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THIRD DIVISION
May 22, 2002

On November 19, 1999, Sears, Roebuck & Company (Sears),the insured, filed a three-count complaint for declaratoryjudgment and other relief seeking a judicial determinationas to whether, pursuant to a commercial general liabilitypolicy (Policy), its insurer, National Union, had a duty todefend and indemnify it in an underlying lawsuit filed byCrystal D. Bland. In her complaint, Bland alleged that shewas assaulted and raped by Arthur V. Lanier, who was hiredto clean her carpets as an employee of Flagship CleaningServices (Flagship), a Sears licensee.

Count I of Sears' complaint sought a declaratoryjudgment that National Union had a duty to defend andindemnify Sears in the Bland lawsuit pursuant to thePolicy's coverage for "bodily injury." Count II sought adeclaratory judgment that, under the Policy, Sears wasentitled to "insured contract" coverage. In count III,Sears sought damages for National Union's alleged breach ofcontract for refusing to defend and indemnify Sears in theBland lawsuit.

On February 17, 2000, Sears filed an amended complaintcontaining four counts. The amended complaint also gavenotice that on December 15, 1999, Sears had reached asettlement agreement in the Bland lawsuit. Count III in theamended complaint now alleged breach of contract only forthe failure to indemnify. The newly added count IV allegedbreach of contract for the failure to reimburse defense feesand costs.

On April 19, 2000, National Union filed a motion todismiss the amended complaint pursuant to section 2-615 ofthe Illinois Code of Civil Procedure (Code)(735 ILCS 5/2-615(West 1998)), along with a supporting memorandum of law.

On June 27, 2000, the circuit court issued a memorandumopinion in which it granted National Union's motion todismiss as to count II (declaratory judgment that Sears wasentitled to insured contract coverage) and count IV (breachof contract for failure to reimburse fees and costs).However, the court denied the motion to dismiss as to countI (declaratory judgment that National Union had duty todefend and indemnify Sears) and count III (breach ofcontract for failure to indemnify), where Sears soughtcoverage for "bodily injury." The court found that based onthe holding in Nationwide Mutual Fire Insurance Co. of Ohiov. Pipher, 140 F.3d 222 (3d Cir. 1998), Bland's claimsalleging negligent conduct on the part of Sears fell withinthe Policy's coverage for "bodily injury" and, therefore,National Union could not claim that there was no coveragefor Sears' potential liability.

On June 28, 2000, the circuit court issued a correctedmemorandum opinion stating that its June 27 memorandumopinion mistakenly indicated that the court had grantedNational Union's motion to dismiss count IV. The court thencorrected the error, stating that National Union's motion todismiss count IV was denied.

On July 10, 2000, Sears filed a motion for partialsummary judgment, contending that the circuit court's June27 and 28 memorandum opinions were tantamount to a findingthat National Union should have defended and indemnifiedSears in the Bland lawsuit.

On July 17, 2000, Sears' motion for partial summaryjudgment was entered, but it was continued when NationalUnion filed a motion to reconsider the denial of its motionto dismiss as to counts I, III, and IV of Sears' amendedcomplaint.

On September 13, 2000, the circuit court entered amemorandum opinion granting National Union's motion toreconsider, thereby dismissing counts I, III, and IV ofSears' amended complaint. The court granted NationalUnion's motion principally on the ground that it found thatthe holding in Moscov v. Mutual Life Insurance Co. of NewYork, 387 Ill. 378, 56 N.E.2d 399 (1944), prevented thecourt from exercising its discretion to follow the ThirdCircuit's decision in Pipher.

On September 19, 2000, Sears filed a timely notice ofappeal from the September 13, 2000, final order dismissingits amended complaint. On appeal, Sears argues that: (1)the trial court erred when it determined that, based on theholding in Moscov, the court did not have the discretion tofollow the Third Circuit's decision in Pipher; and (2)National Union should have defended Sears in the Blandlawsuit. For the following reasons we affirm the circuitcourt's final order dismissing Sears' amended complaint.

FACTUAL BACKGROUND

This declaratory judgment action arose from a lawsuitfiled by Bland against Flagship, Sears, and Lanier, aFlagship employee. Bland's lawsuit was filed in the circuitcourt of Prince George's County, Maryland. The Blandcomplaint alleged that she was assaulted and raped by Lanierwhen he came to her home to clean her carpets. Bland'scomplaint contained 18 counts against Sears.

In the Policy that National Union issued to Flagship,Sears was named as an additional insured. National Uniondefended Flagship in the Bland lawsuit and ultimatelysettled it on behalf of Flagship. However, National Unionrefused to extend coverage to Sears.

On December 15, 1999, Sears reached a settlementagreement with Bland, fully resolving that underlyinglitigation. National Union has refused Sears' request forreimbursement of its settlement and defense costs, thusgiving rise to the present action.

ANALYSIS

Applicable Law

The parties agree that pursuant to the terms of thePolicy at issue in this case, Pennsylvania substantive lawapplies. However, the parties have cited and relied on theprocedural law of Illinois.

Standard of Review

Where a trial court dismisses a complaint under eithersection 2-615 or section 2-619 of the Code (735 ILCS 5/2-615, 2-619 (West 1998)), this court applies a de novostandard of review. R-Five, Inc. v. Shadeco, Inc., 305 Ill.App. 3d 635, 712 N.E.2d 913, 915 (1999). Additionally, thedetermination of rights and obligations under an insurancepolicy is a question of law for the court to determine.Crawford Laboratories, Inc. v. St. Paul Insurance Co. ofIllinois, 306 Ill. App. 3d 538, 715 N.E.2d 653, 656 (1999).

I. Illinois Trial Court's Authority to Exercise itsDiscretion to Follow Federal Court Decisions in PredictingHow a Sister State's Supreme Court Would Rule on a Matter atIssue

Sears contends that the trial court erred in holdingthat under Moscov the court had no discretion to follow theThird Circuit's decision in Pipher, in determining whetherBland's sexual assault constituted an accidental"occurrence" under the Policy. Sears maintains that theholdings in West v. American Telephone & Telegraph Co., 311U.S. 223, 85 L. Ed. 139, 61 S. Ct. 179 (1940), and Williams,McCarthy, Kinley, Rudy & Picha v. Northwestern NationalInsurance Group, 750 F.2d 619 (7th Cir. 1984), allowIllinois state courts to rely on persuasive authority,including federal diversity cases such as Pipher, inpredicting how a sister state's supreme court would rule ona particular issue.

In response, National Union contends that the trialcourt correctly determined that it had no discretion tofollow Pipher, because under the Uniform Judicial Notice ofForeign Law Act (Uniform Foreign Law Act) (735 ILCS 5/8-1003through 8-1008 (West 1994)), as interpreted by the IllinoisSupreme Court in Moscov, an Illinois trial court has nodiscretion to rely upon a federal diversity case whenapplying a sister state's law, if the sister state'sintermediate court has already addressed the matter at issueand there is no controlling decision by that state's highestcourt of review. National Union argues that, therefore, thePennsylvania Superior Court's decision in BritamcoUnderwriters, Inc. v. Grzeskiewicz, 433 Pa. Super. 55, 639A.2d 1208 (1994), and not Pipher, provides the rule of lawto be followed in this case.

Illinois adopted the Uniform Foreign Law Act in 1939.See O'Neal v. Caffarello, 303 Ill. App. 574, 25 N.E.2d 534(1940). In Cliff v. Pinto, 74 R.I. 369, 375, 60 A.2d 704,707 (1948), the court stated that it adopted its version ofthe Uniform Foreign Law Act to provide a simple method ofenabling courts of the forum to ascertain the law of everystate, territory and other jurisdiction of the UnitedStates. In Strout v. Burgess, 144 Me. 263, 68 A.2d 241(1949), the court stated that it adopted its version of theUniform Foreign Law Act to simplify the method ofappropriately bringing to the consideration of the courtapplicable principles of foreign law and to leave itsdetermination to the court rather than the jury. In Franzenv. Equitable Life Assur. Soc., 130 N.J.L. 457, 33 A.2d 599(1943), the New Jersey Supreme Court stated that apart fromthe principle of uniformity, it adopted its version of theUniform Foreign Law Act to achieve certainty in theascertainment and application of foreign law.

In Moscov, the Illinois Supreme Court held that theUniform Foreign Law Act along with the reasoning employed bythe United States Supreme Court in its application ofsection 34 of the Judiciary Act of 1789, 28 U.S.C.