2015 IL App (2d) 121276-B 

No. 2-12-1276 

Opinion filed May 13, 2015 

______________________________________________________________________________ 

IN THE

APPELLATE COURT OF ILLINOIS

SECOND DISTRICT

______________________________________________________________________________ 

G.M. SIGN, INC., ) Appeal from the Circuit Court 

) of Lake County. 

Plaintiff and Defendant and ) 

Counterplaintiff-Appellee and ) 

Cross-Appellant, ) 

) 

v. ) 

) 

PENNSWOOD PARTNERS, INC., ) Nos. 07-CH-757 

) 08-MR-153 

Defendant-Appellee and ) 

Cross-Appellant ) 

) 

(Maryland Casualty Company and Assurance ) 

Company of America, Plaintiffs and ) Honorable 

Counterdefendants-Appellants and ) Margaret J. Mullen,

Cross-Appellees). ) Judge, Presiding. 

______________________________________________________________________________ 

JUSTICE McLAREN delivered the judgment of the court, with opinion. 

Justices Burke and Spence concurred in the judgment and opinion.

OPINION

¶ 1 G.M. Sign, a recipient of unsolicited faxed advertisements, with its principal place of 

business in Round Lake, Illinois, filed a class action complaint against Pennswood Partners 

(Pennswood), a Pennsylvania corporation with its principal and only place of business in 

Pennsylvania. Pennswood’s insurers, Maryland Casualty Company (Maryland Casualty) and 

Assurance Company of America (Assurance) (collectively, Zurich) denied Pennswood’s tender of 

its defense. Maryland Casualty, a Maryland corporation with its principal place of business in 
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Illinois, and Assurance, a New York corporation with its principal place of business also in 

Illinois, are underwriting insurance companies used by the Zurich Insurance Group’s small 

business unit to issue insurance policies. Subsequently, G.M. Sign and Pennswood settled their 

lawsuit for $8 million. Zurich filed a declaratory judgment action against Pennswood and G.M. 

Sign, seeking a declaration that their insurance policies did not provide coverage to Pennswood for 

the underlying lawsuit. The parties filed cross-motions for summary judgment. Applying 

Illinois law, the trial court granted summary judgment in favor of Pennswood and G.M. Sign and 

against Zurich, determining that Zurich had a duty to defend and indemnify Pennswood and that 

the settlement was reasonable. The trial court entered judgment in favor of G.M. Sign in the 

amount of $8 million and denied Pennswood and G.M. Sign’s request for accrued postsettlement 

interest.

¶ 2 The parties appealed. On March 24, 2014, we issued an opinion reversing in part and 

affirming in part (G.M. Sign, Inc. v. Pennswood Partners, Inc., 2014 IL App (2d) 121276) 

(original opinion). G.M. Sign and Pennswood filed a motion for a supervisory order in the 

Illinois Supreme Court, which the supreme court granted. G.M. Sign, Inc. v. Pennswood

Partners, Inc., No. 117912 (Ill. Aug. 22, 2014) (nonprecedential supervisory order directing 

vacatur of judgment and reconsideration in light of Bridgeview Health Care Center, Ltd. v. State 

Farm Fire & Casualty Co., 2014 IL 11689, and dismissing petition for leave to appeal as moot). 

¶ 3 On appeal Zurich argues: (1) Zurich had no duty to defend or indemnify Pennswood in the 

underlying action under Pennsylvania law; (2) Illinois courts are vested with the discretion to 

consider federal courts’ predictions in their conflict-of-law analysis; and (3) in an insurance 

coverage case, a single state’s law should be applied to the interpretation of an insurance policy.1

 

 1 We granted leave to Property Casualty Insurers Association of America and National 
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Pennswood and G.M. Sign argue that the trial court erred by denying their request for accrued 

postsettlement interest. We vacate our original opinion and determine that our reconsideration in 

light of Bridgeview does not change the result. We reverse in part and affirm in part. 

¶ 4 I. BACKGROUND

¶ 5 On March 20, 2007, G.M. Sign filed a class action complaint2 against Pennswood, an 

executive placement services provider, alleging the following. Pennswood “transmitted by 

telephone facsimile machine unsolicited advertisements to [G.M. Sign’s] facsimile machine.” 

Pennswood “sent thousands of similar unsolicited facsimile advertisements to at least 39 other 

recipients.” Pennswood “knew or should have known that” it did not have the recipients’ 

permission or invitation to send them advertising. The complaint alleged that on two occasions in 

2006 Pennswood faxed two unsolicited advertisements to G.M. Sign. The three-count complaint 

alleged the following: (1) Pennswood violated the Telephone Consumer Protection Act of 1991 

(TCPA) (47 U.S.C. § 27 (2006)), “by transmitting [the advertisements] to [G.M. Sign] and the 

other members of the class” and that Pennswood’s “actions caused damages to [G.M. Sign] and the 

other class members, because their receipt of [Pennswood’s] unsolicited fax advertisements 

caused them to lose paper and toner consumed as a result” and “cost [them] employee time”; (2) 

Pennswood was liable for common-law conversion of the plaintiffs’ “fax machine toner, paper, 

memory, and employee time”; and (3) Pennswood violated the Illinois Consumer Fraud and 

Deceptive Business Practices Act (815 ILCS 505/2 (West 2006)). The complaint alleged that a 

class action was proper in that “the class consists of forty or more persons in Illinois and 

throughout the United States and is so numerous that joinder of all members is impracticable.” 

 

Association of Mutual Insurance Companies to file a joint brief as amici curiae in support of 

reversing the trial court’s summary judgment.

2 Case No. 07-CH-757.
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The complaint alleged that members of the class received faxed unsolicited advertisements from 

Pennswood within three, four and five years from the filing of the complaint. The complaint 

sought damages, an injunction, attorney fees, and the certification of the class.

¶ 6 On May 22, 2007, Pennswood tendered its defense to Zurich. In a letter dated July 23, 

2007, Zurich denied Pennswood’s tender of defense, disclaiming any obligation to defend or 

indemnify in the underlying class action. 

¶ 7 On July 31, 2007, the parties to the underlying class action filed a motion in the trial court 

for approval of terms of a settlement agreement signed by the parties on July 27 and July 30, 2007. 

The settlement agreement provided that Pennswood agreed to allow entry of a judgment against it 

in the amount of $8 million that would be enforceable only “against the proceeds of” the Zurich 

policies. In addition, Pennswood agreed to assign to the class its rights under the Zurich policies.

¶ 8 On October 30, 2007, following a fairness hearing, the trial court in the underlying class 

action granted Pennswood and G.M. Sign’s motion for approval of the settlement agreement and 

entered judgment in favor of the class and against Pennswood in the amount of $8 million, “to be 

satisfied only from the proceeds of [Pennswood’s four Zurich] insurance policies.” The trial 

court also ordered G.M. Sign’s attorney to receive 33.33% of any recovery from Zurich, in 

accordance with the agreement. The trial court found the provisions of the agreement to be fair 

and reasonable. The trial court found that Pennswood faxed in excess of 80,000 unsolicited 

advertisements to the class between March 20, 2003, and December 1, 2003; faxed in excess of 

160,000 unsolicited advertisements to the class between December 1, 2003, and December 1, 

2004; faxed in excess of 160,000 unsolicited advertisements to the class between December 1, 

2004, and December 1, 2005; and faxed in excess of 160,000 unsolicited advertisements to the 

class between December 1, 2005, and December 1, 2006. The trial court ordered that 
2015 IL App (2d) 121276-B 

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postsettlement interest would accrue from the date of the entry of the order. The trial court stated 

that its order was a “final and appealable order.”

¶ 9 Zurich issued four commercial general liability policies to Pennswood (the Zurich policies) 

that were in effect during the relevant time period of the allegations contained in G.M. Sign’s class 

action complaint. The policies were negotiated, delivered and received in Pennsylvania. The 

premiums for the policies were paid by Pennswood from Pennsylvania. 

¶ 10 Under “Coverage A,” the Zurich policies provide coverage for “bodily injury” and 

“property damage” caused by an “occurrence.” The policies define “occurrence” as an “accident, 

including continuous or repeated exposure to substantially the same general harmful conditions.” 

The policies define “property damage” as:

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

property. All such loss of use shall be deemed to occur at the time of the physical injury 

that caused it; or

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

shall be deemed to occur at the time of the ‘occurrence’ that caused it[.]”

¶ 11 The policies contain the following exclusion: 

“Expected Or Intended Injury:

‘Bodily Injury’ or ‘property damage’ expected or intended from the standpoint of 

the insured.” 

¶ 12 Under “Coverage B,” the policies provide coverage for “personal and advertising injury.” 

¶ 13 The policy in effect December 1, 2005, through December 1, 2006, also incorporates an 

endorsement applicable to “Coverage A,” entitled “Violation Of Communication Or Law 

Exclusion,” that provides: 

“This insurance does not apply to: 
2015 IL App (2d) 121276-B 

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Violation of Communication or Information of Law 

‘Bodily injury,’ ‘property damage’ or ‘personal and advertising injury’ resulting 

from or arising out of any actual or alleged violation of: 

A. The Federal Telephone Consumer Protection Act (47 U.S.C. § 227), *** 

B. Any other federal, state or local statute, regulation or ordinance that 

imposes liability for the:

(1) Unlawful use of telephone, electronic mail, internet, computer, 

facsimile machine or other communication or transmission device; or 

(2) Unlawful use, collection, dissemination, disclosure or reclosure 

of personal information in any manner by any insured or on behalf of any 

insured.” 

¶ 14 Each Zurich policy at issue includes the following endorsement: 

“EXCLUSION - PERSONAL AND ADVERTISING INJURY

This endorsement modifies insurance provided under the following: 

COMMERCIAL GENERAL LIABILITY COVERAGE PART

COVERAGE B (Section I) does not apply and none of the references to it in the 

Coverage Part apply.”

¶ 15 Each Zurich policy at issue contains the following condition: 

“2. Duties In The Event Of Occurrence, Offense, Claim Or Suit

* * * 

c. You and any other involved insured must: 

* * * 

(3) Cooperate with us in the investigation or settlement of the claim 

or defense against the ‘suit’; and

(4) Assist us, upon our request, in the enforcement of any right 
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against any person or organization which may be liable to the insured 

because of injury or damage to which this insurance may also apply. 

d. No insured will, except at that insured’s own cost, voluntarily make a 

payment, assume any obligation, or incur any expense other than first aid, without 

our consent.” 

¶ 16 On February 1, 2008, Zurich filed a three-count declaratory judgment action against 

Pennswood and G.M. Sign.3

 Zurich sought declarations that its policies provided no coverage: 

(1) because the underlying action did not involve “property damage” caused by an “accident,” and 

because coverage was precluded by the “expected or intended” injury exclusion; (2) because

“Coverage B” (covering “personal and advertising injury”) was not purchased and is excluded by 

the policies; and (3) due to Pennswood’s breach of contract. The class action suit and the 

declaratory judgment suit were consolidated by the trial court.

¶ 17 On November 13, 2008, G.M. Sign filed a counterclaim for declaratory relief. 

Subsequently, G.M. Sign filed an amended counterclaim asserting an additional claim for statutory 

bad faith under Pennsylvania law. On May 6, 2011, the parties filed cross-motions for summary 

judgment only on the coverage issues. Pursuant to the trial court’s order, the cross-motions were 

not to address G.M. Sign’s bad-faith claim. Zurich moved for summary judgment on all counts of 

its declaratory judgment complaint. Pennswood and G.M. Sign moved for summary judgment on 

“all claims other than the bad faith claim reserved for future proceedings by Court order” and for 

judgment in their favor on the reasonableness of the settlement, on Zurich’s duty to defend and 

indemnify, and in the amount of the settlement, plus accrued postsettlement interest.

¶ 18 After argument by counsel, the trial court issued a well-reasoned written order on 

September 9, 2011, granting Zurich’s motion. The trial court concluded that Illinois and 

 3

 Case No. 08-MR-153.
2015 IL App (2d) 121276-B 

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Pennsylvania law were not in conflict on the issue of whether Coverage B was excluded from the 

policies; thus, the trial court applied Illinois law and determined that Coverage B was 

unambiguously excluded. Next, the trial court concluded that a conflict existed between Illinois 

and Pennsylvania law regarding whether “fax-blasting constitutes ‘property damage’ caused by an 

‘occurrence’ within the meaning of the Policies.” The trial court considered Illinois appellate 

court decisions and decisions from federal courts in Pennsylvania and determined that Illinois 

provided coverage while Pennsylvania did not. After applying the choice-of-law analysis set 

forth in Lapham-Hickey Steel Corp. v. Protection Mutual Insurance Co., 166 Ill. 2d 520, 526-27 

(1995), the trial court concluded that Pennsylvania law applied in interpreting the policy 

provisions, because it had the most significant contacts. The trial court determined that it was 

unnecessary to decide the remaining issues and granted summary judgment in favor of Zurich and 

against Pennswood and G.M. Sign on counts I, II, and III of Zurich’s complaint for declaratory 

judgment and count I of G.M. Sign’s counterclaim.

¶ 19 Pennswood and G.M. Sign filed a motion to reconsider. In their motion, Pennswood and 

G.M. Sign relied on a recent appellate court decision, Pekin Insurance Co. v. XData Solutions, 

Inc., 2011 IL App (1st) 102769, ¶ 23 (holding that federal district court decisions predicting state 

law do not represent “state law for the purposes of engaging in a choice of law analysis”). Based 

on XData, the trial court granted the motion, withdrew its prior summary judgment order, and 

granted summary judgment in favor of Pennswood and G.M. Sign and against Zurich. 

¶ 20 The trial court issued its written order on October 12, 2012, stating the following. There 

was no conflict between Illinois and Pennsylvania law regarding whether “fax-blasting constituted 

‘property damage’ caused by an ‘occurrence’ within the meaning of the Policies.” Because no 

conflict existed, Illinois law applied and Zurich had a duty to defend and indemnify under the 

“property damage” provision. The trial court also determined that no conflict existed regarding 
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the expected/intended injury exclusion and that the exclusion did not bar coverage. The trial 

court also determined that the law of Illinois and Pennsylvania differs on the issue of estoppel 

against insurers that breach the duty to defend, but that the difference was immaterial here because 

the underlying case had been settled before trial, and, thus, it was “impossible to determine if the 

insured would have been liable for covered or uncovered counts.” The trial court concluded that 

Pennsylvania law applied to the issues of whether TCPA claims are insurable as a matter of public 

policy and which damages are recoverable for Zurich’s alleged bad faith. The trial court granted

summary judgment in favor of Pennswood and G.M. Sign and against Zurich on counts I, II, and 

III of Zurich’s complaint and count I of G.M. Sign’s counterclaim, declaring that: (1) Zurich had a 

duty to defend Pennswood under the policies for the underlying suit; (2) Zurich breached that duty 

to defend; (3) Zurich owed a duty of indemnity for the settlement resulting from the underlying 

suit; and (4) the settlement was reasonable. The trial court also entered judgment in favor of G.M. 

Sign and the class.

¶ 21 On October 31, 2012, Zurich filed a motion for a finding under Illinois Supreme Court 

Rule 304(a) (eff. Feb. 26, 2010) that there was no just reason to delay the enforcement of, or appeal 

from, the judgment entered by the trial court on October 12, 2012. 

¶ 22 On November 5, 2012, Pennswood and G.M. Sign filed a “Memorandum in Support of” 

accrued postsettlement interest. On November 9, 2012, the trial court entered judgment in favor 

of G.M. Sign in the amount of $8 million, denied Pennswood and G.M. Sign’s request for accrued 

postsettlement interest, and granted Zurich’s Rule 304(a) motion. 

¶ 23 Zurich filed its notice of appeal on November 9, 2012. On November 13, Pennswood and 

G.M. Sign filed their notice of cross-appeal from the portion of the trial court’s November 9 order 

denying their request for accrued postsettlement interest.

¶ 24 II. ANALYSIS
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¶ 25 Zurich urges this court to reverse the trial court’s summary judgment in favor of 

Pennswood and G.M. Sign and against Zurich. 

¶ 26 Summary judgment is appropriate only where the pleadings, depositions, admissions, and 

affidavits, viewed in the light most favorable to the nonmovant, show that no genuine issue of 

material fact exists and that the moving party is entitled to judgment as a matter of law. 735 ILCS 

5/2-1005(c) (West 2010). “By filing cross-motions for summary judgment, the parties agree that 

no factual issues exist and this case turns solely on legal issues subject to de novo review.” 

Gaffney v. Board of Trustees of the Orland Fire Protection District, 2012 IL 110012, ¶ 73. 

¶ 27 Furthermore, the “purpose of a motion to reconsider is to bring to the court’s attention 

newly discovered evidence that was not available at the time of the hearing, changes in the law or 

errors in the court’s previous application of existing law.” Pence v. Northeast Illinois Regional 

Commuter R.R. Corp., 398 Ill. App. 3d 13, 16 (2010). “A ruling on a motion to reconsider is 

typically reviewed for an abuse of discretion, but a motion to reconsider a grant of summary 

judgment typically questions the trial court’s application of existing law,” and the grant or denial 

of such a motion is reviewed de novo. See Wilfong v. L.J. Dodd Construction, 401 Ill. App. 3d 

1044, 1063 (2010). 

¶ 28 In general, when a court must resolve a case in which multiple jurisdictions have an 

interest, the court applies the choice-of-law rules of its own state to determine which state’s law 

will apply. Townsend v. Sears, Roebuck & Co., 227 Ill. 2d 147, 155 (2007). To determine which 

jurisdiction’s law applies, a court must first isolate the issue, define the conflict, and determine 

whether the law of the interested jurisdictions conflicts. See id. at 155-56. A choice-of-law 

determination is required only when a difference in law will make a difference in the outcome. 

Bridgeview, 2014 IL 116389, ¶ 14. The party seeking the choice-of-law determination bears the 

burden of demonstrating that a conflict exists. Id. Because Zurich seeks a choice-of-law 
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declaration, it bears the burden of demonstrating that a conflict of law exists. See id. We review 

de novo a trial court’s decision on a choice-of-law issue. Id. 

¶ 29 In many respects, courts in Pennsylvania and Illinois interpret insurance policies and 

determine insurers’ duties in a similar manner. In both states, courts interpret insurance policies 

to give effect to the intention of the parties, as that intention is expressed by the language of the 

policies when given its plain and ordinary meaning. Valley Forge Insurance Co. v. Swiderski 

Electronics, Inc., 223 Ill. 2d 352, 362-63 (2006); Kvaerner Metals Division of Kvaerner U.S., Inc. 

v. Commercial Union Insurance Co., 908 A.2d 888, 897 (Pa. 2006). Similarly, in both states, an 

insurer has a duty to defend if the underlying complaint alleges facts within, or potentially within, 

the policy’s coverage provisions. United States Fidelity & Guaranty Co. v. Wilkin Insulation Co., 

144 Ill. 2d 64, 73 (1991); Gedeon v. State Farm Mutual Automobile Insurance Co., 188 A.2d 320, 

321-22 (Pa. 1963). 

¶ 30 The parties disagree as to whether a conflict exists between Illinois and Pennsylvania 

regarding whether Zurich owed Pennswood a duty to defend under the “property damage” 

provision of the policies. The parties agree that Zurich owed a duty to defend Pennswood under 

Illinois law. See Insurance Corp. of Hanover v. Shelborne Associates, 389 Ill. App. 3d 795, 803 

(2009) (holding that, under Illinois law, the duty to defend was triggered under the “property 

damage” provision of the insured’s policy where the claim alleged violations of the TCPA); see 

also Valley Forge Insurance Co. v. Swiderski Electronics, Inc., 223 Ill. 2d 352, 364-65 (2006) 

(Illinois recognizes a duty to defend a class action complaint asserting violations of the TCPA). 

However, Zurich argues that, under Pennsylvania law, it did not owe a duty to defend, because the 

complaint did not allege “property damage” caused by an “occurrence” as defined in the policies. 

Zurich contends that under Pennsylvania law an “occurrence,” as defined in the policies as an 

“accident,” does not apply to intentional acts such as sending faxes.
2015 IL App (2d) 121276-B 

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¶ 31 In this case, the Zurich policies provide liability coverage for “property damage” caused by 

an “occurrence,” and the policies define “occurrence” as an “accident.” Pennsylvania courts have 

interpreted “property damage” provisions similar to the provisions contained in the Zurich 

policies. See Kvaerner Metals, 908 A.2d 888. The Pennsylvania Supreme Court cautioned 

against “being overly inclusive in defining an ‘occurrence.’ ” Erie Insurance Exchange v. Maier, 

963 A.2d 907, 909 (Pa. Super Ct. 2008) (citing Kvaerner Metals, 908 A.2d at 888). Thus, the 

Pennsylvania Supreme Court defined “occurrence” as the policies in this case have, as an 

“accident,” and it defined “accident” as “[a]n unexpected and undesirable event,” or “something 

that occurs unexpectedly or unintentionally.” (Internal quotation marks omitted.) Kvaerner 

Metals, 908 A.2d at 897-98. Therefore, intentional acts, and in some instances negligent acts, are 

not occurrences. Erie Insurance Exchange, 963 A.2d at 909. To determine whether an act is 

intentional, courts consider whether the insured “desired to cause the consequences of his act or if 

he acted knowing that such consequences were substantially certain to result.” United Services 

Automobile Ass’n v. Elitzky, 517 A.2d 982, 989 (Pa. Super. Ct. 1986). When an insured is alleged 

to have been negligent, the property damage or injury cannot be the result of an “accident” unless 

the damage or injury was unforeseeable, unexpected, or fortuitous. See Donegal Mutual 

Insurance Co. v. Baumhammers, 938 A.2d 286, 293 (Pa. 2007). 

¶ 32 Regarding allegations of unsolicited faxes and TCPA violations, the United States District 

Court for the Eastern District of Pennsylvania, applying Pennsylvania law in a case similar to the 

case before us, held that an insurer did not have a duty to defend a class action fax-blasting claim. 

Melrose Hotel Co. v. St. Paul Fire & Marine Insurance Co., 432 F. Supp. 2d 488, 507-09 (E.D. Pa. 

2006), aff’d sub nom. Subclass 2 of the Master Class of Plaintiffs Defined & Certified in January 

30, 2006 & July 28, 2006 Orders of the Circuit Court of Cook County, Illinois in Litigation 

Captioned Travel 100 Group, Inc. v. Melrose Hotel Co., 503 F.3d 339, 340 (3d Cir. 2007). 
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¶ 33 In Melrose, the insured (a hotel) hired a third party to send fax advertisements, and the 

recipients of the faxes filed a class action lawsuit against the insured, alleging violations of the 

TCPA, common-law conversion, and common-law trespass to chattels. Id. at 492-93. The 

underlying complaint alleged that the insured “[knew] *** or should have known that its 

appropriation of the paper and toner *** was wrongful and without authorization.” (Internal 

quotation marks omitted.) Id. at 493. The insurer claimed that it had no duty to defend, because 

the policy provided coverage only for accidental property damage. Id. at 505. On cross-motions 

for summary judgment, the Melrose court held that the insurer had no duty to defend, because the 

complaint alleged that the insured’s conduct was intentional and, therefore, not accidental. Id. at 

504-05. The Melrose court relied on Pennsylvania appellate court decisions in analyzing the 

definition of “accident” under the policy. Id. The court was “not persuaded to the contrary 

simply because the [underlying] Complaint uses the phrase ‘should have known.’ ” Id. at 509. 

The court reasoned that the underlying complaint failed to allege that the insured accidently sent 

the faxes to those who did not consent to receiving them and failed to allege specific acts of 

negligence that made possible the intentional acts of the third party. Id. at 510. The court stated 

that, the insured “knew that its actions would cause the very harm that the TCPA aims to prevent.” 

Id.

¶ 34 We recognize that Melrose, “a federal district court’s Erie prediction[,] is not state law, 

[and that] such a prediction cannot, by itself, establish a conflict between state laws.” 

Bridgeview, 2014 IL 116389, ¶ 7. However, because the Melrose court based its decision on the 

holdings of Pennsylvania’s intermediate appellate courts, we may consider Melrose. See id. 
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Further, our focus here is on the holdings of the Pennsylvania courts discussed above and the 

underlying state law cited and discussed in Melrose. See id. 4

¶ 35 The complaint in this case did not allege an accident under Pennsylvania law. The 

complaint alleged that Pennswood “transmitted by telephone facsimile machine [thousands of

unsolicited advertisements] to Plaintiff[s’] facsimile machine[s].” Further, the complaint alleged 

that Pennswood’s action caused the plaintiffs to lose paper, toner and use of their fax machines. 

Although the complaint also alleged that Pennswood “knew or should have known” that it did not 

have permission to send faxes to the plaintiffs, the complaint did not allege that Pennswood 

accidentally sent faxes to those who did not consent to receiving them. In addition, the complaint 

did not contain any specific factual allegations of Pennswood’s negligence that caused 

Pennswood’s intentional act of faxing unsolicited advertisements. Also, even if G.M. Sign had 

alleged “negligence,” Pennswood’s conduct would not qualify as an accident, because the 

damages caused by sending faxes were foreseeable, i.e., loss of paper, toner, and use of fax 

machines. See Baumhammers, 938 A.2d at 293 (property damage cannot be the result of an 

accident under a negligence theory if the damage was foreseeable). Accordingly, we determine 

 4 “[W]hen a circuit court in Illinois is confronted with a motion alleging a conflict of laws 

it may not consider what the federal district court has to say about our sister state’s law. If, for 

example, the federal district court bases its Erie prediction on the holdings of the state’s 

intermediate appellate courts (see, e.g., Menards, 285 F.3d at 637), that would be a relevant 

consideration for the circuit court. But the focus must be on the underlying state law, and not 

merely the fact of the Erie prediction itself. Only when the movant establishes a conflict between 

state laws to the circuit court’s satisfaction is a choice-of-law analysis required.” Bridgeview, 

2014 IL 116389, ¶ 7. 
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that, based on the decisions of Pennsylvania’s state courts and considering the federal court 

decision in Melrose, the allegations in the complaint at issue would not be deemed “property 

damage” or an “accident” under Pennsylvania law.5

¶ 36 Pennswood and G.M. Sign cite Telecommunications Network Design Inc. v. Brethren 

Mutual Insurance Co., 83 Pa. D. & C. 4th 265 (Pa. Com. Pl. 2007), to support their argument that 

there is no conflict between Illinois and Pennsylvania law. In Brethren, the class filed suit against 

both the policyholder and a third-party vendor who sent the faxes. Id. at 271. The Pennsylvania 

Court of Common Pleas held that the insurer had a duty to defend under the “property damage” 

provision of its policy because the court could not determine the relationship between the insured 

and the third-party vendor; it was possible that the third-party vendor sent the faxes to unwilling 

recipients without the insured’s knowledge. Id. at 276. In this case, the complaint did not allege 

a third-party vendor. Rather, it alleged that Pennswood sent the unsolicited faxes directly to the 

recipients. Further, nothing in the record indicates that Pennswood reasonably believed that it 

had the recipients’ permission. To the contrary, the record indicates that Pennswood’s owner’s 

belief that the recipients would like to receive the faxes was based only on his belief in the value of 

 5 Pennswood argues in its supplemental brief that Zurich forfeited the argument on appeal 

that Pennsylvania decisions conflict with those in Illinois on property-damage coverage, because it 

failed to raise the issue and relied solely on federal decisions. However, we are not constrained 

by the forfeiture rule. Forfeiture of an argument is a limitation on the parties and not on this court, 

which has a responsibility to achieve a just result and maintain a sound and uniform body of 

precedent. See O’Casek v. Children’s Home & Aid Society of Illinois, 229 Ill. 2d 421, 438 (2008). 

Further, we do not deem the argument forfeited. Zurich raised the issue in its initial brief and it 

cited Melrose, which relies on Pennsylvania state appellate court cases throughout. 
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Pennswood’s products and not on any actual knowledge that he had the recipients’ consent. 

Therefore, Brethren is distinguishable from this case.

¶ 37 Pennswood and G.M. Sign also argue that there is coverage under the policies’ “property 

damage” provision because Pennswood did not intend to cause harm. Pennswood supports this 

argument with its owner’s statements that he believed it had the recipients’ consent and that it 

would not have sent the faxes if he had known that Pennswood did not have the recipients’ 

consent. However, this “accidental fax” argument fails because nothing in the record indicates 

that Pennswood attempted to determine whether the recipients had consented or given their 

express permission to receive faxes, as required by the TCPA. See Melrose, 432 F. Supp. 2d at 

505; see 47 U.S.C. § 27(a)(5) (2006) (forbidding all unsolicited fax advertisements and defining 

unsolicited faxes as those transmitted “without that person’s prior express invitation or 

permission”). 

¶ 38 In addition, Pennswood and G.M. Sign argue that there is no conflict between Illinois and 

Pennsylvania law regarding whether Zurich owed a duty to defend pursuant to the policies’ 

“property damage” provisions. They cite Elitzky, 517 A.2d 982, to support their argument. In 

Elitzky, the Pennsylvania Superior Court stated that “[i]nsurance coverage is not excluded because 

the insured’s actions are intentional unless he also intended the resultant damage.” Id. at 987. 

The court held that the insurer had a duty to defend because the underlying plaintiff could recover 

on his libel claim even if the insureds thought that their statements were true and thus had no intent 

to injure the plaintiff. Id. at 989. In this case, the record reveals that Pennswood intended the 

resultant damage or harm because Pennswood’s owner testified that he knew that the faxes would 

consume the recipients’ paper and toner. Thus, Elitzky does not support Pennswood and G.M. 

Sign’s position. Accordingly, a conflict exists between Illinois and Pennsylvania regarding 
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whether Zurich owed Pennswood a duty to defend under the “property damage” provision of the 

policies.

¶ 39 Because we have determined that a conflict exists, we must undertake a choice-of-law 

analysis. See Townsend, 227 Ill. 2d at 155. It is undisputed that the policies at issue in this case 

contain no choice-of-law provision; thus, we apply the general choice-of-law rules of the forum 

state, Illinois, to determine which state’s law should apply. See Emerson Electric Co. v. Aetna 

Casualty & Surety Co., 319 Ill. App. 3d 218, 231-32 (2001). If an insurance policy does not 

specify a choice of law, the determination is generally governed by the following factors: (1) the 

location of the subject matter; (2) the place of delivery of the insurance policy; (3) the domicile of 

the insured or of the insurer; (4) the place of the last act to give rise to a valid insurance policy; and 

(5) the place of performance, or other place bearing a rational relationship to the general insurance 

policy. Lapham-Hickey, 166 Ill. 2d at 526-27. These factors do not have equal significance and 

are to be weighed according to the issue involved. Emerson Electric, 319 Ill. App. 3d at 232. To 

assist in the application of the Lapham-Hickey analysis for the choice of law applicable to an 

insurance policy, consideration should be given to the justified expectations of the parties, to the 

predictability and uniformity of the result, and to the ease in the determination and application of 

the law to be applied. Id. 

¶ 40 In this case, the location of the subject matter is the location of the risk insured by the 

Zurich policies. See Emerson Electric, 319 Ill. App. 3d at 232-33. Those risks are located at the 

various fax machines that gave rise to Pennswood’s liability. As alleged in the class action

complaint, these sites are nationwide. Because the Zurich policies provided coverage for sites 

located in more than one state, little weight is given the location of the subject matter. See 

Restatement (Second) of Conflict of Laws § 193 cmt. b, at 611-12 (1971) (“The location of the 

insured risk [is] given greater weight than any other single contact *** provided that the risk can 
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be located, at least principally, in a single state. Situations where this cannot be done, and where 

the location of the risk has less significance, include *** where the policy covers a group of risks 

that are scattered throughout two or more states.”); see also Emerson Electric, 319 Ill. App. 3d at 

232-33. 

¶ 41 Regarding the second factor, the parties agree that the place of delivery of the insurance 

policies was Pennsylvania. Thus, this factor weighs in favor of Pennsylvania’s interests. 

¶ 42 Regarding the third factor, the domicile of the insured or of the insurer, the parties agree 

that the domicile of the insurers, Maryland Casualty and Assurance, is Illinois. However, in cases 

such as this one, where the risk is located in multiple states, courts focus on the domicile of the 

insured, and where the negotiations, purchase, and issuance of the insurance policies took place. 

See, e.g., Emerson Electric, 319 Ill. App. 3d at 235-36. In this case, Pennswood is domiciled in 

Pennsylvania. Pennsylvania is the place of its incorporation and its principal place of business. 

Apart from Pennswood’s unsolicited faxing activities, it has no business operations outside of 

Pennsylvania. Pennswood’s employees and facilities are all located in Pennsylvania. The 

Zurich policies were negotiated with, purchased by, and issued to Pennswood in Pennsylvania 

through an agent located in Pennsylvania. Thus, the third factor weighs heavily in favor of 

Pennsylvania’s interests.

¶ 43 Regarding the fourth factor, the place of the last act giving rise to the policies is the state 

where the policies were delivered and where the premiums were paid. Id. at 233-35. The 

policies were delivered in Pennsylvania and Pennswood paid its premiums in Pennsylvania. Thus, 

this factor weighs in favor of Pennsylvania’s interests.

¶ 44 The fifth factor, the place of performance, also weighs in favor of Pennsylvania because 

there is no express agreement determining the place of performance, and Pennswood’s principal 

place of business is in Pennsylvania. See id. at 234 (where there was no express agreement as to 
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the place of performance, and the intended place of the insurer’s payment of claims could not be 

determined because they were scattered throughout several states, the court looked to the state 

where the insured was located).

¶ 45 As the trial court concluded in its well-reasoned choice-of-law analysis in its initial 

September 9, 2011, summary judgment order, we also conclude that the record points to 

Pennsylvania as the appropriate choice of law governing the interpretation of the Zurich policies. 

Guided by Pennsylvania state case law and considering one federal district court case relying on 

Pennsylvania law, we determine that, under Pennsylvania law, the underlying complaint did not 

allege an accident. Therefore, Zurich had no duty to defend under the policies’ “property 

damage” provisions. Because Zurich had no duty to defend, it has no duty to indemnify. See 

Kvaerner, 908 A.2d at 896 n.7 (an insurer has a duty to indemnify only if it has a duty to defend). 

Further, because we have determined that Pennsylvania law and not Illinois law governs, we need 

not address Zurich’s final argument that there is no coverage because Illinois’s public policy 

precludes coverage for fax-blasting lawsuits.

¶ 46 Thus, under our authority pursuant to Illinois Supreme Court Rule 366(a)(5) (eff. Feb. 1, 

1994), we grant summary judgment in favor of Zurich and against Pennswood and G.M. Sign and 

declare: (1) Zurich had no duty to defend Pennswood under the policies for the underlying 

complaint; (2) Zurich had no duty to defend and has no duty to indemnify Pennswood with respect 

to any liability, judgment or settlement resulting from the underlying complaint; and (3) Zurich did 

not breach any contractual obligations to Pennswood. In addition, we dismiss G.M. Sign’s claim 

against Zurich alleging statutory bad faith under Pennsylvania law. 

¶ 47 Addressing Pennswood and G.M. Sign’s cross-appeal, because we have determined that 

Zurich has no duty to Pennswood regarding any liability, judgment or settlement in the underlying 

lawsuit, we affirm the trial court’s denial of Pennswood and G.M. Sign’s request for accrued 
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postsettlement interest. Further, we need not address Zurich’s motion to strike a portion of 

Pennswood and G. M. Sign’s cross-reply brief addressing the trial court’s denial of their request 

for accrued postsettlement interest.

¶ 48 III. CONCLUSION

¶ 49 For the reasons stated, we reverse the trial court’s summary judgment in favor of 

Pennswood and G.M. Sign. We enter summary judgment in favor of Zurich and against 

Pennswood and G.M. Sign. Further, we affirm the trial court’s order denying Pennswood and 

G.M. Sign’s request for accrued postsettlement interest and dismiss G.M. Sign’s claim against 

Zurich alleging statutory bad faith under Pennsylvania law. 

¶ 50 Reversed in part and affirmed in part. 

¶ 51 Judgment entered.