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Panel rules on insurance dispute over $4.5M-plus jury award in injury suit

By Jonathan Bilyk | Dec 9, 2013

An appeals panel has ruled that a Boston-based insurance company erred when it attempted to pass off its obligation to defend the management company for a Lake County golf course against a claim brought by a woman who was struck by a tree and resulted in more than $4.5 million in damages.

On Nov. 20, a three-justice panel of the Second District Appellate Court issued an unpublished order affirming the decision of Lake County Circuit Court Judge Christopher C. Starck to dismiss a claim brought by Indiana Insurance Co. against another insurer, defendant Amco Insurance Co., and to deny a request to amend the complaint.

The appellate court order was authored by Justice Mary Seminara-Schostok. Justices Michael J. Burke and Robert D. McLaren concurred.

The case stems from a 2008 incident in which Cathy Stackhouse was struck and injured by a falling tree while at the Lakemoor Country Club.

Stackhouse sued Lakemoor and the company it had hired to run the golf course, Royce Realty and Management Co.

After about two years of litigation, a jury in 2010 awarded Stackhouse more than $4.5 million. The jury affixed liability for the incident evenly between Lakemoor and Royce.

Lakemoor’s defense in the matter had been funded through an insurance policy it held through Amco Insurance. Royce held a similar policy through Indiana Insurance.

However, in May 2010, before the jury verdict and award to Stackhouse, Indiana Insurance opted to try to push off its defense of Royce against Stackhouse’s claim to Amco.

Amco refused, and filed suit, asking a court to stipulate that it had no obligation to defend Royce.

Following the jury verdict, Stackhouse and Amco reached a $3.6 million settlement deal.

Although Amco withdrew its suit against Royce, Indiana Insurance pushed ahead in 2012 with a claim, asking the court to determine it had no obligation to defend Royce in the matter, and that Amco had “wrongfully refused to defend Royce” in the Stackhouse case, as Indiana Insurance believed Royce was insured under Amco’s policy.

In October 2012, Stark, a Lake County judge, ruled against Indiana Insurance, finding that Indiana was obligated to pay to defend Royce under the terms of its insurance policy.

And later that same month, Starck granted a request from Amco to dismiss Indiana Insurance’s suit.

Indiana Insurance then appealed, arguing the trial court had erred in dismissing the case.

In the recently-released appellate court order, the justices found nothing in Indiana Insurance’s appeal to overturn the lower court’s decisions.

The justices determined that, because the lower court had previously determined that Indiana Insurance indeed owed coverage to Royce in the Stackhouse incident, Starck was correct to dismiss the case.

“Indiana could not maintain an action based on the premise that it owed Royce no such coverage,” Seminara-Schostok wrote for the appeals panel.

Likewise, the justices found that Starck was also right in refusing to allow Indiana Insurance to amend its complaint, noting that even an amended filing would not “cure the defect” in its original claim, namely, “that it owed no insurance coverage to Royce regarding the Stackhouse incident.”

The appeals panel also shot down a new issue raised by Indiana Insurance on appeal, rejecting Indiana’s attempt to extract “equitable contributions” from Amco to defend Royce.

Seminara-Schostok wrote in the order that the two polices were not “concurrent,” noting that the polices did not cover “the same entities, the same interests and the same risks.”

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