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Madison Mut. Ins. Co. v Diamond State Ins. Co.

851 F.3d 749 (7th Cir. 2017)

Words & Phrases

Professional Liability Policy: In General

Trial Judge

J. Phil Gilbert

Appellate Judge



Neighbor's pattern of harrassment, intimidation and interference with property rights did not relate to insured’s profession as real estate broker.

Fact Summary

The Dribbens purchased a home from Todd and Sherry Favre on 42 acres in an exclusive four-parcel development known as Heartland Oaks, in Southern Illinois not far from Saint Louis, Missouri.  Davidson represented the Favres in that purchase.  Davidson had also conceived of and was one of the developers of Heartland Oaks, and she and her husband owned one of the four parcels in the development.  At the center of the development is a 30-acre artificial lake, and the dam creating that lake is located on the parcel that the Dribbens purchased.  In a 2006 lawsuit filed by the Dribbens against Davidson and the other original owners in the development, the Dribbens alleged that Davidson had failed to disclose that the original owners/developers had never obtained a permit from the Illinois Department of Natural Resources (“IDNR”) authorizing the dam.  The 2006 suit alleged, inter alia, that Davidson’s non-disclosure amounted to fraudulent concealment and consumer fraud.

Davidson tendered the suit to Diamond State, which had issued a professional liability errors and omissions policy to her effective from October 2005 through October 2006 and extended by endorsement to November 22, 2007.  The Diamond State policy applied to claims made and reported during the policy period and provided coverage for “wrongful acts arising out of the performance of professional services for others.”