Ohio Security Insurance Co. v. Best Inn Midwest, LLC

Plaintiff filed a declaratory judgment action seeking a declaration that an insurance policy it issued to the defendant did not cover claims related to damage to the defendant’s property by vandals. The insurance company alleged that the property was vacant and, as a result, was not covered under the terms of the policy. Defendant counter-sued and alleged that plaintiff denied the claim in bad faith. The district court found that the hotel was vacant as a matter of law as a sanction against plaintiff for failing to comply with discovery and granted summary judgment in favor of the defendant. The Seventh Circuit affirmed, finding that the sanction was an appropriate, proportionate response and was not an abuse of discretion. (EASTERBROOK and KIRSCH, concurring)