville had the obligation

to “immediately” send West Americ an copies of any leg al papers related to the Kuzma action, includ i ng t he c om pl ain t. In ad dition, Yorkville was required to authorize the insurer to obtai n records and other informat ion c onnecte d to this mat ter and t o coopera te with the investigation or settlement of the suit. Again, Yorkville failed to comply with any of these policy provision s. Thus, upon review of

the plain and unambiguous language of the notice provision s contained in the instant policy, it is apparent that Yorkville breach ed each and ev ery report ing ob ligat ion i t agr eed to

as a condition

of cover age. H ad Yorkv

ille fulfilled the policy notice require ments, West Amer

ican wou ld have been

in receipt of pertinent and timely information reg arding the Kuzma matter, including the contact informat ion for th e partie s, the bas is for the fili n g of the lawsuit, and the correct case caption, file number a nd location of

the action. As Justi ce Schmidt observed in his special concurrence be low, “[m]any of the in surance coverage notice case s involve swearing contests between the insurance carrie r and its insured as to wh ether oral notice was given,” and the “obvi ous in tent” of a written notice provision “is to avo id

these ‘he said-she said’ coverag e disputes.” 388 Ill. App. 3d at 781- 82 (Schmid t, J., speci ally

concurr ing). I ndeed, th is

caseprovides a textbook

example of the importance of an insured’s adherence to the written notice requirement, as Yorkville’s compliance would hav e allowe d West America n to perform a timely investigation, t o g ather and preserve evidence , and to allow an informed decision as to whether to settle or litigate the matter. Due to Yorkvil le’s failure

to comply

with its poli cy

obligat ions, West American was deprived of these options, and this litigation ensued.-23- It is th erefor e deepl y troubli ng t h at despite the majority’s statemen ts th at th e l an gu ag e o f t he po li cy c ontrol s and that an insured’s co m pliance

with policy no tice pro visions is a “valid prerequisite” to coverage, my colleagues fail to apply these we llsettled principles to the matter at bar . As a re su lt, the majority does notanswer the pivotal question of whether Yorkville

complied with the notice pr

ovisions a s set fort

h in the policy. I

nstead, my colleag

ues overl ook the plain

and unamb iguous la

nguag e of the n

otic e provisions and, in an

appare nt effor t to salvag e Yorkvi l le’ s claim, address the subsequent

andseparate question of whether the notice given wa s r ea so na bl y ti me ly. I su bm it th at by depa rting from the framework

set forth at the out set of the

“Analy sis” porti on of its opinion, t he m ajority tacitly undercuts our precedent absent discussion or suppor

t f or doing so, and its opinion will engender confusionamong the bench and bar as to the continued va lidity of these pr eviously settled pr inciples. Departing fromour prec edent, th e majorit y’ s analy sis in support of uphol ding Y orkvill e’s coverage claim consists solely of an application of five factors set forth by this court in Country Mutual
, whichprovide g

uidance in deter mining wheth er n otice given to an insurer is made within a re aso nable 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 a

n insur er, before being relieve d of its duty

to defend, must prove that it was prejudiced by the delay inreceiving notic e. We cla rified that several factors may be conside red in assessing whether timely notice is given in a particular case, including wh eth er the insurer was prejudiced; the specific language of the policy ’s not ic e provision; the insured’s sophistication in commerce and insurance matters; the insured’s

aware ness of an event

which may trigger

insurance coverage; a

nd the insured’s diligence in ascertaining whe ther polic

y c overag e is available. Country Mutual , 222 Ill. 2d at 31 3. Si gn if

ic an tl y, Country Mutual held that

a lack of prejudice on the part of the insurer does not foreclose an

in su re r’ s c on te nt io n t ha t n ot ic e w as un ti me ly ( Country Mutual
, 222 Ill. 2d at 31 6-17), and reaffirmed our long- established-24- holding in Simmon that the presence or absence of prejudice to an insurer is on ly one factor

to consider. Country Mutual
, 222 Ill. 2d at 317. Unlike the matte

r at bar , there w as no dispu te in Country Mutual

c oncerning 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 factua lly i napposite to the matter before us and provides no guidance as to the important question presented in the instant ap peal: whether Yorkville

complied

with the no tice req

uiremen ts o f the po li cy. The major it y nevertheless takes the unprecedented ste p of employing

the five Country Mu tual factors intended to gau ge the timelines s of notice as its sole basis for reversing the judgment of

the appella te court and ho ldin g that Y orkvi lle i s enti tled t o cove rage

. Becau se the majority adop ts this analysis absent discussion or explanation for departing from our settled precedent, I

cannot jo in its opinion. Moreover, even if

I agre ed with the majority that this analy

sis is appropriate, Istill could not join the majority opinion based upon my bel ief that the majority errs in its application of the se factors. For example, in assessing whether notice was provided to the in surer within a reasonable time, Country Mutual directs t hat the sp ecific langua ge of the policy’s notice provision be considered. In re viewing th is factor, the majority

states that “the specific languag e in th e Policy’s notice provision does not aid in our rea sonableness anal

ysi s because it does no t identify a specific time frame for giving notice” (slip op. at 6) apart from

directing that the written notice be sent “as

soon as prac ticable”

and that c opies of a

ny l egal p aper s be sent “immediately.”

First, I note that this is the majority ’s sole reference within its analysis to the langua ge of the policy ’s notice prov is ions, despite its pronouncement earlier in its opinion that the p lain langua ge of the policy contr ols and tha t effect should be

given to every provision to fulfill the intent of the parties. Second, I disag ree with the majority’s conclusion that these ter ms “do[] not aid” in the

reasona blenessanalysis; to the contrar y, they indicate that

an insured must satisfy these provisions with the g oal of prov iding the insurer withnoti ce at the earliest possible moment under the facts and circumstances presented.-25- Equally problematic is the majority’s discussion of th e Country Mut ual factor that directs a court to assess whether the insured was diligent in asc e rtaining the availability of policy cover

age. Rely ing upon the haphazard encounter betweenLigge

tt and Dickson at the bank “in late 2001 o r early 2002” and the vague statements made during that “inpassing” conversation, the majority concludes that Yorkville displayed di l igence in ascertaining w hether the policy would cover th e Kuzma la

wsuit. I n furthe r support , the majo rity quotes from the circuit court’s finding that during this conversation, Lig gett told Dickson “that we we re involved in this defamation lawsuit in Ottawa. That it was kind of a he said/she said s ort of thing,” and that

Dickson responded by

stating that this ma

tter woul d “[p ]robably

not” be covered under the policy . See slip op. at 8.Th e majority concludes that “[a]fter

being informed by

its agent that the Pol ic y probably did not cov er the la

wsuit, Yor

kville re asonably believed that sending written n o tice to its insurer would be futile.” Slip op. at 8. The majority’s analy

sis on this point is

flawed i n severa l respects. First, the record is devoid of support for the majority ’s conc lusion that Yorkville was of the belief “that sending written notice would be futile.” Second, I

note that t

he major ity r elies upon Dickson ’s reply that th e p ol ic y “

probably” would

notcover th e vague factu

al scena rio out lined by Liggett during their informal exchang e. I submit that Dickson’s response is not a definitive denial of coverage , and that his offhand statement left the question open for further discussio n. Thus, the maj ority

factua lly e rrs when it subsequently

states tha t Dickso n informed Yorkville that “the policy a fforded no c overage. ” (Emphasi s added.) Slip op. at 8. Accor dingly , its conclusi on that “[a

] reasona bly prudent party in the posi

tion of the insured would

not have continued to pursue coverage under the policy having

been i nformed

*** that the policy affor

ded no coverage ” (emphas is added) (slip op. a

t 8) is called into question. Finally, the majority ’s deter min ation that Yorkville display e d diligence is further undercut by its holding earlier inits opinion t

hat York ville is a “sophisticated” insured, owing to the factt hat it is a bank with experience in the areas of commerce a n d insurance. Slip op. at 7. Given that Yorkville is skilled in busines s and insurance matters, is represented by counsel, and alsois subject to layers of sta

te and federal regulation as a bank , I fin d it paten

tly-26- unreasonablefor s uch an entity to relyupon an in-passing, off-thecuff informal conversation and an equivocal response a s the basis for its failure to formally pu

rsue the covera ge que stion and l eave its elf opento potential liability exposure. Although the majority rel ies upon

a series of appellate court decisions for the propositio

n that “[c]o

urts have recogni zed t hat an insu red’s r eason able b elief of non covera ge

u nder a poli cy may be an accep table excu se for t he fail ure to gi v e timely notice, even wherethe dela y 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 ex amines the Country Mutual factor that questions whether West American suffered prejudiceas a result of the 28-month

delay in written notice. T

he majority notes that the circuit court held that

West American received “actual notice” of the Ku zma lawsuit in late 2001 or early 2002 a s a result of t he “in

passi ng” conversation betweenLigge tt and Dickson, as well as the mention of

the matter during two Yorkville board meetings. Agreeing withthe circuit court’s ruling that under our prior dec ision i n Cincinnati

Cos. v. West American Insurance Co. , 183 Ill. 2d 317, 329 (1998), Yorkville

had “actual notice” of the Ku zma lawsui

t in that it had sufficient informat ion t o “locate and defend” that action, the majority concludes that

Wes t Americ an suffe

red no pr ejudice as a

re su lt of th e 2 8- mo nt h d el ay. Not only do I d isagre e with

the majority’sconclusi on, but I also

amconcerned

that the majority today

expands the principle of “actual not ice” as it was used in Cincinnati without ad

dressing th e di fferenc es 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 p ersonal injuries agai nst several s ubcontracto rs, includ ing Ba ird
, whichwas defende d under a policy issued by Cincinnat

i Companie s. A second subcontractor , B&D, was defended by West American. Unbeknow

nst to Baird
, it was an additional insured under B&D’s West American policy ; therefore, it had no reason t o 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 thentendere d its defe

nse to West American, which rejected Baird’s-27- tender. Cincinnati , 183 Ill. 2d at 319-21. We held that the insurer could not decline covera ge on th e basis that there had n ot been a

n officia l tender of defe nse by the newly discovered insured

when it already ha

d “actual notice” of the action b e cause it had been actively

defending the identical lawsuit for another insu r ed, B&D. Cincinnati , 183 Ill. 2d at 329-30. Defining “actual notice ” as “ ‘n otice suf ficient t o permit th e insure

r to loca te the suit and defend

it’ ” ( Cincinnati , 183 Ill . 2d at 324, q uoti ng Long

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

that th e insurer actually

knew of the lawsuit at issue for three ye ars, as it had been defending B&D throughout the pendency of that action. Cincinnati , 183 Ill. 2d at 330. Ac cordingly, we held that an exception to the tend er requi rement exists–and the insurer’s duty to defend was therefore trig gered– whe re it was

unmistaka

ble that th e in sur er w as a lre ady a war e of th e su it . In arriving

at this hold ing, we explicitly stated that because neith er party invoked the specific terms of

th e p ol ic y, “policy defe

nses have not been a factor in our decision.” Cincinnati , 183 Ill. 2d at 323 n.1. Cl ea rl y, Ci ncinnati

is neither factua lly n or lega lly on point with this case. The insurer in Cincinnati knew of the lawsuit beca use it

was already

a party to that

action; hence the term “actual notice.” The insurer’s participation in th e defense of the suit thereby foreclosed any que stion regar

ding its k nowledg e of that

litigati on. I

n contra st, West American was not a participant in t he Kuzma action and, therefore, the same level of knowledge cannot be attribut ed to it. Further, unlike in C incinnati , the insurer here is vigorously raising policy defense s, argu

ing that the lang uage o f the polic

y c ontrols, and relying upon long-settled precedent that an i nsure d’s compl iance with notice provisions is a prer equ isite to insurance coverage. The majority’s application of Cincinnati to this case will cause confusion to both bench and bar, as today ’s holding contra dicts long-he ld not ions in Illinois that notice provisions are not simply technical requirement s to be over

looked bu

t, rathe r, condit ions prec edent to coverage. Furt hermore
, the major

ity’ s holding

that York ville prov ided West American with “actual notice” to allow it to “locate and defend” the Kuzma lawsuit (slip op. at 9-10) is unsuppor ted by th e record. The majority summarily concludes that the c irc ui t court c orrect ly7 Although the m ajority relies u

pon Lig gett’s

accoun t rega rding this

encoun ter, I note that the circuit court sp ecifical ly found that large p ortions of his testimony

were not credible.

-28- determined

that Yorkville provided “actual notice” to We st American of the Kuzma lawsuit, thereby fulf illing its notice responsibilities under the policy. The majority ’s holding is premised o n ly upon the circuit court’s finding that Liggett and Dickson had a conversation about the Kuzma

actionin late 2001 or early 2002, combined with the brief menti on of t he Kuzma lawsuit during the September and November

20 0 2 Yorkville board meetings at which Dickson was present. Inote, however, that as part of these findings, the c ircui t c ourt als o found that the conversation informally occurred “in pa ssing,” an d 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 refe ren ce to a time frame when this defamation took place and no production of a copy of the complain t. 7 Even while candidly a

cknowledging

that “no details were given as to when th e alleged defamation took place or where the l awsuit was filed” (slip op. at 10), the majority nevertheless concludes that West Amer

ican wa s provide d with suff icient inf ormation t

o locate and defend the lawsuit. I strongly disag

ree. Since the Kuzma a

ction 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 understa nd how the short informal exch ange b etween Ligg ett and Dickson would have provided West Amer

ican with the i nformati on nece ssary “to loca te and defend the lawsuit.” Under themajority’s view, West American shou ld ha ve been

able to sim

ply contact the cour

thouse in Ottawa–which

is in the Th

irteenth 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 cir cuit court of Will County

–which is i

n the T welfth Judicial Circuit–and the p aperwork

would have been located in the Joliet courthouse. T her e is nothing in the record

to show tha

t Yorkvill e ever informed Dickson and/or West American that Kuzma’s act ion was filed in a different-29- ci ty, county

and judic ial circ

uit prior to sending West American the complaint in January 2004. Withrespect to the minutes of the Yorkville board meetings, the circuit court found that “[t]he minutes don’tcontain any information about where the suit was filed, when the incident allegedly took place, who the part ies to the lawsuit were.” Given that specific factua l findin g, I question how the information in the minutes would have provided West American with the ability “to loca te an d defe nd the lawsuit,” particu

larly in light o f the fa

ct that the

minutes al so misidentify Shery

l Kuzma as “Cheryl Kuzman.” My review of the record

establishes that the

circuit c ourt cor

rectly determined

that L iggett

believed that

the Kuzma matter wo

uld simply go away , to the extent that he “satisfi ed himself

that this w as no big deal.” The circuit court found that this belief

accounted for Lig

gett’s fail ure to notify

West Amer

ican of a potentia l claim af ter meet in g with Kuzma in November 2000, even though section I V(2)(a) of the West American

policy require s thatthe insured “must see to it that we

are notified a s soon as pr actic able of an ‘occ

urrenc e’ or an

offense whichmay res

ul t in a claim.” Despite this reporting obligation, Lig gett made no contact with W e st American at that time, even thou gh Kuzma had “threaten[ed] a suit with the bank. ” This may

also explain why L iggett did not inform York vil le’s board of directors about the Kuzma litigation until one y ear had passed f rom the da

te it

was f ile d, even though Yorkville had the potential for significa nt exposure if found

liable. In addition, this belief may also account for the fact that, even whe n t he litigation was finally announced to the board, Lig gett downpla

ye d its sign

ificanc e by

including

very little about the action in the minutes of the meeting.
Insum, it is my belief that under our well-es tablished

preced ent, Yorkville breached the plain and unambiguous lang uage of each and

ever y notice provision contained within the policy. B ecause no tic e provisions are not merely technical requirements but, rather, conditions precedent to the trigger ing of an insurer’s contractual duties, Yorkville therefore is not entitled to coverage under the policy. Although today ’s opinion pay s lip servi ce to these lon g-held principles of insura

nce law , the eff

ect of th e majorit

y’ s rulin g undercu ts th is precedent and creates conf usion for both bench and bar.-30- By ignoring the settled

rules of insurance policy

construction and, instead, focusing

exclusive ly on the timel iness fa ctors set forth in Country Mutual , the major it y redirects the focus of analy sis away fromcompli a nce with policy provisions to an unworka ble and p ro blematic

case-by- case exa

mination, r

equiring swearin g conte sts between the insurer and insured as to whether and when not ice was pr ov ided. The majority’s opinion will undoubtedly engender additional litigation and pl ace fur ther strain on our courts to sort throu gh these “h e said-s he said” situations

inlieu of holding insureds to the ter ms of their

policies.
Inaddition, today ’s opinion summarily

extends the

princip le o f “actual notice” a

nd , b y doing so, effectively overrules decades of precedent establishing that notice provisions are conditions pr ecede nt to covera ge under a p olicy and are not mere ly

technic al requi

rements. Under this holding, virtually any insured may now

prevail on a clai m that because the insur er

was provided with “ actual notice”– in

w ha tever haphazard way

and despite that information being incorrect–the plain and unambiguous language of t he notice provisions contained within the policy ar e irrelevant . T his holding essentia lly writes ou

t of the Wes t Americ an polic y its detailed require ments regarding provision of notice to the insurer
, none of which were complied with by Yorkville. For the foregoing r

easons, I cannot join the majority opinion.