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Essex Insurance Co. v. Supreme Transportation

July 12, 2007


The opinion of the court was delivered by: Judge Virginia M. Kendall


On or about July 17, 2005, sixteen pallets of Hewlett-Packard laptop computers were stolen from the premises located at 1300 Michael Drive, Suite B, Wood Dale, IL ("the Premises"). Plaintiff Essex Insurance Company ("Essex") issued a policy to Supreme Transportation, Inc. ("Supreme") for the Premises. Essex now moves for a judgment declaring that Supreme breached the conditions of the insurance policy by failing to properly maintain its burglar alarm system at the Premises. Alternatively, Essex asks for a declaration that the insurance policy is void because of material misrepresentations made in Supreme's application for coverage. For both reasons, Essex ultimately seeks a declaration that it is relieved of any obligation to defend or indemnify any of Defendants for any loss arising from the theft on Supreme's premises. Because there is insufficient undisputed evidence regarding Supreme's practice of maintaining the alarm system when the Premises were unoccupied, genuine issues of material fact exist as to whether Supreme breached the conditions of the insurance policy or made a material misrepresentation in its application for insurance.

Statement of Facts

Supreme has operated as an expedited trucking company and warehouseman at the Premises since approximately August of 2003. (Plf. ¶ 27.)*fn1 The building at 1300 Michael Drive contains three suites. (Plf. ¶ 28.) In July 2005, Supreme leased Suite B and the adjacent suite, Suite G. (Plf. ¶ 46.) During that time, Supreme subleased Suite G to MARX's Transportation and Express Freight and rented space in Suite B to American Line Haul. (Plf. ¶ 59.) Supreme operates out of its space twenty-four hours a day, seven days a week from approximately 8:00 p.m. Sunday night through 5:30 p.m. the following Sunday night. (Plf. ¶ 30.) During the remaining two-and-a-half hour window on Sunday night, the Premises are unoccupied. (Plf. ¶ 24.)

In 2003, Supreme contracted with ADT to install a burglar alarm system at the Premises. (Def. ¶ 4.)*fn2 The burglar alarm utilized motion detectors near the dock doors and a contact device on the office door. (Def. ¶ 5.) The westerly wall dividing Supreme's space from Suite G includes a large, metal, roll up door which was not wired with the ADT burglar alarm. (Plf. ¶ 29.) It was Supreme's practice to have the burglar alarm turned off while the premises were occupied. (Plf. ¶ 18.) On the evening of the theft, the last employee, Marcin Burcyzc, purportedly left Suite B around 4:30 p.m. (Plf. ¶ 26.) Mr. Burcyzc did not turn on the alarm and, at the time of the theft, the alarm was turned off. (Plf. ¶¶ 19-20; Def. ¶ 9.) Supreme first became aware of a possible theft at approximately 11:00 or 11:30 a.m. the following day, Monday, July 18, 2005. (Plf. ¶ 31.) The stolen laptop computers belonged to Met Logistics, Inc. ("Met").*fn3 (Plf. ¶ 14.)

The president of Supreme, James Lumley, signed a Warehouseman Liability Insurance Proposal on March 8, 2004. (Plf. ¶ 8; Compl., Ex. A.) The Proposal sought insurance coverage from Essex for the Premises. (Compl., Ex. A.) Bill Hunt of Trio Insurance Agency prepared the Proposal that James Lumley signed. (Def. ¶¶ 21-22.) Supreme gave the following answers in The Proposal:


c. (1) Are your premises protected by an operating Premises Alarm System? yes Central Station? yes

(Plf. ¶ 8; Compl., Ex. A.) Based on the Proposal, Essex issued Warehouseman Liability Insurance Policy No. 1MD6675 - 0 ("the Policy") to Supreme. (Plf. ¶ 9; Compl., Ex. B.) The Policy included a Protective Safeguards Endorsement which states that:

In consideration of the premium at which this policy is written, based on the protection of the premises by the protective safeguard system or systems indicated below, it is a condition of this policy that the insured shall exercise due diligence in maintaining in complete working order all equipment and services pertaining to the system which are under the control of the insured, including any special maintenance or service requirements indicated below. It also is a condition of this insurance that the insured shall give immediate notice to this Company or [sic] any impairment in or suspension of any equipment or service pertaining to the system within the knowledge of the insured. (Plf. ¶ 10.) The "protective safeguard system or systems indicated below" were an automatic sprinkler system; automatic fire alarm, reporting to a public or private fire alarm station; and an automatic burglar alarm, reporting to a public or private burglar alarm station. (Plf. ¶ 11; Compl. Ex. B.) The Endorsement states in large, bold text that "[f]ailure to comply with the Protective Safeguard Clauses specified as applicable in the Schedule below shall suspend this insurance." (Plf. ¶ 12.)

Standard of Review

Summary judgment is proper when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). In determining whether a genuine issue of fact exists, a court must view the evidence and draw all reasonable inferences in favor of the party opposing the motion. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). The court will "limit its analysis of the facts on summary judgment to evidence that is properly identified and supported in the parties' [Local Rule 56.1] statement." Bordelon v. Chicago Sch. Reform Bd. Of Trustees, 233 F.3d 524, 529 (7th Cir. 2000). Where a proposed statement of fact is supported by the record and not adequately rebutted, the court will accept that statement as true for purposes of summary judgment. See Drake v. Minnesota Mining & Mfg. Co., 134 F.3d 878, 887 (7th Cir. 1998) ("Rule 56 demands something more specific than the bald assertion of the general truth of a particular matter[;] rather it requires affidavits that cite specific concrete facts establishing the existence of the truth of the matter asserted"). An adequate rebuttal requires a citation to specific support in the record, an unsubstantiated denial is not adequate. Albiero v. City of Kankakee, 246 F.3d 927, 933 (7th Cir. 2001).


Illinois law governs the construction of the insurance policy that Essex issued to Supreme. See Lapham-Hickey Steel Corp. v. Protection Mut. Ins. Co., 655 N.E.2d 842, 845 (Ill. 1995). Under Illinois law, the construction of an insurance policy is a question of law. Outboard Marine Corp. v. Liberty Mut. Ins. Co., 607 N.E.2d 1204, 1212 (1992). A court's goal in construing a policy is the same as interpreting any contract -- to give effect to the parties' intent. Id. The best evidence of that intent is the language of the contract itself. Carey v. Richards Bldg. Supply Co., 856 N.E.2d 24, 27 (Ill. App. 2006). When the terms of an insurance policy are unambiguous -- susceptible to just one reasonable interpretation -- a court will not look to extrinsic evidence and "must afford them their plain, ordinary, and popular meaning." Id. (emphasis in original); see T.H.E. Insurance Co. v. Chicago Fireworks Manufacturing Co., 724 N.E.2d 188, 192 (Ill. App. 1999) ("When ...

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