Jordan Mozer & Associates, Ltd. v. General Casualty Company of Wisconsin
MOTION by Plaintiff Jordan Mozer & Associates, Ltd. for judgment on Count V Pursuant to Section 155 of the Illinois Insurance Code (Nelson, Bradley)
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,
Hon. Ronald A. Guzman
PLAINTIFF’S MOTION FOR JUDGMENT ON COUNT V PURSUANT TO
SECTION 155 OF THE ILLINOIS INSURANCE CODE
Plaintiff Jordan Mozer & Associations, Ltd. (“Mozer”), by and through its
attorneys, hereby moves for judgment in its favor on Count V of Plaintiff’s Complaint,
pursuant to Section 155 of the Illinois Insurance Code. In support of this Motion,
Plaintiff states as follows:
This matter was tried before a jury between October 24 and
November 2, 2017. The jury returned a verdict in Plaintiff’s favor, awarding Plaintiff
$1,390,716.64 on Plaintiff’s claims for coverage under its insurance policy, including
$278,752 for lost business income and $1,111,964.64 for extra expenses.
In addition to the claims tried to the jury, Plaintiff has asserted, in
Count V of its Complaint, a claim pursuant to Section 155 of the Illinois Insurance Code,
215 ILCS § 5/155. That claim is for the Court to decide and was not submitted to the
Section 155 provides in relevant part that:
(1) In any action by or against a company wherein there is in issue
the liability of a company on a policy or policies of insurance or the
amount of the loss payable thereunder, or for an unreasonable delay
in settling a claim, and it appears to the court that such action or
delay is vexatious and unreasonable, the court may allow as part of
the taxable costs in the action reasonable attorney fees, other costs,
plus an amount not to exceed any one of the following amounts:
(a) 60% of the amount which the court or jury finds such party is
entitled to recover against the company, exclusive of all costs;
(c) the excess of the amount which the court or jury finds such party
is entitled to recover, exclusive of costs, over the amount, if any,
which the company offered to pay in settlement of the claim prior to
215 ILCS § 5/155.
In determining whether General Casualty acted vexatiously or
unreasonably for purposes of Section 155, the Court should look to the totality of the
circumstances. Valdovinos v. Gasllant Ins. Co., 314 Ill. App. 3d 1018, 1021, 733 N.E.2d
886 (2d Dist. 2000). Factors to consider include the insurer’s attitude, whether, as here,
the insured was forced to sue to recover, and whether, also as here, the insurer offered a
unreasonably small amount to settle the claim without an adequate explanation for its
position. Id., 314 Ill. App. 3d at 1021-22.
The evidence at trial in this case established that General Casualty
vexatiously and unreasonably denied and delayed Mozer’s claims. Plaintiff’s insurance
adjusting expert, Edward McKinnon, testified that General Casualty’s handling of
Mozer’s claims fell far below standard customs and practices in the industry and
substantially below the standards and practices followed by similarly situated insurance
With the extra expense claim in particular, General Casualty acted
vexatiously and unreasonably by, for example, telling Mozer repeatedly that its relocation
and moving costs were covered under the Policy, and then, after Mozer moved, reversing
its position and refusing to pay one cent of the relocation expenses or costs to equip and
operate the replacement premises. The evidence that General Casualty told Mozer many
times its move was covered was undisputed, as was the evidence that, after a nineteenmonth review of the claims, General Casualty reneged on its original representations that
the claim was covered.
Mozer’s extra expense claims awarded by the jury clearly fell
within the extra expense coverage of the Policy, which provides coverage for any
expense incurred to “avoid or minimize the suspension of” Mozer’s business and to
resume “operations” at replacement premises, “including relocation expenses” and “costs
to equip and operate” the replacement premises. The jury agreed as to the bulk of
Mozer’s claimed expenses, awarding Mozer extra expenses of $1,111,964.64.
General Casualty never offered more than $300,000 to settle the
business income and extra expense claims combined, and offered no explanation for its
unreasonably low offer.
General Casualty also delayed Mozer’s ability to move and
relocate by, for example, insisting that Mozer obtain a sixth estimate for cleaning
Mozer’s artwork, knowing that the added delay would cause Mozer to lose the chance to
relocate to the Washington Street property, which was planned for September 2013. That
added delay postponed Mozer’s ability to relocate until April/May of 2014.
General Casualty caused numerous other delays, including delays
caused by General Casualty’s insistence on allowing numerous inspections, lasting
through February 2014, of Mozer’s contaminated space at 320 West Ohio Street, and
General Casualty’s insistence, in September 2013, that Mozer complete a comprehensive
and detailed inventory of more than 64,000 items of artwork.
General Casualty’s own witness, Thomas Hofbauer, testified that
in light of General Casualty’s delays, General Casualty agreed that it would be flexible
with regard to extra expenses incurred outside of the 12-month limitation period. General
Casualty then reneged on that promise as well, and denied Mozer’s extra expense claim
in its entirety based, among other things, on General Casualty’s assertion that some
unspecified amount of the extra expenses were “paid” outside of the 12-monthn period.
By measuring the timing of the expenses based on when they were
“paid” rather than when they were incurred, General Casualty also relied on an improper
standard to deny the claim. Central Contr., Inc. v. Kenny Constr. Co., 2015 U.S. Dist.
LEXIS 22223, *25 (N.D. Ill. Feb. 25, 2015) (“incur” means to become liable for, and
does not require that the expense was “paid”); Chatham Corp. v. Danns Ins., 351 Ill.
App. 3d 353, 812 N.E.2d 483, 489 (1st Dist. 2004).
General Casualty also used the wrong date of loss, by basing it on
when the dust contamination began, March 3, 2013, rather than when it ended on or about
April 6, 2013. Wood v. Allstate Ins. Co., 21 F.3d 741, 744 (7th Cir. 1994) (“date of loss”
in an insurance policy was ambiguous and must be construed in the insured’s favor such
that the date of loss was the day the fire was extinguished, not when it started). The
result was General Casualty cutting off Mozer’s claims after only 11 months.
With respect to the extra expenses awarded by the jury, which are
Mozer’s basic relocation expenses and costs incurred to equip and operate the
replacement premises, General Casualty did not establish at trial any legitimate defense
to payment based on non-coverage or otherwise.
In addition to Mr. McKinnon’s testimony regarding General
Casualty’s sub-standard claim handling in this case, this Court can assess General
Casualty’s conduct against the Illinois statute governing improper claims practices, 215
ILCS 5/154.6. Zagorski v. Allstate Ins. Co., 2016 IL (App) (5th) 140056, ¶ 26, 54 N.E.3d
296 (court may properly consider improper claims practices outlined in § 154.6 in
determining whether insurer acted vexatiously or unreasonably for purposes of § 155).
Pursuant to Section 154.6, it is an improper claims practice for an insurance company to
knowingly and without just cause commit any of the following:
Failing to adopt and implement reasonable standards for
the prompt investigation and settlement of claims arising under its
Not attempting in good faith to effectuate prompt, fair,
and equitable settlement of claims submitted in which liability has
become reasonably clear;
Compelling policyholders to institute suits to recover
amounts due under its policies by offering substantially less than the
amounts ultimately recovered in suits brought by them; . . .
Refusing to pay claims without conducting a reasonable
investigation based on all available information; . . .
Delaying the investigation or payment of claims by
requiring an insured . . . to submit a preliminary claim report and then
requiring subsequent submission of formal proof of loss forms, resulting
in the duplication of verification;
Failing in the case of the denial of a claim or the offer of a
compromise settlement to promptly provide a reasonable and accurate
explanation of the basis in the insurance policy or applicable law for
such denial or compromise settlement; . . . or
Engaging in any other acts which are in substance
equivalent to any of the foregoing.
215 ILCS 5/154.6.
The evidence at trial here established that General Casualty
engaged in most or all of the above-listed improper claims practices. It failed to adopt or
follow reasonable procedures for the prompt investigation and settlement of Mozer’s
claims; it failed to act in good faith to resolve Mozer’s extra expense claims even after
acknowledging that at least major components of the claims were covered; it compelled
Mozer to file suit to recover its extra expense claim by offering no more than $300,000 to
settle claims that they jury valued at more than $1,390,000; it failed to conduct a
reasonable investigation or analysis of Mozer’s extra expense claim; it delayed the
adjustment of Mozer’s claims by requiring Mozer to repeatedly submit preliminary claim
reports and then, a full year after the claim was filed, required a formal proof of loss and
examination under oath; and it offered an unreasonably small amount, no more than
$300,000, to resolve all of Mozer’s remaining claims with no explanation whatsoever of
the basis in the insurance policy or otherwise for the unreasonably low settlement offer.
In addition to the evidence introduced at trial, the Court should
consider General Casualty’s delays after this suit was filed. In particular, General
Casualty failed and refused for months to comply with Plaintiff’s initial written discovery
requests, forcing Plaintiff to repeatedly seek Magistrate Judge Finnegan’s assistance in
compelling General Casualty to respond to discovery. (See Plaintiff’s Motion to Compel
and for Discovery Sanctions, Doc. No. 30; see also, Orders entered at Doc. Nos. 18, 23,
25, and 31.) Those matters culminated in Judge Finnegan entering an order sanctioning
General Casualty for its failure to comply with discovery. (Doc. No. 31.)
Pursuant to section 155, the Court should award Mozer, in addition
to all amounts awarded by the jury, Mozer’s attorneys’ fees and all “other costs” incurred
herein, plus an additional award of $60,000, plus pre- and post-judgment interest, and
such additional relief as this Court deems appropriate. 215 ILCS § 5/155.
Pursuant to Rule 54(d)(2)(C) of the Federal Rules of Civil
Procedure, Mozer requests that the Court first decide the issue of General Casualty
Company’s liability for attorneys’ fees and other costs before receiving submissions from
Mozer on the value and amount of the fees and costs incurred.
Plaintiffs’ Complaint, including Count V, also seeks prejudgment
interest on all amounts awarded. Prejudgment interest is warranted under the Illinois
Interest Act, which provides for recovery of prejudgment interest at the rate of five
percent per annum for all amounts found due on any “instrument of writing.” 815 ILCS
205/2. An insurance policy is an “instrument of writing” under the Interest Act.
Marcheschi v. Ill. Farmers Ins. Co., 298 Ill. App. 3d 306, 314 (1st Dist. 1998).
WHEREFORE, Plaintiff respectfully requests that this Court enter an order and
supplemental or amended judgment in Plaintiff’s favor and against defendant General
Casualty Company of Wisconsin as follows:
awarding Jordan Mozer & Associates an additional $60,000, as provided
in Section 155(1)(b);
finding that Jordan Mozer & Associates is entitled to an award of its
attorneys’ fees and “other costs” incurred herein pursuant to Section 155(1) and
providing a schedule for the submission of a fee petition specifying the amounts of
attorneys’ fees and costs sought;
awarding Jordan Mozer & Associates prejudgment interest on the jury’s
extra expense and lost business income awards from at least July 9, 2014, which is the
date of Plaintiff’s original Sworn Statement in Proof of Loss, through the date of
granting such additional relief as this Court deems appropriate.
November 7, 2017
Bradley P. Nelson
One North Franklin Street, Suite 3200
Chicago, Illinois 60606
/s/Bradley P. Nelson
One of the Attorneys for Plaintiff
CERTIFICATE OF SERVICE
I, Bradley P. Nelson, an attorney, certify that I caused the foregoing Notice of Motion
and Plaintiff’s Motion for Judgment on Count V Pursuant to Section 155 of the Illinois
Insurance Code to be filed with the Court’s CM/ECF electronic filing system, which will cause
it them to be served upon all counsel of record, on this 7th day of November, 2017.
/s/ Bradley P. Nelson
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