Cincinnati Ins. Co. v. Vita Food Prods., Inc.
| Decision Date | 16 December 2015 |
| Docket Number | No. 15–1405.,15–1405. |
| Citation | 808 F.3d 702 |
| Parties | CINCINNATI INSURANCE CO., Plaintiff–Appellee, v. VITA FOOD PRODUCTS, INC., Defendant–Appellant. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Brian M. Reid, Daniel Patrick Johnston, Attorney, Litchfield Cavo LLP, Chicago, IL, for Plaintiff–Appellee.
Steven Paul Blonder, I, Attorney, Much Shelist, P.C., Chicago, IL, for Defendant–Appellant.
Before BAUER, POSNER, and KANNE, Circuit Judges.
The Cincinnati Insurance Company issued a liability insurance policy to a company called Painters USA for a one-year period beginning on January 15, 2011. It has brought this suit to try to avoid having to provide coverage to another company, Vita Food Products, which claims to be an "additional insured"—that is, to also be covered by the liability insurance policy that Cincinnati had issued to Painters.
The policy covered "bodily injury" caused by an "occurrence" (an accident, presumably) for which the insured was legally liable to the injured person. But in addition the policy allowed the insured to add an "additional insured" to the policy by an oral agreement (or a written one, but this case involves an oral agreement), provided that the oral agreement preceded the "occurrence" and that "a certificate of insurance showing that person or organization as an additional insured has been issued." No permission from Cincinnati Insurance is required for the primary insured to create an additional insured, provided that the two insureds have a relationship that makes the addition of a second insured consistent with the nature and aims of the policy, as when the original insured is providing products or services to the additional insured (as occurred in this case).
While Cincinnati's insurance policy was in force, Painters was hired by Vita Food Products to do painting on Vita's premises. According to Vita, Painters agreed to add Vita as an additional insured—orally. Vita doubtless was concerned that if one of Painters' workers was injured on Vita's premises, the worker would file a tort suit against Vita—he couldn't sue Painters because an employee normally has only a workers' compensation remedy against his employer and not a common law tort remedy.
In fact, one of Painters' workers, Nardo Ovando, did sue Vita, for negligent maintenance of its premises. It was soon after Painters began doing work for Vita and before there was any written confirmation of the oral agreement that Ovando fell while working at Vita. He sustained a terrible injury, and remains in a coma to this day. A tort suit was filed against Vita on Ovando's behalf and that of his wife (Karina Baez, who claims loss of consortium). The suit before us, however, is a diversity suit brought by the insurance company to obtain a declaration that Vita was not covered by the policy that the company had issued to Painters. The company points out that the accident, even if it occurred after the oral agreement that added Vita as a party insured, occurred before the preparation of the certificate confirming Vita's status as an additional insured. Ovando and Baez are named as additional defendants, since as plaintiffs in the state court tort suit against Vita they might claim an entitlement to share in any insurance proceeds that Vita receives in order to help it pay damages to the plaintiffs, should Vita be held liable for Ovando's accident.
Painters had requested the certificate within hours after Ovando's injury, and an insurance agent for Cincinnati Insurance had issued it to Vita the next day. But the district judge agreed with Cincinnati that the certificate had come too late—that until it was prepared and signed the "additional insured" was not actually insured. And so the judge granted summary judgment in favor of the insurance company, precipitating this appeal by Vita. The insurance company also denied, and continues to deny, that the oral agreement adding Vita as an insured preceded the accident. But there was conflicting evidence on that point, and the district judge therefore correctly ruled that the issue could not be resolved on a motion for summary judgment.
But his grant of summary judgment in favor of Cincinnati Insurance was premature. The reference in the insurance policy to a certificate of insurance is...
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