Houston General Ins. Corp. v. BSM CORP., 92 C 6516.

• Decision Date: 22 February 1994
• Docket Number: No. 92 C 6516.,92 C 6516.
• Citation: 843 F. Supp. 1264
• Parties: HOUSTON GENERAL INSURANCE CORPORATION, Plaintiff, v. BSM CORPORATION, Defendant.
• Court: U.S. District Court — Northern District of Illinois

843 F. Supp. 1264

HOUSTON GENERAL INSURANCE CORPORATION, Plaintiff, v. BSM CORPORATION, Defendant.

No. 92 C 6516.

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

February 22, 1994.

Donald A. O'Brien, Jeffrey L. Kaser, Rivkin, Radler & Kremer, Chicago, IL, for plaintiff.

George Edward Bullwinkel, Eric F. Greenberg, Bullwinkel Partners, Ltd., Chicago, IL, Francis W. Deisinger, Michael D. Rechtin, Philip P. Mann, Reinhart, Boerner, Van Deuren, Norris & Rieselbach, Milwaukee, WI, for defendant.

ORDER

ALESIA, District Judge.

In this cause of action, plaintiff Houston General Insurance Corporation seeks a declaration that it has no duty to defend or indemnify defendant BSM Corporation in another lawsuit brought against defendant by International Business Machines Corporation. Now before the court are (1) defendant BSM Corporation's objections to Magistrate Judge Bobrick's Report and Recommendation, which recommended that plaintiff Houston General Insurance Corporation's motion for summary judgment be granted and that defendant BSM Corporation's counterclaim be dismissed; and (2) plaintiff's motion to strike defendant's May 10, 1993, letter to the court and the accompanying "Supplemental Affidavit" as untimely and as improper ex parte communication.

Plaintiff's Motion to Strike

The documents to which plaintiff objects were docketed May 11, 1993, long after the motion for summary judgment had been briefed and shortly after the May 3 deadline for objections to the Report and Recommendation had passed. The documents were accompanied by no motion to file instanter. Although plaintiff is correct that defendant's filing of the supplemental affidavit was technically improper, the court will consider the affidavit. This affidavit in essence only serves to identify and authenticate a discovery response from the lawsuit between IBM and defendant. Especially since the discovery responses do not change the conclusion this court reaches, it is preferable to include the affidavit as part of the considered record. Otherwise, the motion to strike could be mistaken as determining the outcome of the summary judgment motion.

The letter from counsel for defendant that came with the affidavit, however, was not only sloppy practice; that letter was a breach of a party's duty not to engage in ex parte communication with the court. The letter was not along the lines of "enclosed please find a courtesy copy"; rather, it engaged in argument to the court. Therefore, this letter is stricken from the record.

Accordingly, plaintiff's motion to strike is granted in part and denied in part. The letter from Francis W. Deisinger to Judge Alesia dated May 10, 1993, is stricken.

Plaintiff's Motion for Summary Judgment

Magistrate Judge Bobrick has recommended that plaintiff be granted summary judgment and that defendant's counterclaim be dismissed. The court has reviewed de novo his Report and Recommendation, and is in full agreement with the magistrate judge's conclusions and the vast majority of his reasoning. The court only wishes to (1) distinguish its reasoning from that of the magistrate judge in one regard, and (2) add a note about a recent Illinois case that bolsters the conclusions of the Report and Recommendation.

The most straightforward and precise treatment of the merits of the summary judgment motion occurs in the last pleading, Houston General's Motion to Strike and Response to BSM's Objections to Magistrate Judge Bobrick's Report and Recommendation. Houston General argues:

It makes no difference to the analysis whether it was BSM or its customers that advertised. If either were the case, there would be no coverage unless IBM had alleged slogan or copyright infringement resulting from the advertising. Thus, BSM's objection to the Magistrate's sic statement in that regard and its subsequent improper "Supplement sic Affidavit" are not well taken.

(Houston General's Motion to Strike and Response to BSM's Objections to Magistrate Judge Bobrick's Report and Recommendation at 2-3 (footnote omitted))

The energy spent on debating whether IBM's complaint alleges offenses that occurred in the course of advertising is misplaced. It is only to the extent Magistrate Judge Bobrick joins this debate that the court would have taken a slightly different course in reaching the same result. The key, as Houston General asserts, is looking to the policy definition of "advertising injury," and determining whether the IBM complaint sounds in one of the enumerated areas defined exclusively as covered advertising injury. For the reasons given by Magistrate Judge Bobrick, the court holds it does not. As the Seventh Circuit recently explained, applying Illinois law, "where the language of an insurance contract is clear and unambiguous, courts do not hesitate to give full effect to its provisions." Horning Wire Corp. v. Home Indemnity Co., 8 F.3d 587, 589 (7th Cir.1993). The contract here is clear and unambiguous, and the full effect is to absolve Houston General of any duty to defend or indemnify BSM on IBM's complaint.¹

On the issue of the ripeness of Houston General's request for a declaration of no duty to indemnify, a recent Illinois Supreme Court case strengthens the magistrate judge's conclusions. The court clarified its prior decisions on an insurer's duty to indemnify once a decision has been made on the insurer's duty to defend in Crum & Forster Managers Corp. v. RTC, 156 Ill.2d 384, 189 Ill.Dec. 756, 620...