Caveo, LLC v. Citizens Ins. Co. of Am., Inc.

CAVEO, LLC, Plaintiff, v. CITIZENS INSURANCE COMPANY OF AMERICA, INC.and HANOVER INSURANCE COMPANY, Defendants.

Case No. 15-cv-6200

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

June 21, 2017

Judge Robert M. Dow, Jr.

MEMORANDUM OPINION AND ORDER

In this insurance coverage dispute, Plaintiff Caveo LLC seeks to impose a duty to defend on Defendants Citizens Insurance Company of America and Hanover Insurance Company with respect to a lawsuit filed against Plaintiff in state court. On September 29, 2016, the Court granted Plaintiff's motion for summary judgment [21] and denied Defendants' motion for summary judgment [23] solely with respect to the threshold issue of whether Defendants are estopped from asserting policy defenses. Currently before the Court is Defendants' motion for reconsideration of the Court's September 29, 2016 opinion [59]. For the reasons set forth below, the Court denies Defendants' motion for reconsideration [59]. This case is set for further status hearing on July 6, 2017 at 9:45 a.m.

I. Background

The Court takes the undisputed facts from the applicable policy provisions and the relevant admissions by the parties. In this insurance coverage dispute, Plaintiff seeks to impose a duty to defend on Defendants with respect to a state court lawsuit filed against Plaintiff by Abreon that has since settled. Plaintiff, a consulting company and competitor of Abreon, was sued for a range of torts and civil statutory violations stemming from the alleged theft of copyrighted material and other confidential information by a former Abreon employee who later worked for Plaintiff. Defendants declined coverage, concluding that their policies either did not provide or expressly excluded coverage for the events at issue in the underlying Abreon lawsuit.

In 2013, Plaintiff renewed its Avenues Business Owners Policy ("the Policy") with Defendants. The Policy was effective from June 20, 2013 through June 20, 2014. Section II.A.1.a of the Policy provides that Defendants "will pay those sums that the insured becomes legally obligated to pay as damages because of * * * 'personal and advertising injury,' to which this insurance applies," and that Defendants "will have the right and duty to defend the insured against any 'suit' seeking those damages." [1, at ¶ 17.] The Policy defines "personal and advertising injury" as "injury, including consequential 'bodily injury,' arising out of one or more of the following offenses: * * * (g) Infringing upon another's copyright, trade dress, or slogan in your 'advertisement.'" [Id., at ¶ 18.] In Section II.F.1, the Policy defines "advertisement" as "a notice that is broadcast or published to the general public or specific market segment about your goods, products or services for the purpose of attracting customers or supporters," providing that "[n]otices that are published include material placed on the internet or a similar electronic means of communication." [1, at ¶ 19.]

The Policy also contains a professional services exclusion, which states in relevant part that the Policy does not apply to "'personal and advertising injury' arising out of the rendering of or failure to render any professional service * * * regardless of whether or not such service, advice or instruction is ordinary to any insured's profession. This includes but is not limited to * * * Management, Human Resources, Technology, Testing, Media or Public Relations consulting services[.]" [1-3, at 82.]

Abreon filed the underlying lawsuit against Plaintiff on May 22, 2014. In its complaint, Abreon alleged that Plaintiff and Abreon are direct competitors in the consulting industry, including in training for enterprise resource planning software that an organization can use to collect, store, manage and interpret data. [1-1, at ¶¶ 2, 9-13.] Abreon alleged that Plaintiff had "engaged in a scheme and conspired with the Former Abreon Employees to have them work for [Plaintiff] and use Abreon's confidential, proprietary, trade secret and copyrighted material to compete with Abreon, interfere with its customer relationships and grow [Plaintiff's] competing business by capturing Abreon's business." [Id.]

Following the May 22, 2014 filing beginning the underlying litigation, Plaintiff tendered the litigation to Defendants on June 10, 2014. In a June 27, 2014 letter, Defendants denied coverage for Plaintiff in connection with the Abreon Litigation. Defendants did not provide a defense to Plaintiff under a reservation of rights or seek declaratory judgment that there was no coverage. [15, at ¶ 1.] On July 15, 2015, Plaintiff filed this suit, seeking a declaratory judgment (Count I), and alleging breach of contract (Count II) and a violation of 215 ILCS 5/155 (Count III). [1.] Both parties moved for summary judgment, [21, 23], and this Court granted summary judgment for Plaintiff, solely with respect to the threshold issue of whether Defendants are estopped from asserting policy defenses. [56.] Defendants now move for reconsideration. [59.]

II. Legal Standard

There has not yet been a final judgment in this case, thus Rule 54(b) governs Defendants' motion for reconsideration. Under Rule 54(b), "any order or other decision [ ] that adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties does not end the action as to any of the claims or parties and may be revised at any time before the entry of ajudgment adjudicating all the claims and all the parties' rights and liabilities."¹ Fed. R. Civ. P. 54(b); see also Rothwell Cotton Co. v. Rosenthal & Co., 827 F.2d 246, 251 (7th Cir.), opinion amended on denial of reh'g, 835 F.2d 710 (7th Cir. 1987) (affirming district court's denial of motion to reconsider under Rule 54(b)).

Revisions under Rule 54(b) are discouraged and should be reserved for circumstances in which the initial decision was "clearly erroneous and would work a manifest injustice." See Ghashiyah v. Frank, 2008 WL 680203, at *3 (E.D. Wis. Mar. 10, 2008) (quoting Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 817 (1988)) (internal quotation marks omitted). In general, "litigants must fight an uphill battle in order to prevail on a motion for reconsideration." Id. (citation and internal quotation marks omitted).

Motions to reconsider under Rule 54(b) "are judged by largely the same standards as motions to alter or amend a judgment under Rule 59(e)." Ghashiyah, 2008 WL 680203, at *3. The Court may a grant Rule 59(e) motion to alter or amend the judgment if the movant presents newly discovered evidence that was not available at the time of trial, points to evidence in the record that clearly establishes a manifest error of law or fact, or if the Court previously misunderstood a party's arguments. Miller v. Safeco Ins. Co. of Am., 683 F.3d 805, 813 (7th Cir. 2012); United States v. Ligas, 549 F.3d 497, 501 (7th Cir. 2008). Rule 59(e) "enables the court to correct its own errors and thus avoid unnecessary appellate procedures." Miller, 683 F.3d at813 (citation and internal quotation marks omitted). Rule 59(e) motions are "not appropriately used to advance arguments or theories that could and should have been made before the district court rendered a judgment, or to present evidence that was available earlier." Id. (citation and internal quotation marks omitted). Additionally, "'manifest error' is not demonstrated by the disappointment of the losing party. It is the 'wholesale disregard, misapplication, or failure to recognize controlling precedent.'" Oto v. Metro. Life Ins. Co., 224 F.3d 601, 606 (7th Cir. 2000) (quoting Sedrak v. Callahan, 987 F.Supp. 1063, 1069 (N.D. Ill. 1997)).

III. Analysis

In its summary judgment opinion, this Court concluded that Defendants had a duty to defend because (1) the alleged copyright infringement in Plaintiff's webinar took place in an "advertisement," and thus was covered as a "personal and advertising injury; and (2) the professional services exclusion does not apply because Plaintiff's solicitation of potential customers to purchase consulting services and its co-presenter's software did not constitute the provision of a professional service. [56, at 6-8.] Defendants seek reconsideration solely with respect to the application of the professional services exclusion, arguing that "the Court has misapprehended critical facts and law" in determining that this exclusion does not apply.

First, Defendants argues that the Court erred in not acknowledging the decision in Landmark Am. Ins. Co. v. NIP Group, Inc., 962 N.E.2d 562 (Ill. App. Ct. 2011), and argues that the holding of Landmark contradicts this Court's conclusion that the professional services exclusion does not apply to the case at hand. This argument fails for several reasons. First, Defendants already raised this Landmark argument in their summary judgment briefing. [See 46 (Defendants' Response Brief), at 8 (citing Landmark, Inc., 962 N.E.2d 573-76 for the proposition that an advertisement for insurance products can also be a professional service); 49(Defendants' Reply Brief), at 4 (citing Landmark, 962 N.E.2d 574 to support Defendants argument that an advertisement can constitute a professional service under certain circumstances).] The Court previously rejected this professional services argument, stating "Nor is the Court persuaded by Defendants' arguments that the professional services exclusion in the Policy precludes coverage." [56, at 7]; see also Caisse Nationale de Credit Agricole v. CBI Indus., Inc., 90 F.3d 1264, 1270 (7th Cir. 1996) ("Reconsideration is not an appropriate forum for rehashing previously rejected arguments or arguing matters that could have been heard during the pendency of the previous motion."). Although the Court did not explicitly address the Landmark decision, there is no requirement that the Court must discuss every case cited by the parties. See Johnson v. Strasser, 449 F. App'x 523, 524 (7th Cir. 2011) (...