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General Casualty Insurance Co. v. Rend Lake Resort, Inc.

United States District Court, S.D. Illinois

September 20, 2017

GENERAL CASUALTY INSURANCE COMPANY, Plaintiff,
v.
REND LAKE RESORT, INC., and SHARON S. NOLTE, Defendants.

          MEMORANDUM & ORDER

          J. PHIL GILBERT, DISTRICT JUDGE

         This matter comes before the Court on the parties' cross motions for summary judgment. Defendant Sharon Nolte filed a motion for summary judgment (Doc. 57) and plaintiff General Casualty Insurance Company filed a timely response (Doc. 61). Plaintiff General Casualty Insurance Company also filed a motion for summary judgment (Doc. 58) and defendant Sharon Nolte filed a timely response (Doc. 62).

         I. BACKGROUND

         Rend Lake Resort, Inc. (“Rend Lake”) operated a hotel and resort in Southern Illinois for 27 years. The resort was open year-round and had 104 rooms, a restaurant, a conference center, a gift shop, a bait shop, and a fish cleaning station. In July 2014, defendant Sharon Nolte was a guest at the resort. Nolte alleges that while she was a guest, she suffered severe and permanent injuries when she slipped and fell on a set of stairs that was slick with dead bugs. In September 2014, Nolte filed a claim for damages with Rend Lake for her injury. Rend Lake forwarded the claim to its insurance agent: Downing Insurance (“Downing”). Downing then forwarded the claim to Rend Lake's insurer: General Casualty Insurance Company (General Casualty). General Casualty investigated the claim and, on June 23, 2015, issued a letter to both Downing and Nolte's attorney stating that Rend Lake was not liable for Nolte's injuries.

         One week later on June 29, 2015, Nolte filed a negligence claim against Rend Lake in Illinois state court for damages stemming from the alleged accident. John Reilly, the owner and president of Rend Lake, received a copy of the complaint and forwarded it to Robert Davey, the chief accountant of the resort. Davey, however, “did not forward the summons or complaint from the Nolte Lawsuit . . . to Downing Insurance or General Casualty at that time.” (Davey Decl. Ex. A, at ¶ 10, ECF No. 59.) In fact, Davey did not contact Downing or General Casualty about the suit until December 22, 2015-36 days after the Illinois state court entered default judgment against Rend Lake (November 16, 2015) and awarded Nolte $300, 000. Reilly admitted that Davey “dropped the ball” on this matter. (Reilly Dep. Ex. C, at 27:5-13, ECF No. 59.)

         Once General Casualty received notice of the default judgment, they sent a letter to Rend Lake stating that they had retained counsel in order to attempt to vacate the default judgment. General Casualty also stated, however, that it was reserving its right to deny coverage if the effort to vacate was not successful. General Casualty's position that it could deny coverage derived from the notice conditions in its policy agreement with Rend Lake (the “policy”), which General Casualty claimed that Rend Lake violated. The pertinent section provides:

a. You must see to it that we are notified as soon as practicable of an “occurrence” or an offense which may result in a claim. To the extent possible, notice should include:
(1) How, when and where the “occurrence” or offense took place;
(2) The names and addresses of any injured persons and witnesses; and
(3) The nature and location of any injury or damage arising out of the “occurrence” or offense.
b. If a claim is made or “suit” is brought against any insured, you must:
(1) Immediately record the specifics of the claim or “suit” and the date received; and
(2) Notify us as soon as practicable.
You must see to it that we receive written notice of the claim or “suit” as soon as ...

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