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Libman v. Great Northern Insurance Co.

United States District Court, N.D. Illinois, Eastern Division

February 15, 2018

Jody A. Libman and Tami S. Libman, Plaintiff,
Great Northern Insurance Company and Federal Insurance Company, Defendants.



         Jody and Tami Libman allege that Great Northern Insurance Company failed to pay for damage to a residential building they owned in breach of a property insurance policy.[1] The Libmans and Great Northern have cross-moved for summary judgment on the limited issue of whether the Libmans' sale of the building after the damage occurred serves to limit their loss. R. 63; R. 65. For the following reasons, the Libmans' motion is denied and Great Northern's motion is granted in part and denied in part.

         Legal Standard

         Summary 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).


         The Libmans renewed a property insurance policy with Great Northern on August 30, 2014, covering a building they owned in Chicago. Sometime in the fall of 2014, the property went into foreclosure and the Libmans agreed to a short sale to extinguish their debt. Before the sale closed, extensive water damage occurred in the building on December 4, 2014. The Libmans contracted to mitigate the damage but did not fully repair the property. Despite the damage, the short sale closed on December 29, 2014, for the original sale price, with no reduction for the damage to the property.[2] Jody Libman filed this case in state court on February 4, 2016, and it was removed to this Court on March 9, 2016.

         On October 17, 2017, the parties filed a joint motion seeking to stay discovery and leave to file cross motions for summary judgment on “case dispositive issues, ” R. 61, which the Court granted. In its summary judgment motion, Great Northern does not dispute that the policy provides coverage for the mitigation costs the Libmans paid. But in addition to the mitigation costs the Libmans seek the “replacement cost of the property, ” under a provision of the policy providing for such payment when the insured chooses not to “repair, replace or rebuild.” Great Northern argues that the Libmans have not suffered a loss beyond the mitigation costs because they sold the building for a benefit that was not discounted due to the damage. Great Northern argues that the Libmans would receive an inequitable “double recovery” if they are paid the replacement cost of the building in addition to the benefit from the short sale. The Libmans argue that the policy contains no provision limiting recovery in this manner. Both parties seek summary judgment in their favor on this issue.


         I. The Scope of the Joint Motion

         Before addressing the “double recovery” issue, the Court must resolve a dispute the parties have over the proper scope of these cross motions for summary judgment. In addition to the “double recovery” issue, Great Northern seeks summary judgment based on alleged misrepresentations Jody Libman made during Great Northern's investigation of the water damage, which Great Northern argues completely relieves it of any obligation to pay under the policy (including the mitigation costs). The Libmans cry foul and argue that this issue is beyond the scope of the issues contemplated by the “joint motion” that precipitated these cross-motions, and should not be addressed until they can have further discovery on this issue. The Libmans, however, do not explain what further discovery they might need to adequately address this issue.

         Generally, under Federal Rule of Civil Procedure 56(d), a party's contention that they cannot respond to a summary judgment motion without additional discovery must be supported by “affidavit or declaration” setting forth “specified reasons.” Although the Libmans have failed to do this here, the Court finds that the parties' joint motion did not clearly provide that issues beyond “double recovery” were to be briefed. In the “joint motion, ” the parties stated that “discovery concerning the issue of double recovery” was complete, and that settlement discussions could not proceed without a ruling on “case-dispositive issues.” The parties further described their dispute about the significance of the building's sale, and explained that “[e]xpert and remaining discovery will be expensive and unnecessary depending upon the court's ruling on dispositive motions.”

         Despite these direct references to “double recovery” and the effect of the sale on the Libmans' loss, paragraphs two and seven of the “joint motion” use the terms “case-dispositive issues” and “dispositive motions” without direct reference to the “double recovery” issue. This creates some ambiguity about the parties' intent regarding the scope of the “dispositive motions, ” which has resulted in this dispute. Considering the apparent miscommunication between the parties, the Court will address only the issue of “double recovery” at this time, and will reserve ruling on the issue of Jody Libman's alleged representations.

         II. “Double Recovery”

         In discussing the case law relevant to the “double recovery” issue, the Libmans note that “it would be inequitable for a party to receive the full value of a policy without having suffered a loss.” R. 70 at 14. Illinois courts agree with this assertion, holding that property insurance policies must be “construed” according to the “fundamental purpose of insurance coverage, ” which is “indemnity for actual loss.” Paluszek v. Safeco Ins. Co. of Am., 517 N.E.2d 565, 568 (Ill.App.Ct. 1st Dist. 1987). In other ...

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