September 2012 Case Notes & Comments

“A positive attitude may not solve all your problems, but it will annoy enough people to make it worth the effort” ~ Herm Albright (1876 - 1944)

MONTHLY QUIZ: Owner purchases vintage House as a rental property. House has older screw-in fuses rather than modern circuit breakers. Tenant complains to Owner of electrical problems, such as flickering lights and blown fuses.  Owner promises to send an electrician but fails to do so. House burns down while Tenant is at work and causes injuries to family members and property damages. Tenant advises local fire department of blown fuses and “electrical problems.” Fire Department concludes that while “fire scene suggests a possible electrical cause…, due to the extensive damage, the specific cause [cannot be] identified.” Fire Department relays all the information to Insurer. Owner’s Insurer then conducts two investigations and removes and preserves a section of wiring from the living room and some smoke alarms. Though it suspects that an electrical problem was the “most probable” cause of the fire, Insurer concludes that there does not appear to be any liability on the part of Owner. Less than two months later, City issues a demolition order stating that the building was an unsafe structure. Owner advises Insurer, but not Tenant, of City’s order, hires a demolition contractor and Insurer pays for the demolition. Tenant sues Owner and Insurer for spoliation of evidence.  Trial Court dismisses action on grounds that neither Owner nor Insurer have a duty to notify and preserve the fire scene so Tenant can investigate. Tenant appeals, asserting that Insurer spoliated the scene. Who is right? You be the judge (Answer below)

 

PROXIMATE CAUSE: Plaintiff firefighter was injured when he fell while investigating an alarm at Defendant’s building. Defendant sought summary judgment, arguing there was no direct evidence that Defendant’s negligence caused Plaintiff’s fall, because Plaintiff had no memory of the fall and no one witnessed the fall. However, testimony from two witnesses established that building was “pitch black” inside and had no safety tape on the floor near the drop-off. Court ruled that proximate cause can be sufficiently established by circumstantial evidence, and testimony was sufficient to create a question of fact for the jury. Court also noted that common law “fireman’s rule”, holding property owners harmless for injuries to firefighters investigating emergencies, no longer applies, and a property owner must maintain its property in a reasonably safe condition. Olson v. Williams All Seasons Co., 2012 IL App (2d) 110818 (Aug. 9, 2012)

 

DRIVER & MASKED MAN’S ROBBERY & ASSAULT OF PASSENGER NOT COVERED:Victim hailed a taxi, only to have Driver allegedly take him to an area he did not want to go, stop the cab, allow a masked man enter, and have Driver and Masked Man rob and batter him. Victim sued Taxi Lessee. The jury found for Victim and against Lessee. Following the verdict, Lessee’s Insurer filed a declaratory judgment action against Lessee, seeking a determination that Insurer had no duty to indemnify Lessee for Victim’s jury verdict because Victim’s injury did not “arise out of the ownership, maintenance, or use of” the subject taxi cab, as provided by the policy. Lessee appealed trial court’s grant of summary judgment in favor of insurer on issue of coverage. The First District Appellate Court considered whether Victim’s proof at trial, that a crime was committed with the use of the covered taxi cab, should be resolved as a matter of law to preclude coverage to Lessee for Victim’s damages. The Appellate Court affirmed, finding no coverage, reasoning that Victim’s injury did not arise from the ownership, maintenance, or use of the automobile simply because the crime was perpetrated in the insured automobile. American Country Ins. Co. v. Chicago Carriage Cab Corp. et al., 2012 IL App (1st) 110761 (Aug 17, 2012)

 

NEGLIGENCE - CITY HAD NO DUTY TO MAINTAIN STREETLIGHT IT DID NOT OWN OR OPERATE: Plaintiff's decedent was struck in a crosswalk by a car while crossing a street. Plaintiff alleged that the City failed to maintain a streetlight owned by ComEd that was located near the crosswalk. Trial court entered directed finding in favor of City on the grounds that: (1) City had no duty of care relating to the streetlight and (2) no evidence was presented as to actual or constructive notice that streetlight was inoperable. Plaintiff appealed. While Appellate Court observed that a municipality has a duty to maintain its property in a reasonably safe condition, both under the common law and as codified in the Local Governmental Tort Immunity Act, the municipality's duties do not extend to property it does not own. While Appellate Court agreed with Plaintiff that sufficient notice that the streetlight was out could give rise to liability, there was neither evidence that the City had actual notice, nor could Plaintiff establish the City had constructive notice. Constructive notice can be established where the dangerous condition is shown to exist for a sufficient length of time to impute knowledge of its existence to a defendant. Warning v. City of Joliet, 2012 IL App (3d) 110309 (Aug. 22, 2012)

 

ASSUMPTION OF FACTORY'S OPERATIONS WAS NOT A MISAPPROPRIATION OF ADVERTISING IDEAS OR STYLE OF DOING BUSINESS - While serving as directors, Insureds allegedly misled minority Shareholders as to Company’s financial situation and meanwhile, formed a new business  that engaged in the same type of business. Insured’s new business took over Company’s factory and operations. When Shareholders filed suit for breach of fiduciary duty, Insureds tendered claim to Insurer. Insurer refused the tender and filed an action seeking a declaration that Insurer owed no duty to defend Insureds. Trial Court disagreed with Insureds, that Shareholder’s allegation that Insureds had “assumed operations” of Company and constituted a covered offense, including misappropriation of advertising ideas or style of doing business and wrongful invasion into the right of private occupancy of the factory, and entered favor of Insurer.  In affirming, Appellate Court reasoned that the allegation that new business assumed operations of Company’s factory encompassed only the manufacture of products, but did not refer to advertising or misappropriation of advertising ideas or style of doing business in any way. Pekin Insurance Co. v. Precision Dose, Inc., 2012 IL App (2d) 110195  (Mar. 16, 2012)

 

ANSWER TO QUIZ: The Tenant is correct. Insurer may have spoliated evidence. In Illinois, though the case law is not well developed, a duty to preserve evidence may arise through a “special circumstance.” Here, the Appellate Court found that Tenant’s complaints, that there were “some electrical problems” and recurring blown fuses, were communicated directly to Owner and indirectly to Insurer (i.e. via the local fire department) and were arguably “a request [to preserve evidence] sufficient to put defendants on notice that they were potential litigants.” As a result, a question of fact existed as to whether Owner and Insurer were on notice of potential litigation and, in turn, whether they could be characterized as potential litigants. The Court also found that questions of fact existed as to whether Owner and Insurer controlled the premises and whether Plaintiff had an adequate opportunity for an inspection. Combs v. Schmidt  2012 IL App (2nd) 110517 (Sept. 12, 2012)

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