Schuchman v. State Auto Property & Casualty Insurance
733 F.3d 231
7th Cir.2013Background
- Schuchmans obtained State Auto homeowners insurance in Sept. 2000 for a property in Junction City, Illinois.
- After a May 2010 fire, State Auto denied coverage for the dwelling based on non-residency at the residence premises and alleged breach of Special Provisions.
- Policy defines residence premises as the dwelling where you reside and includes other structures/grounds at the location; Declarations list 109 West 14th Street as the Premises.
- Schuchmans moved to mobile homes at 1408 Madison Avenue on the same parcel and continued to reside there while keeping the 109 West 14th Street house; they paid premiums for years.
- District court granted summary judgment to State Auto; the Seventh Circuit reversed, holding the term residence premises is ambiguous and should be liberally construed in the insureds’ favor to include the mobile homes; case remanded for entry of judgment for Schuchmans on Count I.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is residence premises ambiguous and include the mobile homes? | Schuchmans/residents | State Auto; only the 109 West 14th Street dwelling is residence premises | Ambiguous; includes mobile homes; coverage |
| Do multiple mailing addresses define boundaries of residence premises? | Addresses on the parcel reflect a single location | Addresses define separate parcels; no single location | Ambiguous; mailing addresses cannot alone define property boundaries; include entire contiguous parcel |
| Did Schuchmans violate Special Provisions by residing elsewhere? | Not violated since residence premises includes the whole parcel | Residing in mobile homes outside residence premises | Not violated; liberal construction favors insured |
Key Cases Cited
- Grinnell Mut. Reinsurance Co. v. Haight, 697 F.3d 582 (7th Cir. 2012) (de novo review; interpret insurance policies under Illinois law)
- Auto-Owners Ins. Co. v. Munroe, 614 F.3d 322 (7th Cir. 2010) (interpretation of insurance contracts; ambiguity)
- Nicor, Inc. v. Associated Elec. & Gas, 223 Ill.2d 407 (Ill. 2006) (plain and ordinary meaning; ambiguity rule; liberal construction for insured)
- Indiana Ins. Co. v. Pana Comm. Unit School Dist. No. 8, 314 F.3d 895 (7th Cir. 2002) (ambiguous language construed against insurer; favorable to insured)
- Gillen v. State Farm Mut. Auto Ins. Co., 830 N.E.2d 575 (Ill. 2005) (insurer drafting policy; ambiguity resolved in insured’s favor)
- Howard Foundry Co. v. Hartford Fire Ins. Co., 222 F.2d 767 (7th Cir. 1955) (policy description of premises; absence of clear legal description creates ambiguity)
- General Casualty Co. of Illinois v. Olsen, 372 N.E.2d 846 (Ill. App. 2d Dist. 1977) (ambiguity when residence premises lacks clear boundary description)
- Hobbs v. Hartford Insurance Co. of the Midwest, 214 Ill.2d 11 (Ill. 2005) (liberal construction in favor of insured when ambiguity)