The Townes of Cedar Ridge Condominium Association (“Cedar Ridge”) was damaged as a result of a hailstorm in March 2019. Cedar Ridge informed its insurer, the Travelers Indemnity Company of America (“Traveler”), which inspected the complex and concluded that some gutters, downpipes, air conditioners and a shingle on a roof had received hail damage. As a result, travelers issued payment of $ 17,140.88 for the damages they found were covered and denied the remainder of the claim.
Cedar Ridge, which did not agree with the decision of the travelers, provided its estimate of damage in the amount of $ 2,078,657.08 to repair the damage caused by hail. Thereafter, Cedar Ridge required assessment in accordance with the policy.
Travelers rejected Cedar Ridge̵7;s claim for valuation and refused to appoint a valuer or otherwise participate in the appraisal process to determine the magnitude of the hail loss to the property. Travelers took the position that since no hail or wind damage was found on the buildings, there was no disagreement about the size of the loss. It was rather a “coverage dispute” between the parties that was unsuitable for assessment.
Three months later, travelers filed a two-point request with the Illinois State Court for a declaration that the hail loss was not subject to assessment and that it had no additional liability for the hail loss beyond its previous payment.
On behalf of Cedar Ridge, we decided to reject the declaratory judgment, arguing that travelers’ actions erroneously sought declaratory exemption for past conduct. The declaratory judgment procedure enables parties to a dispute to ascertain the consequences of their actions before effective. In other words, travelers had already established their position by issuing their partial rejection of the claim and rejecting the insured’s request for assessment. Instead of using the declaratory assessment process as it should be used, before When they made a decision, Travelers made their decision and then waited three months to submit their declaratory judgment. In addition, we argued that if the travelers ‘declaratory judgment were to be deprived of Cedar Ridge the right to decide, when and where they would bring an action to address travelers’ behavior, if they were allowed to remain. In that regard, we wanted to bring an action for enforcement in the Illinois Federal Court.
On appeal, the Illinois District Court of Appeal upheld our position and upheld the lower court’s decision in Traveler’s declaratory judgment.1 The Court of Appeal agreed that if travelers had wanted guidance on the scope of the assessment provision, it should have requested an explanation before making a decision on Cedar Ridge’s request for assessment.
The importance of this decision is that Illinois insurance companies often try to file declaratory judgments in state courts in an attempt to avoid litigation in the Illinois federal court that supports disputes involving (a) causation (if the damage was caused by a covered hazard), (b) the damage the extent (extent or extent of the physical damage from the covered hazard), (c) the extent of repairing or compensating the damage, (d) the cost of repairing or compensating the damage, (e) matching and (f) whether the damage is sufficiently extensive to demand that a general contract be used, disputes about the amount of the loss, not coverage, are all further up for assessment.2 Two recent blogs, Another Illinois federal district court rules that causation can be determined in Illinois assessmentsand Northern District of Illinois Forces Evaluation AGAIN!, raised these issues. In other words, insurers often hope to evade Illinois federal court because they will be forced to proceed to judgment, while in Illinois State Court they may be able to avoid being forced to judge and instead engage in protracted litigation over what they have stamped as an alleged “coverage dispute”.
1 Travelers Indem. Co. of America v. Townes of Cedar Ridge Condo. Ass’n2022 IL App (3d) 200542 (Ill App. April 25, 2022).
2 Khaleel v. AmGuard Ins. Co., 2022 US Dist. LEXIS 24851 (ND Ill. 11 February 2022); B&D Investment Group, LLC v. Mid-Century Ins. Co.2021 WL 6125853 (ND Ill. December 28, 2021); Adam Auto Group, Inc. v. Owners Ins. Co.2019 WL 4934597 (ND Ill. October 7, 2019); Windridge of Naperville Condo. Ass’n v. Philadelphia Indem. Ins. Co.2018 WL 1784140 (ND Ill. 13 Apr. 2018); Spring Point condo. Ass’n v. QBE Ins. Corp.2017 WL 8209085 (ND Ill. 13 Dec. 2017); Runaway Bay Condo. Ass’n v. Philadelphia Indem. Ins. Cos.262 F.Supp.3d 599 (ND Ill. 25 Apr. 2017); Windridge of Naperville Condo. Ass’n v. Philadelphia Indem. Ins. Co.2017 WL 372308 (ND Ill. January 26, 2017); Philadelphia Indem. Ins. Co. v. Northstar Condo. Ass’n15-cv-10798 (ND Ill. 18 October 2016 (DE 34)).