Am. Bankers Ins. Co. of Fla. v. Shockley, 20-1938
| Decision Date | 28 June 2021 |
| Docket Number | No. 20-1938,20-1938 |
| Citation | 3 F.4th 322 |
| Parties | AMERICAN BANKERS INSURANCE COMPANY OF FLORIDA, Plaintiff-Appellee, v. Robert SHOCKLEY, Jr., Defendant-Appellant. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Mark John Sobczak, Emily R. Steinberg, Attorney, Nicolaides Fink Thorpe Michaelides Sullivan LLP, Chicago, IL, for Plaintiff-Appellee.
Peter J. Flowers, Ted A. Meyers, Attorneys, Meyers & Flowers, LLC, St. Charles, IL, for Defendant-Appellant.
Before Manion, Kanne, and Rovner, Circuit Judges.
This insurance dispute stems from Robert Shockley, Jr., filing a civil complaint in Illinois state court. The complaint alleged Shockley was severely injured after being thrown from (and run over by) a golf cart driven by a St. Charles Farms ("SFC")1 employee. Shockley sued SFC and its employee for negligence. In response, SFC's insurer American Bankers Insurance Company of Florida filed suit in federal court seeking a declaratory judgment that it has no duty to defend or indemnify SFC or its employee in the underlying lawsuit. The district court granted American's motion for summary judgment. Because the district court erred in interpreting the insurance policy, we reverse and remand.
SFC operated a horse farm and equestrian center in St. Charles, Illinois. SFC's business activities included maintaining, training, and boarding horses. It also provided riding lessons for a fee. SFC hosted shows and events both on and off its property. One type of off-site event was trail riding, which had previously occurred at different forest preserves. SFC held off-site events about once a month or less, with trail-riding events approximately three times a year. Sometime during the operation of the business, SFC attended a festival at the Kane County Fairgrounds.
SFC and American entered into an insurance contract, labeled as a farmowner policy, with coverage running from June 2016 through June 2017. The policy declarations describe the insured premises as "42W 690 North Ave, St. Charles, Illinois." The second page of declarations provides the coverage limits for "Commercial Liability Coverage." The final page of declarations, reproduced in relevant part below,2 includes a provision identifying "All known exposures" related to "Commercial Liability."
Casification Code Rating Basis Rate Premium
Stables, Boarding 16402 VARIOUS INCLUDED $ 855
Riding Clubs & Academies 16200 VARIOUS INCLUDED 2,284
Saddle Animals, Comm'l 16401 VARIOUS INCLUDED 289
Instructors Laib. 08201 VARIOUS INCLUDED 134
The policy includes an additional insured endorsement that states it "changes the Commercial Liability Coverages provided by this policy." The endorsement was issued to the Kane County Fairgrounds.3 It amends the definition of "insured" to include the Kane County Fairgrounds.
The policy has a number of coverage provisions following a table of contents labeled "Farm Coverage." Those coverage provisions relate to property such as barns, other buildings, and machinery. The provisions include incidental property coverages and perils coverages.
The coverage provision at issue in this case is coverage L. Coverage L follows a subsequent table of contents labeled "Commercial Liability Coverage (Farm Premises and Operations)." Coverage L provides coverage for bodily injury and property damage. The coverage states in relevant part:
Exclusion six of the policy clarifies that there is no coverage for bodily injury or property damage arising from use of a motorized vehicle except as provided by the supplemental coverage referenced above.
Shockley filed a negligence lawsuit in the Circuit Court of Cook County. According to the complaint, on November 11, 2016, Ashley Ratay, an employee of SFC, transported horses, equipment, and an SFC golf cart from the farm to Barrington Hills Riding Center. The riding center is located at 361 Bateman Road in the Village of Barrington Hills, approximately fifteen miles from SFC's property.
While at the riding center, Ratay was responsible for supervising those riding SFC horses. She did so while driving the SFC golf cart. At some point, Shockley was a passenger in the golf cart. With Shockley in the passenger seat, Ratay used the golf cart to chase a horse. She quickly drove the cart off the mowed path and onto a grassy field. The cart hit uneven ground, causing Shockley to fly out of the vehicle and land on the ground. Ratay ran over his leg with the golf cart.
Shockley sought to hold Ratay liable for his injuries. He also sued SFC under a respondeat superior theory.
After Shockley filed the underlying lawsuit, American filed a declaratory judgment in federal court against SFC, Ratay, and Shockley.5 American alleged it had no duty to defend or indemnify SFC in the underlying lawsuit since the injury occurred at the Barrington Hills Riding Center and, alternatively, based on exclusion six of the insurance policy.
American filed a motion for summary judgment. Shockley responded and filed a cross-motion for summary judgment. The district court found the insurance policy was a farmowner policy rather than a commercial general liability ("CGL") policy. It granted American's motion for summary judgment and denied Shockley's cross-motion for summary judgment. After an initial appeal, this Court remanded the case for the district court to enter a judgment declaring the rights and duties of the parties. The district court declared American has no duty to defend or indemnify SFC in the underlying lawsuit and entered judgment accordingly.
We have jurisdiction over this appeal under 28 U.S.C. § 1291. The district court had subject matter jurisdiction based on diversity of citizenship. See 28 U.S.C. § 1332(a)(1). The parties agree that Illinois substantive law applies.6
We review the district court's grant of summary judgment de novo and view the facts in the light most favorable to Shockley, the non-moving party. Sterling Nat'l Bank v. Block , 984 F.3d 1210, 1217 (7th Cir. 2021) (quoting Henry v. Hulett , 969 F.3d 769, 776 (7th Cir. 2020) (en banc)). The interpretation of an insurance contract is a legal issue that may be decided on a motion for summary judgment. Twenhafel v. State Auto Prop. & Cas. Ins. Co. , 581 F.3d 625, 628 (7th Cir. 2009). Summary judgment is proper when no genuine issue of material fact exists, and the moving party is entitled to judgment as a matter of law. Sterling , 984 F.3d at 1217.
In Illinois, the duty to defend is broader than the duty to indemnify. Coyle , 983 F.3d at 314. We compare the allegations of the underlying complaint to the language of the policy to determine whether there is a duty to defend. Id. If the facts alleged in the complaint fall within, or potentially fall within, the policy coverage, the insurer must defend the insured. Id. "Any doubts about the duty to defend are resolved in favor of the insured." Id. (quoting Scottsdale , 972 F.3d at 919–20 ).
Here, in comparing the underlying complaint to the insurance policy, the parties do not dispute what facts were alleged. Instead, at issue is the scope of coverage of the insurance policy, a pure question of law. To determine the scope of the policy, traditional principles of contract interpretation apply. See Murbach v. Noel , 343 Ill. App. 3d 644, 278 Ill.Dec. 426, 798 N.E.2d 810, 812 (2003). "Under Illinois law, the goal of contract interpretation is to ascertain the parties’ intent and, in doing so, we first look to ‘the plain and ordinary meaning’ of the contract language." Selective Ins. Co. of South Carolina v. Target Corp. , 845 F.3d 263, 267 (7th Cir. 2016) (quoting Aeroground, Inc. v. CenterPoint Props. Tr. , 738 F.3d 810, 813 (7th Cir. 2013) ). We interpret the contract "as a whole, viewing each part in light of the others." Id. (quoting Aeroground , 738 F.3d at 813 ). Each clause and word must be given effect to the extent possible so that no term is rendered meaningless. Id.
And if the contract is not clear on its face? Whether a contract is ambiguous is a legal question for the courts. See Dash Messenger Serv., Inc. v. Hartford Ins. Co. of Illinois , 221 Ill. App. 3d 1007, 164 Ill.Dec. 313, 582 N.E.2d 1257, 1260 (1991). If ambiguous, courts strictly construe the policy against the insurer and in favor of the insured. Trotter v. Harleysville Ins. Co. , 821 F.3d 916, 918 (7th Cir. 2016). A provision is ambiguous "only when it is susceptible to more than one reasonable interpretation." Id.
When interpreting an insurance contract, we account for "the type of insurance for which the parties have contracted, the risks undertaken and purchased, the subject matter that is insured and the purposes of the entire contract." Crum & Forster Managers...
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