June 2016 Case Notes & Comments

"Music speaks what cannot be expressed, soothes the mind and gives it a rest, heals the heart and makes it whole, flows from heaven to the soul."~ Unknown

MONTHLY QUIZ: Cabby pulls taxi up to a crosswalk, apparently too close to Pedestrian. Pedestrian strikes the cab windshield with his briefcase, causing damage. Cabby exits his cab and pursues Pedestrian on foot; and a scuffle ensues in which Pedestrian strikes Cabby with his briefcase, injuring Cabby. Cabby files a lawsuit for negligence and battery against Pedestrian (Tort Case) and Pedestrian is charged, but not yet convicted, with aggravated battery (Criminal Case). Pedestrian files an affirmative defense asserting self-defense in the Tort Case and tenders his defense in the Tort Case to Insurer under his homeowner's policy. Insurer files a declaratory action (DJ Case), asserting that it has no duty to defend or indemnify Pedestrian in the Tort Case because the allegations do not constitute an "occurrence," which the policy defines as an "accident," and that any claim was barred by the policy's "criminal acts" and "expected or intended injury" exclusions. Does Insurer owe Pedestrian a defense in the Tort Case? Is Insurer's duty to defend Pedestrian extinguished if Pedestrian is subsequently convicted of battery stemming from the same events? You be the judge. (Answer below)

LEF WINS SUMMARY JUDGMENT: Congratulations to Roland S. Keske who obtained summary judgment in favor of the insurer in a first party / breach of contract suit filed in the Circuit Court of Cook County arising from an alleged holdup and jewelry theft. The Court agreed that no coverage was owed due to several misrepresentations in the insured's  application for insurance regarding the insured's residence, roommates, alarm system, safe and travel habits.  The insured, who incidentally claimed to be a trainer to several current and former NBA players, argued that coverage was owed because the misrepresentations were not significant and were wholly unrelated to the loss. However, Mr. Keske convinced the Court that a dismissal was warranted because the insured's misrepresentations materially affected the insurer's acceptance of the risk. No appeal was filed. McCray v. Jeweler's Mutual Insurance Company, Case No. No. 13 CH 15238 (Cook County) 


PREMISES LIABILITY / OPEN AND OBVIOUS / DISTRACTION EXCEPTION:  Plaintiff-Pedestrian was walking across the street from that a crowd that had gathered to celebrate the release of a political prisoner. When Plaintiff heard people shouting obscenities and yelling "everybody hit the floor," she looked over her shoulder out of fear for her own safety, at which point she tripped on a 2" high uneven piece of sidewalk.  Though Plaintiff admitted that the height differential was open and obvious, Plaintiff claimed that the "distraction" exception applied. The Illinois "distraction exception" provides that landowners must warn of or guard against even open and obvious dangers if it is reasonably foreseeable that the person will be distracted and not discover the danger. The trial court, however, granted summary judgment. In affirming the dismissal, the appellate court found that while the height differential was open and obvious and despite the fact that Plaintiff actually distracted, the distraction was not foreseeable. Therefore, the City was legally not required to anticipate or guard against the unforeseeable distraction caused by the crowd.  Negron v. The City of Chicago, 2016 IL App (1st) 143432 (May 25, 2015). 

UNINSURED MOTORIST / TOLLING OF SUIT LIMITATION PERIOD: In July 2007, Insured is involved in a motor vehicle accident with an uninsured driver in Wisconsin and promptly notified her Insurer. In October 2009, Insured sent Insurer a written demand for arbitration but does not identify an arbitrator. Accordingly, Insurer denied the demand. On July 19, 2010, Insured filed a new demand for arbitration with the name of an arbitrator, which Insurer denied as untimely as the demand was not made within the policy's two-year limitation provision. Litigation ensues. On cross-motions for summary judgment, Trial Court entered judgment for Insured, finding that, pursuant to section 143.1 of the Illinois Insurance Code, "the two-year time limitation contained in the policy for demanding arbitration had been tolled by the ongoing claims process until the claim was denied [on] October 19, 2009." The Appellate Court affirmed, stating that tolling of the two-year limitations period began when Insurer received a written notice of the UM claim in November 2007. Tolling continued until Insurer rejected Insured's arbitration demand on October 19, 2009. As of July 19, 2010, Insured fulfilled her requirements under the policy by requesting arbitration and naming an arbitrator. Accordingly, while nearly three years passed between the accident and the arbitration demand, almost two years of that period was tolled.Country Preferred Ins. Co. v. Whitehead, 2016 IL App (3d) 150080 (June 2, 2016).

UNDERINSURED MOTORIST / SETOFFS: Insured was negligently struck by a US Postal vehicle and the liability carrier for the US Post Office paid its $25,000 policy limit. In addition, the United States paid $49,900 in exchange for a release of claims against the United States and its agents and employees. Insured, who maintained a $100,000 underinsured motorist (UIM) policy with Insurer, demanded that Insurer pay $75,000, which represented the balance of the UIM limits less a $25,000 setoff for Postal Worker's carrier's liability payment. Insurer filed a declaratory action and did not contest coverage, but asserted that it was entitled to both a $25,000 setoff for the US Postal policy and a $49,900 setoff for the United States' settlement. Insured argued that Insurer was not entitled to the additional setoff because the United States was extinguishing its own, independent liability from that of Postal Worker through its $49,900 settlement. The trial court entered judgment in favor of Insured in the amount of $75,000 and found that Insurer was not entitled to set off the money paid by the United States. The appellate court affirmed, observing that the public policy behind UIM coverage is to place the insured in substantially the same position as if the tortfeasor had carried adequate insurance. The claimed damages exceeded all available UIM motorist coverage, even if credits were allowed for the payment made by the United States. Accordingly, Insurer was not entitled to the additional setoff. DeStefano v. Farmers Auto. Ins. Ass'n, 2016 IL App (5th) 150325 (June 14, 2016) 

ANSWER TO QUIZ: Insurer owed a duty to defend Pedestrian in the Tort Case because the allegations of the Tort Case did not conclusively suggest an intentional act versus a merely negligent act. Further, Insurer's duty arose the moment the suit was filed, not when Pedestrian pleaded self- defense. Also, before Pedestrian was convicted of battery, it was not clear and free from doubt that pedestrian had engaged in a criminal act. Insurer's duty terminated, however, on the date that Pedestrian was criminally convicted because, as of that moment, Pedestrian's conduct fit with the policy's criminal-act exclusion. Country Mutual Insurance Co. v. Dahms, 2016 IL App (1st) 141392 (May 19, 2016)