American Design & Build, Inc. v. Houston Cas. Co., Case No. 11-C-293
| Decision Date | 05 March 2012 |
| Docket Number | Case No. 11-C-293 |
| Court | U.S. District Court — Eastern District of Wisconsin |
| Parties | AMERICAN DESIGN & BUILD, INC. Plaintiff, v. HOUSTON CASUALTY COMPANY, Defendant. |
On March 23, 2011, the plaintiff, American Design & Build, Inc. (American Design), filed a complaint asserting breach of contract and insurance bad faith claims against the defendant, Houston Casualty Company (Houston Casualty). Specifically, the plaintiff asserts that the defendant breached its duty to defend the plaintiff and denied insurance benefits in bad faith.
The court has jurisdiction over this action pursuant to 28 U.S.C. § 1332 because the parties are diverse and the amount in controversy exceeds $75,000.00 Venue is proper under 28 U.S.C. § 1391. The case was assigned according to the random assignment of civil cases pursuant to 28 U.S.C. § 636(b)(1)(B) and General Local Rule 3(a)(1) (E.D. Wis.). The parties have consented to United States magistrate judge jurisdiction pursuant to 28 U.S.C. § 636(c) and General Local Rule 73 (E.D. Wis.).
On August 15, 2011, both parties filed motions for summary judgment. (Docket ## 20, 22). The plaintiff moves for partial summary judgment on its claim that the defendant breached its duty to defend. The defendant moves for summary judgmenton the ground that its insurance policy does not cover the claims against the plaintiff because the plaintiff made material misrepresentations on its application for insurance when it did not disclose that there was a pending controversy with a client.
On September 15, 2011, the defendant filed a motion to strike the supplemental affidavit of Attorney Patrick Madden. (Docket #56). These motions are fully briefed and will be addressed herein.
Because the motion to strike addresses evidence submitted in support of the plaintiff's motion for partial summary judgment, the court will address this motion first. In moving to strike the supplemental affidavit of Attorney Madden or in the alternative, for leave to file a sur-reply, the defendant asserts that Attorney Madden's supplemental affidavit is improper because it violates Wisconsin Supreme Court Rule (SCR) 20:4.2. The defendant contends that Attorney Madden is swearing to a statement made by Mr. Wiley during a conversation that took place when Mr. Wiley was represented by other counsel. The defendant also maintains that the plaintiff may not raise an argument for the first time in its reply brief. Should the court deny the motion to strike, the defendant requests leave to file a sur-reply so that it may address the issues raised in the supplemental affidavit.
In response, the plaintiff states that the supplemental affidavit does not violate SCR 20:4.2 because Mr. Wiley was not represented by counsel. The plaintiff further contends that, because the attorneys who represented Mr. Wiley and the defendant were not licensed to practice in Wisconsin, Mr. Wiley and the defendant were not "represented" under Wisconsin law. The plaintiff also states that the law firm retainedby the defendant at that time was acting solely in the capacity of a claims administrator, not as counsel. In addition, the plaintiff maintains that Attorney Madden's conversation with Mr. Wiley does not violation SCR 20:4.2 because the parties were not adverse at the time of the conversation.
Rule 20:4.2 of the Wisconsin Supreme Court Rules prohibits a lawyer from communicating "about the subject of the representation with a person the lawyer knows to be represented by another lawyer in the matter . . .." Although the parties disagree about the applicability of this rule to Attorney Madden's supplemental affidavit, the court need not determine that issue because it will not consider the supplemental affidavit on other grounds.
A party waives an argument that was not raised in its initial brief. See Carter v. Tennant, 383 F.3d 673, 679 (7th Cir. 2004). Thus, the plaintiff may not introduce new arguments in its reply brief. Id. Accordingly, the court will not consider any argument raised for the first time in the plaintiff's reply brief. Moreover, on a motion for summary judgment, the court considers only those facts that are undisputed. See Fed. R. Civ. P 56(c). The parties dispute whether Mr. Wiley made the statement included in Attorney Madden's affidavit and, therefore, the court will not consider that statement in deciding the summary judgment motion regardless of whether it was a new argument raised in a reply brief or whether Attorney Madden violated SCR 20:4.2. Therefore, the court will deny the defendant's motion to strike.
Summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, showthat there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c); see also, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986); McNeal v. Mach., 763 F. Supp. 1458, 1460-61 (E.D. Wis. 1991). "Material facts" are those facts that under the applicable substantive law "might affect the outcome of the suit." See Anderson, 477 U.S. at 248. A dispute over "material facts" is "genuine" if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. A genuine issue of material fact is not shown by "the mere existence of some alleged factual dispute between the parties," Anderson, 477 U.S. at 247 (1986), or by "some metaphysical doubt as to the material facts," Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). Rather, a genuine issue of material fact exists only if "a fair-minded jury could return a verdict for the [nonmoving party] on the evidence presented." Anderson, 477 U.S. at 252. In determining whether a genuine issue of material fact exists, the court must consider the evidence and all reasonable inferences in the light most favorable to the nonmoving party. See Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., Ltd., 475 U.S. 574, 587 (1986); Matter of Wade, 969 F.2d 241, 245 (7th Cir. 1992).
At the outset, the court notes that a number of the parties' stipulated facts are problematic. For instance, Stipulated Fact 12 states: "Following the February 11, 2010 meeting, Sadownikow sent Buending a memorandum dated the same day." The parties cite to Stipulated Exh. 2. Stipulated Exh. 2 is a three-page memorandum relating to the building specifications and costs as a "Follow-up from 2-11-10 Meeting." Stipulated Fact 26 states: "On September 13, 2010, Tim Mullins of RA&MCO and Jamie McLean of R-TSpecialty corresponded via email." The parties cite to Stipulated Exh. 47 in support of this fact. Stipulated Exh. 47 consists of a chain of eight emails. The emails span several days and include additional people beyond those named in Stipulated Fact 26. Likewise, Stipulated Fact 27 states: "On September 13, 2010, Tim Mullins of RA&MCO sent an email to R-T Specialty." This fact, as written, appears duplicative of Stipulated Fact 26, except that the parties cite to Stipulated Exh. 30. Stipulated Exh. 30 is a continuation of the chain of eight emails in Stipulated Exh. 47. It contains only one new email.
Factual statements like those in Stipulated Facts 12, 26, and 27 are not, in and of themselves, material to the resolution of this dispute. Rather, it appears that the parties intend for the court to ascertain the facts from the stipulated exhibits. However, without more specific stipulated or proposed facts, the court is unable to discern what the parties actually intend to establish with these exhibits. This is especially true when the stipulated exhibits are several pages long and address a number of topics.
Moreover, while the parties do not dispute that an email was sent on a certain date, they do dispute the meaning of some of the language in the email. For example, the parties agree that Tim Mullins sent an email to Jamie McLean on September 13, 2010. See Stipulated Fact 27. In support of Stipulated Fact 27, the parties cite Stipulated Exh. 30, which includes an email stating, "Let's bind it." In its brief, the plaintiff asserts that this email constitutes a binder. The defendant disagrees. The court cannot engage in its own fact finding mission on a motion for summary judgment. Rather, the burden is on the parties themselves to set forth the undisputed facts. Merely citing to an exhibit, without more, does not suffice.
Thus, some of the Stipulated Facts and Exhibits contain disputes of fact which the court cannot resolve on summary judgment. Therefore, if the stipulated facts, without reference to the supporting exhibits, are not themselves relevant or material to this decision, the court did not include them in the relevant undisputed facts and did not consider them for purposes of determining the motions for summary judgment.
Plaintiff American Design is engaged in the business of providing architectural and contracting services with its principal place of business is West Bend, Wisconsin. Kraig Sadownikow is the president and an owner of the plaintiff.
The defendant is an insurance company in the business of providing specialty lines of insurance and is a subsidiary of HCC Insurance Holdings, Inc. The defendant's principal place of business is Houston, Texas. Risk Adjustment & Management Company (RA&MCO) processes insurance applications and claims on behalf of the defendant. RA&MCO also is a subsidiary of HCC Insurance Holdings, Inc.
R&R Insurance Services, Inc. (R&R Insurance) is an independent insurance agency with its corporate headquarters and principal place of business in Waukesha, Wisconsin. R&R Insurance also has an office in West Bend, Wisconsin. R&R Insurance does business with multiple insurance companies and wholesale insurance brokers. The plaintiff is R&R...
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