Congratulations to Howard Randell and Roland Keske, who recently secured a judgment on the pleadings in connection with a shipment of dairy and soy based products that spoiled during their shipment from Illinois to New York. Shortly after the insured signed for and accepted the load, its driver admittedly set the refrigerated truck (reefer) temperature at 53° F, not 35° F. Upon its arrival in New York, the shipper rejected the load and subsequently sued the insured for, among other things, exposing the products to higher temperatures than set forth in the shipping instructions. LEF convinced the Court that the policy only provided coverage for "spoiling, freezing or other change in temperature" to the extent such loss or damage was "directly caused by a sudden and accidental mechanical failure or breakdown" of the refrigeration equipment. Further, Howard and Roland were able to convince the court that no discovery was necessary in light of the insured driver's admissions that he incorrectly set the reefer temperature and that the truck was "fine." Sentry Select Insurance Company v. An Enterprise, Inc. et al., 2017 CH 07390 (Cook).
Leahy, Eisenberg & Fraenkel recently obtained summary judgment in the United States District Court for the Central District of Illinois on application of the "Continuous or Repeated Seepage or Leakage of Water" exclusion in a commercial property policy. Insured, a hotel, brought a claim against its property insurer for water damage discovered behind the drywall of over 30 of its rooms which resulted in approximately $1M in property damage and business income damages. The insurer disclaimed coverage based on a faulty workmanship/faulty construction exclusion in the policy, and reserved its right to rely on additional policy provisions to further deny coverage. Expert testimony in the case established that the water infiltration was the result of faulty workmanship/faulty construction of the hotel. The insured attempted to rely on the ensuing loss provision of the exclusion to argue that the ensuing water damage should still be covered. However, under Illinois law, there is no coverage for an ensuing loss where the ensuing loss is, itself, excluded from coverage. Relying on the "Continuous or Repeated Seepage or Leakage of Water" exclusion, the insurer took the litigation position that the ensuing water damage was also excluded based on evidence in the record demonstrating the water infiltration occurred over a long period of time. The insured challenged the position as barred by Illinois' "mend the hold" doctrine which prevents an insurer from taking a litigation position not previously raised in its denial of coverage. The Central District of Illinois agreed with the insurer that its reservation on other potential provisions in the policy, and its affirmative defense based on the "Continuous or Repeated Seepage or Leakage of Water" exclusion at the onset of litigation, properly raised the coverage issue and did not implicate the "mend the hold" doctrine. The Court also agreed with the insurer that the ensuing loss language in the policy only applied to the faulty workmanship/faulty construction exclusion and did not impact the application of the "Continuous or Repeated Seepage or Leakage of Water" exclusion. Summary judgment in favor of the insurer was granted and the case was dismissed. Tracy Holdings LLC v. West Bend Mutual Ins. Co., 2018 U.S. Dist. LEXIS 162363, 2018 WL 4571859, __ F. Supp. 3d __ (C.D. Ill. Sept. 24, 2018).
Congratulations to Robert Ostojic, who recently prevailed at trial on behalf of a property insurer of a commercial cold-storage warehouse. During trial, the insured claimed that a walk-in freezer door was inadvertently left open, which allowed humid air to enter one of the freezers. Sometime thereafter, the insured noticed that the freezer floor had heaved, and submitted a property claim. The insurer's experts, however, determined that the cause of the loss was the freezing and expanding of the soil underneath the freezer. Consequently, the insurer denied coverage based upon a policy's "Earth Movement" exclusion. During Mr. Ostojic's cross-examination of the insured's three experts, the experts admitted that the cause of the loss was, in fact, the freezing and expanding of the soil beneath the freezer. Following the close of the evidence, the insured requested an award totaling more than $1M. Though the jury awarded a fraction of the requested damages, the trial court threw out the jury verdict and entered judgment in favor of LEF's client, the insurer. The trial court accepted LEF's position that the claimed loss fell squarely within the plain and unambiguous language of the policy's "Earth Movement" exclusion, which broadly excluded coverage for "rising or shifting soil caused by freezing or expansion." The case remains pending on appeal. 4220 Kildare, LLC v. Regent Insurance Company, 16 L 10618 (Aug. 2, 2018, Cook).
Congratulations to John O'Donnell, Sr., Sara E. Spratt and John O'Donnell, Jr. who recently obtained summary judgment for the client, a sailing club. The sailing club operated a bar during a sailing regatta, and during discovery it was revealed that it had violated its liquor license by selling alcohol outside the confines of its building. At some point during the regatta and related social events, the plaintiff (a minor) alleged that she was sexually assaulted by another regatta participant. The plaintiff sued the sailing club, the alleged assailant and another regatta sponsor, alleging, among other things, negligence and premises liability. While businesses invite patrons onto their premises and therefore undertake a duty to provide reasonably safe premises, the undertaking of such a duty does not extend to unforeseeable criminal acts. Mr. O'Donnell highlighted the fact that there was no evidence that the sailing club served the participant with alcohol, was aware of participant's allegedly intoxicated state, or knew that any of the regatta competitors had any violent propensities. In so doing, Mr. O'Donnell successfully convinced an Ohio state court that the sailing club had no duty to protect regatta participants from allegedly intentional and criminal acts because they were unforeseeable. Furthermore, the trial court also agreed and found that the alleged criminal sexual assault was not a natural and probable consequence of the sailing club's technical liquor license violation. Essi v. Shockey, et al, Case No. 16CVH-4365 (Jul. 24, 2018, Franklin County, OH).
Leahy, Eisenberg & Fraenkel, Ltd. is pleased to announce that two of its partners, Steven B. Belgrade and John A. O’Donnell, have been included on the 2018 Chicago Admiralty & Maritime Law - Best Lawyers in America. Best Lawyers is one of the oldest and most highly regarded peer review publications in the legal profession, where lawyers are recognized for their top legal talent. Messrs. Belgrade and O’Donnell will be featured in various regional and national publications, including The Wall Street Journal and The Chicago Tribune.
Congratulations to William P. McElligott who prevailed on behalf of the Defendant in a jury trial held in Cook County, Illinois at the Daley Center. Plaintiff slipped and fell on an accumulation of ice at a shopping center back in 2011. Plaintiff sued the owner and property manager of the shopping center. The ice accumulated as a result of a fire sprinkler test performed by the Third-Party Defendant just hours before Plaintiff's accident. Bill successfully argued that the owner and property manager did not have actual or constructive notice of the accumulated ice that caused Plaintiff's fall. Bill was also successful in a pre-trial motion which barred Plaintiff from alleging that the fire sprinkler company was an agent of the owner or property manager.
Congratulations to Steven B. Belgrade, who recently won summary judgment on behalf of the client, an Insurer-Subrogee, arising from damages caused when a railcar full of sheet metal collided with a railcar loaded with Manufacturer's mining equipment. Pursuant to its policy, Insurer paid Manufacturer $1,686,194.67 for the damaged mining equipment, which was subsequently salvaged for $763,250.00, thereby reducing Insurer's total damages to $922,944.67. Insurer filed suit against two Railroads under the Carmack Amendment, 49 U.S.C. §14706(a)(1)-(2) ("Carmack"). Under Carmack, Insurer was required to prove delivery of the goods to the shipper in an undamaged condition, arrival of the goods in damaged condition and damages. When these are proven, the burden then shifts to the carrier to demonstrate that it was free of negligence and that the damages were due to an act of God, public enemy, an act of the shipper, public authority, or the nature of the goods themselves. When these elements were proved, Railroads argued that they had limited their liability to $25,000.00 through a private rate agreement between Railroads and Manufacturer. Mr. Belgrade successfully demonstrated to the United States District Court that the parties had let the rate agreement lapse and that Railroads had failed to follow the necessary steps to effectively limit their liability. Starr Indemnity & Liability Co. v. BNSF Railway Co., et al., Case No. 1:15-cv-1068 (C.D.Il, Mar. 14, 2018).
Congratulations to David Walters for his recent win in the Illinois Court of Appeals for the First District. The Illinois Court of Appeals recently affirmed a grant of summary judgement in favor of LEF's client, the owner of the suburban strip mall that leased space to a well-known health club franchise. Pursuant to the terms of the lease agreement with its tenant, the client-owner was responsible for plowing/removing snow and ice from the walkways and adjoining parking lot. Plaintiff was injured when she slipped and fell in the parking lot, allegedly on unplowed snow, while walking to entrance of the health club. Plaintiff could not, however, identify anything that would establish that the snow had been negligently plowed and could not establish the existence of an unnatural accumulation of snow and ice. The trial court granted summary judgment concluding that Plaintiff was unable to establish a prima facie case of negligence because she was only able to establish that her injuries were caused by a natural accumulation of snow and ice. On appeal, Plaintiff argued that while Illinois Natural Accumulation Rule provides a defense in tort, liability could still be imposed against the landlord under a breach of contract claim. The First District Appellate Court clarified the law on this issue and held that liability could be imposed upon a landlord for injuries caused by natural accumulations of snow and ice only in situations wherein there was contractual agreement to plow and/or remove snow and ice and the landlord failed to perform any measure of snow plowing or removal after a storm event; however, in cases wherein snow plowing activities were initiated and completed, a plaintiff is still required to establish that the landlord caused or contributed to the cause of an unnatural accumulation of snow and/or ice through negligent snowplowing activities. Mr. Walters convinced the Illinois Appellate Court that his case fell in the latter category and affirmed summary judgment. Robin Allen, v. Cam Girls, LLC , et al.,2017 IL App (1st) 163340,2017 Ill. App. LEXIS 820 (December 26, 2017).