Coachmen Insustries v. Willis of Illinois, Inc.
| Decision Date | 27 June 2008 |
| Docket Number | Civil Action No. H-06-0892. |
| Parties | COACHMEN INDUSTRIES, INC., Plaintiff, v. WILLIS OF ILLINOIS, INC., Defendant. |
| Court | U.S. District Court — Southern District of Texas |
Larry D. Thompson, Lorance & Thompson, Houston, TX, Gregory A. Anderson, Jennifer Courtney Booth, Anderson Glenn LLC, Ponte Vedra Beach, FL, for Plaintiff.
Brendan D. Cook, Elias Mark, James Chadwick Newton, Baker McKenzie LLP, Houston, TX, for Defendants.
Pending before the Court in this action are two dispositive motions and related motions to strike. Defendant Willis of Illinois, Inc. ("Willis"), has filed a Motion for Summary Judgment [Doc. # 79]. Plaintiff Coachmen Industries, Inc. ("Coachmen") has filed a Response and Cross-Motion for Partial Summary Judgment on three of the four claims asserted against Willis [Doc. # 85].1 Willis has replied/responded [Doc. # 105] and Coachmen has replied [Doc. # 113]. Former Defendant Alternative Services Concepts, LLC ("ASC") also responded to Willis's motion, but only as to one of the claims at issue [Doc. # 86]. Willis replied [Doc. # 92] and ASC filed a surreply [Doc. #99].2 Although Coachmen and ASC have since settled their dispute, Coachmen adopted the arguments raised by ASC in its submissions regarding Willis's summary judgment motion. Accordingly, those documents remain relevant to the pending motions for summary judgment. In addition, at the Court's request, in light of the Court's decision on choice of law questions [Doc. # 152], Coachmen and Willis have filed supplementary briefs [Docs. # 156 and # 155, respectively].3 Having considered the parties' submissions, all matters of record, and applicable law, the Court concludes that Willis's Motion for Summary Judgment should be granted in part and denied in part and Coachmen's Cross-Motion for Partial Summary Judgment should be denied.
Coachmen and Willis also have filed Motions to Strike various portions of affidavits submitted in support of each party's motion for summary judgment [Docs. # 84 and # 102, respectively]. Each party has responded [Docs. #110 and # 103, respectively]. The objections raised by Coachmen and Willis largely concern the proper weight to be given to the challenged evidence, rather than its admissibility under the rules of evidence. In any event, the Court does not rely on inadmissible evidence in reaching the holdings discussed herein. Thus, both Motions to Strike are denied as moot.
Coachmen is a manufacturer of travel trailers. Since 1996, Coachmen has worked with an insurance broker,4 Defendant Willis, to aid Coachmen in obtaining insurance coverage. As Coachmen's insurance-broker, Willis undertook each year to survey the insurance market and obtain policy quotes from insurers offering services meeting Coachmen's needs.5 Willis then drafted and presented to Coachmen "brokerage proposals" outlining Coachmen's options, Willis's recommendations, and various other obligations on the part of each party.6
In 2001, Willis guided Coachmen in securing a variety of traditional insurance policies with third party insurers. Between May 1, 2001, and May 1, 2002, Coachmen's primary liability insurance policy was issued by CNA Insurance Company ("CNA"); Coachmen also had an excess coverage — or "umbrella" — policy issued by Gulf Insurance Company ("Gulf'). The Gulf policy included a requirement that Gulf be given "prompt written notice" of any liability claims arising from, inter alia, "severe burns or disfigurement."7 Coachmen alleges that Willis failed to properly notify the company of this obligation.
In 2002, Coachmen, with the aid of Willis, began subscribing to the "Alembic" program, an offshore insurance group captive through which Coachmen received certain types of insurance.8 Willis also brokered policies for Coachmen outside of the Alembic program.9 Willis admits that after Coachmen subscribed to the Alembic program Willis assumed "additional limited responsibilities for overseeing Coachmen's third-party administrator10 with respect to certain kinds of insurance claims."11 Coachmen disputes this characterization and argues that Willis's duties as a broker were the same regardless of Coachmen's involvement with the Alembic program.
In July 2003, Coachmen, apparently on the advice of Willis,12 hired former Defendant ASC to be its third party claims administrator, responsible for, inter alia, notifying Coachmen's insurance carriers of claims brought against the company.13 ASC's responsibilities extended to claims arising on or after July 1, 2003, but included also "certain liability files with loss dates prior to July 1, 2002, as assigned by" Coachmen.14
In March 2004, Coachmen was joined as a defendant in a Texas state court lawsuit for damages caused by a January 2001 fire in a Coachmen-manufactured trailer (the "Brashears lawsuit"). The plaintiffs in the state case alleged they suffered severe burns and disfigurement. On March 19, 2004, Coachmen notified CNA of the lawsuit and sent CNA a copy of the pertinent Complaint.15 Coachmen sent a copy of the notification letter and state court Complaint to ASC and Willis.16 Coachmen noted in the letter that "[i]t [was] too early to tell whether the claims [could] be settled within [Coachmen's] self-insured retention ...."17 Coachmen further wrote that "[i]t [was] not Coachmen's intent to cede direction of the defense or to tender the self-insured limit to [CNA] at th[at] time," as it did not yet appear that Coachmen would need to make a claim for payment from CNA.18 However, Coachmen stated that "if [the recipients] would like to be copied with [Coachmen's] counsel's reports ... Coachmen ha[d] authorized its counsel to cooperate ...."19 Pursuant to Coachmen's representations, ASC requested that it be copied on all reports involving the Brashears lawsuit.20
More than a year later, on April 21, 2005, Coachmen received a multi-million dollar demand letter from the Brashears and subsequently sent a letter to ASC advising that the primary CNA insurance policy would likely be too small to cover a realistic settlement of the Brashears lawsuit. Coachmen stated that "[the] correspondence [should] serve as notice to [Coachmen's] excess carriers of the potential liability involved with [the] case."21 ASC acknowledged its receipt of this notice on April 22, 2005, and that same day contacted Willis to request contact information for the excess carriers who had policies with Coachmen at the time of the 2001 fire. According to an email exchange between ASC and Willis, Willis referred ASC to a Willis subsidiary, Stewart Smith,22 which Willis apparently claimed was Coachmen's 2001 broker. Upon being contacted by ASC, Stewart Smith allegedly assumed responsibility for reporting the Brashears lawsuit to Coachmen's excess insurance carriers,23 and sent notice of the lawsuit to two companies, ACE USA ("ACE") and St. Paul Travelers Insurance ("St.Paul"). However, neither ACE nor St. Paul was potentially implicated by the Brashears claim.24
Despite Coachmen's request that all excess carriers be notified of the Brashears lawsuit, Gulfs claims department did not receive notification until April 29, 2005, the Friday before the Brashears trial was to commence.25 Gulf quickly denied coverage, claiming that it was prejudiced by the late notice and referencing the contractual requirement that it be given prompt notice of liability claims such as those involved in the Brashears lawsuit. The parties in the Brashears lawsuit subsequently settled for $5,000,000 after a court-ordered mediation. Neither Gulf nor ASC participated in the mediation.26
Coachmen thereafter sued Gulf, claiming under various theories that Gulf improperly denied coverage. See Coachmen Indus., Inc. v. Gulf Ins. Co., No. C-05-C0264 (S.D. Tex.-Corpus Christi Div. March 16, 2006). Coachmen argued that any delay in notification was not prejudicial to Gulf. In March 2006, Coachmen and Gulf settled these claims for $2,875,000.27
Shortly after settling with Gulf, Coachmen filed this suit against ASC, accusing the company of negligence, breach of fiduciary duty, breach of contract, and violations of Texas insurance law. ASC subsequently joined Willis as a "responsible third party" and Coachmen thereafter asserted breach of contract, negligence, and insurance law claims against Willis as well. Coachmen and ASC have since settled their dispute. Willis and Coachmen, the sole remaining parties, have variously moved for summary judgment on all claims.
Late in this litigation, choice of law questions were raised. The Court concluded that Illinois law applies to Coachmen's breach of contract claim, that the parties waived application of law other than that of Texas as to Coachmen's negligence claim, and that Willis is not susceptible to liability under the Texas Insurance Code.28 Accordingly, Illinois law governs resolution of Coachmen's breach of contract claim, Texas law governs resolution of the negligence claim, and Coachmen's insurance code claims have been dismissed.
Rule 56 of the Federal Rules of Civil Procedure mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a sufficient showing of the existence of an element essential to the party's case for which that party will bear the burden at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994) (en banc); see also Baton Rouge Oil & Chem. Workers Union v. ExxonMobil Corp., 289 F.3d 373, 375 (5th Cir.2002). In deciding a motion for summary judgment, the Court must determine whether "the pleadings, depositions, answers to interrogatories, and admissions on file, together with any affidavits filed in support of the...
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