2011 IL App (2d) 101143
Ill. App. Ct.2011Background
- Nationwide Mutual, as subrogee of Markowitz, sues tenants (T&N Master Builder and Renovators and Tony Deligio) for fire-related property damage.
- A fire occurred February 9, 2007, damaging the building while rented to defendants, under a policy Nationwide issued to Markowitz.
- Nationwide paid the owner $140,328.98 and seeks recovery from defendants in subrogation.
- Lease was signed December 11, 2005; at fire time the lease term had expired, creating holdover tenancy.
- Lease provisions include duties to repair damages caused by misuse or neglect, but exclude losses by fire; holdover terms contemplate various tenancy outcomes.
- Trial court granted judgment on the pleadings, holding defendants are coinsured under the policy, thus subrogation is barred.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Dix controls subrogation against coinsured in commercial lease | Dix does not apply due to commercial nature. | Dix controls; tenants are coinsured under landlord's policy. | Dix applies; defendants coinsured; no subrogation. |
| Whether lease terms show tenant liability for fire damages despite coinsurance | Lease does not clearly exculpate tenants from negligence. | Lease language, including fire exclusion and repairs, indicates tenant liability is limited and fire losses are landlord’s risk. | Lease language shows coinsurance; tenants not liable in subrogation. |
| Whether holding-over provisions render defendants liable for all damages | Holding-over provision imposes broad damages liability. | Issue forfeited and holds holdover tenancy; more specific fire-related relief governs. | Issue forfeited; even if considered, fire-specific provisions control. |
Key Cases Cited
- Dix Mutual Insurance Co. v. LaFramboise, 149 Ill.2d 314 (1988) (tenant paying rent creates coinsured status; subrogation barred)
- Cerny-Pickas & Co. v. C.R. Jahn Co., 7 Ill.2d 393 (1955) (commercial leases; tenant payments may insulate landlord from fire losses)
- Reich v. Tharp, 167 Ill. App.3d 496 (1987) (subrogation to prevent injustice; coinsured concept discussed)
- Chubb Insurance Co. v. DeChambre, 349 Ill.App.3d 56 (2004) (insurer cannot subrogate against coinsured)