implied covenant of good faith and fair dealing would be proper only in the narrow
context of cases involving an insurer’s obligation to settle with a third party who has sued
the policyholder, Cramer, 174 1l.2d at 525, 675 N.E.2d at 897 (emphasis added).

In this case, we find that CSC is not entitled to punitive damages under the facts
as alleged in the complaint. CSC has not alleged any tort claim against Philadelphia
Indemnity, but instead alleges an action for breach of contract. Moreover, the third party
involved in this case, AOL, has not yet sued CSC. Therefore, under the rationale of
Cramer, an action for tort is not proper because this case does not involve an insurer's
obligation to settle with a third party who has sued the policyholder. CSC has an explicit
contractual remedy and can sue under the policy.

For these reasons, the request for punitive damages contained in Count II is
stricken.

CONCLUSION

For the foregoing reasons, we enter this clarification of our June 5, 2003 order.

Philadelphia Indemnity’s motion to clarify is granted in part and denied in part.

Philadelphia Indemnity’s answer to the complaint is due on or before July 21, 2003.

by o xl A C eA eer
Wayne R. Andersen
United States District Judge

puot_Aeplenebu 2,203



MinuffyOrder Forma (067)

United States District Court, Northern District of Minois

Name of Assigned J Sitting Judge if Oth
nor Magistrate Judge Wayne R. Andersen than Assigned Jade
CASE NUMBER 2C 8913 DATE 9/2/2003
CASE Computer Strategy Coordinators, Inc vs. Philadelphia Indemnity Insurance Co
TITLE
[In the following box (a) indicate the party filing the motion, ¢.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented.
DOCKET ENTRY:
(i) Q Filed motion of [ use listing in “Motion” box above.]
(2) a Brief in support of motion due
Q) Q Answer brief to motion due . Reply to answer brief due. .
(4) QO Ruling/Hearing on set for at
(5) Qa Status hearing[heid/continued to] [set for/re-set for] on set for at
(6) it) Pretrial conference[held/continued to] [set for/re-set for] on set for at :
M a Trial{set for/re-set for] on at
(8) oO [Bench/Jury trial] [Hearing] held/continued to at
(9) o This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to}
OOFRCP4(m) Local Rule 41.1 OOFRCP41(a)(1) O FRCP41(a)(2).
do [Other docket entry] Enter MEMORANDUM, OPINION AND ORDER: For the foregoing
reasons, we enter this clarification [21-1] of our 6/5/2003 order. Philadelphia Indemnity’s motion
to clarify is granted in part and denied in part. Philadelphia Indemnity’s answer to the complaint
is due on or before 7/21/2003.
ai @ {For further detail see order attached to the original minute order.]
No notices required, advised in open court.
No notices required.
Notices mailed by judge's staff.
Notified counsel by telephone.
a | Docketing to mail notices.
Mail AO 450 form. AYNOD LIINLSIA "SN
Copy to judge/magistrate judge. yea
counrvon 97:8 HY €- d3SE0
TSA deputy's apy gycea ye a

initials aie
~ Date/time feceivad in
. central Clerk's Office



IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION .
eee ne
COMPUTER STRATEGY ) Dhece
COORDINATORS, INC,, cep 03 2003
Plaintiff, —)
)
¥. ) No. 02 € 8913
)
PHILADELPHIA INDEMNITY ) Wayne R. Andersen
INSURANCE CO., ) District Judge
)
Defendant. )

MEMO! 1»)
This case is before the Court on the motion of defendant Philadelphia Indemnity

Insurance Company (“Philadelphia Indemnity”) to clarify the Court’s order of June 5,
2003. We issue this opinion as a clarification of our previous order and grant in part and
deny in part Philadelphia Indemnity’s motion to clarify.

L ice of Law

The first clarification requested by Philadelphia Indemnity is to clarify whether
the Court will apply the law of Illinois or the law of Pennsylvania to this case. Plaintiff
CSC maintains that Pennsylvania law should be applied, while Philadelphia Indemnity
contends that Illinois law applies.

“A federal court sitting in diversity looks to the conflict of rules in the state
jurisdiction in which it sits in order to choose the substantive law applicable to the case.”
Massachusetts Bay Ins. Co. v. Vic Koeing Leasing, Inc. 136 F.3d 1116, 1122 (7 Cir.
1998). Here, that forum is Dlinois, and Ilinois applies the “most significant contracts”

analysis in determining which forum’s law governs the interpretation of a comprehensive

o~


insurance policy. Jd., citing Society of Mount Carmel y. National Ben Franklin Ins. Co.
of IIL, 643 N.E. 2d 1280, 1286 (1994). Under Ilinois’ “most significant contacts” test:
“Insurance contract provisions may be governed by the location of the
subject matter, the place of delivery of the contract, the domicile of the
insured or of the insurer, the place of the last act to five rise to a valid
contract, the place of performance, or other place bearing a relationship to
the general contract. While all of these factors must be considered in the
choice of law analysis, the location of the insured risk is given special
emphasis .... The location of the insured risk will be given greater weight
than any other single contract in determining the state of the applicable
Jaw provided that the risk can be located, at least principally in a single
state.

Massachusetts Bay, 643 N.E. 2d at 1122, citing Society of Mount Carmel, 643 N.E.2d at
1287.

In the instant case, the insured risk is CSC’s business, which is located in Illinois,
Moreover, CSC, the insured, is domiciled in Dlinois, and the delivery of the insurance
contract occurred in Illinois when CSC received the counter-signed policy from
Philadelphia Indemnity. Therefore, we find that the proper choice of law is Hlinois law
because the insured risk is the single most important factor, and other factors also favor
Illinois.

Tl. Punitive Damages

Philadelphia Indemnity next argues that punitive damages should not be allowed
in this case. In Count IJ, CSC alleges that Philadelphia Indemnity breached the insurance
policy issued to CSC by failing to act in good faith. CSC requests relief in the form of
punitive damages, Philadelphia Indemnity argues that punitive damages are not allowed
in this instance by Illinois law.

In Cramer v. Insurance Exchange Agency, 174 I1.2d 513, 675 N.E.2d 897 (1996),
the Illinois Supreme Court held that an independent action in tort for breach of an

2