October 2014 Case Notes & Comments

“On Halloween, parents sent their kids out looking like me.” ~ Rodney Dangerfield

MONTHLY QUIZ: Insured leases and operates a water park, which is usually open to the public during the summer months. The park’s property policy covers “vandalism” damages, but includes a limitation that applies to “where loss or damage occurs” on premises that have been “vacant” for more than 60 consecutive days prior to the occurrence. For two consecutive summers, due to inclement spring weather, Insured opts to perform maintenance activities instead of opening for business. During the second summer closure, vandals break into and damage park property. Insurer declines coverage on grounds that since the park was not open to the public during the summer season, the property is vacant as defined by the policy. Insured argues that even though it was not open, its customary operations included not opening if inclement weather prohibited the necessary preparation and maintenance for the summer season. Is the vandalism covered or does the vacancy exclusion apply? You be the judge. (Answer below)

 

POTHOLE IN MALL PARKING LOT WAS NOT A “PUBLIC NUISANCE”:  After shopping, Plaintiff tripped and fell in a mall parking lot in a pothole near the rear of her parked car. Plaintiff sued Property Owner #1, who had sold its interest in the mall and parking lot to Property Owner #2 more than 3 year prior to Plaintiff’s fall. Though Owner#1 had no property interest at the time of the incident, Plaintiff contended that Owner #1 allowed the mall parking lot to fall into disrepair due to lack of maintenance. Plaintiff further alleged, among other things, that when Owner #1 sold the property, Owner #1 knew or should have known that Owner #2 had borrowed heavily and did not have the capital to renovate the parking lot (Owner #2 went into receivership the same year as Plaintiff’s fall). Therefore, Plaintiff alleged, Owner #1 had created a “public nuisance.” Plaintiff also claimed a public right to have “a reasonably safe means of ingress and egress to the mall stores over the parking lot.” In IL, a public nuisance is defined as the “doing of or the failure to do something that injuriously affects the safety, health or morals of the public, or works some substantial annoyance, inconvenience or injury to the public.” A nuisance is considered a “public nuisance” if it affects “a place where the public has a legal right to go, such as a park, street, or alley” but not if it “occurs in a place of business to which an invitee has no public right to go.” In affirming the dismissal of the case, the Court reasoned that Plaintiff was not exercising a right common to the public at the time that she entered the parking lot for the purpose of shopping, that the deterioration of the parking lot did not affect the “community at large” and that the claimed right to have “a reasonably safe means of ingress and egress to the mall stores over the parking lot” was actually a private right and not actionable as a public nuisance. Burns v. Simon Properties Group, LLP, 2013 IL App (5th) 120325 (Oct. 2, 2013)

 

INSURER ALLOWED TO DEDUCT SALES TAX FOR  PROPERTY NOT REPLACED - Policy obliged Insurer to pay Insured “the cost to repair or replace less depreciation” for lost property (i.e. replacement cost). However, even though the policy did not define the term “depreciation,” Insurer was allowed to deduct sales tax from the items Insured did not replace. The Court reasoned that since Insured elected not to replace certain property, Insured was made whole by a reduced amount that did not include sales tax - which Insured would not have to pay for such items. Gee v. State Farm Fire & Cas. Co, N. Dist. Ill., Case No. 11-cv-250 (Sept. 23, 2013)

 

DUTY TO DEFEND - WRONGFUL EVICTION: Insured-Owners leased work and rental space to Tenant. During the lease term, Owners sold the leased premises and in the process, removed Tenant’s personal items. Tenant filed a federal lawsuit against Owners, claiming federal statutory violations, conversion and wrongful eviction. Insurer denied having an obligation to provide Owners a defense and indemnity to Tenant’s lawsuit. In the ensuing declaratory action between Owner-Insured and Insurer, the Court found that Insurer had a duty to defend Owners because the insurance policy defined personal and advertising injury as including “wrongful eviction[s]” and Tenant’s federal lawsuit included allegations that Owners wrongfully evicted Tenant. John T. Doyle Trust v. Country Mut. Ins. Co., 2013 IL App (2d) 121238-U (Sept. 25, 2013)

 

ANSWER TO QUIZ:  Insured-Water Park loses. Court found that the losses did not occur during the park’s “usual and customary” winter closure period for normal maintenance and repair operations, but instead just after it was supposed to be open for the summer season. Therefore, Insured was not engaged in its customary operations at the time of the loss, or for the sixty days prior to the loss. Coverage denied. Travelers Casualty Ins. Co. of America v. Wild Waters, LLC, Dist. ID, Case No. 2:12-cv-00481-CWD (Aug. 30, 2013)

Past Publications

2024

March 2024
January 2024

2023

December 2023
October 2023
September 2023
August 2023
May 2023
March 2023
February 2023

2022

December 2022
October 2022
August 2022
July 2022
April 2022
March 2022
January 2022

2021

December 2021
October 2021
August 2021
July 2021
May 2021
April 2021
March 2021
January 2021

2020

December 2020
November 2020
October 2020
September 2020
August 2020
February 2020
January 2020

2019

December 2019
October 2019
September 2019
July 2019
May 2019
March 2019
February 2019
January 2019

2018

December 2018
October 2018
August 2018
June 2018
May 2018
April 2018
March 2018
February 2018

2017

December 2017
November 2017
October 2017
September 2017
August 2017
July 2017
June 2017
May 2017
March 2017
February 2017

2016

December 2016
October 2016
September 2016
August 2016
July 2016
June 2016
March 2016
January 2016

2015

December 2015
September 2015
August 2015
July 2015
June 2015
May 2015
April 2015
March 2015
February 2015
January 2015

2014

December 2014
October 2014
September 2014
July 2014
June 2014
April 2014
April 2014
March 2014
February 2014
January 2014

2013

December 2013
November 2013
October 2013
September 2013
August 2013
July 2013
June 2013
May 2013
April 2013
March 2013
January 2013

2012

December 2012
November 2012
October 2012
September 2012
August 2012
July 2012
June 2012
May 2012
April 2012
March 2012
February 2012
January 2012

2011

December 2011
November 2011
October 2011
September 2011
August 2011
July 2011
June 2011
May 2011
April 2011
March 2011
February 2011
January 2011

2010

December 2010
November 2010
October 2010
September 2010
August 2010
July 2010
June 2010
May 2010
April 2010
March 2010
February 2010
January 2010

2009

December 2009