Intentional Act Exclusion Defeats Claim for Defense & Indemnity

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Customer Complaint Coverage Doesn’t Apply to Claim of Consumer Fraud

Posted on June 24, 2022 by Barry Zalma

Plaintiff, Owners Insurance Co. (insurer), appealed from the judgment of the circuit court of Du Page County ruling that an intentional-acts exclusion in an insurance policy did not exclude coverage for the expenses incurred by defendant, Don McCue Chevrolet, Inc. (insured) in defending an underlying consumer-fraud complaint brought by a former customer, Julio Salas. In Owners Insurance Company v. DonMcCue Chevrolet, Inc., 2022 IL App (2d) 210634-U, No. 2-21-0634, Court of Appeals of Illinois, Second District (June 17, 2022) the Court of Appeals resolved the dispute.

BACKGROUND

Salas’s one-count complaint against the insured in the underlying lawsuit alleged a violation of the Consumer Fraud and Deceptive Business Practices Act (Act) (815 ILCS 505/1 et seq.

The insured submitted a claim under the policy for expenses incurred in the defense of the underlying lawsuit. The insured based its claim on a policy provision entitled “Customer Complaint Defense Reimbursement Coverage” (defense-reimbursement provision). That provision stated in relevant part that the insurer would reimburse the insured for reasonable costs and expenses incurred in defending a “customer complaint suit.” Coverage was excluded for any suit resulting from “[a]ctual or alleged criminal, malicious or intentional acts” committed by the insured (intentional-acts exclusion).

ANALYSIS

The word “intent” for purposes of an exclusionary clause in an insurance policy denotes that the actor desires to cause the consequences of his action or believes that the consequences are substantially certain to result. The allegations of the underlying complaint fell within the policy exclusion.

CONCLUSION

Because the underlying suit alleged strictly intentional misconduct by the dealership, the policy’s exclusion for intentional acts applied.

ZALMA OPINION

The facts alleging an intentional breach of the consumer protection act, breaching the agreement between the customer and the dealership, were obviously intentional – they kept the down payment and refused to return it and the trade-in vehicle.

(c) 2022 Barry Zalma & ClaimSchool, Inc.

Barry Zalma, Esq., CFE is available at http://www.zalma.com and [email protected].

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