Business Insurance Coverage

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7^th Circuit Court of Appeals

Case Name: Citizens Insurance Company of America v. Wynndalco Enterprises, LLC

Case No.: 22-2313

Officials: Rovner, Kirsch, and Jackson-Akiwumi, Circuit Judges.

Focus:  Business Insurance Coverage

This business insurance coverage dispute calls on us to decide whether a broad catch-all provision in a violation-of-statutes exclusion relieves the insurer of the duty to defend its insured in litigation over violations of Illinois’ Biometric Information Privacy Act (“BIPA”), 740 ILCS 141 et seq.

After Wynndalco Enterprises, LLC was sued in two putative class actions for violating BIPA, its business liability insurer, Citizens Insurance Company of America, filed this action seeking a declaration that it has no obligation under the terms of the insurance contract to indemnify Wynndalco for the BIPA violations or to supply Wynndalco with a defense. Citizens’ theory is that alleged violations of BIPA are expressly excluded from the coverage of the policy. Wynndalco counterclaimed seeking a declaration to the contrary that Citizens is obligated to provide it with a defense in both actions.

The district court entered judgment on the pleadings for Wynndalco, finding that the language of the catch-all exclusion is ambiguous on its face and that, construing that ambiguity in favor of the insured, Citizens consequently had a duty to defend Wynndalco.

The Seventh Circuit agrees that the facial breadth of the catch-all provision gives rise to an ambiguity in the policy, in that the catch-all provision appears to nullify coverage that the policy elsewhere purports to provide. Citizens Ins. Co. of Am. v. Wynndalco Enters., LLC, 595 F.Supp.3d 668 (N.D. Ill. 2022). The narrowing construction that Citizens proposes to resolve that ambiguity is not supported by the language of the provision and does not, in fact, resolve the ambiguity.

Affirmed.

Decided 06/15/23

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