James River Insurance Company v. TimCal, Inc.
81 N.E.3d 185
| Ill. App. Ct. | 2017Background
- TimCal, an insurance agent affiliated with GEICO, sold homeowner’s coverage to Swimley; a fire in April 2012 led Fidelity to pay Swimley’s claim.
- Fidelity sent TimCal a July 9, 2012 letter alleging misrepresentations on the application and stating it would seek to recover the amount it paid (reserved at ~$576,500), and asked TimCal to forward the letter to its E&O insurer.
- James River issued claims-made professional liability policies to GEICO covering 10/1/2011–10/1/2012 and 10/1/2012–10/1/2013; both required written notice of a claim during the policy period (or extended reporting period when applicable) and prompt notice "as soon as practicable, but in no event later than 60 days after the end of the ‘Policy Period.’"
- TimCal did not notify James River of Fidelity’s July 2012 letter until April 3–23, 2013 (TimCal emailed James River on April 3; Fidelity separately sent a notice to James River on April 23, 2013).
- James River sued for a declaratory judgment that it had no duty to defend or indemnify TimCal due to untimely notice; the trial court granted James River summary judgment and issued a protective order shielding James River’s policy drafting history from discovery.
- The appellate court affirmed: it held Fidelity’s July 2012 letter was a ‘‘claim’’ under the policy, TimCal failed to provide timely notice within the applicable policy period (and failed the "as soon as practicable" requirement), and extrinsic drafting-history discovery was unnecessary because policy terms were unambiguous.
Issues
| Issue | Plaintiff's Argument (Fidelity) | Defendant's Argument (James River) | Held |
|---|---|---|---|
| Whether a July 9, 2012 letter to TimCal constituted a "Claim" under the policies | The July letter was not a claim because it did not state a specific dollar demand; only April 2013 letters should qualify | The July letter was a written demand for monetary damages and thus a claim under the policies' definition | The July 9 letter unambiguously qualified as a "Claim" (demand for money need not state a specific amount) |
| Whether TimCal gave timely notice to James River | TimCal may have provided timely notice to a third party (agent) who should have notified James River; renewal history might extend reporting period | James River had no notice until April 2013, after the relevant policy period and outside any extended reporting period | No triable issue: record shows first notice to James River was April 2013; renewals do not create an inherent extension of the prior policy's reporting period |
| Whether renewal/extension or "Extended Reporting Period" language preserved coverage for the July 2012 claim | Renewals impliedly extend reporting period so a claim made during a prior policy year remains reportable under later renewals | Claims-made reporting period is fixed by each policy; renewals do not create an indefinite tail absent explicit language | Renewals do not extend an earlier policy’s reporting period; extended reporting periods apply only upon cancellation/nonrenewal and were inapplicable here |
| Whether discovery into drafting history of the policies was required before ruling | Extrinsic drafting history might show ambiguous policy terms and defeat summary judgment | Policy language is unambiguous; drafting history is irrelevant; protective order appropriate | Trial court did not abuse discretion: policy terms were unambiguous, so drafting-history discovery would not change interpretation |
Key Cases Cited
- Standard Mutual Insurance Co. v. Lay, 2013 IL 114617 (Illinois 2013) (standard of review for summary judgment)
- Hobbs v. Hartford Insurance Co. of the Midwest, 214 Ill. 2d 11 (Ill. 2005) (unambiguous policy language controls; only reasonable interpretations considered)
- Precis, Inc. v. Federal Insurance Co., [citation="184 F. App'x 439"] (5th Cir. 2006) (letter demanding money, even without a specified amount, qualifies as a "written demand for monetary damages")
- Berry v. St. Paul Fire & Marine Insurance Co., 70 F.3d 981 (8th Cir. 1995) (similar holdings treating demand letters as claims under claims-made policies)
- CheckRite Ltd. v. Illinois National Insurance Co., 95 F. Supp. 2d 180 (S.D.N.Y.) (renewal of a claims-made policy does not extend the reporting period for earlier claims)
- Mutlu v. State Farm Fire & Casualty Co., 337 Ill. App. 3d 420 (Ill. App. 2003) (when policy terms are unambiguous, extrinsic drafting history is unnecessary and discovery may be denied)