COMPLAINT FOR DECLARATORY JUDGMENT - … · for its Complaint for Declaratory Judgment against Rena...

IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF ILLINOIS

Benton Division GRINNELL MUTUAL REINSURANCE ) COMPANY, ) ) Plaintiff, ) ) vs. ) No. 08-CV-892 DRH ) RENA SMITH, MICHAEL STIFLE, ) ROGER OSBORN, and TAMMY WOOD ) as administrator of the Estate of Harry ) Yargus, deceased, ) ) Defendants. )

COMPLAINT FOR DECLARATORY JUDGMENT NOW COMES the Plaintiff, Grinnell Mutual Reinsurance Company, a

corporation, hereafter “Grinnell”, by its attorneys, Brandon, Schmidt & Goffinet, and

for its Complaint for Declaratory Judgment against Rena Smith, Michael Stifle,

Roger Osborn and Tammy Wood, as administrator of the Estate of Harry Yargus,

deceased, states as follows:

GENERAL FACTUAL ALLEGATIONS

1. Grinnell Mutual Reinsurance is an Iowa corporation with its principal

place of business in Grinnell, Iowa.

2. Defendant, Rena Smith at all relevant times was and is a citizen and a

resident of Hutsonville, Illinois 62433.

3. Defendant, Michael Stifle, at all relevant times was and is a citizen of

Illinois and a resident of Robinson, Illinois.

4. Defendant, Rodger Osborn, at all relevant times is and was a citizen of

Illinois and a resident of Robinson, Illinois.

Case 3:08-cv-00892-DRH-DGW Document 2 Filed 12/17/08 of 10 Page ID #4

5. The decedent, Harry S. Yargus, at all relevant times was a citizen of

the State of Illinois and his estate is being probated in the Circuit Court of the

Second Judicial Circuit, Crawford County, Illinois No. 07-P-41.

6. Tammy Wood, who is the administrator of the estate of Harry S.

Yargus, deceased, is a citizen of Missouri and resides in Warrenton, Missouri 63383.

7. Rena Smith, on May 29, 2007 was insured under a Farm-Mate/Farm-

Guard policy number 33542-FC, a copy of which is attached hereto and marked

Exhibit A, under which Grinnell provided liability coverage under the Farm Guard

policy. Property damage coverage only was provided by Central Illinois Mutual

Insurance Company under the Farm Mate policy which said coverage is not involved

in this litigation.

8. On said date, there was a gas explosion and fire at an apartment

building located at 204 North Jackson Street in Robinson, Crawford County, Illinois.

9. As a result of said explosion and fire, Michael Stifle, who resided as a

tenant in apartment number 3-A at said location was injured.

10. Michael Stifle has filed a lawsuit for his injuries and damages which he

alleges exceed $75,000 against Rena Smith and others in Crawford County Circuit

Court in a suit styled “Michael Stifle v. A. J. Mason, Inc., Five Star Management,

Inc., Rena Smith and Central Illinois Public Service Company, d/b/a Ameren CIPS,

No. 07-L-8.

11. A copy of the Amended Complaint in said suit is attached hereto and

marked Exhibit B.

12. In said suit, Michael Stifle alleges that Rena Smith “acted in her

individual capacity and as agent of Mason and Five Star Management, Inc., (Five

Star). That Mason, Five Star and Rena Smith acted jointly in the management and


maintenance of the business enterprise of the apartment complex at 204 North

Jackson Street.” (Amended Complaint Count I paragraph 5).

13. As a result of said explosion and fire, Rodger Osborn, who resided as

a tenant in apartment number 5-A at said location was injured.

14. Rodger Osborn has filed a lawsuit for his injuries and damages which

he alleges are in excess of $50,000 against Rena Smith and others in Crawford

County Circuit Court in a suit styled “Rodger L. Osborn v. A. J. Mason, Inc., Five

Star Management, Inc., and Rena Smith, No. 08-L-1.

15. A copy of the Complaint in said suit is attached hereto and marked

Exhibit C.

16. In said suit, Rodger Osborn alleges that “at all relevant times Rena

Smith (Smith) acted in her individual capacity and as an agent of Mason and Five

Star Management, Inc., (Five Star). That Mason, Five Star and Rena Smith acted

jointly in the management and maintenance of the business enterprise of the

apartment complex at 204 North Jackson Street.” (Complaint Count I paragraph 4)

17. As a result of said explosion and fire, Harry L. Yargus, who resided as

a tenant in apartment number 3-A at said location was injured and subsequently

died.

18. Tammy Wood, Individually and as Administrator of the Estate of Harry

L. Yargus, deceased, has filed a lawsuit for his injuries and damages which she

alleges are in excess of $50,000 against Rena Smith and others in St. Clair County

Circuit Court in a suit styled “Tammy Wood, Individually and as Administrator of the

Estate of Harry L. Yargus, deceased v. A. J. Mason, Inc., Rena Smith, Heritage, Five

Star Management, Inc., and Central Illinois Public Service Company, d/b/a Ameren

CIPS, No. 08-L-33.


19. A copy of the Complaint in said suit is attached hereto and marked

Exhibit D.

20. In said suit, Tammy Wood alleges that Rena Smith “was the owner of

A. J. Mason, Inc. (Complaint paragraph 8); was the owner of Heritage (Complaint

paragraph 11); and that Smith was the president, secretary and registered agent of

Five Star Management, Inc. (Complaint paragraph 14).

21. Said Grinnell policy number 33542-FC states a policy limit of

$1,000,000 per occurrence for liability claims.

22. The amount in controversy considering the claims of each of the

Plaintiffs clearly exceeds $75,000.

23. This Complaint for Declaratory Judgment is brought pursuant to

Federal Rules of Civil Procedure 13 and 28 U.S.C. Section 2201.

24. Jurisdiction of this Court is respectfully asserted based upon diversity

of citizenship and the amount in controversy exceeding the sum of $75,000 pursuant

to 28 U.S.C. Section 1332.

LEGAL ALLEGATIONS 25. Said policy of insurance issued by Grinnell to Renee Smith contains

the following pertinent provision entitled “Exclusions – Under Any Of The

Coverages”:

5. “We” do not cover “bodily injury” or “property damage” arising out of any premises:

a. owned by any “insured person”; b. rented or leased to any “insured person”; c. rented or leased to another person or entity by any

“insured person”; or d. in the care, custody or control of any “insured person”;


which is not an “insured premises”.

However, “we” will cover “bodily injury” to any “residence employee” or “farm employee” arising out of and in the course of employment by an “insured person”. (Farm-Guard Policy GMRC 2210P 7-97, page 5)

26. Based on said exclusion, Grinnell has no duty to cover “bodily injury”

occurring on premises that are owned, rented, or leased by Rena Smith which is not

an “insured premises”. In the Definitions Section of said policy “insured premises” is

defined as follows:

10. “Insured premises” means:

a. the farm premises which “you” own, rent or operate and other locations “you” maintain as a “residence premises”;

b. any other premises acquired by “you” in the policy period

which “you” intend to use as a “residence premises”; c. any part of premises which are not owned by an “insured

person” but where the ”insured person” may be temporarily residing or which an “insured person” may occasionally rent for non-business purposes;

d. vacant land, other than farmland, owned by or rented to

an “insured person”; e. cemetery plots or burial vaults owned by an “insured

person”; f. any structures or grounds used by “you” in connection

with “your” residence premises”; or g. land on which a single family or two family residence is

being built for “you”, if the land is owned by or rented to “you”.

(Farm-Guard Policy GMRC 2210P 7-97, page 2)

27. Each Complaint filed against Rena Smith alleges that she and Five

Star Management, Heritage, and A. J. Mason, Inc. possessed an ownership and/or


management interest in the apartment building located at 204 North Jackson Street

in Robinson, Illinois, i.e. “That Mason, Five Star, and Rena Smith acted jointly in the

management and maintenance of the business enterprise of the apartment complex

at 204 North Jackson Street” (Stifle Amended Complaint Count I paragraph 5); that

Mason, Five Star, and Rena Smith acted jointly in the management and

maintenance of the business enterprise of the apartment complex at 204 North

Jackson Street (Osborn Complaint Count I paragraph 4); and that A. J. Mason, Inc.

owned and operated the North Jackson Street apartments . . . Rena Smith . . . was

the owner of A. J. Mason, Inc. . . . Defendant Heritage participated in the

management and operation of the North Jackson Street apartments . . . Rena Smith

was the owner of Heritage. . . Five Star Management, Inc. participated in the

ownership, management, and operation of the North Street Jackson apartments. . .

Rena Smith was the president, secretary and registered agent of Five Star

Management”. (Estate of Yargus Complaint paragraphs 7, 8, 10, 11, 13 and 14.)

28. The apartment premises located at 204 North Jackson Street in

Robinson, Illinois does not constitute an “insured premises” as that phrase is defined

in the policy because said apartment complex is not Rena Smith’s farm premises,

nor the place where she resides, nor it is vacant land or a cemetery plot, nor a

structure connected to Rena Smith’s residential premises, nor under construction for

use as a family residence.

29. All of the Complaints allege that the premises at 204 North Jackson

Street in Robinson, Illinois was a “business enterprise” (Stifle and Osborn

Complaints) “containing multiple rental units” (Estate of Yargus Complaint) which

were leased or rented to tenants.


30. The Declarations Page of said policy explicitly states that the location

of the dwelling which is insured under said policy is located at 16490 North 1470

Fifth Street, Hudsonville, Illinois. (See Declarations Page of Policy 33542-FC).

31. Based upon the aforesaid allegations in said Complaints and upon said

policy, Grinnell has no duty to either defend or indemnify Rena Smith in any or all of

the three lawsuits filed against her.

32. In addition, said Farm Guard policy does not provide coverage for any

type of business activity that generates more than $2,000 in compensation for an

insured during the year.

33. Exclusion 4 of said policy provides in pertinent part:

4. “We” do not cover “bodily injury” or “property damage” arising out of “business” activities of any “insured person” when the total gross receipts from the “business” activities exceed $2,000 in the prior calendar year.

(Farm-Guard Policy GMRC 2210P 7-97 page 5)

34. The ownership, management, or renting of apartments to tenants

constitutes a “business” activity under the policy.

35. In the Definitions Section of said policy, the term “business” is defined

as follows:

4. a. Business” means:

1) any full or part time trade, profession or occupation;

2) incidental activities conducted by any “insured

person” if gross receipts are more than $2,000 in the prior calendar year from the incidental activities; or

3) the rental or holding for rental of any premises by

any “insured person”. b. But “business” does not mean:


1) “farming”; 2) occasional rental or holding for rental of the

“residence premises” for use as a dwelling; 3) rental or holding for rental of part of the “residence

premises” for use as a dwelling, unless the rental is to more than three individuals or one family unit;

4) rental or holding for rental of part of the “residence

premises as a garage to be used for other than “business” purposes;

5) rental or holding for rental of a farm dwelling on an

“insured premises”, other than the “residence premises”; or

6) newspaper delivery, caddying, baby-sitting, lawn

care, and similar incidental activities conducted by any “insured person” under the age of 18.

(Farm-Guard Policy GMRC 2210P 7097 page 1)

36. The activities attributed to Rena Smith in the aforesaid Complaints

regarding the rental of said apartments constitutes the rental or holding for rental of

premises by an insured person which constitutes a business under said definition.

37. In addition, the allegations in the Complaints of ownership and

management of the various corporations owning or controlling the apartment

building at 206 North Jackson Street, Robinson, Illinois constitutes “a full or part-time

trade or profession or occupation” by Rena Smith as defined in said policy.

38. Further, Rena Smith’s activities as owner and/or manager of said

apartments located at 204 North Jackson Street, Robinson, Illinois generated more

than $2,000 per year in gross receipts in the year immediately preceding the

occurrence alleged in said Complaints and constituted a “full or part-time trade,

profession or occupation” on the part of Rena Smith.


39. Because the activities and/or ownership interest of Rena Smith

constituted a business activity as defined by said policy, Grinnell has no duty to

either defend or indemnify Rena Smith in any or all of the three lawsuits filed against

her.

40. In addition, in the section of said Farm Guard policy entitled

“Exclusions – Under Any Of The Coverages”, exclusion number 16 states:

16. “We” do not cover “bodily injury” or “property damage” arising out of any act or omission of any “insured person” as an officer, director, trustee, member or agent of any corporation or other organization, not listed as an “insured person” on the declarations, unless:

a. the corporation or organization if a not-for-profit entity

which is not subject to either state or federal taxation; b. the “insured person” serves without compensation from

the corporation or organization; c. the act or omission of the “insured person” was within the

scope of the insured person’s responsibilities as an officer, director, trustee, member or agent of the corporation or organization; and

d. the act or omission of the “insured person” does not

constitute intentional, willful, wanton or reckless conduct.

(Farm-Guard Policy GMRC 2210P 7-97 page 6) 41. Each of the aforesaid Complaints alleges that Rena Smith is an officer,

employee and/or agent of A. J. Mason, Inc., Five Star Management, Inc. and/or

Heritage, Inc. and performed duties on their behalf in managing and renting of

apartments located at 204 North Jackson Street, Robinson, Illinois.

42. None of the aforesaid corporations are listed on the Declarations Page

as an “insured person”, and accordingly any act or omission that Smith took while

acting on behalf of any and all said corporations is excluded from coverage because


none of the corporations were not-for-profit corporations, and Rena Smith was

compensated for acting on behalf of said corporations.

43. Based on the aforesaid, Grinnell has no duty to either defend nor

indemnify Rena Smith in any or all of the three lawsuits filed against her.

WHEREFORE, Plaintiff, Grinnell prays as follows:

A. That this Court find it has jurisdiction over the parties and subject

matter described in this Complaint for Declaratory Judgment.

B. That this Court find or declare that Grinnell has no contractual or other

obligations to provide a defense or indemnification for Rena Smith for any injuries or

damages which either Michael Stifle, Roger L. Osborn or Tammy Wood, Individually

and as Administrator of the Estate of Harry L. Yargus, deceased, incurred as a result

of the alleged malfunctioning water heater which allegedly caused an explosion and

fire at the apartments located at 204 North Jackson Street, Robinson, Illinois on May

29, 2007.

C. For such other relief as may be just and proper.

Respectfully submitted, /s/ Wm. Kent Brandon # IL. REG. NO. 00278742 916 West Main St. P.O. Box 3898 Carbondale, IL 62902 Phone: (618) 549-0777 Fax: (618) 457-4691 E-mail: [email protected]


mailto:[email protected]

Case 3:08-cv-00892-DRH-DGW Document 2-1 Filed 12/17/08 Page 1 of 1 Page ID #14

COMPLAINT FOR DECLARATORY JUDGMENT - … · for its Complaint for Declaratory Judgment against Rena...

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