The issue confronting an Illinois appellate court in BNSF Railway Company v. Probuild North LLC, No. 1-12-3648 (Ill. App. Ct. June 11, 2014), was not uncommon. The plaintiff sought coverage from its insurer under a commercial general liability policy. In defending the suit, the insurer asserted a different defense from the one it had identified in its original denial letter. The plaintiff argued that the insurer was estopped from changing its rationale for denying coverage.
The resolution of that argument turned on a rule you might not know: the “mend the hold” doctrine. The court held that Illinois adheres to a minority version of the rule, which permits insurers to change positions, so long as they act in good faith. Most states that apply the rule are less forgiving.
Mend the … What?
Mend the hold applies to disputes over the non-performance of a contractual obligation. In its strictest formulations, mend the hold prohibits the non-performing party from asserting any defense or explanation for its conduct, other than the one it gave at the time of non-performance. E.g., Village of Bellaire v. Ohio Unemployment Compensation Review Commission, 2011 WL 4609185 (Ohio Ct. App. Sept. 26, 2011).
It all started in 1877, with Ohio & Mississippi Railway Company v. McCarthy, 96 U.S. 258 (1877). In that case, the railroad had agreed to transport 16 car-loads of cattle from East St. Louis to Philadelphia. The cows arrived in Cincinnati on a Sunday morning, but the railroad refused to move them on to Baltimore until the following day, and only after the plaintiff agreed to sign a “new and onerous” contract. At trial, the railroad offered evidence that it had had no cars available until Monday. On appeal, it argued that it should also have been permitted, after the close of evidence, to advise the jury about a West Virginia statute prohibiting the shipment of cattle on the Sabbath. Rejecting that argument, the Supreme Court said:
Where a party gives a reason for his conduct and decision touching any thing involved in a controversy, he cannot, after litigation has begun, change his ground, and put his conduct upon another and a different consideration.
Justice Swayne summarized the court’s decision this way: “He [i.e., the defendant] is not permitted thus to mend his hold.” He was using a wrestling term that means “to get a better grip (hold) on your opponent.” U.S. Fidelity & Guar. Co. v. Treadwell Corp., 58 F. Supp. 2d 77, 113 n.15 (S.D.N.Y. 1999).
Mend the Hold Today
Although some courts have expressed doubts about the...
