Insurance Claim – Coverage

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7^th Circuit Court of Appeals

Case Name: Market Street Bancshares, Inc., v. Federal Insurance Co.,

Case No.: 18-3395

Officials: KANNE, SYKES, and BARRETT, Circuit Judges.

Focus: Insurance Claim – Coverage

This is an insurance-coverage dispute between a bank and its insurer. In 2014, the two entered an agreement: in exchange for an insurance premium, the insurer, Federal Insurance Company, would defend and indemnify the bank, Peoples National Bank, against “claims” made by third parties during the policy period, which ran from April 15, 2014, to April 15, 2017. When they entered this agreement, the bank had been embroiled in an ongoing lawsuit for about a decade. During the damages phase of that lawsuit, in 2016, the plaintiffs in the case argued that the bank owed certain damages, and the bank called upon Federal Insurance to defend against the argument and to cover the bank’s corresponding losses. Federal Insurance refused, explaining in part that the damages argument was not a “claim” under the policy.

The bank then sued Federal Insurance in Illinois state court, seeking to recover losses (including defense costs) from the underlying damages argument. Federal Insurance removed the action to federal court and filed a counterclaim for declaratory relief. Both parties moved for summary judgment on the counterclaim, and the district court granted judgment in the insurer’s favor.

We affirm because the damages argument in the underlying lawsuit is not a “claim” under the parties’ insurance policy.

Affirmed

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Derek A Hawkins is trademark corporate counsel for Harley-Davidson. Hawkins oversees the prosecution and maintenance of the Harley-Davidson’s international trademark portfolio in emerging markets.