An Illinois federal court has granted summary judgment to Liberty Mutual Fire Insurance Co., ruling that the insurer has no duty to defend or indemnify a policyholder where the underlying claims relate to economic damages stemming from allegedly fraudulent actions, but not bodily injury covered by the policy.
The litigation arose out of a 2007 negligence suit against a construction company and Southern Illinois Asphalt Company, Inc. (SIAC) to recover damages for injuries related to a single-vehicle automobile accident. After the defendants disclosed a joint-venture policy, the plaintiffs settled for the policy limits. In 2012, the plaintiffs discovered that both companies also had individual insurance policies they had not previously disclosed, and filed suit alleging intentional and negligent misrepresentation, fraudulent concealment and constructive fraud. SIAC, who held an individual policy with Liberty Mutual, then filed this action for declaratory judgment, arguing that although the 2007 negligence claims were dismissed, the claims still triggered duties to defend and indemnify; SIAC also argued that its individual policies provided coverage because the 2012 claims arose from the original bodily injury.
The court quickly rejected both of SIAC’s arguments, pointing out that although the 2007 claims alleged bodily injury, those claims were dismissed and two amended complaints omitted those claims. The court said that in the pending 2012 action, “There are no claims for bodily injury and the relief requested stem[s] from damages related to the alleged misrepresentation and fraud.” Because the later action arose only from SIAC’s alleged failure to disclose its additional insurance policies, the court found Liberty Mutual had no duty to defend the suit under the policy. In addition, the court said that the duty to indemnify “arises only in circumstances of actual coverage”; because the Liberty Mutual policy did not provide coverage for the claims in the 2012 suit, it was also entitled to summary judgment on the issue of indemnification.
S. Ill. Asphalt Co. v. Turubchuk, No. 17-405 (S.D. Ill. 2018.)