UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

K&S INVESTMENT PROPERTY

GROUP, LLC,

Plaintiff, Case No. 20-cv-02426

v.

WESTFIELD INSURANCE COMPANY, Judge John Robert Blakey 

Defendant.

MEMORANDUM OPINION AND ORDER

After a fire destroyed Plaintiff K&S Investment Property Group LLC’s building 

in Chicago, Plaintiff submitted a claim to its insurer, Defendant Westfield Insurance 

Company, to recover business income and rental value losses. Defendant ultimately 

rejected Plaintiff’s business income loss claim based upon Plaintiff’s alleged failure to 

cooperate during Defendant’s investigation of the claim, and Plaintiff filed this 

coverage suit in turn. Defendant now moves for summary judgment [10], arguing 

that Plaintiff’s failure to cooperate forecloses its entitlement to coverage. For the 

reasons explained below, this Court denies Defendant’s motion.

I. Background

A. Facts1

On December 23, 2018 a terrible fire broke out at Plaintiff’s property located 

at 2235 W. 74th Street in Chicago, resulting in the total loss of the building and its 

 1 This Court takes these facts from Defendant’s statement of facts [12], Plaintiff’s statement of 

additional facts [18], and Defendant’s response to Plaintiff’s statement of additional facts [23]. 

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contents. [18] at ¶ 1. At the time of the fire, Plaintiff maintained a single tenant in

the property, IIK Transport. Id. at ¶ 2. 

From November 12, 2018 through November 12, 2019, Defendant insured the 

property via policy CWP-7928998. [12] at ¶ 1; [13-1] at 15. The policy covered, among 

things, business income and rental value losses. [18] at ¶ 3. The policy also contained 

the following provision:

BUSINESS INCOME (AND EXTRA EXPENSE) COVERAGE FORM

C. Loss Conditions

The following conditions apply in addition to the Common Policy 

Conditions and the Commercial Property Conditions.

***

2. Duties In The Event Of Loss

a. You must see that the following are done in the event of loss:

***

(5) As often as may be reasonably required, permit us to inspect 

the property proving the loss or damage and examine your books 

and records . . . and permit us to make copies from your books and 

records.

***

(7) Cooperate with us in the investigation or settlement of the 

claim.

b. We may examine any insured under oath, while not in the presence 

of any other insured and at such times as may be reasonably required, 

about any matter relating to this insurance or the claim, including an 

insured’s books and records. In the event of an examination, an insured’s 

answers must be signed.

[12] at ¶ 3; [13-1] at 44. The policy also provides that “No one may bring a legal action 

against [Defendant] . . . unless . . . [t]here has been full compliance with all the terms 

of this Coverage Part.” [12] at ¶ 15.

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Defendant received notice of Plaintiff’s claim the day after the fire. [18] at ¶ 4; 

[23] at ¶ 4. A few days later, on December 27, 2018, Defendant’s claims adjuster met 

with Plaintiff’s owner, Ivan Kazniyenko, at the loss site. [18] at ¶ 6. From that date 

on, the parties continued to communicate about the claim, and Plaintiff produced a 

variety of documents in response to Defendant’s requests, including a copy of the 

lease agreement between Plaintiff and IIK, IIK’s corporate formation documents, tax 

returns, and other financial documents. Id. at ¶¶ 8–10. 

In April 2019, without providing any advance notice to Plaintiff, Defendant 

sent an investigator to Sutton Transportation, the company leasing space to Plaintiff 

while Plaintiff’s property was being repaired. Id. at ¶ 14. George Stetsiuk, one of 

Plaintiff’s employees, then complained that the investigator’s visit caused problems 

for Plaintiff and its tenant, IIK. Id. at ¶ 15. Thereafter, Defendant’s investigator 

appointed counsel to investigate the claim and demanded an examination under oath 

(EUO) of Kazniyenko. Id. at ¶ 16. In July 2019, Kazniyenko appeared with counsel 

for his EUO. Id. at ¶ 17; [12] at ¶ 4. 

At the EUO, Kazniyenko testified that Plaintiff sought reimbursement for its 

rental payments for the Sutton facility. [13-2] at 21. To that end, Kazniyenko 

testified about the amounts of various rental payments Plaintiff made to Sutton. Id.

at 20. When Defendant’s counsel asked why K&S, and not IIK, was making the rental 

payments to Sutton, Kazniyenko refused to answer on advice of counsel. Id. at 20–

21. And when asked whether Plaintiff continued to make payments to Sutton after 

March 2019, Kazniyenko again refused to answer the question on advice of counsel. 

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Id. at 23.

At the EUO, Defendant also questioned Kazniyenko about a second

commercial property lease Plaintiff executed after the December 2018 fire with a 

landlord named 9901 Derby Lane LLC. [12] at ¶ 9; [13-2] at 23. Kazniyenko, again 

under advice of counsel, refused to answer all questions about this lease. [13-2] at 

23. 

Around September 2019, Plaintiff received a letter from Defendant denying 

Plaintiff’s claim for business income loss based solely upon Plaintiff’s alleged failure 

to cooperate. [18] at ¶ 26. Hoping to change Defendant’s mind, in February 2020, 

Plaintiff (through new counsel) sent Defendant additional documentary evidence 

supporting its business income loss claim and offered to make Kazniyenko and 

Stetsiuk available for another EUO. Id. at ¶ 27. But Defendant rejected this offer, 

stating that its position remained unchanged. Id. at ¶ 28. 

B. Procedural History

On March 19, 2020, Plaintiff filed a complaint against Defendant in state court, 

and Defendant removed the case to this Court on April 20, 2020. [1]. The complaint 

seeks a declaratory judgment (Count I) that Defendant must provide coverage on 

Plaintiff’s business income losses, including the net income losses associated with 

renting alternative accommodations pursuant to its lease with IIK. [1-1] at ¶¶ 13–

19. Plaintiff also asserts claims for breach of contract (Count II), id. at ¶¶ 20–26, and 

“vexatious and unreasonable action or delay” (Count III), id. at ¶¶ 27–31.

In lieu of answering the complaint, Defendant moved for summary judgment. 

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[10]. While unusual, courts may consider and rule upon such motions before the 

defendant files an answer. Greene v. CCDN, LLC, 853 F. Supp. 2d 739, 744 (N.D. Ill. 

2011). This Court therefore considers the merits of Defendant’s motion below.

II. Legal Standard

Summary judgment is proper where there is “no dispute as to any material fact 

and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). A 

genuine dispute as to any material fact exists if “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). The party seeking summary judgment has the 

burden of establishing that there is no genuine dispute as to any material fact. See 

Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). 

In determining whether a genuine issue of material fact exists, this Court must 

construe all facts and reasonable inferences in the light most favorable to the nonmoving party. King v. Hendricks Cty. Commissioners, 954 F.3d 981, 984 (7th Cir. 

2020). The non-moving party bears the burden of identifying the evidence creating 

an issue of fact. LeDure v. Union Pac. R.R. Co., 962 F.3d 907, 910 (7th Cir. 2020). To 

satisfy that burden, the non-moving party “must do more than simply show that there 

is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co., 

Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986); Barnes v. City of Centralia,

Illinois, 943 F.3d 826, 832 (7th Cir. 2019). Thus, a mere “scintilla of evidence” 

supporting the non-movant’s position does not suffice; “there must be evidence on 

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which the jury could reasonably find” for the non-moving party. Anderson, 477 U.S. 

at 252. 

III. Analysis

Moving for summary judgment, Defendant argues that Plaintiff’s failure to 

cooperate during the investigation bars its recovery on its complaint. [10]; [11] at 3–

6. In so doing, Defendant invokes the plain language of the policy requiring Plaintiff 

to cooperate with Defendant’s investigation of its claim and barring Plaintiff from 

initiating suit for failing to cooperate. See [12] at ¶¶ 3, 15.

Under Illinois law, which the parties agree applies here, any “condition in the 

policy requiring cooperation on the part of the insured is one of great importance . . . 

and its purpose should be observed.” Am. Access Cas. Co. v. Alassouli, 31 N.E.3d 803, 

808 (Ill. App. Ct. 2015) (quoting Waste Mgmt., Inc. v. Int’l Surplus Lines Ins. Co., 579 

N.E.2d 322, 327 (Ill. 1991)). The duty to cooperate recognizes that insurers ordinarily 

possess little to no knowledge of the facts surrounding a claim, and thus, depend upon 

their insureds for “fair and complete disclosure.” Piser v. State Farm Mut. Auto. Ins.

Co., 938 N.E.2d 640, 647 (Ill. App. Ct. 2010). To avoid coverage under the policy based 

upon an insured’s alleged failure to cooperate, the insurer must show that: (1) the 

insured breached the duty to cooperate; and (2) the insurer was “substantially 

prejudiced” by that failure. Xtreme Prot. Servs., LLC v. Steadfast Ins. Co., 143 N.E.3d 

128, 138 (Ill. App. Ct. 2019). 

Illinois courts acknowledge that, in some circumstances, an insured’s refusal 

to cooperate might support a finding of summary judgment for the insurer in an 

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insured’s claim for proceeds under a fire insurance policy. Crowell v. State Farm Fire

& Cas. Co., 631 N.E.2d 418, 420 (Ill. App. Ct. 1994). But generally, whether an 

insured has breached a cooperation clause is a question of fact. Piser, 938 N.E.2d at 

649. Thus, courts reserve granting summary judgment based upon an insured’s 

breach of a cooperation clause for only “the most extreme of cases.” Hartshorn v.

State Farm Ins. Co., 838 N.E.2d 211, 214 (Ill. App. Ct. 2005) (quoting Piro v. Pekin

Ins. Co., 514 N.E.2d 1231, 1234 (Ill. App. Ct. 1987)). Courts also deny summary 

judgment where the insured agrees to cooperate further by producing documents or 

submitting to a deposition after the insurer files its motion for summary judgment. 

Id. at 215; Crowell, 631 N.E.2d at 421 (reversing grant of summary judgment to 

insurer where the trial court failed to allow the insured to “cure his noncompliance” 

with his duty to cooperate before entry of summary judgment). 

Defendant’s motion fails under these standards. This case does not qualify as 

extreme. In Hartshorn, the Illinois appellate court affirmed summary judgment in 

favor of the insurer based upon an insured’s failure to cooperate; the insured produced

no documents aside from a police report, failed three times to appear for an oral 

examination, and made no effort to cooperate even after the insurer moved for 

summary judgment. 838 N.E.2d at 215. Similarly, in Piser, the appellate court 

affirmed judgment for the insurer because the insured failed to cooperate; the insured

failed to sign a financial authorization allowing the insurer to check his credit, failed 

to submit to an EUO, and failed to provide any financial documentation whatsoever. 

938 N.E.2d at 649.

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In contrast, Plaintiff here diligently responded to Defendant’s document 

requests. [18] at ¶¶ 8–10, 26. Defendant emphasizes Kazniyenko’s EUO, arguing 

that his refusal to answer certain questions demonstrates Plaintiff’s failure to 

cooperate. [22] at 2. But, although the parties disagree as to whether Kazniyenko 

was sufficiently forthcoming during his EUO, they do agree that he showed up for his 

EUO. And this Court’s own review of Kazniyenko’s EUO transcript reveals that 

Kazniyenko was far from evasive. He answered most of Defendant’s questions and 

only refused to answer certain questions under (somewhat questionable) advice of 

counsel. Finally, perhaps recognizing that prior counsel may have hampered 

Kazniyenko’s ability to fully cooperate during the EUO, Plaintiff, through new 

counsel, has offered to present Kazniyenko for another EUO. Id. at ¶ 27. This record

precludes summary judgment in Defendant’s favor.

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IV. Conclusion

For the reasons set forth above, this Court denies Defendant’s motion for 

summary judgment [10]. Defendant is ordered to answer the complaint by 2/15/21. 

In addition, the parties shall file a status report by 2/26/21, proposing reasonable case 

management dates. If the parties are interested in a settlement conference with the 

Magistrate Judge, they should so advise this Court, and this Court will enter an 

expedited referral order. 

Dated: January 15, 2021

Entered:

__________________________________

John Robert Blakey

United States District Judge

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