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Twenhafel v. State Auto Property

November 26, 2008

ROGER TWENHAFEL, D/B/A CONSOLIDATED SERVICES, PLAINTIFF,
v.
STATE AUTO PROPERTY AND CASUALTY INSURANCE COMPANY, DEFENDANT.



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

MEMORANDUM AND ORDER

The issue presented in this insurance coverage dispute is whether business inventory stored outside under an industrial tarp is "in the open." If it is, State Auto Property and Casualty Company ("State Auto") avoids coverage under its policy with Roger Twenhafel. If it is not, State Auto owes Twenhafel $81,678.10.

I. BACKGROUND

Twenhafel manufactures kitchen and bathroom cabinets. He stores some of his raw wood inventory outdoors under industrial tarps that are secured in place by straps. In September 2006, a violent storm or tornado tore the industrial tarp off the wood inventory. The wood was exposed to rain and damaged; according to Twenhafel, the total amount of the loss is $81,678.10.

At the time of the storm, Twenhafel insured his business property through State Auto. There is no dispute that he had a policy that was in effect on the day in question. But the policy, an "open peril" policy which covers all losses unless there is a specific exclusion, contains the following exclusion:

CAUSES OF LOSS -- SPECIAL FORM

B. Exclusions

2. We will not pay for loss or damage caused by or resulting from any of the following:

j. Rain, snow, ice, or sleet to personal property 'in the open.'

(See Doc. 2-8, Answer/Affirmative Defense to Complaint). According to State Auto, the loss is not insured because the inventory was damaged by rain while it was "in the open;" according to Twenhafel, the inventory was not "in the open" because it was covered by an industrial tarp. The term "in the open" is not defined in the policy.

The Court has subject matter jurisdiction under 28 U.S.C. § 1332(c): Twenhafel is a citizen of Illinois, State Auto is an Iowa corporation with its principal place of business in Ohio, and the amount in controversy exceeds $75,000, exclusive of interest and costs. (See Doc. 2, paras. 4-6).

II. ANALYSIS

Summary judgment may be granted "if 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 a judgment as a matter of law." Fed.R.Civ.P 56 (c). In considering a summary judgment motion, a court must review the entire record and draw all reasonable inferences in the light most favorable to the non-moving party. See NLFC, Inc. v. Devcom Mid-America, Inc., 45 F.3d 231, 234 (7th Cir. 1995); Enquip, Inc. v. Smith-McDonald Corp., 655 F.2d 115, 118 (7th Cir. 1981). When considering cross-motions for summary judgment, the Court construes the evidence and makes reasonable inferences in favor of the party against whom each motion is made. See Premcor USA, Inc. v. Am. Home Assurance Co., 400 F.3d 523, 526 (7th Cir. 2005).

Under Illinois law (which the parties agree applies in this diversity case), the interpretation of an insurance contract is an issue of law properly determined by the Court on a motion for summary judgment. BASF AG v. Great Am.Assurance Co., 522 F.3d 813, 818-19 ...


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