Twin City Fire Ins. Co. v. Law Offices of Xydakis

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TWIN CITY FIRE INSURANCE COMPANY, Plaintiff, v. LAW OFFICE OF JOHN S. XYDAKIS, P.C., et al., Defendants.

No. 18 C 6387

United States District Court, N.D. Illinois, Eastern Division

March 20, 2023

MEMORANDUM OPINION &amp ORDER

Virginia M. Kendall United States District Judge

Plaintiff Twin City Fire Insurance Company sold a malpractice insurance policy to John S. Xydakis, an attorney and one of the Defendants.^[1]Xydakis made claims under the policy based on lawsuits and motions filed against him in Illinois state court. Twin City seeks a declaratory judgment that it owes no insurance coverage to Defendants for these claims or, in the alternative, rescission of the policy. Twin City moves for summary judgment. (Dkt. 121). For the following reasons, the Motion is granted. [121]

Local Rule 56.1 requires that the party opposing summary judgment file and serve on the moving party “a response to the LR 56.1(a)(2) statement of material facts that complies with LR 56.1(e) and that attaches any cited evidentiary material not attached to the LR 56.1(a)(2) statement.” N.D.Ill R. 56.1(b)(2) (as amended Feb. 18, 2021). “When a responding party's statement fails to dispute the facts set forth in the moving party's statement in the manner dictated by the rule, those facts are deemed admitted for purposes of the motion.” Cracco v. Vitran Exp., Inc., 559 F.3d 625, 632 (7th Cir. 2009). Xydakis's LR 56.1(b)(2) Response to Twin City's 56.1(a) Statement of Material Facts fails to comply in all respects with LR 56.1. (See dkt. 144 at 13-14). Xydakis's entire response consists of three numbered paragraphs containing legal arguments objecting to the admissibility of Twin City's Exhibit B as evidence. (Id. (citing Dkt. 122-2 at *2-6)). He disputes none of Twin City's facts; nor does he submit admissible evidence to support denial of any fact. Therefore, the Court deems admitted all Twin City's statements of fact as undisputed. See Curtis v. Costco Wholesale Corp., 807 F.3d 215, 218-19 (7th Cir. 2015); Ammons v. Uniform Servs., 368 F.3d 809, 817-18 (7th Cir. 2004); Jupiter Aluminum Corp. v. Home Ins. Co., 225 F.3d 868, 871 (7th Cir. 2000).

Moreover, Xydakis's argument as to Twin City's Exhibit B's admissibility is off track. In the affidavit to which Xydakis objects, Twin City's counsel avers that several publicly-filed documents were either served on Twin City or retrieved from the Cook County Clerk of Court or the Illinois Appellate Court. (Dkt. 122-2 at 1-5). The Exhibit then attaches the referenced court filings and orders. (Id. at 8-482). Xydakis contends that Twin City's counsel cannot properly authenticate the documents attached to the affidavit because he has no personal knowledge of the statements therein. (Dkt. 144 at 1 ¶ 2).

But Twin City does not offer these documents for the truth of the statements they contain. It offers them to show what allegations have been made-and when and by whom-against Xydakis for purposes of his malpractice insurance eligibility. Twin City's counsel certainly has personal knowledge of documents served on Twin City and those filings he retrieved from other courts. The Court may also take judicial notice of publicly filed documents in other courts if, as here, their existence is not subject to reasonable dispute. See Tobey v. Chibucos, 890 F.3d 634, 647-48 (7th Cir. 2018) (citing Fed.R.Evid. 201(b)); Daniel v. Cook County, 833 F.3d 728, 742 (7th Cir. 2016) (courts routinely take judicial notice of the actions of other courts or the contents of filings in other courts). Twin City's affidavit and the attached filings in, and rulings from, other courts in Exhibit B are admissible.

Background

A. Underlying Lawsuits

The Chen Lawsuit.^[2] Fiona Chen Consulting Company (“Chen Consulting”) sued Xydakis for failing to pay retained expert witness fees. (Dkt. 122 ¶¶ 7-8).^[3]Chen Consulting alleges that in 2012, Xydakis entered into multiple oral contracts agreeing to pay fees for work performed between June 2012 and October 2012. (Id. ¶ 10). It seeks damages for failure to pay these fees, despite multiple requests and demands throughout 2012. (Id. ¶ 11). Xydakis filed a sworn Answer, Affirmative Defenses, and Counterclaim against Chen Consulting, demonstrating that all the acts and conduct related to the Chen Lawsuit occurred between January 2012 and November 2012. (Id. ¶ 13).

The Spiegel Motions for Sanctions. Litigants in a separate set of lawsuits (collectively the “Spiegel Lawsuits”)^[4] brought three motions for sanctions against Marshall Spiegel and his attorney Xydakis. First, on May 9, 2018, Valerie Hall filed a petition in the Spiegel Lawsuits seeking sanctions under Illinois Supreme Court Rule 137 against Spiegel and Xydakis (the “Hall Motion”). (Id. ¶ 17). On July 11, 2018, Duane Morris LLP filed a petition in the Spiegel Lawsuits seeking sanctions under Illinois Supreme Court Rule 137 against Spiegel and Xydakis (the “Duane Morris Motion”). (Id. ¶ 18). On or around July 17, 2018, Michael Kim filed a petition in the Spiegel Lawsuits seeking sanctions under Illinois Supreme Court Rule 137 and Section 15 of the Illinois Citizen Participation Act solely against Marshall Spiegel (the “Kim Motion”). (Id. ¶ 19). On March 29, 2019, the presiding Cook County judge ruled on all three motions and entered judgment against Spiegel and Xydakis for over $1,000,000. (Id. ¶ 21).

The Klein Lawsuit.^[5]Finally, on August 14, 2019, Tiberiu Klein filed a complaint against Twin City and Xydakis alleging legal malpractice, breach of contract, and breach of fiduciary duty. (Dkt. 122 ¶¶ 24, 30, 33). The Klein Lawsuit alleges that Xydakis's wrongful conduct caused Klein to lose his “statutory deadlines” and his opportunity to collect a “significant recovery” of settlement proceeds in an underlying 2014 tort action. (Id. ¶ 34). The Klein Lawsuit alleges that Xydakis knew of his malpractice on March 9, 2018 after the Seventh Circuit Court of Appeals “issued a damning decision criticizing Xydakis for his various failures in representing [Klein], which amounts [to] legal malpractice ” (Id. ¶ 31; see also Klein v. O'Brien, 884 F.3d 754, 757 (7th Cir. 2018) (“Klein and Xydakis have caused havoc in the tort litigation.”)).

B. The Twin City Insurance Policy

In December 2016, Xydakis applied for legal malpractice insurance coverage from Twin City. (Dkt. 122 ¶ 35). Twin City underwrote and issued a claims-made-and-reported Lawyers' Professional Liability Policy to the Law Office of John S. Xydakis (the “Policy”). (Id. ¶ 36). The Policy covered the period from January 26, 2017 through January 26, 2018. (Id.) It provides in relevant part:

Notice - This is a claims made and reported policy. Please read it carefully. Coverage applies only to claims first made against the insured during the policy period or applicable extended reporting period and reported in writing to the company immediately but in no event later than sixty (60) calendar days after the expiration date of the policy period or applicable extended reporting period. ...

(Dkt. 122-1 at *8 (Policy at 1)). The Policy's Scope of Coverage declares:

We will pay on behalf of an insured, subject to the limit of liability, such damages and claims expenses in excess of the applicable deductible amount for claims made during the policy period or applicable extended reporting period and reported in writing to us immediately, but in no event later than sixty (60) calendar days after the expiration date of the policy period or applicable extended reporting period. The damages must arise out of a negligent act, error, omission or personal injury in the rendering of or failure to render professional legal services or non-profit services for others by you or on your behalf provided always that the negligent act, error, omission or personal injury occurs on or after the retroactive date as stated in the Declarations.

(Id. at *8 (Policy at 1 § I.A)). It defines a “claim” as “A demand received by an insured for money or services alleging a negligent act, error, omission or personal injury in the rendering of or failure to render professional legal services or non-profits services for others by you or on your behalf;” or “Service or receipt of a suit or arbitration proceedings or any other alternative dispute resolution proceeding in which damages are claimed.” (Id. at *8 (Policy at 1 § I.B.2)).

The Policy defines “retroactive date” as “the date specified in the Declarations, or in any endorsement attached to this policy, on or after which the negligent act, error, omission, or personal injury must have occurred in order for any claim or notice of circumstance given to us pursuant to Section IV: A. Awareness of Circumstances and B. Notice of Claim to be covered under this policy.” (Id. at *10 (Policy at 3 § I.B.18)). The Policy's Declarations section specifies the retroactive date as January 26, 2016. (Id. at *6; Dkt. 122 ¶ 39).

Xydakis sought coverage from Twin City for liability in the Chen Lawsuit and for the Spiegel Motions for Sanctions. (Dkt. 122 ¶¶ 40-41). Twin City has denied it owes Xydakis defense or indemnity obligations in these matters. (Id.) Additionally, the Klein Lawsuit seeks damages in connection with Xydakis's alleged malpractice. (Id. ¶ 42). Twin City likewise denies it owes defense or indemnity obligations for the Klein Lawsuit. (Id. ¶ 43).

C. Procedural History

In September 2018, Twin City sought a declaratory judgment that it owed no duty to defend or indemnify Xydakis for liability arising out of the Chen Lawsuit or the Spiegel Motions for Sanctions. (Dkt. 1). This matter first proceeded before Judge Robert M. Dow. Initially, Twin City brought its claims only against Xydakis, his sole proprietorship, and his dissolved professional corporation. (Dkt. 1)....