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Nationwide Mutual Fire Insurance Company, As Subrogee v. T and N Master Builder and Renovators

October 25, 2011

NATIONWIDE MUTUAL FIRE INSURANCE COMPANY, AS SUBROGEE
PLAINTIFF-APPELLANT,
v.
T AND N MASTER BUILDER AND RENOVATORS, D/B/A TN CONSTRUCTION, AND TONY DELIGIO, INDIVIDUALLY AND D/B/A TN CONSTRUCTION, DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Lake County. of Michael Markowitz, No. 09-L-748 Honorable Margaret J. Mullen, Judge, Presiding.

The opinion of the court was delivered by: Justice Hudson

JUSTICE HUDSON delivered the judgment of the court, with opinion.

Presiding Justice Jorgensen and Justice Birkett concurred in the judgment and opinion.

OPINION

¶ 1 Plaintiff, Nationwide Mutual Fire Insurance Company (as subrogee of Michael Markowitz), appeals an order of the circuit court of Lake County granting judgment on the pleadings (735 ILCS 5/2-615(e) (West 2008)) in favor of defendants T&N Master Builder and Renovators and Tony Deligio. Plaintiff had issued an insurance policy covering property owned by Markowitz. Defendants were tenants upon the property. While the property was occupied by defendants, a fire occurred, damaging the building. The trial court determined that plaintiff could not maintain an action as subrogee against defendants, because they were coinsureds under Markowitz's policy with plaintiff. For the reasons that follow, we affirm.

¶ 2 I. BACKGROUND

¶ 3 On February 9, 2007, a fire occurred in a building rented by defendants. The property was insured under a policy issued by plaintiff. As a result of the fire, plaintiff was obligated to pay the owner of the property $140,328.98. Plaintiff now brings this action in subrogation to recover the $140,328.98 from defendants. Plaintiff alleges that the fire resulted from defendants' negligence.

¶ 4 On December 11, 2005, Markowitz entered into a commercial leasing agreement with defendants. At the time of the fire, the lease was expired. A holdover tenancy resulted. Plaintiff alleges 11 counts in all, including negligence, spoliation of evidence, and breach of contract. Defendants filed a motion for judgment on the pleadings pursuant to section 2-615(e) of the Civil Practice Law (735 ILCS 5/2-615(e) (West 2008)), which the trial court granted. It found that defendants were coinsureds under the terms of the lease and therefore plaintiff could not maintain an action against them, relying on Dix Mutual Insurance Co. v. LaFramboise, 149 Ill. 2d 314 (1992).

¶ 5 The relevant provisions of the lease are as follows:

"4. REPAIR. The Lessee covenants and agrees with Lessor to take good care of and keep in clean and healthy condition the Premises and their fixtures, and to commit or suffer no waste therein; that no changes or alterations of the Premises shall be made or partitions erected, nor walls papered without the consent in writing of Lessor; that Lessee will make all repairs required to the walls, windows, glass, ceilings, paint, plastering, plumbing work, pipes, and fixtures belonging to the Premises, whenever damage or injury to the same shall have resulted from misuse or neglect; and Lessee agrees to pay for any and all repairs that shall be necessary to put the Premises in the same condition as when he entered therein, reasonable wear and loss by fire excepted, and the expense of such repairs shall be included within the terms of the lease.

8. HOLDING OVER. If the Lessee retains possession of the Premises or any part thereof after the termination of the term by lapse of time or otherwise, then the Lessor may at Lessor's option within thirty days after the termination of the term serve written notice upon Lessee that such holding over constitutes either (a) renewal of this lease for one year, and from year to year thereafter, at double the rental specified under Section 1 for such period, or (b) creation of a month to month tenancy, upon the terms of this lease except at double the monthly rental specified under Section 1, or (c) creation of a tenancy at sufferance, at a rental of $75.00 dollars per day for the time Lessee remains in possession. If no such written notice is served then a tenancy at sufferance with rental as stated at (c) shall have been created. In such a case if specific per diem rental shall not have been inserted herein at (c) such per diem rental shall be one-fifteenth of the monthly rental specified under Section 1 of this lease. Lessee shall also pay to Lessor all damages sustained by Lessor resulting from retention of possession by Lessee.

15. FIRE AND CASUALTY. In case the Premises shall be rendered untenantable [sic] by fire or other casualty, Lessor may at his option terminate this lease, or repair the Premises within thirty days, and failing so to do, or upon the destruction of the Premises by fire, the term hereby created shall cease and determine."

¶ 6 II. ANALYSIS

¶ 7 Plaintiff raises two main issues on appeal. First, it contends that the rule announced by the supreme court in Dix, 149 Ill. 2d 314, should not apply in this case, because Dix involved a residential lease and the instant case involves sophisticated, commercial parties. Second, plaintiff asserts that certain provisions of the lease make ...


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