Insurance Law

In action alleging fraudulent and negligent misrepresentation, as well as negligence arising out of defendant-counsel for insurance company’s failure to disclose during discovery existence of $1 million umbrella policy that covered plaintiff’s car accident with insured, Dist. Ct. did not err in dismissing all three claims, since neither plaintiff nor her counsel had relied on any misrepresentation regarding existence of umbrella policy where plaintiff pleaded in complaint that her counsel “repeatedly expressed uncertainty” about lack of umbrella policy at time defendant had only stated that insured had automobile insurance policy that applied to accident. Also, said defendant did not owe plaintiff duty of care to reveal existence of umbrella policy, since: (1) said attorney only owed such duty to his client; and (2) client did not hire said attorney for benefit of plaintiff, who otherwise was in adversarial relationship with client. Too, plaintiff had no valid claim under 215 ILCS 5/143.24(b) that required disclosure of policy limits under certain circumstances, where: (1) plaintiff had failed to disclose description of her injuries or medical records as required by said statute when requesting such policy limits; and (2) defendants’ disclosure of insured’s automobile liability insurance policy satisfied requirements of said statute. Finally, allegations in instant complaint were sufficient to provide Dist. Ct. with jurisdiction to hear said case under class action provisions under CAFA, since (1) plaintiff alleged that defendant insurance company had failed to disclose existence of umbrella policies to at least 500 others; (2) subject umbrella policies concerned at least $1 million each, so as to satisfy $5 million amount in controversy requirement for CAFA treatment; and (3) local controversy exception to class action treatment under CAFA did not apply since, although instant claim was filed in state where certain defendants were located, defendant insurance company was primary defendant that was located in different state.

Dist. Ct. did not err in granting defendant-insurance company’s motion for summary judgment in action by plaintiffs-assignees of insured, alleging that defendant owed plaintiffs proceeds from insurance policy, where: (1) insured had settled underlying Texas lawsuit, which concerned potential claim under policy with plaintiffs; (2) terms of settlement called for stipulation to entry of judgment in amount of $5.12 million against insured; (3) insured assigned to plaintiffs’ purported right to recover against defendant in coverage dispute; (4) plaintiffs promised not to execute on judgment against insured; and (5) defendant played no role in insured’s settlement of underlying action since defendant had no duty to defend under policy. Ct. found that: (1) instant type of settlement and assignment was neither enforceable nor binding against defendant because said settlement was collusive and distorted adversarial process; and (2) insured’s assignment was invalid as matter of relevant Texas public policy. Ct. further noted that plaintiffs could not use amount of settlement of Texas lawsuit as evidence as to what defendant owed plaintiffs in underlying claim under instant circumstances, where there was no full adversarial trial on matter.

Dist. Ct. erred in granting Intervenors-insurance companies’ motion for summary judgment, alleging that it was not obligated to defend defendant-insured in underlying defective-product lawsuit arising out of claim that windows manufactured by insured were defective and had allowed air and water to leak into and damage plaintiffs-homeowners’ homes. Under terms of insurance policies, Intervenors were not obligated to reimburse insured for replacement of defective windows that had been manufactured by insured. However, instant policies potentially covered damages caused by leaky windows to plaintiffs' homes, where exclusion in policies for property damage “to your product,” i.e., windows, did not apply to damage to plaintiffs walls and other elements of their homes that were not supplied to plaintiffs by insured. As such, Intervenors had duty to defend insured on all claims in underlying lawsuit.

Dist. Ct. did not err in dismissing as untimely plaintiff’s 2012 breach of contract action, alleging that defendant owed it $2 million for series of reinsurance transactions that occurred prior to 1993. Record showed that said contracts required parties to generate quarterly statements that netted various claims and payments between parties, and that said statements ceased after 1993. Moreover, Illinois 10-year limitations period for instant contracts applied, such that plaintiff had until 2003 to sue on said contracts. Ct. rejected plaintiff’s claim that under Ill. Statute (215 ILCS 5/206), it (as insurance company liquidator) could wait until its predecessor in interest competed its liquidation to submit final statement of account between parties, especially where plaintiff had not obtained judicial permission to delay submission of statements. Also, fact that plaintiff made initial $2 million demand in 2008 did not support its claim that separate contract arose at that time, since defendant never accepted plaintiff’s demand.