Insurance Law

Dist. Ct. did not err in granting plaintiff-insurance company’s motion for summary judgment in action seeking declaration that it was not required to defend or indemnify insured-developer in underlying complaint seeking damages against developer arising out of water damage to condominium and to resident’s personal property that stemmed from poor workmanship by developer. Under terms of policies, developer’s poor workmanship with respect to construction project/condominium was not “occurrence” or “accident” so as to provide coverage for damage to condominium itself. Moreover, while damages to residents’ personal property was potentially covered under policies, policies’ products-completed operations’ hazard exclusion applied so as to preclude coverage, where developer had completed construction work on condominium by time residents had moved in and subsequently incurred water damage to personal property.

Dist. Ct. did not err in dismissing for failure to state valid claim in action alleging that defendant-insurance company breached duty to defend insured in underlying section 1983 action, in which judgment was entered against insured for, among other things, $3.4 million in punitive damages that was not covered by insurance policy in claim that insured subjected victim to false arrest and malicious prosecution in criminal matter. Ct. of Appeals doubted whether Illinois would allow instant lawsuit, which seeks to shift burden of punitive damage award from insured-tortfeasor to insurance company. Moreover, instant insurer, which provided coverage only after primary insurer had exhausted its coverage, did not breach any duty to insured because it did not actually control litigation in underlying lawsuit at time when victim made settlement demand that was within instant insurer’s policy limits. Also, instant insurer was not required to seek out fresh negotiations once insurer had subsequently obtained control of litigation during appeal of underlying case.