MONTHLY QUIZ: Insureds purchase several automobiles from a private individual and thereafter procure several automobile insurance policies from Insurer. While the policies are in force, law enforcement seizes Insureds' cars on the grounds that they previously had been stolen. Insureds did not steal the cars and were not aware that the vehicles were stolen at the time they were purchased. Following the seizure, Insureds make claims for comprehensive coverage on their policies. Insurer ultimately declines and files several declaratory suits. Did the Insureds suffer losses? If yes, are losses due to seizure by law enforcement officers covered? You be the judge. (Answer below)
HOMEOWNER / ASSOCIATION LAW: Homeowner purchases house and property adjacent to several lakes, which lakes are considered common areas, and becomes a member of Homeowners’ Association. The only recorded restrictive covenants provided that "[n]o boat pier may extend more than two (2) feet into the waters of the lake." Under Association's bylaws, which were never recorded, "all members [we]re bound by the current ... [the] Association Rules." Association's Board also promulgated rules regulating various activities on the lakes, such as fishing, swimming, boating, camping, and guest usage. When Association amended its rules to prohibit the use of pontoon boats with more than two pontoons, Homeowner sued since he owned a boat with three pontoons. Citing Illinois precedent for the proposition that restrictions on the use of private property must be recorded and made a part of the chain of title in order to be enforced, Homeowner argued that Association could not limit his use of the lake. The Court ruled that because the Association had the responsibility of administering the common property for the common good of the members, the Association also had the implied power to make rules over the common property - even where the recorded covenants did not expressly grant the authority to regulate those common areas. Homeowner loses, Association wins. Ripsch v. Goose Lake Association, 2013 IL App (3d) 120319 (May 14, 2013)
CONSUMER FRAUD / ATTORNEYS FEES: Following trial on breach of contract and Illinois Consumer Fraud Act claims, Trial Court awarded Plaintiffs a $5,994.32 judgment. But Trial Court also entered judgment for attorney fees against Defendants in the amount of $32,306.25 and costs in the amount of $680.67, (i.e. roughly four times the amount sought in actual damages). Defendants appealed, arguing that the Trial Court abused its discretion in awarding Plaintiffs four times more in attorneys’ fees than the actual damages, and, that Plaintiffs' attorney did an "overzealous" amount of work was done to recover the $5,994.32. But, the Appellate Court affirmed that attorney fees were properly awarded by examining the eight factors to be considered in connection such awards. Defendant loses, Plaintiffs’ attorney wins. Clayton v. Planet Travel Holdings, 2013 IL App (4th) 120717 (May 9, 2013)
NO COVERAGE FOR KICKBACK SCHEME: Insured, a provider of magnetic resonance imaging (MRI) services to patients, was sued by one of its competitors for allegedly violating section 2 of the Illinois Consumer Fraud Act (i.e. 815 ILCS 505/2 (West 2010)). Competitor alleged that Insured engaged in a kickback scheme with certain physicians or clinics, submitted false and deceptive billing records to patients and third-party payors and engaged in a predatory pricing scheme designed to price Competitor and others out of the MRI services market. Insured tendered the various complaints to Insurer. Insurer filed a declaratory judgment action. In affirming the trial court, the Appellate Court found no coverage since Insured's conduct, which was willful and intentional, did not constitute an “occurrence” under the policy. The Appellate Court also found that the complaint did not allege discrimination and therefore the personal and advertising injury coverage was not triggered. Insurance company wins, Insured loses. West American Ins. Co. v. Midwest Open MRI, Inc., 2013 WL 1641408 (Apr.16, 2013)
ANSWER TO QUIZ: The Insureds lose. Comprehensive coverage was not available since the law enforcement seizure did not constitute a "direct, sudden and accidental damage to....a covered vehicle" because any damage was to the Insureds rather than to their vehicles. That is, while Insureds suffered losses due to the seizure of their cars, the cars themselves did not sustain any damage. State Farm Mut. Auto. Ins. Co. v. Rodriguez, 2013 IL App (1st) 121388 (Mar. 28, 2013)
