Joseph T. Ryerson & Son, Inc. v. Travelers Indem. Co. of Am.

• Decision Date: 07 April 2020
• Docket Number: No. 1-18-2491,1-18-2491
• Citation: 165 N.E.3d 439,2020 IL App (1st) 182491,444 Ill.Dec. 793
• Parties: JOSEPH T. RYERSON & SON, INC., f/k/a Ryerson Inc. and Ryerson Tull, Inc., Plaintiff-Appellant, v. TRAVELERS INDEMNITY COMPANY OF AMERICA, Travelers Property Casualty Company of America, and Illinois National Insurance Company of Illinois, Defendants (Travelers Property Casualty Company of America, Defendant-Appellee.)
• Court: United States Appellate Court of Illinois

2020 IL App (1st) 182491

165 N.E.3d 439

444 Ill.Dec. 793

JOSEPH T. RYERSON & SON, INC., f/k/a Ryerson Inc. and Ryerson Tull, Inc., Plaintiff-Appellant,

v. TRAVELERS INDEMNITY COMPANY OF AMERICA, Travelers Property Casualty Company of America, and Illinois National Insurance Company of Illinois, Defendants(Travelers Property Casualty Company of America, Defendant-Appellee.)

No. 1-18-2491

Appellate Court of Illinois, First District, SECOND DIVISION.

Opinion filed April 7, 2020

Rehearing denied May 1, 2020

Alan J. Martin, of Law Offices of Alan J. Martin, LLC, of Chicago, for appellant.

Michael M. Marick, W. Joel Vander Vliet, and Andrew J. Candela, of Skarzynski Marick & Black LLP, of Chicago, for appellee.

PRESIDING JUSTICE FITZGERALD SMITH delivered the judgment of the court, with opinion.

¶ 1 The plaintiff, Joseph T. Ryerson & Son, Inc., formerly known as Ryerson Inc., and Ryerson Tull, Inc. (Ryerson), filed this lawsuit against its insurance companies, Travelers Indemnity Company of America, Travelers Property Casualty Company of America (Travelers), and Illinois National Insurance Company of Illinois (Illinois National).¹ This case involves two underlying lawsuits in which Ryerson was sued and tendered defense of the suit to Travelers, but the two suits are otherwise unrelated. The first underlying lawsuit was filed in federal court in the Western District of Oklahoma under the caption Champagne Metals v. Ken-Mac Metals, Inc., No. CIV-02-528-C (W.D. Okla.) (Champagne Metals suit). Ryerson alleged in this case that Travelers had a duty to defend it in the Champagne Metals suit, which Travelers breached. It also sought relief under section 155 of the Illinois Insurance Code ( 215 ILCS 5/155 (West 2014) ). Ryerson appeals the trial court's granting of summary judgment in favor of Travelers on the allegations concerning the duty to defend and the dismissal of the corresponding section 155 claim. The second underlying lawsuit was filed in the circuit court of Cook County and was the subject of this court's order in Hoffman v. Crane , 2014 IL App (1st) 122793-U, 2014 WL 2565691 (Hoffman suit). Ryerson alleged in this case that Travelers committed breach of contract, violated section 155 of the Illinois Insurance Code ( 215 ILCS 5/155 (West 2014) ), and violated the Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act) ( 815 ILCS 505/1 et seq. (West 2014)) in the handling of its defense of Ryerson in the Hoffman suit, and it appeals from the trial court's dismissal of those counts. For the reasons that follow, we affirm the judgment of the trial court.

¶ 2 I. BACKGROUND

¶ 3 A. Champagne Metals Suit

¶ 4 In 2002, Champagne Metals sued Ryerson and six other defendants who were competitors of Champagne Metals in the metal service center industry. Ryerson and its codefendants had been in the industry for many decades, but Champagne Metals had been in business for only about six years when it filed its complaint alleging that Ryerson and the other defendants were engaging in conspiratorial conduct aimed at keeping it out of the industry. The complaint contained a count for violation of the Sherman Act ( 15 U.S.C. § 1 et seq. (2000) ), a count for violation of the Oklahoma Antitrust Reform Act ( Okla. Stat. tit. 79, § 201 et seq. (2002)), and a count for the common law tort of interference with business or contractual relations. It is this common law tort count that Ryerson alleges in this case triggered Travelers' duty to defend it, as all allegations of the underlying complaint were incorporated into that count.

¶ 5 The underlying compliant alleged that Ryerson and its codefendants acted "to deny Champagne Metals a relationship" with the six leading aluminum mills in North America (i.e. , the suppliers of the metal service centers), which Champagne Metals needed to compete in the relevant market. It alleged that Ryerson and the codefendants engaged in an agreement, understanding, and concerted action that included "expressing disapproval to certain aluminum mills of any intent, plan, or consideration to add Champagne Metals as a distributor or to sell aluminum to Champagne Metals," "threatening certain aluminum mills that Defendants will take business away from the mills if Champagne Metals is designated as a distributor for the mills or if the mills sell aluminum to Champagne Metals," and "expressing disapproval to and threatening Pechiney and Commonwealth for selling aluminum to Champagne Metals." It alleged that this conspiracy caused four of the aluminum mills to refuse to designate Champagne Metals as a distributor, leaving it with the ability to buy products from only two of the North American aluminum mills (Pechiney and Commonwealth), neither of which manufactured all of the products that Champagne Metals needed to compete in the industry. It alleged that the conduct by Ryerson and its codefendants caused injury to Champagne Metals by foreclosing it from competing for business in the relevant market and causing it to lose business. It additionally alleged that "customers have determined not to purchase aluminum products from Champagne Metals because of Defendants' conduct and because of the concern that Defendants will put Champagne Metals out of business."

¶ 6 The underlying complaint also contained a paragraph that alleged the following:

"In the alternative, under rule of reason analysis, Defendants' unlawful conduct demonstrates competitive injury in that any arguable prospective benefits resulting from the conduct are clearly outweighed by its anticompetitive effects. For instance, Defendants each have a long history in the metals business and wield substantial power in the relevant market. As a result of said conspiracy, which is generally known in the industry, upon information and belief, other potential service centers have been deterred from entering the relevant market. In fact, upon information and belief, an officer of one of the Defendants stated that Champagne Metals is the biggest mistake in the last 30 years of his career, and that if he had known about Champagne Metals on the day it started, he would have stopped it from entering the market. Thus, as a result of said conspiracy, competition in the relevant market has been injured."

The count for interference with business or contractual relations alleged that Champagne Metals had business and contractual relationships with original equipment manufacturers, other customers, and aluminum mills and that the defendants maliciously and wrongfully interfered with those relationships, thereby causing injury and damages to Champagne Metals.

¶ 7 According to Travelers, Ryerson did not tender the Champagne Metals suit for defense or indemnification until May 6, 2004. In a letter to Ryerson dated June 28, 2004, Travelers informed Ryerson that it had no obligation to defend or indemnify Ryerson against the allegations of the Champagne Metals suit. It is undisputed that Travelers never filed a declaratory judgment action concerning the propriety of its denial, and it did not defend Ryerson under a reservation of rights.

¶ 8 On June 15, 2004, the district court granted summary judgment in favor of Ryerson and the other defendants on Champagne Metals' claims. See Champagne Metals v. Ken-Mac Metals, Inc. , No. CIV-02-528-C, 2004 WL 7318834 (W.D. Okla. June 15, 2004). In its order, the district court addressed the evidence presented by Champagne Metals that Ryerson had participated in a conspiracy, which included evidence of Ryerson's representatives' "complaints to Commonwealth about its relationship with Champagne Metals." Id. at *17. In setting forth this evidence, the court referenced a statement attributed by a Commonwealth employee to Ryerson's representative Phil Wylie, that "Mr. Wiley reiterated his belief that [Champagne Metals] did not meet the distributor criteria." Id. Concluding that Ryerson's complaints were consistent with its independent business interests, the district court stated, "Wylie may just as likely have been commenting on the likelihood that other service centers were equally concerned about Champagne Metals when he said that Commonwealth risked losing potential customers because of that relationship." Id. at *18.

¶ 9 Champagne Metals appealed the district court's granting of summary judgment against the defendants, and on August 7, 2006, the United States Court of Appeals for the Tenth Circuit reversed the district court's decision. See Champagne Metals v. Ken-Mac Metals, Inc. , 458 F.3d 1073 (10th Cir. 2006). On May 13, 2009, an order was filed in the district court reflecting that the parties had reached a settlement and the case was being dismissed.

¶ 10 Following the conclusion of the Hoffman suit (in which Travelers was defending Ryerson), Ryerson filed this action in which it sought in count I a declaratory judgment that Travelers had a duty to defend it against the underlying allegations of the Champagne Metals suit, that it had breached that duty, and that it should be estopped from asserting any policy defenses to coverage based on that breach. In count II, Ryerson asserted a claim for breach of contract based on the same conduct by Travelers. In count VII of its first amended complaint, Ryerson asserted that it was entitled to a remedy under section 155 of the Illinois Insurance Code ( 215 ILCS 5/155 (West 2014) ) based on Travelers' conduct with respect to the Champagne Metals suit.

¶ 11 The trial court dismissed count VII on the basis that it was not filed within the applicable statute of limitations. It granted a motion for summary judgment in favor of Travelers on counts I and II, concluding that under the policy at issue Travelers owed no duty to defend Ryerson in the Champagne Metals suit. Ryerson timely appeals these orders of the trial court.

¶ 12 B. Hoffman Suit

¶ 13 The underlying facts of the Hoffman suit are set forth in greater detail in this court's order in Hoffman , 2014 IL App (1st) 122793-U. The case...