Starr Indem. & Liab. Co. v. Tech. Ins. Co.
| Decision Date | 31 March 2019 |
| Docket Number | No. 16-cv-09553,16-cv-09553 |
| Citation | 379 F.Supp.3d 723 |
| Parties | STARR INDEMNITY & LIABILITY CO., Plaintiff, v. TECHNOLOGY INSURANCE CO., INC., Defendant. |
| Court | U.S. District Court — Northern District of Illinois |
Kurt D. Baer, Steven Schulwolf, Michaels, Schulwolf & Salerno, P.C., Chicago, IL, for Plaintiff.
Kevin M. Lougachi, Karbal, Cohen, Economou, Silk & Dunne, Chicago, IL, for Defendant.
Plaintiff Starr Indemnity & Liability Co. ("Starr") provided workers' compensation insurance for construction contractor Lend Lease (US) Construction, Inc. ("Lend Lease"). Lend Lease managed a construction project for which it retained subcontractors that were also insured under Lend Lease's policy from Starr. One of the subcontractors, however, also had a contract with another employer, which Starr claims made Defendant Technology Insurance Co., Inc. ("TIC") its coinsurer on Lend Lease's construction project. While working on the project, four ironworkers employed by the subcontractor sustained injuries for which they sought workers' compensation benefits. Starr covered their claims, paying a total of $ 583,045.18. As Starr's policy with Lend Lease contained a $ 500,000 deductible, Lend Lease reimbursed Starr for that amount. Starr has brought the present action seeking equitable contribution from TIC for its share of the ironworkers' claims. Now before the Court are cross-motions for summary judgment filed by Starr and TIC, each seeking a ruling on whether Starr may recover the $ 500,000 deductible from TIC, if Starr proves that TIC was in fact a coinsurer of Lend Lease. (Dkt. Nos. 59, 72.) For reasons explained below, the Court finds in favor of TIC on this narrow issue.
In evaluating cross-motions for summary judgment, the Court must take "the facts in the light most favorable to the non-movant, first for one side and then for the other." R.J. Corman Derailment Servs., LLC v. Int'l Union of Operating Eng'rs, Local Union 150, AFL-CIO , 335 F.3d 643, 648 (7th Cir. 2003). Here, there are several disputed facts, particularly with respect to those facts supporting Starr's motion for partial summary judgment. Yet the present motions concern a purely legal issue that will only arise if Starr proves certain facts establishing that TIC was a coinsurer obligated to pay out for the injuries for which Starr seeks equitable contribution. Both parties agree that TIC's coinsurer status should be resolved at a later stage in the proceedings. Thus, any disputed facts are not material to the present motions. For that reason, where disputed, the Court provides Starr's version of the following facts for context, while not resolving any disputed factual issues at this time.
Lend Lease was the construction manager for a construction project in downtown Chicago. (Def.'s Resp. to Pl.'s Statement of Uncontroverted Facts ("DRSUF") ¶¶ 6, Dkt. No. 67.) To provide insurance for the construction project, Lend Lease created a Contractor Controlled Insurance Program ("CCIP"). (Id. ¶ 7.) Pursuant to the CCIP, construction workers on the project were covered by the Workers' Compensation and Employers Liability insurance policy that Lend Lease acquired from Starr. (Id. ¶¶ 4, 7.) The CCIP Procedures Manual stated that subcontractors of every tier would be required to enroll in the CCIP, unless specifically excluded. (Id. ¶ 8.) Accordingly, Lend Lease's sub-subcontractor on the project, Midwest Steel, Inc. ("Midwest"), was enrolled in the CCIP and insured by Starr. (Id. ¶¶ 10–11.)
At all relevant times, Midwest was a party to a Client Service Agreement with Administrative Employer Services, Inc. ("AES"). (Id. ¶ 19.) Pursuant to the Client Service Agreement, all Midwest employees working on the Lend Lease project were deemed also to be AES employees. (Id. ¶ 20.) Among the responsibilities AES agreed to assume was to provide workers' compensation insurance for Midwest employees.1 (Id. ) AES's Workers' Compensation and Employers Liability insurance policy was issued by TIC. (Id. ¶ 18.)
Pursuant to its policy issued to Lend Lease, Starr agreed to pay all damages for bodily injuries sustained by Lend Lease employees. (Id. ¶ 5.) However, the policy contained a "Deductible Coverage Endorsement" under which Lend Lease was required to reimburse Starr for amounts paid up to the $ 500,000 per accident deductible. (Id. ) Thus, Starr would pay for all covered losses in the first instance, but Lend Lease would subsequently repay Starr for any amounts it paid up to the deductible. (Id. ) In the event Lend Lease failed to reimburse Starr, Starr was entitled to cancel the policy but would remain fully liable for the amount of claims incurred before cancellation. (Id. ) By contrast, TIC's policy contained no deductible provision. (See Aff. of Baer, Ex. 5 at TIC 001215–18, Dkt. No. 62.) Both Starr and TIC's policies contained an identical "Other Insurance" provision, however, which stated:
We will not pay more than our share of benefits and costs covered by this insurance and other insurance or self-insurance. Subject to any limits of liability that may apply, all shares will be equal until the loss is paid. If any insurance or self-insurance is exhausted, the shares of all remaining insurance will be equal until the loss is paid.
On December 29, 2014, four ironworkers suffered injuries while working on Lend Lease's downtown Chicago construction project. (DRSUF ¶ 12.) Those injured ironworkers sought workers' compensation benefits for their injuries. (DRSUF ¶ 13; Pl.'s Resp. to Def.'s Statement of Material Facts ("PRSMF") ¶ 4, Dkt. No. 82.) In their applications for workers' compensation benefits, the ironworkers identified both Midwest and AES as their employers. (DRSUF ¶ 14.) Starr ultimately paid $ 583,045.18 to cover all expenses associated with the injured ironworkers' claims. (Id. ¶ 16.) Shortly thereafter, Lend Lease reimbursed Starr for the full amount of the $ 500,000 deductible. (PRSMF ¶ 17.)
Prior to commencing the present action, Lend Lease filed another lawsuit in the United States District Court for the Northern District Illinois against TIC and AES. (PRSMF ¶ 5; Lend Lease (US) Constr., Inc. v. Admin. Emp'r Servs., Inc. , No. 1:15-cv-04318 (N.D. Ill.).) In the complaint, Lend Lease alleged that TIC was a coinsurer for purposes of the ironworkers' injuries pursuant to Midwest's contract with AES. (PRSMF ¶ 6.) Lend Lease sought indemnification from TIC for the full $ 500,000 that Lend Lease paid to Starr to satisfy the Starr policy's deductible. (Id. ) TIC moved to dismiss the action, arguing that Lend Lease "failed to plead a legal theory which would entitle it to recover its own deductible from [TIC] under Illinois law." (Id. ¶ 7.) The district court ruled in TIC's favor and dismissed Lend Lease's claims with prejudice, finding that Lend Lease could not maintain a claim for equitable contribution from TIC for amounts it paid to satisfy the Starr policy's deductible because Lend Lease was not itself an insurer. (Id. ¶¶ 10–11); Lend Lease (US) Constr., Inc. v. Tech. Ins. Co. (Lend Lease I) , No. 15 C 4318, 2016 WL 147895, at *3 (N.D. Ill. Jan. 13, 2016).
Following dismissal of its complaint, Lend Lease filed a motion pursuant to Federal Rule of Civil of Procedure 59(e) to alter or amend the judgment, requesting that the dismissal be without prejudice so that Lend Lease could file a third amended complaint. Lend Lease's proposed third amended complaint sought to add Starr as a plaintiff so that Starr could bring a contribution claim against TIC. (Id. ¶ 2.) The district court denied the motion. (Id. ¶ 4.) Lend Lease then appealed the dismissal to the Seventh Circuit. (PRSMF ¶ 13.) However, the Seventh Circuit affirmed the district court's ruling, holding that Lend Lease was not entitled to contribution or indemnification from TIC. (Id. ¶¶ 14–15); Lend Lease (US) Constr., Inc. v. Admin. Emp'r Servs., Inc. (Lend Lease II) , 840 F.3d 386 (7th Cir. 2016). Its decision also addressed Lend Lease's Rule 59(e) motion, again affirming the district court and noting that "Lend Lease has already had three chances to plead correctly—making this a case of three strikes and you're out—and Starr can litigate its own claims against TIC." Lend Lease II , 840 F.3d at 388. Starr apparently heeded the Seventh Circuit's admonition and filed the present action for equitable contribution against TIC in the Circuit Court of Cook County, Illinois, which TIC promptly removed to this Court on the basis of diversity jurisdiction.2 (Notice of Removal, Dkt. No. 1.)
Both parties agree that their motions for partial summary judgment focus on a single legal issue for which there are no disputed issues of material fact: whether Starr may recover from TIC the $ 500,000 it paid in connection with the injured ironworkers' claims, even though Lend Lease reimbursed that sum pursuant to the deductible provision in its insurance policy with Starr. Whereas Starr contends that the deductible must be included in its contribution claim, TIC argues that Starr already has been made whole for the amount of the deductible and may only seek contribution from TIC for its share of payments made in excess of the deductible. Although TIC's status as a coinsurer from whom Starr may seek equitable contribution will be determined later, the parties seek to narrow the issues such that if a jury (or the Court) at a later stage in the proceedings determines that TIC shared with Starr an obligation to cover the ironworkers' claims, the damages issue will already be resolved. The Court agrees that there are no disputed issues of material fact as to this legal issue such that it is ripe for resolution.
TIC argues in its motion for partial summary judgment that the doctrine of...
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