Conagra, Inc. v. Arkwright Mut. Ins. Co.
| Decision Date | 10 September 1999 |
| Docket Number | No. 95 C 3738.,95 C 3738. |
| Citation | 64 F.Supp.2d 754 |
| Parties | CONAGRA, INC. Plaintiff, v. ARKWRIGHT MUTUAL INSURANCE CO. and The Hobbs Group, Inc., Defendants. |
| Court | U.S. District Court — Northern District of Illinois |
Gerald G. Saltarelli, Michael A. Stick, Butler, Rubin, Saltarelli & Boyd, Chicago, IL, Pamela K Black, McGrath, North, Mullin & Kratz, Omaha, NE, John E. North, Jr., McGrath, North Mullin & Kratz, Omaha, NE, Peter G. Land, Babbitt & Melton, Chicago, IL, for Conagra Inc, plaintiff.
Patricia Peter, John C. Goodnow, Mark J. Feinberg, Dale I Larson, Terese S Wallschlaeger, Kathryn M. Walker, Zelle, Hofmann, Voelbel & Gette, LLP, Minneapolis, MN, Jeffrey Eric Margulis, Kaplan, Begy & von Ohlen, Chicago, IL, Jeffrey Mark Rubin, Neal Jeffrey Moglin, Lovell, White & Durrant, Chicago, IL, for Arkwright Mutual Insurance Co., defendant.
David M Agnew, Lord, Bissell & Brook, Chicago, IL, for Hobbs Group, Inc., The defendant.
After its initial complaint in Massachusetts state court was stayed on grounds of forum non conveniens, see Conagra, Inc. v. Arkwright Mut. Ins. Co., 1995 WL 808941 (Mass.Super. March 14, 1995), in June 1995, Conagra, Inc. ("Conagra") filed an action in this Court against Arkwright Mutual Insurance Co. ("Arkwright"), its former insurer, and The Hobbs Group, Inc. ("Hobbs"), its purported insurance broker, seeking over $28 million pursuant to various claims regarding its insurance coverage for two warehouse fires. Since then, the parties have battled regarding, among other things, procedure, see Conagra v. Arkwright Mut. Ins. Co., 1997 WL 573401 (N.D.Ill. Sept.11, 1997), and discovery, see ConAgra v. Arkwright Mut. Ins. Co., 32 F.Supp.2d 1015 (N.D.Ill.1999). It is finally ripe to address some of the merits of the parties' contentious dispute.
Presently, the parties have submitted five separate motions for summary judgment: (1) Conagra's motion for summary judgment against Arkwright, (2) Conagra's motion for summary judgment against Hobbs, (3) Arkwright's motion for partial summary judgment against Conagra, (4) Hobbs' motion for summary judgment, and (5) Hobbs' motion for partial summary judgment to reduce damages. Having considered the hundreds of pages of briefs and factual submissions, as well as the relevant portions of the 14 volumes of exhibits, the Court: (1) denies Conagra's motions for summary judgment against Arkwright and Hobbs, (2) grants Arkwright's motion for partial summary judgment against Conagra, (3) grants in part and denies in part Hobbs' motion for summary judgment against Conagra, and (4) denies Hobbs' motion for partial summary judgment to reduce damages.
The following facts are undisputed unless otherwise noted. Conagra and its wholly owned subsidiaries and divisions (the independent operation companies, or "IOCs") are engaged in the production and distribution of a wide range of food and food related products throughout the United States and internationally. Arkwright is authorized to conduct business in Illinois as an insurer of various risks including damages to property. Hobbs, at all times relevant in this case, was an insurance broker engaged in the business of selling insurance and providing related services to its customers. Arkwright was the parent company of Hobbs.
Prior to June 1, 1989, Conagra and its IOCs were insured by a group of London underwriters. In early 1989, Arkwright had initial discussions with representatives of Conagra concerning the possibility of Arkwright providing property insurance for Conagra. These initial discussions culminated on April 21, 1989, when Arkwright presented its initial proposal for property coverages commencing June 1, 1989 and continuing for five years. On August 28, 1989, Arkwright issued a written policy of insurance (the "Arkwright Policy") to Conagra, and the Arkwright Policy was modified December 31, 1989 to add certain additional coverages. In June of 1991, Conagra's property insurance program was modified again as a joint property insurance program was instituted between Arkwright and certain London insurers.
On December 28, 1991, Conagra sustained fire damage to its property at the Americold Facility in Kansas City, Kansas. On March 16, 1992, Conagra sustained fire damages to its property at the Marshall Facility in Marshall, Missouri. The Marshall Facility was a non-owned outside warehouse used for temporary storage and consolidation of Conagra's products after they had left Conagra manufacturing facilities and while they were in the process of being distributed to Conagra's ultimate customers. The Americold Facility was also a non-owned outside warehouse used for temporary storage of product awaiting delivery to the Marshall Facility. None of the products in the Americold Facility or the Marshall Facility had reached their final destination at the time of the fires.
Conagra subsequently submitted claims for coverage for losses associated with the two fires. At that point, as one of the parties has stated in a colossal understatement, "certain issues arose between the parties which were not resolved." (Ark. Mot. at 2.) Indeed, in January of 1993, Conagra initiated action in Massachusetts state court against Arkwright. That action was stayed under the doctrine of forum non conveniens on May 4, 1995. Conagra subsequently refiled this action in this Court on June 6, 1995 and, on October 2, 1997, filed its Second Amended Complaint against Arkwright and Hobbs. Presently, as noted above, each party has filed at least one motion seeking summary judgment in this proceeding.
Summary judgment is proper if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(c). The moving party has the initial burden of submitting affidavits and other evidentiary material to show the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Only genuine disputes over "material facts" can prevent a grant of summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
To overcome a motion for summary judgment, the opposing party cannot rest on the pleadings but must, by affidavit or other means, set forth specific facts showing that there is a genuine issue of fact. See Fed.R.Civ.P. 56(e). While the record "and all reasonable inferences drawn from it [are to be viewed] in the light most favorable to the party opposing the motion," Bisciglia v. Kenosha Unified Sch. Dist. No. 1, 45 F.3d 223, 226 (7th Cir.1995), the nonmovant must show more than "some metaphysical doubt" regarding the facts. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).
Conagra's Second Amended Complaint asserts six claims against Arkwright: (1) breach of contract (Count I), (2) estoppel (Count II), (3) unfair practices (Count III), (4) improper claims practice (Count IV), (5) breach of fiduciary duty (Count V), (6) negligent misrepresentation (Count VI), and (6) breach of contract (Count IX).1 Conagra presently moves for summary judgment with respect to the breach of contract (Count I) and estoppel (Count II) claims. Arkwright presently moves for summary judgment with respect to the unfair practices claim (Count III) and breach of contract claim (Count IX).
Conagra asserts that Arkwright has breached its insurance contract. Under Illinois law,2 a court's primary duty in construing the language of an insurance policy is to ascertain and give effect to the intentions of the parties as expressed within the policy. See Outboard Marine Corp. v. Liberty Mut. Ins. Co., 154 Ill.2d 90, 107-08, 180 Ill.Dec. 691, 607 N.E.2d 1204, 1212 (1992). As the Seventh Circuit has stated:
[i]n construing an insurance policy, the court must ascertain the intent of the parties to the contract by construing the policy as a whole while giving due regard to the risk undertaken, the subject matter that is insured, and the purposes of the entire contract. When the words of the policy are unambiguous, they are afforded their plain, ordinary and popular meaning. If the words are susceptible to more than one interpretation, however, they are ambiguous and are to be construed in favor of the insured and against the insurer.
Employers Ins. of Wausau v. James McHugh Const. Co., 144 F.3d 1097, 1104 (7th Cir.1998) (citing Outboard Marine Corp., 154 Ill.2d at 107-08, 180 Ill.Dec. 691, 607 N.E.2d at 1212).
Here, Conagra asserts that Arkwright has breached the insurance contract because coverage exists for the Americold Loss and the Marshall Loss. Specifically, Conagra contends that coverage exists in the Arkwright policy under: (1) its property coverage and (2) an Ocean Cargo Endorsement. The Court will consider these arguments in turn.
Conagra argues that the Americold and Marshall losses were covered under property insurance coverage with Arkwright. The Arkwright Policy property coverages were "All Risk" and insured Conagra and all of its affiliates. (Joint App., Ex. 175 at A309407.) The property coverages further applied "only at locations described in the Schedule(s) attached to and forming a part of [the] Policy." (Id. at A309543.)
Arkwright first provided coverage for Conagra's property locations within the United States in 1989. In June of 1991, Arkwright and certain London insurers split up the responsibility for covering Conagra's property locations on the basis of the properties' reported total insured value. At that time, those with reported total insured values of under $10 million would be covered by London insurers. Those with reported total insured value of over $10 million...
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