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Vol. 7, Iss. 3
April 11, 2018

What A Really Clever Idea For A Coverage Article

Guest Author: Michael Young, HeplerBroom, St. Louis

As a reader and writer of many insurance coverage articles, I am always impressed when someone comes up with a clever idea for one. It is not easy to do. That’s why I so liked this article from Michael Young, a very talented coverage lawyer at HeplerBroom, LLC in St. Louis. Michael took a famous coverage decision and examined it, not from the legal perspective, as we are all usually so wont to do, but its historical one. Kudos to Michael for this impressive piece and my thanks to him for letting me share it with Coverage Opinions readers.

The Little Known Story Behind Maryland Casualty v. Peppers

Michael Young
HeplerBroom, LLC


Perhaps no appellate court decision is more famous in insurance coverage circles than the Illinois Supreme Court’s opinion in Maryland Casualty Co. v. Peppers, 64 Ill. 2d 187, 355 N.E.2d 24 (1976). Most insurance practitioners know the case as one of the first to recognize the right of a liability insured to independent counsel (i.e. “Peppers counsel”) should a coverage defense raised by the carrier pose a conflict for a lawyer to represent both the interests of insured and insurer.

On a very simple level, the basic fact pattern in Peppers presents the classic conflict situation: the insured was alleged to have both negligently and intentionally caused bodily injury to the claimant. As the Illinois Supreme Court explained, “In the personal injury action if [the insured] Peppers is held responsible, it would be to his interest to be found negligent, which, under the policy of insurance, would place the financial loss on [the insurer] St. Paul.” The court continued: “On the other hand it would be to St. Paul’s interest to have a determination that Peppers intentionally injured [the claimant], which, by the terms of the policy, would relieve St. Paul of the obligation to pay the judgment.” Because of this conflict, the Supreme Court held that the insured was entitled to independent defense counsel.

A closer read of the facts in Peppers, however, reveals an even more interesting story. The insured owned three separate buildings on the same street: his home, another building and a Pizza Hut. “Because the Pizza Hut had been burglarized on numerous occasions,” the court explained, “Peppers had been staying in that building at night.” On the evening in question, “Peppers was awakened by a noise at the door which he determined was caused by someone trying to break in.” The court continued: “When he went to the door he saw a person fleeing. He shouted for him to stop and then fired his shotgun, wounding the fleeing person, James Mims.”

The idea of someone sleeping overnight in his Pizza Hut to prevent future burglaries seems very strange until one considers the time and place of these events: January 1971 in East St. Louis, Illinois. People familiar with East St. Louis today know it as a small city that struggles with high unemployment, poverty and crime. Sixty years ago, however, East St. Louis was a very different place.

Just across the Mississippi River from St. Louis, Missouri, East St. Louis grew into a major industrial and rail center in the first half of the twentieth century. Though always a bit rowdier than its counterpart across the river, East St. Louis became fairly prosperous during this time period. As described in the documentary “Made in USA: The East St. Louis Story,” “this was a city with neighborhoods, pretty parks, crowded schools, factory jobs and unions.” By 1960, Look Magazine had honored East St. Louis as an “All-America City.” [At the 2:15 mark in the “Made in USA” documentary, you can watch a parade the city held to celebrate this honor. It is incredible footage.] As the documentary explained, however, “what happened over the next ten, fifteen years would stun, anger and frustrate these citizens, as their hometown experienced a decline as incredible as its rise just a lifetime before.”

Specifically, industry began to leave the city. The large factories that had fueled the local economy were abandoned. Between 1960 and 1970, East St. Louis lost nearly 70 percent of its businesses. Unemployment increased at an alarming rate. Residents soon moved away. Between 1970 and 2000, the city lost 55 percent of its population. Crime rose. As the Federal Reserve Bank of St. Louis later described it, “East St. Louis and devastation became synonymous.”

It is against this historical backdrop that Mr. Peppers found himself in January 1971 protecting his Pizza Hut overnight with a shotgun. With people fleeing the area in droves and crime on the rise, it is perhaps easier to understand the circumstances that gave rise to the claim in Peppers. While Mr. Peppers’ insurance company rightfully may not have wanted to pay for bodily injury intentionally caused by its insured, the policyholder had an equal desire to prepare a defense that explained why he acted the way that he did in this time and place of devastating decline. For this reason, the Illinois Supreme Court agreed that Mr. Peppers was entitled to independent defense counsel, and in the process, created a doctrine that many insurance lawyers and professionals in and outside of Illinois still follow (and struggle with) forty years later.

Indeed, what the historical background of Maryland Casualty v. Peppers reveals is that many of the fundamental principles of insurance law that we take for granted every day, like the right to independent counsel, were not created in a vacuum. They are the result of real claims involving real people, and for good reason, as those principles continue and will continue to apply to real claims involving real people. We often read insurance law cases to quickly, pull the holding and apply it to a given claim. Sometimes we may draw better understanding of that holding if we take the time to consider more carefully the claim that gave rise to it.


Michael L. Young is a litigation attorney in the St. Louis office of HeplerBroom LLC with a primary emphasis in the practice of insurance coverage and bad faith. He represents insurance companies in Illinois and Missouri in complex insurance coverage matters at all stages of the claims process. Mr. Young also has advised insurers in drafting policy language and developing claims best practices. He has assisted insurer clients in recent legislative changes in insurance law in Missouri. He frequently presents and writes about these topics, including daily postings on LinkedIn. Mr. Young currently serves as the Vice-Chair of the Insurance Law Committee for the Illinois Association of Defense Trial Counsel (IDC). He has been named one of the Best Lawyers in America and a Missouri & Kansas Super Lawyer in Insurance Law. Mr. Young graduated from Washington University in St. Louis in 1999, summa cum laude, and from Saint Louis University School of Law in 2002, where he was the Valedictorian of his class.



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