535 F. Supp. 912 | N.D. Ill. | 1982
MEMORANDUM OPINION AND ORDER
Georgetown Associates (“Georgetown”) sues Cherokee Insurance Co. (“Cherokee”) and Nordstrom Agency of Illinois, Inc. (“Nordstrom”), claiming Cherokee breached its contract of insurance by refusing to pay for loss sustained when Georgetown’s outdoor swimming pool unexpectedly popped out of the ground. Georgetown and Cherokee have filed cross-motions for summary judgment. Because there are material fact issues, both motions are denied.
Facts
Georgetown is a real estate limited partnership. One of its developments is Georgetown of Willow Bend (“Willow Bend”), an apartment complex in Rolling Meadows, Illinois. Willow Bend’s outdoor swimming pool is adjacent to the living units, shaped like a trapezoid (60 feet long, 40 feet wide at the shallow end narrowing to 20 feet at the deep end) and surrounded by a concrete deck.
Before April 30,1980 substantial amounts of ground water had collected around and beneath the pool,
There is a dispute as to why the water pressure had been unrelieved before the occurrence:
Georgetown presents the affidavits of experts Richard Hults and Lewis Blue. Hults, president of a local construction company who has worked in the industry for 11 years, inspected the pool shortly after the accident. He concluded that the pool’s “hydrostatic gravity valve failed to release hydrostatic external ground water forces, which caused pressure to build up around the pool, and which ultimately forced the pool to rise above ground level.” Blue, housing inspector for the City of Rolling Meadows, came to the same conclusion based on substantially the same observation.
Baer’s conclusion is thus directly at odds with that of Hults and Blue. Both of them chalk up the accident to failure of a valve to relieve pressure caused by unfavorable weather. Baer rather ascribes the accident to negligence in operation, maintenance or design.
Sharp differences also exist as to the existence of insurance coverage for the loss. Nordstrom had told Georgetown that the usual multi-peril (“all risks” in common parlance) policy did not cover swimming pools. Georgetown ordered and paid an extra premium for extended coverage including swimming pools and other structures apart from the residential buildings (to a maximum limit of $25,000).
Unfortunately the policy as delivered to Georgetown, though it did include the swimming pool rider (Endorsement E), omitted the very coverage form (MP 101) to which it was a rider.
(1) Among the eight “forms and endorsements” listed on the cover sheet as “applying to Section I” (property coverage) was “MP 101.” That form was missing while the other seven were in the package.
(2) Endorsement E itself was captioned “Special Conditions and extensions to MP 101 4- MP 126.” It specified that its “conditions and Extensions apply only when the aforementioned forms are attached to and made a part of this Certificate.” Its swimming pool coverage was specified as an extension of “coverage under MP 101.”
But of course no one did study the package or discover the omission until the loss was incurred and the claim was made and refused. This action must determine both the effect of the omission and the effect of MP 101 if it were in fact deemed part of the policy despite its omission.
Georgetown's Motion
Georgetown urges that the undelivered MP-101 cannot apply to defeat its claim under the policy, and alternatively that if MP 101 were to apply, its provisions do not bar Georgetown’s claim. Its summary judgment motion must be denied because both propositions are unclear at this point.
There is law in other jurisdictions — not Illinois
It is one thing to say that an amendment that would vary, add to or subtract from a policy- — otherwise complete in itself — but is never delivered to the insured cannot be
J. M. Corbett Co. v. Insurance Co. of North America, 43 Ill.App.3d 624, 627, 2 Ill.Dec. 148, 151, 357 N.E.2d 125, 128 (1st Dist. 1976) does not counsel a different result. Corbett teaches that where information contained in a certificate of insurance conflicts with the terms of the undelivered policy, the terms specified in the certificate must govern. It proceeded from the premise “that all uncertainty should be resolved in favor of the insured” (id. at 626, 127, 2 Ill.Dec. 148, 357 N.E.2d 125). But here there is no conflict between the provisions delivered to Georgetown and MP 101. Instead they are complementary. On the record before the Court Georgetown has not conclusively negated the proposition that it was on notice that (1) MP 101 contained the substantive policy provisions and (2) those provisions naturally included limitations on coverage.
Georgetown goes on to argue that even if MP 101 must be considered, its exclusions do not defeat the claim. That contention requires little discussion. Four MP 101 exclusions would arguably block Georgetown’s claim:
(1) Section III, Paragraph E states, “The 'following property is subject to these additional limitations: . .. outdoor swimming pools, and related equipment ... are not covered against loss by freezing or thawing, ... or by pressure or weight of ice or water, whether driven by wind or not.”
(2) Section VI, Paragraph D states, “This policy does not insure under this form against . .. Loss caused by, resulting from, contributing to or aggravated by any of the following: ... (4) Water below the surface of the ground. . . . ”
(3) Section VI, Paragraph E states, “This policy does not insure under this form against .. . Loss caused by: (1) wear and tear, deterioration. .. . ”
(4) Section VI, Paragraph E also states, “This policy does not insure under this form against: ... Loss caused by: ... (7) continuous or repeated seepage or leakage of water or steam from within a plumbing, heating, or air conditioning system ...”
Resolution of the possible applicability of one or more of these exclusions must await further factual development. Whichever expert’s version of the accident’s cause is accepted by the trier of fact (as well as any other evidence bearing on the issues) may lead to a different conclusion. Certainly at this stage, taking all reasonable factual inferences in Cherokee’s favor (as is required on Georgetown’s motion) the Court could find at least one of the exclusions applies. That suffices to defeat Georgetown’s motion.
Cherokee’s Motion
All reasonable factual inferences are taken the other way on Cherokee’s summary judgment motion.
Even more significant, the state of the record forbids the conclusion that in all events MP 101’s limitations are binding on Georgetown. It may well be that an estoppel situation is posed here, for the parties have not addressed what discussions preceded or accompanied the ordering of the rider.
It is unnecessary to multiply the examples or prolong the discussion. Cherokee’s summary judgment motion must also be denied.
Conclusion
Each party’s motion is denied. Both parties are directed to address any further discovery expeditiously. This case is set for a further status report March 30, 1982 at 9:15 a. m.
. Apparently the buildup of ground water was caused by heavy rainfall aggravated by the spring thaw.
. Cherokee has moved to strike the affidavit of Mary Patricia Pike, custodian of the insurance policy for Georgetown, and seeks to argue that a genuine issue of fact exists as to whether MP 101 was delivered to Georgetown. But Cherokee has produced neither (a) any evidence that MP 101 was with the other materials sent to Georgetown nor (b) any facts derogating from Ms. Pike’s credibility in stating that she placed the policy in the files when received and only discovered that it lacked MP 101 when it was removed from the files for examination after the loss was sustained and Cherokee rejected the claim. Cherokee’s assertion that Georgetown’s evidentiary position is weak does not raise a factual issue.
. Neither party has challenged the applicability of Illinois law to this diversity action under Erie v. Tompkins principles.
. Cherokee has moved to strike part of the affidavit of Ms. Pike in which she concludes that MP 101 was not received until after Cherokee had disclaimed policy coverage. Whether or not Ms. Pike is allowed to state that conclusion, the evidentiary facts she verifies (see n.2) are certainly enough to support such a conclusion by the factfinder under summary judgment principles.
. On this score an “all risks” understanding by Georgetown might be relevant as well.
. Who on receiving a homeowner’s policy, for example, stops to examine and parse its contents in detail?
. Georgetown has proffered specific evidence of the availability of other coverage had Cherokee disclosed its alleged exclusions. Cherokee’s motion to strike that proffer is based on a misstatement of the Court’s request on that subject at an earlier hearing. It is denied.