The Protection Service Is Exceptionally Widespread

The Rule of Eight Corners Strikes Again

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M/I Homes of Chicago, LLC (M/I Homes), appealed to the circuit court which granted summary judgment in favor of Acuity, an insurance company. The circuit court found that Acuity did not have a duty to defend M/I Homes in the tort action—arising from damages resulting from the defective construction work of one of M/I Homes’ subcontractors—because the complaint in the case did not allege that “ goods”. damage caused by the incident.

In Acuity, a Mutual Insurance Company v. M/I Homes Of Chicago, LLC, and Church Street Station Townhome Owners Association, No. 1-22-0023, 2022 IL App (1st) 220023, Court of Appeals of Illinois, First District, Sixth Division (September 9, 2022) The Illinois Appellate Court dismissed the dispute.


The Townhomes owners’ association filed a breach of contract and warranty of habitability lawsuit against M/I Homes as the developer/seller of the Townhomes, and M/I Homes asked Acuity to defend them in the same lawsuit, as an additional insured. on the policy Acuity issued to one of its contractors, H&R Exteriors Inc. (H&R). Acuity denied any liability to protect M/I Buildings under the policy and filed a motion for summary judgment pending before the court.


Acuity provided H&R with a strong commercial position and an overarching business philosophy. M/I houses are listed as an additional insured on the Policy.

First Case

Church Street Station Townhome Owners Association (Association), and its board of directors, sued for breach of contract (count I) and breach of warranty of occupancy (count II). In an amended complaint, the Association sued M/I Homes as the developer/seller on behalf of Townhomes, after winning all remaining claims of the original developer/seller, Neumann Homes Inc. (Neumann).

The agency said Neumann and M/I Buildings built and sold Townhomes with exterior defects, including moisture-damaged or water-damaged baseboard, water-damaged OSB sheathing, faulty brickwork, poor weatherstripping, misplaced. J-channel and flashing, are members that quickly deteriorate at the base of the balcony beams. The agency also said that Neumann and M/I Homes did not do the construction work themselves, but that all of the Townhomes work was done on their behalf by subcontracting with the developer.

The agency stated that the damage to the property was an accident because M/I Buildings did not want to cause damage to the design, materials and construction in the Townhomes, and property damage. The agency said that the damage to other building materials, such as windows and patio doors, including but not limited to water damage inside the units, and that the damage was not expected or their purpose.

Declaratory Judgment Action

Acuity filed its complaint for summary judgment against M/I Homes and the Association. The Association is not a party to this petition.

Acuity sought a declaration that it had no obligation to defend or indemnify the M/I Buildings. Accordingly, M/I Homes filed a counterclaim against Acuity, seeking a declaration that Acuity had a duty to defend.

The parties filed for summary judgment. M/I Homes argued in a motion for summary judgment that Acuity had a duty to defend because the plaintiff’s allegation was that “other things” were damaged and that the damage was more than just repair and replacement of the building. . According to M/I Homes, the “property damage” caused by the “event” was therefore sufficient.

The circuit court granted summary judgment in favor of Acuity and denied summary judgment in favor of M/I Homes.


The creation of an insurance policy and the determination of rights and conditions under it are questions of law before the court that are appropriate for summary judgment.

The duty to defend oneself is determined only from the pleadings of the complaint. [ISMIE Mutual Insurance Co. v. Michaelis Jackson & Associates, LLC, 397 Ill.App.3d 964, 968 (2009) (citing Thornton v. Paul, 74 Ill.2d 132, 144 (1978), overruled in part on other grounds by American Family Mutual Insurance Co. v. Savickas, 193 Ill.2d 378, 387 (2000).] A duty to defend exists if the claims in the grand complaint fall within or possibly within the terms of this policy, even if the claim is unfounded, false, or fraudulent.

In Illinois, the insurer’s duty to defend does not depend on a reasonable assumption regarding the claim; instead, the insurer has a duty to defend only if the allegations of the underlying complaint show that the plaintiff in the circumstances cannot prove that he is insured, according to any theory supported by the complaint, without also proving the facts that show the loss. it is not covered by insurance. [American Economy Insurance Co. v. Holabird & Root, 382 Ill.App.3d 1017, 1022 (2008).]

The policy, which is a general commercial policy (CGL) raises the question of M/I Home’s ability to be found, and Acuity’s responsibility to defend, which depends on whether the complaint alleges “property damage” due to “events. .”

M/I Homes contends that, based on the Association’s statement, the complaint is sufficiently serious that the property has been damaged as a result of the incident. M/I Homes also argued that the damage to some property was caused by “incidental events” because the main complaint alleged that the damage was an accident caused by an unintended subcontractor or M/I Homes.

Acuity argued that the allegation of damage to “other property” is insufficient to trigger its defense because the claim is inconsistent with the doctrine of recovery and the original complaint fails to identify the owner of the “other property” and to state how. The Association is responsible for prosecuting the damage to the property.

In Travelers Insurance Co. v. Eljer Manufacturing, Inc., 197 Ill.2d 278, 308 (2001), the Supreme Court held that, in determining whether there is CGL coverage, the phrase “damage to property” is satisfied only “when the property has been altered in appearance, shape, color or other dimension, and does not occur in the event of an economic crisis, such as devaluation.” Supreme court in Eljer he also warned against expanding CGL’s coverage so that it acts as a “stimulus” to the work of the insurance companies.

Some of our cases have held that the “other property” requirement is not embedded in the policy language itself. As we have noted, this line of cases establishing the “other property” requirement has been criticized by some commentators.

The main complaint in this case contains claims that would support the duty to protect M/I Houses. It states that “the work of the sub-contractors and the planner destroyed some aspects of the Townhomes that were not the work of those small businessmen.”

The Association-as “a group of managers or a group of managers” will legally have the opportunity to act on behalf of the people in relation to several areas or sectors, on behalf of the members. or unit owners as their preferences may appear.

The chances of finding a defense liability are low and any doubt about such a duty should be resolved in favor of the insured. Since the Association clearly has a responsibility to represent liability in relation to common property, claims for damage to “other property” may be claims for Association property in the common property, and no claim will be made. to eliminate transmission.

Therefore, these claims are sufficient to fall within the Policy’s requirements for “property damage” due to “occurrence” and trigger a duty of care.

The circuit court’s grant of summary judgment in favor of Acuity was reversed and remanded to the circuit court for summary judgment in favor of M/I Nyumba on the issue of duty to defend.

ZALMA’s opinion

It is impossible to refuse to protect the insurance because of the lack of standing or property damage to the property that was not damaged. In this case the court found a duty to defend because there may be damage to the common property of the Association. Unless there is clear evidence to show that there is no security or interest, security claims must be waived with the reservation of rights including the right to demand a refund of money paid for the security.

(c) 2022 Barry Zalma & ClaimSchool, Inc.

Barry Zalma, Esq., CFE, now narrows his practice to an insurance consultant specializing in insurance coverage, insurance litigation, insurance bad faith and insurance fraud for both insurers and policyholders alike. . He has practiced law in California for over 44 years as an insurance and claims attorney and over 54 years in the insurance business. Available at

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