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Dileo v. United States Fidelity & Guaranty Co.

MARCH 21, 1969.




Appeal from the Circuit Court of Cook County; the Hon. WILBERT F. CROWLEY, Judge, presiding. Affirmed in part, reversed in part, and remanded.


Rehearing denied May 20, 1969.

Plaintiffs, Rocco and Angelo DiLeo, appeal from a judgment awarding them damages in the gross amount of $4,987.87 pursuant to an action in law brought by them to recover for business interruption loss under policies of insurance issued by the defendants, Fireman's Fund Insurance Company, National-Ben Franklin Insurance Company of Pittsburgh, and National Fire Insurance Company of Hartford.

Plaintiffs seek remandment to the trial court with direction to enter judgment in their favor to the increased gross amount of $13,370.08 with prejudgment interest thereon to the date of entry of judgment, at the rate of 5% per annum from and after October 15, 1958, in equal amounts as to each of these defendants.

Defendants on cross-appeal contend plaintiffs' recovery, measured by the "time to restore" clause in the applicable insurance endorsements, was limited by the "actual loss sustained" clause also contained in the endorsements which, when applied, produces an amount of recovery substantially less than that awarded by the trial court.

On January 9, 1957, the named defendants issued their respective policies of fire insurance insuring the plaintiffs during the period from January 9, 1957, to January 9, 1960, against direct loss by fire due to business interruption, as defined in the policies, suffered by plaintiffs in their grocery and meat market in a brick mercantile building situated at 1122 West Erie Street, Chicago, Illinois. Each of the three policies insured against business interruption loss up to an amount of $10,000. Each policy also included an endorsement entitled, "Business Interruption Form No. 3," which, in pertinent part, provides:

"1. Subject to all its provisions and stipulations, this policy covers only against loss directly resulting from necessary interruption of business caused by damage to or destruction of real or personal property by the peril(s) insured against during the term of this policy, except as hereinafter specifically excluded or limited, on premises occupied by the insured as . . . and situated . . . Illinois.

"2. The measure of recovery in the event of loss hereunder shall be the reduction in gross earnings directly resulting from such interruption of business, less charges and expenses which do not necessarily continue during the interruption of business, for only such length of time as would be required with the exercise of due diligence and dispatch to rebuild, repair or replace such part of the property herein described as has been damaged or destroyed, commencing with the date of such damage or destruction and not limited by the date of expiration of this policy, but not exceeding the ACTUAL LOSS SUSTAINED by the Insured resulting from such interruption of business. Due consideration shall be given to the continuation of normal charges and expenses, including payroll expense, to the extent necessary to resume operations of the Insured with the same quality of service which existed immediately preceding the loss.

"3. Gross Earnings: For the purposes of this insurance `Gross Earnings' are defined as the sum of:

"(a) Total net sales, and

"(b) Other earnings derived from operation of the the business, less the cost of:

"(c) Merchandise sold, including packaging materials therefor,

"(d) Materials and supplies consumed directly in service(s) sold, and

"(e) Service(s) purchased from outsiders (not employees of the Insured) for resale which do not continue under contract.

"No other costs shall be deducted in determining `Gross Earnings.'

"In determining `Gross Earnings' due consideration shall be given to the experience of the business before the date of damage or destruction and the probable experience thereafter had no loss occurred.

"7. Resumption of Operations: If the Insured, by resumption of complete or partial operation of the property herein described or by making use of other property, equipment or supplies, could reduce the loss resulting from interruption of business, such reduction shall be taken into account in arriving at the amount of loss hereunder."

Prior to 1:00 a.m., on June 27, 1958, plaintiffs' business was being operated in the building on West Erie Street under a lease which was to expire on December 31, 1959. At that time a fire occurred which caused substantial damage and destruction to plaintiffs' property in the store and to the building.

During the period of 1958, prior to the fire, the building in which plaintiffs' store was situated had been condemned by the City of Chicago under an area clearance project for the construction of the Northwest Expressway. In the condemnation proceedings, plaintiffs were awarded a judgment of $1,200 for their leasehold interest. Thereafter, on May 27, 1958, plaintiffs were served with notice by the City of Chicago, requiring them to surrender the premises on June 30, 1958.

Following the fire, plaintiffs unsuccessfully negotiated a settlement with their insurers on the "contents" loss and "business interruption" loss policies. After summary judgment holding the various insurers liable to plaintiffs, both as to "contents" and "business interruption" loss, was entered on July 16, 1962, and affirmed by the Appellate Court, DiLeo v. United States Fidelity & Guaranty Co., 50 Ill. App.2d 183, 200 N.E.2d 405, the defendants in this cause amended their answer to plaintiffs' complaint, admitting loss to plaintiffs from business interruption in the amount of $2,131.37, but denying any liability in excess of that amount. Trial before a judge without a jury proceeded on the issue of ...

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