Creation Supply, Inc. v. Selective Insurance Company of the Southeast

Dist. Ct. erred in granting plaintiff-insured's motion for summary judgment in action for extracontractual damages under section 155 of Illinois Insurance Code, based on defendant-insurance company's failure to defend plaintiff in underlying action, as well as defendant's failure to pay plaintiff for over one year for fees and expenses awarded to it in underlying action, after state court had found that defendant had duty to defend plaintiff in underlying action that had been ultimately settled by plaintiff in 2013 for zero dollars in exchange for plaintiff's promise not to sell alleged copy-cat products. Record showed that Illinois Appellate Court found in 2015 that defendant was liable under its policy to defend plaintiff in underlying action and further awarded plaintiff damages in 2017 that were payable under defendant's policy. Moreover, section 155 allowed insured to seek extracontractual damages from insurer only under circumstances where: (1) insurer's liability under policy was undecided; (2) amount of loss payable under policy was undecided; or (3) there was unreasonable delay in settling underlying claim. Plaintiff, though, did not satisfy any of these prerequisites, since: (1) defendant's liability and damages under said policy had already been resolved by 2013 settlement, as well as Illinois Appellate Court judgments in 2015 and 2017; and (2) plaintiff did not seek recovery based on delay in settling underlying lawsuit against plaintiff, but rather delay in defendant's failure to pay Illinois court's judgment relating to fees and expenses associated with underlying claim.