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09/06/89 Mohammad Altaf, v. Hanover Square Condominium

September 6, 1989

MOHAMMAD ALTAF, PLAINTIFF

v.

HANOVER SQUARE CONDOMINIUM ASSOCIATION NO. 1 ET AL., DEFENDANTS (HANOVER SQUARE CONDOMINIUM ASSOCIATION, PLAINTIFFS-APPELLANTS; ECONOMY PREFERRED INSURANCE COMPANY, THIRD-PARTY, DEFENDANT-APPELLEE)



APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, THIRD DIVISION

No. 1-88-2871

544 N.E.2d 1032, 188 Ill. App. 3d 533, 136 Ill. Dec. 257 1989.IL.1382

Appeal from the Circuit Court of Cook County; the Hon. Arthur L. Dunne, Judge, presiding.

APPELLATE Judges:

PRESIDING JUSTICE FREEMAN delivered the opinion of the court. WHITE and CERDA, JJ., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE FREEMAN

Third-party plaintiffs appeal from the trial court's grant of a motion for summary judgment in favor of third-party defendant, Economy Preferred Insurance Company (Economy Preferred), and the denial of the third-party plaintiffs' cross-motion for summary judgment. The third-party complaint sought a declaratory judgment regarding whether Economy Preferred had a duty to defend third-party plaintiffs, Hanover Square Condominium Association No. 1 and five members of its board of directors, and whether Economy Preferred had a duty to indemnify the third-party plaintiffs, regarding an underlying property damage action.

For the reasons stated below, we affirm the judgment of the circuit court.

The record indicates that the underlying suit was brought by Mohammad Altaf, a condominium unit owner, against the third-party plaintiffs, the condominium association and members of the association's board of directors. Altaf's complaint seeks recovery for property damage to his unit resulting from a fire which began in an adjacent unit. At the time of the occurrence, Economy Preferred provided liability insurance to the condominium association under "Special Multi-Peril Policy No. SP-08865." In addition, Economy Preferred provided errors and omissions coverage to the board members under a directors and officers liability supplement endorsement to the policy.

In count I of the underlying complaint, plaintiff cites section 12 of the Condominium Property Act (Ill. Rev. Stat. 1985, ch. 30, par. 312), which sets forth the authority of the board of managers to obtain insurance for the property against loss or damage by fire or other hazards. Plaintiff asserts that the condominium association and board of directors had a duty to obtain insurance which would fully insure replacement costs; process with diligence any claims declared under the policy; and oversee the insurance company's response to claims made under the insurance policy. Plaintiff alleges that defendants breached an implied contract by failing to assist him in having his premises restored as required by statute.

Count II of the complaint, also entitled "Breach of Contract," cites the bylaws of the condominium association and an enabling declaration filed with the Cook County recorder of deeds. The enabling declaration provides, among other things, that the association or manager will obtain and continue in effect blanket insurance, comprehensive public liability insurance, and other liability insurance it deems desirable. The bylaws state, among other things, that the association or board of directors are responsible for providing for the maintenance and repair of the common elements. Plaintiff alleges that defendants failed to assist him in processing his claim with defendants' insurance company and that defendants' insurance company failed to replace furnishings and clothing and other things, and delayed the repair work being performed on plaintiff's unit.

Count III, entitled "Negligence," alleges that defendants failed in their duties to provide an insurance company "which processed and completed all insurance claims" and to see that all claims filed with the insurance company were processed quickly and diligently. Plaintiff also alleges that defendants failed to replace damaged property with like property or compensation. Plaintiff alleges that defendants failed also in their implied duties inherent in their positions as board members. A fourth count, also entitled "Negligence," eventually was dismissed on plaintiff's motion.

Defense of the underlying suit was tendered to Economy Preferred, which declined coverage and denied owing a duty to defend the association or the board members regarding the allegations of the underlying suit. Defendants/third-party plaintiffs then filed their third-party complaint. Cross-motions for summary judgment were filed, briefed and argued. The trial court granted summary judgment in favor of Economy Preferred, finding that it had no duty to defend or indemnify the third-party plaintiffs.

The record indicates that the special multiperil insurance policy issued by Economy Preferred provided general liability coverage for the association's common areas. The additional directors and officers liability supplement endorsement ...


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