BURMAC METAL FIN. v. WEST BEND MUT. INS.

• Decision Date: 31 March 2005
• Docket Number: No. 2-04-0544.,2-04-0544.
• Citation: 825 N.E.2d 1246,356 Ill. App.3d 471,292 Ill.Dec. 235
• Parties: BURMAC METAL FINISHING COMPANY, Plaintiff-Appellant, v. WEST BEND MUTUAL INSURANCE COMPANY, Defendant-Appellee.
• Court: United States Appellate Court of Illinois

825 N.E.2d 1246

356 Ill. App.3d 471

292 Ill.Dec. 235

BURMAC METAL FINISHING COMPANY, Plaintiff-Appellant, v. WEST BEND MUTUAL INSURANCE COMPANY, Defendant-Appellee.

No. 2-04-0544.

Appellate Court of Illinois, Second District.

March 31, 2005.

Edward Eshoo Jr., Michael L. Childress, Childress Duffy Goldblatt, Ltd., Chicago, for Burmac Metal Finishing Co.

John W. France, Ronald A. Barch, Cicero & France, P.C., Rockford, for West Bend Mutual Insurance Company.

Justice BYRNE delivered the opinion of the court:

Plaintiff, Burmac Metal Finishing Co., brought a claim against defendant, West Bend Mutual Insurance Co., its commercial insurer, to cover the loss of its commercial property after a fire damaged the property. The jury found that plaintiff failed to substantially perform the condition of the insurance contract that required plaintiff to maintain its automatic sprinkler system and returned a general verdict in favor of defendant. Thereafter, the trial court entered judgment for defendant and awarded it costs in the amount of $3,632.

Plaintiff appeals the judgment, contending that the trial court erred in denying its motion for a judgment notwithstanding the verdict or, in the alternative, denying its motion for a new trial. Plaintiff further contends that the trial court abused its discretion in awarding costs to defendant. We affirm.

BACKGROUND

Duane and Susan Dickson have been the owners and operators of plaintiff since 1981. Some time around 1990, the Dicksons relocated plaintiff's operations to a building located at 2300 11th Street in Rockford, which it insured through defendant. Plaintiff sought coverage from defendant after a natural gas explosion and ensuing fire caused damage to the building on March 29, 1997. Defendant denied coverage, claiming plaintiff failed to satisfy a condition precedent under the insurance policy when plaintiff failed to properly maintain its automatic sprinkler system, which was required by the protective safeguards endorsement (PSE) to the policy. Plaintiff filed a complaint for declaratory judgment against defendant.

Deposition testimony revealed that plaintiff's employees were directed to plug at least three sprinkler heads that had been placed over an oven in plaintiff's building. Plaintiff was seeking to prevent the building's automatic sprinkler system from activating over the area containing the oven because of the high heat generated by the oven. Plaintiff did not inform defendant of the sprinkler removals. An independent insurance adjuster hired by defendant testified that he found 13 capped sprinklers, including one sprinkler that had been over the oven. His investigation revealed that the fire had originated in the area of the oven.

The trial court granted defendant's motion for summary judgment, finding that plaintiff did not comply with the conditions of the policy and therefore was not entitled to coverage. Thereafter, plaintiff appealed. Burmac Metal Finishing Co. v. West Bend Mutual Insurance Co., No. 2-00-1390 (2002) (unpublished order under Supreme Court Rule 23).

On appeal, we found that the policy clearly required plaintiff to maintain a sprinkler system in its 11th Street building as a condition precedent to insurance coverage. However, we held that the question of whether plaintiff substantially complied with the condition precedent of maintaining the sprinkler system was a question of fact that should have precluded the granting of summary judgment. The record revealed that plaintiff removed and plugged only 3 to 13 sprinklers out of over 600 and that, although the fire may have originated in the area of the plugged sprinklers, the disabled sprinklers may not have caused or contributed to the fire. This presented a question of fact as to plaintiff's compliance, and accordingly, we held that summary judgment was improper. Thus, the cause continued on remand to a jury trial on the sole question of whether plaintiff substantially complied with the condition precedent of maintaining the sprinkler system in question.

THE JURY TRIAL ON REMAND

At the jury trial on remand, Duane testified that the building was equipped with an automatic sprinkler system consisting of approximately 600 sprinkler heads. The system consisted of four major sections and the water flow to each section was controlled by a separate "post-indicator valve" or PIV. If a PIV is in the closed position, there is no water flow to the portion of the sprinkler system controlled by the closed PIV. However, a closed PIV can be overridden if necessary to fight a fire. The configuration of plaintiff's automatic sprinkler system remained unchanged from 1990 through the time of the fire.

Duane testified that during the summer of 1996, plaintiff remodeled the southwest portion of its facility to incorporate a new coating line, the Atwood Line, which included a washer, a dryer, a coating section, and a high-heat oven that operated at 375 degrees Fahrenheit. When the Atwood Line finally went into production, sprinkler heads in the area immediately in front of the high-heat oven began discharging water. Plaintiff tried to correct the problem with new sprinkler heads, but was unsuccessful. In order to avoid further disruption in production, Duane directed an employee named Brad Sassman to remove and replace several sprinkler heads with metal plugs or caps. Duane acknowledged that three sprinkler heads were removed and replaced with plugs.

Prior to his death, Edward Archer gave a discovery deposition. Portions of the deposition were read into evidence during the trial. At the time of the fire, Archer was district chief of the Rockford fire department and was the first member to arrive at the scene of the 11th Street fire on March 29, 1997. He testified that, upon his arrival, the southwest portion of the building was in flames. He also inspected the building several days after the fire and observed between 9 and 19 capped sprinkler heads.

Darrell Roum and Brad Sassman also testified concerning the capped sprinkler heads. Roum stated that, during his inspection of plaintiff's site, he discovered 19 capped sprinkler heads, all of which were adjacent to the high-heat oven located in the southwest portion of the building. He prepared a diagram depicting the location of the capped sprinkler heads, which was introduced into evidence. Roum also testified that he had a conversation with Duane, Arthur Pestcoe, and Bruce Frazier, representatives of the public adjuster plaintiff hired to represent it in connection with the loss. Roum related that Pestcoe stated in Duane's presence that no water flowed through the portion of the sprinkler system that serviced the location of the March 29 fire because the PIV was shut off.

Sassman testified that he was directed by Duane in the summer of 1996 to cap sprinkler heads in the area immediately adjacent to the high-heat oven. Sassman explained to the jury that he removed two sprinkler heads and replaced them with metal plugs. Shortly after he capped the first two heads, "a couple more heads went off," and Duane sent him to the hardware store to purchase more metal plugs. He purchased 20 to 39 more plugs, but he refused Duane's directive to remove and replace more sprinkler heads. Sassman testified that he did not know whether any more heads were capped and did not know what happened to the additional plugs that he purchased.

Plaintiff employed Per Mar Security to maintain the automatic sprinkler system, although Per Mar denies that it did anything other than inspect and test plaintiff's system. It is undisputed, however, that Per Mar inspected and tested the sprinkler system on a monthly basis and that after each visit a representative would generate a report listing the results of the inspection. Susan admitted at trial that from time to time she received and signed the monthly inspection reports. Susan testified that on March 3, 1997, she signed a Per Mar inspection report that specifically indicated that the PIV that controlled the water supply to the portion of the sprinkler system that serviced the location of the Atwood Line was in the closed position. Susan testified that she did not inform defendant that any sprinkler heads had been removed and capped during 1996. In fact, she did not even know about the capping until Duane told her after the fire occurred.

William Moran, who worked for Per Mar during the months leading up to the fire and who inspected and tested the sprinkler system for water flow on March 3, determined that the PIV that controlled the water flow through the portion of the sprinkler system that protected the location of the Atwood Line was in the closed position, and he had Susan sign the report so indicating. Moran testified that the PIV that controlled the water to the portion of the sprinkler system that serviced the Atwood Line was in the closed position each time he checked it between June 1996 and March 1997.

Ann Kempka, a former underwriter employed by defendant, testified that plaintiff's automatic sprinkler system met underwriting guidelines when she renewed plaintiff's policy in December 1996. Kempka did not learn about the capping until after the fire. According to Timothy Wiedmeyer, who was then defendant's property claims specialist, to the best of his knowledge, plaintiff did not make defendant aware of the fact that sprinkler heads had been removed and capped prior to the fire.

Dennis Dyl, a professional engineer who was certified and specially trained in the concepts, principles of cause, and origin of fires, testified on behalf of defendant. He investigated the 11th Street fire and opined that the damages caused to the building resulted from a fire that originated in the area of the pilot to the main burner of the large high-heat oven in the southwest corner of the building. In his opinion, an aluminum pilot line that plaintiff used to connect the oven burner pilot to a nearby natural gas supply failed and...