Full opinion text
MEMORANDUM OPINION AND ORDER VIRGINIA M. KENDALL, District Judge. This insurance coverage dispute between the City of Waukegan, Illinois (“Waukegan” or “the City”) and its various insurers arises from a $9,063,000 verdict entered against Waukegan in a civil rights case brought by S. Alejandro Dominguez (“Dominguez”), who was convicted of rape in 1990 after an investigation by Waukegan police officers but exonerated by DNA evidence in 2002. The insurers issued to the City various primary and excess policies in effect between 1991 and 2006. The parties have filed summary judgment motions addressing whether the insurers should now indemnify Waukegan for its loss as a result of the Dominguez verdict, whether certain of Waukegan’s carriers should have defended the City in the underlying case, and whether a subset of those insurers violated Section 155 of the Illinois Insurance Code by acting “unreasonably and vexatiously” in handling the Dominguez claim. Plaintiff American Safety Casualty Insurance Company (“American Safety”) filed a Complaint against Waukegan on April 11, 2007, seeking a declaratory judgment that it does not owe coverage to Waukegan for its obligations in S. Alejandro Dominguez v. Paul Hendley et al., No. 04 C 2907 (N.D.Ill.) (“the Dominguez Civil Case”). On August 19, 2009, Waukegan filed its operative complaint, the Second Amended Counterclaim (Doc. 273), against Counter-Defendants American Safety, Interstate Indemnity Company (“Interstate”), Certain Underwriters at Lloyds of London (“Underwriters”), Northfield Insurance Companies (“Northfield”), West-port Insurance Corporation (“Westport”) (formerly Coregis Insurance Organizations), Dominguez, and Paul Hendley (“Hendley”). Two defendants, Scottsdale Insurance Company (“Scottsdale”) and Evanston Insurance Company (“Evanston”), were named in Waukegan’s first counterclaim, but the Court granted Scottsdale’s motion for summary judgment in March 2009 (see Doc. 236) and Waukegan voluntarily dismissed Evanston without prejudice in July 2009 (see Doc. 260). American Safety (Doc. 563) and Interstate (Doc. 561) have each filed Motions to Strike portions of Waukegan’s Rule 56.1 statements of material facts in connection with its summary judgment motions. The Court addressed these motions during its analysis of the pending summary judgment motions. For the reasons explained below, the Court grants in part and denies in part American Safety’s motion, and grants Interstate’s motion in its entirety. In addition, American Safety (Doe. 444), Interstate (Doc. 448), and Westport (Doc. 460) have each filed motions for summary judgment against Waukegan, and Waukegan has cross-moved for summary judgment against each of them. (Docs. 458, 533 (amending 466), 539 (amending 476), respectively). Northfield and Underwriters have joined in three separate summary judgment motions, one addressing whether their policies were triggered (Doc. 450), one addressing their duty to defend Waukegan (Doc. 435), and the last addressing whether they had a duty to indemnify the City given its allegedly voluntary agreement to assume Hendley’s liability (Doc. 429). Waukegan has cross-moved for summary judgment against Northfield and Underwriters separately (Docs. 535 (amending 491), 537 (amending 498), respectively). For the reasons stated below, the Court: 1. grants in part American Safety’s motion to strike portions of Waukegan’s Local Rule 56.1 Statement supporting its motion for summary judgment against American Safety, as detailed below; 2. grants in its entirety Interstate’s motion to strike portions of Waukegan’s Local Rule 56.1 Statement supporting its motion for summary judgment against Interstate; 3. denies American Safety’s motion for summary judgment against Waukegan in its entirety, and grants Waukegan’s cross-motion for summary judgment as detailed below, finding American Safety (a) breached its duty to defend Waukegan, (b) must now indemnify Waukegan for the Dominguez verdict to the policy’s limits, and (c) is liable under Section 155 of the Illinois Insurance Code for “unreasonable and vexatious” conduct in handling the Dominguez claim; 4. grants in part, and denies in part, Interstate’s motion for summary judgment against Waukegan; and grants in part, and denies in part, Waukegan’s cross-motion for summary judgment, finding that Interstate did not breach a duty to defend or violate Section 155, but must indemnify Waukegan for the Dominguez verdict; 5. grants in its entirety Northfield’s and Underwriters’ joint motion for summary judgment regarding whether their policies were triggered and denies Waukegan’s cross-motions for summary judgment against Northfield and Underwriters, finding that the Northfield/Underwriters policies were not triggered by Dominguez’s allegations in the underlying complaint, rendering moot Northfield’s and Underwriters’ joint motions for summary judgment regarding duty to defend and duty to indemnify; 6. grants in its entirety Westport’s motion for summary judgment against Waukegan, and denies in its entirety Waukegan’s motion for summary judgment against Westport, finding that the Westport policies were not triggered by Dominguez’s allegations in the underlying complaint. 7. denies as moot Waukegan’s objection (Doc. 781) to Magistrate Finnegan’s Order of December 17, 2010 denying Waukegan’s motion to compel. I. MOTIONS TO STRIKE PORTIONS OF WAUKEGAN’S 56.1 STATEMENTS As an initial matter, American Safety and Interstate have each moved to strike portions of Waukegan’s Local Rule 56.1 statements in the City’s cross-motions for summary judgment against them, arguing that they contain improper legal conclusions, rely on portions of Donald Brayer’s Amended Expert Report that have been stricken by the Court’s January 12, 2011 order, 2011 WL 98596, fail to provide adequate citation to the record, or are immaterial. Local Rule 56.1(a) provides that a party moving for summary judgment shall file a “statement of material facts” entitling it to judgment as a matter of law, “including within each paragraph specific references to the affidavits, parts of the records, and supporting materials relied upon to support the facts set forth in that paragraph.” See L.R. 56.1(a) (emphasis added). Nonconformity with the Local Rules and the standing orders of the Court is not without consequence. “A district court is entitled to expect strict compliance with Rule 56.1.” Ammons v. Aramark Uniform Servs., Inc., 368 F.3d 809, 817 (7th Cir.2004) (citing Bordelon v. Chicago School Reform Bd. of Trustees, 233 F.3d 524, 527 (7th Cir.2000)). Further, “a district court does not abuse its discretion, when, in imposing a penalty for a litigant’s non-compliance with Local Rule 56.1, the court chooses to ignore and not consider the additional facts that a litigant has proposed.” Cichon v. Exelon Generation Co., L.L.C., 401 F.3d 803, 809-10 (7th Cir.2005). First, with respect to American Safety’s and Interstate’s objections to paragraphs that contain or consist of legal conclusions, a party may not include legal opinions or conclusions of law in its statement of facts in support of summary judgment. See Judson Atkinson Candies, Inc. v. Latini-Hohberger Dhimantec, 529 F.3d 371, 382 n. 2 (7th Cir.2008) (“Local Rule 56.1 requires that statements of facts concerning summary judgment motions identify the evidence supporting a party’s factual assertions. It is inappropriate to make legal arguments in a Rule 56.1 statement of facts.”); Cady v. Sheahan, 467 F.3d 1057, 1060 (7th Cir.2006) (finding a statement of material facts did not comply with Rule 56.1 because it failed to adequately cite the record and contained legal arguments). The Court, therefore, strikes the following portions of Waukegan’s statements of material facts because they address legal issues that are to be decided by this Court: _Document_Statement Stricken_ Waukegan’s Statement of Material Facts in support of its Motion for Summary Judgment against American Safety The second and forth sentences of paragraph 34; the latter part of the second sentence of paragraph 54. Waukegan’s Statement of Additional Material Facts in Opposition to American Safety’s Motion for Summary summary judgment The first clause of paragraph 7; paragraph 9; paragraph 13; and the first sentence of paragraph 24_ Waukegan’s Statement of Material Facts in support of its Motion for Summary Judgment against Interstate Paragraph 34; all but the first sentence of paragraph 36; all but the first sentence of paragraph 38; the first clause of paragraph 44; the last sentence of paragraph 45; paragraph 46; the last clause of paragraph 48 reading “Dominguez’s claims ... are covered claims under the Interstate policy.”; and the first sentence of paragraph 50._ Waukegan’s Statement of Additional Material Facts in Opposition to Interstate’s Motion for Summary Judgment Paragraphs 10-11; the first sentence of paragraph 14; the first clause of paragraph 15; paragraphs 18-19; the last sentence of paragraph 20; the first sentence of paragraph 22; _and the first two sentences of paragraph 23. Each of these paragraphs contains or consists of legal conclusions regarding whether certain claims in the Dominguez Civil Case occurred or accrued within the policy periods, who qualifies as an insured under the policies, when an insured’s duty to defend was triggered, and whether claims in the underlying complaint are “covered” under the policies — in other words, the primary issues to be decided in this case. Turning to American Safety’s and Interstates’s objections to statements of fact that rely on Brayer’s expert testimony, “to be considered in a motion for summary judgment, the testimony [by an expert] must be admissible.” See Porter v. Whitehall Labs., Inc., 9 F.3d 607, 612 (7th Cir.1993). For that reason, the Court strikes the following portions of Waukegan’s statements of material facts because they are supported solely by portions of Brayer’s report that the Court struck in its January 12, 2011 order. See e.g., Good Shepherd Manor Found. v. City of Momence, 323 F.3d 557, 564 (7th Cir.2003) (expert testimony on conclusions of law not admissible); see also In re Ocean Bank, 481 F.Supp.2d 892, 898 (N.D.Ill.2007) (St. Eve, J.) (same). _Document_Statement Stricken_ Waukegan’s Statement of Material Facts in support of its Motion for Summary Judgment against American Safety_ Paragraph 47 and paragraph 68. Waukegan’s Statement of Additional Material Facts in Opposition to American Safety’s Motion for Summary Judgment_ The second sentence of paragraph 2; and the second sentence of paragraph 19. Waukegan’s Statement of Material Facts in support of its Motion for Summary Judgment against Interstate_ All but the first sentence of paragraph 42 and paragraph 43. Finally, the Court strikes various facts because they do not making specific reference to a relevant portion of the record to support the statements therein or are not supported by the cited record. See L.R. 56.1 (a party’s statement of material facts in support of its motion for summary judgment “shall consist of short numbered paragraphs, including within each paragraph specific references to the affidavits, parts of the record, and other supporting materials relied upon to support the facts set forth in that paragraph”). In Waukegan’s 56.1 statement in support of its motion for summary judgment against American Safety, the Court strikes the last clause of paragraph 31 referring to various “provisions” without citing them specifically; the general statements about cooperation and notification of “all information” in paragraph 49; and the last statement in paragraph 72 that “[b]y its own admission, [American Safety] has no policies or procedures it followed with regard to processing claims,” which is a conclusion not supported by the cited testimony. See L.R. 56.1(a). The Court denies American Safety’s motion to strike, however, with respect to the first sentence of paragraph 56, paragraphs 58-59, and paragraphs 69-70 in Waukegan’s 56.1 statement. Contrary to American Safety’s assertions, these factual statements are relevant to the Court’s legal determinations regarding coverage in this matter, including whether American Safety’s conduct was “unreasonable and vexatious” for purposes of Waukegan’s claims under Section 155 of the Illinois Insurance Code. It also denies American Safety’s motion to strike with respect to paragraph 71 in Waukegan’s 56.1 statement, which cites to portions of Brayer’s amended report describing a claim representative’s duties that the Court found admissible in its January 12, 2011 order. II. MOTIONS FOR SUMMARY JUDGMENT A. Statement of Material Undisputed Facts 1. The Parties. Waukegan is a municipal corporation providing governance to residents within Lake County, Illinois. (Waukegan v. American Safety 56.1 Resp. ¶ 1; Interstate v. Waukegan 56.1 Resp. ¶ 1; Underwriters & Northfíeld Trigger Issue 56.1 Resp. ¶ 1; Waukegan v. Westport 56.1 Resp. ¶ 1.) Plaintiff and Counter-Defendant American Safety issued insurance policies to Waukegan that are at issue in this matter, as did Counter-Defendants Interstate, Westport, Underwriters, and Northfíeld. (Waukegan v. American Safety 56.1 Resp. ¶2; Waukegan v. Interstate 56.1 Resp. ¶ 2; Underwriters & Northfield Trigger Resp. ¶¶ 24-25; Waukegan v. Westport 56.1 Resp. ¶2.) Counter-Defendant Interstate provides insurance coverage policies to Illinois insureds. (Interstate v. Waukegan 56.1 Resp. ¶ 3.) Counter-Defendant Underwriters are members of syndicates who severally subscribed to certain insurance policies and are authorized to underwrite insurance policies in Illinois. (Underwriters & Northfíeld Trigger Issue 56.1 Resp. ¶ 2.) Counter-Defendant Northfíeld is a Minnesota insurance company that provides insurance policies to Illinois insureds. (Underwriters & Northfíeld Trigger Issue 56.1 Resp. ¶ 3.) Counter-Defendant West-port is an insurance company licensed to do business in the state of Illinois. (West- port v. Waukegan 56.1 Resp. ¶ 1.) Counter-Defendant Dominguez is a resident of Illinois who was tried and convicted for home invasion and sexual assault in 1990 but later exonerated. (Waukegan v. American Safety 56.1 Resp. ¶¶ 4 — 5.) Counter-Defendant Hendley is a former Waukegan police sergeant involved in the investigation of the home invasion and sexual assault for which Dominguez was convicted. (Waukegan v. American Safety 56.1 Resp. ¶7; Waukegan v. Interstate 56.1 Resp. ¶ 7; Underwriters & Northfield Trigger Issue 56.1 Resp. Add. Facts ¶ 15; Waukegan v. Westport 56.1 Resp. ¶ 6.) At all times relevant to the allegations in Dominguez’s federal court complaint following his exoneration, Hendley was a Waukegan employee engaged in law enforcement activities, as directed and controlled by Waukegan. (Waukegan v. American Safety 56.1 Resp. ¶ 8; Waukegan v. Interstate 56.1 Resp. ¶ 7.) 2. Dominguez’s Civil Case (the Underlying Complaint). On April 23, 2004, Dominguez then filed suit against Waukegan, Hendley, Waukegan Police Detective John Moran (“Moran”), Lisa Kraus (“Kraus”), and others in the United States District Court for the Northern District of Illinois, alleging false arrest and false imprisonment, malicious prosecution under 42 U.S.C. Section 1983 (“Section 1983”), and unconstitutional policies and procedures (the “Dominguez Civil Case”). (Waukegan v. American Safety 56.1Resp. ¶¶ 6, 26; Interstate v. Waukegan 56.1 Resp. ¶¶ 6, 16; Waukegan v. Interstate 56.1 Resp. ¶¶ 6, 23-24; Underwriters & Northfield Trigger Issue 56.1 Resp. ¶¶ 6, 17; Waukegan v. Westport 56.1 Resp. ¶ 5; Waukegan v. Westport 56.1 Resp. ¶ 24.) Dominguez filed his operative complaint on August 2, 2004 against Waukegan, Hendley, Moran, Kraus, and security guard Richard McCandless (“McCandless”), alleging federal claims for false arrest and false imprisonment (Count I), a violation of the Due Process Clause through malicious prosecution pursuant to Section 1983 (Count II), claims against Kraus and McCandless for conspiracy pursuant to Section 1983 (Count III), state law malicious prosecution against Kraus and McCandless (Count IV), state law intentional infliction of emotional distress (Count V), respondeat superior (Count VI), and indemnification (Count VII) (“the Underlying Complaint”). (Waukegan v. American Safety 56.1 Resp. ¶ 27; Interstate v. Waukegan 56.1 Resp. ¶ 6; Waukegan v. Interstate 56.1 Resp. ¶¶ 23, 25; Underwriters & Northfield Trigger Issue 56.1 Resp. ¶¶ 6, 18; Underwriters & Northfield Trigger Issue 56.1 Resp. Add. Facts ¶3; Waukegan v. Westport 56.1 Resp. ¶ 24, 26.) These constitute personal injury claims for offenses caused in the course of Waukegan’s law enforcement activities. (Waukegan v. American Safety 56.1 Resp. ¶ 15; Waukegan v. Interstate 56.1 Resp. ¶ 13.) a. The Factual Allegations in the Underlying Complaint. The Underlying Complaint made the following factual allegations. First, it alleged that on September 19, 1989, Lisa Kraus (“Kraus”) filed a complaint with the Waukegan Police Department asserting that she was sexually assaulted in her apartment. (Waukegan v. American Safety 56.1 Resp. ¶ 15; Waukegan v. Interstate 56.1 Resp. ¶ 13; Underwriters & Northfield Trigger Issue 56.1 Resp. ¶7; Waukegan v. Westport 56.1 Resp. ¶ 14.) Waukegan police officers Hendley and Moran conducted an investigation into these allegations. (Waukegan v. American Safety 56.1 Resp. ¶ 16; Interstate v. Waukegan 56.1 Resp. ¶ 8; Waukegan v. Westport 56.1 Resp. ¶ 15.) On September 21, 1989, the Underlying Complaint alleged, Hendley arrived at Kraus’s apartment building for investigation purposes and spoke with a security guard. (American Safety v. Waukegan 56.1 Resp. ¶ 7; Waukegan v. Interstate 56.1 Resp. ¶ 14; Underwriters & North-field Trigger Issue 56.1 Resp. ¶ 8.) Although Hendley denied the following allegations in his answer to the Underlying Complaint, that complaint alleged that Hendley asked the security guard to bring Dominguez into the guard’s office for Kraus to identify him, and that Kraus then identified Dominguez as her assailant in that office. (American Safety v. Waukegan 56.1 Resp. ¶¶ 8,10.) It further alleges that Dominguez was arrested on September 21, 1989 and convicted on February 28, 1990 of aggravated criminal sexual assault and home invasion; he was sentenced to a nine year term, but then released for good behavior in December 1993 and required to register as a sex offender for ten years. (Waukegan v. American Safety 56.1 Resp. ¶¶ 4, 18-19; American Safety v. Waukegan 56.1 Resp. ¶ 12; Interstate v. Waukegan 56.1 Resp. ¶¶ 10-12; Waukegan v. Interstate 56.1 Resp. ¶¶ 15-17; Underwriters & North-field Trigger Issue 56.1 Resp. ¶¶ 9-11; Underwriters & Northfield Trigger Issue 56.1 Resp. Add.'Facts ¶ 19; Waukegan v. Westport 56.1 Resp. ¶¶ 17-18.) When he missed the sex offender registration deadline in November 1998, he was arrested and held in jail for one day. (Waukegan v. American Safety 56.1 Resp. ¶ 20; Interstate v. Waukegan 56.1 Resp. ¶ 13; Underwriters & Northfield Trigger Issue 56.1 Resp. ¶¶ 12-13; Waukegan v. Westport 56.1 Resp. ¶ 19) He then pled guilty to attempted failure to register as a sex offender and was sentenced to two years of probation and 100 hours of community service; he was also required to participate in therapy sessions. (Waukegan v. American Safety 56.1 Resp. ¶ 21; Waukegan v. Interstate 56.1 Resp. ¶ 19; Underwriters & Northfield Trigger Issue 56.1 Resp. ¶ 14; Waukegan v. Westport 56.1 Resp. ¶ 20.) On January 28, 2001, Immigration and Naturalization Services (“INS”) arrested Dominguez, a non-citizen, and initiated proceedings for his immediate removal from the country based on his earlier sexual assault conviction. (Waukegan v. American Safety 56.1 Resp. ¶ 35; American Safety v. Waukegan 56.1 Resp. Add. Facts ¶ 15.) He remained in INS custody for a one month period between January 28, 2001 and February 28, 2001. (American Safety v. Waukegan 56.1 Resp. Add. Facts ¶ 15.) On August 10, 2001, the Underlying Complaint alleges, Dominguez was granted postconviction DNA testing; the results of this test excluded Mr. Dominguez as the alleged rapist. (American Safety v. Waukegan 56.1 Resp. ¶ 17; Interstate v. Waukegan 56.1 Resp. ¶ 14; Waukegan v. Interstate 56.1 Resp. ¶ 21; Underwriters & Northfield Trigger Issue 56.1 Resp. ¶ 15; Waukegan v. Westport 56.1 Resp. ¶ 21.) On April 26, 2002, the Circuit Court of the Nineteenth Judicial Circuit for Lake County, Illinois reversed Dominguez’s convictions for home invasion, aggravated criminal sexual assault, and exonerated him. (Waukegan v. American Safety 56.1 Resp. ¶ 5; Waukegan v. Interstate 56.1 Resp. ¶ 5; Waukegan v. Westport 56.1 Resp. ¶¶ 22-23.) b. The Dominguez Verdict and Post-Trial Proceedings. The district court later dismissed Counts III, IV, and V — the Counts against Kraus and the security guard individually. (American Safety v. Waukegan 56.1 Resp. ¶ 20.) On October 13, 2006, the district court entered a minute order stating: “[i]n accordance with this Court’s oral ruling the City of Waukegan is hereby dismissed as a defendant.” (Interstate v. Waukegan 56.1 Resp. ¶ 17; Underwriters & North-field Trigger Issue 56.1 Resp. ¶ 19.) That order stated: the ruling was based on the lack of proof as to City in terms of the substantive Section 1983 claims of plaintiff S. Alejandro Dominguez ..., but with the express understanding, based on the representations of counsel for all parties, that the City had unconditionally undertaken to indemnify codefendant Paul Hendley ... for any awards of compensatory damages and attorneys’ fees entered against him. {American Safety v. Waukegan 56.1 Resp. ¶ 40; American Safety v. Waukegan 56.1 Ex. Q.) Through this order, the Court ordered Waukegan to be held liable as indemnitor for all sums that Hendley was obligated to pay in the litigation. {Waukegan v. American Safety 56.1 Resp. ¶ 29.) The district court conducted a jury trial beginning on October 3, 2006, and the jury returned a verdict in favor of Dominguez in the amount of $9,063,000 in compensatory damages on October 17, 2006. (Waukegan v. American Safety 56.1 Resp. ¶¶ 6, 28; Interstate v. Waukegan 56.1 Resp. ¶ 18; Underwriters & Northfield Trigger Issue 56.1 Resp. ¶ 20; Underwriters <fe Northfield Trigger Issue 56.1 Resp. Add. Facts ¶ 22; Waukegan v. Westport 56.1 Resp. ¶¶ 27, 59.) Dominguez had withdrawn all punitive damages claims before the close of the trial. (Underwriters & Northfield Trigger Issue 56.1 Resp. Add. Facts ¶ 23; Waukegan v. Westport 56.1 Resp. ¶ 27.) On October 27, 2006, Hendley moved for judgement as a matter of law and for a new trial, which the district court denied on December 4, 2006. (Underwriters «fe Northfield Trigger Issue 56.1 Resp. Add. Facts ¶ 24.) On December 13, 2006, the district court entered a judgment order vacating the prior dismissal of Waukegan as a defendant based on its binding admissions that it would indemnify Hendley for all compensatory damages and attorney’s fees for which he was held liable. (Interstate v. Waukegan 56.1 Resp. ¶ 19; Waukegan v. Interstate 56.1 Resp. ¶ 28; Waukegan v. Westport 56.1 Resp. ¶ 28.) The order specifically explained that the City would be “held liable as indemnitor for all sums that Hendley is obligated to pay” and that the “City is further ordered to be jointly and severally liable with Hendley as to all such sums, and a judgment shall be entered against it in accordance with this judgment order.” (Underwriters «fe Northfield Trigger Issue 56.1 Resp. ¶ 21.) Waukegan has since satisfied the judgment award, including the judgment, interest, and attorneys’ fees, in a total amount of $11,397,195.39. (Waukegan v. American Safety 56.1 Resp. ¶ 30; Waukegan v. Interstate 56.1 Resp. ¶ 29; Waukegan v. Westport 56.1 Resp. ¶ 29.) Waukegan also incurred at least $1,079,296.90 in its own attorneys fees in defending Hendley in the Dominguez Civil Case and the appeal. (Waukegan v. American Safety 56.1 Resp. ¶ 30; Waukegan v. Interstate 56.1 Resp. ¶ 29.) On December 29, 2006, Waukegan filed a notice of appeal to the United States Court of Appeals for the Seventh Circuit from the jury verdict in the Dominguez Civil Case. (Underwriters & Northfield Trigger Issue 56.1 Resp. Add. Facts ¶ 25.) The Seventh Circuit affirmed the judgment of the District Court on September 30, 2008 and issued its mandate on November 12, 2008. (American Safety v. Waukegan 56.1 Resp. ¶ 23; Underwriters & Northfield Trigger Issue 56.1 Resp. Add. Facts ¶ 26.) On January 29, 2009, Waukegan and Hendley petitioned the Supreme Court for certiorari, which the Supreme Court denied on May 19, 2009. (Underwriters & Northfield Trigger Issue 56.1 Resp. Add. Facts ¶ 27.) 3. The Insurance Policies at Issue. a. The Policy Periods Summarized. Northfield and Certain Underwriters issued Law Enforcement Liability insurance policies to Waukegan that were in effect, for the purposes of this suit, between November 1, 1991 and November 1, 1995. (Underwriters & Northfield Trigger 56.1 Resp. ¶¶ 24-25.) Westport issued primary and umbrella policies to Waukegan effective between November 1, 1997 and November 1, 2000. (Westport v. Waukegan ¶¶ 17-19, 30-32.) American Safety issued two policies to Waukegan, effective November 1, 2000 through November 1, 2001 and November 1, 2001 through November 1, 2002. (Waukegan v. American Safety ¶ 31.) Finally, Interstate issued a Commercial Umbrella Policy to Waukegan covering excess over American Safety’s November 1, 2001 through November 1, 2002 insurance policy. (Interstate v. Waukegan ¶¶ 21-22.) b. American Safety’s Policies. American Safety issued two Comprehensive Law Enforcement Liability Policies to Waukegan (“American Safety’s Policies”). (Waukegan v. American Safety 56.1 Resp. ¶ 31.) The first was Public Entity Program Policy No. 14AN-MUOO-0000008-001 to Waukegan, effective between November 1, 2000 and November 1, 2001, and the second was Public Entity Program Policy No. 14AN-MUOO-0000008-002, effective between November 1, 2001 and November 1, 2002. (Waukegan v. American Safety 56.1 Resp. ¶ 31.) Each of the American Safety policies contains the following relevant provisions: General Liability We will pay all sums in excess of the “Self Insured Retention” limit stated in the Policy Declarations that any “Insured” becomes legally obligated to pay as damages because of “Bodily Injury” or “Property Damage” caused by an “Occurrence”, or “Advertising Injury” or “Personal Injury” caused by an offense to which this coverage applies. The amount we will pay in damages is limited as described in section 2b below. The above stated coverage applies only if the “Occurrence” or offense occurs during the policy period and within the Policy Territory as set forth in the General Policy Provisions. The amount we will pay in damages is limited as described in Section 2b below. The above stated coverage applies only if the “Occurrence” or offense occurs during the policy period and within the Policy Territory as set forth in the General Policy Provisions. This General Liability Coverage Part does not apply if the “Occurrence” or offense arises as a result of a “Law Enforcement Activity”. Law Enforcement Liability We will pay all sums in excess of the “Self Insured Retention” limit stated in the Policy Declarations that any “Insured” becomes legally obligated to pay as damages because of “Bodily Injury” or “Property Damage” caused by an “Occurrence” in the course of a “Law Enforcement Activity” or because of an “Advertising Injury” or “Personal Injury” caused by an offense in the course of your “Law Enforcement Activity.” Duty to Defend We shall have the right and duty to select counsel and defend any claims seeking damages to which Part II applies. Our right and duty to defend ends when we have used up the applicable limit of insurance in the payment of judgments or settlements. Liability Exclusions ... This insurance does not apply to any claim due to: ... 2. Assumption of Liability: Damages any “Insured” is obligated to pay by reason of the assumption of liability under a contract or agreement. This exclusion does not apply to liability for damages assumed in a contract or agreement that is an “Insured Contract” provided “Bodily Injury”, “Property Damage”, “Personal injury” and/or “Advertising Injury” occur subsequent to the execution of the contract or agreement.... Supplementary Payments In addition to the Limit of Insurance we will pay for the “Insured”: (5) All costs taxed against the “Insured” in the “Suit”; (6) Prejudgment interest awarded against the “Insured” on that part of the judgment we pay ... (7) All interest on the full amount of any judgment that accrues after entry of the judgment and before we have paid, offered to pay, or deposited in the court the part of the judgment that is within the applicable limit of insurance. These payments will not reduce the limits of insurance. Common Policy Conditions ... 12. An “Insured’s” Duties in the Event of an “Occurrence,” Claim or Suit ... Unless having our express written consent, or acting at their own cost, an “Insured” will not voluntarily: 1. Make a payment; 2. Assume any obligation; or 3. Incur any expense .... 24. Policy Period We will pay only for loss that you sustain occurring during the Policy Period shown in the Declarations of this policy. Common Policy Definitions ... 9. “Bodily Injury” means bodily injury, sickness, disease, disability, shock, mental anguish, mental injury and humiliation sustained by a person, including death resulting from any of these at any time.... 19. “Insured” means (a) You ... (d) Any “Employee” or any other person for whom the “Insured” is legally liable provided that, at the time of the “Occurrence” or wrongful act, the individual or individuals are under the direct supervision or control of an “Insured.” ... (f) Your “Employee” is an “Insured” for: 1) “Bodily Injury” or “Personal Injury” to you or to a co-employee while in any way connected or related to the course and scope of his or her employment, or the spouse, child, parent, brother or sister of that co-employee as a consequence of such “Bodily Injury” or “Personal Injury,” or for any obligation to share damages with or repay someone else who must pay damages because of the injury; or 2) “Property Damage” to property owned or occupied by or rented or loaned to that “Employee”, or any of your other “Employees”... 21. “Law Enforcement Activity” means all operations of your police force or any other public safety organization which enforces the law and protects persons or property.... 29. “Occurrence” means an accident caused by a “Covered Cause of Loss”, including continuous or repeated exposure to substantially the same general harmful conditions.” 30. “Personal Injury” means injury, other than “Bodily Injury”, arising out of one or more of the following offenses: (a) False arrest, detention or imprisonment; (b) Malicious prosecution; ... (g) Violation of the Federal Civil Rights Act of 1871 or 42 U.S.C. 1983 and similar laws. 38. “Self Insured Retention” means: that sum or sums indicated in the Declarations or Schedule of “Self Insured Retentions” which the “Insured” shall pay: (a) For settlement or satisfaction of claims, “Suits” of judgments, after making deductions for all salvages and recoveries; plus (b) “Allocated Claims Expenses”.... The “Self Insured Retention” shall be paid by the “Insured” prior to any obligation on the part of this Company. This “Self Insured Retention” shall be funded by an “annual Aggregate Loss Fund” administrated by a “Third Party Administrator.” (American Safety v. Waukegan 56.1 Resp. ¶¶ 26, 43; American Safety v. Waukegan 56. 1, Exhibits B and C to Ex. A; Waukegan v. American Safety 56.1 Resp. ¶¶ 38-41, 44-45; Waukegan v. American Safety 56.1 Resp. Add. Facts. ¶¶ 1, 4; American Safety v. Waukegan 56.1 Resp. Add. Facts ¶¶ 2, 3, 11, 17, 20; Waukegan v. Interstate 56.1 Resp. ¶¶ 44, 47; Interstate v. Waukegan 56.1 Resp. Add. Facts ¶¶ 14, 16.) The first American Safety policy lists the “Policy Period” as “From: 11/01/00 To: 11/01/01.” (Waukegan v. American Safety 56.1 Resp. Add. Facts. ¶ 2.) The second American Safety policy lists the “Policy Period” as “From: 11/01/01 To: 11/01/02.” (Waukegan v. American Safety 56.1 Resp. Add. Facts. ¶ 2.) Dominguez’s January 28, 2001 arrest and incarceration occurred during the policy period for the first American Safety policy, and his convictions for home invasion, sexual assault, and failure to register as a sex offender were vacated during the policy period for the second American Safety policy. (Waukegan v. American Safety 56.1 Resp. ¶ 35-36.) The policies included $1,000,000 limits for each person and occurrence for losses, including losses attributable to or occurring in the course of law enforcement activities. (Waukegan v. American Safety 56.1 Resp. ¶ 31.) Waukegan’s police officers are insureds under the policies. (Waukegan v. American Safety 56.1 Resp. ¶ 38.) Under the American Safety Policies, Dominguez’s claims of false arrest (Count I) and malicious prosecution (Count II) fall within the definition of “personal injury.” (Waukegan v. American Safety 56.1 Resp. ¶ 42.) The Policies do not require insureds to notify American Safety when the SIR is exhausted. (Waukegan v. American Safety 56.1 Resp. ¶ 46; American Safety v. Waukegan 56.1 Resp. Add. Facts ¶ 18.) American Safety never inquired whether the SIR was exhausted or requested “paid to date” figures to determine whether the SIR was exhausted. (American Safety v. Waukegan 56.1 Resp. Add. Facts ¶ 18.) c. Interstate Policy. Interstate issued to Waukegan Commercial Excess and Umbrella Policy number UMC6101226 (“the Interstate Policy”), which had a policy period of November 1, 2001 through November 1, 2002. (Interstate v. Waukegan 56.1 Resp. ¶ 21, 24; Waukegan v. Interstate 56.1 Resp. ¶ 30.) The policy includes a provision for an upper liability limit of $10,000,000 per occurrence. (Waukegan v. Interstate 56.1 Resp. ¶ 30.) It provides coverage that follows form of underlying policies listed in its Schedule of Underlying Insurance. (Interstate v. Waukegan 56.1 Resp. ¶ 21.) Specifically, the Interstate Policy was an excess policy over American Safety’s policy effective November 1, 2001 through November 1, 2002. (Interstate v. Waukegan 56.1 Resp. ¶ 22.) The Interstate Policy provides coverage on an “occurrence” basis, and defines “insured” as “[t]he ‘named insured’ ” or “[a]ny person or organization included as an insured in any ‘underlying policy’ at the inception of this policy, other than an Additional Insured.” (Waukegan v. Interstate 56.1 Resp. ¶ 45.) Interstate’s policy provides that “[n]o ‘insured’ will, except at their own expense, voluntarily make a payment, assume any obligation or incur any expense without our consent.” (Interstate v. Waukegan 56.1 Resp. ¶ 25.) Interstate’s Policy has a SIR limit of zero dollars. (Waukegan v. Interstate 56.1 Resp. ¶ 33.) Under Section I, “Coverage,” of Interstate’s Policy, the section entitled “Coverage A-Excess Liability Coverage” states that: Insurance under Coverage A applies only to liability and damages covered by the ‘underlying insurance’ scheduled on this policy and is subject to the same terms, conditions, agreements, warranties, exclusions, definitions and limitations as the ‘underlying policy’ which are incorporated as part of this policy as applicable to Coverage A, except for: 3. Any duty to investigate or defend, or to pay for any investigation or defense ... 7. Any provision of the ‘underlying policy’ which is inconsistent with the provisions specifically set forth in this policy as applicable to Coverage A, in which case the provisions of this policy will apply; and 8. Any provision in this policy which is applicable to Coverage A for which a similar provision is not contained in the ‘underlying policy,’ in which case the provisions of this policy will apply. We will pay on behalf of the ‘insured’ that part of ‘loss’ to which this insurance applies, in excess of the total applicable limits of ‘underlying insurance’ and any ‘other insurance’ that the ‘insured’ becomes legally obligated to pay as damages provided such damages are caused by an ‘occurrence’ during this Policy Period .... (Waukegan v. Interstate 56.1 Resp. ¶ 39; Waukegan v. Interstate 56.1 Exhibit 10, p. 20.) Under Section II, “Defense and Supplementary Payments,” Interstate’s Policy further states: Defense 1. At Our Discretion, We May: (a) Investigate any ‘occurrence,’ claim or ‘suit, and (b) Settle any claim of which we assume control of the settlement, or ‘suit’ of which we assume control of the defense ... 3. We will assume control of the investigation and settlement of any claim, or defense of any ‘suit’ brought in the United States of America (including territories and possessions), Puerto Rico or Canada, against any ‘insured’ seeking damages to which this policy applies: a. Under Coverage A, when the applicable limits of ‘underlying insurance’ and ‘other insurance’ have been exhausted by payments of ‘loss,’ or expenses if included within the limits of insurance, arising from ‘occurrences’ to which this policy applies ... (Waukegan v. Interstate 56.1 Resp. ¶ 39.) Under Section V, “Limits of Insurance,” “Limits of Insurance Applicable to Coverage A and Coverage B,” Interstate’s Policy states: “We will pay only that amount of the covered ‘loss’ that is in excess of: 1. Under Coverage A, the total applicable limits of the ‘underlying policies’ listed in the Schedule of Underlying Insurance and all ‘other insurance’; ... (Waukegan v. Interstate 56.1 Resp. ¶ 32; Waukegan v. Interstate 56.1 Exhibit 10, p. 26.) “Loss” is defined as “those sums actually paid in settlement of a claim or ‘suit’ in satisfaction of a judgment which the ‘insured’ is legally obligated to pay as damages because of a covered injury, damage or offense, after making proper deductions for all recoveries or salvage.” (Waukegan v. Interstate 56.1 Resp. ¶ 45.) Under Section VII, Conditions, subsection J, the Policy further provides: When loss is payable This policy does not apply until: (1) Under Coverage A, any ‘insured,’ ‘underlying insurance,’ and/or ‘other insurance’ is obligated to pay the full amount of the ‘underlying insurance’ plus any applicable ‘other insurance, ... (Waukegan v. Interstate 56.1 Resp. ¶ 32; Waukegan v. Interstate 56.1 Exhibit 10, p. 33.) Interstate’s Policy, finally, contains a “Police Professional Liability Following Form Endorsement” that states under “Exclusions Applicable to Coverage A This insurance does not apply: To any liability resulting from the operations or activities of any police department or any other law enforcement agency of any ‘insured’ including any agent or employees thereof, arising out of and including but not limited to: A. False arrest, detention, or imprisonment; ... This exclusion does not apply if such liability is covered by valid and collectible ‘underlying insurance’ for the full limits scheduled. The coverage afforded by this policy will be no broader than the coverage provided by the ‘underlying insurance.’ (Waukegan v. Interstate 56.1 Resp. ¶¶ 41-42.) d. Underwriters’ and Northfield’s Policies. Underwriters subscribed to Public Entity All Lines Aggregate Insurance policies issued to Waukegan (“the Underwriters Policies”) with the following coverage periods: (1) Underwriters’ Policy No. 101104700 between November 1, 1991 and November 1, 1994; and (2) Underwriters’ Policy No. G712157, for which only the November 1, 1994 to November 1, 1995 term provided law enforcement liability coverage and is relevant purposes of this litigation. (Underwriters & Northfield Trigger Issue 56.1 Resp. ¶ 24; Underwriters & Northfield Trigger Issue 56.1 Resp. Add. Facts ¶5.) Northfield issued Commercial Insurance Policies to Waukegan (“the Northfield Policies”) with the following coverage periods: (1) Northfield Policy No. AA101050 between November 1, 1991 and November 1, 1994; and (2) Northfield Policy No. AA101117, for which only the November 1, 1994 to November 1, 1995 term provided law enforcement liability coverage and is relevant for purposes of this litigation. (Underwriters & North-field Trigger Issue 56.1 Resp. ¶ 25; Underwriters & Northfield Trigger Issue 56.1 Resp. Add. Facts ¶ 5.) Within the Underwriters’ Policies, Underwriters and North-field apportioned liability for these policies between themselves. (Underwriters & Northfield Trigger Issue 56.1 Resp. Add. Facts ¶ 6.) Both Underwriters’ Policies include provisions for $1,000,000 limits for each loss and/or occurrence and a $2,000,000 aggregate limit for losses including those attributable to law enforcement activities. (Underwriters & North-field Trigger Issue 56.1 Resp. Add. Facts ¶ 7.) Underwriters’ Policies provide in relevant-part as follows: It is agreed that the unqualified word ‘Assured’ wherever used in this Insurance includes not only the Named Assured but also: 1. any official, trustee, Director, Officer, Partner, Volunteer or employee of the Named Assured while acting within the scope of his duties as such ... * * * INSURING AGREEMENTS This section applies only to bodily injury, personal injury or property damage which occur during the policy period and arise out of an occurrence which takes place within the territorial scope of the Policy ... C — LAW ENFORCEMENT LIABILITY: Underwriters hereby agree, subject to the limitations, terms and conditions hereunder mentioned, to indemnify the Assured for all sums which the Assured shall be obligated to pay by reason of errors, omissions, or negligent acts arising out of the performance of the Assured’s duties while acting as a law enforcement official or officer in the regular course of public employment as hereafter defined, arising out of any occurrence from any cause on account of Personal Injury, Bodily Injury, Property Damage [the latter policy adds Violation of Civil Rights] or First Aid, happening during the period of this insurance!.] ... DEFINITIONS 1. PERSONAL INJURY — The term “personal injury” wherever used herein, shall mean Bodily injury, Mental Anguish, Shock, Sickness, Disease, Disability, Wrongful Eviction, Malicious Prosecution, Discrimination, Humiliation ... In addition respects Insuring Agreement C only, “Personal injury” shall mean False Arrest, False Imprisonment, Detention and Violation of Civil Rights arising out of Law Enforcement Activities. 2. BODILY INJURY — The term “bodily injury” shall mean physical injury to any person (including death) and any mental anguish or suffering associated with or arising from such physical injury 9. OCCURRENCE — The term “occurrence” wherever used herein shall mean an accident or a happening or event or a continuous or repeated exposure to conditions which result in personal injury or damage to property during the policy period. All personal injuries to one or more persons and/or property damage arising out of an accident or event or a continuous or repeated exposure to conditions shall be deemed one occurrence. (Underwriters & Northfield Trigger Issue 56.1 Resp. ¶ 26; Underwriters & North-field Trigger Issue 56.1 Resp. Add. Facts ¶¶ 8,11-12.) e. Westport’s Policies. Westport’s predecessor Coregis issued Public Entity Pooled Program Policy No. 651-006954-0 to Waukegan, with a policy period from November 1, 1997 to November 1, 1998. (Waukegan v. Westport 56.1 Resp. ¶ 30.) That policy was renewed for the period November 1, 1998 to November 1, 1999, and again for the period November 1, 1999 to November 1, 2000; each of these three policies had a $1 million limit of insurance for each occurrence (collectively, “the Westport Primary Policies”). (Waukegan v. Westport 56.1 Resp. ¶ 30.) Those policies include law enforcement liability coverage and state that Westport will pay “all sums in excess of the ‘Self Insured Retention’ limit stated in the Policy Declarations that any ‘Insured’ becomes legally obligated to pay as damages ... because of ... ‘Personal Injury caused by an offense in the course of your ‘Law Enforcement Activity.’ ” (Waukegan v. Westport 56.1 Resp. ¶ 34.) The Westport Primary Policies at issue state that “[w]e shall have the right and duty to defend or be associated with the defense of any claim or ‘Suit’ seeking damages to which Part II [including Law Enforcement Liability] applies .... ” (Waukegan v. Westport 56.1 Resp. ¶ 36.) The City is an insured under the Westport Primary Policies. (Waukegan v. Westport 56.1 Resp. ¶ 37.) The Westport Primary Policies define “Law Enforcement Activity,” in part as “all operations of your police force or any other public safety organization which enforces the law and protects persons or property.” (Waukegan v. Westport 56.1 Resp. ¶ 40.) “Occurrence,” under the policies, “means an accident caused by a ‘Covered Cause of Loss’, including continuous or repeated exposure to substantially the same general harmful conditions.” (Waukegan v. Westport 56.1 Resp. ¶ 40.) “Personal Injury” is defined as “injury, other than ‘Bodily Injury’ arising out of one or more of the following offenses: (a) false arrest, detention or imprisonment; (b) malicious prosecution.... ” (Waukegan v. Westport 56.1 Resp. ¶ 40.) The Westport Primary Policies state that “[Westport] will pay only for the loss that you sustain occurring during the Policy Period shown in the Declarations of this Policy.” (Westport v. Waukegan 56.1 Resp. ¶ 27.) Those policies also have a provision prohibiting the City from “voluntarily” “[m]ak[ing] a payment,” “[a]s-sum[ing] any obligation” or “[i]ncur[ring] any expense” without Westport’s written consent.” (Waukegan v. Westport 56.1 ¶ 29.) Westport also issued a series of umbrella policies to the City that were in effect November 1, 1997 to November 1, 2000 (together with the Westport Primary Policies, “the Westport Policies”). (Waukegan v. Westport 56.1 Resp. ¶ 41.) 4. Dominguez Insurance Claim Handling. On April 11, 2007, six months after the verdict in the Dominguez Civil Case in October 2006, American Safety filed this Complaint for declaratory judgment seeking a coverage determination with respect to Dominguez’s insurance claim with various carriers (“the Dominguez Claim”). (Waukegan v. American Safety 56.1 Resp. ¶ 76; Waukegan v. Interstate 56.1 Resp. ¶ 10.) The material facts specific to Waukegan’s relationship with each insurer during the pendency of the Dominguez Civil Case and up until filing this declaratory judgment action are detailed below, a. American Safety. Linda Ford has been the benefits administrator for Waukegan since 1989; she is responsible for maintaining all claims against Waukegan and ensuring that those claims are reported to a third party administrator. (American Safety v. Waukegan 56.1Resp. ¶ 28.) Custard Claims served as the third party administrator for Waukegan’s claims relevant to this case. (American Safety v. Waukegan 56.1 Resp. ¶ 29.) More specifically, Marianne Veltri (“Veltri”) of Custard Claims handled the Dominguez claim and was responsible for keeping track of expenses that would exhaust the $100,000 SIR. (American Safety v. Waukegan 56.1 Resp. ¶ 29.) On June 2, 2004, Waukegan was served with the Dominguez Civil Complaint and a waiver of service of summons with a return date for its answer of July 28, 2004. (Waukegan v. American Safety 56.1 Resp. ¶ 50.) Attorney Michael Noonan (“Noonan”) was one of the attorneys who defended Waukegan in the Dominguez Civil Case. (American Safety v. Waukegan 56.1 Resp. ¶ 31.) In a letter to Veltri on June 17, 2004, Noonan provided his opinion that “the malicious prosecution claim would not have ripened until the judge vacated the judgment against him which would have been on April 26, 2002.” (American Safety v. Waukegan 56.1 Resp. Add. Facts ¶23; Underwriters & Northfield Trigger Issue 56.1 Resp. Add. Facts ¶ 18.) On July 14, 2004, Custard Claims, through Veltri, provided actual notice of the Dominguez Civil Case and status of proceedings to American Safety, reporting the Dominguez claim on a precautionary basis. (Waukegan v. American Safety 56.1 Resp. ¶ 51.) Jean Fisher, American Safety’s claims counsel, explained that if the insurer is on notice of a claim on a precautionary basis, its obligations are “generally, nothing” at that point in time, unless the insured asks the handler to accept the obligation-it does not at that time have to look at the policy to see if the provisions would apply. (Waukegan v. American Safety 56.1 Resp. ¶ 75.) In response to the City’s notification, American Safety acknowledged notification, assigned a claim number, assigned Peter Hildebrand (“Hildebrand”) as a supervisor to handle the claim, and demanded status reports over a two year period. (Waukegan v. American Safety 56.1 Resp. ¶¶ 52-53.) Fisher, when asked about American Safety’s claims handling process in place at the time, explained that American Safety would receive notice of a claim, send a fax acknowledgment in response, and then the individual claim handler — in this case Hildebrand — would maintain the claim file. (Waukegan v. American Safety 56.1 Resp. ¶ 72.) As early as August 6, 2004, Hildebrand the began receiving status reports from Noonan. (Waukegan v. American Safety 56.1 Resp. ¶ 53.) On November 18, 2004, in response to the question: “What is your position on primary coverage?” from Interstate employee Terry Donahoe (“Dona-hoe”), Hildebrand answered that “wrongful acts are covered under the primary policy.” (Waukegan v. American Safety 56.1 Resp. ¶ 56.) the time the Dominguez Civil Case was pending, Hildebrand was handing at least four other claims for Waukegan. (Waukegan v. American Safety 56.1 Resp. ¶ 53.) Hildebrand requested updates on the Dominguez civil case along with some of these other cases. (Waukegan v. American Safety 56.1 Resp. ¶ 54.) On December 6, 2004, for example, Hildebrand faxed Veltri comments on five of Waukegan’s claims, identifying the date of accident for the Dominguez claim as April 26, 2002. (Waukegan v. American Safety 56.1 Resp. ¶ 54.) Noonan provided status updates to American Safety on an ongoing, regular basis throughout the Dominguez Civil Case. (Waukegan v. American Safety 56.1 Resp. ¶ 53; American Safety v. Waukegan 56.1 Resp. Add. Facts ¶ 22.) During the time that Hildebrand handled the Dominguez claim, he never denied coverage. (Waukegan v. American Safety 56.1 Resp. ¶ 57.) After Hildebrand left his employment with American Safety in late 2005, the Dominguez claim file was transferred to Robert D’Olympio (“D’Olympio”). (Waukegan v. American Safety 56.1 Resp. ¶ 58.) D’Olympio had no prior experience handling public entity or law enforcement liability policy claims. (Waukegan v. American Safety 56.1 Resp. ¶ 59.) He did not contact Waukegan to announce his appearance on the case for several months even though regular status reports were still being sent to Hildebrand at American Safety. (Waukegan v. American Safety 56.1 Resp. ¶ 59.) D’Olympio contacted Veltri by email on April 12, 2006 asking about the probability of the outcome of the case. (Waukegan v. American Safety 56.1 Resp. ¶ 60.) Veltri forwarded status reports according to D’Olympio’s expectations. (Waukegan v. American Safety 56.1 Resp. ¶ 60.) D’Olympio testified one of the primary rights of an insured is to know if there is no coverage under a given policy. (American Safety v. Waukegan 56.1 Resp. Add. Facts ¶ 27.) On June 6, 2006, Veltri contacted D’Olympio with a status update and to confirm that American Safety was the carrier with coverage for the Dominguez claim. (Waukegan v. American Safety 56.1 Resp. ¶ 61.) In his email response on that same day, D’Olympio suggested to Waukegan that there was no coverage under the American Safety policies, stating: “I don’t understand why we would have any coverage at all for this matter ... I continue to review the file and will also research this situation with respect to the DOL. Therefore, in answer to your question: 1) American Safety is not the carrier with coverage for this claim.” {American Safety v. Waukegan 56.1 Resp. ¶ 33; American Safety v. Waukegan 56.1, Ex. K; Waukegan v. American Safety 56.1 Resp. ¶ 61; (American Safety v. Waukegan 56.1 Resp. Add. Facts ¶ 28.) D’Olympio sent another email to Veltri two days later stating that based on the dates of arrest and imprisonment, it did not “appear” that the claim would be covered and suggested that he needed to contact an attorney. (Waukegan v. American Safety 56.1 Resp. ¶ 62.) In a separate email on June 8, 2006, D’Olympio told Veltri that he forwarded the coverage question to separate counsel in Illinois to obtain a second opinion. (Waukegan v. American Safety 56.1 Resp. ¶ 63.) D’Olympio did not initiate any further communication with Veltri until September 22, 2006, when she wrote to him and reminded him that had expressed that he would research the date of loss. (Waukegan v. American Safety 56.1 Resp. ¶ 64.) Also in this email, Veltri reminded D’Olympio about the impending trial on October 3, 2006 and a $4,000,000 settlement demand; she also stated that she needed American Safety’s position on coverage. (Waukegan v. American Safety 56.1Resp. ¶ 65.) D’Olympio responded to Veltri’s email on September 25, 2006, explaining that he had not received a coverage opinion from Illinois counsel and stating that American Safety did not believe there was coverage for the claim; he then informed her that he would give a more detailed explanation the next day. (Waukegan v. American Safety 56.1 Resp. ¶¶ 66-67.) On September 26, 2006, seven days before the Dominguez Civil Case proceeded to trial and 27 months after American Safety received a copy of the Dominguez Civil Complaint, D’Olympio sent a letter to Veltri advising that the American Safety Policies do not provide coverage for the Dominguez claim. (American Safety v. Waukegan 56.1 Resp. ¶ 33; American Safety v. Waukegan 56.1 Resp. Add. Facts ¶¶ 32, 34.) More specifically, D’Olympio’s letter explained that the date of loss was not within the applicable policy period. (Waukegan v. American Safety 56.1 Resp. ¶ 67.) Waukegan, through its counsel, William Anderson (“Anderson”), requested indemnification for the Dominguez Civil Case verdict on November 3, 2006. (Waukegan v. American Safety 56.1 Resp. ¶ 74.) American Safety then issued a claim denial to Waukegan through its attorney, Neil Kraetsch (“Kraetsch”), on December 8, 2006. (Waukegan v. American Safety 56.1 Resp. ¶ 73.) In this letter, Kraetsch explained that the occurrence was not within the policy period. (Waukegan v. American Safety 56.1 Resp. ¶ 73.) American Safety did not appear and defend Waukegan or Hendley during the litigation, trial, or appeal of the Dominguez Civil Case, or defend under a reservation of rights. (American Safety v. Waukegan 56.1 Resp. Add. Facts ¶ 21.) Following the October 17, 2006 verdict of $9,063,000 in the Dominguez Civil Case, American Safety had declined to provide a defense or coverage to Waukegan under either relevant policy. (Waukegan v. American Safety 56.1 Resp. ¶ 76.) b. Interstate On September 15, 2004, Veltri sent notice to of the Dominguez Civil Case to Interstate. (Waukegan v. Interstate 56.1 Resp. ¶ 51.) Donahoe was a claims analyst for Interstate, a subsidiary of Fireman’s Fund. (Waukegan v. Interstate 56.1 Resp. ¶ 52.) As early as September of 2004, Donahoe sent an email to Veltri stating that Donahoe would monitor the case through the primary carrier. (Waukegan v. Interstate 56.1 Resp. ¶ 53.) The Interstate claims file notes further show that Interstate received a number of updates about the status of the litigation after September 2004. (Interstate v. Waukegan 56.1 Resp. Add. Facts ¶ 26.) On October 23, 2006, a week after the jury returned a verdict in favor of Dominguez, Interstate sent Waukegan a letter denying coverage based on the date of loss and Dominguez’s incarceration not falling within the policy period. (Waukegan v. Interstate 56.1 Resp. ¶ 64; 70; Interstate v. Waukegan 56.1 Resp. Add. Facts ¶ 35.) On November 3, 2006, Waukegan Attorney Anderson sent Interstate a letter requesting indemnification. (Waukegan v. Interstate 56.1 Resp. ¶ 74.) Approximately one year later, on October 12, 2007, Interstate filed a declaratory judgment action against Waukegan in the Circuit Court for the Nineteenth Judicial Circuit, Lake County, seeking a declaration that its insurance policies did not provide coverage for the Dominguez Claim. (Waukegan v. Interstate 56.1 Resp. ¶ 65.) c. Underwriters and Northfield. The City reported the Dominguez Civil Case to Underwriters in a letter from Veltri on January 19, 2005. (Waukegan v. Underwriters 56.1 Resp. ¶ 45.) On January 11, 2006, Underwriters sent Waukegan a reservation of rights letter concerning coverage for the November 1, 1992 to November 1, 1994 policy period. (Waukegan v. Underwriters 56.1 Resp. ¶ 45.) Underwriters reserved its rights for the other policy periods in October 2006 and December 2009. (Waukegan v. Underwriters 56.1 Resp. ¶¶ 54, 58, 61.) Northfield received notice of the Dominguez Civil Case in a letter from Veltri dated September 17, 2004. (Waukegan v. Northfield 56.1 Resp. ¶¶ 46, 72.) On October 6, 2006, Northfield sent the City a letter reserving its rights. (Waukegan v. Northfield 56.1 Resp. ¶ 50; Waukegan v. Northfield 56.1 Exhibit 22.) d. Westport. Westport received the July 14, 2004 letter from Veltri reporting the Dominguez suit “on a precautionary basis.” (Waukegan v. Westport 56.1 Resp. ¶ 48.) West-port’s claims handler reviewed all the Westport Policies in connection with his analysis of the Dominguez Claim prior to sending a letter on September 17, 2004, denying coverage under a 1988-1989 policy that did not have law enforcement coverage. (Waukegan v. Westport 56.1 Resp. ¶ 50; Westport v. Waukegan 56.1 Resp. Add. Facts ¶ 37.) Westport did not file a declaratory judgment against the City with regard to policies Westport had issued to the City. (Waukegan v. Westport 56.1 Resp. ¶ 59.) On January 23, 2007, Westport sent a letter to Waukegan’s attorney declining coverage under the West-port Policies, on the grounds that none of the dates of incidents described in Dominguez’s complaint occurred during any of Westport’s policy periods, as well as several other grounds. (Waukegan v. Westport 56.1 Resp. ¶¶ 61-62.) 5. Waukegan’s Damages On May 12, 2008, Judge Shadur ordered that “a letter of credit be posted by the City of Waukegan in favor of Dominguez’s attorneys in the total sum of $10,047,195,-39. (Waukegan v. American Safety 56.1 Resp. ¶ 77; Waukegan v. Interstate 56.1 Resp. ¶ 75; Waukegan v. Westport 56.1 Resp. ¶ 65.) On May 22, 2009, he issued an order authorizing Dominguez to draw on the letter of credit in this amount. (Waukegan v. American Safety 56.1 Resp. ¶ 77; Waukegan v. Interstate 56.1 Resp. ¶ 75; Waukegan v. Westport 56.1 Resp. ¶ 65.) On December 21, 2009, Waukegan issued an ordinance providing for the issuance of $11,452,000 of General Obligation Bond Anticipation Notes to pay the verdict amount in the Dominguez Civil Case as well as certain attorneys’ fees incurred in the litigation. (Waukegan v. American Safety 56.1 Resp. ¶ 78; Waukegan v. Interstate 56.1 Resp. ¶ 76.) A March 9, 2010 Satisfaction of Judgment provided that: S. Alejandro Dominguez, the judgment creditor, having received full satisfaction and payment, releases the judgment against Paul Hendley entered on October 17, 2006 as modified by the judgment order entered on December 18, 2006 against Paul Hendley and the City of Waukegan in the amount of $9,063,000 and the judgment entered against Paul Hendley and the City of Waukegan on August 7, 2007 in the amount of $517,532 as well as all accrued interest and additional costs and attorneys fees accrued by judgment creditor since August 21, 2007. (Waukegan v. American Safety 56.1 Resp. ¶ 79; Wauke