Emmis Communications Corp. v. Illinois National Insurance Co, No. 18-3392 (7th Cir. 2019)

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Emmis bought a directors-and-officers liability policy covering October 1, 2009 to October 1, 2010, from Chubb Insurance. Emmis later bought, from Illinois National, a policy covering liability from October 1, 2011, to October 1, 2012, with an exclusion for any losses in connection with “Event(s),” which included “[a]ll notices of claim of circumstances as reported” under the Chubb policy. In 2012, Emmis tried to gain control of enough of its shares to go private. Shareholders filed suit to stop Emmis’s effort. Emmis reported the suit to Chubb and also sought coverage under the Illinois National policy. Illinois National refused coverage. Emmis sued, seeking damages for breach of contract and breach of the duty of good faith and fair dealing. The district court granted Emmis summary judgment for breach of contract, rejecting Illinois National’s interpretation of the “as reported” language. The Seventh Circuit reversed. Illinois National’s proposed interpretation is correct. The phrase “as reported” has no discernable temporal limitations. Once Emmis reported a claim to Chubb, at any time, then that claim was “reported” and excluded.

The court issued a subsequent related opinion or order on August 21, 2019.

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In the United States Court of Appeals For the Seventh Circuit ____________________ No. 18 3392 EMMIS COMMUNICATIONS CORPORATION, Plaintiff Appellee, v. ILLINOIS NATIONAL INSURANCE COMPANY, Defendant Appellant. ____________________ Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. 1:16 cv 89 — William T. Lawrence, Judge. ____________________ ARGUED MAY 30, 2019 — DECIDED JULY 2, 2019 ____________________ Before FLAUM, MANION, and BARRETT, Circuit Judges. BARRETT, Circuit Judge. Emmis Communications Corpora tion bought two insurance policies, each from a different pro vider. From Chubb Insurance Company, it purchased a direc tors and officers liability policy for the period of October 1, 2009, to October 1, 2010. Emmis later bought a second insur ance policy, this time from Illinois National Insurance Com pany. This policy covered liability from October 1, 2011, to 2 No. 18 3392 October 1, 2012. It had an exclusion for any losses in connec tion with “Event(s),” which included “[a]ll notices of claim of circumstances as reported under policy 8181 0068 issued to Emmis Corporation by Chubb Insurance Companies.” In 2012, Emmis tried to gain control of enough of its shares to go private. Three shareholders filed an action to stop Em mis’s effort. Emmis, through its broker, reported this suit to Chubb. It also sought coverage under the Illinois National policy. Illinois National refused coverage, so Emmis sued, seeking damages for breach of contract and breach of the duty of good faith and fair dealing. Both parties sought summary judgment—Emmis arguing that coverage was appropriate, and Illinois National arguing that the policy’s complex exclusion provisions prevented cov erage. Among the disputes was the meaning of “as reported.” Illinois National argued that this provision excluded all no tices that were reported to Chubb at any time—which of course would include the notice in dispute. Emmis, on the other hand, claimed that it excluded only those notices that had been reported at the time that the policy went into effect— two years before this notice was reported. The district court entered summary judgment for Emmis on its claim for breach of contract. It rejected each of Illinois National’s theories under the language of the exclusion, in cluding its interpretation of the “as reported” language. It concluded that, while both interpretations were reasonable, Emmis’s was better. The court thought that the past tense of “as reported” must “refer[] to events that had already oc curred at the time of drafting.” It bolstered its holding by in voking the rule favoring coverage when multiple reasonable No. 18 3392 3 readings of an insurance policy might apply. See Bradshaw v. Chandler, 916 N.E.2d 163, 166 (Ind. 2009). On appeal, the parties briefed many legal issues arising from the Byzantine exclusion language. But we can resolve this case on a single issue: the meaning of “as reported.” We disagree with the district court’s opinion; Illinois National’s proposed interpretation is correct. The phrase has no discern able temporal limitations. Once Emmis or one of its agents re ports a claim to Chubb, at any time, then that claim is “re ported”—and so is excluded. The timing of the report is irrel evant. Emmis acknowledged in its brief that it did in fact re port its claim to Chubb. That resolves our inquiry. The exclusion applies, so summary judgment should have been entered in favor of Illinois National. The judgment of the district court is REVERSED and REMANDED for proceed ings consistent with this opinion.

Primary Holding

Seventh Circuit interprets the term "as reported" in an exclusion contained in a liability policy.

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