Employers Ins. of Wausau v. James McHugh Const. Co.
| Decision Date | 27 May 1998 |
| Docket Number | No. 97-2346,97-2346 |
| Citation | 144 F.3d 1097 |
| Parties | EMPLOYERS INSURANCE OF WAUSAU, a Wisconsin mutual company, Plaintiff-Appellant, v. JAMES McHUGH CONSTRUCTION COMPANY, The University of Chicago, a not-for-profit, Northbrook Property & Casualty Company, et al., Defendants-Appellees. |
| Court | U.S. Court of Appeals — Seventh Circuit |
William H. Jones, Peter M. King (argued), Chicago, IL, for Employers Ins. of Wausau.
Robert J. Franco, II (argued), Christopher M. Cano, Bollinger, Ruberry & Garvey, Chicago, IL, for James McHigh Construction Co.
Jeffrey A. Siderius (argued), Oppenheimer, Wolff & Donnelly, Chicago, IL, for University of Chicago, Northbrook Property & Cas., Co., and St. Paul Fire & Marine Ins. Co.
Before BAUER, RIPPLE and KANNE, Circuit Judges.
Appellant Employers Insurance of Wausau appeals from the district court's grant of summary judgment to the defendants on Wausau's complaint for declaratory and monetary relief stemming from an insurance coverage dispute. For the reasons discussed below, we affirm.
The underlying facts in this case are fairly straightforward and are not disputed by the parties. In July 1992, appellee James McHugh Construction Company ("McHugh") was hired as a contractor by Stein & Company Program Management, Inc. ("Stein") for a project undertaken for the University of Chicago (the "University"). Specifically, the project at issue was the construction of the University's Graduate School of Business at Cityfront Center. McHugh, in turn, hired Pitt-Des Moines, Inc. ("PDM") as the structural steel sub-contractor. As part of its contract with McHugh, PDM was required to provide certain insurance, and PDM took out a policy with appellant Employers Insurance of Wausau ("Wausau") to fulfill its obligations. In the Wausau policy, McHugh, Stein, and the University were all named as additional insureds. McHugh also had its own general liability insurance with appellee St. Paul Fire & Marine Insurance Company ("St.Paul"), which named the University as an additional insured, and the University was itself insured by appellee Northbrook Property & Casualty Company ("Northbrook"). This tangled web of policies is the catalyst for the present suit.
On January 18, 1995, John Budeselich, an ironworker at the University construction site, filed suit against McHugh and the University in the Circuit Court of Cook County, Illinois. Budeselich claimed that he was injured at the site on July 7, 1993, due to the wrongful and negligent acts of McHugh and the University, and also sought relief under the Illinois Structural Work Act, 740 ILCS 150/1 et seq. 1 McHugh notified Wausau on January 26, 1995, requesting that Wausau defend and indemnify it (as well as the University) against the Budeselich suit. After other correspondence, Wausau acknowledged that McHugh and the University were additional insureds under the PDM policy, but requested that the parties also tender their defenses to their own insurance companies so that the cost of the defense could be split among the insurers. McHugh refused on behalf of itself and the University to tender the defense to their insurers, and refused to reconsider its decision after Wausau sent it another letter in January 1996. McHugh and the University proceeded to hire lawyers to defend them in the Budeselich suit. As of February 28, 1997, Wausau had expended $7,125 in defense of the suit.
On November 4, 1996, Wausau filed the present suit against McHugh and the University, as well as against St. Paul and Northbrook. With regard to McHugh and the University, Wausau sought a declaratory judgment that either: 1) McHugh and the University had an obligation under the Wausau policy to tender their defenses to St.
Paul and Northbrook, respectively, and that their failure to do so was a breach of the insurance contract with Wausau which voided its coverage; or 2) Wausau is only required to pay its pro rata share of the defense of the Budeselich case. Wausau also sought monetary relief for the amounts it had expended in defending McHugh and the University. With respect to St. Paul and Northbrook, Wausau sought a declaratory judgment that St. Paul and Northbrook must pay their pro rata shares of the defense costs of McHugh and the University, and also sought monetary relief and equitable subrogation. After some discovery, the parties filed cross-motions for summary judgment, and on April 21, 1997, Judge Conlon granted the defendants' motions and denied the plaintiff's motion. Judgment was entered the same day, and Wausau filed a timely notice of appeal on May 20, 1997. With these facts in mind, we turn to Wausau's contentions on appeal.
We review the district court's grant of summary judgment de novo. McGinn v. Burlington Northern Ry. Co., 102 F.3d 295, 298 (7th Cir.1996) (citation omitted). Summary judgment is appropriate where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); see Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). We view the record and extract all reasonable inferences from it in the light most favorable to the nonmoving party. McGinn, 102 F.3d at 298 (citation omitted). Only disputes that could affect the outcome of the suit under governing law will preclude an entry of judgment for the moving party. Id.
In the district court, Wausau argued that the court should find that McHugh and the University breached their contract with Wausau, thus ending Wausau's obligation to defend and indemnify them. The claimed breach was the failure of McHugh and the University to tender their defenses to their own insurance companies as well as to Wausau. Wausau claimed that the insurance contract required McHugh and the University to tender their defenses to their own insurers, pointing to the following language:
2. Duties In The Event Of Occurrence, Claim or Suit.
. . . . .
c. You and any other involved insured must:
. . . . .
(3) Cooperate with us in the investigation, settlement or defense of the claim or "suit"; and
(4) Assist us, upon our request, in the enforcement of any right against any person or organization which may be liable to the insured because of injury or damage to which this insurance may also apply.
. . . . .
8. Transfer Of Rights Of Recovery Against Others To Us
If the insured has rights to recover all or part of any payment we have made under this Coverage Part, those rights are transferred to us. The insured must do nothing after loss to impair them. At our request, the insured will bring "suit" or transfer those rights to us and help us enforce them.
McHugh and the University, in turn, argued that they were well within their rights in tendering their defense solely to Wausau, based on the Illinois Appellate Court case of Institute of London Underwriters v. The Hartford Fire Insurance Company, 234 Ill.App.3d 70, 175 Ill.Dec. 297, 599 N.E.2d 1311 (1992). The district court rejected Wausau's argument and accepted that of the appellees, and granted summary judgment based on Institute. Wausau repeats its claims here, arguing that the district court erroneously relied on Institute, a threshold issue which we examine de novo. In order to do so, however, we must first relay a rather lengthy rendition of the background facts of Institute.
In Institute, the Illinois Appellate Court confronted this question: "where two insurance policies potentially apply to a loss, may At some point, Thatcher employee Richard Garcia died while working on the Great Lakes project, and his estate filed suit against Great Lakes in August 1987. Great Lakes tendered its defense of this suit (the "Garcia suit") to Thatcher and requested that Thatcher provide it with assurances that any liability of Great Lakes would be covered by Institute. Great Lakes also informed Hartford of the Garcia suit. In September 1987, the Garcia suit was dismissed without prejudice, and Great Lakes' president alerted Hartford to this fact in a letter. Great Lakes' president also noted that while the litigation could be recommenced, Great Lakes had no involvement in the accident and that Institute had the primary duty to defend Great Lakes in any further proceedings. In February 1988, Great Lakes received a letter from attorney C. Roy Peterson ("Peterson") advising Great Lakes that the Garcia suit had been re-filed and that he would file an answer denying Great Lakes' liability, pursuant to the Institute policy. Since the damage claim exceeded the limits of the Institute policy, Peterson advised Great Lakes to contact its excess insurance carrier. Pursuant to this advice, Great Lakes notified Hartford of the suit and informed it that Peterson was defending Great Lakes pursuant to the Thatcher contract. Institute, 175 Ill.Dec. 297, 599 N.E.2d at 1312.
an insured elect which of its insurers is to defend and indemnify the claim by tendering its defense to one insurer and not the other and thereby foreclose the [defending] insurer from obtaining contribution from the [non-defending] insurer?" 175 Ill.Dec. 297, 599 N.E.2d at 1313. The facts in Institute were straightforward and analogous to the present case. The Great Lakes Towing Company ("Great Lakes") hired Thatcher Engineering Corporation ("Thatcher") to perform repairs on a damaged dockwall owned by Great Lakes. The agreement between the parties required Thatcher to have Great Lakes named as an additional insured on its liability policy for any injuries or deaths occurring during the project. Thatcher complied and had its insurer, Institute of London Underwriters ("Institute"), issue a certificate naming Great Lakes as an additional insured with respect to the...To continue reading
Request your trial
-
In re Swiontek, Bankruptcy No. 04-bk-48014.
...See also Hoffman-Dombrowski v. Arlington Int'l Racecourse, Inc., 254 F.3d 644, 650 (7th Cir.2001); Employers Ins. of Wausau v. James McHugh Cond. Co., 144 F.3d 1097, 1100 (7th Cir.1998). "Only disputes over facts that might affect the outcome of the suit under the governing law will properl......
-
Miller UK Ltd. v. Caterpillar, Inc.
...the other in relation to the ... claim, and its rights, remedies, or securities.’ ” Employers Insurance. of Wausau v. James McHugh Constr. Co., 144 F.3d 1097, 1105 (7th Cir.1998) (ellipsis in original). Under Illinois law, the party claiming a right of subrogation must establish that he pai......
-
Schuchman v. State Auto Prop. & Cas. Ins. Co.
...857 (2002). A court must afford unambiguous provisions their plain, ordinary, and popular meaning. Employers Ins. of Wausau v. James McHugh Constr. Co., 144 F.3d 1097, 1104 (7th Cir.1998) (applying Illinois law). Moreover, “a court should consider the plain meaning of the policy language an......
-
Conagra, Inc. v. Arkwright Mut. Ins. Co.
...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 Here, Conagra ass......