IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

B&D INVESTMENT GROUP, LLC –

8507-8527 S. 88TH AVENUE SERIES,

Plaintiff,

v.

MID-CENTURY INSURANCE 

COMPANY,

Defendant.

No. 20-cv-03299

Judge Franklin U. Valderrama

MEMORANDUM OPINION AND ORDER

Plaintiff B&D Investment Group, LLC – 8507-8527 S. 88th Avenue Series 

(B&D) owns a commercial building which was damaged by hail. B&D submitted a 

claim to its insurer, defendant Mid-Century Insurance Company (Mid-Century), but 

the parties disagreed as to the damage and B&D requested an appraisal of the 

damage, which Mid-Century denied. B&D filed a two-count Complaint seeking a 

declaratory judgment compelling the parties to proceed with an appraisal (Count I) 

and seeking damages for breach of contract (Count II). R. 1, Compl.1 B&D now moves 

for a judgment on the pleadings on Count I, requesting that the Court enter an order: 

(1) compelling and requiring the parties to proceed with an appraisal to determine 

the amount of hail loss to the building, and (2) staying the case pending the outcome 

of the appraisal. R. 19, Mot. JP. For the reasons that follow, the Court grants B&D’s 

motion. 

1Citations to the docket are indicated by “R” followed by the docket number or filing name, 

and where necessary, a page or paragraph citation. 

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Background

B&D is the owner of a commercial building in Justice, Illinois (the Property). 

Compl. ¶ 1. Mid-Century issued a property insurance policy to B&D effective May 29, 

2018 through May 29, 2019 (the Policy). Id. ¶ 6. Under the Policy, Mid-City insured 

B&D against direct physical loss of or damage to the Property caused by or resulting 

from hail. Id. ¶ 7. On May 27, 2019, the Property was damaged by hail. Id. ¶ 8. B&D

submitted a claim for hail damage to the Property. Id. ¶ 9. Mid-Century found there 

was hail damage to metal vents on the roof of the Property and estimated the repair 

costs to be $4,271.95. Id. ¶ 10; R. 17, Answer ¶ 10. Mid-Century found no hail damage 

to the roof itself. Compl. ¶ 11. B&D disagreed with that assessment and insisted that 

there was additional damage to the Property, specifically the roof. Id.; Compl. Exh. 

C. As such, B&D made a made a written demand to Mid-Century for an appraisal

regarding the hail loss pursuant to the Policy’s Appraisal provision. Id. ¶ 13. MidCentury rejected B&D’s appraisal demand, claiming in a letter that there was no 

disagreement about the loss amount. Id. ¶ 14; id., Exh. E. Mid-Century found that 

the condition of the roof was due to wear and tear and therefore constituted an 

excluded cause under the Policy. Answer ¶¶ 24–25.

B&D subsequently filed a two-count complaint against Mid-Century, which 

Mid-Century has answered. B&D now moves for judgment on the pleadings on Count 

I, requesting a declaratory judgment based on the Appraisal provision of the 

insurance policy to compel an appraisal to determine the amount of the hail loss to 

the Property. Mot. J.P. 

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Standard of Review

Federal Rule of Civil Procedure 12(c) allows a party to move for judgment on the 

pleadings after the pleadings are closed. “Judgment on the pleadings is appropriate 

when there are no disputed issues of material fact and it is clear that the moving 

party . . . is entitled to judgment as a matter of law.” Unite Here Local 1 v. Hyatt 

Corp., 862 F.3d 588, 595 (7th Cir. 2017). A district court is confined to matters in the 

pleadings and must consider the pleadings in the light most favorable to the nonmoving party. Id. Pleadings include “the complaint, the answer, and any 

accompanying written instruments attached as exhibits.” Rube v. PartnerRe Ireland 

Ins. DAC, 470 F. Supp. 3d 829, 943 (N.D. Ill. 2020) (citing N. Ind. Gun & Outdoor 

Shows, Inc. v. City of S. Bend, 163 F.3d 449, 452 (7th Cir. 1998)). 

Analysis

In diversity cases, such as this one, federal courts apply state substantive law. 

Nat’l Am. Ins. Co. v. Artisan & Truckers Cas. Co., 796 F.3d 717, 723 (7th Cir. 2015).

Issues regarding the interpretation of an insurance policy are substantive. Id.

Because neither party disputes that Illinois substantive law applies, the Court 

applies Illinois law. See Med. Protective Co. of Fort Wayne, Ind. v. Am. Int’l Specialty 

Lines Ins. Co., 911 F.3d 438, 445 (7th Cir. 2018) (“When sitting in diversity, we apply 

state substantive law. We will not address a conflict of law issue unless there is a 

dispute as to which state’s law applies. If neither party disputes the issue, we will 

apply the law of the state in which the federal court sits.”) (internal citations omitted).

Under Illinois law, an insurance policy is a contract and the standard rules of contract 

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interpretation apply—the “primary objective is to ascertain and give effect to the 

intention of the parties, as expressed in the policy language.” Westfield Ins. Co. v. 

Vandenberg, 796 F.3d 773, 777–78 (7th Cir. 2015) (internal quotation and citation 

omitted). “[I]f the terms of the policy are susceptible to more than one meaning, they 

are considered ambiguous and will be construed strictly against the insurer who 

drafted the policy.” Pekin Ins. Co. v. Wilson, 930 N.E.2d 1011, 1017 (Ill. 2010) 

(internal quotation and citation omitted). However, a policy provision is not 

ambiguous solely because the parties disagree about its interpretation. Founders Ins. 

Co. v. Munoz, 930 N.E. 2d 999, 1004 (Ill. 2010). Additionally, an appraisal clause is

considered analogous to an arbitration clause and therefore is enforceable by the 

Court. Lundy v. Farmers Grp., Inc., 750 N.E.2d 314, 318 (2001). 

The Court begins, as it must, with the Policy. Under the coverage provision, 

Mid-Century must “pay for direct physical loss of or damage to Covered Property at 

the premises described in the Declarations caused by or resulting from any Covered 

Cause of Loss.” R.1-1, Policy at 70.2 “Covered Property” means “the buildings and 

structures at the premises described in the Declarations.” Id. “Covered Causes of 

Loss” are “Risks of Direct Physical Loss unless the loss is: a. Excluded in Section B., 

Exclusions; or b. Limited in Paragraph A.4. Limitations . . . .” Id. at 71. It is 

undisputed that the Policy covers hail damage to the Property. See Answer ¶ 7. The

Policy contains an Appraisal provision, which states: 

If we and you disagree on the amount of loss, either may make written demand 

for an appraisal of the loss. In this event, each party will select a competent 

2The Policy is not paginated, so the citations to it refer to the CM/ECF pagination in the 

header of the electronically filed document (e.g., “Page 70 of 172”). 

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and impartial appraiser. The two appraisers will select an umpire. If they 

cannot agree, either may request that selection be made by a judge of a court 

having jurisdiction. The appraisers will state separately the amount of loss. If 

they fail to agree, they will submit their differences to the umpire. A decision 

agreed to by any two will be binding. . . .

Compl. ¶ 12; Policy at 83.

Under the plain language of the Policy, if the parties disagree as to the “amount 

of loss,” either party may request an appraisal. Compl. ¶ 12; Policy at 83. B&D argues 

that when an insurer admits there is a covered loss, determining the extent and 

causation of the damage is part of the “amount of loss” determination and subject to 

the Appraisal clause; it is not a coverage dispute. Mot. J.P. at 5–6 (citing, among other 

cases, Runaway Bay Condo. Ass’n v. Phila. Indem. Ins. Co., 262 F. Supp. 3d 599, 601–

02 (N.D. Ill. 2017); Adam Auto Grp., Inc. v. Owners Ins. Co., 2019 WL 4934597, at *2 

(N.D. Ill. Oct. 7, 2019) (“To determine which damages . . . are pertinent to calculation 

of the amount of loss, an appraiser would necessarily need to distinguish between 

[causes of] damages.”); Spring Point Condo. Ass’n v. QBE Ins. Corp., 2017 WL 

8209085, at *2–3 (N.D. Ill. Dec. 13, 2017) (holding that an appraisal was appropriate 

because the disparity in valuation between the parties was based on a disagreement 

as to the cause of the damage); Phila. Indem. Ins. Co. v. Northstar Condo. Ass’n, Case 

No. 15-cv-10798, at R. 34 (N.D. Ill. Oct. 18, 2016) (“Whether other damage was 

already present or occurred after the April 2014 storm are factors for the appraiser 

to take into consideration when making his assessment.”)). B&D submits that these 

cases stand for the proposition that “causation is a coverage question for the court 

when an insurer wholly denies there is a covered loss, and an amount of loss question 

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for the appraisal panel when an insurer admits there is covered loss, the amount of 

which is disputed.” Id. at 6 (emphasis in original). 

Mid-Century, on the other hand, frames the dispute as whether damage to the 

roof was caused by hail or by wear and tear and deterioration. R. 21, Resp. at 4. It

contends that, contrary to B&D’s assertion, it has not “admitted” coverage for the hail 

damage, leaving only the outstanding issue of damages. Id. at 5. Rather, argues MidCentury, it has acknowledged hail damage to the soft metal vents on top of the roof, 

but denies that the roof itself sustained hail damage. Id. at 6. Mid-Century asserts 

that under Illinois law, causation disputes are not subject to appraisal. Id. at 7 (citing, 

among other cases, Spearman Indus., Inc. v. St. Paul Fire & Marine Ins. Co., 109 F. 

Supp. 2d 905 (N.D. Ill. 2000); Breckenridge Apartment Homes, LLC v. Greater N.Y.

Mut. Ins. Co., 2016 WL 11700913, at *3 (N.D. Ill. Oct. 31, 2016)). As for the cases 

cited by B&D, Mid-Century argues that they are distinguishable as they all involved 

acknowledged disputes over the amount of loss, something which is absent here. Id.

at 10–11.

The Court’s task is to ascertain and give effect to the intent of the parties as 

expressed in the Policy. The language of the Policy is unambiguous: appraisal is 

available to resolve disagreements as to the “amount of loss.” But the Policy does not 

define “amount of loss.” The parties agree there is a covered hail loss to the metal 

vents on the roof of the Property amounting to $4,271.45. See Resp. at 1. However, 

Mid-Century maintains that any additional damage to the roof was due to an 

excluded cause (wear and tear and deterioration), and, therefore, a disagreement 

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exists as to whether the damage to the roof was caused by hail or by wear and tear.

Resp. at 4–5. This factual dispute, reasons Mid-Century, dictates that B&D’s motion 

be denied. Id. B&D, though, contends that the damage to the roof was also caused by 

the hail and that an appraisal should be conducted to resolve the disagreement as to 

the “amount of loss” from the hail. Mot. J.P. at 6. The Court agrees with B&D’s

interpretation of the Policy. 

It is fundamental that a court, when interpreting a contract, does not reach 

absurd constructions of a contract. See Holmes v. Godinez, 991 F.3d 775, 783 (7th Cir. 

2021) (“Illinois law requires that contracts must be construed to avoid absurd 

results . . . .”). Mid-Century does not argue that the Policy does not cover hail damage 

to the Property. To the contrary, Mid-Century has acknowledged that some portion

of the Property was damaged by hail and therefore constitutes a covered loss. Resp. 

at 1. It insists, however, that not all of the alleged damage was caused by hail. Id. at 

1–2. B&D posits that Mid-Century’s argument is predicated on an unsupported 

definition of the term “Covered Property” that limits coverage to the Property’s 

individual components. R. 22, Reply at 3. B&D points out that the Policy only requires 

loss or damage to the Building, not loss or damage to each individual building 

component, such as the roof. Id. The Court agrees with B&D that Mid-Century’s 

position is untenable in light of the Policy’s language.

Determining the cause and extent of damage to the Property is an inherent 

part of an appraisal to determine the amount of loss. While not dispositive, this very 

issue was addressed in Adam Auto Grp., 2019 WL 4934597. In that case, the plaintiff 

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filed a claim with its insurer, the defendant, after fire damaged its property. Id. at 

*1. While the defendant paid $70,000.00 of the claim, the plaintiff disagreed that this 

amount covered all of its fire-related loss. Id. The plaintiff invoked the insurance 

policy’s appraisal provision, arguing that the payment did not cover the full value of 

its fire-related loss because it understated the extent of the fire damage and the cost 

of repairing that damage. Id. In rejecting the defendant’s argument that the 

plaintiff’s request for an appraisal was a causation issue and not an amount of loss 

dispute, the district court found that the defendant’s contention was based on the 

false premise that “the task of determining the value of damage can be meaningfully 

separated from the task of determining what caused the damage.” Id. at *2 (quoting 

Runaway Bay Condo. Ass’n, 262 F. Supp. 3d at 601). As the district court explained, 

to determine which damages to the plaintiff’s building were pertinent to the loss 

amount calculation, “an appraiser necessarily would have to distinguish between 

damages caused by the fire from those caused by other events or conditions like wear 

and tear.” Id. The Court finds this reasoning persuasive. 

Here, the initial determination by Mid-Century’s investigator determined the 

amount of loss to the roof vents based on the fact that the damage was due to hail, 

but then ruled out any loss for the roof itself based on his view that the damage to 

the roof was caused by wear and tear and deterioration. See Resp. at 1. This analysis

inherently involved causation determinations. To make this decision, the investigator 

had to distinguish between damage caused by hail from that caused by other events 

or conditions, such as wear and tear. As the district court noted in Adam Auto Grp.,

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“courts have ‘routinely’ rejected the argument that issues that implicate damage 

causation are not appropriate for resolution by appraisal.” 2019 WL 4934597, at *2 

(citing Runaway Bay Condo. Ass’n, 262 F. Supp. 3d at 601). It therefore logically 

follows that the causation for all of the damage to the Property would be part of the 

amount of loss analysis by an appraiser.

Conclusion

For the foregoing reasons, the Court grants Plaintiff’s motion for judgment on 

the pleadings on Count I [19] and directs the parties to engage in the appraisal 

process under the Policy’s Appraisal provision to determine the amount of hail loss to 

the Property. This case is stayed pending the outcome of the appraisal. The Court 

directs the parties to file a joint status report on the status of the appraisal by 

February 11, 2022.

Dated: December 28, 2021

United States District Judge

Franklin U. Valderrama

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