IL 1st Dist: “Professional Services” Coverage Interpreted Broadly:

Allegation that appraisals for parent company would be given to 3rd party constitutes covered professional services.

The Illinois First District Court of Appeals held that Liberty Surplus Insurance Corp. and an Ace Ltd. insurer had a duty under professional liability policies to defend two Hilco Trading LLC subsidiaries against claims that they “grossly inflated” loan collateral appraisals that underlying plaintiffs relied on when providing loans worth millions of dollars to Hilco Financial LLC.  The Hilco subsidiaries argued that the underlying suits involved professional services provided to a “third party,” as required by the policies.  The insurers argued there was no coverage under those policies because the Hilco subsidiaries only provided professional services to Hilco Financial, which the insurers argued was not a third party.  The appeals court acknowledged that the Hilco subsidiaries completed the appraisals for Hilco Financial, but stressed that the Hilco subsidiaries knew before preparing the appraisals that Hilco Financial would eventually pass on their appraisals to the underlying plaintiffs.  “We agree with Hilco Appraisal and Valuation’s argument that it is immaterial that the appraisal services were performed for Hilco Financial, as long as the complaints alleged that plaintiffs also received the appraisals in addition to Hilco Financial,” the appeals court said.  The case is Hilco Trading LLC et al. v. Liberty Surplus Insurance Corp. et al., No. 1-12-3503 (Ill. App. Ct. March 17, 2014).

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