MONTHLY QUIZ: Krampus is driving his toboggan through North Star County (County) and pondering new punishments for this year's misbehaving children. As he approaches an old bridge on the outskirts of North Pole Village (City) that was built decades before, Krampus' toboggan slides on ice and/or snow, crosses the roadway and collides with a concrete abutment on the corner of the bridge. With his toboggan smashed, pitchfork bent and his right hoof seriously cracked, Krampus sues the County, City and Santa Claus, alleging negligence for their failure to remove snow/ice and for their negligent design and maintenance of the bridge. Defendants successfully move to dismiss as they were immune from liability for failing to remove snow and ice from the roadway under the Local Governmental and Governmental Employees Tort Immunity Act (745 ILCS 10/1, et seq., "Act"). Krampus files an amended complaint alleging that Defendants negligently designed, constructed and maintained the bridge without a guardrail on its corners. Defendants move to dismiss, arguing that the 10-year statute of repose for construction projects applies to Krampus' design and construction claims. Defendants also move to dismiss Krampus' negligent maintenance claims, contending that while Defendants were required to exercise ordinary care in the old bridge's maintenance under the Act, Defendants had no duty to undertake improvements (i.e. installation of a guardrail) that was not part of the original construction. Would a 10-year construction statute of repose apply to this bridge and the alleged lack of guardrail, which was not part of the original construction? Did Defendants' duty to exercise ordinary care require the County, City and Santa to install a guardrail? You be the judge. (Answer below).
SUBROGATION - ILLINOIS SUPREME COURT ALLOWS INSURER'S SUBROGATION SUIT AGAINST SUBCONTRACTOR EVEN THOUGH INSURER’S UNDERLYING CLAIM PAYMENTS WERE MADE TO A 3RD-PARTY, NOT THE INSURED: Insurer issued a builder's risk policy to the insured, City, for a project that involved the construction of a rainwater collection system. The system failed and caused significant damages to City property. Rather than issue payment to City, Insurer paid the General Contractor (GC), who repaired the damages. Insurer, claiming status as subrogee of City, subsequently filed suit against the Subcontractor that built the system. Subcontractor moved to dismiss, arguing that Insurer was not entitled to subrogation as a subrogee because it issued payment under the policy to the GC, not the City. The trial court granted summary judgment to Subcontractor, but the appellate court reversed, finding that Insurer could act as a subrogee even though its claimed status as subrogee was based on a payment made to a third party. The Illinois Supreme Court affirmed, finding that nothing about the facts precluded the Insurer’s subrogation action where there was an insured loss, for which Insurer made payment. Zurich American Ins. Co. v. Infrastructure Engineering, Inc., 2024 IL 130242 (Sep. 19, 2024).
COVERAGE - FEDERAL DISTRICT COURT IN ILLINOIS HOLDS THAT INSURED'S MISREPRESENTATIONS CONCERNING DAMAGES RENDERED THE POLICY VOID: Following a burst pipe and water loss, Insured submitted claim to Insurer through its public adjuster (PA) for more than $8 million in property damages, which included a $1.14M line item in "actual costs" to remove lead paint and asbestos. By comparison, Insurer estimated the damages at $401,537.95. Insurer paid $301,537.95 after accounting for the deductible. Insured sued for breach of contract. Following discovery, Insurer filed an amended answer and counterclaim as it believed that Insured intentionally misrepresented their damages regarding asbestos / lead paint removal. Neither Insured nor its PA had any written record of Contractor's supposed quote. At deposition, the PA testified that based upon his research into buildings of similar age, the insured building "may have asbestos" and that his asbestos / lead paint removal estimate was based upon a $1.14M oral estimate he received over the phone from a remediation Contractor, sight unseen. Employees for the remediation Contractor testified at deposition that the largest project they had ever completed was less than $250,000, that they would never provide an oral quote under such circumstances, and that the largest oral quote it would ever offer would be "around $25,000." Insurer moved for summary judgment on the basis of the Policy's Concealment, Misrepresentation, or Fraud condition, which rendered the Policy void if the Insured "commits fraud or intentionally conceals or misrepresents a material fact relating to .... [a] claim under the Policy." Specifically, Insurer argued that " was simply a lie for the [Insured] to [represent such a] ... generalized number for hypothetical work ... as [actual] 'proof'" of $1.14M in damages. The Court agreed that the estimate had "no factual connection to any work that actually had to be done" and that to claim such was indeed, a material misrepresentation. While noting that the existence of fraud or false swearing is ordinarily a question of fact, no jury could have concluded the Insured's mischaracterizations as to the nature and basis for the estimate as innocent. Held: Policy is void and Insurer entitled to judgment in the amount of $301,537.95. Pittsfield Dev. LLC v. Travelers Indem. Co., 2024 U.S. Dist. LEXIS 117530 (N.D. Ill. July 3, 2024).
WORKERS' COMPENSATION - CHILLING DECISION FROM THE ILLINOIS FIRST APPELLATE DISTRICT: Plaintiff-Appellant (Petitioner), a construction manager, appealed a circuit court decision in favor of Defendant-Appellee (Respondent), a home construction company. Petitioner, who was survived by his son and wife, suffered a heart attack and died while shoveling a 10' x 10' area of snow in front of a newly constructed home. The coroner’s initial autopsy report indicated that Petitioner’s cause of death was “Hypertensive Cardiovascular Disease” with coronary atherosclerosis. His report noted that Petitioner was a pack a day smoker, but had no history of cardiovascular issues. Respondent obtained a Section 12 records review without providing the autopsy report, only the death certificate. The Section 12 opined that the given the relationship between shoveling snow and the development of chest pain, it would make sense the two were related. After reviewing the autopsy report containing more details about the defects in Petitioner’s heart, the Section 12 opined Petitioner’s death was unrelated to any physical activity given the minimal amount of snow shoveled and arterial narrowing noted during the autopsy. Petitioner’s expert opined the death was caused by exertion while shoveling snow due to the nature of the heart attack – lightheadedness, chest pain followed by loss of consciousness. The Commission and circuit court affirmed the Arbitrator’s decision. Petitioner appealed the matter to the Appellate Court, which reversed all issues of the three prior decisions. The Appellate Court found the Petitioner’s expert doctor more persuasive and focused on the Section 12’s opinion in his first report stating that the relationship between the shoveling activities and the development of chest pain lends credibility that they are related. Thus, the Appellate Court found the shoveling was a contributing factor to the heart attack and that it was causally related to his employment. EDITOR'S NOTE: The key takeaway is to ensure that Respondents have submitted all necessary, supportive documents prior to obtaining a Section 12 report. As shown by the above, Respondents who fail to submit complete documentation run the risk of the Section 12 flip-flopping their opinion – negatively affecting their credibility at trial. This is especially true in catastrophic cases, such as the above. Kevin Cronk, Son of Richard Cronk, Deceased v. I.W.C.C., 2024 IL App (1st) 221878WC (Jul. 19, 2024).
ANSWER TO QUIZ: Krampus loses, all claims dismissed. Illinois has a 10-year construction statute of repose (735 ILCS 5/13-214(b)) that applies to any "design, planning, supervision, observation or management of construction, or construction of an improvement to real property." Here, given that the allegedly defective / dangerous condition (i.e. lack of a guardrail) existed upon construction and completion of bridge, decades ago, and remained unchanged, Krampus' defective design and construction claims were barred by the Illinois construction statute of repose. Krampus' negligent maintenance claims were also properly dismissed. Though the County, City and Santa were duty-bound to exercise ordinary care to maintain government property under their control, they had no duty to undertake improvements. In Illinois, liability only arises when a local governmental entity undertakes an improvement and the improvement itself creates an unreasonably dangerous condition. Since County, City and Santa had no affirmative obligation to install a guardrail, Krampus' failure to maintain claims were properly dismissed. Trial court decision affirmed. DiFoggio v. County of Will, et al., 2024 IL App (3d) 230261-U (Nov. 4, 2024).
