An insurance company argues that a Deli company’s lawsuit should be dismissed for failure to state a claim after the insurer denied the plaintiff’s request for coverage following a fire.
Deli Star Corp. filed the complaint on Dec. 21 in the St. Clair County Circuit Court against Continental Western Insurance Company. The plaintiff is represented by Derek Siegel of Kuehn Beasley & Young PC in Belleville.
The complaint was removed to the U.S. District Court for the Southern District of Illinois on March 18.
Deli Star alleges in its three-count complaint that a fire occurred at its manufacturing plant in Fayetteville on Jan. 11, 2021. Deli Star submitted a claim under its insurance policy for newly acquired or constructed property enhancement coverage on March 9, 2021. The plaintiff also submitted a claim for spoilage enhancement coverage on May 11, 2021, and a claim for valuable papers enhancement coverage on May 12, 2021.
Continental Western denied all three claims on June 29, 2021.
Deli Star claims that the newly acquired or constructed property enhancement claim should apply because within 180 days prior to the fire, its contractor began construction on a building enclosure, warehouse and truck lot expansion on the premises.
The plaintiff also claims it lost business personal property destroyed by the fire with a replacement value of $1,248,391.
As for its spoilage claim, Deli Star claims “perishable stock in the form of meat products was being stored on the described premises in a finished product cooler that lost electrical power as well as temperature and humidity control.” Deli Star alleges the spoiled meat resulted in a loss of $560,066.62.
“Unlike much of the other perishable stock on the subject premises, the perishable stock in the finished product cooler was not destroyed by fire, but instead was left exposed to the elements with its red plastic casing still intact and unburnt,” the suit states.
Deli Star also claims it lost approximately $300,000 worth of blueprints and building plans in the fire.
The suit states that the insurance company “gave a bare notice of a reservation of rights” in its denial letter and did not specify any other policy defense.
“Defendant has breached the terms of the policy by continually refusing to tender the insurance policy benefits to plaintiff,” the suit states.
Deli Star claims Continental Western acted in bad faith by failing to properly investigate its claims. The plaintiff claims the defendant led it to believe that the claims would be honored but “ultimately chose to deny the claims based on bogus interpretations of policy language.”
“The defendant’s sole intention during the entire claim process was to find a way to deny this claim, versus conducting an unbiased, informative, and collaborative investigation,” the suit states.
Deli Star claims Continental Western disregarded evidence, conducted a biased investigation and tried to find ways to avoid coverage and deter the plaintiff from seeking coverage.
The plaintiff also alleges the defendant should be estopped from asserting any other policy provisions in an attempt to justify its denial of the claims.
Deli Star seeks $2 million for the newly constructed and acquired property loss, $500,000 for spoilage and $100,000 for the valuable papers loss. The plaintiff also seeks in excess of $50,000 for the bad faith allegation, plus attorney’s fees, court costs and all other relief the court deems just.
Continental Western Insurance filed a motion to dismiss the complaint on March 25 through attorney James Eastham of Traub Lieberman Straus & Shrewsberry LLP in Chicago. The defendant argues that the complaint fails to state a claim upon which relief can be granted.
Eastham wrote that the plaintiff failed to allege specific factual allegations in its claims for breach of contract, bad faith and estoppel.
The defendant also argues that the claim for bad faith “is nothing more than a recitation of the breach of contract allegations … with a series of added contradictory and conclusory statements regarding Continental Western’s unidentified ‘unreasonable and vexatious’ conduct.”
“Plaintiff has failed to plead sufficient facts for court to plausibly conclude that the defendant’s conduct did not stem from bona fide dispute,” Eastham wrote.
U.S. District Court for the Southern District of Illinois case number 3:22-cv-557