Remy v. Travelers Home & Marine Ins. Co.

Decision Date11 June 2013
Docket NumberCase No. 11 C 3564
PartiesGERDA REMY, Plaintiff, v. THE TRAVELERS HOME AND MARINE INSURANCE COMPANY, Defendant.
CourtU.S. District Court — Northern District of Illinois

Judge Joan B. Gottschall

MEMORANDUM OPINION AND ORDER

In May of 2009, Gerda Remy and her sixteen-year-old daughter Francesca, fourteen-year-old daughter Claudia, and thirteen-year-old daughter Gabriella lived together in a home in Elgin, Illinois, covered by homeowner's insurance issued by The Travelers Home and Marine Insurance Company. While Remy was out shopping, the sisters argued and Francesca made the fateful decision to retaliate against Gabriella by pushing a lit piece of paper into a vent connecting Francesca's and Gabriella's bedrooms. The house caught on fire and was extensively damaged. Francesca was charged with aggravated arson in a juvenile proceeding and pleaded guilty to a reduced charge of criminal damage to property. Remy filed a claim with Travelers, which denied coverage based on its belief that Francesca set the fire intentionally. Dissatisfied with this decision, Remy filed suit. Travelers' motion for judgment on the pleadings is before the court. For the following reasons, the motion is denied.

I. BACKGROUND

Remy's three-count complaint challenges Travelers' denial of coverage. Count I seeks a declaratory judgment that Travelers wrongfully denied coverage because: (1) Francesca was not an insured under the policy since she was a minor and did not possess an insurable interest in the family home; and (2) did not intend to burn down the home or destroy insured property.Alternatively, Remy argues that even if Francesca caused an intentional loss, her actions nevertheless fall within the domestic violence exception to the intentional loss exclusion. Count II asserts Travelers' denial of coverage is a breach of contract. Count III alleges Travelers' denial of coverage was vexatious and unreasonable.

Remy's homeowner's policy provided coverage for losses up to $292,000 to her home, $204,400 to personal property, and $87,600 for loss of use of the home. Key provisions of the policy are as follows:1

The Policy's Definition of "Named Insured" and "Insured"

The named insured in the policy Declarations is "Gerda Remy." Policy, Travelers' Answer and Affirmative Defenses, Dkt. No. 28, Ex. A at 13. The policy defines "you" as "the named 'insured' shown in the Declarations and the spouse if a resident of the same household." Id. at 19. It further defines an "insured" as "[y]ou and residents of your household who are: (1) Your relatives; or (2) Other persons under the age of 21 and in the care of any person named above." Id. at 20.

Intentional Loss Exclusion and the Pattern of Criminal Domestic Violence Exception

The policy also contains an intentional loss provision:

8. Intentional Loss
a. Intentional Loss means any loss arising out of any act an "insured" commits or conspires to commit with the intent to cause a loss.
In the event of such loss, no "insured" is entitled to coverage, even "insureds" who did not commit or conspire to commit the act causing the loss.
b. However, this exclusion will not apply to deny payment to an innocent co-"insured" who did not cooperate in or contribute to the creation of the loss if:
(1) Such loss arose out of a pattern of criminal domestic violence; and
(2) The perpetrator of the loss is criminally prosecuted for the act causing the loss.
c. If we pay a claim pursuant to Paragraph 8.b., our payment to the "insured" is limited to that "insured's" insurable interest in the property less any payments we first made to a mortgagee or other party with a legal secured interest in the property. In no event will we pay more than the limit of liability.

Id. at 52.

The Cooperation Clause

Next, the policy contains a cooperation clause:
SECTION I - CONDITIONS
* * *
2. Duties After Loss. In case of a loss to covered property, we have no duty to provide coverage under this policy if the failure to comply with the following duties is prejudicial to us. These duties must be performed either by you, an "insured" seeking coverage, or a representative of either.
* * *
e. Cooperate with us in the investigation of a claim; * * *
g. As often as we may reasonably require: * * *
(2) Provide us with records and documents we request and permit us to make copies; and(3) Submit to examination under oath, while not in the presence of another "insured", and sign the same;

Id. at 32. Finally, it provides that, "[n]o action can be brought against us unless there has been full compliance with all of the terms under Section I of the policy and the action is started within two years after the date of loss." Id. at 52.

II. ANALYSIS
A. Jurisdiction - Amount in Controversy

The court must assure itself that subject matter jurisdiction is proper. Northeastern Rural Elec. Membership Corp. v. Wabash Valley Power Ass'n, 707 F.3d 883, 890 (7th Cir. 2013). Travelers removed this case from state court based on diversity jurisdiction, 28 U.S.C. § 1441(b), which requires complete diversity and an amount in controversy exceeding $75,000, 28 U.S.C. § 1332. The parties are completely diverse as Remy is an Illinois citizen and Travelers is a Connecticut corporation with its principal place of business in Connecticut.

The court assesses the amount in controversy as of at the time Travelers removed this case from state court. See Carroll v. Stryker Corp., 658 F.3d 675, 680-81 (7th Cir. 2011). Remy seeks $224,530.90 for repairs to her home plus statutory damages under 215 Ill. Comp. Stat. § 5/155 and unspecified damages for loss of personal property and loss of use of the home during repairs. Travelers paid $187,207.73 to Remy's mortgagee for the loss. Notice of Removal, Dkt. 1 at 2. The company that restored the house filed a lien against the house in the amount of $212,950.39. Amended Complaint, Dkt. 27 at ¶ 21.

The complaint does not address set-off, and the court makes no findings about this issue now. Nevertheless, even if Remy may only potentially recover the difference between the costof repairs and the amount paid to her mortgagee ($37,323.17), the $75,000 amount in controversy requirement has been met as she also alleges many of her personal items were destroyed in a significant fire that "spread throughout" her home. Id. at ¶ 15. Moreover, Remy alleges that she and her family were forced to stay in a hotel for six months while the home was being repaired. Id. at ¶¶ 19-20. In addition, the Illinois Insurance Code allows the court to award statutory damages not to exceed 60% of any recovery by Remy or $60,000. See 215 Ill. Comp. Stat. § 5/115(1)(a) & (b); Stachewicz v. Nat. Union Fire Ins. Co. of Pittsburg, No. 3:09-CV-470-JPG, 2009 WL 3065065, at *4 (S.D. Ill. Sept. 23, 2009) (statutory damages available under 215 Ill. Comp. Stat. § 5/115 count towards the amount in controversy).

These potential damages are sufficient to support diversity jurisdiction. See Carroll, 658 F.3d at 680 (after the removing party suggests the amount in controversy exceeds $75,000 by a preponderance of the evidence, "jurisdiction will be defeated only if it appears to a legal certainty that the stakes of the lawsuit do not exceed $75,000."). Travelers' motion for judgment on the pleadings is thus properly before the court.

B. Travelers' Motion for Judgment on the Pleadings

Travelers seeks judgment on the pleadings, arguing that the intentional loss exclusion bars Remy's claim because: (1) Francesca was an "insured" under Remy's policy; (2) who intended to cause a loss; (3) that did not arise out of a pattern of criminal domestic violence. Alternatively, Travelers asserts that even if the loss was unintentional, Remy did not cooperate during Traveler's investigation of her claim and thus failed to satisfy a condition precedent to recovery under the policy. It also seeks judgment on the pleadings as to Remy's vexatious and unreasonable denial of coverage claim. As discussed below, Francesca is an "insured" underRemy's policy but based on the current record, the court cannot determine if Francesca intended to cause a loss, if Remy and her family cooperated sufficiently with Travelers as it investigated Remy's claim, or if Travelers acted vexatiously and unreasonably in denying coverage. In addition, if the court later determines that Francesca intentionally caused the loss, the "pattern of criminal domestic violence" exception to the intentional loss exclusion does not apply.

1. Standard of Review

In evaluating a motion for judgment on the pleadings under Federal Rule of Civil Procedure 12(c), the court employs the "same standard that applies when reviewing a motion to dismiss for failure to state a claim under Rule 12(b)(6)." Buchanan-Moore v. Cnty. of Milwaukee, 570 F.3d 824, 827 (7th Cir. 2009). Thus, the court must view the facts alleged in the complaint "in the light most favorable to the nonmoving party and will grant the motion only if it appears beyond doubt that the plaintiff cannot prove any facts that would support her claim for relief." Id. (internal citation and quotation omitted). The court should not ignore facts in the complaint that "undermine the plaintiff's claim" nor "give weight to unsupported conclusions of law." Id. Moreover, although the complaint need only contain "a short and plain statement of the claim showing that the pleader is entitled to relief," Fed. R. Civ. P. 8(a)(2), the complaint's factual allegations "must be enough to raise a right to relief above the speculative level." Pisciotta v. Old Nat'l Bancorp, 499 F.3d 629, 633 (7th Cir. 2007) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (quotation marks omitted)).

Moreover, the court decides a Rule 12(c) motion for judgment on the pleadings under based upon its review of the pleadings alone. N. Ind. Gun & Outdoor Shows, Inc. v. City of S. Bend, 163 F.3d 449, 452 (7th Cir. 1998). The pleadings include the complaint, the answer, andany documents attached as...

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