Travelers Indemnity Co. of America v. Townes of Cedar Ridge Condominium Ass'n
2022 IL App (3d) 200542
| Ill. App. Ct. | 2022Background
- Travelers insured Townes of Cedar Ridge Condominium Association for property damage (policy Sept 6, 2018–Sept 6, 2019) with an appraisal clause for disputed value/amount of loss and an exclusion for wear-and-tear/deterioration.
- March 2019 hailstorm: Cedar Ridge claimed widespread building damage and submitted a $2,078,657.08 repair estimate.
- Travelers inspected, paid $17,140.88 for discrete hail-damaged items, and concluded remaining alleged damage was wear and tear (noncovered); it denied the remainder of the claim on Oct. 1, 2019.
- Cedar Ridge demanded appraisal; Travelers refused, asserting the dispute was about coverage (whether damage was excluded), not the amount of a covered loss.
- Travelers filed a declaratory-judgment action seeking a court ruling that the appraisal clause did not apply; the trial court granted Cedar Ridge’s motion to dismiss with prejudice. Travelers appealed and the appellate court affirmed.
Issues
| Issue | Plaintiff's Argument (Travelers) | Defendant's Argument (Cedar Ridge) | Held |
|---|---|---|---|
| Whether Travelers’ declaratory-judgment action should survive dismissal seeking a declaration that the policy’s appraisal provision did not apply and that Travelers properly denied an appraisal demand | Travelers: an actual controversy exists because the parties dispute whether the appraisal procedure applies (coverage vs. amount); declaratory relief is appropriate to resolve scope before further litigation | Cedar Ridge: Travelers already denied the appraisal demand, terminating any live controversy; declaratory relief cannot be used to approve past conduct | Court: Dismissed. No actual controversy remained after Travelers denied the appraisal demand; declaratory judgment cannot be used to ratify past conduct and Travelers should have sought a pre-denial ruling if it wanted guidance |
Key Cases Cited
- Adkins Energy, LLC v. Delta-T Corp., 347 Ill. App. 3d 373 (Ill. App. Ct. 2004) (elements required for declaratory-judgment action and necessity of an actual controversy)
- Howlett v. Scott, 69 Ill. 2d 135 (Ill. 1977) (declaratory judgment not proper to determine nonliability for past conduct)
- Eyman v. McDonough District Hospital, 245 Ill. App. 3d 394 (Ill. App. Ct. 1993) (dismissal affirmed where party sought validation of past termination rather than prospective guidance)
- L.A. Connection v. Penn-America Ins. Co., 363 Ill. App. 3d 259 (Ill. App. Ct. 2006) (duty-to-defend context applying a "reasonable time" test for seeking declaratory relief; distinguished by this court)
- Board of Directors of Bloomfield Club Recreation Ass’n v. Hoffman Group, Inc., 186 Ill. 2d 419 (Ill. 1999) (standard for evaluating a section 2-615 motion to dismiss)