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06/03/87 Mary Paluszek, F/K/A Mary v. Safeco Insurance Company

June 3, 1987





517 N.E.2d 565, 164 Ill. App. 3d 511, 115 Ill. Dec. 154 1987.IL.742

Appeal from the Circuit Court of Cook County; the Hon. Morton C. Elden, Judge, presiding.


PRESIDING JUSTICE McNAMARA delivered the opinion of the court. RIZZI and WHITE, JJ., concur.


Defendant Safeco Insurance Company appeals from an order granting summary judgment to plaintiff Mary Cox on the issue of coverage under the repair or replacement cost provision of her homeowner's insurance policy. Defendant also appeals from the trial court's finding of vexatious and unreasonable delay in payment of the claim, the penalty assessed therefore, and an award of attorney fees to plaintiff. Plaintiff has cross-appealed, urging that the amount of attorney fees awarded was inadequate.

Plaintiff Mary Paluszek, formerly Mary Cox, and her ex-husband Jody Cox purchased homeowner's insurance from defendant after purchasing a home in February 1980. The policy provided coverage against loss caused by fire. Jody Cox was originally a plaintiff in this case but his claim was dismissed with prejudice for repeatedly violating court orders to appear for his deposition. The Cox home suffered extensive damage as a result of a fire on December 12, 1980. The fire department listed the cause of the fire to be "undetermined," although the origin of the fire was in the kitchen and more specifically near the coffee maker.

Representatives of defendant visited the home on the same day the fire occurred and advanced the Coxes $3,200 within two days to cover living expenses. On December 15, 1980, defendant's adjuster, Leonard Cooper, discussed with Jody Cox an estimated timetable for working up the claims for additional living expenses, content losses and the scope of repairs. Cooper was unable to obtain a statement from plaintiff at this time because she was too emotionally upset.

Defendant's property supervisor, James Schild, requested Cooper to employ the services of an investigator to determine the cause of the fire. If the investigation revealed that the fire was caused by the coffee maker, Schild was concerned with recovering the amount of the loss via subrogation. Upon inspection of the premises, the investigator noted indications of unusual burn patterns at the floor level which would be abnormal for a fire that allegedly started at counter-top level. The investigator sent samples of the kitchen tile and living room carpet to a lab for analysis. The test results revealed that the samples contained gasoline. Additionally, the second place of origin of the fire, a crawl space, was apparently concealed after the fire was extinguished. A crawl space carpet sample also contained gasoline. The investigator issued a report to defendant which stated that he believed the fire to be of an incendiary origin. On February 24, 1981, defendant sent plaintiff's counsel a copy of the investigator's report.

While investigation of the fire continued, defendant continued to adjust the loss. Cooper attempted to get content evaluation sheets and proofs of loss from the Coxes in January 1981. Cooper made several unsuccessful attempts to get signed statements from both Coxes. Upon receiving proofs of loss, counsel for defendant requested that the Coxes be examined under oath, as provided in the policy. The Coxes twice requested that the examinations be rescheduled, and on April 7, 1981, defendant's counsel wrote that no further action would be taken on the claim until the Coxes complied with the cooperation clause in the policy. The Coxes were examined under oath on April 15 and 16, but did not return the signed transcripts to defendant for approximately another month.

On July 22, 1981, after reviewing a financial and character report on the Coxes, Schild decided that although defendant could prove that the fire had an incendiary original and that the Coxes met the opportunity requirement, it could not prove a motive for intentionally setting the fire, all of which are necessary elements to establish arson. On this basis, Schild recommended that the investigation be closed and coverage afforded. The Coxes were informed of defendant's decision on July 29, 1981, the same day the decision to pay the claim was made.

On August 4, 1981, Cooper wrote plaintiff's counsel, setting forth three bids for repair received from contractors. The contractor selected by the Coxes submitted a bid of $52,955, while the contractor selected by defendant submitted a bid for $39,788.54. An independent contractor, Cameo Construction Company, submitted a bid of $40,974.95. Cooper suggested that Cameo be retained to perform the repairs, offering to update the Cameo bid to take into consideration inflation since the date of loss. Plaintiff's counsel stated that he could not immediately respond to this offer.

With regard to the contents claim, defendant paid $28,841 to the Coxes on September 3, 1981. With regard to an additional living expense claim, defendant was not provided with the information necessary to determine any additional amount owed.

On November 6, 1981, because defendant had not received a response regarding Cameo's bid and no repairs had been made on the house, it sent the Coxes a check for $36,371.30, representing the actual cash value of the dwelling. On December 4, 1981, defendant sent the Coxes an additional check for $2,750.94 to correct an error which it discovered in the calculation of the ...

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