Lumbermen's Mutual Casualty Co. v. Gloria Sykes (1st Dist., Doc. No. 1-07-0860)

In this opinion, the plaintiff, Lumbermen's filed for a declaratory judgment against the defendant, Gloria Sykes, seeking a coverage determination regarding a policy that Sykes had in 2001.

Some time in early 2001, Sykes discovered water entering her house and submitted a claim for water damage under the homeowner's policy with Lumbermen's.  Lumbermen's paid the damages and closed their file, but in November 2001, Sykes reported toxic mold growth in the home and alleged that the mold was the result of the prior occurrence.


Lumbermen's investigated the later claim and sent several letters to Sykes.  In the meantime, Sykes was forced to leave her home while Lumbermen's undertook construction and because Lumbermen's and their contractors left in July, 2002, when it denied the claim, work was not finished and Sykes was never able to move back into her residence.  Lumbermen's complaint alleged that after the investigation and a proper reservation of rights, a letter denying coverage was sent to Sykes on July 24, 2002.  Sykes countersued and alleged multiple claims, the two at issue in the appeal argued that Lumbermen's breached its contract with Sykes and that Lumbermen's was estopped from denying coverage because letters sent to Sykes from Lumbermen's where several letters - importantly, one on March 14, 2002, admitted that the mold in her house was covered by the policy, but affirmatively stated that if damage to the home was not caused by the ice/water damage from the previous claim, then there would be no coverage.  Sykes moved for summary judgment and attached an affidavit declaring that she was told on February 19, 2002, by representatives of Lumbermen's that her claim was covered by the policy.  The affidavit was never contradicted by Lumbermen's.

The trial court awarded summary judgment to Sykes on her coverage/breach of contract claim and granted an injunction forcing Lumbermen's to turn over some $11,000 that was left on Sykes' policy to Sykes for the costs she had incurred by being forced out of her home and unable to move back in.

Lumbermen's appealed and the appellate court held that the trial court properly granted summary judgment for damages from February 19 to March 14.  Specifically, the court looked to the communications between the Lumbermen's the Sykes and found that assertions made in Sykes' affidavit regarding representations of February 19 were never contradicted by Lumbermen's.  Holding that those non-contradicted assertions must be assumed true, there was evidence was put forth showing that any denial or explanation that coverage would be provided for damages that did not result from the prior occurrence until Lumbermen's March 14 letter.  Therefore, Lumbermen's was estopped from denying coverage for damages prior to March 14.

The court then found that the March 14, 2002, letter was sufficiently worded so as to arguably inform Sykes that claims may not be covered by her policy, and that any reasonable person could possibly understand the subsequent letter to mean that there might not be coverage for certain mold and water damage.  Because a reasonable person could interpret the letter differently than the plaintiff claimed she interpreted the letter, the appellate court found that an issue of fact existed sufficient enough to preclude the grant of summary judgment for damages incurred by the plaintiff subsequent to the March 14, 2002, letter, but upheld the trial court's grant of summary judgment for the damages suffered between the February 19, 2002, letter and the March 14th letter.

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