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May 4, 1994


An Appeal from the Circuit Court of the Twelfth Judicial Circuit, Will County, Illinois. Honorable Herman Haase, Judge Presiding.

Present - Honorable Peg Breslin, Justice, Honorable Tom M. Lytton, Justice, Honorable Tobias Barry, Justice

The opinion of the court was delivered by: Lytton

JUSTICE LYTTON delivered the opinion of the court:

Plaintiff Reginald Thompson filed suit in the circuit court of Will County against defendant Green Garden Insurance Company to recover damages for vandalism to a building owned by plaintiff and insured by defendant. The trial court granted defendant's motion for summary judgment on the ground that plaintiff's building had been vacant for more than 30 days prior to the loss and was thus excluded from coverage by the terms of the insurance policy. On appeal, plaintiff argues that summary judgment was erroneously granted because the pleadings, depositions and affidavits present genuine issues of material fact concerning defendant's alleged vacancy defense. We agree, and therefore, we reverse and remand.

Plaintiff owned a two-story residence in Steger, Illinois, which was divided into two apartments, one on the first floor and one on the second. Tenants occupying the first floor apartment moved out in June of 1990, and at the end of October, 1990, plaintiff evicted the tenants of the second floor apartment for nonpayment of rent. He then began to do extensive work inside the building, including painting and plastering in both apartments and rebuilding the downstairs bathroom by installing a new ceiling, new floor, new vanity cabinet and new faucets.

Plaintiff did most of the reconstruction work on the building himself. He worked in the building nearly every day and slept overnight on an average of three to five nights each week. In addition to stoves, refrigerators, kitchen chairs, and an air conditioner, plaintiff kept an air mattress on the premises and kept all the utilities connected.

On January 27, 1991, plaintiff discovered that the property had been vandalized. Some windows and a storm door were broken, the gas supply to the building had been shut off at the meter, and ice was visible in the toilets and faucets. After the gas was turned on by the gas company and heat restored, the radiators began to leak, floors and rugs became water-soaked, plaster fell, and other plumbing damage occurred.

Plaintiff notified defendant of the loss, and adjuster Michael Phillips investigated. Plaintiff informed Phillips that no tenants had resided in the two apartments since early November of 1990 and that two new tenants had signed leases and paid deposits prior to January 28, 1992. After meeting with Phillips, plaintiff submitted a contractor's estimate for repair of the damages, and Phillips responded on April 1, 1991, with an offer of $10,883 which plaintiff rejected. On April 24, 1991, defendant paid plaintiff $3,600 for lost rents. Another offer of $15,346 for damage repair made by defendant on May 2, 1991, was also rejected by plaintiff as insufficient.

On May 8, 1991, defendant withdrew all previous settlement offers and asked plaintiff to submit a sworn proof of loss with new estimates. Plaintiff prepared a sworn claim for damages totalling $37,560.50, obtained a police report and submitted to an examination under oath. Defendant then offered to settle the claim for approximately $23,000, and again plaintiff refused the offer. Plaintiff's final settlement demand of $61,407 was rejected by defendant on March 13, 1992, and plaintiff filed his complaint shortly thereafter.

Defendant's claims manager testified at her deposition that, at the time of the May 8, 1991, letter, defendant had no question with respect to coverage of plaintiff's claim under the policy. Although the original report of loss filled out by Phillips noted that the building had been vacant for 30 days, plaintiff was never advised by defendant that coverage was in doubt or would be denied. The only dispute during negotiations concerned the amount of money due plaintiff.

Between June 21, 1991, and March 13, 1992, attorneys for defendant sent at least 10 letters to plaintiff or plaintiff's attorney concerning the requirements that plaintiff submit a sworn proof of loss, produce documents, and appear for an examination under oath. Each letter contained a paragraph stating that neither the letter nor its contents was intended to be a waiver of any of the terms or conditions of the insurance policy at issue or of defendant's rights under that policy.

In response to plaintiff's complaint, defendant filed an answer and four affirmative defenses. The third and fourth defenses were filed 10 months after the answer and set forth the "vacancy" defense at issue on appeal. The insurance policy provides that loss caused by vandalism or malicious mischief is covered, but also provides:

"We will not pay for loss:

(b) at any insured premises which has been vacant for more that 30 consecutive days immediately preceding the loss. A building under ...

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