No. 3-05-0158 

 

 IN THE 

 APPELLATE COURT OF ILLINOIS 

 THIRD DISTRICT 

 A.D., 2006 

L.A. CONNECTION, 

Plaintiff-Appellant, 

v. 

PENN-AMERICA INSURANCE CO., 

Defendant-Appellee, 

and 

MARVIN E. WHITE, Administrator of the 

Estate of MARVIN E. WHITE, JR., 

Deceased, 

Defendant. 

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Appeal from the Circuit Court 

of the 10th Judicial Circuit 

Peoria County, Illinois 

No. 02-MR-236 

Honorable 

John A. Barra, 

Judge, Presiding. 

JUSTICE SLATER delivered the opinion of the court: 

Marvin E. White, Jr., was shot and killed on the dance floor of plaintiff L.A. 

Connection, a Peoria bar, on November 11, 2001. White's estate filed a wrongful death 

action against plaintiff, which tendered defense of the claim to defendant PennAmerica Insurance Company ("Penn"). Penn declined to defend or indemnify 

plaintiff, primarily on the basis of an "assault and battery" exclusion contained in 

the commercial general liability policy issued to plaintiff. Plaintiff thereafter 

filed a declaratory judgment action to determine Penn's 
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obligations under the policy. The trial court granted summary 

judgment to Penn and this appeal followed. We affirm. 

Facts 

Plaintiff was served with a complaint by White's estate on May 

28, 2002. The complaint alleged that Edward Jackson entered 

plaintiff's premises on November 11, 2001, armed with a handgun and 

thereafter shot and killed Marvin White. The complaint asserted 

that plaintiff was negligent in allowing Jackson to enter while 

armed, in failing to provide security, and in failing to search 

patrons for weapons. 

Plaintiff tendered defense of the suit to Penn on or about June 

5, 2002, and Penn denied coverage by letter on June 11. Plaintiff

filed the instant declaratory judgment action on August 13, 2002, 

and Penn filed its answer and cross-claim for declaratory relief 

on October 3. Plaintiff filed an answer to defendant's cross-claim on 

November 4, 2002. The next filing contained in the record is Penn's April 1, 2003, 

motion for a default judgment against plaintiff due to its alleged failure to respond 

to Penn's cross-claim. It is unclear whether Penn did not receive the November 4 

answer filed by plaintiff or if it simply made a mistake. In any event, the filing of the 

default motion is significant, for reasons which will be explained below. On August 24, 

2004, plaintiff filed a motion for summary judgment, to which Penn responded by 

filing its own summary judgment motion on November 18, 2004. 

Citing Korte Construction Co. v. American States Insurance, 322 Ill. App. 3d 451, 

458, 750 N.E.2d 764, 769-70 (2001), for the proposition that "there need not be a race 
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to the courthouse and the insured should not be able to estop the insurer" by being the 

first to file a declaratory judgment action, the trial court ruled in favor of Penn: 

"The [c]ourt finds that the defendant insurance company, by filing its 

answer and cross-claim when it did, took action within a reasonable time 

of the demand by the insured. The [c]ourt can therefore look beyond the 

four corners of the original complaint to determine whether it had a duty to 

defend. Under the uncontested facts presented, the [c]ourt finds that the 

injuries were caused as a result of a 'battery'. The incident therefore was 

excluded by the insurance contract and was not covered by it." 

Analysis

Plaintiff contends that the trial court should have found that 

Penn was estopped from relying on the assault and battery 

exclusion contained in the insurance policy due to its breach of 

the duty to defend. We disagree. 

The Estoppel Doctrine 

The estoppel doctrine provides that an insurer presented with a claim may not 

simply refuse the defend its insured under a belief that no coverage exists; it must either 

defend the lawsuit under a reservation of rights or seek a declaratory judgment that 

there is no coverage. If the insurer fails to take either of those steps and is found to 

have wrongfully denied coverage, the insurer is estopped from raising policy defenses, 

even those that might have otherwise been successful. Employers Insurance v. Ehlco 

Liquidating Trust, 186 Ill. 2d 127, 708 N.E.2d 1122 (1999); Clemmons v. Travelers 

Insurance Co., 88 Ill. 2d 469, 430 N.E.2d 1104 (1981). 
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Duty to Defend 

The initial step in an estoppel analysis is determining whether a duty to defend 

exists. See Ehlco, 186 Ill. 2d at 151, 708 N.E.2d at 1135. The duty to defend is 

determined solely from the language of the underlying complaint and the insurance 

policy. Clemmons, 88 Ill. 2d 469, 430 N.E.2d 1104; Thornton v. Paul, 74 Ill. 2d 132, 384 

N.E.2d 335 (1978), overruled on other grounds, American Family Mutual Insurance Co. 

v. Savickas, 193 Ill. 2d 378, 739 N.E.2d 445 (2000). If the complaint alleges facts within 

or potentially within policy coverage, the insurer is obliged to defend its insured even if 

the allegations are groundless, false, or fraudulent (United States Fidelity and Guaranty 

Co. v. Wilkin Insulation Co., 144 Ill. 2d 64, 578 N.E.2d 926 (1991)), and even if the 

insurer knows that the allegations are untrue (Thornton, 74 Ill. 2d 132, 384 N.E.2d 335). 

 The complaint and insurance policy must be liberally construed in favor of the insured, 

and an insurer may not justifiably refuse to defend unless it is clear from the face of the 

complaint that it fails to state facts which bring the case within, or potentially within, the 

policy's coverage. Ehlco, 186 Ill. 2d 127, 708 N.E.2d 1122; Wilkin Insulation, 144 Ill. 2d 

64, 578 N.E.2d 926. 

In this case, the complaint alleged that plaintiff was negligent in allowing 

Edward Jackson to enter the bar while armed with a handgun and in failing to provide 

security. Thereafter, according to the complaint, Jackson "shot and killed" Marvin 

White. The general liability policy issued by Penn contained an exclusion for injury or 

damages "resulting from assault and battery or physical altercations that occur in, on, 

near, or away from" the insured premises, including damages arising out of the 

insured's failure to properly supervise or keep the premises in a safe condition. Plaintiff 
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argues that the exclusion does not necessarily apply because the complaint does not 

allege an intentional shooting and could describe an accidental discharge of the firearm. 

 We agree that, construed most liberally in favor of the plaintiff, the allegations of 

the complaint are not, on their face, clearly encompassed by the assault and battery 

exclusion and therefore are potentially within the policy's coverage. Accordingly, Penn 

had a duty to defend its insured which required it to either defend under a reservation of 

rights or seek a declaratory judgment of no coverage. Ehlco, 186 Ill. 2d 127, 708 N.E.2d 

1122. The trial court ruled that this duty was discharged when Penn filed its answer and 

cross-claim in response to plaintiff's declaratory judgment action, and 

we agree. 

Effect of Declaratory Judgment Action by the Insured 

Although our supreme court has never addressed the issue, 

the appellate courts of this state have repeatedly held that the 

initiation of a declaratory judgment action by the insured, rather 

than the insurer, is sufficient to avoid estoppel. As this court noted nearly 25 years ago, 

"[i]t is the fact of the proceeding itself, and not the identity of the party initiating the 

proceeding, that is of legal import." Ayers v. Bituminous Insurance Co., 100 Ill. App. 3d 

33, 35 n.1, 424 N.E.2d 1316, 1318 n.1 (1981); see Pekin Insurance Co. v. Allstate 

Insurance Co., 329 Ill. App. 3d 46, 768 N.E.2d 211 (2002) (identity of party initiating 

declaratory judgment action is irrelevant); Waitzman v. Classic Syndicate, Inc., 271 Ill. 

App. 3d 246, 648 N.E.2d 104 (1995) (same); Sears, Roebuck & Co. v. Seneca 

Insurance Co., 254 Ill. App. 3d 686, 627 N.E.2d 173 (1993) (same); Village of Melrose 
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Park v. Nautilus Insurance Co., 214 Ill. App. 3d 864, 574 N.E.2d 198 (1991) (same); 

Louis Marsch, Inc. v. Pekin Insurance Co., 140 Ill. App. 3d 1079, 491 N.E.2d 432 (1985) 

(same); see also Farmers Automobile Insurance Ass'n v. Country Mutual Insurance Co., 

309 Ill. App. 3d 694, 722 N.E.2d 1228 (2000) (no estoppel where insurer filed 

counterclaim prior to judgment in underlying suit); SportMart, Inc. v. Daisy 

Manufacturing Co., 268 Ill. App. 3d 974, 645 N.E.2d 360 (1994) (no estoppel where 

insured did not allege it was prejudiced by fact that it initiated declaratory judgment 

action). Although this position has been widely adopted, contrary authority exists. See 

Korte Construction, 322 Ill. App. 3d 451, 750 N.E.2d 764 (holding insurer was estopped 

where insured filed declaratory judgment actions 12 months after underlying suit was 

filed); Shell Oil Co. v. AC&S, Inc., 271 Ill. App. 3d 898, 649 N.E.2d 946 (1995) (insurer 

was estopped for failing to take legal action prior to insured filing declaratory judgment 

action); Consolidated Rail Corp. v. Liberty Mutual Insurance Co., 92 Ill. App. 3d 1066, 

416 N.E.2d 758 (1981) (insurer was estopped despite declaratory judgment action filed 

by insured); see also County of Massac v. United States Fidelity & Guaranty Co., 113 Ill. 

App. 3d 35, 446 N.E.2d 584 (1983) (finding insurer estopped where it responded to 

insured's declaratory judgment action by filing motion to dismiss, thereby contesting 

insured's efforts to construe policy). We continue to adhere to our decision in Ayers, not 

only because it is supported by the weight of authority, but also because of the potential 

consequences of a contrary rule. If an insured could prevent an insurer from raising 

valid policy defenses by simply filing a declaratory judgment action immediately upon 

denial of coverage, we would indeed be sponsoring a race to the courthouse. We 

decline to do so, and we find that the trial court properly ruled that Penn had fulfilled its 
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obligations by filing its answer and cross-claim to plaintiff's declaratory 

action. 

Timing Issues 

The final step in the estoppel analysis, after finding the 

existence of a duty to defend and that a declaratory judgment 

action has been filed, is determining whether the insurer acted 

"promptly" (see Household International, Inc. v. Liberty Mutual 

Insurance Co., 321 Ill. App. 3d 859, 869, 749 N.E.2d 1, 9 (2001) 

(describing Ehlco as requiring insured to "promptly" litigate)) or 

in a "timely manner" (see Aetna Casualty & Surety Co. v. O'Rourke Brothers, Inc., 333 

Ill. App. 3d 871, 880, 776 N.E.2d 588, 596 (2002) (insurer must seek declaratory 

judgment in a "timely manner," citing Ehlco)) in filing or responding to the declaratory 

action. The issue of what constitutes "promptness" or "timeliness" in this context has 

not been definitively resolved, although two supreme court decisions help define the 

outer boundaries. In Ehlco, the court held that a declaratory judgment action filed after 

the underlying lawsuit has been resolved by judgment or settlement is untimely as a 

matter of law, resulting in estoppel. Ehlco, 186 Ill. 2d at 157, 708 N.E.2d at 1138. Less 

than three months later, the court ruled that "[a]n insurer will not be estopped from 

denying coverage merely because the underlying case proceeds to judgment before the 

declaratory judgment action is resolved." State Farm Fire & Casualty Co. v. Martin, 186 

Ill. 2d 367, 374, 710 N.E.2d 1228, 1232 (1999). Thus it is clear that, to avoid estoppel, 

a declaratory judgment action must commence before the underlying suit has been 
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resolved, but the declaratory action need not outrace the lawsuit to the judgment "finish 

line." 

Faced with these rather vague contours of timeliness, the courts of this state 

have generally applied one of three standards to measure an insurer's promptness. 

See S. Nardoni & J. Vishneski, The Illinois Estoppel Doctrine Revisited: How Promptly 

must an Insurer Act?, 24 N. Ill. U. L. Rev. 211, 220-24 (2004). Some cases have 

deemed a declaratory judgment action timely as long as it was filed before the 

underlying lawsuit ends. See Pekin Insurance, 329 Ill. App. 3d 46, 768 N.E.2d 211; 

Farmers Automobile Insurance Ass'n, 309 Ill. App. 3d 694, 722 N.E.2d 1228; 24 N. Ill. 

U. L. Rev. at 221-22. Other cases have focused, not on the "raw chronological delay," 

but on whether the insured "waited until trial or settlement was imminent." O'Rourke, 

333 Ill. App. 3d at 880, 776 N.E.2d at 596; see also Westchester Fire Insurance Co. v. 

G. Heileman Brewing Co., 321 Ill. App. 3d 622, 634, 747 N.E.2d 955, 965 (2001); 24 N. 

Ill. U. L. Rev. at 220-23 (describing the "imminent resolution" test). Still others have 

required an insurer to seek declaratory relief within a "reasonable time" of learning of 

the underlying lawsuit. See, e.g., West American Insurance Co. v. J.R. Construction 

Co., 334 Ill. App. 3d 75, 777 N.E.2d 610 (2002) (insurer was estopped when it filed 

declaratory judgment action 21 months after defense was tendered); Employers 

Reinsurance Corp. v. E. Miller Insurance Agency, Inc., 332 Ill. App. 3d 326, 341-42, 773 

N.E.2d 707, 719-20 (2002) (rejecting "anytime before resolution of underlying lawsuit 

test" in favor of "reasonable time from date of notice to insurer" test); see also 24 N. Ill. 

U. L. Rev. at 223-230 (advocating adoption of reasonable time test). 
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In O'Rourke, this court stated that the "most important factor" in determining 

whether an insurer had breached its duty to defend was not the mere chronological 

delay in filing for declaratory relief, "but whether the insurer waited until trial or 

settlement was imminent." O'Rourke, 333 Ill. App. 3d at 880, 776 N.E.2d at 596. That 

statement must be viewed in the factual context of the case, rather than as a blanket 

adoption of the so-called "imminent resolution" test. See 24 N. Ill. U. L. Rev. at 223 

(citing O'Rourke as following that test). By the time the insurer in O'Rourke filed for 

declaratory relief, four of the underlying suits had been settled and many others were 

nearing settlement. 333 Ill. App. 3d at 880, 776 N.E.2d at 596. Under those 

circumstances, emphasizing the looming termination of litigation over the mere passage 

of time was appropriate. However, each case must be decided on its own facts, and for 

that reason we favor the more flexible "reasonable time" test. We agree with the 

commentators cited above that the reasonable time test promotes quick action by 

insurers and best serves the goal of the estoppel doctrine - enforcement of the duty to 

defend (24 N. Ill. U. L. Rev. at 224-25; see Ehlco, 186 Ill. 2d at 154, 708 N.E.2d at 

1136). That duty is a "fundamental" obligation of an insurer. Ehlco, 186 Ill. 2d at 151, 

708 N.E.2d at 1135. 

We conclude that, under the reasonable time test, Penn did not breach its duty to 

defend. Plaintiff tendered defense of the suit to Penn on June 5, 2002, and plaintiff

subsequently filed its declaratory judgment action on August 13, a little more than two 

months later. Penn filed its answer and cross-claim less than two months after that. 

Plaintiff has not cited, and our research has not revealed, any case holding that an 

insurer breached the duty to defend where a declaratory judgment action was 
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commenced within four months. On the contrary, courts have declined to apply 

estoppel where the time period between notification to the insurer of the underlying suit 

and the filing of a declaratory judgment action exceeded that presented here. See 

Westchester Fire Insurance Co., 321 Ill. App. 3d 622, 747 N.E.2d 955 (six months); 

Sears, Roebuck & Co., 254 Ill. App. 3d 686, 627 N.E.2d 173 (seven months). We 

discern no reason to find the relatively brief passage of time at issue here as anything 

other than reasonable. 

Plaintiff also argues that estoppel should be applied because even after 

plaintiff filed its declaratory action, Penn failed to take steps to advance the 

litigation and remained "virtually idle" for two years prior to plaintiff's filing of 

its motion for summary judgment. We disagree. Penn responded 

promptly to plaintiff's declaratory judgment action by filing its 

answer and cross-claim within two months. Thereafter, Penn did 

not remain "idle"; it filed a motion for default judgment within 

six months, premised on its apparently mistaken belief that 

plaintiff had failed to respond to Penn's cross-claim. Beyond that, we 

find that plaintiff's "failure to advance the litigation" argument 

is waived. Although it was mentioned in a perfunctory fashion in 

plaintiff's motion for summary judgment, there is no indication that 

it was argued to the trial court. "[A]n issue not presented to 

or considered by the trial court cannot be raised for the first 

time on review." In re Marriage of Schneider, 214 Ill. 2d 152, 172, 

824 N.E.2d 177, 189 (2005). 
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Assault and Battery Exclusion 

Finally, having determined that Penn is not estopped from 

raising policy defense, we consider the effect of the assault and 

battery exclusion contained in the insurance policy. In doing 

so, we are no longer limited to the allegations of the complaint, 

but may also consider extrinsic evidence gathered during the 

discovery process. See Mutlu v. State Farm Fire & Casualty Co., 

337 Ill. App. 3d 420, 785 N.E.2d 951 (2003); Fidelity & Casualty Co. 

v. Envirodyne Engineers, Inc., 122 Ill. App. 3d 301, 461 N.E.2d 471 

(1983). Deposition testimony contained in the record establishes 

that Edward Jackson intentionally shot Marvin White while White 

was on the dance floor of L.A. Connection. After White fell to 

the floor, Jackson grabbed a bottle from a table and hit White on 

the head with it. Jackson was later arrested and he was 

subsequently convicted of first degree murder. See Savickas, 193 

Ill. 2d 378, 739 N.E.2d 445 (criminal conviction may collaterally 

estop insured from relitigating issue decided at criminal trial 

in subsequent declaratory judgment action). Jackson's actions 

are clearly encompassed by the assault and battery exclusion, 

regardless of whether those terms are defined under the criminal 

code (see 720 ILCS 5/12-1 (West 2000) (defining assault as 

placing another in reasonable apprehension of receiving a 

battery); 720 ILCS 5/12-3 (West 2000) (defining battery as 

causing bodily harm or making physical contact of an insulting or 
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provoking nature)) or by civil case law (see Britamco 

Underwriters, Inc. v. J.O.C. Enterprises, Inc., 252 Ill. App. 3d 96, 

623 N.E.2d 1036 (1993) (defining civil battery as wilful touching 

of another or a successful attempt to commit violence on 

another)). Accordingly, the trial court properly granted summary 

judgment in favor of Penn. 

For the reasons stated above, the judgment of the circuit 

court is affirmed. 

Affirmed. 

LYTTON and BARRY, J.J., concur.