Hanover Ins. Co. v. R.W. Dunteman Co.

Hanover Ins. Co. v. R.W. Dunteman Co.

Opinion

 [*781]  Sykes, Chief Judge. This insurance-coverage dispute arises from a conflict among family members over ownership interests in the family's construction business located in Addison, Illinois. Jane Dunteman, the matriarch, held a minority stake in Du-Kane Asphalt Company and Crush Crete, Inc., two companies owned and operated by her husband, Paul Dunteman Sr., and other family members. The couple divorced [**2]  in 2009, and Jane died in March 2017. Paul died six months later.

Jane's death spawned litigation in state court over the size of her interest in the family business; her estate sued the companies and her sons, Paul Jr., Jeffrey, Roland, and Matthew Dunteman. The four  [*782]  Dunteman brothers are the majority shareholders and officers and directors of the companies. Their sister, Audrey, as the personal representative of her mother's estate, alleged that Jane's ownership interest was wrongfully diluted after their parents divorced.

All six codefendants were insured under consecutive "claims made" liability policies issued in 2017 and 2018 by The Hanover Insurance Company to R.W. Dunteman Company, an affiliated family business. The distinguishing feature of "claims made" insurance, as the name suggests, is that the insured must notify the insurer of a "claim" in the same policy period in which it is first "made." ] If a claim goes unreported in the relevant policy period, then the insurer owes no duty to defend or indemnify.

The estate filed its suit in August 2017. The wrinkle is that the original complaint sought a declaratory judgment and named only Du-Kane Asphalt as the defendant, though the [**3]  allegations concerned the brothers' actions as officers, directors, and shareholders. In an amended complaint filed in July 2018, the estate broadened its factual allegations and added Crush-Crete and the Dunteman brothers as codefendants. At that point the insureds first notified Hanover and sought coverage under the 2018 policy.

Hanover denied the request because the claim was first made in 2017 and had not been timely reported during that policy period. After denying coverage, Hanover filed suit in federal court seeking a declaration that it owes no defense or indemnity. The insureds counterclaimed for breach of contract. The district court entered judgment for Hanover.

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