No Duty to Defend if Underlying Complaint does not Allege Injury Potentially Falling within Policy Coverage
In Rocks v. State Farm, the Rocks sold a home to the Kosses. The insurer, State Farm, issued a homeowner’s insurance policy to the Rocks that was in effect at the time. The policy provided that State Farm would provide a defense if a claim was made or a suit brought against an insured for damages because of bodily injury or property damage caused by an occurrence.
The Kosses filed suit against the Rocks, alleging that the Rocks knowingly, recklessly, or negligently misrepresented that there were no moisture or water problems in the home and that they relied upon the misrepresentations and were injured as a result. The alleged damages were the loss of their bargain, the loss of value to their property, and the loss of their property. The Rocks sought a declaration that State Farm had an obligation to defend them in the suit.
State Farm denied the Rocks’ request for defense of the suit and argued that the liability provision of the insurance policy was not triggered. State Farm argued that the underlying complaint did not contain allegations of an occurrence that caused property damage.
The court held that the acts alleged in the underlying complaint, to have caused injury and the only possible “occurrence,” were the misrepresentations made by the Rocks. The court held that there were no allegation of post-sale water infiltration to the home. Thus, State Farm had no duty to defend the Rocks in the underlying action.
Rocks v. State Farm Fire and Cas. Co., 395 Ill.App.3d 145, 917 N.E.2d 610 (Ill.App. 3 Dist., 2009).
