Hermitage Ins. Co. v. Dahms, 93 C 1700.

• Decision Date: 10 January 1994
• Docket Number: No. 93 C 1700.,93 C 1700.
• Citation: 842 F. Supp. 319
• Parties: HERMITAGE INSURANCE COMPANY, Plaintiff, v. Richard DAHMS, et al., Defendants.
• Court: U.S. District Court — Northern District of Illinois

842 F. Supp. 319

HERMITAGE INSURANCE COMPANY, Plaintiff, v. Richard DAHMS, et al., Defendants.

No. 93 C 1700.

United States District Court, N.D. Illinois, E.D.

January 10, 1994.

Stephen T. Mikus and Janice Lynn Triptow, Chicago, IL, for plaintiff.

David J. Santori, Chicago, IL, for defendants.

MEMORANDUM OPINION AND ORDER

SHADUR, Senior District Judge.

Hermitage Insurance Company ("Hermitage") has brought this action against Richard Dahms ("Dahms"), R.C.D. Enterprises, Inc. ("R.C.D.") and other defendants under the Declaratory Judgment Act, 28 U.S.C. § 2201. Hermitage seeks a judicial ruling that it has no obligation under a policy issued to R.C.D. (the "Policy") either to defend or to indemnify R.C.D. and Dahms in connection with a dramshop action brought against them and David Rybak ("Rybak") by John Medlin ("Medlin") in the Circuit Court of Cook County (Medlin v. Dahms, No. 92 L 8152). Hermitage on the one hand and R.C.D. and Dahms on the other¹ have moved for summary judgment under Fed.R.Civ.P. ("Rule") 56. For the reasons stated in this memorandum opinion and order, Hermitage's motion is granted.

Summary Judgment Principles

Rule 56 principles impose on any movant the burden of establishing the lack of a genuine issue of material fact (Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986)). For that purpose this Court is "not required to draw every conceivable inference from the record — only those inferences that are reasonable" — in the light most favorable to the nonmovant (Bank Leumi Le-Israel, B.M. v. Lee, 928 F.2d 232, 236 (7th Cir.1991) and cases cited there). Where as here cross-motions are involved, that principle thus demands a dual perspective — one that this Court has often described as Janus-like — that sometimes involves the denial of both motions.

This District Court's General Rules ("GR") 12(m) and 12(n) require the submission of factual statements respectively in support of and in opposition to Rule 56 motions. R.C.D. and Dahms have filed a GR 12(m) statement (the "12(m) Statement"), while Hermitage has neither contested that statement as allowed under GR 12(n) nor filed its own GR 12(m) statement.² Consequently the material facts set out in the 12(m) Statement that are supported by the factual record are deemed admitted (Stewart v. McGinnis, 5 F.3d 1031, 1034 (7th Cir.1993)). Because the outcome here depends upon:

1. the causes of Medlin's injuries as alleged in his Circuit Court Complaint and

2. the precise coverage to which R.C.D. and Dahms are entitled under the Policy,

this Court relies on those documents (both of which are exhibits to Hermitage's Complaint) to assess the accuracy of the 12(m) Statement (see, e.g., Scherer v. Rockwell Int'l Corp., 766 F.Supp. 593, 595 n. 1 (N.D.Ill. 1991)).

Facts

Medlin's Lawsuit

R.C.D. d/b/a Ricky D's is a dramshop (a bar) located at 7900 Ogden Avenue, Ogden, Illinois. As already stated, Dahms is an officer-shareholder of R.C.D. Because the nature of Medlin's claims provides the key to the Policy's coverage or noncoverage, Medlin's substantive allegations in his Circuit Court action are reproduced at length here.

COUNT I³

2. That prior to 2:00 a.m. on July 21, 1991, said Defendants Dahms and R.C.D. d/b/a Ricky D's sold liquor to sever sic unknown male patrons of their dram shop, causing the intoxications sic of said unknown persons.

3. That as a result of the intoxication of said unknown persons, said persons assaulted the Plaintiff Medlin both inside and outside of Defendants's sic dram shop, and he was forced into the path of an automobile as a result of which he was struck by said automobile, causing him to suffer: injuries.

* * * * * *

COUNT II (Re: RICKY D's)

1-3. Plaintiff Realleges sic paragraphs 1, 2, and 3 of Count I.

4. That Defendant owed a duty to its customers, including the Plaintiff, to provide reasonable or adequate security to provide for their safety.

5. That the Defendants violated this duty to the Plaintiff by one or more of the following acts or omissions:

a. Failed to maintain order in their place of business;

b. Continued to sell intoxicating beverages to persons who were argumentative and violent;

c. Failed to take any action to provide for the protection of the Plaintiff when they had reasonable notice that he was in danger of being injured by 3rd persons d. Forced the Plaintiff to have sic; obviously should read "leave" their place of business, knowing that if he was on the street he would be assaulted by 3rd persons.

6. That as a result of one or more of said acts or omissions the Plaintiff was attacked by 3rd persons causing him to suffer: injuries.

* * * * * *

COUNT III (Re: David Ryback sic)

1. That on July 21, 1991, at approximately 2:00 a.m., the Defendant, DAVID RYBACK, owned and operated a motor vehicle in a West direction on Ogden Avenue, near Amelia Avenue, in the City of Lyons, County of Cook, State of Illinois.

2. That the Defendant had a duty to the Plaintiff to use reasonable care for the safety of pedestrians, including the Plaintiff, who were on or about Ogden Avenue at said location.

3. That the plaintiff was among a group of people sic who were on and about said street.

4. That in violation of his duty to the Plaintiff, the Defendant was guilty of one or more of the following acts or omissions:

a. Failed to exercise reasonable caution after observing a large crowd of people in the roadway;

b. Drove his car too fast for conditions;

c. Failed to stop his car to avoid striking a pedestrian;

d. Negligently drove his car through a large group of people who had gathered in the street knowing that a pedestrian in said group might run or be pushed in front of or into his vehicle;

5. That as a result of one or more of the said negligent acts or omissions, the Defendant's vehicle struck the Plaintiff causing him to suffer: injuries.

Policy Provisions

Hermitage issued the Policy (including provisions for liability coverage) to R.C.D. for the period from July 15, 1991 to July 15, 1992. Its Special Multi-Peril Liability Insurance section appears on Heritage's standard form MP 00 93⁴ and includes coverage for bodily injury (Policy 93 at 1):

caused by an occurrence, and arising out of the ownership, maintenance or use of the insured premises and all operations necessary or incidental to the business of the named insured conducted at or from the insured premises.

Occurrence is defined as (Policy 90 at 6):

an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured.

Insured premises are defined as (Policy 93 at 3):

all premises owned by or rented to the named insured with respect to which the named insured is afforded coverage for bodily injury liability under this policy, and includes the ways immediately adjoining on land.

Another provision of the Policy, not part of the printed provisions dealing with liability coverage, is at the core of the parties' dispute. That is the Policy's "ASSULT sic & BATTERY EXCLUSION ENDORSEMENT":

Notwithstanding anything contained herein to the contrary, it is understood and agreed in consideration of the premium charged, bodily injury or death alleged to have been caused by ASSULT sic AND/OR BATTERY shall not be deemed an accident or occurrence under the Policy and no coverage shall apply hereunder.⁵

Substantive Legal Principles

This Court's June 18, 1993 memorandum opinion and order has already upheld diversity jurisdiction here, given (1) the complete diversity of citizenship between the opposing parties and (2) the potential for a jury verdict of more than $50,000 in Medlin's underlying lawsuit. Because federal jurisdiction does sound in diversity and the parties have argued Illinois law in their submissions, the proper course for this Court is to apply that substantive law (Wood v. Mid-Valley Inc., 942 F.2d 425, 426-27 (7th Cir.1991)).

Under Illinois law the interpretation of an insurance policy is a question of law for the court and is therefore appropriate grist for the summary judgment mill (Crum & Forster Managers Corp. v. Resolution Trust Corp., 156 Ill.2d 384, 391, 189 Ill.Dec. 756, 760, 620 N.E.2d 1073, 1077 (1993)). To that end, policy provisions are to be construed in favor of the insured and against the insurer where they are ambiguous — that is, are "subject to more than one reasonable interpretation" (United States Fidelity & Guaranty Co. v. Wilkin Insulation Co., 144 Ill.2d 64, 74, 161 Ill.Dec. 280, 284, 578 N.E.2d 926, 930 (1991)). That contra proferentem principle is applied with added rigor in determining the meaning of exclusionary provisions (Goldblatt Bros., Inc. v. Home Indem. Co., 773 F.2d 121, 125 (7th Cir.1985), quoting Dawe's Lab. N.V. v. Commercial Ins. Co., 19 Ill.App.3d 1039, 1049, 313 N.E.2d 218, 225 (1st Dist.1974)), which will be enforced only "where the terms are clear, definite, and explicit" (Economy Fire & Casualty Co. v. Kubik, 142 Ill.App.3d 906, 908, 97 Ill.Dec. 68, 71, 492 N.E.2d 504, 507 (1st Dist.1986)). On the other hand, no policy language should be rendered meaningless surplusage — instead all the language must be interpreted in accordance with its plain and ordinary meaning (Outboard Marine Corp. v. Liberty Mut. Ins. Co., 154 Ill.2d 90, 108, 122, 180 Ill.Dec. 691, 699, 706, 607 N.E.2d 1204, 1212, 1219 (1992)).

As an overlay to that general approach to policy construction, Illinois law also teaches that an insurer's obligation to defend its insured is separate from and broader than its contractual obligation to indemnify (Conway v. Country Casualty Ins. Co., 92 Ill.2d 388, 394, 65 Ill.Dec. 934, 936, 442 N.E.2d 245, 247 (1982)). There is a duty to defend if the complaint in the underlying action alleges facts that are at least "potentially within" the coverage provided by the insurance policy (Thornton v. Paul, 74 Ill.2d 132, 144, 23 Ill.Dec. 541, 545,...