The estoppel argument is based on the deposition of Keith Arendt in which he claims
that he spoke to someone from Avemco on the phone sometime in May prior to the
accident and they allegedly told him the plane would be covered on the trip.
Defendants have provided no evidence or phone records to show that the call actually
occurred.

Itis Avemco’s policy to memorialize any such conversations conceming policy
coverage and no such conversation is listed on Avemco’s records. Arendt does not
deny that Avemco sent him a notice dated April 20, 2001 stating that his policy would
be cancelled on May 5, 2001 if his premiums were not paid, Nor does Arendt deny
that Avemco sent him a letter dated May 23, 2001 stating that the policy was “no
longer in force.” Arendt claims that he does not remember who he talked to or what
day it was. He states only that he believes that someone at Avemco told him his plane
would be covered for the trip. When asked if he had any sort of evidence to support
his claim that the call occurred, he replied that he did not. Also, after the accident on
June 1, 2001, counsel for Arendt contacted Avemco and indicated that Arendt would
be sending a money order to reinstate the policy, and on June 2, 2001 the money order
was sent to Avemco. Avemco returned the money order stating that the policy would

not be reinstated.



immaterial. Avemco has provided ample evidence from its underwriter and other
sources from which a reasonable jury would conclude that the misrepresentation was
material and affected the risk undertaken by Avemco.
CONCLUSION

Based on the foregoing analysis we grant the motion for summary judgment and
declare that Avemco has no duty to defend or indemnify Keith Arendt, Kent Arendt,
Executive Agent, [nc., or any other person or entity claiming to be covered under the
insurance policy concemming the 1961 Piper PA-24-250 aircraft which crashed on

May 28, 2001. Also, Policy No. NC-000107827700 is rescinded and void ab initio.

cp Qa f eco

Charles P. Kocoras
Chief Judge
United States District Court

Dated: November 6, 2002



May 23 letter confirmed the May 5 letter indicating that the policy was “no longer in
force.” Therefore, no reasonable jury could find for Arendt based on a confusion
caused by the receipt of multiple letters from Avemco in the months prior to the
accident.

Arendt also claims that there was confusion because Avemco allegedly told
Arendt that he had premium credits from premiums paid for Arendt’s other plane that
was no longer in use. Arendt also claims that it was not clear what premiums were
owed because Avemco improperly charged Arendt premiums and told Arendt not to
pay attention to statements mailed to him because Avemco was having computer
difficulties. To support these claims Arendt offers only his uncorroborated self-serving
testimony, Arendt also points out that Avemco applies premiums for thirty days even
though an aircraft may be flown for less than thirty days during the policy period. The
thirty day minimum requirement has been in effect for fifteen years and the standard
practice by Avemco is to notify a customer when he calls for short-term coverage that
the minimum charge would be for thirty days. Arendt has failed to offer evidence on
which a reasonable jury could find that there was a confusion as to what premiums

were owed or that any supposed confusion justifies estopping Avemco from asserting

that the policy was canceled.



We have before us ample evidence that Defendants followed all the prescribed
procedures of notification for cancelling the policy and that Arendt did not try to pay
the premiums until after the accident. On the other hand, we have an unsubstantiated
declaration by Arendt claiming that some person at Avemco told him at some point in
time that his policy was still valid and that he believed the person at Avemco, despite
the fact that Arendt had received notification of the cancellation of his policy.
Therefore, no reasonable jury could find for Defendants.

Arendt also argues that Avemco should be estopped because Avemco sent
multiple letters to Arendt prior to the accident which confused Arendt and made it
unclear as to whether the policy was cancelled. Avemco sent a letter to Arendt on
April 2, 2001 which dealt with the possible renewal of the policy. Avemco also sent
a letter dated April 3, 2001 to Arendt indicating a payment date of April 13, On
April 20, 2001 Avemco sent the notification of cancellation, informing Arendt that the
policy would be cancelled on May 5, 2001. Finally Avemco sent Arendt a letter dated
May 23, 2001, stating that policy “is no longer in force” and indicating that the amount
requested was the balance owed on the policy. The April 2 letter concerned a possible
renewal of the policy rather than the current payment of premiums. The April 3 letter
dealt with a premium payment due on April 13. When Arendt received the April 20,

letter he was clearly informed that the policy would be cancelled on May 5. The

-5-



that he had substantial flight hours. This allegation is corroborated by documents
submitted by Avemco such as an “approved pilots/pilot experience” form that shows
that Arendt had received his PVT and a “pilot details” record that lists Arendt as
having received his PVT and as having accrued substantial flight hours in retractable
gear aircraft. Arendt denies ever making any oral representations concerning his pilot’s
license or flight hours. Recently, in a deposition on March 13, 2002, Avemco
discovered that Arendt does not have a PVT and that in fact he is only a student pilot.

Arendt’s sole argument against the claim of fraud in its answer is that Avemco
waived its right to assert a fraud claim. Arendt bases this assertion on the fact that an
Avemco record dated October 7, 2000, states: “10.7.00 Keith said that he was owner
of a/c, but did not want to be listed as pilot . . ..” However, by asking not to be listed
on the policy as a pilot, Arendt did not inform Avemco that he did not have a PVT
license which would have been necessary to avoid the misrepresentation made on the
insurance policy application. See Anetsberger v. Metropolitan Life Ins. Co, 14 F.3d
1226, 1233 (7th Cir. 1994) (stating that a waiver is an intentional “relinquish[ment] of
a known right”).

Defendant Casper argues that the insurance application is ambiguous and that

the misrepresentation was not material. We do not agree that the application is unclear,

misleading or ambiguous. Neither do we agree that the misrepresentation was



Mite Onion Foren (O47)

United States District Court, Northern District of THinois

Name of Assigned Judge Charles P. Kocoras Sitting Indge If Other
or Magistrare Judge thun Assigned Judge
CASE NUMBER 01 C5918 DATE 11/6/2002
CASE Avemco Ins Co, vs, Arendt et al
TITLE

Ln the fotlowing box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3¢d party plaintiff, and (b) state briefly the nature
of the motion being presented. |

MOTION:

DOCKET ENTRY:

dQ) Oo Filed motion of [ use listing in “Motion” box above.]

Q@ a Brief in support of motion duc

(3) o Answer brief to motion duc__—- Reply to answer briefdue_____.

(4) a Ruling/Hearingon____ssetfor_— at

(5) ao Status hearing[held/continued to] [set for/re-set for]on__setfor___ at

(6) o Pretrial conference|held/continued to] [set for/re-set for]on___ssetfor__— at
(eo) o Trial[set for/re-sct for] on att

(8) Oo [Bench/Jury trial] [Hearing] held/continued to at __

(9) Oo This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]

OFRCP4(m) ClLocal Rule 41.1 OFRCP4I (a1) C) FRCP41(a)(2). -

(ao) «=x [Other docket entry] Ruling held. ENTER MEMORANDUM OPINION: We grant plaintiff's
motion (Doc 14-1) for summary judgment and declare that Avemco has no duty to defend or indemnify
Keith Arendt, Kent Arendt, Executive Agent, Inc. or any other person or entity claiming to be covered
under the insurance policy concerning the 1961 Piper PA-24-250 aircraft which crashed on May 28, 2001.
Also, Policy No. NC-000107827700 is rescinded and void ad initio.

ai) [For further detail see order attached to the original minute order,]

No notiees required, advised in open court.

No notices required. A
re number of notices

Notices mailed by judge's staff.

Notified counsel by telephone. date docketed

7 | Docketing to mail notices.

of | Mail AO 450 form. lunoo i on 4 sia a1) docketng deputy ints

Copy to judge/magistrate judge.

~ KON 20
courtroom gi :2 Wd 9 KON date ted pies
SCT deputy's
initials 3p
QL Usp hbrtnt received in
central Clerk’s Office railing deputy initials



Il. Fraudulent Misrepresentation

Avemco also claims that it has no duty to provide a defense or indemnify the
Defendants because Arendt obtained the policy through fraud. Under Illinois law a
misrepresentation by the insured shall not invalidate the policy unless: 1) the
misrepresentation is “stated in the policy or endorsement or rider attached thereto, or
in the written application therefore,” and 2) the “misrepresentation is made with actual
intent to deceive or materially affects either the acceptance or the risk or the hazard
assumed by the company.” 215 ILCS § 5/154 (emphasis added), Thus, even a
misrepresentation made in good faith without an intent to deceive can invalidate a an
insurance contract if the misrepresentation is a material one. Jd.; Golden Rule Ins. Co.
v. Schwartz, 751 N.E.2d 123, 128 (Ill. App. Ct. 2001). Under Illinois law a
misrepresentation is defined as a “statement of something as a fact which is untrue and
affects the risk undertaken by the insurer.” Ratcliffe v. International Surplus Lines Ins.
Co., 550 N.E.2d 1052, 1057 (Ill. App. Ct. 1990).

Arendt does not dispute that the insurance policy application he signed for the
policy that listed him as an “approved pilot” states that the applicant “represent[s] that
as of the date of [the] application” that “[e]ach approved pilot named has effective Pilot
and Medical Certificates and satisfies the FAA’s flight review requirements.” Avemco

also claims that Arendt orally stated that he had a private pilot’s license (“PVT”) and



in the pleadings, but, “by affidavits or as otherwise provided for in [Rule 56], must set
forth specific facts showing that there is a genuine issue for trial.” Fed. R.
Civ. P. 56(e). A “genuine issue” in the context of a motion for summary judgment is
not simply a “metaphysical doubt as to the material facts.” Matsushita Elec. Indus.
Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). Rather, a genuine issue of
material fact exists when "the evidence is such that a reasonable jury could return a
verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986); Insolia v. Philip Morris, Inc., 216 F.3d 596, 599 (7th Cir. 2000). The court
must consider the record as a whole in a light most favorable to the non-moving party
and draw al] reasonable inferences that favor the non-moving party. Anderson, 477
USS. at 255; Bay v. Cassens Transport Co., 212 F.3d 969, 972 (7th Cir. 2000).
DISCUSSION

I. Cancellation of Policy

Avemco claims that the Arendt’s policy was properly cancelled on May 5, 2001,
which was 23 days before the accident occurred. Arendt does not dispute Avernco’s
assertion that it followed the proper procedures and abided by the proper time
requirements for canceling the policy. Neither does Arendt claim that the premium was
paid prior to the policy cancellation. Instead Arendt argues that Avemco should be

estopped from claiming that the policy was cancelled prior to the accident on May 28.

-3-



crash. Defendant Nicolas Casper (“Casper”) brought a wrongful death and survival
action against Executive in the Circuit Court of Cook County, Illinois for the death of
Cindy Casper. Keith Arendt (“Arendt”) and Executive have demanded that Avemco
defend them from the claims asserted by Casper and provide coverage to them pursuant
to the provisions of an insurance policy issued to Arendt that was cffective April 2,
2001. Avemco brought this action to declare the rights of the parties with respect to
the policy.
LEGAL STANDARD

Summary judgment is appropriate when the record, viewed in the light most
favorable to the non-moving party, reveals that there is no genuine issue as to any
material fact and the moving party is entitled to judgment as a matter of law. Fed. R.
Civ, P, 56(c). In seeking a grant of summary judgment, the moving party must identify
“those portions of ‘the pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any’ which it believes demonstrate
the absence of a genuine issue of material fact.” Cefotex Corp. v. Catrett, 477 U.S.
317, 323 (1986) (quoting Fed. R. Civ. P. 56(c)). This initial burden may be satisfied
by presenting specific evidence on a particular issue or by pointing out “an absence of

evidence to support the non-moving party’s case.” Celotex, 477 U.S, at 325. Once the

movant has met this burden, the non-moving party cannot simply rest on the allegations



UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS ~=——sQCKETED
EASTERN DIVISION av 07 2002

AVEMCO INSURANCE COMPANY,
Plaintiff,

vs. 01 C 5918
KEITH ARENDT; THE ESTATE OF KENT
ARENDT, deceased; EXECUTIVE AGENT,
INC., an Illinois corporation, NICHOLAS R.
CASPER, Special Administrator of the Estate of
Cindy D. Casper, deceased; and THE ESTATE
SYLVIA ORDONEZ, deceased.

NS SS SS ee ew

Defendants.

MEMORANDUM _OPINION
CHARLES P,. KOCORAS, Chief District Judge:

This matter is before the court on Plaintiff Avemco Insurance Company’s
(“Avemco”) motion for summary judgment. For the reasons stated below, we grant the
motion for summary judgment.

BACKGROUND
This case involves a crash of a 196] Piper PA-24-250 aircraft on May 28, 2001,

which was piloted by Kent Arendt who was an employee of Executive Agent, Inc.

(“Executive”). Kent Arendt and two passengers were fatally injured as a result of the

on