Court Opinion

ID: 9955275
Source: CourtListenerOpinion
Date Created: 2024-03-27 22:03:40.32242+00
Date Added: 2024-06-11T08:15:24.801359
License: Public Domain

2024 IL App (1st) 231210-U
                                                                           THIRD DIVISION
                                                                             March 27, 2024
                                        No. 1-23-1210

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 DISTRICT
______________________________________________________________________________
ADMIRAL INSURANCE CO.,                                    )    Appeal from the Circuit Court
                                                          )    of Cook County.
       Plaintiff-Appellee,                                )
                                                          )
v.                                                        )    No. 2011 CH 02244
                                                          )
TRACK GROUP, INC. f/k/a SECUREALERT, INC., and            )
JEFFREY MOHAMMED ABED,                                    )
                                                          )
       Defendants,                                        )
                                                          )
and                                                       )
                                                          )
CERTAIN UNDERWRITERS AT LLOYD’S, LONDON                   )
SUBSCRIBING TO POLICY NO. CJ10028219,                     )    Honorable
                                                          )    Caroline K. Moreland,
       Intervenor-Appellant.                              )    Judge Presiding.

       JUSTICE VAN TINE delivered the judgment of the court.
       Presiding Justice Reyes and Justice Lampkin concurred in the judgment.
1-23-1210

                                             ORDER

¶1     Held: We reverse the circuit court’s judgment that a professional liability carrier does not
       owe its insured coverage, where potential coverage is not excluded by the plain language
       of the insurance policy.

¶2     This appeal concerns an insurance coverage dispute between a general liability carrier and

a professional liability carrier. Certain Underwriters at Lloyd’s, London Subscribing to Policy No.

CJ10028219 (Underwriters) and Admiral Insurance Co. (Admiral) both insured Track Group, Inc.,

a company in the business of electronically monitoring individuals using ankle monitors. Track

Group was sued after a person wearing the ankle monitor sustained severe injuries while driving

his vehicle. Underwriters has paid the costs of Track Group’s defense of the suit thus far, but it

argues that Admiral should share in the costs, as it believes both insurance policies provide

coverage in this case. However, the circuit court held that Admiral does not owe coverage under

the terms of its insurance policy with Track Group. Underwriters appeals that decision. For the

following reasons, we reverse.

¶3                                      BACKGROUND

¶4     Track Group is in the business of monitoring individuals wearing ankle monitors. It

utilizes, primarily, an ankle monitor, computer software, the global positioning system (GPS), and

smartphone applications to do so. Underwriters issued Track Group a general liability insurance

policy, while Admiral issued a professional liability insurance policy. Track Group sought

coverage under both policies in connection with a personal injury lawsuit filed against it in Los

Angeles, California. The plaintiff in that suit, Jeffrey Mohamed Abed, alleged that his leg was torn

from his body after his foot, on which he was wearing the ankle monitor, became lodged between

the gas and brake pedals in the vehicle he was driving. In his complaint, Abed alleged that Track

Group is “engaged in the business of designing, manufacturing, assembling, merchandising,

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marketing, selling, and or distributing” the ankle monitor at issue here. Both policies covered the

time period relevant to Abed’s lawsuit. Underwriters agreed to defend Track Group, whereas

Admiral denied coverage and filed a declaratory action, contending that it does not owe coverage

under these circumstances.

¶5     In the declaratory action, Admiral and Underwriters eventually filed cross motions for

summary judgment. Admiral argued that its policy did not provide coverage because the ankle

monitor is neither computer hardware nor an electronic component, which is a requirement for

coverage under its professional services liability coverage. Underwriters countered, contending

that the ankle monitor constitutes computer hardware, as the unit can retrieve, process, and store

data, and therefore falls under the terms of the policy.

¶6     The circuit court granted Admiral’s motion for summary judgment and denied

Underwriters’ motion for summary judgment. First, the court held that Admiral did not owe Track

Group a duty to defend. The court reasoned that Admiral’s policy “provides coverage for negligent

acts or errors in monitoring the location of the people wearing the ankle monitors and not for injury

arising from any alleged negligent design.” In other words, because Abed’s injury did not arise

from Track Group’s monitoring of him, the policy did not provide coverage. The court also found

that the policy provides coverage only for the smaller internal components of the ankle monitor

and not the entire device itself. Because Abed did not allege that the design of the internal

components of the monitor resulted in his injury, the court held that Admiral’s coverage is not

triggered. Second, the court held that Underwriters is not entitled to equitable contribution from

Admiral because such contribution is allowed only where the particular risk (here, Abed’s injury)

in the case is covered by both policies, and the court already held that the risk here is not covered

by the terms of Admiral’s policy.

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¶7     Underwriters appeals.

¶8                                          ANALYSIS

¶9     On appeal, Underwriters argues that the circuit court erred in granting summary judgment

in favor of Admiral, contending that the court’s interpretation of the Admiral policy was overly

narrow. Underwriters argues that Admiral’s policy covers the injury at issue here, and,

alternatively, that equitable principles require Admiral to share in the costs of defending the injury

lawsuit.

¶ 10   We review a circuit court’s decision to grant a motion for summary judgment de novo.

Country Mutual Insurance Co. v. Under Construction and Remodeling, Inc. 2021 IL App (1st)

210600, ¶ 23. De novo consideration means we perform the same analysis that a circuit court judge

would perform. Country Mutual Insurance Co., 2021 IL App (1st) 210600, ¶ 23. “ ‘The

construction of an insurance policy and a determination of the rights and obligations thereunder

are questions of law for the court which are appropriate subjects for disposition by way of summary

judgment.’ ” Steadfast Insurance Co. v. Caremark Rx, Inc., 359 Ill. App. 3d 749, 755 (2005)

(quoting Crum & Forster Managers Corp. v. Resolution Trust Corp., 156 Ill. 2d 384, 391 (1993)).

¶ 11   “ ‘An insurance policy is a contract between the company and the policyholder, the benefits

of which are determined by the terms of the contract unless the terms are contrary to public policy.’

” Hanover Insurance Co. v. MRC Polymers, Inc., 2020 IL App (1st) 192337 (quoting State Farm

Mutual Automobile Insurance Co. v. Villicana, 181 Ill. 2d 436, 453 (1998)). In construing the

language of an insurance policy, a court must ascertain and give effect to the intention of the parties

as expressed in their agreement. Villicana, 181 Ill. 2d at 441. “To that end, terms utilized in the

policy are accorded their plain and ordinary meaning. [Citation.] We will apply those terms as

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written unless such application contravenes public policy. [Citation.]” Villicana, 181 Ill. 2d at 441-

42.

¶ 12   Moreover, where “policy language is susceptible to more than one reasonable

interpretation, it is considered ambiguous and will be construed strictly against the insurer.” Acuity

v. M/I Homes of Chicago, LLC, 2023 IL 129087, ¶ 31 (citing Travelers Insurance Co. v. Eljer

Manufacturing, Inc., 197 Ill. 2d 278, 293 (2001)). If competing reasonable interpretations of a

policy exist, “a court may not choose which interpretation it will follow.” Id. (citing Outboard

Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill. 2d 90, 108-109 (1992)). “Rather, under

those circumstances, the court must construe the policy in favor of the insured and against the

insurer that drafted the policy.” Id. (citing Employers Insurance of Wausau v. Ehlco Liquidating

Trust, 186 Ill. 2d 127, 141 (1999)). We construe the policy as a whole, “giving effect to each

provision where possible because we must assume that the provision was intended to serve a

purpose.” Id. (citing Valley Forge Insurance Co. v. Swiderski Electronics, Inc., 223 Ill. 2d 352,

362 (2006)). Finally, “[i]f the facts alleged in the underlying complaint fall within, or potentially

within, the policy’s coverage provisions, then the insurer has a duty to defend the insured in the

underlying action.” Crum and Forster Managers Corp. v. Resolution Trust Corp., 156 Ill. 2d 384,

393 (1993) (citing Outboard Marine Corp., 154 Ill. 2d at 108).

¶ 13   With these principles in mind, we analyze the relevant portions of Admiral’s policy to

determine whether the facts of Abed’s case against Track Group “potentially fall” within the terms

of the policy. The starting point in our analysis is “Coverage A (Technology Errors and Omissions

and Professional Liability)” of Admiral’s policy, which provides:

       “We will pay on behalf of the Insured those amounts, in excess of the Third Party

       Wrongful Act Deductible and subject to the Third Party Limits of Liability as

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       stated on the Declarations, which the Insured is legally obligated to pay as

       Damages and Claim Expenses because of a Claim, and which directly results from

       the following Wrongful Acts committed by the Insured:

       A. Professional Services Wrongful Acts; or

       B. Technology Products Wrongful Acts; ***.” (Emphasis in insurance policy.)

According to the plain language of this section, Admiral is potentially liable for wrongful acts

arising out of the provision of “professional services” and “technology products.”

¶ 14   The policy includes a general exclusion for bodily injury and property damage. However,

that exclusion does not apply to bodily injury arising out of the provision of “professional

services.” In other words, Admiral’s policy could potentially cover bodily injury arising out of the

provision of “professional services.” Thus, we look to relevant policy definitions to determine

what “professional services” covers.

¶ 15   “Professional services” is a defined term in “Item I” of Admiral’s policy’s declarations. It

is defined as “Technology Services Including Probation/Alternative Incarceration Monitoring

Services for others for a fee.” “Technology Services” in turn “means any of the following services

performed by or on behalf of the Named Insured for others for compensation:

       1. Computer hardware or electronic component design, integration,

       maintenance, repair or support;

       2. Computer firmware or software design, development, integration

       and support;

       3. Computer systems design, integration and analysis;

       4. Information technology:

               a. Consulting,

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              b. Staff augmentation; or

              c. Outsourcing;

       5. Internet service provider (ISP);

       6. Network:

              a. Hosting;

              b. Management;

              c. Security; or

              d. Security outsourcing;

       7. Records management or storage;

       8. Search engine optimization and related services;

       9. Value added resale of computer hardware or software;

       10. Web portal services;

       11. Web site design or hosting;

       12. Application Service Provider, Software as a Service or

       13. Training involving any of the above.”

¶ 16   The question before us is whether one or more of the above potentially covers Abed’s

bodily injury. We find “1. Computer hardware or electronic component design, integration,

maintenance, repair or support” possibly relevant to the ankle monitor at issue here. At the

summary judgment stage in the declaratory action, Admiral and Underwriters disagreed on the

issue of whether the ankle monitor constitutes computer hardware or electronic component design.

This question is critical because if the ankle monitor does constitute computer hardware or

electronic component design, then Admiral potentially owes coverage under its policy. “Computer

hardware” and “electronic component”, however, are not defined terms in the policy. Where an

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insurance policy does not define important terms, we afford them their plain, ordinary, and popular

meanings by looking to their dictionary definitions. Valley Forge, 223 Ill. 2d at 367 (citing

Outboard Marine, 154 Ill. 2d at 115-17)).

¶ 17      A computer is a “programmable usually electronic device that can store, retrieve, and

process        data.”     Merriam-Webster        Online      Dictionary,      https://www.merriam-

webster.com/dictionary/computer (last visited Feb. 29, 2024). It is undisputed that the ankle

monitor is an electronic device that consists of four components: 1) cellular module, 2) GPS

module, 3) internal CPU (central processing unit), and 4) radio frequency module. The ankle

monitor’s ability to store and retrieve data is not in dispute. The monitor is capable of storing

tracking data for up to 18 days, and it retrieves the stored data and forwards it to the monitoring

center. The central dispute concerns the ankle monitor’s ability to process data.

¶ 18      As mentioned above, one of the four components of the ankle monitor is an internal central

processing unit. A central processing unit is “the component of a computer system that performs

the system's basic operations (such as processing data), that exchanges data with the system's

memory or peripherals, and that manages the system's other components.” Merriam-Webster

Online Dictionary, https://www.merriam-webster.com/dictionary/central%20processing%20unit

(last visited Feb. 29, 2024). Thus, the central processing unit, which is indisputably a component

of the ankle monitor, has the capability to process data. In addition to the dictionary definition, we

note that Underwriters has explained how the ankle monitor processes data. The ankle monitor can

make and receive calls, generate alarms, receive radio frequency transmissions, and communicate

movements to Track Group.

¶ 19      The ankle monitor is an electronic device that can store, retrieve, and process data. Based

on the foregoing analysis, we find that, at the very least, the ankle monitor is potentially a

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computer. Moreover, the ankle monitor likely constitutes “hardware” under the dictionary

definition of that word: “the physical components (such as electronic and electrical devices) of a

vehicle (such as a spacecraft) or an apparatus (such as a computer).” Merriam-Webster Online

Dictionary, https://www.merriam-webster.com/dictionary/hardware (last visited Mar. 4, 2024).

Because the ankle monitor is potentially computer hardware, we hold that it is potentially covered

by Admiral’s policy. Again, potential coverage is all that is required to trigger an insurer’s duty to

defend its insured. Outboard Marine Corp., 154 Ill. 2d at 108.

¶ 20   Because we hold that the facts of Abed’s lawsuit against Track Group potentially fall

within the terms of the policy, we need not reach the question of whether the principles of equitable

contribution apply to require Admiral to share in the costs of defending the underlying injury

lawsuit. See Horwitz v. Sonnenschein Nath & Rosenthal, 2018 IL App (1st) 161909, ¶ 44 (citing

Scott & Fetzer Co. v. Montgomery Ward & Co., Inc., 129 Ill. App. 3d 1011, 1022 (1984))

(“Equitable principles do not intervene to give a plaintiff the best possible outcome or merely to

add another weapon to a plaintiff's arsenal. They enter the picture if and only if the legal remedy

cannot make a plaintiff whole.”).

¶ 21                                      CONCLUSION

¶ 22   For these reasons, we reverse the circuit court’s judgment.

¶ 23   Reversed.

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