Justia U.S. 7th Circuit Court of Appeals Opinion Summaries

Eric Stupak, a pass-holder at a Wisconsin resort, was injured after using the resort’s tube slides during the summer of 2022. The slides were closed at the time, but the resort had not posted the “Ride Closed” sign or removed the tubes; instead, the protective bumpers on the slides were deflated. After playing disc golf, Stupak and two friends asked the manager if they could use the slides. The manager responded ambiguously, saying, “I’m not going to say anything.” The group proceeded to use the slides, and Stupak fell off, sustaining serious injuries.The United States District Court for the Western District of Wisconsin reviewed Stupak’s suit against the resort and its insurer. The district judge determined, as a matter of law, that Stupak had been a trespasser on the slides, which meant the resort could only be liable if it engaged in “willful, wanton, or reckless conduct.” The judge found insufficient evidence of recklessness and granted summary judgment for the defendants, without addressing other issues raised in the parties’ motions.The United States Court of Appeals for the Seventh Circuit reviewed the district court’s grant of summary judgment de novo, applying Wisconsin substantive law. The appellate court agreed that Stupak was a trespasser, as he lacked express or implied permission to use the closed slides. However, the Seventh Circuit found that a reasonable jury could determine the resort’s actions were reckless, given the ambiguous response by the manager and the unsafe condition of the slides. The court vacated the district court’s summary judgment and remanded the case for further proceedings, allowing the district court to address additional arguments regarding assumption of risk and proximate cause. View "Stupak v Mont du Lac Snowsports, LLC" on Justia Law

A dentist applied for benefits under his individual disability insurance policy after suffering impairments to his hip and back. While his claim was under review, he received payments from his insurer for over a year. During that period, he earned income through part-time teaching and performing duties for two professional dental associations. After discovering this income, the insurer terminated his benefits, determining that his continued work qualified as a “gainful occupation” and thus he did not satisfy the policy’s requirement for “total disability.”The dentist subsequently filed suit in the United States District Court for the Northern District of Illinois, Eastern Division, alleging breach of contract and seeking statutory penalties for bad faith under the Illinois Insurance Code. Both parties moved for summary judgment. The district court granted summary judgment in favor of the insurer, finding that the policy’s language was unambiguous and that the dentist was, as a matter of law, engaged in a gainful occupation based on the undisputed facts.On appeal, the United States Court of Appeals for the Seventh Circuit reviewed the district court’s ruling de novo. The appellate court held that the policy unambiguously required the claimant to show not only inability to perform his prior occupation but also that he was not engaged in any other gainful occupation. The court concluded that “gainful occupation” was not ambiguous and that the dentist’s nonclinical work, which generated substantial income, disqualified him from benefits. The court also rejected the contention that “gainful occupation” should be defined as earning at least 60% of pre-disability income, finding no support for that standard in the policy language. The Seventh Circuit affirmed the district court’s judgment for the insurer. View "Caraba v Paul Revere Life Insurance Co." on Justia Law

A group of former shareholders of a reinsurance provider’s parent company acquired the provider’s rights to seek recourse against third parties for losses stemming from a failed reinsurance program. The losses occurred after the provider’s agent advised participation in a structurally unsound London Market program, resulting in significant financial harm. The shareholders, now plaintiffs, alleged that an insurance brokerage firm failed to properly notify the agent’s professional liability insurers of claims arising from these events, as required under agreements between the broker, the agent, and the insurers.After unsuccessful attempts to recover from the provider’s agent and its bankrupt parent company, the plaintiffs notified the agent’s insurers, who denied coverage due to untimely notice. The plaintiffs then filed suit against the brokerage firm in the Circuit Court of Cook County, Illinois, asserting claims for professional negligence and breach of contract. The suit was removed to the United States District Court for the Northern District of Illinois. The district court dismissed the negligence claim and granted summary judgment to the brokerage firm on the contract claim, finding the provider was not a third-party beneficiary to the relevant agreements and the broker owed no duty to the provider.The United States Court of Appeals for the Seventh Circuit reviewed the case and affirmed the district court’s judgment. The court held that the provider was not a third-party beneficiary of the agreements between the broker and the agent, as the contracts did not expressly manifest an intent to benefit the provider. The court also held that the broker owed no professional duty to the provider to notify the agent’s insurers of claims. Finally, it concluded that the claims were time-barred under Illinois law. View "Ferguson v Aon Risk Services Companies, Inc." on Justia Law

The case centers on a 2016 traffic accident in Will County, Illinois, involving a semi-tractor operated by Midvest Transport Corporation, pulling a chassis managed by two companies. The driver of the car involved sued multiple defendants: Midvest, its driver, and the chassis companies. All defendants were insured by Northland Insurance Company. Northland appointed separate counsel for its insureds, but the chassis companies (Consolidated) preferred their own attorneys and sought reimbursement from Northland for those legal expenses, also seeking statutory penalties under Illinois law.In the United States District Court for the Northern District of Illinois, Consolidated sued Northland for declaratory and compensatory relief, alleging breach of contract and seeking penalties under § 155 of the Illinois Insurance Code. The district court initially ruled for Northland, finding no conflict of interest that would entitle Consolidated to independent counsel at Northland's expense. On reconsideration, however, the court found a conflict existed, granted summary judgment for Consolidated on the breach of contract and declaratory relief claims, and awarded $115,000. The district court rejected Consolidated’s claim for penalties, finding Northland did not act vexatiously or unreasonably.The United States Court of Appeals for the Seventh Circuit reviewed the district court’s rulings de novo. It held that Illinois law only creates a narrow exception to an insurer’s right to control the defense where a serious, actual conflict exists between the insurer and the insured. The court found no such conflict here, as Northland’s interests were not at odds with Consolidated’s, and any adversity between insured codefendants did not trigger the right to independent counsel. Accordingly, the Seventh Circuit reversed the judgment in favor of Consolidated on its breach of contract and declaratory relief claims, and affirmed the judgment in favor of Northland on the § 155 claim. View "Consolidated Chassis Management LLC v Northland Insurance Co." on Justia Law

An employee of High Performance Alloys, Inc. died while working at the company’s facility. The deceased employee’s estate sued the company for wrongful death, alleging gross negligence, willful and wanton conduct, disregard of safety regulations, and actual intent to cause injury. The complaint referenced prior safety violations, knowledge of hazardous conditions, failure to implement available safety measures, and a claim that the employer acted with actual intent to cause injury.The estate’s lawsuit was pending in Indiana state court. High Performance Alloys sought coverage under its Worker’s Compensation and Employers’ Liability Insurance Policy issued by Insurance Company of the West. ICW denied coverage, asserting the claims were excluded by the policy. ICW then filed a federal declaratory judgment action in the United States District Court for the Southern District of Indiana, seeking a determination that it had no duty to defend or indemnify High Performance Alloys. High Performance Alloys counterclaimed for coverage. The district court granted judgment in favor of ICW, holding that the claims were either barred by Indiana’s Workers’ Compensation Act or excluded by the Policy’s intentional acts exclusion.On appeal, the United States Court of Appeals for the Seventh Circuit reviewed the district court’s ruling de novo. The Seventh Circuit held that the estate’s allegations, even if true, either described an accidental injury governed exclusively by Indiana’s Workers’ Compensation Act or an intentional injury excluded from coverage by the policy. The court found the complaint did not allege facts sufficient to plead an intentional tort under Indiana law and denied a request to certify questions to the Indiana Supreme Court. The court affirmed the district court’s judgment, holding that Insurance Company of the West has no duty to defend High Performance Alloys in the underlying lawsuit. View "Insurance Company of the West v High Performance Alloys, Inc." on Justia Law

Lambros J. Kutrubis held a life insurance policy, originally naming the trustee of his trust as the beneficiary. As his health declined, he sought to change the beneficiary to his ex-wife, Betty Stokes, and his adopted son, John Kutrubis. Lambros dictated and signed a letter requesting this change, with two witnesses and a notary present. At his instruction, a friend mailed the letter to the insurer, Banner Life Insurance Company. After Lambros’s death, Banner had no record of receiving the letter before his death. Betty and John claimed the proceeds based on the letter, while Eugenia Kamberos, Lambros’s sister and trustee of the trust, also claimed the funds. Banner initiated an interpleader action to determine the rightful recipient.The United States District Court for the Northern District of Illinois, Eastern Division, handled the interpleader. Betty and John moved for summary judgment, submitting affidavits supporting Lambros’s intent and actions. Eugenia responded with a brief but failed to file a proper response to their statement of facts as required by local rules. The district court deemed Betty and John’s facts admitted due to this noncompliance and granted summary judgment in their favor, finding that Lambros substantially complied with the policy’s beneficiary change procedures. Eugenia appealed, challenging the district court’s evidentiary decisions and the grant of summary judgment.The United States Court of Appeals for the Seventh Circuit affirmed the district court’s judgment. The appellate court held that the district court acted within its discretion in deeming facts admitted due to Eugenia’s procedural noncompliance. It concluded that Lambros had substantially complied with the policy requirements to change the beneficiary, as evidenced by his clear intent and concrete steps. The court also found that, apart from the affidavit of an interested party (Betty), the admissible evidence sufficiently supported summary judgment in favor of Betty and John. View "Kamberos v. Kutrubis" on Justia Law

A lightning strike in October 2019 caused a destructive fire at a large mansion in southern Illinois owned by Wesley Gibson. Gibson had acquired the property nearly 30 years earlier as a family vacation home and, over time, extensively renovated it and filled it with valuable furniture, antiques, and artwork. Eventually, he transformed the mansion and surrounding properties into a commercial lodging and events venue, hosting weddings, corporate retreats, and other gatherings. Gibson’s family continued to use the mansion for about 70 nights per year, but the property’s primary use became commercial, as evidenced by tax filings and significant rental income.Following the fire, Gibson filed a claim with Chubb National Insurance Company under his homeowner’s policy, which provided $8.75 million for the dwelling and $3.5 million for its contents. Chubb paid the dwelling coverage in full but limited payment for the contents to $25,000, citing a business property exclusion in the policy that capped coverage for property used in business at that amount. Gibson sued Chubb in the United States District Court for the Northern District of Illinois for breach of contract and violations of Illinois insurance and consumer-fraud statutes. On cross-motions for summary judgment, the district judge found that the majority of the contents were used for business purposes and subject to the $25,000 limit, granting partial summary judgment to Chubb. The judge allowed Gibson’s claim to proceed only for certain items kept in areas not accessible to guests. After settling remaining issues, final judgment was entered.The United States Court of Appeals for the Seventh Circuit affirmed. The court held that under the terms of the policy and Illinois law, Chubb properly classified most of the mansion’s contents as business property and was only obligated to pay the $25,000 sublimit. The court also affirmed summary judgment for Chubb on the statutory claims. View "Gibson v Chubb National Insurance Company" on Justia Law

A roofing contractor was sued in Illinois state court by the estates of two individuals who died when a building façade collapsed. The estates alleged that the contractor had negligently performed repairs on the building after it was damaged by a windstorm in August 2020. The repairs were completed by December 2020, and the fatal collapse occurred in April 2022. The contractor sought defense and indemnification from its commercial general liability insurer under a policy that began on February 8, 2022. The insurance policy included a “Prior Work Exclusion” that barred coverage for claims arising from work completed before the policy’s inception date.The insurer filed suit in the United States District Court for the Northern District of Illinois seeking a declaratory judgment that it had no duty to defend or indemnify the contractor in the underlying state lawsuit. The contractor counterclaimed for breach of contract and argued that the exclusion rendered coverage illusory. Both parties moved for judgment on the pleadings. The district court granted judgment to the insurer, holding that the exclusion applied because the work at issue was completed before the policy period and that the exclusion did not render the coverage illusory, as some coverage for completed operations remained.On appeal, the United States Court of Appeals for the Seventh Circuit affirmed the district court’s judgment. The court held that, under Illinois law, the Prior Work Exclusion clearly barred coverage for claims arising from work completed prior to February 8, 2022. The court further held that the exclusion did not make completed-operations coverage illusory because the policy still provided coverage for work completed during the policy period. The judgment in favor of the insurer was affirmed. View "Nautilus Insurance Company v Bee Quality Inc." on Justia Law

The Office of the Special Deputy Receiver (OSD), an Illinois non-profit that manages receiverships for insolvent insurance companies, purchased a Financial Institution Bond from Hartford Fire Insurance Company. The bond included coverage for computer systems fraud and for electronic mail initiated transfer fraud, subject to certain exclusions. Hackers infiltrated OSD’s Chief Financial Officer’s email account via a spear phishing attack, impersonated the CFO, and sent fraudulent instructions to other OSD employees, resulting in unauthorized wire transfers and a loss of nearly $4 million.OSD filed claims with both Hartford and another insurer. Hartford denied coverage, asserting that an exclusion in the bond applied to the loss. OSD sued both insurers in the United States District Court for the Northern District of Illinois, seeking declaratory relief and alleging breach of contract. The district court granted Hartford’s motion to dismiss under Rule 12(b)(6), finding that the policy’s exclusion for losses resulting from fraudulent instructions sent to OSD by email applied, and denied the other insurer’s motion. OSD later voluntarily dismissed its claims against the second company, and judgment was entered.On appeal, the United States Court of Appeals for the Seventh Circuit reviewed the dismissal de novo. The court held that the exclusion in Rider 17 of the Hartford bond unambiguously barred coverage for losses resulting from fraudulent email instructions sent to OSD—even if the sender was impersonating an internal employee—because the exclusion focused on the recipient, not the sender. The court found no ambiguity or conflict between the exclusion and other coverage provisions, and concluded that OSD’s losses fell outside the scope of coverage. The Seventh Circuit affirmed the district court’s dismissal of OSD’s claims against Hartford. View "Office of the Special Deputy Receiver v Hartford Fire Insurance Company" on Justia Law

After being injured in a car accident, Ronald Saslow and his passenger sought recovery under auto and umbrella insurance policies issued by Bankers Standard Insurance. The Saslows’ policies provided coverage for medical expenses and uninsured/underinsured motorist (UM/UIM) damages, with specific coverage limits outlined per accident or occurrence. The Saslows insured five vehicles and paid separate premiums for each one. Following the accident, they received $879,832 from the other driver’s insurer, and Bankers Standard paid $100,000 under the medical expenses coverage and $1 million under the umbrella policy’s UM/UIM coverage. The Saslows then sought additional payments, arguing they should be allowed to "stack" the coverage limits due to multiple vehicles, premiums, and insured persons, and also claimed entitlement to penalties and fees for delayed payment.The United States District Court for the Northern District of Illinois, Eastern Division, granted summary judgment to Bankers Standard. The district court determined that the insurance policies contained unambiguous anti-stacking provisions, limiting recovery to the stated coverage limits for each occurrence regardless of the number of vehicles, premiums, or insured persons. The court also found that Bankers Standard’s payment delays, although resulting in a two-month late payment, did not amount to vexatious or unreasonable conduct under Illinois law, and therefore did not warrant statutory penalties or attorney fees.On appeal, the United States Court of Appeals for the Seventh Circuit reviewed the district court’s decision de novo. The appellate court affirmed the district court’s judgment, holding that the language in both the auto and umbrella policies unambiguously prohibited stacking of coverage limits. The court also concluded that Bankers Standard’s conduct was not vexatious or unreasonable and that no additional payments or statutory penalties were owed to the Saslows. View "Saslow v. Bankers Standard Insurance" on Justia Law