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Lexington Insurance Co. v. Chicago Flameproof & Wood Specialties Corp.

950 F.3d 976 (7th Cir. 2020)

Words & Phrases

Occurrence: In General

Trial Judge

Elaine Bucklo

Appellate Judge



Where insured had deliberately shipped uncertified (instead of certified) lumber and concealed said fact did not allege “occurrence” or “accident.”

Fact Summary

Lexington filed this declaratory judgment action, seeking a ruling that it owes no duty to defend Chicago Flameproof for the conduct alleged in the underlying complaints. The dis­trict court entered summary judgment for Lexington, holding that if “Flameproof knowingly supplied non-IBC-compliant lumber and concealed that it did so,” as the underlying com­plaints assert, “then the property damage that allegedly re­sulted from tearing out that non-compliant lumber cannot be said to have been caused by an accident. Rather, these dam­ages are the natural and ordinary consequence of knowingly supplying a non-compliant product and thus do not poten­tially fall within the [] policy’s coverage.”

Chicago Flameproof now appeals the district court’s entry of summary judgment for Lexington, arguing that Lexington must defend it because Chicago Flameproof’s shipment of lumber and the tearing out of that lumber were occurrences that caused property damage. Lexington responds that the underlying complaints do not trigger its duty to defend be­cause the complaints do not allege property damage caused by an occurrence, and that coverage is otherwise excluded by the insurance policy’s business risk exclusions.