No. 3–08–0915

______________________________________________________________________________ File d October 20, 2009 IN THE A PPELL ATE C OURT

OF IL LINO IS THIRD DI STRICT A.D., 2009 GE ORG E a nd MAR TH A ROC K, ) Ap peal f rom th e Ci rcui t Court ) f or th e 1 2th Judi ci al Ci rc ui t, Plai ntif fs-Appel lees, ) Will Co un t y, I llino is ) ) ) No. 07–MR–552 v. ) ) STATE FARM

FIRE AND CA SUALTY ) COMPANY, a/k/a State Farm Insuranc e ) Companies, ) Honorable ) Bob

bi Petr un ga ro, De f en da n t-A pp el l an t. ) Judge, Presi din g.

______________________________________________________________________________ JU STI CECA

RT ER de l i v er ed th e op i n i on of th e c our t:

______________________________________________________________________________ Plai nti f f s G eorg e a

nd Ma rth a R ock (th e R ock s) br ough t a d ec l ara

tory j udg men t ac ti on agai nst def endan t St ate Farm F ire an

d Casual ty Com pany (Stat e Farm

) seeki ng a decl aration that State Fa rm had duties to def

end an d i nde m ni f y the R ocks a gai nst a l awsui

t brough t by a thi rd par t y. Afte r jud gment in the u nder lyi ng laws uit was ent er ed in t he Ro cks ’ favo r, t he inst ant de cl ar ator y j udgm en t ac ti on pr oce eded

sol el y on th e i ss ue of wh eth er Sta te F ar m h ad a d uty to defend the Rocks. The t rial cour t found t hat St ate Farm had a duty to defend the Rocks against the underl yi ng sui t. St ate Farm appe al ed. We reve rse. FA CTS T he r ec o r d r ev ea ls t he fo llo win g fa ct s. I n Au gu st 20 04 , t he Ro ck s s o ld a ho me lo ca t ed in2

La Porte, Indi ana, to Phil li p and Jan el Koss (the Kosses ). In March 2005, the Kosse s f il ed a three-count co mpl

ai nt in Indi ana state court agai

nst the Rocks. In al

l three counts, the K

osses al l eged that the Rocks had i ndi cated on a res i den tia l real estate s ales d

i scl osure f orm th at there were no moi sture or water pro blem s i n an y a rea of the hom

e, there was no dam

age due to flood, there were no haza rdous c ondi

tion s su ch as m old , and there were no foun dati on prob l ems. In count I, t he Kosses claim ed that these stat emen

ts were fraudulent mi srepresentat ions as to past
an d/ or e x i sti n g m ate rial f ac ts a n d th at th e R ock s m ade th es e f alse sta tem en ts k n owi n gl y or w i th reckle ss i gnorance or in

dif feren ce of thei r falsi ty. Further, the Kosses al le ged that the Rocks
ma de these f al se statemen

ts to in duce the Kosses

to purchase the property. The K osses al le ged the y rel i ed upon the Roc ks ’ state men

ts a nd we re i nj ure d. Th

e al l eg ed da mag eswe re th

e l oss of the i r b arg ai n, the l oss of va l ueto the i r prope rty , th e l

oss of us e of the i r prope rty , th e c ost of
re mediat ion, and e mot ional dist re ss and angu ish. In cou nt I I, the K

oss esal l eg ed tha t the Roc ks ’ m

i sr ep res en tati ons vi ol ate d the d

uty of go o d fa it h a nd fair de aling
. T he Ko ss es cla imed da mag es as a r es ult , inc lud ing t he lo ss o f t he ir ba rga i n, the l oss of va l ueto the i r prope rty , th e l

oss of us e of the i r prope rty , an

d the c ost of
rem edi ati on. In coun t III, the K

osse s al l ege th at the m i sreprese ntations m

ade b y the R ocks w ere
ne glig en t misr ep r es en t at io ns a nd r es ult ed in t he lo ss o f t he ir b ar ga in, t he lo ss o f va lue t o t he ir pr op er t y, t he los s o f use o f the ir pr op er t y, and t he co st of r emediat ion. On Jun e 15, 2 007, the Rock s f

i l ed a p eti tion f or decl aratory j udgm en t agai nst State Farm
see king a d eclar at ion t hat St at e Far m had “an o bligat ion t o c ons ider , se t t le and/ or ar bitr at e” t he sui t brough t by the K osse s. The Rock s al

l eged that State F arm

had suc h a duty und er a home owner’s i

nsuran ce poli cy is sued by Stat e Farm

to the Rocks for the La Porte pro perty that3

was i n ef fect i n Jul y 2004. In

addi tion, State Farm had de cl in ed the Rocks’ request to t ender def en se of the s ui t to State Farm
. On Au gust 23 , 2007, th

e Rock s f i l ed an am ended p eti

tion f or decl aratory j udgm en t. In the am ended peti

tion, the Rocks stated that t he un derly in g la wsui t again st them h

ad been tried bef ore a jury. A verdi ct in that suit was entere d in fav or o f the Rocks. Stat e Farm

fi le d its answer i

n the i nstant declarator y judgme nt action on Septem

ber 5, 2007. I n i ts an swe r, State Fa

rm adm i tted a home owne

r’spol i cy wasi n e f f ect i n J ul y 2004. I n ad dit io n, St at e F ar m ad mit t ed t ha t it ha d d en ied t he Ro ck s’ r eq ue st fo rde fen se o f t he law su it brought by

the Kosses b ecause the l

ia bi li ty provi si on of the i

nsuran ce poli cy was not triggered, as th e u n derl y i n g c om pl ai n t di d n ot co n tai n al l eg ati on s of an occ ur re n ce th at c au se d p rop er

ty da mag e. St at e F ar m als o cla imed t wo affir mat ive de fen se s no t at iss ue in t his a pp ea l. The hom eowners’ pol ic

y i n questi on was i ssued on Decem ber 15, 2003, and coverage
cea sed on Septem

ber 14, 20 04. Sec

tion II, cove rage L , of the pol

i cy provi desthat State F arm wil l provi de a def ense “ [i]f a cl ai m i s m ade or a suit i s brought agai nst an i nsured f or damages because of bodily in jury or pro perty dam

age to which

this coverage appl

ie s, caused by

an occurrence.” An

“occurrence” is def

in ed as “a n acci dent, in cl udin g exposure to co ndi

tions” that
re su l ts i n b odi l y i n j ur y or p rop er

ty da mag e. “ Pro perty

da mag e” i s def i n ed as “ph y si ca l da mag e to or destruction

of tan gi bl e proper ty, i nc l udi ng l oss of use of th i s prope rty.” On Ja n ua ry 7, 2 00 8, S tate

Fa rm f i l ed a m oti on f or j udgm en t on th e p l eadi

n gspu rs ua n t to
sec tion 2–615 (e) of

the C ode of

Ci vi l Procedu re. 735 ILCS 5/2–6 15(e) (We st 2008 ). State Fa rm
ar gue d in t hat mot ion t hat it d id no t ow e t he Ro cks a du t y to defend or indemnify beca use t he unde rlying co mplaint d id no t allege a n oc cur re nce t hat cau sed pr op er t y damage . I n re spo nse, t he4

Roc ks arg

ue d that th

e u nd erl y i ng com pl ai nt d i d a l l eg e p rope

rty da mag e, p l ed

as“ cos ts of
rem edi ati on” a nd “ l oss of use of the proper

ty” whi ch wascaus ed b

y water l eaki ng i nto the h ome . T he Ro ck s a r gu ed t ha t t he co mpla int se t fo r t h a lleg at io ns w hic h w er e w it hin o rpo t en t ially w it hin
cove rage u nde r the p oli cy and, thus , State Fa

rm ’smotion

shoul d be

den i ed. Th e c ourt f

oun d that the u

nd erl y i ng com pl ai nt a l l eg ed tha t the Roc ksmad e n

eg l i ge nt or
reckles s m

i sr ep res en tations ca us i ng prop erty da mag e i n th e f orm of l oss of us e a nd cos t of remediation. T hus, t he cou rt found t hat t he all egat ions in

the co mplaint tr iggered S tat e Farm’s duty to def end the Rocks and den i ed State F arm ’smotion

f or ju dgm en t on the p l eadi

ngs . Subsequen

tly, the court entered judgm ent in fav or o f the R

ocks, declari

ng that Stat e Farm

owed them a duty to defend aga

in st the laws

uit brought by

the Kosses. That sam

e day , the parties stipul ated that t he Rocks pai

d $29,645.79 defendi

ng the sui t. St ate Farm appe al ed. AN AL YSIS On appeal, Stat e Farm

ma in tains that t he trial

court erred by

fi ndi ng that Stat e Farm

had a du ty to de f en d th e R ock s a gai n st th e u n derl y i n g c l ai m s th at th ey f ai l ed to disc l ose

pr ob l em s wi th the house. T o det ermi

ne whether an i

nsurer owes a d uty to defend to an ins ured, t he court must compare the al

le gations i

n the un derly in g compl ai nt to the relev

ant port ions

of the i nsuran ce pol i cy . Ou

tboa rd M ari ne Corp . v . Li

be rty Mu tua l In su ran ceCo. , 154 Ill . 2d 90, 107-08, 607 N.E .2d 120 4, 1 212(19 92) . “ If

the f ac ts al l eg ed

i n th e u nd erl y i ng com pl ai nt f al l wi thi n, or pot entia ll y w ithi n, the poli

cy's coverage, the i

nsurer's duty to defend arises.” Out boa rd Mar ine Corp. , 154 Ill .2d at 108, 607 N. E.2d at 1212. “The f actual al le gations of

the compl

ai nt rather th an th e l eg al th eor y un der w h i ch th e acti on i s b rou gh t wi l l de ter m i n e w h eth er th er e i s a du ty to defen d.” Travel ers Insuran

ce Cos. v. P.C. Quot e, Inc. , 211 Ill . App. 3d 719, 729, 570 N.E. 2d5

614, 62 1 (199 1). A

n i ns urer’ s duty

to def end i s m uch broad er tha n i ts duty to in dem ni f y . Crum & Forster Managers Corp. v. Resol ution Trust Corp. , 156 Ill . 2d 384, 393-94, 620 N. E.2d 1073, 1079 (1993). The construct ion of an i nsuran ce poli cy is a question of

la w, which we rev

ie w de
novo . Outboard Marine

Corp. , 154 Il

l . 2d at 10 8, 607 N .E.2d at 12 12. In t his case , t he ho meow ner s’ po licy pro vides t hat St at e Far m has a d ut y to defend t he Ro ck s “[ i]f a cla im is ma de o ra s uit is br o ug ht ag ain st an insu r ed fo rda mag es be ca us e o f bo dily in jury or pro perty dam

age to which

this coverage appl

ie s, caused by

an occurrence.” Thus , we
mus t deter mi ne wh ether the underl

yi ng com pla in t alleges f acts of an occurrence that caused pr operty da mag e. Sta

te F ar m argu es th at th e u n derl y i n g c om pl ai n t di d n ot al l eg e f ac ts
con sti tuti ng an occurren cetha t ca us ed prop erty da mag e. S tateFa

rm mai nta i ns tha t the ba si s of the Kosses’ lawsui

t was alleged m

isrepresentations made by the Rock s and that t hese
m i sreprese ntations were n

ot an occu

rren ce wi thi n the m ean i ng of the p oli cy . Furth er, State F arm
argu es th at th es e r ep re se

n tati on s d i d n ot ca us e p rop er

ty da mag e to th

e h ous e. In addi ti on , Sta te Fa rm con ten dsth at th e u n derl y i n g al l eg ati

on s of l oss of us e of th e h ous e w as n ot prope

rty da mag e in t his c as e. Ra t he r , St at e F ar m ar gu es t ha t t he Ko ss es ’s cla imed da mag es we r e p ur ely economi c. The Rocks conten d tha t the un derl y i ng c omp l ai

nt i nc l uded clai m s of property dam age. The Rocks argue that the und erl y i ng c l ai m s f or rem edi ati on an d the l oss of use of p roperty

are in cl uded wi thin propert y da

ma ge as def in ed by the in surance pol

ic y. F urther, t he Rocks argue that t hese al

le gations of

propert y da

ma ge were caused b

y a postsale occurrence of water in fi ltration to the home. We concl ude that the underly

in g compl ai nt does not all ege an occurrence that caused6

pr operty da mag e. A n occ ur re n ce i s def i n ed b y th e p ol i cy

as an ac ci den t th at res ul ts i n pr ope rty damag e. “The u se o f the wo rd ‘o ccu rr ence ’ in insura nce p olicies br oa dens co ver age and el i m i na testhe ne ed to f i nd an exac t ca us e of da mag esasl ong

asthe y are ne i the r i nte nd ed nor expected by

the in sured.” Indi ana Ins

urance Co. v. Hy

dra Corp. , 245 Ill . App. 3d 926, 929, 615 N.E.2d 7 0, 73 (1 993). Th e occu rren ce m ust sti l l be acc i den tal , however. Hy

dra Corp. , 24 5 I ll. App. 3d at 929, 615 N.E. 2d at 73. An “a cci dent” i s “an

unf orseen occurrence, usual

ly of an
un towa rd or di sa strou s c ha

racter or an un de si gned sudde n or unex pe cte d e ve

nt of an i nf l i cti ve or unf ort unate character.” Aetna Cas ual ty & Surety

Co. v. Freye

r , 89 Ill . App. 3d 617, 619, 411 N.E.2d 1 157, 11 59 (19 80). In the un de rl y i ng com pl ai nt, the Koss esal

l eg e that the R

ock s k now i ng l y , re ck l es sl y or negl ige ntly mi srepresented i

n a real estate discl

osure form that there were no m oisture or water pr oblems in t he ho me, no damag e du e t o flo od and no pr oblems w ith t he ho me’s fo unda t ion. The Koss esal so a

l l eg ed tha t the y rel i ed upon the se m i sr ep res en tations an d w ere i nj ure d a s a

res ul t of their rel ia nce. Contrary to the Rocks’ positi on on appeal , the underl yi ng com pla in t do es not make any al le gation of postsal e water infi ltration to the home. Indee d, the underl yi ng com pla in t all eges t hat t he Ro cks misrepr ese nt ed “p ast and/ or exist ing mat er ial facts .” Thu s, t he ac t s in the underl yi ng com pla in t t hat are al le ged to have caused i nj ury, an d the only possib le “occurrence” f or pu rpos esof thi s a ppe al , we re th e m i sr ep res en tations mad e b y the Roc ks . The R

ock s do not argue that the mi srepresentations are an “ occurrence” wi

thin the me ani

ng of the pol

ic y. W e need not determ

i ne wh ethe r the a l l eged m i sreprese ntations m

eet the def i ni tion of “occurre

nc e,” however, beca

use the underl

yi ng com pla in t do es not all

ege that the mi srepresentations caused property dam age.7

“ Prop erty

da mag e”i s def

i ne d i n th e p ol i cy as“ph y si cal da mag e to or d

es truc ti on of t angible pr op er t y, including lo ss o f use o f this p ro per t y.” I n t his case , t he und er lyi ng co mplaint does not all ege that the purpor tedly fal se statemen

ts made b y the Rocks caused an

y ph ys ic al dam age to o r destruction of tangi ble propert y. The

Kosses al

le ged that the Rocks made misrepr ese nt at ions a bou t pas t and/ or exist ing fact s re late d t o mo istu re or wat er pr oblems in t he home, including d amage due t o flo od and p ro blems with t he fo unda t ion. The unde rlying
com pl ai n t m akes n o re f er en ce to an y ph y si ca l da mag e to th

e h ous e i n cu rre d a f ter th es e s tate

men ts
were made. A ny phy sical dam age to the hous e pred

ated th e statem

en ts m ade b y the R ocks. Log i cal l y , m i sr ep res en tations con ce rni ng pa st or e xi sti ng da mag e c oul

d n ot ha ve ca us ed pa st or exi stin g dam age. See Allstat e I nsur ance Co . v. Lane , 345 Ill . App. 3d 547, 551, 803 N.E. 2d 102, 106 (2 003 ) ( st at ing t hat failure t o d isclos e de fect s in rea l est at e disc losu re for m cou ld no t have
caus ed pre ex i sti

ng d am age to home ). Rather, the underl

yi ng com pla in t alleged that the mi srepresentations by the Rocks caused t he Ko sses t o s uffer e co nomic lo sses st emming from t heir as ser t ions t hat t hey relied u po n t he al l eg edl y f al se sta tem en ts m ad e b y the Roc kswhen

pur ch as i ng the hom e a nd , th us , th ey di d n ot recei ve the v al ue for whi

ch they bargai ned. See Sto neridge Devel opmen t Co. v. Essex

Insuranc e Co. , 38 2 I ll. A pp . 3d 73 1, 75 3, 88 8 N
. E
. 2d 63 3, 65 4 ( 20 08 ) ( cla ims fo rco st o f r ep air t o ho me and dimini

shed value o f home wer e eco nomic losses, not pro per ty damage ); Moorman Ma nuf ac turi ng Co. v . Na

ti ona l Tan k C o. , 91 Ill . 2d 69, 82, 435 N.E .2d 443, 449 (1982) (damages for inadequate value an

d cost s of repair generall

y regarded as economic dam ages); see also Qual ma n v. Bruckm

oser , 163 Wi s. 2d 361, 364-68, 471 N.W.2d 282, 284-85 ( App. 1991) ( find ing no du t y o f insu r an ce co mpa ny t o de fen d c laim a ga inst insu r ed s w he r e u nd er lying c laims8

fo rbr ea ch o f co nt r ac t an d mis r ep r es en t at io n a r ising o ut o f alle ge d fa ilur e t o dis clo se de fec t s in home a lleged p ecu niary damag es, not pr op er t y damage s). Altho ugh t he und er lyi ng co mplaint
con tai ns an al l eg ati on th at the h ous e h ad pre ex i sti ng da mag e a t the ti me of the sa l e, th i s a l l eg ati on of pr ee x i sti n g d am ag e does n ot tra n sf orm th e c om pl ai n t’s re qu es t f or e con om i c dam ag es i n to cla ims o f liab ilit y fo rca us ing ph ysic al d ama ge t o t he ho us e. Fu r t he r mo r e, as we ha ve pr ev io us ly st at ed, t he co mplaint d oe s no t and c anno t allege t hat t he Ro cks ’ misrep re sent at ions c aus ed t he pr eexist ing damag e. The Kos ses s ued t he Ro cks for making false s t at ement s, no t for cau sing pr op er t y damage . T he Ko sses ’ lawsu it “pe rt ained t o t he no ndisclo sur e o f the damag e, not t o t he dam age i tself .” Lane , 345 Ill . App. 3d at 553, 803 N.E .2d at 108. The Rocks argue that the com pl ai nt does i nc l ude a clai m f or property

dam ages , however, because i t incl udes a clai

m f or t he loss o f use of propert y. The Rocks argue t hat any cl aim of loss of u se o f pro per t y is pro per t y damage unde r t he po licy’s definition o f pro per t y damage . We dis ag r ee . T he po licy d efin es pr o pe r t y da mag e a s “p hysic al d ama ge t o o rde st ruc t io n o f t an gib le propert y, i

ncl udin g loss of use of thi s propert y.” Un der the plai

n l anguage of

this policy de f i ni ti on, the ph ras e “ l oss of us e of thi s p rope rty ” re f ers ba ck to the f i rs t pa rt of the de f i ni ti on of pr op er t y damage as p hysical damage t o t angible pr op er t y. Thu s, t he pr op er t y damage unde r t he po licy i s de fined as p hysically

damag ed o r d est ro yed pr op er t y, including lo ss o f use o f the phy si cally dam aged propert y. The

loss of use of property m

ust accompany

the phy si cal dam age or destruction

of that property . Mu

tl u v . Sta te F arm Fi re & Ca su al ty Co. , 337 Ill . App. 3d 420, 431, 78 5 N.E.2d

951, 96 0 (200 3). In thi s case, the un

derly in g compl ai nt does not all ege that the Rocks caused phy si cal dam age to o r destruction of propert y. W hatever ef fi ci ent cause, condi

tion or circum

stance9

pr od uce d t he pr eexist ing physical da mage t o t he pr op er t y, a c aus e t hat is not alleged in the
co mplaint, t hat co ndit ion o r c ircu msta nce c aus ed t he Ko sses t o s uffer t he los s o f use o f the pr operty . Th

us , the K oss es ’ c l ai

m f or d am ag es du e to l oss of us e of pr ope rty wa s n ot a s ep ar ate cl ai m f or pro perty dam

ages as def

in ed by the home owners’ poli

cy . See Mu t lu , 337 Ill . App. 3d at 431 , 78 5 N .E.2 d a

t 960 (no duty to de f en d un de r i ns ura nc e p ol i cy

where cl ai m f or loss of us e of hot water was u

naccom pan i ed b y clai m f or phy sical dam age or de structi

on of property ). CONCLUSION Based upon the ab ove anal ys is , Stat e Farm

did n ot have a duty to defen

d the Rocks ag ai n st th e s ui t b rou gh t b y th e K oss es , a n d th e tr i al cou rt e rre d w h en i t deter m i n ed th at S tate Far m owe d t he Ro cks a du t y to defend t he und er lyi ng ac t ion. Acco rd ingly, the judg ment o f the Will Co un t y cir cu it co ur t is r ev er se d, an d ju dg men t is e nt er ed in fa vo ro f St at e F ar m. Reversed. WR IGHT, J . conc

urri ng. JUSTICE LYTTON, dissen ting: I respectfully dissent from the majority’s opinion in this
case. The allegation s c ontained in the underlying complaint are sufficient to trigger a duty to defend. Thus, I would affirm the trial court’s decision. To determine if an insurer owes a duty to defend, the court must compare the allegations in the underlying complaint with the relevant portions of the insurance policy. Outboard Marine Corp.
v. Liberty Mutual Insurance Co. , 154 Ill. 2d 90, 107-08, 607 N.E.2d 1204, 1212 (1992). If the facts alleged in the underlying10

complaint fall within, or potentially within, the policy’s coverage, the insurer has a duty to defend. Outboard Marine Corp. , 154 Ill. 2d at 108, 607 N.E.2d at 1212. Here, the underlying complaint against defendants George and Martha Rock alleged in pertinent part:

"4. *** Mr. and Mrs. Koss were pr ovided with the Defendants’ Seller’s Residential Real Estate Sales Disclosure. *** 5. On the disclosure form, the Defendants indicated that there were no moisture and/or water problems in the basement, crawl space area, or any other area of the home, that there was not any damage, due to, inter alia , flood, that there had not been or were not any hazardous conditions on the property, such as mold, and that there were not any foundation problems with the improvements.
*** 6. These representations were fraudulent misrepresentations, as they were false statements of past and/or existing material facts made by the Defend an ts, the Defendants made them knowing that the y were false and/or made them with reckless ignorance or indifference
as to their falsity, and made them to induce Mr. and Mrs. Koss to purchase the real estate. 7. M r. and Mrs. Koss justifiably relied and ac te d upon the statements when they purchased the property. 8. Mr. and Mrs. Koss were subsequently injured as a11

result of their reliance upon the fraudulent misrepresentations contained in the Seller’s Residential Real Estate Sales Disclosure form. 9. Mr. and Mrs. Koss’ injuries and damages include the loss of their bargain, the loss of value to their property, the loss of use of their property, the cost of remediation, and emotional distress and mental anguish. * * * 15. The aforementioned misrepresentations were negligent misrepresentations." According to the Rocks’ insurance policy, State Farm is obligated to provide a defense if "a claim i s made or a suit is brought against an insured for damages because of bodily injury or property damage *** caused by an occurrence." An "occurrence" is defined as "an accide nt, including exposure to conditions" that results in bodily injury or property damage. "Property damage" is defined as "physical damage to or destruction of tangible property, including loss of use of this property." The majority concludes that the underlying complaint does not trigger a duty to defend because it "does not allege that the purportedly false statements made by the Rocks caused any physical damage to or destruction of tangible property" but, rather, alleges only "economic losses." Slip op. at ____. I disagree. The allegations against the Rocks are similar to those against the defendants in Jares v. Ullrich , 2003 WI App 56, 266 Wis. 2d 3 22, 667 N.W.2d 843, where the court found a duty to defend. In12

that case, the plaintiffs alleged that the defendants were aware of
or should have been aware of animal infestation and failed to disclose it to the plaintiffs. They further alleged that they justifiably relied on the defendants’ misrepresentations, which caused them to be unable to occupy the premises for over two months and incur costs to repair the property. The court found that the complaint adequately alleged "property damage" because it referred to "loss of use" and repair costs. Jares , 2003 WI App 156, ¶2, 266 Wis. 2d 322, ¶2, 667 N.W.2d 843, ¶2. The court also found that the p laintiffs adequately pled causation by alleging that t h e defendants’ misrepresentations resulted in the loss of use of the property. Jares , 2003 WI App 156, ¶24, 266 Wis. 2d 322, ¶24, 667 N.W.2d 843, ¶24. The court rejected the insurer’s argument that the plaintiffs’ damages were purely economic because the complaint specifically alleged phys ical injury to the property, including loss of use. Jares , 2003 W I App 156, ¶17, 266 Wis. 2d 322, ¶17, 667 N.W.2d 843, ¶17. Likewise, in this cas e, the Kosses’ complaint alleges "the loss of use of their property" and "the cost of remediation." Thus, it alleges "property damage." Additionally, the complaint alleges causation, stating that the Kosses "were injured as a result of their reliance upon the fraudulent misrepresentations contained in the Seller’s Resi den tial Real Estate Sales Disclosure form." Finally, although the complaint alleges that the Kosses s uffere d economic damages in the form of "loss of their bargain" and "the loss of value to their property," it also alleges physical damage13

to the property t hr ough the allegations of "the loss of use of the ir property" and "the cost of remediation." Thus, th e majority’s conclusion that the underlying complaint does not allege property damage caused by the Rocks’ representations is incorrect. The majority also incorrectly conc ludes that "[w]e need not determine whether the alleged misrepresentations meet the definition of 'occurrence' *** because t he u nderlying complaint does not allege that the misrepresentat ions caused property damage." Slip op. at ___. The complaint adequately alleged both property damage and causation. I also believe that the allegations of the complaint were sufficien t t o establish an "occurrence." If a complaint alleges that the insureds made misrepresentations that they knew were false, the misrep re sentations do not constitute an "occurrence." See Allstate Insurance Co. v. Lane , 345 Ill. App. 3d 547, 552, 803 N.E.2d 102, 107 (2003). However, allegations that an insured made "unknowing" misrepresentations or "recklessly disregarded the truth" adequately allege an "occurrence." See Lane , 345 Ill. App. 3d at 552, 803 N.E.2d at 107, citing Prisco Serena Sturm Architects, Ltd. v. Lib erty Mutual Insurance , 126 F.3d 886 (7th Cir. 1997); P osing v. Merit Insurance Co. , 258 Ill. App. 3d 827, 629 N.E.2d 1179 (1994); TIG Insurance Co. v. Joe Rizza LincolnMercury, Inc. , No. 00 C 5182 (N.D. Ill. March 14, 2002). Other jurisdictions agree that a negligent misrepresentation ma y be a n "occurrence," thus triggering an insurer’s duty to defend. See Allstate Insurance Co. v. Bowen , 121 Wash. App. 879, 886, 91 P.3d14

897, 901 (2004); La mpert v. State Farm Fire & Casualty Co. , 85 S.W.3d 90, 93-94 (Mo. App. 2002); Wood v. Safeco Insurance Co. of America , 980 S.W.2d 43, 53 (Mo. App. 1998); Sheets v. Brethren Mutual In surance Co. , 342 Md. App. 634, 658, 679 A.2d 540, 551 (1996). Here, the Kosses a lleged that the Rocks’ misrepresentations
were made with "reckless ignorance or indifference as to their falsity" and/or negligently. These allegations are sufficient to establish an "occurrence" under the State Farm policy. I f ind that the facts contained in the underlying complaint fall potentially within State Farm’s coverage. Thus, the tria l court’s order should be affirmed.