Mine subsidence insurers seek more time to respond to Cates class action

By Ann Maher | Jan 7, 2014


Defendants in a class action initiated in September by the son and husband of a sitting Illinois appellate court judge have asked for more time to respond to the lawsuit.

St. Clair County Circuit Court Judge Robert Le Chien on Dec. 10 set a status conference for Feb. 11 at 9:30 a.m.

Darrell Cates, husband of Fifth District Appellate Court Justice Judy Cates and a lead engineer for St. Clair County, sued Allianz Global Risks US, Illinois Mine Subsidence Fund and others alleging he paid worthless premiums after receiving a mine subsidence policy limit payment of $350,000 from Allianz subsidiary Fireman's Fund in December 2007 for their Swansea home.

Their son David Cates and Ryan Mahoney, of Cates Mahoney in Swansea, filed the suit.

Associated Indemnity Corp., Fireman's Fund and Allianz, represented by Jason Richardson of Edison, McDowell & Hetherington in Houston, filed for extensions of time to respond in October, November, and on Dec. 18 asked for an extension to Jan. 20.

Illinois Mine Subsidence Insurance Fund, represented by Joseph Martineau of Lewis, Rice & Fingersh in St. Louis, also on Dec. 18 asked for an extension to Jan. 20 to respond, which is the last docket entry in the case.

In the complaint, Mahoney wrote that under all Illinois policies, the amount of a recoverable loss is determined at the time the damage first becomes reasonably observable.

“Moreover, all damage caused by a single mine subsidence event or several continuous subsidence events occurring over a period of many years or even decades is treated as one occurrence,” he wrote. “Only once the mine subsidence has completely stopped is there insurance again available to the property owner.

“For an insurance company to collect premiums and the IMSIF to continue to receive premiums during the mine subsidence occurrence period, where the insured cannot receive any additional benefits payable under the mine subsidence insurance policy unjustly enriches the IMSIF and unjustly adds increased profits for which there should be disgorgement.

“Cates is not eligible for any further insurance coverage benefits because his claim is fixed in time by the occurrence date of January 17, 2007, when the mine subsidence was first noticed.

"However, since resolution of his mine subsidence claim in 2007, Fireman’s Fund has continued to collect premiums from Cates for mine subsidence coverage, even though Cates cannot collect any additional benefits under the terms of the Act.

“None of the agents or employees of Fireman’s Fund have ever informed Cates that he need not pay the mine subsidence insurance premiums.

“In fact, every year since 2007, the Fireman’s Fund defendants have automatically sent Cates a renewal policy that contains coverage for mine subsidence.”

Mahoney alleges breach of duty of good faith and fair dealing, consumer fraud, common law fraud, unjust enrichment, and civil conspiracy. He asks for certification of a class action, with Darrell as class representative and the Cates Mahoney firm as class counsel.

He also seeks monetary and punitive damages, attorney fees, costs, and interest at the maximum rate allowable at law. He asks for an injunction against collection of worthless premiums and an injunction requiring defendants to issue waiver forms to the class.


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