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Stonegate Insurance Co. v. Hongsermeier

Court of Appeals of Illinois, First District, Fifth Division

March 3, 2017

STONEGATE INSURANCE COMPANY, Plaintiff-Appellant,
v.
MARK HONGSERMEIER, RHONDA HONGSERMEIER, Defendants, and GMAC MORTGAGE, LLC, Assignee OCWEN LOAN SERVICES, LLC, Defendant-Appellee.

         Appeal from the Circuit Court of Cook County No. 11 CH 39744, Honorable Franklin U. Valderrama, Judge Presiding.

          REYES JUSTICE delivered the judgment of the court, with opinion. Presiding Justice Gordon and Justice Lampkin concurred in the judgment and opinion.

          OPINION

          REYES JUSTICE.

         ¶ 1 Plaintiff Stonegate Insurance Company, a property insurer, appeals an order of the circuit court of Cook County granting summary judgment in favor of defendant Ocwen Loan Services, LLC. Defendant is the mortgagee and named loss payee in an insurance policy that was issued by plaintiff. On appeal, plaintiff argues the circuit court erred in granting summary judgment and allowing defendant to recover under the insurance policy because (1) the insured owners did not occupy the property, which was a condition precedent to coverage, (2) questions of fact exist as to whether the mortgage clause in the policy provides defendant with coverage, and (3) the fraud clause in the policy precludes coverage for the owners of the residential premises and defendant. For the following reasons, we affirm.

         ¶ 2 BACKGROUND

         ¶ 3 On February 20, 2009, Mark Hongsermeier and Rhonda Hongsermeier (collectively, the owners) executed a mortgage with GSF Mortgage Corporation for property located at La Monte Drive, Rockford, Illinois (the property). The owners resided in the property from November 2004 through November 2010. The mortgage was subsequently assigned to GMAC Bank and later transferred to GMAC Mortgage, LLC (GMACM).

         ¶ 4 Thereafter, on February 21, 2011, plaintiff issued a hazard insurance policy (the policy) to the owners for the property against loss and damage caused to the property by fire, among other things. In the policy, the insured is defined as the owners and "residents of your household." Furthermore, the "insured location" is defined as the "residence premises, " which is further defined as "the one family dwelling *** where you reside." The policy also included a mortgage clause to insure GMACM as the named loss payee and provided, in pertinent part:

"If a mortgagee is named in this policy, any loss payable under Coverage A or B will be paid to the mortgagee and you, as interests appear. *** If we deny your claim, that denial will not apply to a valid claim of the mortgagee, if the mortgagee:
a. Notifies us of any change in ownership, occupancy or substantial change in risk of which the mortgagee is aware;
b. Pays any premium due under this policy on demand if you have neglected to pay the premium[;] and
c. Submits a signed, sworn statement of loss within 60 days after receiving notice from us of your failure to do so. Policy conditions relating to Appraisal, Suit
Against Us and Loss Payment apply to the mortgagee.
If we decide to cancel or not to renew the policy, the mortgagee will be notified at least 10 days before the date cancellation or nonrenewal takes effect."

         In addition, the policy contained a fraud clause that provided:

"the entire policy will be void, if whether before or after a loss, an 'insured' has:
a. Intentionally concealed or misrepresented any material fact or circumstance;
b. Engaged in fraudulent conduct; or
c. Made false statements; relating to this ...

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