Gibson v. Chubb Nat'l Ins. Co.

671 F.Supp.3d 867

Wesley J. GIBSON, Plaintiff, v. CHUBB NATIONAL INSURANCE COMPANY, Defendant.

No. 20 C 1069

United States District Court, N.D. Illinois, Eastern Division

Signed May 1, 2023

David Benjamin Goodman, Kalli Kling Nies, Carrie Ellen Davenport, Goodman Law Group Chicago, Chicago, IL, Adrian Mendoza, Jr., Lillig & Thorsness, Ltd., Oak Brook, IL, for Plaintiff.

Allen W. Burton, Pro Hac Vice, Mark Andrew Hayden, Pro Hac Vice, O'Melveny & Myers LLP, New York, NY, Jonathan L. Schwartz, Chicago, IL, Colin Brian Willmott, Kennedys CMK LLP, Chicago, IL, Glenn A. Klinger, Kingshuk K. Roy, Freeman Mathias & Gary, LLP, Chicago, IL, Samantha Samir Rhayem, Goldberg Segalla LLP, Miami, FL, for Defendant.

Memorandum Opinion and Order

Elaine E. Bucklo, United States District Judge

This insurance dispute arises from a fire at a property called "Pine Manor" located in Carbondale, Illinois, owned by plaintiff Wesley Gibson through a single-member limited liability company. Gibson claimed that a "Masterpiece" homeowner's insurance policy ("Policy") issued by defendant Chubb National Insurance Company ("Chubb") covered much of the damage to the house at Pine Manor and its contents. The parties previously filed cross-motions for summary judgment; I denied Gibson's motion and granted Chubb's in part. Dkt. No. 143. Left undecided in that opinion is whether Gibson's damaged fine art and jewelry are covered under the Policy's "Valuable Articles Coverage." The parties have briefed that issue, and for the following reasons Gibson's motion is granted in part and Chubb's motion is denied.

I.

My previous summary judgment opinion contains much of the factual background of this case. Only facts pertinent to the present motions are recounted here.

The Policy, which Gibson purchased from Chubb in 2010, provides three types of coverage for Pine Manor: (1) Deluxe House Coverage; (2) Deluxe Contents Coverage; and (3) Valuable Articles Coverage of $264,480 for jewelry and $500,000 for fine arts. Policy, Dkt. No. 1-1 at 2, 6. After a fire in October 2019 damaged Pine Manor and its contents, Gibson filed a claim seeking the full value of all three coverages. Pl.'s Statement of Material Facts ("PSMF"), Dkt. No. 168 ¶¶ 42-43. Chubb promptly paid Gibson the value of his claim under the Deluxe House Coverage, but largely denied Gibson's claims under the Deluxe Contents Coverage and Valuable Articles Coverage, which precipitated this suit. Dkt. No. 118 ¶¶ 37, 43.¹ In my previous opinion, I resolved Counts II and III of Gibson's complaint in their entirety. I also resolved much of Count I, which I allowed to proceed only as to Gibson's claim for Valuable Articles Coverage and for Deluxe Contents Coverage for contents located in areas of Pine Manor kept locked and inaccessible to guests. At issue here is Gibson's claim for Valuable Articles Coverage only.

The Valuable Articles Coverage provides "coverage against all risk of physical loss to your valuable articles anywhere in the world unless stated otherwise or an exclusion applies." Policy at 55. "Valuable article" is defined under the Policy as "personal property you or a family member owns or possesses for which an amount of coverage is shown in the Valuable Articles section of your Coverage Summary." Id. The Coverage Summary, in turn, provides for two categories of covered articles: fine arts and jewelry. Id. at 6.

Gibson seeks coverage for both fine arts and jewelry. See Dkt. No. 168-6 (Gibson's inventory of items he claims as fine arts); Dkt. No. 168-4 at 4-6 (Gibson's inventory of items he claims as jewelry). Under the Policy, "[f]ine arts" are defined as "[p]rivate collections of paintings, etchings, pictures, tapestries, art glass windows, other bona fide works of art (for example, statues, antiques, rare books and manuscripts, porcelains, rare glass, crystal), and items of historical value or artistic merit." Policy at 56. "Jewelry" is defined as "[a]n article of personal adornment containing gemstones, silver, gold, platinum, or other precious metals or alloys." Id.

II.

The parties dispute whether the fine arts and jewelry for which Gibson seeks coverage are "personal property" as that term appears in the Policy's definition of "valuable article." In Chubb's view, the fine arts and jewelry are not "personal property" because "personal property" does not include "business property" and, like most of the other contents of Pine Manor, the claimed items were used for business purposes.

In Illinois, "the interpretation of an insurance policy is a question of law that is properly decided by way of summary judgment." BASF AG v. Great Am. Assurance Co., 522 F.3d 813, 818-19 (7th Cir. 2008) (citing Crum & Forster Managers Corp. v. Resol. Tr. Corp., 156 Ill.2d 384, 189 Ill.Dec. 756, 620 N.E.2d 1073, 1077 (1993); additional citation omitted). "[T]he primary goal is to give effect to the intent of the parties as expressed in the agreement." DeSaga v. W. Bend Mut. Ins. Co., 391 Ill.App.3d 1062, 331 Ill.Dec. 86, 910 N.E.2d 159, 163 (2009) (citing Nicor, Inc. v. Assoc. Elec. & Gas Ins. Servs. Ltd., 223 Ill.2d 407, 307 Ill.Dec. 626, 860 N.E.2d 280, 286 (2006)). Unambiguous terms are given their plain and ordinary meaning. Id., 331 Ill.Dec. 86, 910 N.E.2d at 163-64 (citing Nicor, Inc., 307 Ill.Dec. 626, 860 N.E.2d at 286; additional citation omitted). But "insurance policies are to be liberally construed in favor of coverage," so any ambiguities are "resolved in favor of the insured and against the insurer." Am. Econ. Ins. Co. v. DePaul Univ., 383 Ill. App.3d 172, 321 Ill.Dec. 860, 890 N.E.2d 582, 588 (2008) (quotation omitted).

Chubb takes the position that "personal property" in the "valuable article" definition is unambiguous and that it excludes business property. In support, Chubb urges that the type of insurance policy is relevant to its interpretation. See id., 321 Ill.Dec. 860, 890 N.E.2d at 587 (citing Crum & Forster Managers Corp., 189 Ill. Dec. 756, 620 N.E.2d at 1078); Westport Ins. Corp. v. Jackson Nat'l Life Ins. Co., 387 Ill.App.3d 408, 326 Ill.Dec. 741, 900 N.E.2d 377, 379-80 (2008). Chubb cites several cases for the proposition that a homeowner's policy, like the Policy here, is generally "intended to cover the insured in his capacity as a homeowner, not in any business capacity." Ins. Co. of Ill. v. Markogiannakis, 188 Ill.App.3d 643, 136 Ill. Dec. 307, 544 N.E.2d 1082, 1090 (1989). But the court in Markogiannakis simply applied an express "business pursuits" exclusion in the policy, and did not make a general pronouncement about whether homeowner's insurance policies as a general matter can ever insure business property. Id., 136 Ill.Dec. 307, 544 N.E.2d at 1089-90.² The other cases Chubb cites in support of this point also considered insurance policies with express business-related exclusions; the disputes in those cases centered not around whether homeowner's insurance policies could cover business property, but whether the business-related exclusions precluded coverage. See, e.g., Indus. Indem. Co. v. Vukmarkovic, 205 Ill.App.3d 176, 150 Ill.Dec. 270, 562 N.E.2d 1073, 1074, 1080 (1990) (identifying business activity exclusion in insurance policy and deciding whether events fell within that exclusion). Here, as Gibson points out, though there is a business property exclusion under the Deluxe Contents Coverage, there is no such exclusion under the Valuable Articles Coverage.

Chubb has other arguments, too. It reasons that because the definition of "valuable article" already clarifies that it must be property "you or a family member owns or possesses," Policy at 55, "personal property" must mean something other than personal ownership--a position Gibson advocates for--since otherwise those parts of the definition would be redundant. See Old Second Nat'l Bank v. Ind. Ins. Co., 390 Ill.Dec. 898, 29 N.E.3d 1168, 1175 (Ill. App. Ct. 2015) ("[W]e will not interpret an insurance policy in such a way that any of its terms are rendered meaningless or superfluous."). It is possible to avoid superfluity, however, by adopting another position for which Gibson advocates: that "personal property" is simply meant to identify property other than real property.

Chubb also suggests that because Gibson's insurance agent recommended that he procure commercial property insurance, Gibson was aware that his current homeowner's policy was only sufficient to cover non-commercial property. Def.'s Statement of Additional Material Facts ("DSAMF"), Dkt. No. 178 ¶ 5. The upshot, according to Chubb, is that Gibson was or should have been aware that the Policy does not cover business property. Finally, Chubb cites several cases from state courts outside of Illinois that distinguish between "personal property" and "business property" in homeowner's insurance policies. See Dkt. No. 169 at 7 (citing cases).³

On the other hand, Gibson brings forth several arguments in support of his position that "personal property" as used in the "valuable article" definition does not necessarily exclude business property. For example, as noted above, though there is a "business property" exclusion for the Deluxe Contents Coverage, there is none in the Valuable Articles Coverage.

Gibson's position is also supported by dictionary definitions of "personal property," which distinguish that type of property from "real property" rather than from business property.⁴ Another secondary source that both parties cite supports an understanding of "personal property" as meant to distinguish from "real property" in some cases, and from "business property" in others. See Personal versus business or commercial property, 10A Couch on Ins. § 148:13 (" 'Personal property' in this sense means property used for the insured's 'personal purposes' rather than for 'business purposes.' Both types of this 'personal property' also fall within the category of 'personal property' used to distinguish real property.").

Gibson's position is further bolstered by the...