Insurer Can’t Hand Over Limits And Bid Adieu-T To Defend
In United States Fire Insurance Company v. Mother Earth School, No. 18-1762 (D. Ore. Oct. 31, 2019), the court concluded that the insurer’s duty to defend was not extinguished after it deposited into the court’s registry $100,000 – the amount the insurer believed it owed in coverage for an underlying suit.  Putting aside that the court was not convinced that the insurer’s maximum liability was capped at $100K – that remained to be seen -- the court was not persuaded that the insurer could drop off its limits and wash its hands of its duty to defend: 

“[T]he policy provides, in relevant part, that the ‘right and duty to defend ends when [Plaintiff] ha[s] used up the applicable limit of insurance in the payment of judgments or settlements[.]’  Plaintiff does not argue that ‘judgment’ or ‘settlement are ambiguous terms, subject to more than one plausible interpretation. Instead, Plaintiff argues that payment of a sum into the court’s registry ‘is tantamount to settlement,’ therefore extinguishing Plaintiff's duty to defend.  Plaintiff provides no relevant authority to support this argument.

The policy does not define ‘judgment’ or ‘settlement.’ When a policy does not define a particular term, a court may look to dictionary definitions to ascertain the term’s plain meaning.  Black’s Law Dictionary defines ‘judgment’ as ‘[a] court’s final determination of the rights and obligations of the parties in a case.’  The term ‘settlement’ is defined as ‘[a]n agreement ending a dispute or lawsuit.’  Under these definitions, Plaintiff's payment of $100,000 into the court’s registry is not a payment of judgment or settlement. . . . Thus, Plaintiff's duty to defend Defendant Mother Earth School remains active at this time.”

What Is A Consumer Protection Law For Purposes Of An Exclusion
In Evergreen Real Estate Services, LLC v. Hanover Ins. Co., No. 1-18-1867 (Ill. Ct. App. Nov. 4, 2019), the court rejected the insurer’s argument that no coverage was owed to a real estate manager, under a professional liability policy, for claims that the insured violated the Chicago Residential Landlord Tenant Ordinance (RLTO).  The insurer argued that coverage was precluded on account of an exclusion for claims arising from “unfair or deceptive business practices” including “violations of any local, state or federal consumer protection laws.”

The court concluded that the exclusion did not apply on the basis that the RLTO is not a consumer protection law: “Consumer protection laws are designed to protect the public—the purchasers of goods and services—against oppressive practices by merchants.  The RLTO, on the other hand, has the purpose of balancing the rights and obligations for both tenants and landlords. For example, the principal consumer protection law in Illinois, the Illinois Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1 et seq. (West 2016)) was enacted as a regulatory and remedial statute for the purpose of protecting consumers and other purchasers of goods and services against fraud, unfair methods of competition, and unfair or deceptive acts or practices in the conduct of any form of trade or commerce.  The RLTO meanwhile is a two-way street enacted to ‘establish the rights and obligations of the landlord and the tenant’ and to ‘encourage the landlord and the tenant to maintain and improve the quality of housing.’ Both landlords and tenants derive direct benefit from the RLTO, while only purchasers of goods and services derive direct benefit from consumer protection laws.”