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One Place Condominium, LLC v. Travelers Property Casualty Company of America

December 13, 2011

ONE PLACE CONDOMINIUM, LLC, THE SOUTH LOOP SHOPS LLC, SOUTHBLOCK DEVELOPMENT LLC, C & K PARTNERSHIP, AND SOUTHBLOCK MANAGEMENT, INC., PLAINTIFFS,
v.
TRAVELERS PROPERTY CASUALTY COMPANY OF AMERICA, DEFENDANT.



The opinion of the court was delivered by: Magistrate Judge Finnegan

MEMORANDUM OPINION AND ORDER

Plaintiffs One Place Condominium LLC, The South Loop Shops LLC, Southblock Development LLC, C & K Partnership, and Southblock Management, Inc. (collectively "Plaintiffs" or "One Place") have filed this diversity suit against Defendant Travelers Property Casualty Company of America seeking to recover amounts allegedly due under a commercial insurance policy. The parties consented to the jurisdiction of the United States Magistrate Judge pursuant to 28 U.S.C. § 636(c), and Plaintiffs now seek partial summary judgment on the issue of coverage limits for "soft costs" resulting from "Earth Movement" loss. For the reasons set forth here, the motion is granted.

BACKGROUND

One Place Condominium LLC, The South Loop Shops LLC, and Southblock Development LLC are Illinois limited liability companies with members who are all citizens of Illinois. (Doc. 28 ¶ 1; Doc. 15 at 1-2). C & K Partnership consists of two partners who are both citizens of Illinois, and Southblock Management, Inc. is an Illinois corporation with its principal place of business in Chicago. (Id.). Plaintiffs are all owners, developers and managers of property located at 1 East 8th Street in Chicago (the "insured premises"). (Doc. 28 ¶ 2). Defendant insurance company is a Connecticut corporation with its principal place of business in Hartford.

A. The Insurance Policy

1. "Builders' Risk": On January 12, 2007, Defendant issued Plaintiffs an insurance policy covering the insured premises in Chicago for the period from November 2, 2006 to November 2, 2007 (the "Policy"). (Id. ¶ 3). The Policy insures against "'loss' to Covered Property from any of the Covered Causes of Loss." (Policy, Doc. 1-1, at 14).*fn1

"Loss" is defined as "accidental loss or damage." (Id. at 28). "Covered Property" means "Builders' Risk," which is defined as "[p]roperty described in the Declarations under 'Builders' Risk' . . . consisting of: . . Buildings or structures [and] Property that will become a permanent part of the buildings or structures at the 'job site.'" (Id. at 26). Under "Builders' Risk" in the Declarations, the policy states that it covers "only the buildings and structures" described on that page, namely, "new construction of a three story fire resistive retail and condominium building located at 1 E. 8th Street, Chicago, IL 60605" (the "project"). (Id. at 7). "Covered Causes of Loss" means "RISKS OF DIRECT PHYSICAL 'LOSS' except those causes of 'loss' listed in the Exclusions." (Id. at 14).

2. "Soft Costs": After stating that Travelers will pay for "loss" to covered property for any of the covered causes of loss, the coverage section then states under the heading of "Soft Costs" that:

We will pay your "soft costs" during the period of delay in completion. Such soft costs must result from "loss" to Covered Property from any of the Covered Causes of Loss which delays the completion of the project beyond the "planned completion date." (Id. at 14). "Soft costs" are defined as "your actual and necessary business costs in excess of your budgeted amount for the 'project' consisting only of [the] type shown in the Declarations." (Id. at 29). The Declarations page lists the following items as "soft costs":

* Interest on money borrowed to finance construction

* Advertising expenses

* Realty taxes and other assessments

* Costs resulting from the renegotiation of your lease(s) or construction loans (Id. at 7).

3. "Limits of Insurance": The Declarations page sets forth the applicable "Limits of Insurance" under the Policy. It contains a section describing the limits of insurance for "Builders' Risk," followed by a separate section with the limits of insurance for "'Soft Costs' and Special Time ...


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