Madison - St. Clair Record

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Reagan rules against insurer seeking to question shopkeeper's husband in case involving suspicious fire

By The Madison County Record | Jan 5, 2016


Chief U.S. District Judge Michael Reagan and former federal judge Patrick Murphy prevented an insurer from questioning the husband of a shopkeeper about a fire, though both husband and wife had signed a proof of loss claim as insureds.  

Reagan granted relief against Amco Insurance on Dec. 11, writing that he was “not aware of any law that makes one an insured merely because he thinks it is so.”

Murphy sued Amco on Nov. 6, on behalf of Jenny’s Uniform Shop in Marion.

Amco had questioned owner Janell Kobler-Litton as an insured, but Murphy argued that Amco couldn’t question her husband Clayton Litton because it didn’t insure him.

Amco retained Jacqueline Satherlie of Buffalo Grove, who as an outsider requested admission to the district for purposes of the case on Dec. 1.

On Dec. 3, Reagan set oral argument on Dec. 10.

He declared the matter so simple and straightforward that it would not need “the customary federal court extravaganza.”

Satherlie answered the next day, offering as evidence the shop’s sworn proof of loss with Clayton Litton’s name on a blank for “signature of insured.”

She argued that he cosigned, as vice president, a $265,000 loan that fully paid previous owners who sold the shop in 2013.

She argued that he had an insurable interest in the shop.

Minutes of the oral argument show Kobler-Litton testified for 10 minutes.

Reagan reached a decision the next day, finding Amco offered no evidence that Clayton Litton was an officer of Jenny’s Uniform Shop.

He found that the Secretary of State did not list Clayton Litton as an officer.

The shop burned on Sept. 3.

Marion firefighters received an alarm at 7:24 p.m., and arrived in three minutes.

They found heavy smoke coming from the west end of the roof.

It took 18 firefighters four hours to put out the fire and clear the scene.

Their initial report estimated property damage at $383,500, and damage to contents at $79,500.

It stated that the cause of ignition was under investigation, and identified Janell Kobler-Litton and Clayton Litton as owners.

“Fire being investigated by the Marion fire department, Marion police department, and the state of Illinois fire marshal’s office,” the report concluded.

Police and firefighters regarded Clayton Litton as a suspect, according to statements Kobler-Litton made to Amco investigator Don Weber on Sept. 16.

He conducted the interview on the shop property.

Early in the examination, Kobler-Litton told Weber that her husband worked for the Bureau of Prisons.

She said his pay changed and she didn’t know what it was.

She said payments on the loan for the shop were about $1,700 a month.

Weber asked how she was notified of the fire, and she said, “My husband came in the back door and told me.”

He asked if she knew how her husband was notified, and she said, “Phone call.”

He also asked if she knew who called him, and she said, “I think it was Carlo but I’m not entirely sure.”

“He is also a lieutenant at the fire department so I know that they called me so I’m sure that they were calling him as well,” Kobler-Litton said.

Weber asked how he was a lieutenant, and she said, “My husband Clayton is a lieutenant at the fire department.”

She didn’t name the department, but his Facebook page identifies him as a lieutenant at Lake Egypt Fire Protection District, south of Marion.

A district employee confirmed Litton’s rank to the Record on Jan. 5, and said his status is “paid on call.”

Weber asked Kobler-Litton how Carlo found out, and she said, “Probably Pittsburg fire department, he’s on, so he probably found out from Pittsburg.

“Everybody knows my husband and they know that this is my business.”

Weber asked if she talked with the fire department at the store, and she said she spoke with investigator Ben Wilson.

“Ben asked me if I was Clayton’s wife and I told him yes, and then he told me that Clayton asked Ben if it was Ben’s first fire,” she said. “They know one another.

“And Ben laughed and said no, but this was my first arson.”

Weber asked why he made that comment, and she said, “I think he was being a smart aleck.”

Weber asked about any further conversations that night, and she said, “I don’t remember who came over and was asking me about furnace filters and where and how many I had.

“He kept asking me about furnace filters and asking me if there were any accelerants in the building.”

She said she told him some paint was left from when they got the building and there was a rusted can of pipe sealant or something like that.

Weber asked if anything particular stood out in her mind that day.

She said her husband and his mother watched the store while she led an exercise class at the veterans hospital.

She said she pulled up and they all left. She said Clayton was on his motorcycle.

“I went to get my hair cut at six, and I came home and got in the shower and Clayton went to go get his hair cut and then he was going to take the trash here and then go to Walt’s, which is over there, to get pizza,” she said.

“That’s when he started getting the phone calls about the business being on fire and I was in the shower."

Weber asked when she got home from the haircut.

Kobler-Litton: “Probably 6:20, 6:25.”

Weber: “And then your husband was out picking up some pizza and he had been - He had actually been back to the shop?”

Kobler-Litton: “He was to the dumpster. He was not to the shop.

“He was to the dumpster which is behind Unique Ink, the building next to us. We share a dumpster with them.

“And he pulled that giant black truck up there to the back and -”

Weber: “Back to his driveway in the back there?”

Kobler-Litton: “There’s a parking lot back there.”

Weber: “You went around to the back of the store?”

Kobler-Litton: “Yeah, there is no other way to get to it.”

Weber: “What time would he have left then, here?”

Kobler-Litton: “I was in the shower, he got his haircut, I sent him a text that told her (Unique Ink) there was another bag of trash out on the back deck. I don’t know, I’d say probably between six 45, seven.”

Weber: “Is that where you normally leave trash, outside in the deck?”

Kobler-Litton: “Yeah, all the time.”

Weber: “He did not go in the store?”

Kobler-Litton: “He did not go in the store.”

Weber: “But he was the last one here prior to the fire then?”

Kobler-Litton: “He was the last one, not – Well, I guess.”

Weber asked if the fire department ever told her who called 911.

Kobler-Litton: “I know the guy at the gas station told me but there was also practice going on at the junior high which is right behind us, football practice. So a lot of those people called, so I don’t know who initiated the call.”

Weber asked if she talked to anyone else after she talked to somebody in the back, and she said she wasn’t sure if it was the chief.

Kobler-Litton: “Like I said, I know everybody and so you know, just having conversations here and there but them asking me specifically things about the fire.

“I do remember them asking that ‘cause I wondered why in the world they were asking me about furnace filters.”

Weber asked if someone came to the house, and she said Ben Wilson showed up. She said her husband went out there.

Kobler-Litton: “My husband knows all these people so he’s thinking this is on a friendly level and then by the end of the conversation it turns out that it was not friendly.”

Weber said he wouldn’t ask about the conversation because she wasn’t privy to it, and she said, “I was privy to the end of it.”

He asked how long Clayton was in Ben’s truck, and she said, “I think probably like 15, 20 minutes.”

He asked what she was privy to.

Kobler-Litton: “Whenever I came up to Clayton’s side of the truck, which was the passenger’s side, I was like hey, you know, what’s going on? I thought they were just out there talking ‘cause they know each other.”

She said Ben asked Clayton how much money he made at the prison.

Kobler-Litton: “That kind of took us off our guard and then, I think, we kind of started figuring out things were going in a different direction.

“He made Clayton sign a piece of paper and he said these are your words, not mine, right, and Clayton said okay and signed the piece of paper and that was the end of it.”

Weber asked if she got a copy of what he signed.

Kobler-Litton: “I didn’t. I don’t know if Clayton did ‘cause I turned around and went, ‘cause I was really ticked off.”

Weber asked if she heard from anyone else since the date of the fire, and she said she heard from the fire marshal.

He asked if the name was Kenny Arnold, and she said, “That’s it.”

He asked if she heard from Marion, and she said police detective sergeant T.J. Warren had been there a couple of times.

Kobler-Litton: “I was having a friendly conversation with T.J. when he came here but he was coming here to take Clayton to the fire department to interrogate him.

“But we didn’t know any of that. T.J. is a friend of ours, we thought.”

Weber asked how many entrances and exits there were, and she said three.

She said one was sealed off.

He asked how.

Kobler-Litton: “It was done before we bought the building, but it was professionally done.”

Weber asked if it was permanent.

Kobler-Litton: “The fire department had a hard time getting over there.

“We didn’t even use that back door. I think we opened it one time and it was such a big hassle and mistake, I don’t think we ever opened it again.”

Weber: “So you really just used the one door.”

Kobler-Litton: “Just the front door, yeah.”

Weber asked how many keys she had to the door,.

Kobler-Litton: “Me, my mom, my sister in law, my dad, my mother in law. Five keys. Oh, my husband. Six.”

He asked if the surveillance system was in when she bought the building.

Kobler-Litton: “It was in but we bought an upgraded model because we were goin’ to add cameras to the parking lot and to the office.”

Weber asked if she was in the process of the upgrade,.

Kobler-Litton: “The new cameras were actually in the back room but they’re a goner.”

She said they had seven cameras and they bought 10 new ones.

Weber asked if they would have three additional, and she said yes.

He asked whose name was on the business.

Kobler-Litton: “The business is mine but my husband’s name is on the loan.

“But he doesn’t like get paid from here or anything like that.”

Weber: “Anybody else listed on the ownership papers?”

Kobler-Litton: “Clayton is listed as the vice president.”

Weber asked if Clayton or anybody else was listed on the insurance policy, and she said she didn’t know.

He asked about premiums, and she said maybe $374 monthly.

Weber: “How is business?”

Kobler-Litton: “Great.”

Weber: “Pretty steady?”

Kobler-Litton: “Definitely.”

Weber asked about monthly gross receipts, and she said $15,000 to $25,000.

Kobler-Litton: “Right now it’s really busy because school’s starting and we have a lot of nursing programs and medical school programs and everything like that, so right now is our absolute busiest time.”

Weber asked if there was a mortgage on her house, and she said yes.

He asked how much.

Kobler-Litton: “My house is tied in with this business.”

Weber asked if it was a home equity line of credit, and she said yes.

Kobler-Litton: “That was, I think, $40,000 and whatever I had left to owe on my house.”

Weber asked how much her house payment was, and she said $330.

He asked about vehicle payments, and she said hers was $365 and his was $350.

He asked if there was a lien on the motorcycle, and she said he just bought it. She said she thought the payments were like $205.

Weber: “Do you have any personal knowledge of how the fire started?”

Kobler-Litton: “No.”

Weber: “Did you start the fire?”

Kobler-Litton: “No.”

Weber: “Did anybody that you know start the fire?”

Kobler-Litton: “No.”

Weber: “If it were found to have been intentionally started, what do you think should happen to the people that started the fire?”

Kobler-Litton: “They should be prosecuted.”

On Oct. 22, Amco scheduled an examination of Clayton Litton on Nov. 4.

The next day, Murphy wrote to an associate of Satherlie that nothing in the policy authorized Amco to conduct such an examination.

“Insofar as the insurer’s refusal to proceed with a claim absent Mr. Litton submitting to an examination under oath, I suppose the insurer bears the same risk as the insured when it breaches a contract,” Murphy wrote.

Amco sent the shop a reservation of rights on Nov. 3.

Murphy filed suit for the shop three days later in a court 100 miles away where he presided from 1999 to 2013.

Random assignment sent the case to District Judge Nancy Rosenstengel, who recused herself.

Random assignment then sent it to Reagan, a district judge since 2000.

He ordered expedition under Rule 57 of federal civil procedure, which applies to actions for declaratory judgment.

The Record has requested a transcript of the oral argument, which was not available at deadline.

Murphy has asked Reagan to assess a $400 filing fee against Amco. Reagan has not ruled on the motion.

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