A federal appeals court has overturned a ruling in favor of Chubb Ltd. in a dispute with a mortgage company over an abandoned laundry room, containing more information needed to determine who controlled the property.
Chuck and Richard Dai owned a laundromat in Chicago, but after failing to offer the mortgage offered the deed to Horsham, Pennsylvania-based Apex Mortgage Corp. instead of foreclosure, according to Monday's ruling of the 7th U.S. Circuit Court of Appeals in Chicago Apex Mortgage Corp. v. Great Northern Co. et. al.
Apex accepted the deed provided that the property could still be sold. However, an inspection in December 2008 revealed that, with the property in disrepair, it was not exposed to the elements, debris and open to vagrants, according to the decision.
Apex took action to preserve the property and sent the deed back to Dais in April 2009.
In December 201
Following the invitation to tender, Great Northern was dismissed from the trial, and Apex then sought cover under its surplus and umbrella police with the Chubb unit Federal Insurance Co. for the remaining $ 14 million.
After Federal refused to cover, Apex filed a lawsuit against the insurer in the U.S. District Court in Chicago, which granted the Federal summary judgment based on an exclusion of exclusion in its policy of excluding coverage to "the mortgagee in possession."
The judgment was overturned by a unanimous three-judge appeals board. There is a "nice question about who owned the property at the time of burning", it is stated in the judgment. If Apex did not actually own the property "then the Federal cannot invoke the exclusion of the" mortgage in possession "policy, the decision said.
" The district court held that Apex must have been in possession of the washing machine in December 2010 because it inspected and cleaned the property, installed a tarp over the deteriorated roof, boarded the windows and changed locks, "it was said.
" But other details also deserve consideration, "the decision was added. These include Apex's return of the deed to Dias in April 2009, along with a letter reminding them of their ownership and mortgage requirements and urging them to inspect and secure the property, "it said.
"Meanwhile, Apex had no contact with the property after April 2009. Together, these facts create a pleasant question about who had, ie physically controlled washing machine" at the time of burning, the decision said, by leading the district court's grant of summary judgment to Chubb and on the extension of the case for the resolution of the actual disputes of the case.
Lawyers in the case had no comment or could not be reached.