After the U.S. District Court for the Northern District of Illinois ruled that an attorney’s letter to an assisted living facility regarding negligence qualified as an insurance claim, the U.S. Court of Appeals for the Seventh Circuit dismissed the appeal of the case because the case was settled out of court. In Church Mutual Insurance Company v. Frontier Management, LLC (7th Cir. No. 24-1900, January 2, 2025).
In January 2021, 87-year-old Bertrand Nedoss wandered out of his assisted living facility in suburban Chicago, developed hypothermia, and died of cardiac arrest. His estate filed suit in state court, raising negligence and wrongful-death claims against Welltower Tenant Group, the facility’s owner, and Frontier Management, LLC, its operator.
Welltower and Frontier were insured by Church Mutual Insurance Company under primary and umbrella policies providing defense and indemnity coverage on a claims-made basis between July 1, 2020, to July 1, 2021. The primary policy covered claims “first made … during the policy period.” The term “claim” as defined in the policy is a “suit or demand made by or for the injured person for monetary damages.”
Mr. Nedoss’s estate filed suit in October 2021, more than three months after the policy expired, raising claims of negligence and wrongful death. However, nine days after Mr. Nedoss’s death, in January 2021, an attorney for the Nedoss family had sent written notice to Welltower and Frontier that his firm had been retained in connection with “personal injuries and related malpractice” at the assisted living facility. The letter claimed an attorney’s lien under Illinois law and demanded that evidence be preserved.
Since the attorney’s January letter was within the policy period, Welltower and Frontier tendered suit to Church Mutual. Church Mutual denied coverage but provided a defense while reserving the right to have a court determine its policy obligations. It then filed a lawsuit seeking a declaratory judgment that it owed no duty to defend or indemnify Welltower and Frontier. Church Mutual argued that the lawyer’s January letter was not a claim, as defined in the policy. Welltower and Frontier counterclaimed for declaratory judgement, breach of contract, and breach of the implied covenant of good faith and fair dealing.
The district court concluded that the attorney’s letter qualified as a claim under the policy and entered partial summary judgement for Welltower and Frontier, triggering Church Mutual’s duty to defend its insureds in the underlying state lawsuit. The judge granted Welltower and Frontier’s request to stay the rest of the federal case pending the outcome of the state lawsuit.
Church Mutual appealed the stay order and asked the appellate court to review and reverse the partial summary judgment. However, before the oral argument was scheduled to take place, Welltower and Frontier settled with Mr. Nedoss’s estate and the state case was dismissed.
The settlement in the state case moots Church Mutual’s appeal for the stay order. The stay order was the only possible basis for appellate jurisdiction. The partial summary judgment is not a final order. Though the district court judge’s stay order evaporated with the dismissal of the state case, the coverage dispute is ongoing. The circuit court dismisses the appeal of the stay order as moot.
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