Insurance – Breach of Policies and Bad Faith

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7^th Circuit Court of Appeals

Case Name: Atlantic Casualty Insurance Company v. Juan Garcia, et al.

Case No.: 17-1224

Officials: BAUER and HAMILTON, Circuit Judges, and DARROW, * District Judge.

Focus: Insurance – Breach of Policies and Bad Faith

Defendants-appellants, Juan and Maria Garcia (“the Garcias”), filed a claim with plaintiff appellee, Atlantic Casualty Insurance Company (“Atlantic”), for insurance coverage. Atlantic responded by seeking declaratory judgment. The Garcias replied with counterclaims for breach of the policies and bad faith for denial of their claim. The district court granted summary judgment in favor of Atlantic. The Garcias now seek reversal.

The Garcias argue that the “Claims in Process” exclusion is ambiguous. In so arguing, the Garcias state that the three parallel conditions following the phrase, “whether known or unknown,” could modify “any loss or claim for damages,” rather than “’bodily injury’ or ‘property damage,’” as the district court found. Accepting the Garcias’ interpretation would exclude coverage for a claim for damages that occurred or was in the process of occurring before inception of the policy. On the other hand, accepting the district court’s interpretation would exclude coverage for any injury or damage that occurred or was in the process of occurring before inception of the policy. We disagree with the Garcias and find the exclusion language unambiguous. Looking at the form of the exclusion, which states, “any loss or claim for damages arising out of or related to ’bodily injury’ or ‘property damage,’ whether known or unknown,” a comma would follow “claim for damages” if the exclusion sought to modify the timing of the claim rather than the damage. This would turn the “’bodily injury’ or ‘property damage’” into a dependent clause. If that were the case, the independent clause would read, “any loss or claim for damages, […] whether known or unknown,” and we would interpret it as the Garcias attempt to do here. With the omission of this comma, the “whether known or unknown” language clearly modifies what precedes it—“’bodily injury’ or ‘property damage.’” For the foregoing reasons, we AFFIRM the district court’s findings.

Affirmed

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Attorney Derek A. Hawkins is the managing partner at Hawkins Law Offices LLC, where he heads up the firm’s startup law practice. He specializes in business formation, corporate governance, intellectual property protection, private equity and venture capital funding and mergers & acquisitions. Check out the website at www.hawkins-lawoffices.com or contact them at 262-737-8825.