Industrial Enclosure Corporation (IEC), Aurora, Illinois, manufactured industrial boxes. Its agent, Glenview Insurance Agency (Glenview), was located in Glenview, Illinois. They began doing business together in 1992 when Glenview wrote IEC's property with Chubb Insurance Company (Chubb). Flood coverage was discussed many times but IEC decided not to purchase it because it had never been flooded, although it had concerns about sewer backup and runoff. Glenview got a competitive quote from Amerisure in 1996 that Chubb was not willing to meet. It also got a quote from The Maryland Insurance Group/Northern Insurance Company (Maryland). Maryland lowered its premium and wrote the business. Glenview later testified that it expected the coverage limits to be comparable to or better than Chubb's.

On July 17 and 18, 1996, the Aurora area received more than 17 inches of rain. IEC sustained extensive damage to its building and equipment. The Maryland adjuster determined that the damage was caused by floodwater and surface water and was not covered. IEC believed the damage inside the building was caused by sewer backup and hired experts to prove it. It submitted a proof of loss to Maryland on November 25, 1996 in the amount of $2,294,704.51, contending that the loss was caused by water backup and overflow from a sewer, drain, and/or sump pump, all covered by the Maryland policy. Maryland denied coverage and IEC brought suit. A federal court jury returned a verdict against Maryland and awarded IEC $1,100,000 in damages, designating $167,000 of it as lost profits. Maryland did not appeal the verdict.

IEC then sued Glenview to recover attorney fees and costs in the federal litigation and lost profits and other expenses not recovered in the federal action. It claimed Glenview breached its duty to provide the desired insurance coverage and that Glenview was negligent in the policy provided. The jury found for IEC and awarded damages of $567,162. Glenview moved for a judgment notwithstanding the verdict (a motion to enter judgment according to the movant's earlier motion for a directed verdict and notwithstanding the contrary verdict actually returned by the jury). It argued that the court mistakenly denied its motion for a directed verdict because Glenview was not the proximate cause of IEC's damages and it owed no duty to interpret the Maryland policy with respect to the term "surface water." The trial court granted the motion and held that the proximate cause of IEC's damages was Maryland's wrongful denial of IEC's claim and not any act by Glenview. It also ruled that Glenview had no duty to inform IEC that Maryland might determine that flooding caused by surface water could or would nullify the sewer drain coverage. IEC appealed.

A judgment notwithstanding the verdict is granted only when all evidence, viewed in favor of the non-moving party, favors the movant to the extent that no contrary verdict based on that evidence can stand. The Maryland policy covered damage caused by water that backs up from a sewer, drain or sump, the concern expressed by IEC, and Glenview had presented IEC with a coverage comparison demonstrating it. In an action for negligence, IEC must have established that Glenview owed it a duty of care that was breached and that was the proximate cause of the loss. IEC contended that Glenview should have anticipated Maryland's denial based on the surface water exclusion. However, nothing in the record supported IEC's contention that Glenview had a duty to advise it that the exclusion would nullify the sewer backup coverage. In addition, there was no evidence that such notification would have been known of by an insurance agent exercising requesite competency and skill placed on it by law. IEC sought to impose duties beyond those required by state law. IEC bore the burden of reading and understanding the insurance policy and there was no evidence that Glenview was negligent in presenting the Maryland policy to IEC. The judgment of the trial court was affirmed.

Appellate Court of Illinois, First District, First Division. Industrial Enclosure Corporation, an Illinois Corporation, Plaintiff-Appellant v. Glenview Insurance Agency, Inc., an Illinois Corporation, Defendant-Appellee. No. 1-05-0783. Feb. 11, 2008. 379 Ill.App.3d 434, 884 N.E.2d 202, 318 Ill.Dec.647