The opinion of the court was delivered by: Honorable David H. Coar
MEMORANDUM OPINION AND ORDER
Axis Specialty Insurance Corp. has sued Simborg Development, Inc., a policyholder, seeking declaratory judgment that: (1) Simborg's fire loss claim does not trigger or attach coverage under the Axis Policy, by virtue of the terms and conditions of the Axis Policy, and (2) the Court grant Axis other relief such as the Court deems fit and just under the circumstances. Simborg has counterclaimed, alleging breach of contract (Count I), vexatious delay in settling an insurance claim under the Illinois Insurance Code, 215 ILCS 5/155 (Count II), misrepresentation under the Illinois Insurance Code, 215 ILCS 5/154, and violation of the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/1. The parties have filed cross motions for summary judgment, with Axis seeking judgment in its favor on its Complaint for Declaratory Judgment and on Count I of Simborg's Counterclaim, and Simborg seeking judgment on Counts I and II of its Counterclaim.
Simborg has fifty four properties in Illinois, Indiana, and Wisconsin, insured under a two-layered property insurance program in which two insurers provide coverage above Simborg's $25,000 deductible. The first $10 million in coverage established under a policy provided by Nutmeg Insurance Company. The Axis Policy provides an additional layer of recovery of up to $10 million per occurrence in excess of the $10 million limit of the Nutmeg Policy and Simborg's $25,000.*fn2
Simborg obtained the policy by using the services of JMB Insurance Agency, Inc. ("JMB"). JMB was responsible for acquiring Simborg's insurance, including its property insurance. In seeking excess coverage, JMB contacted Maximum Independent Brokerage, a wholesale representative that binds coverage on behalf of Axis, and forwarded a document compiled by Mitchell Simborg, President of Simborg, entitled "Building and Financial Information" (the "BFI Sheet"), along with a property insurance proposal. The BFI Sheet listed individual building and content replacement values for Simborg's fifty four properties, and also listed the total value of all of Simborg's properties as $137 million. Among other properties, the BFI Sheet listed a total building and contents value of $6 million for the Halsted Industrial Centre Partnership in Harvey, Illinois (the "Halsted Site").
Axis provided a quote and a revised quote for Simborg's excess insurance policy to Maximum. When the quote was accepted, Axis issued a binder confirming coverage which stated "Scheduled Limit of Liability applies." Maximum incorporated the Axis binder into its own set of forms, and therefore retained this wording. The Axis Policy was thereafter issued, and included a document entitled Endorsement A, the Excess Scheduled Limit of Liability Endorsement (the "Axis Endorsement"). Coverage was provided in the amount of $10 million per occurrence for loss or damage between December 31, 2006 and December 31, 2007. The sole exception to these limits was the 9200 Calumet Avenue location in Munster, Indiana, for which the Axis Policy provided a limit of $25 million. Axis charged Simborg a $35,000 premium for the Axis Policy, though the parties dispute how this amount was determined.
On or about May 24, 2007, a fire caused significant damage to Simborg's buildings located at the Halsted Site. The incident was reported to Axis on or about May 30, 2007. Axis issued a letter to Simborg on July 11, 2007, that purported to reserve its rights in relation to Simborg's claim. On August 2, 2007, Axis received an estimate to repair the Halsted Property, prepared by Andersen Group International, of $22,823,427.24, which did not include the cost of debris removal, value of the building contents destroyed or damaged by the fire, or any estimate of lost rents or other expenses. On August 17, 2007, Simborg notified Axis that Nutmeg had paid out its entire $10 million on the underlying policy limits and requested that Axis fulfill its own policy obligations. On September 18, 2007, Axis denied Simborg's claim, stating that under the Axis Endorsement, the Policy was not attached by the fire loss. On October 18, 2007, Axis filed the instant Complaint for Declaratory Judgment.
A party seeking summary judgment has the burden of showing that there are no genuine issues of material fact that would prevent judgment as a matter of law. Fed. R. Civ. P. 56. When reviewing a motion for summary judgment, the court will "view all facts and draw all inferences in the light most favorable to the non-moving party." Chortek v. City of Milwaukee, 356 F.3d 740, 745 (7th Cir. 2004). Once a summary judgment motion has been filed, the non-moving party must show through specific evidence that a triable issue of fact remains on issues it bears the burden of proof at trial. Liu v. T & H Machine, Inc., 191 F.3d 790, 797 (7th Cir. 1999). A party must "present more than mere speculation or conjecture to defeat a summary judgment motion." Sybron Transition Corp. v. Security Ins. Co. of Hartford, 107 F.3d 1250, 1255 (7th Cir. 1997). Summary judgment is appropriate if the nonmoving party fails to establish the existence of an element essential to his case, one on which he would bear the burden of proof at trial. Ortiz v. John O. Butler Co., 94 F.3d 1121, 1124 (7th Cir. 1996). "[A] complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
A. Breach of the Insurance Contract
1. Excess Scheduled Limit of Liability Endorsement
When interpreting insurance policies, "a court's primary objective is to ascertain and give effect to the intentions of the parties as expressed by the words of the policy." Cent. Ill. Light Co. v. Home Ins. Co., 821 N.E.2d 206, 218 (Ill. 2004). Whether an insurance policy is ambiguous is a question of law. See Bohner v. Ace American Ins. Co., 834 N.E.2d 635, 638 (Ill. App. 2005). The Court is not to adopt a "strained, forced, unnatural, or unreasonable construction, or one which would lead to an absurd result." U.S. Fire Ins. Co. v. Hartford Ins. Co., 726 N.E.2d 126, 128 (Ill. App. 2000). Words are ambiguous only if they are susceptible to more than one reasonable interpretation. USF&G v. Wilkin Insulation Co., 578 N.E.2d 926, 930 (Ill. 1991). Furthermore, extrinsic evidence is admissible to interpret the terms of an insurance policy only when the language itself is ambiguous. See Lee v. Allstate Life Ins. Co., 838 N.E.2d 15, 23 (Ill. App. 2005). If the terms of the insurance policy are clear and unambiguous, a ...