LPP Attorney Peter Syregelas Secures Summary Judgment in Breach of Contract Action for Insurer Client

Peter Syregelas secured summary judgment for our insurer client in a breach of contract action filed by the former operator of a Chicago brewery. The shuttered brewery sought nearly $500,000 in property damage and business personal property losses stemming from a January 14, 2022 flood at its facility. Our client denied the claim based on the policy’s vacancy exclusion, as the building had been vacant since March 2020, well over 60 consecutive days before the loss. The brewery sued for breach of contract and alleged bad faith under 215 ILCS 5/155, claiming that the insurer should have known the property was vacant and should have provided coverage despite the exclusion.

At first glance, the court’s decision seemed straightforward: the property was vacant for more than 60 days before the water loss, and the policy’s vacancy provision barred coverage.

But beneath the surface, this case raised nuanced issues: (1) whether an insurer is charged with constructive notice of vacancy from other lines of coverage (like worker’s compensation audits); (2) whether accepting renewal premiums creates a duty to advise the insured that a vacancy exclusion would apply; (3) whether Illinois’ Section 143.17a notice statute could be stretched beyond its scope to initial policy terms; and (4) whether alleged “failure to warn” arguments could transform into a breach of contract or §155 bad-faith claim.

Through depositions of the insured, its longtime employee, and its broker, as well as careful reliance on Illinois precedent, we demonstrated that: (1) the vacancy exclusion had been part of the policy since inception; (2) no communication to the company disclosed the vacancy prior to the loss; (3) Illinois law imposes no duty on an insurer to advise insureds of coverage adequacy absent a special relationship; and (4) without a contractual duty to pay, there can be no breach.

The court ultimately cut through to the core: the exclusion was unambiguous, the facts undisputed, and our client had no duty to indemnify.  This decision was a great result and a necessary reminder that even “simple” cases are often won in the trenches of discovery and briefing.