Former judge Murphy sues insurer to force payment for suspicious fire

By The Madison County Record | Feb 9, 2016

Former U.S. district judge Patrick Murphy filed suit in the court where he dispensed justice for 14 years, to force an insurer to pay for a suspicious fire at a shop in Marion.

Chief U.S. District Judge Michael Reagan, who worked beside Murphy for 13 of those 14 years, will preside over the action.

Reagan previously granted relief to Murphy’s client, Jenny’s Uniform Shop, when Murphy asked him to limit an investigation by Amco Insurance.

Reagan ruled in December that Amco could not question the shop owner’s husband, Clayton Litton, although he signed an initial loss claim as an insured.

Reagan wrote that he was “not aware of any law that makes one an insured merely because he thinks it is so.”

Shop owner Janell Kobler-Litton signed a sworn statement of proof of loss on Jan. 4, claiming $375,192.49 under the Amco policy.

On Jan. 29, Amco counsel Jacqueline Satherlie of Buffalo Grove sent Murphy a letter rejecting the statement.

“Be advised that Amco continues to investigate the claim and has questions regarding its obligations under the policy to Jenny’s as the cause of the fire has been determined to be incendiary,” Satherlie wrote.

“The coverage provided is subject to, among other exclusions, the dishonesty exclusion.”

Satherlie quoted from the policy that Amco will not pay for loss caused by dishonesty or criminal acts by anyone else with an interest in the property.

She offered the address and telephone number for the state insurance department, if the insured wished to take the matter up with its consumer division.

Murphy chose to take it up with the federal court.

He sued Amco on Jan. 30, calling its rejection vexatious and unreasonable.

He asked for judgment declaring Kobler-Litton’s statement sufficient.

The court clerk randomly assigned the case to District Judge Phil Gilbert.

He transferred the case to Reagan, “to preserve judicial economy, for the convenience of the parties, and to avoid inconsistent judgments.”

The shop burned on Sept. 3.

A fire department report stated that the cause of ignition was under investigation.

The report identified husband and wife as shop owners.

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

Amco investigator Don Weber examined Kobler-Litton on Sept. 16, at the shop.

Kobler-Litton told Weber she got home around 6:20 p.m.

Weber: “Your husband was out picking up some pizza and he had actually been back to the shop?”

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

Weber: “He was the last one here prior to the fire?”

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

She said fire investigator Ben Wilson came to the house, and her husband went out to Wilson’s truck.

She said Wilson 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.”

She said Wilson made Clayton sign a piece of paper.

Weber asked whose name was on the business.

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

She said he was listed as vice president on the ownership papers.

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

On Oct. 23, Murphy wrote that nothing in the policy authorized the examination.

On Nov. 3, Amco sent Murphy a reservation of rights.

On Nov. 6, Murphy sued Amco in federal court to block the examination.

Reagan scheduled a hearing before Amco had answered.

He took 10 minutes of testimony from Kobler-Litton at the hearing, and ruled that Amco couldn’t question Litton because it didn’t insure him.

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