Summary
This Seventh Circuit opinion resolves an insurance coverage dispute involving a vandalism claim denied due to a policy vacancy exclusion. After the insured party repeatedly failed to produce discovery materials regarding hotel occupancy, the district court sanctioned the noncompliance by deeming the hotel vacant as a matter of law and granted summary judgment for the insurer. The appellate court affirmed, holding that the district court did not abuse its discretion in imposing the severe discovery sanction.
Topics
Practice areas
Questions Presented
- Whether the district court erred in finding the hotel vacant under the insurance policy.
- Whether the sanctions imposed on Best Inn were an abuse of discretion.
Holdings
- The district court correctly found the hotel vacant as a matter of law based on the policy’s definition and the undisputed facts.
- The sanctions were appropriate and not an abuse of discretion.
Key quotations
“Not only did Best Inn fail to respond to Ohio Security’s requests, but it also failed to respond to this court’s orders directing it to disclose the records.” (at 91)
“The sanction was an appropriate, proportionate response to Best Inn’s conduct, and not an abuse of discretion.” (at 91)
Factual background
Best Inn operated a hotel that was largely unoccupied; the insurer denied a vandalism claim on the basis that the building was "vacant" under the policy definition (less than 31% of space rented). Best Inn failed to produce occupancy records despite multiple discovery orders, leading the district court to find the hotel vacant and grant summary judgment to the insurer.
Procedural history
The district court entered a summary‑judgment order granting Ohio Security’s motion and a sanctions order declaring the hotel vacant under the policy. Best Inn appealed both orders.