Duty to Defend Is Not Without Limit

Courts Must Never Speculate About Facts Not in Evidence
Post 5192

Injuries to Others at McDonald's Do Not Provide Duty to Defend Suit by Employee Who Did Not Incur Bodily Injury

In McdDonald's Corporation, et al v. Homeland Insurance Company Of New York, No. 23 C 16297, United States District Court, N.D. Illinois, Eastern Division (September 10, 2025) McDonald's Corporation and McDonald's USA LLC (collectively, “McDonald's”) sued Defendant Homeland Insurance Company of New York (“Homeland”) challenging Homeland's denial of coverage under a commercial general liability insurance policy.

BACKGROUND        

A McDonald's franchisee operated the McDonald's restaurant (“Restaurant”) located in Chicago, Illinois. (hereinafter, “PRSOF”). From March 1, 2015 through March 1, 2018, the franchisee maintained a commercial general liability policy (“Policy”) issued by Homeland.

Section I of the Policy provides: “We will pay those sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury' or ‘property damage’ to which this insurance applies.” Importantly, the Policy dictates that a bodily injury is covered only if takes place during the policy period, i.e., March 1, 2015, through March 1, 2018.

McDonald's attempted to utilize the Policy after being sued by a Restaurant employee in the Circuit Court of Cook County, Sonia Acuna, et al. v. McDonalds, et al., No. 2019 CH 13477 (“Underlying Action”). Ultimately, Acuna was a party to four different complaints in the Underlying Action; her participation culminated with the filing of the third amended complaint on July 19, 2021. Since Acuna was the sole plaintiff in the Underlying Action who worked at the Restaurant, only her specific claims are relevant to this dispute.

After evaluating the lawsuit and the Policy, Homeland denied coverage because Acuna did not allege any “bodily injury” during the policy period.

DISCUSSION

The factual allegations in the amended complaint state a vicarious liability claim that falls within the coverage of the insurance policy, and therefore, plaintiff's amended complaint was not an improper or unsupported attempt to plead into coverage.

The Operative Complaint includes allegations of specific incidents involving Acuna, which McDonald's concedes cannot trigger Homeland's duty to defend because they occurred outside the policy period, and more generalized allegations of harm.

An insurer has a duty to defend when the complaint's allegations fall within or potentially fall within the coverage provisions of the policy. Because a complaint need not allege or use language affirmatively bringing the claims within the scope of the policy, the duty to defend is broader than the duty to indemnify.

The duty to defend depends on the facts underlying a complaint, not the specific legal theory on which the plaintiffs base their claims. Illinois courts follow the so-called “eight-corners rule”  where courts determine the duty to defend by looking only within the four corners of the insurance policy and the four corners of the complaint for which defense is sought.

The insurer's duty to defend, while broad, is not without limits. Notwithstanding the breadth of the duty, the claim against the insured must still contain explicit factual allegations that potentially fall within policy coverage. While the Court must examine the underlying claims with care, it cannot read into the complaint facts that are not there. Generalized allegations are not enough

The gist of Acuna's claims is that witnessing bodily injury inflicted on others resulted in psychological harm to her. The Operative Complaint, and all preceding complaints for that matter, were devoid of facts establishing that Acuna sought damages for a covered bodily injury that occurred during the policy period.

A Court may not find a duty to defend based on conjecture. The duty to defend may be broad, but Illinois law does not permit the court to speculate about possible factual scenarios that are absent from the claim itself. Even if it could, second-hand injuries such as fear and emotional distress caused by viewing other persons' bodily injuries are simply not covered by the Policy.

Therefore the Court found no duty to defend and granted summary judgment in favor of Homeland.

ZALMA OPINION

The Illinois 8 corners rule made the decision of the Court obvious because the allegations of the complaint by Ms. Acuna did not fit the definitions of injury within the policy's effective dates. Since there must be a bodily injury within the policy's effective dates and no evidence existed the court properly refused to speculate and granted Homeland's summary judgment.

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c) 2025 Barry Zalma & ClaimSchool, Inc.

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