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Chicago double LODD 12-22-10 (more)
In a recent decision by the 7th Circuit Court of Appeals, a significant legal battle has unfolded involving Apex Mortgage Corporation and its relationship with a tragic incident that claimed the lives of two Chicago firefighters. At the heart of the dispute is whether Apex Mortgage can be considered a "mortgagee in possession" under the terms of an excess liability policy issued by a Chubb subsidiary, Great Northern Insurance Company.
The case began when two firefighters, Corey Ankum and Edward Stringer, lost their lives while responding to a fire at an abandoned laundry located at 1738-1744 East 75th Street in Chicago. The property, once home to the Sing Way Commercial Shirt Service, had fallen into disrepair and was left vulnerable to the elements. The building's owners, Chuck and Richard Dai, had defaulted on their mortgage, prompting Apex Mortgage to consider foreclosure. However, instead of proceeding with foreclosure, Apex opted to return the deed to the Dais after inspecting the property, installing new locks, and placing a tarp over the damaged roof.
Despite these efforts, the property remained unsecured, and the tragedy occurred when the roof collapsed during firefighting operations. The families of the deceased firefighters subsequently filed wrongful death lawsuits against Apex Mortgage, which ultimately settled for $15 million. Apex's primary insurer, Great Northern, paid out the maximum policy limit of $1 million, leaving Apex to seek recovery of the remaining $14 million from its excess insurer, Federal Insurance Company.
Federal argued that Apex was excluded from coverage due to the "mortgagee in possession" clause. District Court Judge Virginia M. Kendall initially sided with Federal, concluding that Apex was indeed in possession of the property at the time of the fire. However, the 7th Circuit Court reversed this decision, emphasizing that questions remained regarding Apex's actual control over the property. The court noted that Chuck Dai had taken some steps to address the city's concerns about the property's condition, such as boarding it up, but failed to complete necessary repairs, leading to criminal charges.
Federal further contended that Apex had implicitly admitted its role as a possessor through the settlement agreement. Yet, the appellate court dismissed this claim, asserting that settlements do not constitute definitive rulings or admissions of liability. Instead, settlements are agreements based on various factors unrelated to legal findings.
This complex case highlights the nuances of insurance law and property management responsibilities. With the case now remanded back to the district court, further litigation seems inevitable. The implications could redefine how mortgage companies handle foreclosed properties and their potential liabilities in such scenarios.