Harvey Fruit Market v. Hartford Insurance Co.

SIXTH DIVISION
January 30, 1998


No. 1-96-2746

HARVEY FRUIT MARKET, INC., KONSTANTINOS
KOKKINIS, and ZENOPHON LABOS, one or
more d/b/a HARVEY FRUIT MARKET AND DELI,
INC.,

Plaintiffs-Appellants,

v.

HARTFORD INSURANCE COMPANY OF ILLINOIS,

Defendant-Appellee.)
)
)
)
)
)
)
)
)Appeal from the
Circuit Court of
Cook County

Honorable
Kenneth L. Gillis,
Judge Presiding.


JUSTICE QUINN delivered the opinion of the court:
On April 19, 1992, a fire destroyed the Harvey Fruit Market
and the contents therein. Plaintiffs, Harvey Fruit Market, Inc.,
Konstantinos Kokkinis, and Zenophon Labos, one or more d/b/a
Harvey Fruit Market and Deli, Inc., subsequently filed a claim
which was denied by defendant, Hartford Insurance Company of
Illinois, due to a finding of arson, misrepresentation, and fraud.
Plaintiffs then filed a complaint for breach of contract, which was
dismissed by the trial court pursuant to section 2-619 of the Code
of Civil Procedure. 735 ILCS 5/2-619 (West 1994). On appeal, we
address the following issues: (1) when did plaintiffs' loss occur;
and (2) whether the insurance policy's time limitation on lawsuits
was tolled when plaintiffs provided notice of loss on the day of
the fire.
For the following reasons, we affirm.
The relevant facts are as follows. Defendant issued
plaintiffs an insurance policy, effective December 1, 1991, to
December 2, 1992. The policy covered, among other items,
plaintiffs' building, business personal property, money and
securities, and loss of income sustained over 12 consecutive
months. The policy included the following specific provisions:

"2. Duties of the Named Insured After a Loss
a. give immediate notice of such loss to the
Company;
***
e. submit to the Company within 60 days after
requested a signed, sworn statement of loss ***
***

8. Suit
No suit shall be brought on this policy unless the
insured has complied with all the policy provisions
and has commenced the suit within one year after the
loss occurs."

On April 19, 1992, a fire destroyed the Harvey Fruit Market
and the contents therein. That same day, plaintiffs contacted
their insurance carrier, defendant, to inform defendant of the
loss. Defendant assigned an adjuster to the claim the same day.
On April 20, 1992, the adjuster prepared an internal memorandum
which stated that the loss for business personal property and
business income was to be determined in the future. Plaintiffs
filed a sworn statement of loss on July 28, 1992, and defendant
denied the plaintiffs' claim on October 25, 1993, due to a finding
of arson, misrepresentation, and fraud. Plaintiffs then filed a
complaint on October 25, 1994, which was dismissed by the trial
court as untimely on May 31, 1996. This appeal followed.
Plaintiffs first maintain that their complaint in the circuit
court was timely filed because they could not determine the extent
of their loss of earnings as covered by the policy until the one-
year period expired. Therefore, plaintiffs maintain, their loss
did not occur until one year after the fire, on April 19, 1993. We
disagree.
In Illinois, the date utilized for determining the date of
loss is the date on which the actual physical loss of property
occurred. See Wilson v. Indiana Insurance Co., 150 Ill. App. 3d
669, 672, 502 N.E.2d 69 (1986). Plaintiffs' loss here occurred on
the date of the fire, April 19, 1992. Thus, as discussed in
further detail below, plaintiffs' complaint was untimely.
Plaintiffs cite to Pichel v. Hanover Insurance Cos., 155 Misc.
2d 746, 589 N.Y.S.2d 979 (1992), to support the proposition that
their loss actually occurred on April 19, 1993. In Pichel, the
trial court of Onondaga County, New York, ruled that the
commencement date for a two-year period of limitations for filing
suit on an insurance policy began on the date when the full extent
of loss of income could be ascertained, not on the date when the
actual physical loss occurred. Pichel, 155 Misc. 2d at 748, 589 N.Y.S.2d at 980. The court reached its decision after resolving
conflicting provisions in the policy in favor of the insured.
Pichel, 155 Misc. 2d at 748, 589 N.Y.S.2d at 980. We decline to
adopt the New York court's approach.
In the instant case, the fire completely destroyed plaintiffs'
building. Plaintiffs' losses, including future business proceeds,
could be adequately ascertained at the time of the fire. In
reaching this decision, we equate the situation in the present
cause with the business interruption scenario where the loss of
future net profits and necessary earned expenses are calculated at
a fixed point in time. See Cohen Furniture Co. v. St. Paul
Insurance Co., 214 Ill. App. 3d 408, 415, 573 N.E.2d 851 (1991)
(also interpreting a fire insurance policy for a retail business).
Furthermore, to adopt plaintiffs' position would be the equivalent
of adopting the discovery rule on damages, which states that the
limitation period for filing suit does not begin until the loss is
discovered. Wabash Power Equipment Co. v. International Insurance
Co., 184 Ill. App. 3d 838, 845, 540 N.E.2d 960 (1989). This
position has been consistently rejected by this court because to
hold otherwise would allow the insured to determine the time of
loss. See Wabash, 184 Ill. App. 3d at 845-46; Wilson, 150 Ill.
App. 3d at 672; Naghten v. Maryland Casualty Co., 47 Ill. App. 2d
74, 197 N.E.2d 489 (1964). Thus, for the purpose of determining
whether plaintiffs' complaint was timely filed, we find that
plaintiffs' loss occurred on April 19, 1992. Accordingly, the
circuit court properly dismissed the complaint as untimely pursuant
to section 2-619 of the Code of Civil Procedure. 735 ILCS 5/2-619
(West 1994).
Plaintiffs also contend that their complaint was filed timely
because their notice to defendant on the day of the fire was
sufficient to initiate the tolling of the one-year period in which
to file suit.
As noted above, defendant's insurance policy required the
insured to complete, among other items, the following two steps
after loss of property: (1) to provide immediate notice of loss to
defendant; and (2) to submit to defendant within 60 days after
requested a signed, sworn statement of loss. Here, plaintiffs
informed defendant of the loss on the day of the fire and submitted
their signed, sworn statement of loss on July 28, 1992. Plaintiffs
allege that the notice provided on the day of the fire was
sufficient to toll the time limitation on the filing of suit. We
disagree.
Section 143.1 of the Illinois Insurance Code provides the
following:
"Whenever any policy or contract for insurance ***
contains a provision limiting the period within which the
insured may bring suit, the running of such period is
tolled from the date proof of loss is filed, "in whatever
form is required by the policy", until the date the claim
is denied in whole or in part." (Emphasis added.) 215
ILCS 5/143.1 (West 1994).

It is well settled that if the terms of an insurance policy are
clear and unambiguous, the words of the policy will be given their
plain meaning. Vole v. Atlanta International Insurance Co., 172
Ill. App. 3d 480, 483, 526 N.E.2d 653 (1988); Giardino v. American
Family Insurance, 164 Ill. App. 3d 389, 391, 517 N.E.2d 1187
(1987).
In Davis v. Allstate Insurance Co., 147 Ill. App. 3d 581, 498 N.E.2d 246 (1986), the insured's policy required that, after a
loss, the insured submit a signed and sworn statement of loss.
Similar to the present case, a provision limiting the time period
for suits was included in the policy, and the relevant provisions
of the Illinois Insurance Code were in effect. The insured's house
was destroyed by fire on March 26, 1983, and the insured notified
the defendant insurance company on March 28, 1983. The insurance
company subsequently mailed the insured a letter dated April 11,
1983, directing her to comply with the terms and conditions of the
policy. On May 24, 1983, the insured submitted a sworn statement
of loss, and the insurance company denied the insured's claim on
December 12, 1983. On appeal, the insured maintained that the
initial notice provided on March 28, 1983, was sufficient to toll
the period for filing suit. This court disagreed, and while also
rejecting an argument unrelated to the present cause, this court
held:
"Plaintiff's sworn statement, the format of which
was in satisfaction of the policy's requirements, was
submitted to defendant on May 24, 1983. Defendant denied
the claim on December 12, 1983, thereby tolling the
limitation period for 202 days beyond the one-year
anniversary of the loss, or to October 13, 1984. Because
plaintiff did not bring suit until November 16, 1984, her
filing was untimely, and the trial court properly
dismissed her complaint." Davis, 147 Ill. App. 3d at
584.

We reach the same result here and find that plaintiffs' complaint
was untimely.
The Illinois Insurance Code provides that the period for
filing suit on a policy will be tolled once the insured files a
proof of loss in whatever form is required by the policy.
Plaintiffs' policy required that plaintiffs provide both immediate
notice of loss and submit a sworn, signed statement of loss.
Hence, the period of limitation for filing suit continued to run
until July 28, 1992, the date on which plaintiffs filed their sworn
statement of loss. The time period for filing suit was then tolled
until October 25, 1993, the date on which defendant denied
plaintiffs' claim; a period of 1 year and 89 days. Given that
plaintiffs' loss occurred on April 19, 1992, plaintiffs' complaint
had to be filed on or before July 18, 1994. Therefore, the
complaint filed on October 25, 1994, was untimely, and the trial
court's dismissal of plaintiffs' complaint was not in error.
For the above-stated reasons, the decision of the circuit is
affirmed.
Affirmed.
GREIMAN, P.J. and THEIS, J. concur.