No Temporal Limitation in “As Reported” Exclusion

The Seventh Circuit, in an opinion written by Circuit Judge Barrett, applying Indiana law, reversed the district court and entered summary judgment in favor of the insurer.  The Seventh Circuit found the “as reported” language in the policy at issue precluded coverage for the underlying lawsuit, because an exclusion covered all notices of claims reported to the insured’s other insurer at any time.

In 2012, Emmis Communications Corporation (“Emmis”) attempted to obtain enough shares to go private.  Three shareholders filed an action to stop Emmis’ effort.  Both Chubb Insurance Company (“Chubb”) and Illinois National Insurance Company (“Illinois National”) insured Emmis.   The Chubb policy was a D & O liability policy for the period of October 1, 2009 to October 1, 2010.  The Illinois National policy covered liability from October 1, 2011 to October 1, 2012.  The Illinois National policy included an exclusion for any losses in connection with “Event(s),” which included “[a]ll notices of claim of circumstances as reported under policy … issued to Emmis Corporation by Chubb….”

Emmis reported the shareholder suit to Chubb.  Emmis also sought coverage for the shareholder suit under the Illinois National policy.  Illinois National denied coverage relying on the policy’s exclusion.  Emmis sued Illinois National seeking damages for breach of contract and breach of the duty of good faith and fair dealing.  The parties filed cross motions for summary judgment.

The parties disputed the meaning of “as reported” as used in the Illinois National exclusion.  Illinois National argued that the provision excluded all notices that were reported to Chubb at any time – which included the shareholder dispute.  Emmis argued that the exclusion only excluded those notices that had been reported at the time the Illinois National policy went into effect and not notice provided thereafter.  The district court entered summary judgment for Emmis on its claim for breach of contract.  The district court reasoned that the past tense of “as reported” must “refer[] to events that had already occurred at the time of the drafting.”  The district court also relied on the fact that, because there were multiple reasonable interpretations of the language, under Indiana law, the language should be construed in favor of coverage. 

On appeal, the Seventh Circuit noted that while the parties “briefed many legal issues arising from the Byzantine exclusion language,” only the meaning of “as reported” needed to be resolved.  The Seventh Circuit disagreed with the district court.  According to the Seventh Circuit, Illinois National’s proposed interpretation was correct because the phrase, as used in the policy, had no discernable temporal limitations.  “Once Emmis or one of its agents reports a claim to Chubb, at any time, then the claim is ‘reported’ – and so is excluded.”  Because Emmis did in fact report the claim to Chubb, the exclusion in the Illinois National policy applied.  Thus, the Seventh Circuit held summary judgment should have been entered in favor of Illinois National. Emmis Communications Corp. v. Illinois Nat’l Ins. Co., No. 18-3392 (7^th Cir.  July 2, 2019).