Nagel-Taylor Automotive Supplies, Inc. v. Aetna Casualty & Surety Co.
Illinois Appellate Court
81 Ill. App. 3d 607, 37 Ill. Dec. 412, 402 N.E.2d 302 (1980)
Marvin Taylor was the sole owner of Nagel-Taylor Automotive Supplies, Inc. (collectively, Taylor) (plaintiffs). Taylor owned a nightclub near a small town in Illinois. Less than a year after Taylor opened the nightclub, a fire occurred at the nightclub. Aetna Casualty & Surety Co. (Aetna) (defendant) provided fire insurance for the nightclub property, and the insurance contract covered business-interruption loss. The contract contained a false-swearing clause that voided coverage if the insured “willfully concealed or misrepresented any material fact or circumstance concerning this insurance or the subject thereof . . . or in case of any fraud or false swearing by the insured relating thereto.” Taylor filed an insurance claim with Aetna for property loss and for business-interruption loss. In support of his claim, Taylor submitted a verified, written proof of loss to Aetna, in which Taylor estimated that the nightclub’s loss of gross earnings for a year was $100,000. Aetna challenged the loss and raised a question about whether Taylor had set the fire. Taylor then filed a lawsuit against Aetna for insurance coverage. At trial, the evidence demonstrated that the nightclub had an operating deficit of $17,000 during the months it was open. Aetna presented testimony from an accountant, who stated that the nightclub’s financial records showed no loss from business interruption. In response, Taylor testified that shortly before the fire, the nightclub had reduced expenses and that he expected the reduction of expenses to result in profits for the nightclub. The jury awarded damages to Taylor for property loss, but not for business-interruption loss. Aetna sought a judgment notwithstanding the verdict (JNOV). The trial court granted the JNOV and ruled that Taylor could not recover on the policy because Taylor had engaged in fraud and false swearing with regard to the business-loss estimate in the proof of loss. Taylor appealed, and Aetna filed a cross-appeal.
Rule of Law
Holding and Reasoning (Green, J.)
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