IL N.D. / Class Action

No “Property Damage” or “Bodily Injury” Alleged 

The District Court for the Northern District of Illinois, in an opinion by Judge Ronald A. Guzman, applying Illinois law, held that an insurer was not obligated to defend or indemnify its insured for a lawsuit related to adding hidden charges to vending machine transactions.  The underlying lawsuit did not contain allegations that potentially triggered the insurer’s duty to defend or indemnify, or, alternatively, contained allegations that fell squarely within an exclusion from the policies.  

AMCO Insurance Company (“AMCO”) filed an action seeking a declaratory judgment that it had no duty to defend or indemnify Avoca, Inc. (“Avoca”) in connection with a putative class-action lawsuit under the commercial general liability policies it issued to Avoca.  The underlying lawsuit alleged breach of contract, unjust enrichment, and violation of the Illinois Consumer Fraud and Deceptive Practices Act. The complaint alleged that Avoca owns and/or operates vending machines, some of which allows customers to make purchases with credit or debit cards, and that Avoca wrongfully adds a hidden additional charge of ten cents per item to purchases made with cards.  AMCO moved for summary judgment.  

The policies at issue cover “bodily injury,” “property damage,” and “personal and advertising injury.”  The underlying lawsuit alleged only financial loss and is based entirely upon Avoca’s alleged practice of charging customers hidden fees when they pay with a credit or debit card.  The underlying lawsuit contained no allegations of bodily injury, sickness or disease; physical injury to or loss of use of tangible property; or any of the categories of injuries that constitute “personal and advertising injury.”  The only “advertising injur[ies]” covered by the policies are the offenses of using another’s advertising idea or infringing upon intellectual property. Moreover, the policies include a “Wrongful Description of Prices” exclusion, which would exclude coverage for “personal and advertising injury” arising out of the wrong description of the price of goods stated in an advertisement.  Thus, even if the allegations in the underlying complaint could be characterized as “personal and advertising injury,” coverage from the underlying lawsuit would be excluded. AMCO Ins. Co. v. Avoca, Inc., No. 19 C 480 (N.D. Il. Sept. 4, 2019).