Admiral Insurance Co. v. Certain Underwriters at Lloyd's, London Subscribing to Policy No. CJ10028219 , 2024 IL App (1st) 231210-U ( 2024 )

2024 IL App (1st) 231210-UTHIRD 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.
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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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