Bad Faith Blog

Summary: Allstate insured Valentine and Christina Zagorski’s home suffered a fire loss. Allstate’s Special Investigation Unit (SIU) assisted with the investigation of what was ultimately concluded to be an arson fire. Allstate’s retained counsel took an Examination Under Oath (EUO), and otherwise assisted with the claims handling before the claim was denied. After the denial, the Zagorskis filed suit for breach of contract, fraud, and sought extra-contractual damages for vexatious delay and refusal to pay. During the course of that litigation Allstate was ordered to disclose information through discovery, it refused, its attorney was held in civil contempt, and the matter was appealed to the Appellate Court, which then ruled on the various discovery issues, mostly in the Zagorskis’ favor, but also making some rulings in favor of Allstate. The Court also admonished Allstate’s counsel regarding properly responding to discovery.

Summary: The Trust owned a building in Galena, Illinois which was leased to an architect and artist. When the Trust sold the real estate, it removed and destroyed artwork and other personal items without the artist’s permission. He filed suit in federal court under multiple theories for wrongfully evicting him without proper notice and the destruction of his personal items without compensating him. After Country Mutual denied duties to defend and indemnify, the Trust filed a declaratory judgment action. The trial court found coverage, but denied plaintiff’s motion for sanctions under Illinois’ vexatious refusal statute. The appellate court affirmed finding Country Mutual had a duty to defend the federal lawsuit under the policy’s personal and advertising injury coverage, but vexatious penalties were properly denied.