Insurance Law

Dist. Ct. did not err in granting defendant-insurance company’s motion for summary judgment in plaintiff-insured’s action alleging that defendant breached its duty to settle underlying property-damage claim that arose out of grain bin explosion, where: (1) at time of explosion insured had been hired to work on grain bin to reduce temperature in bin that posed risk of fire and explosion; and (2) defendant’s failure to settle claim resulted in jury finding that insured was liable for property damage to bin. Relevant damage-to property clause in policy precluded coverage for damage to property on which insured was performing work, and said clause was designed to prevent insured from collecting insurance proceeds for its own faulty workmanship arising out of risks associated with its business. As such, defendant did not breach any duty to settle underlying property-damage claim since claim was not covered because of damage-to-property exclusion where: (1) insured performed its work incorrectly by failing to reduce grain temperature in timely manner; and (2) damage that plaintiff caused was one of normal risks associated with its business of remedying hot grain bins. Fact that plaintiff was only working on grain (as opposed to bin) at time of explosion did not require different result.

Dist. Ct. did not err in dismissing for failure to state cause of action plaintiff’s lawsuit alleging claims for fraudulent misrepresentation, fraudulent omission, unjust enrichment and violation of Illinois Consumer Fraud and Deceptive Practice Act (ICFDPA) arising out of defendant-insurance company’s sale of long-term care insurance policy to plaintiff that contained 10-year guarantee that defendant would not raise premiums, under circumstances where defendant raised premiums by 76.5 percent 11 years after effective date of policy. Accordingly to plaintiff, defendant engaged in scheme to lure elderly people to purchase said policy by offering artificially low premiums for first 10 years and mentioning hypothetical raise of premiums of only 20 percent in sales pitch and then not disclosing any intent to raise rates substantially at time when elderly insureds would likely need to make claims. However, plaintiff failed to identify any false statement for purposes of her fraudulent misrepresentation claim and failed to identify any fraudulent omission, under circumstances where defendant did not owe plaintiff duty to disclose any facts. Also, plaintiff failed to state cause of action under ICFDPA, because plaintiff failed to identify any deceptive practice engaged in by defendant, any material omission of fact or any unfair practice. Moreover, express contract between parties precluded plaintiff from proceeding on unjust enrichment claim.

Dist. Ct. erred in granting defendant-insured’s motion for summary judgment in plaintiff-insurance company’s action seeking declaration that it owed no duty to defend or indemnify defendant in underlying personal injury action arising out of incident in which defendant’s truck hit pedestrian who refused medical treatment. Record showed that: (1) policy contained clause indicating that plaintiff owed no duty to provide coverage unless defendant provided prompt notice of accident or loss; and (2) defendant waited 21 months after instant accident to give plaintiff notice of accident, which occurred one day after pedestrian served lawsuit against defendant. Ct. of Appeals found that instant 21-month delay from date of accident was unreasonable, where all five factors in assessing reasonableness of instant delay mentioned in Yorkville, 939 N.E. 2d 288, favored plaintiff, since: (1) reasonable insured would have known at time of accident that future claim may be filed by pedestrian; (2) defendant, as business owner, had certain degree of sophistication in matters of commerce and insurance; (3) there was no reason for defendant to be sure that no claim would be filed by pedestrian; (4) defendant failed to be diligent in ascertaining whether instant accident would be covered; and (5) instant delay prejudiced plaintiff because prompt notice would have given plaintiff opportunity to determine whether pedestrian was willing to settle case and would have given plaintiff opportunity to obtain medical evidence to defend against pedestrian’s claim of latent injury.

Dist. Ct. did not err in granting defendant-insurance company’s motion to dismiss plaintiff-insured’s action alleging that defendant breached terms of insurance policy by failing to defend or indemnify plaintiff for $24 million settlement of underlying lawsuit alleging that plaintiff had assessed and collected excessive overdraft fees from its bank customers. Dist. Ct. could properly find that provision in policy that excluded coverage for claims “based upon, arising from or in consequence of fees or charges” applied, such that defendant was not required to defend or indemnify plaintiff in underlying lawsuit. Ct. rejected plaintiff’s argument that dismissal was improper because underlying lawsuit asserted injuries that were primarily caused by plaintiff’s policies and practices, since: (1) only harm alleged in underlying lawsuit was plaintiff’s maximization of excessive overdraft fees; and (2) there was no policy or practice alleged that existed independent of plaintiff’s overdraft fee scheme. Ct. further noted that instant exclusion served necessary purpose of avoiding “moral hazard,” where plaintiff would otherwise be free to create another alleged improper fee scheme knowing that defendant would reimburse it if and when said scheme was discovered.