Insurance Law

Dist. Ct. did not err in granting plaintiff’s motion for summary judgment in ERISA action alleging that defendant-insurance company wrongfully determined that plaintiff was ineligible for long-term disability benefits because, according to defendant, plaintiff’s vision impairment failed to meet definition of disability in subject insurance policy. Under de novo review, plaintiff proved by preponderance of evidence that she was disabled under terms of policy. Moreover, Dist. Ct. could properly find that State of Illinois insurance regulation (i.e., 50 Ill. Admin. Code section 2001.3) applied so as to nullify provision in policy that reserved discretion to defendant to interpret terms of policy, even though defendant argued that section 2001.3 was preempted by ERISA, since section 2001.3 was specifically directed toward entities engaged in insurance and it substantially affected risk pooling arrangement between insurer and insured.

Dist. Ct. erred in granting defendant-insurance company’s motion for summary judgment in action alleging that defendant breached contract to insure life insurance policies developed by parties and brokered by plaintiff, where defendant informed plaintiff four months after signing contract that it was terminating agreement because instant policy had not been approved by defendant’s internal review process. Contract contained ambiguity as to whether defendant could terminate contract at will, which precluded issuance of summary judgment, where parties presented conflicting extrinsic evidence as to said issue. Ct. also found existence of material fact as to: (1) whether defendant breached implied covenant of good faith, where plaintiff produced internal email from defendant’s CEO indicating that defendant was not acting “with integrity” in denying approval of proposed policy; and (2) whether proposed policy had actually been approved by defendant. Ct. rejected defendant’s argument that it could terminate contract at any time because termination provision contained no limit on timing of termination. (Partial dissent filed.)

Dist. Ct. did not err in granting plaintiff-insured’s motion for summary judgment in action alleging that defendant-insurance company breached terms of general commercial liability policy by failing to defend plaintiff in underlying action by employee of subcontractor, who was injured while performing insulation work at insured’s property. While “Employee Exclusion” clause in policy supported defendant’s contention that instant accident was not covered event, policy’s “Contractor-Subcontracted Work Endorsement” provided coverage for work “being performed specifically and solely for you.” As such, policy contained ambiguity with respect to coverage that must be resolved in favor of providing coverage, where defendant had drafted terms of policy.

Dist. Ct. did not err in granting plaintiff-insurance company’s motion for summary judgment in action seeking declaration that plaintiff’s commercial general liability policy did not provide coverage for defendant’s injuries sustained on yacht that was owned by insured-construction company. Language in policy provided insurance only in connection with insured’s “construction, reconstruction, repair or erection of buildings,” and also contained exclusion for liability arising out of ownership, use or entrustment to others of any watercraft owned by insured. Ct. rejected defendant’s contention that policy provided coverage for instant accident where instant policy did not expressly exclude non-construction-related injuries.

Dist. Ct. did not err in granting plaintiff’s motion for summary judgment in action seeking declaration that defendant-insurance company had duty to defend underlying lawsuit alleging, among other things, that insured was responsible for third-party’s injuries arising out of accident in which truck that was owned by insured struck third-party’s vehicle. While defendant argued that its policy did not cover instant accident, where insured’s truck was being driven on behalf of another entity that had placard on insured’s truck, and thus was excluded by policy’s Contingent Liability Endorsement, defendant had duty to defend insured in underlying lawsuit since underlying lawsuit had certain counts that specifically alleged that truck was being operated on behalf of named insured under plaintiff’s policy. Fact that underlying lawsuit also contained allegations against other entity that was not covered under policy did not require different result, since defendant had duty to defend lawsuit despite presence of proscribed theory of recovery. Moreover, defendant had duty to defend even if other entity may ultimately be found to liable in underlying lawsuit.