The sales manager of a real estate company left the firm to take a similar position with another company and, allegedly, induced other sales agents to leave the former employer and accept employment with the new company. It was further alleged that he took business from and left debts with the previous employer.

The lawsuit was brought by the former employer against the new one, and its affiliates, and the sales manager and his wife. The matter was referred to the professional liability insurer of the new company, which filed an action for declaratory judgment, seeking a determination of duty to defend and indemnify the defendants. The insurer filed a motion and the defendants filed a cross-motion for summary judgment.

The applicable policy provided coverage for sums an insured "....shall become legally responsible to pay in damages....by reason of any act, error or omission in professional services rendered or that should have been rendered....because of personal injury arising out of the professional activities of the Insured as a real estate agent estate broker...."

The trial court allowed the defendants' motion, finding "the conduct alleged in the....complaint brings the defendants within the potential coverage of the policy...." The insurance company appealed.

On appeal, the insurer argued that the allegations brought against its insureds were not within the coverage of the policy. It said that "....the policy in question was an errors and omissions policy and is analogous to malpractice insurance policies dealing solely with services to others and to the public, not actions between business partners."

The appeal court quoted the trial court as follows: "It was the action of the defendants as real estate agents and brokers in allegedly taking away....real estate business which started the proceedings in the first place. Had defendants not engaged in the real estate profession, there would have been no lawsuit." It concluded that the alleged facts were sufficient for a finding of a duty to defend.

The judgment of the trial court was affirmed in favor of the insureds and against the insurer.

(CRUM & FORSTER MANAGEMENT CORP. (ILL.) ET AL., Plaintiffs, Appellants v. RESOLUTION TRUST CORP. ET AL., Defendants, Appellees. Illinois Appellate Court, Fourth District. No. 4-92-0148. October 29, 1992. CCH 1993 Fire and Casualty Cases, Paragraph 4009.)