MONTHLY QUIZ: A May 2014 hail and windstorm damages the aluminum siding on the south and west sides of buildings owned by condominium Association. Association contends that because matching siding could not be located, Association's Insurer is required to replace the siding on all four sides of the buildings. Insurer argues that per the terms of the policy, Insurer is not responsible to replace the undamaged siding on the north and east sides. The policy's loss valuation provision provides the following four measures for loss, leaving Insurer to choose the least expensive: (1) pay the value of lost or damaged property; (2) pay the cost of repairing or replacing the damaged property; (3) pay an agreed or appraised value; or (4) repair, rebuild or replace the property of "comparable material and quality." Whose interpretation is correct? Under these facts, is Insurer required to replace all the siding if only two sides are damaged? You be the judge (Answer below).
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UCC / SALES / CONTRACTS - BUYER NEED NOT PROVIDE AN OPPORTUNITY TO CURE A SUBSTANTIAL NONCONFIRMITY BEFORE REVOKING ACCEPTANCE: Plaintiff-Consumers purchased a recreational vehicle (RV) from Dealership. When it leaked during a rainstorm, Consumers brought it in for repair. When it leaked again, Consumers brought it back. Just over two weeks after they dropped it off the second time, and without a timetable for when the vehicle would be repaired, Consumers told Dealership that they no longer wanted the RV and asked for their money back. Consumers filed suit for the return of the purchase price under a claim of revocation of acceptance pursuant to the Uniform Commercial Code, 810 ILCS 5/2-608(1). The Circuit Court granted Dealership's motion for summary judgment, finding that Consumers did not give Dealership a reasonable time to cure, which was fatal to their claims. The Appellate Court affirmed. On appeal, the Illinois Supreme Court reversed, finding that, under the plain language of the statute, where a buyer accepts a nonconforming unit without knowledge of the nonconformity, Section 2-608(1)(b) does not require that the buyer give the seller an opportunity to cure a substantial nonconformity before revoking acceptance. Kimberly Accettura v. Vacationland, Inc., 2019 IL 124285 (Sept. 19, 2019).
IMPACT OF SPECIAL INTERROGATORIES AT TRIAL SIGNIFICANTLY CURTAILED: On August 2, 2019, Illinois Governor Pritzker approved HB2233 (which has been enacted as Public Act 101-0184), which amends Section 2-1108 of the Code of Civil Procedure relating to special interrogatories at trial. Under the new rule, within the discretion of the court, a jury may be asked to make a special finding upon any material question(s) of fact submitted to the jury in writing. (This changes the prior rule, which required the court to ask such special interrogatories when submitted by a party.) Submitting or refusing to submit a question is reviewable on appeal under an abuse of discretion standard (as opposed to a de novo review). The Act further provides that, where the special finding of fact is inconsistent with the general verdict, the court shall direct the jury to further consider its answers and verdict and if, in the discretion of the trial court, the jury is unable to reconcile the two, the court shall order a new trial. (Under the prior rule, in the event of inconsistent answers, the answer to the special interrogatory controlled for purposes of entering judgment.) The Act further permits the parties to explain to the jury, during closing arguments, the implications of rendering a general verdict inconsistent with a special finding. (These changes are seen as a win for the plaintiff's bar, which has long argued that special interrogatories are an unnecessary check on jurors and primarily used as a defense tactic on appeal. Conversely, the defense bar has argued in favor of liberal use of special interrogatories in order to identify red flags in jury deliberations, indicating where jurors do not understand the jury instructions themselves.) These changes apply to trials commencing on or after January 1, 2020.
ANSWER TO QUIZ: Association wins, Insurer is required to replace all of the siding. On review, the court stated that intent of a "replacement cost policy" is to return the insured to the "approximate ... situation [it] would have occupied had the [storm] not occurred." Further, the 7th Circuit found that the terms "direct physical loss" and "Covered Property" rendered the policy ambiguous with regard to whether Insurer would be required to replace all of the siding under these facts. Windridge of Naperville Condominium Association v. Philadelphia Indemnity Insurance Company, No. 18-2103 (7th Cir. Aug. 7, 2019). EDITOR'S NOTE: While Windridge is adverse to insurers, matching questions are still fact intensive inquiries and the application of Windridge may be limited. Notably, the 7th Circuit found the policy "ambiguous as applied to the facts" and suggested that scenarios involving relatively minor damages (e.g. an individual panel of siding), may cause a different result. COMPARE/CONTRAST: Mohr v. American Auto Insurace Co., 2004 WL 533475, at 10-15 (N.D. Ill 2004) (Held: Policy did not require "aesthetic perfection," and that after bench trial, the insured failed to prove that replacing all siding was necessary).