Jordan Mozer & Associates, Ltd. v. General Casualty Company of Wisconsin
MEMORANDUM Opinion and Order Signed by the Honorable Ronald A. Guzman on 9/27/2017: For the reasons stated below, the Court grants in part and denies in part the parties' motions in limine 64 , 65 , 66 , 67 , 69 , 70 , 71 , 72 , 73 , 74 , 75 , 76 as detailed herein. The Court notes that the rulings are provisional and may need to change in the context of trial. [For further details see Memorandum Opinion and Order.] Mailed notice(is, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
JORDAN MOZER & ASSOCIATES,
LTD., an Illinois corporation,
GENERAL CASUALTY COMPANY
OF WISCONSIN, a Wisconsin corporation,
No. 14 CV 10264
Judge Ronald A. Guzmán
MEMORANDUM OPINION AND ORDER
For the reasons stated below, the Court grants in part and denies in part the parties’
motions in limine [64, 65, 66, 67, 69, 70, 71, 72, 73, 74, 75, 76] as detailed herein. The Court
notes that the rulings are provisional and may need to change in the context of trial.
Defendant’s Motions in Limine
MOTION IN LIMINE # 1: TO BAR EVIDENCE RELATING TO
ALLEGATIONS OF VEXATIOUS AND UNREASONABLE DELAY
The motion is granted in part and denied in part. Insofar as Defendant seeks to keep the
issues of attorney’s fees and statutory (punitive) damages from being submitted to the jury, the
motion is granted. This is an issue for the Court to determine.
The motion is denied to the extent it seeks to keep from the jury evidence of how long it
took Defendant to process Plaintiff’s claims. Such evidence, while relevant to the attorney’s
fees and statutory (punitive) damages, is also relevant to several issues that will go to the jury,
including whether the 12-month period of restoration governing Plaintiff’s extra expense claim
should be extended and whether the 12-month limitation period governing Plaintiff’s business
interruption/business income losses should be extended. Courts in this district and elsewhere
have repeatedly held that such limitations periods should be extended where, as here, the insurer
causes delays that prevent the insured from relocating or repairing or rebuilding its premises and
resuming operations. A&S Corp. v. Centennial Ins. Co., 242 F. Supp. 584, 587-88 (N.D. Ill.
1965) (period of business interruption extended through date reconstruction actually completed,
where start of reconstruction delayed by insurer’s delay in approving building plans). See also
LaSalle Bank, N.A. v. Paramont Props., 588 F. Supp. 2d 840, 857 (N.D. Ill. 2008) (citing Beraha
v. Baxter Health Care Corp., 956 F.2d 1436, 1443-45 (7th Cir. 1992); Gore v. Ind. Ins. Co., 876
N.E.2d 156, 161-62 (Ill. App. Ct. 2007)).
The length of time it took for Defendant to process Plaintiff’s claim is also relevant to
whether Defendant breached its implied duty of good faith and fair dealing. Evidence of breach
of the implied duty will include: (a) GCC’s slow processing of Mozer’s claims; (b) GCC’s
failure to process or pay most of Mozer’s business income claim; (c) GCC’s delays in processing
Mozer’s extra expense claim; (d) GCC’s refusal to pay those expenses while the claim was being
processed; (e) GCC’s insistence that Mozer could not pack or move to replacement premises
until after multiple parties could make inspections of the insured premises and Mozer could
complete an inventory of all of Mozer’s artwork and other property, which took over a year; and
(f) GCC’s assurance to Mozer that it would be flexible and not restrict Mozer’s business income
and extra expense claims to the 12-month period following the loss or the “period of restoration”
referenced in the GCC Policy, but would take the GCC-caused delays into account and deal
fairly with lost income and extra expenses incurred afterwards, and Mozer’s detrimental reliance
on those assurances.
MOTION IN LIMINE # 2: TO BAR EVIDENCE RELATING TO EXTRA
EXPENSES WHICH HAVE NOT BEEN INCURRED
Defendant seeks to bar two categories of expenses claimed by Plaintiff: (1) the value of
time spent by Mozer employees on clean-up and relocation, and (2) other extra expenses that
GCC claims have “yet to be incurred.” According to GCC, the Policy expressly provides that it
covers only those expenses that are actually “incurred” by the insured. Plaintiff’s Extra Expense
claim includes $1,207,591.25 reflecting the purported billable value of time spent by Mozer
employees in activities relating to the relocation of Plaintiff’s business. Defendant contends that
Plaintiff was not obligated to pay and did not pay any employees over and above their salaries
for these activities; thus, they have not been ‘incurred” under the Policy. As to the $313,489.50
in costs characterized by Plaintiff as “yet to be incurred,” Defendant asserts these are expressly
excluded by the Policy.
Plaintiff responds that GCC’s argument that the cost of Mozer’s employee time was not
“incurred” is: (1) barred by waiver and estoppel in that the evidence will show that GCC
repeatedly told Mozer that its employees’ time spent supervising the clean-up, relocating the
business, and setting up Mozer’s new premises would be covered as an Extra Expense and
reimbursed on an hourly basis, without any qualification that those costs would not be covered
because they were not “incurred;” and/or (2) the expenses are reasonably foreseeable
consequential damages of GCC’s breach of contract in refusing to pay the third-party relocation
expenses clearly covered by the contract.
The motion to bar evidence of the aforementioned expenses is denied. Plaintiff may
recover any reasonable extra costs (costs that it would not have incurred in the absence of the
destruction of its premises) incurred in moving and restoring the premises, whether Plaintiff paid
the cost of these expenses to its employees or to third parties. Plaintiff may present evidence of
what these costs were and the parties’ intent surrounding the provisions in the Policy that cover
such expenses as well as any waiver or estoppel or breach of contract theory it proposes.
Whether GCC’s failure to pay for such services is a breach of contract that forced Plaintiff to
undertake the payments itself is a mixed question of fact and law for the jury, as are the issues of
waiver or estoppel.
3 & 4. MOTIONS IN LIMINE ## 3 & 4: TO BAR EVIDENCE OF LOST
BUSINESS INCOME OR EXTRA EXPENSES INCURRED MORE THAN
12 MONTHS AFTER THE DATE OF LOSS
Plaintiff seeks to recover damages relating to its lost business income arising out of the
subject loss. In that regard, the Policy provides as follows:
(a) We will pay for the actual loss of Business Income you
sustain due to the necessary suspension of your “operations”
during the “period of restoration”. The suspension must be
caused by direct physical loss of or damage to property at the
described premises. The loss or damage must be caused by or
result from a Covered
Cause of Loss. . . .
(b) We will only pay for loss of Business Income that you
sustain during the “period of restoration” and that occurs
within 12 consecutive months after the date of direct physical
damage. . . .
Plaintiff also seeks coverage for Extra Expenses, as to which the Policy provides as
We will pay necessary Extra Expense you incur
during the “period of restoration” that you would not have
incurred if there had been no direct physical loss or damage
to property at the described premises. The loss or damage
must be caused by or result from a Covered Cause of Loss. . . . .
(4) We will only pay for Extra Expense that occurs within
12 consecutive months after the date of direct physical loss or
In its October 12, 2016 Order ruling on the parties’ cross-motions for summary
judgment, this Court held that evidence of GCC’s delays in processing Plaintiff’s claims, “if
true, could justify an extension of the 12-month period [applicable to Mozer’s Extra Expense
claim]” and “[a]ccordingly, whether GCC unjustifiably delayed Plaintiff’s claim such that the
12-month limitations period should be extended must also go to the jury.” (Dkt. No. 61, at 7-8)
(citing G&S Metal Consultants, Inc. v. Cont’l Cas. Co., 200 F. Supp. 3d 760, 771-72 (N.D. Ind.
2016) (holding that a reasonable jury could find that the insurer’s actions extended the “period of
restoration” because of its delay in processing the claim)). In support of its ruling on the instant
motion, the Court also refers to its ruling above on Defendant’s Motion in Limine # 1.
MOTION IN LIMINE # 5: TO BAR DOCUMENTS PRODUCED AFTER
THE CLOSE OF DISCOVERY
As ruled on by Judge Finnegan.
MOTION IN LIMINE # 6: TO BAR EVIDENCE OF FINANCIAL STATUS
Obviously, evidence of Mozer’s “financial status” in terms of its lost income and extra
expenses is relevant and admissible to support its damages claims. GCC offers no analysis or
explanation as to why that evidence should be excluded, and it clearly should not be. Evidence
of Mozer’s financial status is relevant in other ways as well; for example, it could be used to
show the significant loss of business income caused by the contamination events as well as
Mozer’s financial inability to relocate and resume operations in order to mitigate damages in the
face of GCC’s long delays. Therefore, Defendant’s motion to bar evidence of Plaintiff’s
financial status during the relevant time period is denied.
As to GCC’s financial status, Plaintiff has not set forth any theory under which GCC’s
financial status would be relevant to any issue at trial. Therefore, the motion to bar evidence of
GCC’s financial status is granted. Plaintiff is barred from introducing evidence of GCC’s
financial status without first raising the issue with the Court outside of the jury’s presence.
MOTION IN LIMINE # 7: TO BAR OFFERS OF SETTLEMENT
The question of admissibility of any evidence of an offer of settlement is governed by
Rule 408 of the Federal Rules of Evidence. While Rule 408 precludes evidence of a settlement
offer “to prove or disprove the validity or amount of a disputed claim,” it specifically provides
that “[t]he court may admit this evidence for another purpose.” Fed. R. Evid. 408(a), (b). It is
clear that the evidence that supports a finding of compensatory damages for a violation of the
implied covenant of good faith and fair dealing is the same in many cases as the evidence that
would support a finding of statutory (which have replaced punitive damages in insurance cases)
damages for vexatious and unreasonable conduct under 215 ILCS 5/155. Thus, evidence of
unreasonably low settlement offers is admissible to show bad faith.
Therefore, this motion is denied.
MOTION IN LIMINE # 8: TO BAR NON-PARTY WITNESSES FROM
This motion is granted.
DEFENDANT’S MOTION IN LIMINE # 9: TO BAR TESTIMONY THAT
THE EXTRA EXPENSE PROVISION IN GENERAL CASUALTY
COMPANY OF WISCONSIN’S POLICY IS AMBIGUOUS
PLAINTIFF’S MOTION IN LIMINE TO PRECLUDE
PLAINTIFF’S EXTRA EXPENSE CLAIM IS
Insofar as Defendant’s Motion in Limine # 9 seeks to bar testimony that a provision in a
Policy is ambiguous, the motion is granted. There is no need for any witness to testify as to
whether a term is ambiguous, as that is an issue for the Court to decide. For the same reason,
there is no need for the attorneys to use the term “ambiguous” in addressing the jury. The
Court’s instructions will inform the jury as to what it must decide and how it should go about
As to Plaintiff’s motion in limine to preclude Defendant from arguing that Plaintiff’s
Extra Expense claims are excluded from coverage, Defendant is permitted to argue that
particular claimed expenses are not covered. However, Defendant may not argue that extra
expenses are not covered due to the interplay between the Extra Expense and Covered Property
provision, which is a matter of law. Because the Policy is ambiguous with respect to how these
two provisions are to be interpreted, as a matter of law, such ambiguities are resolved in favor of
the insured. Thus, the existence of the arguably overlapping clauses is not a per se bar to
recovery under the Extra Expense provision, and no such argument can be made to the jury. As
already noted, the jury will decide on an item-by-item basis whether any particular item is
covered under the Extra Expense coverage clause.
MOTION IN LIMINE # 10: TO BAR CERTAIN OPINIONS OF WILLIAM
POLASH RELATING TO LOST RETAIL SALES
William Polash has estimated that Mozer experienced $1,067,555.00 in lost retail sales
between March 2013 and August 2015 as a result of the dust incident. Defendant contends that
this calculation, and the related opinions, are baseless, speculative and unreliable and, thus,
should be barred.
The motion to bar Mr. Polash’s estimate of lost retail sales is denied. The only objection
raised is to the reliability of the data which Mr. Polash used in forming his opinion, which can be
challenged on cross examination, but is not a basis for barring the expert’s opinion. See
Manpower, Inc. v. Ins. Co. of Pa., 732 F.3d 796, 809 (7th Cir. 2013) (stating that the quality or
sufficiency of the data used by an expert “is a question for the jury, not the judge,” and cannot
provide the basis to bar an expert’s testimony).
Plaintiff’s Motion in Limine to Exclude Legal Opinion Evidence
Plaintiff moves to exclude, as pure legal conclusions, defendant’s attorney Thomas
Hofbauer’s opinions on coverage issues. Federal Rule of Evidence 702 allows an expert to
provide testimony only if the testimony will help in understanding the factual issues in the case.
“A well-settled corollary is that the Rule does not contemplate expert assistance on legal
questions.” RLJCS Enters. v. Prof’l Benefit Tr., Inc., No. 03 C 6080, 2005 WL 3019398, at *3
(N.D. Ill. Nov. 8, 2005). Generally, opinion testimony purporting to construe the terms of an
insurance policy or an insurer’s coverage obligations consists of “legal conclusions” and is thus
inadmissible under Federal Rule of Evidence 702. Scottsdale Insurance Co. v. City of
Waukegan, 689 F. Supp. 2d 1018, 1022-23 (N.D. Ill. 2010). “Under Illinois law, the
interpretation of an insurance policy is a question of law.” Id. (quoting BASF AG v. Great Am.
Assurance Co., 522 F.3d 813, 818-19 (7th Cir. 2008)).
Defendant responds that Mr. Hofbauer’s testimony would not be offered as expert legal
opinion on the interpretation of the General Casualty policy, but with respect to his personal
involvement in the investigation of Plaintiff’s Extra Expense and Business Income claims and
General Casualty’s ultimate coverage determination, and that, to the extent that Mr. Hofbauer’s
testimony may include his coverage opinions, it would be solely to explain the nature of his role
in General Casualty’s claim investigation and its ultimate conclusion. As noted in Plaintiff’s
motion, General Casualty waived the attorney-client privilege with respect to Mr. Hofbauer and,
thus, Plaintiff had the opportunity to conduct discovery on the issue of Mr. Hofbauer’s
Plaintiff’s motion is denied. To the extent that Plaintiff is accusing Defendant of bad
faith in its refusal to pay certain of Plaintiff’s claims, Defendant is entitled to introduce evidence
of its good faith in reaching its coverage conclusions. Such evidence might include a description
of the claim-investigation process, e.g., what was done by each person involved as well as
Defendant’s reliance on the advice of counsel. Plaintiff, for example, intends to introduce
evidence of Defendant’s unreasonably low offers to settle the disputed claims as proof of
Defendant’s breach of the implied covenant of good faith and fair dealing. Defendant should be
allowed to present evidence that it was acting in good faith in making the alleged unreasonable
offers based on the advice of its counsel that it was not required to pay the same. That said,
Plaintiff is entitled to a cautionary instruction to the jury that Mr. Hofbauer’s opinions are being
offered only to prove the Defendant’s state of mind and not as instructions on the law.
Date: September 27, 2017
Ronald A. Guzmàn
United States District Judge
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