The mend-the-hold doctrine can prevent parties from changing their defenses in a breach of contract case mid-litigation, but it is not always a surefire defense. A recent case demonstrates the application of Illinois’ mend-the-hold doctrine.

In July this year, a case was decided in the Northern District of Illinois[1], where Philadelphia Indemnity Insurance Co. (PIIC) was the insurer of Towne Place Condominium Association (TPCA) property in the period August 1, 2013 to August 1, 2014. When a contractor identified hail damage, TPCA filed a claim specifying April 12, 2014 as the damage date. PIIC investigated, but denied coverage stating that TPCA “did not sustain damage from this year’s storms”.

TPCA Retains Counsel to Dispute Decision

TPCA retained counsel to dispute the decision. When TPCA presumably realized it would be difficult to prove the damage occurred on this specific date, they hired a meteorologist. The meteorologist concluded that the damage occurred on May 20, 2014 and TPCA filed a claim for damage on that date. PIIC opened a new claim, investigated and denied the claim on the basis that that no evidence suggested it occurred on this date and that TPCA did not give timely notice of the May 20, 2014 loss date.

Judge Feinerman denied TPCA’s argument that the mend-the-hold doctrine precluded PIIC from pressing a notice defense. However, his reasoning was that in pre-suit communications, PIIC denied the claim because TPCA did not sustain hail damage, and not because of inadequate notice.

While some Illinois appellate courts have limited insurers to their original defense, Ryerson Inc. v. Federal Insurance Co[2] was cited as binding authority on the Court, with Judge Feinerman holding that mend-the-hold doctrine does not prevent an additional defense after suit is filed. He clarified that mend-the-hold prohibits a defendant from changing defenses in the middle of litigation.

Judge Feinerman denied reconsideration of his ruling in a decision on August 16, 2019.[3]

While the doctrine did not bar defenses in the matter, this case is a reminder about the importance of consistency in breach of contract cases.  A thorough understanding of the facts and law can help prevent a preventable defense.

If you have an insurance or breach of contract dispute, contact our Chicago insurance coverage and breach of contract litigators at (312) 223-1699.

[1] 2019 U.S. Dist. LEXIS 121393 (July 22, 2019)

[2] Ryerson Inc. v. Fed. Ins. Co., 676 F.3d 610, 614 (7th Cir. 2012)

[3] Towne Place Condo. Ass’n v. Phila. Indem. Ins. Co., 2019 U.S. Dist. LEXIS 138570 (August 16, 2019)