Declaratory Relief Granted to Insurer

Post number 5294

Suit for Defective Windows Excluded from Insurance

See the video at https://rumble.com/v769fsk-no-duty-to-defend-when-exclusion-applies.html  and at https://youtu.be/F8sBTHNS31s

In Acuity v. Marion Glass And Mirror, Inc., No. 3:25-CV-00562-NJR, United States District Court, S.D. Illinois, Acuity, a mutual insurance company based in Wisconsin, filed a Complaint for Declaratory Judgment in the United States District Court for the Southern District of Illinois. Acuity sought a declaration that it has no duty to defend or indemnify its insured, Marion Glass and Mirror, Inc. (“Marion Glass”), in connection with a Third-Party Complaint brought by Samron Midwest Contracting, Inc. (“Samron”) in Williamson County.

Facts

The underlying lawsuit, filed in June 2023, involved allegations of property damage at the City of Marion’s Community Recreational Center due to allegedly faulty construction work performed by Samron and Marion Glass.

Law

The relevant insurance contract was Policy No. ZH5256, a commercial insurance policy with occurrence-based Business Liability coverage, issued by Acuity to Marion Glass for the period December 30, 2020, to December 30, 2021.

Discussion and Analysis

The central issue presented to the USDC was whether Acuity was obligated under the policy to defend or indemnify Marion Glass in the underlying suit regarding alleged construction defects. The policy language and the nature of the claims in the underlying lawsuit were key to this determination.

As contracts, insurance policies are assessed using ordinary principles of contract interpretation. A court’s “primary objective is to ascertain and give effect to the intention of the parties, as expressed in the policy language.

Illinois law provides that the insurer’s duty to defend arises when the facts alleged in the underlying complaint fall within, or potentially within, the policy’s provisions. An insurer’s duty to defend is broader than its duty to indemnify. For that reason, the duty arises not just when the allegations of the underlying complaint fall within the policy’s coverage, but also when those allegations “potentially” fall within that coverage.

The Court reviewed the pleadings and the insurance policy provisions to assess whether the claims asserted against Marion Glass are covered by the policy, or whether any exclusions apply. Acuity argued that the claims arose from faulty workmanship, which fell under policy exclusions for property damage resulting from the insured’s own work.

Marion Glass did not appear or respond, and Acuity moved for default judgment.

Regardless, the Court considered whether Acuity’s allegations and the uncontested evidence supported granting declaratory relief. The analysis focused on whether the policy’s coverage provisions or exclusions unambiguously precluded coverage for the damages alleged in the underlying action.

Conclusion

The USDC concluded that Acuity owed no duty to defend or indemnify Marion Glass under the Business Liability, Errors and Omissions, or Commercial Excess Liability coverage provisions of Policy No. ZH5256 with respect to the underlying litigation. The litigation, the City of Marion, Samron, and Marion Glass, styled The City of Marion v. Baysinger Architects, LLC et al, Case No. 2023 LA 52, pending in the Circuit Court for Williamson County, Illinois was based on a situation and facts excluded.

The Court found that Acuity demonstrated it is entitled to a declaratory judgment as a matter of law, given the facts presented and the lack of opposition from Marion Glass.

Accordingly, the Court granted Acuity’s Motion for Default Judgment, declaring that Acuity had no duty to defend or indemnify Marion Glass with respect to the claims in the underlying lawsuit.

ZALMA OPINION

No insurance policy covers every possible risk of loss. Acuity excluded property damage resulting from the insured’s own work. The insured, recognizing the exclusion was clear and unambiguous did not participate in the declaratory relief action and the court found its default, coupled with the exclusions, was sufficient to allow a judgment in favor of the insurer.

(c) 2026 Barry Zalma & ClaimSchool, Inc.

Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos.

Subscribe to my substack at https://barryzalma.substack.com/subscribe

Go to X @bzalma;  Go to Barry Zalma videos at Rumble.com at https://rumble.com/account/content?type=all; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the InsuranceClaims Library – https://lnkd.in/gwEYk.