Court Opinion

ID: 9913161
Source: CourtListenerOpinion
Date Created: 2023-12-26 22:02:44.992522+00
Date Added: 2024-06-11T13:07:31.834050
License: Public Domain

2023 IL App (1st) 221529-U

                                                                            SECOND DIVISION
                                                                           DECEMBER 26, 2023

                                         No. 1-22-1529

NOTICE: This order was filed under Supreme Court Rule 23 and is not precedent except in the
limited circumstances allowed under Rule 23(e)(1).
______________________________________________________________________________

                                    IN THE
                        APPELLATE COURT OF ILLINOIS
                           FIRST JUDICIAL DISTRICT
______________________________________________________________________________

LM INSURANCE CORP. and LIBERTY                      )       Appeal from the
INSURANCE CORP.,                                    )       Circuit Court of
                                                    )       Cook County.
       Plaintiffs-Appellees,                        )
                                                    )
       v.                                           )       No. 21 CH 538
                                                    )
VILLAGE OF LYONS,                                   )       Honorable
                                                    )       Michael T. Mullen,
       Defendant-Appellant.                         )       Judge Presiding.

       PRESIDING JUSTICE HOWSE delivered the judgment of the court.
       Justices McBride and Cobbs concurred in the judgment.

                                       ORDER

¶1     Held: The judgment of the circuit court of Cook County is reversed; the insurance policy
       contains reasonable, irreconcilably inconsistent provisions and is ambiguous, the policy
       must be construed in favor of the insured, and the insurer’s duty to defend the insured
       arises as to the entire underlying complaint.

¶2     Plaintiffs, LM Insurance Corporation and Liberty Insurance Corporation (hereinafter,

collectively “Liberty”) filed a complaint for declaratory judgment against defendant, the Village

of Lyons, Illinois (Lyons) and Willow Way, LLC (Willow). (Willow is not a party to this

appeal.) Liberty insures Lyons under three relevant insurance policies. Willow sued Lyons
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alleging the village wrongfully demolished a residential building it owned in Lyons. Lyons

tendered defense of Willow’s lawsuit to Liberty. Liberty filed a complaint for a declaration that

“under insurance policies issued by it to [Lyons,] it has no duty to defend or to indemnify

[Lyons] in an underlying lawsuit” filed by Willow. Lyons filed an answer and affirmative

defenses to the complaint for declaratory judgment. The parties filed cross-motions for judgment

on the pleadings. Following a hearing, the circuit court of Cook County granted judgment on the

pleadings in part in favor of Liberty and in part in favor of Lyons. Upon a motion to reconsider,

the trial court reversed its judgment in favor of Lyons and entered judgment in favor of Liberty

on all counts. This appeal followed.

¶3                                     BACKGROUND

¶4     In May 2020, Willow filed a complaint against Lyons in the United States District Court

for the Northern District of Illinois for claims related to the demolition of a residential building

Willow owned in Lyons (hereinafter, “the underlying complaint”). The underlying complaint

alleges that in July 2016 Willow purchased real property improved with a residence in Lyons.

Willow placed funds in escrow with Lyons based on Lyons’ claim the residence required repairs.

Willow immediately began to seek contractors to perform the work. Willow obtained building

permits to perform the work. By July 2017, the underlying complaint alleges, the contractor had

completed “a substantial amount” of the work at “substantial expense” to Willow.

¶5     In August 2017, Lyons informed Willow certain permits were set to expire and new

permits would have to be obtained. That same month, Lyons allegedly informed Willow’s

contractor that certain work had to be performed on the residence but, on information and belief,

“no such work was legitimately required.” In September 2017, Lyons allegedly informed Willow

the renovation project was on hold and Lyons was going to fine Willow’s contractor for

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improper work on the premises; but, on “information and belief, no such infraction occurred.”

Willow and its contractor attempted to obtain permission from Lyons to continue work on the

project through October 2017, when Lyons orally informed Willow of certain requirements for

the project that Willow alleges, on information and belief, were not “legitimately required.”

Willow received a bid from its contractor for this additional work.

¶6     In January 2018, Lyons allegedly informed Willow that Lyons wanted to tear the house

down, but Lyons gave no reason why. Willow attempted to resolve the issues with the residence

with Lyons and received additional requirements for the renovation. In April 2018, Willow’s

contractor informed Willow that the project was “in a state of substantial completion.” In July

2018, Lyons allegedly informed Willow that it would have to engage in extensive additional

renovations or demolish the entire property; but, on “information and belief, no such work was

legitimately required.” That same month Lyons allegedly informed Willow that additional

repairs were needed immediately or the house would be torn down. Over the next several months

Willow sought a full list of the additional repair requirements but Lyons failed to provide one.

¶7     In October 2019, Lyons allegedly informed Willow that the residence was beyond repair

and was scheduled for demolition. In December 2019, Lyons gave notice of intent to demolish

the residence. In February 2020, Willow observed notices of demolition posted at the residence.

Later in February 2020, Willow, after repeated attempts, met with two building inspectors for

Lyons. That same day, Willow had observed the presence of demolition equipment on the

property. The building inspectors allegedly informed Willow that the residence was “only being

prepared for demolition, and that no demolition had occurred.” During this meeting, when

Lyons’ building inspectors allegedly made that representation to Willow, Lyons completely

demolished the residence, “leaving the lot as bare land.”

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¶8     The underlying complaint alleges Willow “spent substantial amounts of money in

renovation of the [property] in reliance upon building permits issued by [Lyons,] giving

[Willow] vested property rights in said permits under Illinois law.” The underlying complaint

alleges Lyons “engaged in the demolition of the Premises without legitimate revocation or other

legitimate legal action to terminate the building permits held by [Willow,] thereby interfering

with and destroying [Willow’s] vested rights in said permits.

¶9     The underlying complaint alleges, on information and belief, that “the actions of [Lyons]

were not taken to substantially advance legitimate governmental interests of the public but

instead in the illegitimate pursuit of purchase of the Premises by [Lyons] as an empty lot at a low

price for the eventual enrichment of [Lyons] officials or their favored partisans.”

¶ 10   The underlying complaint alleges the loss to Willow “resulting from the demolition of the

Premises” exceeds $75,000.

¶ 11   Counts I and II of the underlying complaint are for a violation of 42 U.S.C. § 1983.

Count I alleges Lyons acted under color of state law to violate Willow’s fifth amendment right

not to be deprived of property without just compensation by “a. improper abrogation of the

permits granted for [Willow] to engage in the Renovation Project; b. destruction of [Willow’s]

rights in building permits to complete construction as called for under said permits; and c.

demolition of the Premises.” Count II alleges Lyons acted under color of state law to violate

Willow’s fourth amendment right to be secure in its property against unreasonable seizures “by

engaging in unreasonable seizure of [Willow’s] property and removal of same from the

Premises.”

¶ 12   Count III of the underlying complaint is for “Eminent Domain” and alleges that Lyons’

actions constituted “damage” and “taking” of Willow’s property and “the vested rights of

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[Willow] in issued building permits as well as the buildings on the Premises” without just

compensation in violation of section 15 of the Illinois constitution.

¶ 13   On February 3, 2021, Liberty filed its complaint for declaratory judgment in the circuit

court seeking a declaration that “under insurance policies issued by it to [Lyons,] it has no duty

to defend or to indemnify [Lyons] in [Willow’s] lawsuit.” The declaratory judgment complaint

alleges that there are three policies at issue: a Commercial General Liability (CGL) policy, a

Public Official Liability (POL) policy, and a Commercial Liability Umbrella (CLU) policy. The

declaratory judgment complaint alleges generally that neither the CGL nor CLU policies provide

coverage because the underlying complaint “does not allege ‘property damage’ caused by any

‘occurrence’ ” as required by [the] insuring agreement, and the POL policy does not provide

coverage because the underlying complaint does not allege any “wrongful act” as required by the

insuring agreement. The declaratory judgment complaint also alleges that several exclusions

eliminate coverage under each policy.

       ¶ 14    The CGL policy provides coverage for property damage caused by an

“occurrence” and excludes damage expected or intended by the insured:

               “We will pay those sums that the insured becomes legally obligated to pay

       as damages because of *** ‘property damage’ to which this insurance applies. We

       will have the right and duty to defend the insured against any ‘suit’ seeking those

       damages.

                                               ***

               This insurance applies to *** ‘property damage’ only if: (1) The ***

       ‘property damage’ is caused by an ‘occurrence.’

                                               ***

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               ‘Occurrence’ means an accident, including continuous or repeated

       exposure to substantially the same general harmful conditions.

               ‘Property damage’ means: a. Physical injury to tangible property,

       including all resulting use of that property. *** b. Loss of use of tangible property

       that is not physically injured.”

¶ 15   The CGL policy also contains the following language: “This insurance does not apply to:

*** ‘property damage’ expected or intended from the standpoint of the insured.”

¶ 16   Count I of the declaratory judgment complaint is for a declaration that Liberty has no

duty to defend or indemnify Lyons under the CGL policy. Count I specifically alleges that the

underlying lawsuit seeks damages for “property damage” and that the “property damage” is the

demolition of the residence; the underlying complaint does not allege the demolition was caused

by an “occurrence” within the meaning of the policy; and the underlying complaint only alleges

“property damage” expected or intended from the standpoint of Lyons. Liberty claims that

coverage under the CGL policy is precluded by the insurance policy or excluded from coverage

under the expected or intended injury exclusion.

¶ 17   Count II of the declaratory judgment complaint is for a declaration that Liberty has no

duty to defend or indemnify Lyons under the POL policy. Count II specifically alleges that the

underlying complaint does not allege a “wrongful act” as defined by the POL policy; therefore,

coverage is precluded by the insurance contract. The POL policy reads, in pertinent part, as

follows:

               “This insurance applies to claims on if: (1) The claim is caused by a

       ‘wrongful act’ committed while conducting duties by or on behalf of you or ‘your

       boards.’

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                                               ***

              ‘Wrongful act’ means any actual or alleged negligent act, failure to act,

       error or omission.”

¶ 18   The POL policy excludes from this coverage:

       “o. Claims arising out of ‘property damage’

                                               ***

       u. Claims arising out of malicious, criminal, dishonest or fraudulent ‘wrongful

       acts,’ or any knowing violation of rights or laws, committed by or at the consent,

       direction or knowledge of the insured. This exclusion does not apply to our duty

       to defend the insured until it has been determined in a ‘final adjudication’ or

       admitted that such ‘wrongful act’ or knowing violation was committed by the

       insured or with consent, direction or knowledge of the insured.

                                               ***

       w. Claims arising out of any insured’s personal profit, advantage, gain or

       compensation to which that insured is not legally entitled.

                                               ***

       z. ‘Punitive or exemplary damages’

                                               ***

       cc. Claims arising out of the taking or controlling of private property for public

       use or benefit, including the diminution in value of such property, by

       condemnation, inverse condemnation, adverse possession, dedication by adverse

       use, eminent domain or any other proceeding.”

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¶ 19   Count II also alleges that any coverage would be excluded by the POL policy because:

the underlying lawsuit arises out of “ ‘property damage’ to the Premises;” the underlying

complaint alleges that Lyons was motivated by a pursuit to purchase the property at a low price

to the enrichment of Lyons’ officials for personal profit; the underlying complaint alleges a

taking without just compensation constituting a taking for public use; and because other listed

exclusions also eliminate coverage.

¶ 20   The CUL policy includes a Public Officials Liability Coverage Limitation (Claims-Made)

Endorsement. That endorsement excludes from coverage:

               “Any liability arising out of a wrongful act committed while conducting

       duties by or on behalf of you or your boards.

                                               ***

               However, this exclusion does not apply to the extent the underlying

       insurance provides coverage for damages arising out of a wrongful act. Coverage

       provided will be no broader than that provided by underlying insurance.”

¶ 21   If the underlying insurance provides coverage, the CUL policy provides that, for purposes

of coverage provided by the POL endorsement in the CUL policy: “We will pay on behalf of the

insured those sums in excess of the retained limit that the insured becomes legally obligated to

pay as damages because of claims arising out of a wrongful act to which this insurance applies.

*** This insurance applies to claims only if: The claim is caused by a wrongful act committed

anywhere while conducting duties by or on behalf of you or your boards.”

¶ 22   Finally, for purposes of the POL endorsement in the CUL policy, “Wrongful act means

any actual or alleged negligent act, failure to act, error or omission;” and “A wrongful act, a

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single wrongful act or a series of causally connected wrongful acts will be considered one

occurrence.”

¶ 23   Count III of the declaratory judgment complaint is for a declaration that Liberty has no

duty to defend or indemnify Lyons under the CUL policy. As to the CUL policy, count III

specifically alleges that the alleged “property damage” for which the underlying suit seeks

damages is the demolition of the “Premises;” the underlying complaint does not allege the

demolition was caused by an “occurrence” within the meaning of the CUL policy; and the

underlying complaint “alleges only ‘property damage’ expected or intended from the standpoint

of [Lyons;]” therefore, coverage is either precluded by the language of the policy or excluded

from coverage by the exclusion for expected or intended injury. The CUL policy reads, in

pertinent part, as follows:

               “We will pay *** those sums in excess of the retained limit that the

       insured becomes legally obligated to pay as damages because of *** property

       damage.

                                              ***

               With respect to *** property damage ***, this insurance applies only if:

       *** The *** property damage *** is caused by an occurrence ***.

                                              ***

               Occurrence means, with respect to *** property damage, an accident,

       including continuous or repeated exposure to substantially the same general

       harmful conditions.

                                              ***

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       Property damage means: Physical injury to tangible property, including all

       resulting loss of use of that property. *** or Loss of use of tangible property that

       is not physically injured.”

The CUL policy excludes from its coverage: “property damage expected or intended from the

standpoint of the insured.”

¶ 24   On April 9, 2021, Lyons filed its Answer and Affirmative Defenses to the declaratory

judgment complaint. The Answer admits that for purposes of the CGL policy (count I) the

alleged property damage for which the underlying lawsuit seeks damages is the demolition of the

premises. However, for purposes of the CUL policy (count III), Lyons denies the allegation that

the alleged “property damage” for which the underlying lawsuit seeks damages is the demolition

of the premises. Lyons’ Third Affirmative Defense claims that:

               “In the Underlying Lawsuit [Willow] seeks compensation not only for

       property damage, but also for its constitutional injuries. Therefore, any Policy

       language excluding coverage for property damage and punitive damages is not

       sufficient to bar the Village’s claim for coverage under the Policy.

               The constitutional causes of action and damages sought extend beyond

       claims of property damage, the taking of property for public use, and claims of

       personal profit, including but not limited to allegations concerning the deprivation

       of its rights; thus the exclusions upon which [Liberty] seek to rely upon are

       insufficient to bar coverage.

                                                   ***

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               [Liberty’s] claims that coverage is excluded for malicious, criminal,

       dishonest or fraudulent wrongful acts does not impact [Liberty’s] duty to defend

       until there is a final adjudication or admission concerning said wrongful act ***.”

¶ 25   In August 2021, Willow stipulated that it would be bound by the declaratory judgment

concerning whether any of Liberty’s policies provide coverage to Lyons for Willow’s lawsuit.

The trial court voluntarily dismissed Willow as a party to the action.

¶ 26   The parties filed cross-motions for judgment on the pleadings. Following a hearing, the

trial court granted judgment on the pleadings in favor of Liberty on count I (CGL) of the

declaratory judgment complaint and granted judgment in favor of Lyons on counts II (POL), but

“only with respect to [Liberty’s] duty to defend [Lyons] in the Underlying Lawsuit,” and count

III (CUL), but “only in the event the POL Policy is exhausted.” Liberty filed a motion to

reconsider the trial court’s judgment on the cross-motions for judgment on the pleadings.

(Liberty attached a Memorandum Opinion and Order from the United States District Court for

the Northern District of Illinois granting summary judgment in favor of Lyons on Willow’s

complaint. Willow appealed that judgment.) After hearing on the motion to reconsider, the court

granted Liberty’s motion to reconsider, and entered judgment in favor of Liberty on counts II

(POL) and III (CUL) of the declaratory judgment complaint.

¶ 27   This appeal followed.

¶ 28                                    ANALYSIS

¶ 29   This is an appeal from a final judgment on a motion for judgment on the pleadings. 735

ILCS 5/2-615(e) (West 2020) (“Any party may seasonably move for judgment on the

pleadings.”)). This court reviews judgments on motions for judgment on the pleadings de novo.

Continental Casualty Co. v. 401 N. Wabash Venture, LLC, 2023 IL App (1st) 221625, ¶ 25. De

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novo review of a judgment on a 2-615(e) motion means that this court performs the same

analysis the trial court would perform. Rico Industries, Inc. v. TLC Group, Inc., 2014 IL App

(1st) 131522, ¶ 14. “A trial court properly grants a motion for judgment on the pleadings *** ‘if

the pleadings on file disclose no genuine issues of material fact so that the movant is entitled to

judgment as a matter of law.’ [Citation.]” Id. In ruling on a motion for judgment on the pleadings

the court only considers those facts appearing on the face of the pleadings, matters subject to

judicial notice, and any judicial admissions in the record. Continental Casualty Co., 2023 IL App

(1st) 221625, ¶ 25. All well-pled facts and the reasonable inferences based on those facts are

taken as true. Id. Indeed, when a party moves for judgment on the pleadings, it concedes the truth

of the well-pled facts in the nonmoving party’s pleadings. Allstate Property and Casualty

Insurance Co. v. Trujillo, 2014 IL App (1st) 123419, ¶ 16. See also McCall v. Devine, 334 Ill.

App. 3d 192, 198 (2002) (citing Richo Plastic Co. v. IMS Co., 288 Ill. App. 3d 782, 786 (1997)).

“When evaluating the facts, a court must construe the evidence strictly against the movant and

liberally in favor of the nonmoving party.” McCall, 334 Ill. App. 3d at 198 (citing Dowd &

Dowd, Ltd. v. Gleason, 181 Ill. 2d 460, 483 (1998)).

¶ 30   The question in this case is whether the facts appearing on the face of the declaratory

judgment complaint and the pleadings on file and the reasonable inferences from those facts

disclose that there is no genuine issue of material fact and either party is entitled to judgment as a

matter of law that Liberty does or does not have a duty to defend Lyons. Illinois State Bar Ass'n

Mutual Insurance Co. v. McNabola Law Group, P.C., 2019 IL App (1st) 182386, ¶ 12 (“Where

cross-motions for judgment on the pleadings are filed, the parties ‘agree that only a question of

law is involved and invite the court to decide the issues based on the record.’ ”); Rico Industries,

Inc., 2014 IL App (1st) 131522, ¶ 14. “In a declaratory judgment action in which the issue is

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whether the insurer has a duty to defend, courts first look to the allegations in the underlying

complaint and compare those allegations to the relevant provisions of the insurance contract.”

(Citations and internal quotation marks omitted.) Professional Solutions Insurance Co. v.

Karuparthy, 2023 IL App (4th) 220409, ¶ 47. See also Continental Casualty Co., 2023 IL App

(1st) 221625, ¶ 26. If the facts alleged in the underlying complaint fall even potentially within

the policy’s coverage, the insurer has a duty to defend. Continental Casualty Co., 2023 IL App

(1st) 221625, ¶ 26.

¶ 31   The insurer has a duty to defend if only one of several alleged theories of recovery in the

complaint potentially falls within the policy’s coverage and the insurer must defend the entire

complaint. Erie Insurance Exchange v. Aral Construction Corp., 2022 IL App (1st) 210628, ¶

28; American Alliance Insurance Co. v. 1212 Restaurant Group, LLC, 342 Ill. App. 3d 500, 510

(2003) (“It is well settled that if one claim in a complaint falls within or potentially within a

policy’s coverage, then the insurer has a duty to defend the insured as to the entire complaint.”).

       ¶ 32    The factual allegations of the complaint determine whether there is a duty

       to defend, not the legal theory under which the action is brought. Universal

       Underwriters Insurance Co. v. LKQ Smart Parts, Inc., 2011 IL App (1st) 101723,

       ¶ 26 (citing Pekin Insurance Co. v. Dial, 355 Ill. App. 3d 516, 520 (2005)). The

       allegations are not required to be in any particular form. Karuparthy, 2023 IL App

       (4th) 220409, ¶ 48 (citing Empire Indemnity Insurance Co. v. Chicago Province

       of the Society of Jesus, 2013 IL App (1st) 112346, ¶ 35). “[T]he duty to defend

       does not require that the complaint allege or use language affirmatively bringing

       the claims within the scope of the policy.” (Internal quotation marks omitted.)

       Empire Indemnity Insurance Co., 2013 IL App (1st) 112346, ¶ 35. In fact, “[l]ittle

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       weight is given to the legal label that characterizes the allegations of the

       underlying complaint; rather, the determination focuses on whether the alleged

       conduct arguably falls within at least one of the categories of wrongdoing listed in

       the policy.” Illinois State Bar Ass’n Mutual Insurance Co. v. Mondo, 392 Ill. App.

       3d 1032, 1037 (2009). The court should read the complaint as a whole “to assess

       its true nature.” Id. “[C]ourts should consider each count in a plaintiff's complaint

       to determine (1) what the plaintiff's complaint is really alleging and (2)

       considering the totality of the plaintiff's complaint, whether an insurance company

       has a duty to defend.” Karuparthy, 2023 IL App (4th) 220409, ¶ 74. “The

       threshold for finding a duty to defend is low and any doubt with regard to such

       duty is to be resolved in favor of the insured.” (Internal quotation marks omitted.)

       Acuity v. M/I Homes of Chicago, LLC, 2022 IL App (1st) 220023, ¶ 49.

¶ 33   We first look to the allegations in the underlying complaint. Continental Casualty Co.,

LLC, 2023 IL App (1st) 221625, ¶ 26.

              “A court’s primary objective in construing the language of an insurance

       policy is to ascertain and give effect to the intentions of the parties as expressed

       by the language of the policy. [Citation.] Like any contract, an insurance policy is

       to be construed as a whole, giving effect to every provision, if possible, because it

       must be assumed that every provision was intended to serve a purpose.

       [Citation.]” Valley Forge Insurance Co. v. Swiderski Electronics, Inc., 223 Ill. 2d

       352, 362 (2006).

¶ 34   The parties disagree as to whether the policy “is really alleging” claims for “property

damage” in the form of demolition of the residence or that, and something more. For example,

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Liberty argues that the trial court correctly found that all of the claims and damages in the

underlying complaint arise out of the “property damage” that is the demolition of the residence.

Liberty further asserts that “the claims related to the loss of building permits are inextricably

linked to the demolition of the building and, accordingly, arise out of ‘property damage.’ ”

Liberty argues that because all of the claims in the underlying lawsuit “arise out of,” i.e., were

caused by, “property damage,” they are excluded by the exclusion in the POL policy language

that exclude coverage for “[c]laims arising out of *** ‘property damage.’ ” See Allstate

Insurance Co. v. Smiley, 276 Ill. App. 3d 971, 978 (1995).

¶ 35      To the contrary, Lyons argues that all of the claims do not “arise out of” the demolition of

the residence because Willow also claims, among other things, “abrogation of issued building

permits and damages related to unjustified fines and interference in the rehab work.” Lyons

argues that Willow has potentially viable claims in the underlying complaint “based on the

alleged course of dealings between the parties.” Lyons asserts these harms are not limited to

harms to Willow’s tangible property; therefore, the exclusions for “property damage” do not

apply. Specifically, Lyons argues the exclusions would not apply to interference with Willow’s

claimed vested rights in the building permits, damages from its reliance on the permits, and

“constitutional injuries from [Lyons’] officials allegedly exceeding their authority in dealing

with the property,” including “the privacy and/or other constitutional rights violations and

injuries raised by [Willow] under the fourth and fifth amendments.” Lyons argues that Willow’s

claims “potentially involve both property and privacy rights” that “do not necessarily arise only

from the demolition,” and those damages are not to “tangible” property but rather to Willow’s

rights.

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¶ 36    In Smiley, the court held that the injury arose out of a business activity (which was

excluded from coverage) because the injury (a death) “originated or came about from the

[business activity.]” Smiley, 276 Ill. App. 3d at 979. Liberty argues that similarly here, regardless

of the type of claim alleged, all of the claims “came about” because Lyons destroyed the

residence, which is “property damage” under the policy. In other words, Willow lost its rights in

the building permits because, and only because 1, Lyons destroyed the property to which the

permits applied.

¶ 37    We disagree with the assertion that all of the claims in the underlying lawsuit only “came

about” because Lyons demolished the residence. This court must look to the allegations in the

underlying complaint as a whole, construed liberally in Lyons’ favor, to determine whether the

conduct alleged in the underlying complaint arguably falls within at least one of the categories of

wrongdoing listed in the policy. Mondo, 392 Ill. App. 3d at 1037. We must look to the “true

nature” of the underlying complaint. Id. We may not focus, as Liberty has, on the discreet

moment when the conduct alleged in the complaint finally had injurious effect. See Karuparthy,

2023 IL App (4th) 220409, ¶ 66 (rejecting argument that the means of accomplishing the harm

can be distinguished from the harm itself).

¶ 38    In Karuparthy, the insured, a doctor, injected his patient with ketamine and sexually

assaulted her. The patient filed the underlying lawsuit in that case against the doctor alleging the

doctor immobilized her with a medical substance and assaulted her and that in administering the

medical substance the doctor breached the standard of care in numerous ways unrelated to the

sexual assault. See id. ¶¶ 9-11. The doctor’s insurer filed a declaratory judgment complaint

        1
         Liberty argues: “Causation is expressly alleged by [Willow:] but for the demolition of the
Premises, there would have been no claim for abrogation of rights in [Willow’s] building permits.”
(Emphasis omitted and emphases added.)
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seeking a declaration it had no duty to defend the doctor because the complaint alleged

intentional conduct by the doctor that did not constitute an “incident” under the policy: the

doctor’s conduct did not constitute “professional services,” which was required under the

definition of “incident.” Id. ¶¶ 21-22. On the parties’ cross-motions for judgment on the

pleadings the insureds argued that the assault was separate from the administration of the

injection; in other words, the injection shows that the victim did receive medical treatment as

defined by the terms of the policy. Id. ¶ 35.

¶ 39   The Karuparthy court found that “[i]t is well settled that the substance of the factual

allegations of the underlying complaint—not the legal labels attached thereto—determines

whether a claim falls potentially within coverage. [Citation.]” Id. ¶ 60. Applying that principle,

the court concluded that any person reading the underlying complaint as a whole would easily

understand that the patient singularly sought to recover for injuries resulting from the sexual

misconduct. Karuparthy, 2023 IL App (4th) 220409, ¶ 61. The court rejected the insured’s

argument that the negligence counts (which would have triggered coverage) were “wholly

independent and separate from the intentional torts.” Id. ¶ 64.

¶ 40   The court found that “the substance of [the underlying] complaint—what she is actually

suing over—is [the doctor’s] immobilizing her without her knowledge and consent to

subsequently [assault] her.” Id. ¶ 65. The court found that the means of accomplishing the

misconduct could not, in that case, be distinguished from the misconduct itself where the

underlying complaint failed to explain how the purported negligence “caused an injury distinct

from those asserted in the intentional tort counts.” The court conceded that the negligence counts

may have been pled in the alternative to the intentional tort counts but noted that “no rule of law

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requires this court to ignore the foundational allegations of the other counts in the complaint.” Id.

¶ 69 (citing Farmers Automobile Insurance Ass’n v. Danner, 2012 IL App (4th) 110461).

¶ 41   In this case, we look to “the substance of the factual allegations of the underlying

complaint—not the legal labels attached thereto.” Karuparthy, 2023 IL App (4th) 220409, ¶ 60.

From our examination we find it clear that Willow sought to recover for injuries resulting from

Lyons’ machinations with regard to the subject property—whether in an effort to obtain the

property for itself or simply to deprive Willow of it. The conduct alleged in the complaint is

interference with Willow’s “property” rights beyond its rights in the tangible property. We agree

with Lyons that Willow alleges that for years before the house was demolished Lyons

wrongfully interfered with its rights. We note that “[i]f the underlying complaint alleges facts

that fall ‘within[ ] or potentially within’ the coverage of the policy, the insurer is obligated to

defend its insured even if the allegations are ‘groundless, false, or fraudulent.’ ” Erie Insurance

Exchange, 2022 IL App (1st) 210628, ¶ 28.

¶ 42    The underlying complaint alleges Willow placed funds in escrow with Lyons based “on

[a] claim by [Lyons] that repairs were required on the House.” The complaint then alleges

several ways Lyons prevented Willow from making those repairs. A year after Willow purchased

the property Lyons informed Willow, without explanation, that some of its building permits

would be terminated. Lyons required Willow to make additional repairs and improvements that

were not “legitimately required” at additional expense to Willow. Willow suffered work

stoppages and fines and was told certain repairs would be required but was never told what they

were. We must agree with Lyons that Willow may have had a cause of action for any of these

acts even if the house was never demolished.

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¶ 43    We also agree that these potential claims do not involve tangible property. Black’s Law

Dictionary defines tangible property as “Property that has physical form and characteristics.”

PROPERTY, Black's Law Dictionary (11th ed. 2019). Simultaneously, the dictionary provides

that: “It is common to describe property as a ‘bundle of rights.’ These rights include the right to

possess and use, the right to exclude, and the right to transfer.” PROPERTY, Black’s Law

Dictionary (11th ed. 2019). Lyons’ conduct at minimum interfered with Willow’s right to use the

subject property, in this instance by improving it.

¶ 44    This case is not like Smiley, where the injured party and the insured interacted “only”

because of the provision of the insured’s business services to the injured party. See Smiley, 276

Ill. App. 3d at 979. While instructive, this case is also not like Karuparthy. Unlike that case, the

underlying complaint in this case did explain how Willow suffered damages from Lyons’

conduct that constitutes “property damage,” i.e., the destruction of the residence, and damage

distinct from “property damage” or damage to tangible property, e.g., interference with Willow’s

right to use its property. Cf. Karuparthy, 2023 IL App (4th) 220409, ¶ 69.

¶ 45    We find that the underlying complaint is “really alleging” damages from Lyons’

interference with Willow’s “bundle of rights” in the subject property and potential violations of

its constitutional rights.

¶ 46    Having determined what the underlying complaint actually alleges, we next compare

those allegations to the relevant provisions of the insurance contract. Continental Casualty Co.,

2023 IL App (1st) 221625, ¶ 26. We begin with the POL policy because, for the reasons to

follow, we find that the allegations in the complaint fall within, or potentially within, that

policy’s coverage and any exclusion from coverage under the POL policy is not clear and free

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from doubt. Having made that determination, the duty to defend arises and Liberty must defend

the entire underlying lawsuit. American Alliance Insurance Co., 342 Ill. App. 3d at 510.

¶ 47   Here, Liberty argues that the POL policy does not cover intentional conduct, and the

underlying complaint only alleges intentional conduct by Lyons. Lyons argues the POL policy

does not deny coverage for intentional conduct until there has been an adjudication that the

insured acted intentionally; therefore, Liberty’s denial of coverage was premature. Alternatively,

Lyons argues the contract is ambiguous and for that reason must be construed in favor of

coverage. The relevant policy language—in an “insuring clause”—effectively reads as follows:

“This insurance applies to claims only if [t]he claim is caused by *** any actual or alleged

negligent act, failure to act, error or omission.”

¶ 48   We note at the outset it is well settled that this clause describes negligent acts, negligent

failures to act, negligent errors, or negligent omissions and not just negligent acts. See Illinois

State Bar Ass’n Mutual Insurance Co. v. Cavenagh, 2012 IL App (1st) 111819, ¶ 18. There, this

court noted that “Illinois appellate court cases interpreting the ‘very common’ phrase *** ‘have

assumed, without deciding, that “negligent” modifies act, error, and omission and thus excluded

coverage for intentional conduct.’ ” Cavenagh, 2012 IL App (1st) 111810, ¶ 18 (and cases cited

therein). Thus, the “duty to defend is only triggered by allegations that the insured has committed

an act of negligence, not an act classified as intentional.” Id. Furthermore, “it is presumed that

parties contract with knowledge of the existing law, and the laws in existence at the time a

contract is executed are considered part of the contract.” Chicago Hospital Risk Pooling

Program v. Illinois State Medical Inter-Insurance Exchange, 397 Ill. App. 3d 512, 531 (2010).

Lyons’ argument that the policy is ambiguous as to whether the term “negligent” modifies only

“act” or also “failure to act,” “error,” and “omission,” fails.

                                                     20
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¶ 49     Lyons argues that the insuring clause, which again provides coverage only for negligent

acts, conflicts with a separate exclusionary clause for “Malicious, Criminal, Dishonest or

Fraudulent Acts” (the intentional act exclusion). The exclusionary clause at issue effectively

reads:

                “This insurance does not apply to *** [c]laims arising out of malicious,

         criminal, dishonest or fraudulent ‘wrongful acts’, or any knowing violation of

         rights or laws. *** This exclusion does not apply to our duty to defend the insured

         until it has been determined in a ‘final adjudication’ or admitted that such

         ‘wrongful act’ or knowing violation was committed by the insured ***.”

Lyons argues the exclusion for intentional acts is effective only after a final adjudication or

admission that a wrongful act or violation was committed by the insured; therefore, Liberty must

defend the lawsuit.

¶ 50     Liberty argues an exclusion in an insurance policy cannot operate to expand coverage “or

otherwise change the meaning of the plain language of the insuring agreement.” Liberty argues

Lyons is attempting to use the exclusion to create coverage where none exists by arguing that the

intentional acts exclusion should modify the insuring clause. In support of its argument this is

improper, Liberty cites Stoneridge Development Co., Inc. v. Essex Insurance Co., 382 Ill. App.

3d 731 (2008), for the proposition that “an exception to an exclusion cannot create coverage

which does not already exist under the policy.” Further, Liberty, citing Continental Casualty Co.

v. Donald T. Bertucci, Ltd., 399 Ill. App. 3d 775 (2010), argues that where a claim does not fall

within the insuring clause, an exception cannot provide coverage. Separately, Liberty argues the

intentional act exclusion is merely redundant and does not create an ambiguity. Liberty argues

“redundancy within an insurance policy’s insuring agreement and its exclusions does not create

                                                  21
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an ambiguity because ‘parties and their attorney-drafters often want to make doubly sure’ about a

point.” See Executive Risk Indemnity, Inc. v. Chartered Benefit Services, Inc., 2005 WL

1838433, *9.

¶ 51   “[T]he court must construe the policy in its entirety giving effect to all parts of the policy

as is possible, including endorsements.” Central Illinois Public Service Co. v. Allianz

Underwriters Insurance Co., 240 Ill. App. 3d 598, 602 (1992). “[B]ecause words derive their

meaning from the context in which they are used, a contract must be construed as a whole,

viewing each part in light of the others.” Schuster v. Occidental Fire & Casualty Co. of North

America, 2015 IL App (1st) 140718, ¶ 17. “[A] policy that is susceptible to more than one

reasonable interpretation is ambiguous and subject to rules of interpretation, such as the rule that

ambiguities are construed against the drafter of the policy and in favor of coverage.” Id. See also

Erie Insurance Exchange, 2022 IL App (1st) 210628, ¶ 27; Skolnik v. Allied Property &

Casualty Insurance Co., 2015 IL App (1st) 142438, ¶ 25 (citing Charles H. Eichelkraut & Sons,

Inc. v. Bituminous Casualty Corp., 166 Ill. App. 3d 550, 557 (1988) for the proposition that “in

general the question of whether a claim against an insured is potentially covered is so close in so

many cases that the benefit of the doubt goes to the insured”). Any inconsistent or conflicting

provisions must be construed in favor of granting coverage to the insured. National Discount

Shoes, Inc. v. Royal Globe Insurance Co., 99 Ill. App. 3d 54, 60 (1981). See also Rhone v. First

American Title Insurance Co., 401 Ill. App. 3d 802, 818 (2010) (Lampkin, J., concurring in part

and dissenting in part) (“it has been consistently held that any ambiguity or inconsistent or

conflicting provisions in insurance contracts must be construed in favor of granting coverage to

the insured.” (citing National Discount Shoes, Inc., 99 Ill. App. 3d at 60)).

                                                 22
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¶ 52   Lyons argues the clause at issue in this case is analogous to the arson clause in Gulliver’s

East, Inc. v. California Union Insurance Co., 118 Ill. App. 3d 589, 590 (1983), therefore

Gulliver’s supports the proposition that the intentional acts clause is enforceable in this case. In

Gulliver’s East, Inc., 118 Ill. App. 3d at 590, this court applied a clause that barred arson as a

defense to an insurance policy until there was an indictment and conviction for arson. In

Gulliver’s, the court found that “rather than allow defendant to deny plaintiff's claim based solely

upon defendant's opinion that the fire was intentionally set by or on behalf of plaintiff, the parties

agreed to delegate the arson assessment to a disinterested party, the prosecuting authorities.”

Gulliver's East, Inc., 118 Ill. App. 3d at 591. The court held this clause was not “repugnant to

public policy.” Id. at 592.

¶ 53   Gulliver’s is inapposite to the issue before this court. Gulliver’s came to the court on a

certified question of whether the arson clause was valid and enforceable under Illinois law. Id. at

591. Gulliver’s did not address whether the arson clause could be read to expand coverage in the

insurance policy or to create an ambiguity in the policy, which are the questions before this

court. Gulliver’s is not helpful to our disposition. Similarly, Executive Risk Indemnity, Inc., is not

persuasive. We note it is not a decision of this court, so its persuasive weight is diminished.

Regardless, in Executive Risk Indemnity, Inc., the District Court did write that “[i]f coverage

cannot be found in the insuring agreement, it will not be found elsewhere in the policy.”

Executive Risk Indemnity, Inc., 2005 WL 1838433, *8. Liberty’s position in this case is that the

insuring clause does not provide coverage for intentional acts; therefore, coverage for intentional

acts cannot be found in the intentional acts exclusion. Liberty argues the intentional acts

exclusion is merely redundant to the insuring clause and its inherent exclusion of intentional acts.

In that regard, the District Court wrote that:

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               “The Seventh Circuit has specifically taught that the anti-redundancy

       canon often is not helpful when interpreting disputed contractual language

       because parties and their attorney-drafters often ‘want[ ] to make assurance

       doubly sure’ about a point, ‘a desire that explains much apparently superfluous

       language in contracts.’ ” Executive Risk Indemnity, Inc., 2005 WL 1838433, at *9.

¶ 54   In Executive Risk, the insured’s argument was expressly “that the exclusion language

must be read to expand the coverage.” Id. at *9. Alternatively, the insured’s argument in

Executive Risk, Inc. was that the exclusion “must be read so as to create an ambiguity that must

be construed in its favor because [the insurer’s] reading of the [exclusion] renders [the exclusion]

redundant.” Id.

¶ 55   We do not find Executive Risk, Inc. (or Gulliver’s) helpful in this case because we

disagree with Liberty’s premise that Lyons is attempting to find coverage under the intentional

acts exclusion or to use the intentional acts exclusion to expand the coverage stated in the

“insuring clause.” Nor do we agree that the intentional acts exclusion is merely redundant to the

insuring clause’s “exclusion” for intentional acts. We do not construe Lyons as arguing that the

intentional acts exclusion creates a coverage that is not already contained in the policy or to

modify the insuring clause. We construe Lyons as arguing that the intentional acts exclusion

renders the POL policy ambiguous. Therefore, Stoneridge Development Co., Inc. v. Essex

Insurance Co., 382 Ill. App. 3d 731 (2008) is also inapposite. There, the court held that “an

exception to an exclusion does not create coverage or provide an additional basis for coverage

[citations,] but, rather, “merely preserves coverage already granted in the insuring provision.”

Stoneridge Development Co., 382 Ill. App. 3d at 756.

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¶ 56   In support of its position Liberty also relies on Ludwig Candy Co. v. Iowa National

Mutual Insurance Co., 78 Ill. App. 3d 306, 311 (1979), where court held that “the issue of

coverage must necessarily be determined not by the various exclusions but by the policy

definition of the coverage.” The court agreed that “exclusions in an insurance policy have

relevance only when there is coverage.” Id.

¶ 57   Ludwig Candy Co. is distinguishable. In that case, the insured was attempting to construe

the policy language defining coverage by reference to the various exclusions. Id. The court

rejected that effort on the ground “the language of the policy defining coverage [was] clear and

unambiguous.” Id. The court felt itself “obliged to give this language its plain and ordinary

meaning so that there is no need for construction or interpretation.” Id. Unlike this case, nothing

in the opinion suggests the insured in Ludwig Candy Co. even argued the insurance policy was

ambiguous, much less that it was ambiguous.

¶ 58   For the same reason, we are not persuaded by Liberty’s reliance on Matthew T. Szura &

Co., Inc. v. General Insurance Co. of America, 543 Fed. Appx. 538, 544 (6th Cir. 2013). That

case applied the general rule that “[e]xclusions limit the scope of coverage; an exclusion cannot

expand the scope of coverage beyond that provided in the insuring agreement.” Id. This foreign

judgment is of little weight to this court generally; but specifically, we agree with Lyons that the

Szura & Co. court did not address an ambiguity argument and nothing in the opinion suggests

one was raised. Szura does not address or affect our analysis in this case and is, therefore,

inapposite.

¶ 59   Once again, we construe Lyons to argue that the policy in this case is not clear and

unambiguous and that resort to construction and interpretation is required. That being so, we find

that Lyons is not interpreting the intentional acts exclusion as providing coverage or providing an

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additional basis for coverage. Cf. Central Illinois Public Service Co., 240 Ill. App. 3d at 603 (“an

exception to an exclusion should not be interpreted as providing coverage or providing an

additional basis for coverage.”). In Central Illinois Public Service Co., the court found that the

effect of the proffered interpretation of an exclusion was to eliminate the language defining

coverage and replace it with an exclusion. Id. at 602. In this case, Lyons is not attempting to

replace the coverage in the POL policy, which only applies to negligent acts, with the intentional

acts exclusion; Lyons is only attempting to demonstrate the insurance contract as a whole is

ambiguous.

¶ 60   We also reject Liberty’s argument the exclusion cannot create an ambiguity because of

the inherent repetitiveness of insurance contracts. Liberty cites Aetna Casualty and Surety Co. v.

Freyer, 89 Ill. App. 3d 617 (1980), but that decision does not aid Liberty’s position. The issue in

that case was whether there was an “occurrence” within the meaning of the policy because it was

an “accident.” Aetna Casualty and Surety Co., 89 Ill. App. 3d at 619. The court noted that “[a]n

accident has been defined as an unforeseen occurrence *** or an undesigned sudden or

unexpected event.” Id. Under the policy at issue in Aetna Casualty an “occurrence” must be

accidental. Id. The court wrote that “insurance companies, in order to make this limitation of

coverage absolutely clear and inescapable, include an exclusion for ‘intentional injuries’ caused

by the insured. This intentional injury exclusion is necessary to the insurer to enable it to set rates

and supply coverage only if losses are uncertain from the standpoint of any single policyholder.”

Id. at 619-20.

¶ 61   We find Aetna inapposite as well. Aetna Casualty suggests insurance companies

sometimes include superfluous language to make their exclusions “absolutely clear and

inescapable.” Id. at 619-20. This finding in Aetna Casualty does not mean, however, that

                                                  26
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contradictory clauses in an insurance contract do not give rise to an ambiguity, just because they

address the same subject matter (in this case, intentional conduct). The Aetna Casualty decision

supports the view that ambiguity could exist in the case of conflicting language in an insurance

contract. The court recognized that “[t]he policy in this case did more than exclude intentional

injuries. It excluded coverage for liability for bodily injury or property damage ‘which is either

expected or intended from the standpoint of the insured.’ ” Freyer, 89 Ill. App. 3d at 620. But the

court found that “these two words, ‘intended’ and ‘expected,’ cannot be treated as synonymous

since if they were there would be no reason for the insurer to have modified the insurance clause

by adding the word ‘expected.’ ” Id. Thus, in Aetna Casualty, there was no contradiction in terms

from which to find ambiguity. See id.

¶ 62   In this case, the intentional acts exclusion is not merely superfluous to the insuring

clause’s “exclusion” nor does Lyons argue the intentional acts exclusion modifies, expands, or

replaces the insuring clause. The two provisions in the contract before this court cannot coexist.

Central Illinois Public Service Co. is illuminating. There, the question was whether an

endorsement to an excess liability policy was ambiguous such that it had to be construed in favor

of coverage. Central Illinois Public Service Co., 240 Ill. App. 3d at 600-01. In that case, the

alleged ambiguity was internal to a single endorsement to the policy and not in separate

provisions of the policy; but this distinction makes no difference in light of the rule this court is

to construe insurance contracts as a whole with the aim of giving meaning and effect to every

provision. See ABW Development, LLC v. Continental Casualty Co., 2022 IL App (1st) 210930,

¶ 26 (“Like any contract, an insurance policy is to be construed as a whole, giving effect to every

provision, if possible, because it must be assumed that every provision was intended to serve a

purpose.”). The contract language at issue in that case read as follows:

                                                  27
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               “It is understood and agreed that except insofar as coverage is available to

       the assured in the underlying insurances as set out in the schedule of underlying

       policies, this insurance shall not apply to any loss arising out of the contamination

       or pollution.

               Notwithstanding the foregoing, it is understood and agreed that this

       insurance does not apply to bodily injury, personal injury, or property damage

       arising out of the discharge dispersal, release or escape of:

                       (1) smoke, vapors, soots, fumes, acids, alkalis, toxic

               chemicals, liquids or gases, waste materials or other irritants,

               contaminants or pollutants into or upon the land, the atmosphere or

               any watercourse or body of water, but this exclusion does not

               apply if such discharge, dispersal, release or escape is sudden and

               accidental.

                       (2) Oil or other petroleum substance or derivative

               (including any oil refuse or oil mixed with wastes) into or upon

               any watercourse or body of water, whether or not such discharge,

               dispersal, release or escape is sudden and accidental, but the

               exclusion *** (2) shall apply with respect to operations described

               as follows ***.” Central Illinois Public Service Co., 240 Ill. App.

               3d at 601.

¶ 63   The insured argued the net effect of this language was (1) to create a condition for an

exception to an exclusion from coverage for pollution (in that case, coverage by underlying

insurance); then (2) to eliminate that exception to the exclusion and replace it with a different

                                                 28
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exception with a different precondition (that being that the pollution being covered was “sudden

and accidental” as opposed to long-term and unintentional). Id. at 602. The court, however,

construed the language to mean that the second condition was only available where the first

condition had been met. Id. (“Construing the language of paragraph two in light of paragraph

one, the exception to the pollution exclusion for the discharge, dispersal, release or escape of the

substances in sub paragraph (1) which is sudden and accidental is only applicable where there is

underlying insurance coverage.”).

¶ 64    This case is different. In this case, the “exclusion” in the insuring clause states the policy

does not provide coverage for intentional acts. (“This insurance applies *** only if [t]he claim is

caused by a ‘wrongful act’ ” which means “any *** negligent act, failure to act, error or

omission [—full stop].” (Emphases added.)). Then, using the same term as the unequivocal

exclusion (“wrongful act” in quotations), the intentional act exclusion states there is at least

conditional coverage for intentional acts unless and until a third party adjudicates the act as

intentional (“This exclusion (for intentional acts) does not apply *** until it has been determined

in a ‘final adjudication’ or admitted that such ‘wrongful act’ [it being unclear if this is the same

‘wrongful act’ in the insuring clause] *** was committed by the insured.”). The two provisions

read together say (1) there is no coverage—period; and (2) there is at least conditional coverage

for intentional acts.

¶ 65    Liberty argues the “clear purpose” of the intentional act exclusion is to prevent it from

“ever declining a defense based solely on” the intentional act exclusion. But if we accept

Liberty’s view the policy is not ambiguous and does not provide coverage for intentional acts,

then Liberty would never be in a position to have to decline coverage based solely on the

                                                  29
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intentional act exclusion—it could simply decline on the grounds there is no coverage. Liberty’s

argument about the purpose of the exclusion actually demonstrates the ambiguity it creates.

¶ 66    Similarly, Liberty’s argument that Lyons’ reading of the intentional acts exclusion would

render the relevant portion of the insuring clause superfluous is not persuasive because the

intentional act exclusion, if given effect, would not render the insuring clause superfluous, it

would effectively replace it—which we cannot allow. Supra, ¶¶ 64-65. Nor can we just ignore

the intentional acts exclusion. ABW Development, LLC v. Continental Casualty Co., 2022 IL

App (1st) 210930, ¶ 26. Again, this demonstrates, at minimum, the ambiguity in the policy.

¶ 67    “Our courts have repeatedly held that ‘[a]lthough “creative possibilities” may be

suggested,’ when considering the existence of an ambiguity in an insurance policy, ‘only

reasonable interpretations will be considered.’ [Citations.]” Erie Insurance Exchange, 2022 IL

App (1st) 210628, ¶ 50. It is reasonable to construe the intentional act exclusion to provide

conditional coverage for certain narrow categories of intentional acts—specifically those listed in

the intentional acts exclusion.2

¶ 68    We find that the policy is ambiguous as to its coverage. Therefore, we must construe the

policy to provide coverage to Lyons on the underlying complaint under the POL policy. National

Discount Shoes, Inc.; Rhone, 401 Ill. App. 3d at 818 (Lampkin, J., concurring in part and

dissenting in part) (citing National Discount Shoes, Inc., 99 Ill. App. 3d at 60) (“it has been

consistently held that any ambiguity or inconsistent or conflicting provisions in insurance

contracts must be construed in favor of granting coverage to the insured.”); Yates v. Farmers

Automobile Insurance Ass’n, 311 Ill. App. 3d 797, 800 (2000) (“Since the policy contains

inconsistent provisions, we must construe the policy in a manner that is most favorable to the

        2
           Those being: “malicious, criminal, dishonest or fraudulent [acts] or any knowing violation of
rights or laws.”
                                                    30
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insured.”). Furthermore, we find that the applicability of none of the exclusions in the POL

policy is clear and free from doubt. Although the underlying complaint alleges in conclusory

fashion that Lyons’ officials were motivated to enrich themselves or their constituents and makes

reference to a prior incident of an improper taking, there are insufficient facts alleged in the

complaint as to Lyons’ motivations as to the subject property to make the applicability of the

exclusions for personal profit, taking for public use, or any other exclusion, clear and free from

doubt. 3 Therefore, we construe the policy in favor of providing coverage to Lyons. See Sentry

Insurance v. Continental Casualty Co., 2017 IL App (1st) 161785, ¶ 38 (“ ‘[W]here an

exclusionary clause is relied upon to deny coverage, its applicability must be clear and free from

doubt because any doubts as to coverage will be resolved in favor of the insured.’ *** Wilson,

237 Ill. 2d at 456 (‘ “provisions that limit or exclude coverage will be interpreted liberally in

favor of the insured and against the insurer” ’ [citation].”).

¶ 69    Our holding is limited to Liberty’s duty to defend Lyons; we make no finding concerning

Liberty’s duty to indemnify Lyons. A determination concerning Liberty’s duty to indemnify

Lyons would be premature at this point because we have found a duty to defend, which is

broader than the duty to indemnify, and liability has not been finally resolved. Crum & Forster

Managers Corp. v. Resolution Trust Corp., 156 Ill. 2d 384, 398 (1993) (principle that

determination of duty to indemnify is premature until liability has been resolved “is only

operative in cases where the court has determined that the insurer’s duty to defend its insured has

arisen”). Liberty must defend Lyons against the entire lawsuit. Erie Insurance Exchange, 2022

IL App (1st) 210628, ¶ 28; American Alliance Insurance Co., 342 Ill. App. 3d at 510. Because of

our holding we decline to address whether Liberty also had a duty to defend under the CGL or

        3
         Regardless, Liberty admits that “These exclusions were not relied upon by Liberty as a basis to
deny a duty to defend the Village.”
                                                   31
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CUL policies. “[T]his court will not decide moot questions, render advisory opinions, or consider

issues where the result will not be affected regardless of how those issues are decided.” Chinlund

v. Heffernan Builders, LLC, 2020 IL App (1st) 191528, ¶ 17. See also Mendez v. City of

Chicago, 2023 IL App (1st) 211513, ¶ 11 (“An ‘actual controversy’ requires a showing that the

underlying facts and issues of the case are not *** premature, such that a court must pass

judgment on mere abstract propositions of law, render an advisory opinion, or give legal advice

on future events.”).

¶ 70                                 CONCLUSION

¶ 71   For the foregoing reasons, the judgment of the circuit court of Cook County is reversed

and the cause is remanded for further proceedings consistent with this order.

¶ 72   Reversed and remanded.

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