December 2013 Case Notes & Comments

“With the new day comes new strength and new thoughts.” ~ Eleanor Roosevelt

MONTHLY QUIZ:  Not to be outdone by Santa and his reindeer, Jack Frost decides to raise llamas and hires the Grinch to clean the llama barn in exchange for a Chihuahua. During the summer months, Jack and Grinch tend to the animals together, including Beau, the llama. On each of these occasions, Beau is aggressive towards Grinch and at one point, rears up and bloodies Grinch’s mouth and nose. Regardless, Grinch agrees to clean while Jack is gone spreading the wintry weather. While cleaning, Grinch notices Beau walking free in the barn, which is not a surprise since Jack previously told Grinch he would let Beau roam. However, Beau rears up, backs Grinch into a corner and kicks Grinch over the barn’s half-wall, dislocating Grinch’s left arm. Beau continues to spit at Grinch and charge him, though Grinch is able to fend Beau off with a rake and exit the barn. Grinch sues Jack Frost for ordinary negligence and under the Animal Control Act (510 ILCS 5/16 (West 2008)). However, Father Time dismisses Grinch’s suit based upon assumption of the risk. Under these facts, did Grinch assume the risk of a llama attack? You be the judge (Answer below).


NEGLIGENCE LAW – VOLUNTARY UNDERTAKING & RULE 191: A massive propane explosion caused $14.5 mil in damages to building on Chicago’s Jewelers’ Row. Insurer paid building Owner and subrogated against Security Company, alleging that the building security guards negligently allowed the delivery of and/or failed to inspect a propane tank that subsequently caused the explosion. Both trial and appellate courts found that, in the absence of contract language, Security Company had no duty to inspect, stop or report the delivery of the gas tanks. Likewise, there were no facts that could be narrowly construed to impose a voluntary undertaking of such duties upon Security Company. Illinois Supreme Court Rule 191’s requirements for affidavits also discussed.St. Paul Mercury Insurance v. Aargus Security Systems, Inc., 2013 IL App (1st) 120784 (Dec. 10, 2013) 


DRAMSHOP - ILLINOIS GUARANTY FUND ACT: Decedent was fatally injured in an automobile accident with intoxicated Driver. Decedent’s Family settled with Driver’s automobile liability insurer, as well as their own, for total benefits of $106,550. Family also filed suit under Illinois Dramshop Act against Bar where the Driver had been served. Bar’s dramshop liability policy provided a policy limit of $130,338.51, the “maximum statutory liability”. During the pendency of the case, Bar’s Insurer was declared insolvent and liquidated. The Illinois Insurance Guaranty Fund stepped in to provide a defense and filed a motion for summary adjudication that would reduce its liability to $23,788.51, the difference between the maximum statutory liability and the “other insurance” collected by the family pursuant to Section 546(a) of the Guaranty Fund Act. Family opposed this motion arguing that under the Dramshop Act, the reduction should first be applied to the jury’s verdict and then further reduced to the maximum statutory liability. On initial appeal, appellate court ruled that the reduction should be applied against the jury’s verdict under the Dramshop Act as opposed to the maximum statutory liability under Guaranty Fund Act. The Illinois Supreme Court, however, reversed and remanded the matter to the trial court for further proceedings, indicating that the requirement that a jury determine damages in a Dramshop Act case is not relevant to the construction of the “other insurance” provision in the Guaranty Fund Act. The maximum statutory liability owed by Bar’s Insurer should have been offset by Family’s recovery. Rogers v. Imeri, 2013 IL 115860 (Nov. 21, 2013)


INNOCENT CO-INSURED - FRAUD IN APPLICATION: Two partners operated a law practice together for several years. After mishandling several matters, Partner No. 1 settled one potential malpractice claim with Client and attempted to settle a second malpractice claim. Thereafter, Partner No. 1 submitted an insurance renewal form indicating that there had been no “past or present circumstances which may give rise to a claim that has not been reported.” Partner No. 2 did not sign the renewal form as he was not required to do so. Over a month after the completion of the form, Partner No. 2 received a lien letter related to the second malpractice claim, which was Partner No. 2’s first notice of such claims. Partner No. 2 immediately reported the letter to Insurer. Insurer thereafter filed a complaint to rescind the policy on the grounds that Partner No. 1’s witholding of information amounted to a material misrepresentation that voided the entire policy, including Partner No. 2’s coverage. In reversing trial court’s rescission of Partner No. 2’s coverage, appellate court noted that the policy of Illinois is to "favor[] coverage under [a] … policy whenever the facts justify such coverage." Under the facts, the existing case law regarding the innocent insured doctrine, Illinois courts' overall inclination to protect the insured, and the persuasive authority from other jurisdictions, the innocent insured doctrine preserved coverage for Partner No. 2. ISBA Mut. Ins. Co. v. Office of Tuzzolino and Terpinas, 2013 IL App (1st) 122660 (Nov. 22, 2013)


LEF OBTAINS FAVORABLE RULING IN APPRAISAL: Congratulations to Howard Randell and Davis Kim who obtained a favorable ruling in a property damage dispute between a Homeowner and Insurer over alleged windstorm damages. While Insurer acknowledged coverage for the loss, Homeowner sought more than $700,000.00 for damages Insurer estimated at less than $100,000.00. The parties agreed to proceed through an appraisal, while suit remained pending in the Circuit Court of Cook County, Illinois.  After extensive written submissions and hearing, the Umpire ruled in Insurer’s favor, finding less than $70,000.00 in windstorm damages and that the remaining damages were caused by long-term deterioration and wear and tear.  Homeowner’s lawsuit was subsequently dismissed pursuant to the Umpire’s award. 


ANSWER TO QUIZ: Jack Frost wins, Grinch loses. Here, Grinch contracted to care for Jack’s llamas knowing Beau would be free to roam; and, that Beau had been aggressive towards him in the past. Therefore, Grinch assumed the risk that Beau would attack him in a manner similar to those past instances. Edwards v. Lombardi, 2013 IL App (3d) 120518 (Nov. 20, 2013) LEF wishes everyone Happy Holidays and a healthy, happy and prosperous New Year!