____________________________________________________________________________

____________________________________________________________________________

JUSTICE RARICK delivered the opinion of the court:

The plaintiff, the Bank of Carbondale (the Bank), filed a complaint in the circuit courtof Jackson County against Leonard Bening and alleged that Bening had failed to pay certainpromissory notes. Bening filed a counterclaim alleging, inter alia, that the Bank, actingthrough its officers and/or directors, altered the notes. The counterclaim named the Bankas a defendant but did not name any officer or director. The defendant, the Kansas BankersSurety Company (KBS), had issued to the Bank an insurance policy entitled "Director andOfficer Legal Defense and Limited Indemnity Policy." The policy provided that KBS wouldindemnify any director or officer of the Bank for any loss which the director or officer waslegally obligated to pay by reason of any wrongful act in his or her capacity as a director orofficer. The Bank notified KBS of Bening's counterclaim, but KBS refused to providecoverage. KBS relied on a policy exclusion which provides that KBS is not liable to makepayment or provide any defense in connection with a claim against the Bank itself. TheBank then brought the present action against KBS. The Bank alleged a breach of contractand further alleged that KBS's failure to provide coverage was vexatious and unreasonableunder the provisions of section 155 of the Illinois Insurance Code (215 ILCS 5/155 (West1998)). KBS filed a motion to dismiss pursuant to section 2-619 of the Code of CivilProcedure (Code) (735 ILCS 5/2-619 (West 1998)), arguing that the policy in question didnot provide coverage to the Bank. The trial court granted KBS's motion and dismissed theBank's complaint, finding that the Bank was excluded from coverage under the policy.

On appeal, the Bank argues that the provisions of the insurance policy are ambiguous,requiring the policy to be construed in favor of the Bank and obligating KBS to providecoverage. Specifically, the Bank maintains that pursuant to section III of the policy, KBSis obligated to indemnify the Bank when a claim is made against an officer or directorthereof. However, under paragraph (b) of section IV, KBS is excused from indemnifyingthe Bank if a claim is made against it. The Bank argues that the policy includes norequirement that an officer or director be named a party rather than the Bank. Thus, theBank contends, the provisions of section III are in conflict with and contradictory to theprovisions of section IV, rendering the coverage provisions of the policy ambiguous. TheBank contends that although it is the only named defendant in Bening's counterclaim, thecounterclaim alleges wrongful acts on the part of the officers and directors. The Bankmaintains that if interpreted as KBS argues, the policy provides no coverage at all.

"Section I

1. The Underwriter *** agrees to indemnify each and every person who was, nowis[,] or may hereafter be a Director or Officer of the Bank for loss which the Directoror Officer is legally obligated to pay by reason of any Wrongful Act in theircapacities of Director or Officer in the Bank arising out of an occurrence Discoveredby the Director or Officer during the policy period.

Section III

***

(b) The term 'Director or Officer' shall mean any duly elected Director or person dulyelected or appointed to any position of Bank Management designated by the Boardof Directors of the Bank as an Officer.

(c) Wrongful Act shall mean any actual or alleged:

1) error or misstatement; or

2) misleading statement; or

3) act of omission; or

4) breach of duty; or

5) breach of fiduciary duty; or

6) any other act

by the Directors or Officers in the discharge of their duties, individually orcollectively, which is claimed against them solely by reason of their being Directorsor Officers of the Bank except as excluded from coverage under Section IV.

(d) [']Loss['] shall mean any amount which the Directors and Officers are legallyobligated to pay or for which the Bank may be required or permitted by law to payas indemnity to the Directors and Officers, for a claim or claims made against theDirectors and Officers for Wrongful Acts and shall include but not be limited todamages, judgements, settlements and costs, cost of investigation (excluding salariesof officers or employees of the Bank) and defense of legal claims, claims orproceedings and appeals therefrom, cost of attachment[,] or similar bonds.

Section IV

***

b) The Underwriter shall not be liable to make any payment or provide any defensein connection with any claim or legal proceedings made against the Bank."

Initially, we must address KBS's claim that the Bank waived its argument that thepolicy is ambiguous. KBS argues that the Bank failed to advance such argument in the trialcourt. It is well-settled that an argument not advanced in the trial court is waived forpurposes of review. Reedy Industries, Inc. v. Hartford Insurance Co. of Illinois, 306 Ill.App. 3d 989, 715 N.E.2d 728 (1999). The Bank maintains that the pleadings filed with thetrial court clearly show that the issue of the policy's ambiguity was central to its claim. Wedo not agree. Nowhere in any of its pleadings does the Bank assert or imply that thelanguage of the policy is ambiguous. In its reply to KBS's motion to dismiss, the Bankasserted, "[T]he unambiguous language of the preceding Sections of the policy of insuranceissued to the [Bank] clearly show that [KBS] was contractually obligated to indemnify the[Bank] for expenses incurred in defending the claims in the Cause Number 93-L-134." TheBank takes the remarkable position that it raised the issue of ambiguity by asserting that thelanguage of the policy was unambiguous. Although artful, the Bank's argument isunpersuasive.

Even if we were to consider the Bank's argument, we find nothing ambiguous aboutthe policy language. In section I, KBS agrees to indemnify the officers and directors for anyloss that they are legally obligated to pay by reason of any wrongful act in their capacity asan officer or director. No coverage is provided for the Bank itself. Section III(d) defines"loss" as any amount that the directors or officers are legally obligated to pay or for whichthe Bank may be required or permitted by law to pay as indemnity to the officers or directorsfor claims made against the officers or directors for their wrongful acts. Section IV(b)provides that KBS shall not be liable to make any payment or provide any defense inconnection with any claim or legal proceeding made against the Bank. Thus, KBS is liableto the Bank only where the Bank has indemnified an officer or director for claims madeagainst such officers or directors for their wrongful acts. The policy provides no coveragefor the Bank itself, nor does it obligate KBS to defend the Bank in any suit brought againstit. Contrary to the Bank's argument, we find nothing conflicting or contradictory betweensections III and IV.

Although this is a case of first impression in Illinois, courts in other jurisdictionsinterpreting similar insurance policy provisions have reached the same conclusion.

In Clark v. General Accident Insurance Co., 951 F. Supp. 559 (D.V.I. 1997), sevencondominium owners filed suit against Mountain Top Condominium Association (MountainTop) and its individual officers and directors, including Nancy Clark, for alleged wrongfulactions concerning the distribution of certain insurance proceeds. Mountain Top hadpurchased from General Accident Insurance Co. PR, Ltd. (General Insurance) an "all risk"insurance policy that included general liability insurance, as well as directors and officersliability insurance (D&O). Both Mountain Top and Clark notified General Accident of thelawsuit and requested General Accident to defend and indemnify them pursuant to the D&Opolicy. When General Accident refused, Clark brought suit. Mountain Top intervened,seeking a declaration that the D&O policy provided coverage to Mountain Top and thatGeneral Accident was obligated to defend and indemnify it.

General Accident's D&O policy contained language similar to the policy in the caseat bar. Under "Coverage A," General Accident agreed to "pay on behalf of any director orofficer all loss which such director or officer shall become legally obligated to pay becauseof any civil claim arising from a wrongful act as defined in this endorsement." Clark, 951F. Supp. at 561. Under "Coverage B," General Accident agreed to "pay on behalf of thenamed insured all loss which the named insured shall be required or permitted by law to payas indemnity to any director or officer because of any civil claim arising from a wrongful actas defined in this endorsement." Clark, 951 F. Supp. at 561.

The court held that the language of the policy was plain and unambiguous and thatit did not provide coverage to Mountain Top for Mountain Top's defense of the claimsagainst it in the underlying action. The court also held that the fact that Mountain Top onlyacted through the actions of its board members did not render Mountain Top and the officersand directors one and the same for purposes of insurance coverage.

The court in Clark relied upon Farmers & Merchants Bank v. Home Insurance Co.,514 So. 2d 825 (Ala. 1987), and Edinburg Consolidated Independent School District v. St.Paul Insurance Co., 783 S.W.2d 610 (Tex. App. 1989). In Farmers & Merchants Bank,Farmers & Merchants Bank (Farmers) had purchased directors and officers insurance fromHome Insurance Company (Home) to protect against monetary loss resulting from thenegligence of Farmers' officers or directors. The policy provided coverage to Farmers'officers and directors under circumstances where Farmers was not required or permitted toindemnify them, and it provided coverage to Farmers for losses sustained by it because ofits indemnification of the officers and directors under circumstances where it was requiredor permitted to indemnify them. When a suit was brought against Farmers and its officersand directors, Farmers demanded that Home provide the bank and its officers and directorswith a defense. Home refused, taking the position that Farmers was not an insured underthe policy, except to the extent that it could indemnify its officers and directors. Homefurther informed Farmers that the coverage provided by the policy did not include anassumption by Home of the defense of claims made against the insureds. Rather, theinsureds were to prepare and present their own defense and seek reimbursement for the coststhereof.

Farmers filed a declaratory judgment action asking the trial court to find that Homewas obligated to defend Farmers and its officers. The court held that under the plainlanguage of the policy, Farmers was not an insured and that to the extent that the complaintasserted claims against Farmers, such claims would not be covered. The court further heldthat the costs of defense incurred by Farmers would not be covered.

In Edinburg Consolidated Independent School District, St. Paul Insurance Company(St. Paul) had issued a policy that stated that it would pay on behalf of the EdinburgConsolidated Independent School District (District) "any amount it is required or permittedto pay as indemnity to any person insured under the applicable Coverage Plan." (Emphasisomitted.) Edinburg Consolidated Independent School District, 783 S.W.2d at 611. Theapplicable coverage plan insured the members of the board of trustees of the District. A suitarising from a hand injury suffered by a student was brought against both the trustees andthe District. At the trial of that action, the plaintiffs dismissed their suit against the trusteesbut continued against the District. After the dismissal of the trustees, St. Paul withdrew itsdefense. The plaintiffs received a favorable judgment, but it was reversed on appeal.

The District filed suit against St. Paul and alleged, inter alia, that it had wrongfullywithdrawn from the case. The District filed a motion for a summary judgment, arguing thata suit against the trustees in their official capacity was equivalent to a suit against theDistrict. St. Paul also sought a summary judgment on the ground that no claim was madeand no suit was filed against any of the named insureds. The court held that the policy wasunambiguous and insured only the trustees. The court rejected the District's argument thatit and the trustees were one and the same for purposes of coverage under the policy.

The policy in the present case is clear and unambiguous. It describes the type ofcoverage provided, defines the insureds, and excludes coverage for any claim or legalproceeding against the Bank. No reasonable construction of the policy language supportsthe Bank's position, either with respect to the existence of an ambiguity in the policy orKBS's obligation to provide a defense or coverage thereunder. The trial court properlydismissed the Bank's action.

Having determined that the trial court properly dismissed the Bank's action, we neednot address the Bank's argument with respect to section 155 of the Illinois Insurance Code.

For the foregoing reasons, the judgment of the circuit court of Jackson County isaffirmed.

Affirmed.

MAAG and WELCH, JJ., concur.