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GEORGETOWN ASSOCIATES v. CHEROKEE INSURANCE COMPANY

February 12, 1982

GEORGETOWN ASSOCIATES, ET AL., PLAINTIFFS,
v.
CHEROKEE INSURANCE COMPANY, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Shadur, District Judge.

MEMORANDUM OPINION AND ORDER

Georgetown Associates ("Georgetown") sues Cherokee Insurance Co. ("Cherokee") and Nordstrom Agency of Illinois, Inc. ("Nordstrom"), claiming Cherokee breached its contract of insurance by refusing to pay for loss sustained when Georgetown's outdoor swimming pool unexpectedly popped out of the ground. Georgetown and Cherokee have filed cross-motions for summary judgment. Because there are material fact issues, both motions are denied.

Facts

Georgetown is a real estate limited partnership. One of its developments is Georgetown of Willow Bend ("Willow Bend"), an apartment complex in Rolling Meadows, Illinois. Willow Bend's outdoor swimming pool is adjacent to the living units, shaped like a trapezoid (60 feet long, 40 feet wide at the shallow end narrowing to 20 feet at the deep end) and surrounded by a concrete deck.

Before April 30, 1980 substantial amounts of ground water had collected around and beneath the pool,*fn1 creating hydrostatic pressures whose force ultimately exceeded the weight of the pool. On April 80 the excess force caused the pool to thrust upward more than 12 inches, shattering the concrete deck, destroying the pool's plumbing connections and substantially damaging the pool.

There is a dispute as to why the water pressure had been unrelieved before the occurrence:

Georgetown presents the affidavits of experts Richard Hults and Lewis Blue. Hults, president of a local construction company who has worked in the industry for 11 years, inspected the pool shortly after the accident. He concluded that the pool's "hydrostatic gravity valve failed to release hydrostatic external ground water forces, which caused pressure to build up around the pool, and which ultimately forced the pool to rise above ground level." Blue, housing inspector for the City of Rolling Meadows, came to the same conclusion based on substantially the same observation.

Cherokee counters with the affidavit of its own expert Ruben J. Baer, a registered structural engineer. Baer too examined the swimming pool shortly after the accident. He concluded that the "uplifting . . . was caused by a loss of pool water through a crack or cracks in the pool wall or floor and that said cracks were caused either by faulty operation or maintenance of the pool and/or as a result of poor design of the pool itself."

Baer's conclusion is thus directly at odds with that of Hults and Blue. Both of them chalk up the accident to failure of a valve to relieve pressure caused by unfavorable weather. Baer rather ascribes the accident to negligence in operation, maintenance or design.

Sharp differences also exist as to the existence of insurance coverage for the loss. Nordstrom had told Georgetown that the usual multi-peril ("all risks" in common parlance) policy did not cover swimming pools. Georgetown ordered and paid an extra premium for extended coverage including swimming pools and other structures apart from the residential buildings (to a maximum limit of $25,000).

Unfortunately the policy as delivered to Georgetown, though it did include the swimming pool rider (Endorsement E), omitted the very coverage form (MP 101) to which it was a rider.*fn2 Had anyone studied the package delivered to Georgetown in detail, the gap in documentation would have been apparent, for:

    (1) Among the eight "forms and endorsements" listed
  on the cover sheet as "applying to Section I"
  (property coverage) was "MP 101." That form was
  missing while the other seven were in the package.
    (2) Endorsement E itself was captioned "Special
  Conditions and extensions to MP 101  MP 126." It
  specified that its "conditions and Extensions apply
  only when the aforementioned forms are attached to and
  made a part of this Certificate." Its swimming pool
  coverage was specified as an extension of "coverage
  under MP 101."

But of course no one did study the package or discover the omission until the loss was incurred and the claim was made and refused. This action must determine both the effect of the omission and the effect of MP 101 if it ...


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