Scottsdale Insurance Company v. Good Holdings, LLC et al

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
SCOTTSDALE INSURANCE CO.,,
Plaintiff,
vs.
GOOD 	HOLDINGS, 	LLC, 	RBM
PARTNERS, 	LLC, 	FIRESIDE
MANAGEMENT, LLC, and BENJAMIN
TOMASINO, and RYLEE SZOKE,
Defendants.
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Case No. 24-CV-2366-DWD
MEMORANDUM & ORDER
DUGAN, District Judge:
In this insurance coverage dispute, Scottsdale Insurance Company (“Scottsdale”)
seeks a declaratory judgment that it has no duty to defend or indemnify Good Holdings,
LLC, RBM Partners, LLC, Fireside Management, LLC, or Benjamin Tomasino (“Good
Holdings Defendants”), under Scottsdale insurance policy numbers CPS7335681 and
CPS7552587, in the underlying lawsuit that Ryle Szoke (“Szoke”) filed against them.
Presently before the Court is Scottsdale’s Motion for Judgment on the Pleadings.
(Doc. 34). The Good Holdings Defendants have withdrawn their request for coverage
under the subject policies and have been dismissed from the case. (Docs. 32 and 33).
Szoke, the only remaining defendant, has not filed a Response in Opposition to
Scottsdale’s Motion for Judgment on the Pleadings.
I. 	BACKGROUND
A. Underlying Lawsuit
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The Underlying Lawsuit, captioned Szoke v. Good Holdings, LLC et al., Cir. Ct.
Madison Cnty., IL., No. 2024 LA 250, brings personal injury claims against the Good
Holdings 	Defendants. 	According 	to 	the 	First 	Amended 	Complaint 	(“Underlying
Complaint”), Szoke rented an apartment, pursuant to two written lease agreements,
effective from June 11, 2021 through June 30, 2023. While Szoke lived in the apartment,
water leakage allegedly caused a mold infestation, and failure to rectify the mold issue
allegedly caused Szoke personal injurues.
B. The Policies
At issue here are two commercial general liability insurance policies issued by
Scottsdale: (1) Policy No. CPS7335681, effective from March 31, 2021 to March 31, 2022
(“2021-2022 CGL Policy”), and (2) Policy No. CPS7552587, effective from March 31, 2022
to March 31, 2023 (collectively, the “Policies”). (Docs. 1-1 and 1-2). The Policies include
the Commercial General Liability Coverage Form (CG 00 01 04 13), which provides, in
pertinent part, as follows with respect to “bodily injury” liability (Coverage A):
SECTION I – COVERAGES
COVERAGE 	A 	– 	BODILY 	INJURY 	AND 	PROPERTY 	DAMAGE
LIABILITY
1. 	Insuring Agreement
a. 	We will pay those sums that the insured becomes legally obligated
to pay as damages because of “bodily injury” … to which this
insurance applies. We will have the right and duty to defend the
insured against any “suit” seeking those damages. However, we will
have no duty to defend the insured against any “suit” seeking
damages for “bodily injury” … to which this insurance does not
apply.
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The Policies are endorsed by the following Fungi or Bacteria Exclusion:
A. The following exclusion is added to Paragraph 2. Exclusions of Section I
— Coverage A — Bodily Injury And Property Damage Liability:
2. 	Exclusions
This insurance does not apply to:
Fungi Or Bacteria
a. 	“Bodily injury” … which would not have occurred, in whole or in
part, but for the actual, alleged or threatened inhalation of, ingestion
of, contact with, exposure to, existence of, or presence of, any “fungi”
or bacteria on or within a building or structure, including its
contents, regardless of whether any other cause, event, material or
product contributed concurrently or in any sequence to such injury
or damage.
b. 	Any loss, cost or expenses arising out of the abating, testing for,
monitoring, 	cleaning 	up, 	removing, 	containing, 	treating,
detoxifying, neutralizing, remediating or disposing of, or in any way
responding to, or assessing the effects of, “fungi” or bacteria, by any
insured or by any other person or entity….
* * *
C. The following definition is added to the Definitions Section:
“Fungi” means any type or form of fungus, including mold or mildew and
any mycotoxins, spores, scents or byproducts produced or released by
fungi…. (Doc. 1-1, pg. 47; Doc. 1-2, pg. 47).
II. 	STANDARD FOR JUDGMENT ON THE PLEADINGS
Rule 12(c) of the Federal Rules of Civil Procedure permits a party to seek judgment
on the pleadings after the pleadings have been closed. Buchanan–Moore v. Cty. of
Milwaukee, 570 F.3d 824, 827 (7th Cir. 2009). Courts apply the same standard in deciding
a 	motion 	for 	judgment 	on 	the 	pleadings 	as 	they 	do 	in 	deciding 	a 	motion 	to
dismiss. Landmark Am. Ins. Co. v. Hilger, 838 F.3d 821, 824 (7th Cir. 2016). The facts are
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viewed in the light most favorable to the nonmovant. Id. A judgment on the pleadings is
properly granted if the pleadings disclose no issue of material fact and the mover is
entitled to judgment as a matter of law. Employers Insurance of Wausau v. Ehlco Liquidating
Trust, 186 Ill.2d 127, 237 Ill.Dec. 82, 708 N.E.2d 1122 (1999).
III. 	A PPLICABLE LAW
Under Illinois law, the primary function in construing an insurance policy is to
ascertain and give effect to the intentions of the parties as expressed by the words of the
policy. Cent. Illinois Light Co. v. Home Ins. Co., 213 Ill. 2d 141, 153 (2004). “If the words of
the policy are clear and unambiguous, they must be afforded their plain, ordinary and
popular meaning.” Connecticut Specialty Ins. Co. v. Loop Paper Recycling, Inc., 356 Ill. App.
3d 67, 73 (1st Dist. 2005). In construing an insurance policy, the court should refrain from
creating ambiguities where none exist. Id.
Illinois law provides that “the insurer's duty to defend arises when ‘the facts
alleged in the underlying complaint fall within, or potentially within, the policy's
provisions.’ ” Mkt. St. Bancshares, Inc. v. Fed. Ins. Co., 962 F.3d 947, 951–52 (7th Cir.
2020) (quoting Crum & Forster Managers Corp. v. Resolution Tr. Corp., 620 N.E.2d 1073, 1079
(Ill. 1993)); see also Pekin Ins. Co. v. Wilson, 930 N.E.2d 1011, 1016–17 (Ill. 2010) (“In a
declaratory judgment action such as that presented here, where the issue is whether the
insurer has a duty to defend, a court ordinarily looks first to the allegations in the
underlying complaint and compares those allegations to the relevant provisions of the
insurance policy.”). The insured bears the burden of proving that its claim falls within
the policy's coverage. Addison Ins. Co. v. Fay, 905 N.E.2d 747, 752 (Ill. 2009). Once the
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insured has established coverage, the burden shifts to the insurer to prove that a
limitation or exclusion applies. Id.
An insurer's duty to defend is broader than its duty to indemnify. Pekin Ins. Co.,
930 N.E.2d at 1017 (citing Outboard Marine Corp., 607 N.E.2d 1204 (Ill. 1992)). Thus, a
finding that an insurer has no duty to defend necessarily means that it has no duty to
indemnify.See Crum & Forster Managers Corp. v. Resolution Tr. Corp., 156 Ill.2d 384, 189 Ill
.Dec. 756, 620 N.E.2d 1073, 1081 (1993) (“[W]here no duty to defend exists and the facts
alleged do not even fall potentially within the insurance coverage, such facts alleged
could obviously never actually fall within the scope of coverage. Under no scenario
could a duty to indemnify arise.”).
IV. 	DISCUSSION
The Court has examined the Policies, the Underlying Complaint, and the Policies’
Fungi or Bacteria Exclusion (the “Exclusion”). The Exclusion eliminates coverage for any
“bodily injury” that “would not have occurred, “in whole or in part, but for the actual,
alleged or threatened inhalation of, ingestion of, contact with, exposure to, existence of,
or presence of, any ‘fungi.’” The term “fungi” is defined to include mold. The Underlying
Complaint alleges that water leakage caused a mold infestation in the apartment and that
the Good Holding Defendants’ failure to remediate the mold caused Szoke’s personal
injuries. Under a plain reading of the Policies, Szoke’s alleged bodily injuries fall within
the Exclusion because the injuries would not have occurred, in whole or in part, but for
the presence of and exposure to mold.
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Because the allegations in the Underlying Complaint trigger the Fungi or Bacteria
Exclusion, there is no coverage under the Policies, and Scottsdale has no duty to defend
or indemnify the Good Holdings Defendants in the Underlying Lawsuit. Accordingly,
Scottsdale’s Motion for Judgment on the Pleadings is GRANTED.
V. 	CONCLUSION
For the reasons set forth above, the Court concludes that the Policies’ Fungi or
Bacteria Exclusion bars coverage for the claims in the Underlying Lawsuit. Therefore, the
Motion for Judgment on the Pleadings (Doc. 34) is GRANTED. The Court DECLARES
as follows:
Scottsdale Insurance Company has no duty to defend or indemnify Good
Holdings, 	LLC, 	RBM 	Partners, 	LLC, 	Fireside 	Management, 	LLC 	or
Benjamin 	Tomasino, 	under 	Scottsdale 	insurance 	policy 	numbers
CPS7335681 and CPS7552587, in the underlying lawsuit filed by Rylee
Szoke, styled Szoke v. Good Holdings, LLC et al., Cir. Ct. Madison Cnty., IL.,
No. 2024 LA 250.
The Court DIRECTS the Clerk to close the case and to enter judgment accordingly.
SO ORDERED.
Dated: November 25, 2025 	/s/ David W. Dugan
______________________________
DAVID W. DUGAN
United States District Judge
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