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IN THE CIRCUIT COURT OF COOK COUNTY.

ILLINOIS
COTJNTY DEPARTMENT, CHANCERY DIVISION
DHR INTERNATIONAL, INC., f/K/A )
HOFFMAN ACQUISTIION CO., INC., )
an Illinois Corporation, and DAVID H.
HOFFMAN, an Illinois Resident,

t2CH28 ? 6 3

Plaintiffs,
No.

FEDERALINSURANCECOMPANY, )
a Foreign

Corporation,

Defendant.

)
)

COMPLAINT FOR DECLARATORY JUDGMENT AND OTIIER RELIEF


Plaintiffs, DHR Intemational, Inc., flkla Hoffman Acquisitions co., Inc., and David

I-I.

Hoffman, by their undersigned counsel, for their complaint for Declaratory Judgment and other
Relief, state as follows:

l.

This is an action for a Declaratory Judgment pursuant to 735 ILCS 5/2-702, to

determine the obligations and duties

of Defendant, Federal Insurance company (..Federal")

under a ForeFront Portfolio insurance policy issued by Federal to Plaintiff DH1 Intemational,

Inc' ("DHR"), on which policy Plaintiff David H. Hoffman ("Hoffman',) was also an Insured,

copy of which is attached hereto as Exhibit A, with respect to the lawsuit filed in the Law
Division of this court by Defendant Robert E. Reilly, Jr. ("Reily") against plaintiffs, No.2005 L
008700, a copy of which Complaint herein is attached hereto as Exhibit

B.

Robert E. Reillv. Jr..

is notjoined in this action and no reliefis sought against him herein.

PARTIES

2'
Cook County.

Plaintiff DHR is an Illinois corporation with its principal place of business in

3.

Plaintiff Hoffman is an lllinois resident who resides in Cook County.

4.

Defendant Federal is an Indiana stock insurance company with its principal place

of business in New Jersey, and is authorized to write insurance policies in Illinois and did issue
an insurance policy to Plaintiffs in Illinois.

JURISDICTION AND VENUE

5.

This Court has jurisdiction over Defendants pursuant to 735 ILCS 5/2-209.

6.

Venue is proper in this County pursuant to 735 ILCS 5/2-101, 512-102(a), and

5/2-103G)|-

BACKGROUND FACTS and FEDERAL'S COVERAGE POSITION

7.

On August 9,2005, Defendant Reilly filed his Verified Complaint for Damages

and other Relief ("complaint") against Plaintiffs herein styled Robert E. Reilly, Jr., v. DHR

International, Inc., f/Aa Hoffman Acquisition Co., Inc., and David H. Hoffman, (Case No. 2005
L 008700), which complaint was tendered by DHR to Defendant Federal with notice.

8.

On November 9, 2005, Federal provided Defendants with a lefter, a copy of which

is attached hereto as Exhibit c, stating that "Federal accepts coverage," but in which letter
Federal also denied coverage under certain parts of the policy and for certain allegations of the

complaint, and acknowledged its duty to defend the entire complaint. Federal was thereby
obliged to defend the complaint

in its

entirety and pay for

attomeys' fees, costs and expenses incurred

in

all

reasonable and necessary

defending DHR and Hoffman against the

allegations in the Complaint, ("defense expenses,, or ,,Defense Costs").

9.

In spite ofthe fact that Federal both denied coverage for certain allegations under

one part of the Policy and accepted coverage for other allegations under another part of the

policy, and agreed to provide a defense to its insureds for the entire Complaint. Federal never

advised

its

insureds

of their right

under well-established Illinois law

to be

defended by

independent ("Peppers") counsel, and did not in fact provide such independent defense counsel

to its insureds. Instead, Federal pushed upon the insureds the services of a law firm which
regularly did work for Federal, even though that law firm was in a conflict of interest with
respect to the representation.
I

0.

With respect to the defense to the Complaint to be provided to its

insureds,

Federal's November 9, 2005 letter stated in part:


Please note, that pursuant to Policy paragraph X of the General Terms and
Conditions Section, Federal will be providing 100% of the defense costs in this
matter until such lime as all covered claims (Counts I and III) are dismissed frorn
the litigation. Nevertheless, this does not change Federal's position that
[sic] that
coverage in this matter is limited to the provision of dcfensc costs only, once the
Insured's $100,000 deductible has been exhausted.
(See,

Exhibit C, p. 2, emphasis in original). Neither in this part nor any other part of the letter,

did Federal advise the insureds that the provision of 100% of the defense costs would be subject
to any limit whatsoever; the only limitations mentioned are the satisfaction ofthe deductible, and
the continued presence ofCounts I and
I

l.

III,

as discussed below.

Federal's November 9, 2005 letter went on to deny coverage under the Directors

& officers Liability

coverage section of the policy (see, Exhibit

Liability coverage (id., p. r n. l),

as

we

c, p. 5) and the Fiduciary

as to deny and/or reserve the right to deny coverage

under the Employment Practices Liability Coverage Section of the Policy for Loss other than

*Ix.

Defense costs (id., p.

l;

5). The Federal letter

also reserved rights to deny coverage on various bases (rd., p. 5 ff.).

12.

6-10), and to deny coverage for counts II. and IV.

(id.,p. r-2:3-

In spite ofthe fact that Federal provided a defense to the insureds for portions of

the Complaint while reserving the right to deny and,/or denying coverage for other portions
of the

Complaint, Federal neither in its November 9, 2005 letter nor in any other letler to the insureds,

advised the insureds of their rights under Illinois law to independent counsel of the insureds'
choice, which counsel would not be subject to control or inJluence by Federal to steer the
defense of the Complaint away from potentially covered counts and into potentially uncovered
counts.

TIIE COMPLAINT

13.

Defendant Reilly's Complaint in the underlying lawsuit against Plaintiffs contains

nine Counts, which together allege that Plaintiffs' actions as officers and directors and as an
organization constiluted wrongful acts which damaged Reitly.

14.

The nine-count complaintl includes the following causes of action: count I,

Breach of a November 2000 Employment Agreement; count II, Breach of Revised shareholder

Agreementi county

III,

Breach of Board of Director compensafion Agreement; count IV,

Breach of Agreement Regording Profit Distribution; count

y,

Breach of promissory Notes;

count vI, Breach of settlement Agreement; count

vII,

Independent Audit and Accounting Pursuant

805 ILCS 5/12.6; count

Payment and Collection

Act.

to

Breach of Fiduciary Dury; count VIII,

rX,

linois

The allegations arise out of Reilly,s effort to ,,enforce.

..

Lltage

rights

under both an Employment Agreement between Reilly and DHR and under

Agreement with DHR." (,see, Exhibit B, Complaint,

to suggest that

fll). DHR

does not intend

Shareholder

any ofthe allegations have merit.

15.

As factual background for his complaint, Reilly alleges the following: DHR is an

executive search firm assisting businesses in recruiting senior level executives. (1d., Complaint,
1i3).

DHR is not publicly-traded through any security market, DHR is a successor company ro

Hoffman Accusation company, Inc., and Enterprise profir solutions,


c'Eps). (1d,

,1f3).

David

I The-Complaint
in the underlying lawsuit was subsequently amended and the pending pleading in the
underlying fawsuit is cu*ently a se.cond Amended veriJied Complainl. However, lor purposes of
Federal's coverage position, the operative pleading is the original Verffied Complaint.

Hoffman owned the controlling interest in DHR and served as DHR's Chairman and CEO. At

all times, Reilly was and currently is a shareholder of record of DHR owning approximately
6.25% of outstanding shares. (1d,

{7). Reilly was an employee ofDHR

up to and until January

26,2005, when he voluntarily terminated his employment relationship with DHR and terminated
all other then-existing officer and director relationships with DHR. (1d, fls 10, I l).

16.

As a shareholder of DIIR, Reilly was ad is a party to a revised Shareholder

Agreement with DHR of January

l,

2002, (herein, "shareholder Agreement"). The Shareholder

Agreement entitled Reilly to certain rights as a shareholder in DHR. In addition, the Shareholder
Agreement has provisions relating to the re-purchzue ofoutstanding shares of DFIR and requrres,
among other things, an independent appraisal of shares when any shareholder resigns from DLIR
and./or attempts to sell vested shares. (See,

17.

Exhibit B, Complaint,ll2).

In November 2000, in consideration for Reilly's employment services, Reilly and

DHR entered into an additional agreement, (herein, the "November 200 Agreement"). The
November 2000 Agreement provides among other things that Reilly was to be granted additional
ownership equity

in DHR and subject to anti-dilution provisions similar to the Shareholder

Agreement. The November 2000 Agreement also provided for an additional employment rights

and benefits

to Reilly

including reimbursement for business expenses and payments of

percentages of paid commission to

18.

DHR.

(.See,

Exhibit B, Complaint, lls I g_22).

Reilly was awarded an additional compensation for services as a director

member of the Board of Directors of

DHR. Reilly

as an equity owner

and

in DHR was entitled to

distribution of settlement funds from separate litigation between DHR, Hoffman Investment
company, and Deloitte & Touche in a matrer called EpS litigation. (see, Exhibit B,!ls 26-2g).

19.

Pursuant

to a

resolution

by the board of directors, DHR began an

annual

distribution of profits in March 2001. Reilly was entitled to distribution as a shareholder. Based
upon Reilly's stock ownership, he was entitled to profit distributions for the years 2001 through

2005. However, those shareholders distributions were not paid. (see, Exhibit B, complaint,
'lf3 I

). Reilly also alleges that he was the holder of promissory notes with DHR under DHR

agreed to pay Reilly certain sums

of money with interest beginning in 2002 with payments

through 2006. (ld.,lls32 and 33).

20-

Reilly allcges that Hoffman "misappropriated DHR

assets

in corurection with the

EPS litigation." (see, Exhibit B, complaint, '!J34). In connection with the repurchase of DHR in
the EPS litigation, DHR raised Capital from its shareholders in a rotal amounl of $10.57 million.
Each DHR shareholder including Reilly repurchased DHR stock in the transaction. pursuant to a
memorandum of understanding between DHR and its shareholders, the shareholders were to be

repaid pro rata following the buy-back. (1d., fl34). However, Hoffman misappropriated the
additional capital raised and converted it "for the benefit of Hoffm

an)' (1d.,fl39).

Hoffman and

DHR misappropriated and wasted DHR assets for the benefits of individual shareholders
and
family members, and acted in an "illegal, fraudulent and oppressrve mafier towards
Reilly

and

intentionally breach the fiduciary duries to Reilly." (1d, g40).

2l-

In count I of his Complau,rl, Reilly alleges that DIIR an{ Hoffman breached rhe

employment agreement between Reilly and DHR and failed to issue Reilly
additional equity in

DHR as compensation. (see, Exhibit B, Complaint,


l1s 42-47). Reilly alleges that he was not
paid commissions that were owed to him including percentages of commissions
and ..overwrite

commissions." (ld.,n45).

22.

In Count II Reilly alleges that DHR breach the Revised Shareholder Agreement

between DHR and its Shareholders. In particular, Reilly alleges that DHR breach the agreemenr

in "failing to obtain fair or accurate appraisal and failing to repurchase Reilly's shares" pursuant
to the Revised Shareholder Agreement. (See, Exhibit B, Complaint,fl50).

23.

In Counts III and Count IV Reilly alleges that DHR breached its obligations under

the resolutions for payment of valid and binding amounts to DHR and its directors

and

shareholders. Reilly claims that he fulhlled

not

all his obligations as a director and was

distributed profits from DHR according to those revisions. Further, DHR breach the agreement
to distribute DHR profits pro rata to Reilly as a DHR sharchol der. (1d.,!158, et seq.).

24. In count v,

Reilly alleges that DHR breached the Terms of Subordinated

Promissory Notes in failing to repay amounts and interest to Reilly. (,See, Exhibit B, Complaint,

fl61). In Count VI, Reilly alleges that DHR breached the Terms of The Settlement Agreement in
the Deloitte & Touche EPS litigation by failing to make payments to the DHR shareholder and
principals according to the agreement. (ld.,n6q.
25

'

In count

vll,

Reilly alleges that DHR and Hoffman owed ,.fiduciary duties,

including, but not limited to duties to locality and good faith, to DHR shareholders." (see.

Exhibil B, complaint, fl68). while DHR is a closely held corporation and its shares are not
publicly-traded, Hoffman is a controlling Director of DHR and owes a fiduciary duty to Reilly
and other shareholders. (/d , t{69).

26. In count vIII, Reilry alreges that under Ilrinois law, DHR and Hoffman
misappropriated and wasted corporate assets and

willfully breached the fiduciary durres to

Reilly. (see, Exhibit B, Complaint,ll2). Anindependent audit isjustified under Illinois law in
light of DHR's and Hoffman's failure to provide proper accounting.

27.

In Count IX, Reilly alleges that under the Illinois Wage Payment Provisions he is

entitled to additional payment and full compensation for wages, salaries and commissions. (See,

Exhibit B, Complaint,

''Jls

75-82). Reilly further alleges that DHR and Hoffman willfully refused

to pay Reilly a final compensation in order to secure those funds for themselves. (1d.,

'|]180).

TTIE FEDERAL POLICY

28. In its letter of November

9, 2005, Federal sets forth provisions of the Policy

which are set forth further below, (herein, "Federal policy").2 The Federal policy provides lnrer
a/ia a Directors & Officers Liability (D&O) Coverage Section, as follows:

I.

INSURING CLAUSES

(A)

IndividualNon-IndcmnificdLiabilityCoveragc
The Company shall pay Loss on behalfofthe Insured persons resulting from any D&o
claim first made against such Insured Pcrsons during the policy period, or any
applicable Extended Reporting Period, for wrongful Acts, but only to the extent the
Insured Organization does not indemnify the Insured persons for such Loss.

(B)

IndividuallylndcmnifiedLiabilityCoveragc
The company shall pay Loss on behalf of the Insured organization resulting from any
D&o claim first made against Insured persons during the policy pcriod, or any
applicable Extended Reporting Period, lor wrongful Acts to the extent the Insured
Organization indemnifies the Insurcd persons lor such Loss.

(C)

II.

Corporate Liability Coveragc (Optional)


Ifthe Corporate Liability Coverage is purchased as set forth in Item 3 ofthe Declaratrons
of this coverage section, the company shall pay Loss on behalf of the Insured
Organization resulting from any Insurcd Organization Claim first made against such
Insurcd organization during the poricy period, or any applicable ExtendeJReportrng
Period, for Wrongful Acts.

DEFINITIONS
For purposes ofthis Coverage Section;

(D)

D&O Claim

(l)

any

means:

ofthe following:

'To the extent that provisions were not set forth in the Noyember 9, 2005, tener, additional policy provisions are
taken from Exhibit A, Federal's 2005-2006 policy to DHR Intemational. Inc_ anached.

(b)

a civil proceeding commenced by the service of a complaint or similar


pleading;

against an Insured Person for a Wrongful Act, including any appeal therefrom,
or

(J)

Insured Person means any past, present or future Executive or Employee of


Insurcd Organization.

(U)

Wrongful Act means:

(1)

the

any error, misstatement, misleading statement, act, omission, neglect, or breach

of

duty committed, attempted, or allegedly committed or attempted by:

(a)

For purposes of coverage under Insuring Clauses (A) and (B); any
Insured Pcrson in his or her capacity as such, or any matter claimed
against any Insurcd Person solely by reason ofhis or her status as such;

(b)

For purposes

of

coverage under Insuring Clause

(C): any Insured

Organization; or

(c)
(2)

For purposes ofcoverage under Insuring Clause (D): any Executive or

any Outside Capacity

Wrongful Act.

III. EXCLUSIONS

(A)

No coverage will be available under this Coverage Section for any Claim against an
Insured:

(5)

brought or maintained by or on behalf of any Insured in any capacity; provided


that this Exclusion (A) (5) shall not apply to:

(a)

a Security holdcr Derivative

Demand

or Sccurity holdcr Derivative

Action;

(S)

Securityholder Derivative Action means any Claim brought on behalf of, or in the
narne or the right of, the Insurcd Organization by one or more securityholders of the
Insurcd Organization in their capacity as such if such Claim is brought and maintained
without the assistance, participation or solicitation of any Exccutive.

29.

The Federal Policy also provides Employment Practices

in pertinent part as follows:

Liability (EPL) coverage,

the litigation, without any reference in that assertion to any potentially applicable policy limit to
the provision of the defense, Federal did not assert that payment ofDefense Costs shall reduce or
exhaust any available limits. Defendant Federal thereby intentionally relinquished and waived
any right to rely on any such limit ofliability or insurance.

36.

Plaintiffs accordingly request that this Court find that Defendant Federal

waived any right

it

has

may have had to terminate payment of Defense Costs based upon any

puryoned limit and finding that the payment of Defense Costs is in addition to the available
limits of liability.

COUNT III-ESTOPPEL TO ASSERT ANY DEFENSE COST LIMIT


37

38.

Plaintiffs re-allege fl Nos. I -29 above as though restated herein.

Plaintiffs reasonably relied upon Defendant Federal's statement that it would pay

100% of Defense Costs, without reference to any potentially applicable policy limit, and was
materially prejudiced by this reliance, such that Federal is now estopped from maintaining that it
can terminate payment of Defense Costs.

COUNT IV-ESTOPPEL TO ASSERT ERODING LIMIT OF LIABILITY

39.

Plaintiffs re-allege fl Nos. 1-29 above as though restated herein.

40.

Plaintiffs reasonably relied upon Defendant Federal's statement that it would pay

100% of Defense Costs, without reference to any potentially applicable policy limit and by not
representing that the Defense Costs reduce, exhaust or limit any available

limit of liability or

insurance, and Plaintiffs were materially prejudiced by this reliance, such that Federal is now
estopped from maintaining that

it can limit payment of Defense Costs or that the payment erodes

any limits.

ll

COUNT V-ESTOPPEL TO DENY INDEMNITY COVERAGE UNDER ILLINOIS


CASE LAW FOR DIRECTORS AND OFFICERS COVERAGE

41.

Plaintiffs re-allege !f Nos. l-29 above as though restated herein.

42.

Under Illinois case law, an insurer which questions whether there is coverage for

a complaint must promptly seek a declaratory judgment that there is no coverage for

the

complaint, or must defend the insured pursuant to a reservation ofrights to deny coverage for the

complaint. In this instance Federal exercised neither option mandated by Illinois case law: It did
not file a declaratory judgment action, and it did not defend the insured subject to a reservation

of rights to deny indemnity coverage for D & O coverage. Instead, in its November 9,

2005

letter (Exhibit A) and in all subsequent correspondence with Plaintiffs, it denied any obligation
to provide coverage for any judgment or settlement arising from the Complaint, and stated that it

would provide "Defense Costs only." (emphasis in original). See, e.g., Ex. A. p. 1. It did not
offer to defend the insured subject to a reservation of rights to deny D & O coverage, but instead
defended the insured with the express disclaimer that it had already denied D & O coverage, and
therefore would provide only a defense, but never indemnity coverage. In doing so the insured

violated the Illinois requirement to either file a declaratory judgment action seeking judicial
confirmation

of its coverage position on indemnity, or to

defend the insured subject to a

reservation of rights as to indemnity. Having done neither, defendant Federal is now estopped
under Illinois law from disclaiming D & O coverage on any basis.

COUNT VI-DECLARATORY JUDGMEN'I: DUTY TO INDEMNIFY

43.

Plaintiffs re-allege'lf Nos. 1-29 above as though restated herein.

44.

Federal has attempted to both deny (Exhibit A, p.1) and/or reserve the right to

deny (id., p. 6-10) that it has any duty to indemnifr Plaintiffs under the EPL coverage except for
Defense Costs. Federal's denials and/or reservations of rights to deny EPL indemnity coverage

t2

are based upon the employment contract exclusion from EPL coverage set forth above as well as

other exclusions from EPL coverage set forth in Exhibit C, p. 8-10. Federal has failed to carry

its burden to demonstrate that the entirety of the Complaint is encompassed within any of these

exclusions. In particular, the employment contract exclusion III. (C) set forth above does not
apply where there is no written employment contract, and there was no such written contract.
Moreover, even

if

there was such contract, the further exception to the exclusion, for liability

which would exist in the absence of such contract, would apply, because the liability alleged in
the Complaint by defendant herein Reilly could also exist under a negligent misrepresentation or

similar non-contractual theory. Accordingly, Plaintifls are entitled to a Declaratory Judgment


that Federal has the duty to indemnify Plaintiffs for

judgment or settlement arising from the

Complaint which is within the EPL coverage grant set forth above and not excluded.

45.

Federal has denied coverage for the Complaint under

including any defense obligation under the D


Complaint, however, falls within the D

& O coverage.

& O Insuring

See

its D & O

Exhibit A., p.

coverage,

l; 5. The

Clauses set forth above, and Federal has

not met its burden that to establish that the entirety of the Complaint is encompassed by
Exclusion III. A. (5) set forth above. In support thereof plaintiffs state as follows:

46.

The Complaint alleges Wrongful Acts under Insuring Clause (B) as defined in the

Federal policy, including breaches of fiduciary

duty. Specifically, the allegations include that

"As Chairman and CEO of DHR, Hoffman owes fiduciary duties, including but not limited to
duties of loyalty and good faith to DHR and its shareholders." The complaint goes on to allege
that "As a result ofthe acts alleged in paragraphs 34-42, arrd on information and belief, other acts

of self-dealing by Hoffman, the assets of DHR have been misappropriated and wasted to enrich
Hoffman and at the expense of Reilly, whose ownership interest in DHR has lost value and been

IJ

damaged as a result of the self-dealing." Insuring Clause (B) obligates the insurer to pay Loss.

Loss is defined to include Defense Costs. Hoffrnan and DHR have incurred Loss as a result of
allegedly Wrongful Acts, thereby triggering Federal's duty to defend under the D & O coverage.

4'1.

Exclusion A. (5) does not apply because of exception (a) thereto set forth above,

which states that the exclusion does not apply to a Security Derivative Action. Security
Derivative Action is defined in (S) above as any claim brought on behalfofor in the name or the

right of an insured organization by one or more security holders of the insured organization in

their capacity as such,

if

such claim

is brought and maintained without the assistance,

participation or solicitation of any Executive. "Executive" is defined in relevant part as a duly


elected or appointed director or officer. Executive does not include past directors or officers, as
does

the definition of insured person. The Complaint

of DHR, and that Hoffman owed duties to DHR;


assets

does allege that

see, e.g.,

Reilly was a shareholder

Exhibit B,

fl

68; 70, and that the

of DHR have been misappropriated and wasted at the expense of Reilly whose ownership

interest in DHR has thereby lost value. Id.,

tf 69.

Such claim belongs to DHR and is precisely

the t)?e of allegation which only a corporation can assert against Hoffman as

it

was the

corporation to which Hoffman owed duties and which allegedly incurred damages directly, while

Reilly allegedly incurred damages indirectly via an alleged reduction in the value of his

shares

by the alleged damage to the corporation. Reilly therefore brought the Complaint against the
corporation DHR in his capacity as a shareholder, and at a time when he was no longer an
Executive, which places the claim within D & O coverage and not subject to exclusion.

t4

COUNT

VII-VIOLATION

OF INSUREDS' RIGHTS TO INDEPENDENT COUNSEL

48.

Plaintiffs re-allege tf Nos. I -29 above as though restated herein.

49.

The conduct of defendant Federal violates the insureds' right to independent

counsel under the doctrine set forth by the Illinois Supreme Court in Maryland Cas. Co.
Peppers, 64 Ill.

2d 187, 196-99 11976), entitling the insureds to

v.

counsel of its choice to defend

the Complaint henceforth, damages for any and all harm to Plaintiffs caused by the improper
representation, and bars Federal from denying or limiting defense or indemnity coverage for the

Complaint in any fashion.

COUNT

VIII-VIOLATION

50.
51

OF INSUREDS'RIGHTS TO SEPARATE COUNSEL

Plaintiffs re-allege flNos. 1-29 above

as though restated herein.

The Complaint includes allegations that David H. Floffman "misappropriated"

DHR assets and in connection with corporate activity and personally enriched himself "at the
expenses

ofDHR and its sharehoiders."

(See, Exhibit

B, Complaint, us 34, 38). The Complaint

also alleges that David H. Hoffman, personally, acted in an "illegal, fraudulent and oppressive
manner toward Reilly." (1d., fl40). Therefore, the allegations in the Complaint potenlially create a

conflict of interests in the representation of DHR and David H. Hoffman.

52.

Federal violated and continues to violate the rights of both DHR and Hoffman,

personally, to counsel separate and independent from counsel for DHR. The allegations in the

Complaint combined with Federal's conduct in the defense of the Complaint have created

conllict in the representation of its insureds. At a minimum, Federal was required to inform
DHR and Hoffman of the potential conflicts and allow and informed right to waive any such
conflicts. Federal did not protect the rights of its insureds to counsel in violation of Illinois law.

l)

WHEREFORE, DHR International, Inc., and David H. Hoffman, request that this Court
enter judgment in their favor and against Federal Insurance Company, and that the Court further
issue an order as follows, alternatively or in combination:

(a)

declaring that Federal has a duty to defend and a duty to indemnify DHR and
Hoffman for and against all of the allegations in the Complaint in the
underlying lawsuit;

(b)

declaring that Federal has waived any policy limits relating to or limiting the
duty to defend and to pay the attomeys' fees, costs and expenses incuned in
the defense of the allegations in the Complaint in the underlying lawsuit;

(c)

declaring that Federal's obligation to pay the attomeys' fees, costs and
expenses incuned in the defense of the DHR and Hoffman in the underlying
lawsuit are in addition to the limit of liability or insurance of the Federal
policY;

Dated

(d)

declaring that Federal is estopped from denying the obligation to defend and
indemni$ DHR and Hoffman from and against all of the allegations in the
Complaint in the underlying lawsuit;

(e)

awarding DHR and Hoffman's attorneys' fees, costs and expenses in bringing
this lawsuit under Illinois law;

(0

for any such other reliefas this Court deems appropriate under Illinois law'

thisJulv
LG,zotz
---T_---

Edward F. Rubeny
Attorney for Plaintiff
RUBERRY, STALMACK & GARVEY, LLC
500 West Madison Strect, Suite 2300
Chicago, IL 60661
Tel. 3121466-8050
Attomey I.D. No. 48602

lo

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