Iconic Chicago bakery, Gonnella Baking Co., has filed a lawsuit against its insurer, Arch Insurance Company. The suit seeks a court order directing the insurer to cover Gonnella's legal costs in their ongoing lawsuit against a former employee and his wife, who are accused of defrauding Gonnella.
The former employee, Jeff Hicks, has been accused by Gonnella of setting up a shell company named Sabre Supply Inc., owned by his wife, and then allegedly diverting hundreds of thousands of dollars from Gonnella to Sabre for overpriced supplies. This fraudulent activity was allegedly conducted while Hicks was still an employee at Gonnella.
Gonnella had sought coverage for this loss under the employee theft provision of its insurance policy with Arch Insurance. However, Arch denied the claim on the grounds that Hicks' fraudulent scheme did not constitute an "unlawful taking."
In response, Gonnella has brought forward this complaint seeking a declaration that it is entitled to coverage and accusing Arch of breach of contract for refusing to pay for its loss.
The case was filed in Cook County Circuit Court on Feb. 26.
Gonnella is represented by attorneys Michael J. Devine and Brittany E. Kirk, of the firm of Nisen & Elliott, of Chicago.