United States District Court, N.D. Illinois, Eastern Division
Temperature Service Company, Inc., and SSV Partners, LLC Plaintiffs,
Acuity, a Mutual Insurance Company Defendant.
MEMORANDUM OPINION AND ORDER
M. Durkin, Judge
Acuity, a mutual insurance company, moves this Court for
entry of summary judgment in its favor. R. 22. Though
discovery in the matter is not yet complete, R. 16, Acuity
argues based on a single response to interrogatories that the
declaratory judgment and breach of contract claims brought by
Plaintiffs Temperature Service Company, Inc. and SSV
Partners, LLC fail as a matter of law. For the reasons that
follow, Acuity's motion is denied.
judgment is appropriate “if the movant shows that there
is no genuine dispute as to any material fact and the movant
is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(a); see also Celotex Corp. v.
Catrett, 477 U.S. 317, 322-23 (1986). The Court
considers the entire evidentiary record and must view all of
the evidence and draw all reasonable inferences from that
evidence in the light most favorable to the nonmovant.
Ball v. Kotter, 723 F.3d 813, 821 (7th Cir. 2013).
To defeat summary judgment, a nonmovant must produce more
than “a mere scintilla of evidence” and come
forward with “specific facts showing that there is a
genuine issue for trial.” Harris N.A. v.
Hershey, 711 F.3d 794, 798 (7th Cir. 2013). Ultimately,
summary judgment is warranted only if a reasonable jury could
not return a verdict for the nonmovant. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
Plaintiffs' commercial property in Elk Grove, Illinois was
insured by Acuity from January 1, 2013 to January 1, 2014. R.
29 (Pls.' R. 56.1 Response) ¶ 4. The commercial
building on the property was constructed in or around 1980.
R. 29 ¶ 10. In August 2013, Plaintiffs excavated around
the building for the construction of a storage addition.
Id. ¶ 7. During the excavation process,
Plaintiffs discovered that the soil around and under the
insured property contained “urban backfill”-
construction debris, asphalt, concrete and other man-made
materials that cause “differential settlement” of
the earth. Id. ¶ 8. In October 2013, Plaintiffs
retained a consultant to perform a subsurface soil
investigation of the premises. R. 31 (Def. R. 56.1 Reply)
¶ 1. The consultant documented cracks in the building
foundation, steps and drywall, as well as damage to the
window frames and doors. Id. ¶ 2. A third-party
contractor then conducted an engineering and geotechnical
investigation of the premises, which revealed, among other
damage, cracks in the exterior masonry. Id.
¶¶ 3, 5. Based on the work of the consultant and
independent contractor, as well as on their own observations
of the deterioration of the property, Plaintiffs contend that
the urban backfill caused and continues to cause damage to
the insured premises. Id. ¶ 9.
submitted a proof of loss claim to Acuity seeking coverage
for stabilization measures, structural upgrades, and other
property repairs. Id. ¶ 11. Acuity hired its
own expert to investigate the insured premises in connection
with Plaintiffs' claim. Id. ¶ 12. Following
the investigation, Acuity denied coverage pursuant to certain
exclusions and limitations in the insurance policy. R. 1
(Complaint) and R. 11 (Answer) ¶ 8. This lawsuit
discovery, Acuity issued the following interrogatory to
Plaintiffs: “State the date on which the direct
physical loss you claim is covered pursuant to the Acuity
policy first occurred.” R. 29 ¶ 11. Plaintiffs
[Plaintiffs] object[ ] to this interrogatory on the grounds
that the term “first occurred” is vague and
overly broad. Without waiving said objection, due to the
nature, complexity, and circumstances surrounding the type of
direct physical Loss, [Plaintiffs] at this time cannot state
when the direct physical loss “first occurred”,
but the direct physical loss is ongoing and occurred after
January 1, 2013, the inception date of the Acuity policy.
Id. ¶ 12. “Acuity admits that the damage
to the building continues to progress.” R. 31 ¶
Acuity policy insures Plaintiffs against “loss or
damage commencing [d]uring the policy period . . . [w]ithin
the . . . United States of America.” R. 29 ¶ 5.
The parties dispute the meaning of the term
“commencing” within this coverage provision.
According to Acuity, if the term is construed to refer to the
single moment in time when all of the alleged damage to the
insured property began or originated, Plaintiffs' claims
fail as matter of law because Plaintiffs have not, and likely
cannot, establish that the date falls within the period of
coverage. The Court examines that position below.
interpretation of an insurance policy is a question of law
that is properly decided by way of summary judgment. BASF
AG v. Great Am. Assur. Co., 522 F.3d 813, 818-19 (7th
Cir. 2008) (quoting authority). “A court's primary
objective in construing the language of an insurance policy
is to ascertain and give effect to the intentions of the
parties as expressed by the language of the policy.”
Id. at 819 (quoting authority). “In performing
that task, the court must construe the policy as a whole,
taking into account the type of insurance purchased, the
nature of the risks involved, and the overall purpose of the
contract.” Id. (quoting authority). Where the
terms of an insurance policy are ambiguous, they will be
strictly construed against the drafter. Id.
Ambiguity exists where a provision is susceptible of more
than one interpretation and “reasonably intelligent
persons would honestly differ as to its meaning.”
Sentinel Ins. Co., Ltd. v. Cogan, 2016 WL 4270213,
at *3 (N.D. Ill. Aug. 15, 2016) (citing Nat'l Ben
Franklin Ins. Co. of Ill. v. Calumet Testing Servs.,
Inc., 191 F.3d 456, 1999 WL 594926 at *4 (7th Cir. May
argument is simple-because Plaintiffs concede in their
interrogatory response that they do not now (and may not
ever) know when, precisely, the damage to the insured
property “commenced” their claims fail as a
matter of law. R. 23 at 4-6. In support of this argument,
Acuity relies primarily on St. Michael's Orthodox
Catholic Church v. Preferred Risk Mutual InsuranceCompany,496 N.E.2d 1176 (Ill.App.Ct. 1986), a
widely-cited Illinois appellate court opinion that teaches
that “the existence of coverage is an essential element
of the insured's case, and the insured has the burden of
proving that his loss falls within the terms of his
policy.” Id. at 1178. St.
Michael's involved flood damage sustained by a
church over several years, including the year in which the
plaintiff was insured by the defendant. The policy at issue
covered only property damage “occurring” during
the policy period. The ...