Nat'l Cas. Co. v. S. Shore Iron Works, Inc., 16-cv-07479

• Decision Date: 14 September 2018
• Docket Number: No. 16-cv-07479,16-cv-07479
• Citation: 341 F.Supp.3d 884
• Parties: NATIONAL CASUALTY COMPANY, Plaintiff, v. SOUTH SHORE IRON WORKS, INC., Defendant.
• Court: U.S. District Court — Northern District of Illinois

341 F.Supp.3d 884

NATIONAL CASUALTY COMPANY, Plaintiff,

v.SOUTH SHORE IRON WORKS, INC., Defendant.

No. 16-cv-07479

United States District Court, N.D. Illinois, Eastern Division.

Signed September 14, 2018

Gary K. Moore, Michael W. Donaubauer, Samuel Todd Stevens, Moore Strickland, Chicago, IL, Jon M. Hughes, McMickle, Kurey & Branch, LLP, Alpharetta, GA, for Plaintiff.

David Edwin Schroeder, Michael Joseph Meyer, Monica Singh, Tribler Orpett & Meyer, P.C., Chicago, IL, for Defendant.

OPINION AND ORDER

CHARLES RONALD NORGLE, Judge

PlaintiffNational Casualty Company("National Casualty") brings this declaratory judgment action against DefendantSouth Shore Iron Works, Inc.("South Shore"), seeking a determination that National Casualty has no duty to defend or indemnify South Shore in a personal injury lawsuit in the Circuit Court of Cook County, Delgado v. South Shore, et al., Case No. 2013 L 013458(the "Underlying Lawsuit").National Casualty initially named Julio Delgado("Delgado") and GD Carriers, Inc.("GD Carriers") as defendants in the instant action; however, by way of the parties' stipulated agreement, both Delgado and GD Carriers were dismissed from this action, leaving South Shore as the sole defendant.South Shore has filed a three count Counterclaim: Count I seeks a determination that National Casualty has a duty to defend and indemnify South Shore in the Underlying Lawsuit; Count II sets forth a claim for breach of contract; and Count III sets forth a "bad faith" claim under 215 ILCS § 5/155.Before the Court are the parties' cross-motions for summary judgment.For the following reasons, the Court determines that National Casualty breached its duty to defend South Shore in the Underlying Lawsuit and has a duty to indemnify South Shore for the settlement of the Underlying Lawsuit; however, South Shore's "bad faith" counterclaim under 215 ILCS § 5/155 is dismissed with prejudice.Accordingly, National Casualty's motion is granted in part and denied in part; and South Shore's motion is granted in part and denied in part.

I.BACKGROUND

South Shore is a structural steel company located in Chicago, Illinois.GD Carriers is a trucking company located in Chicago, Illinois.At all times relevant, Delgado was an employee of GD Carriers.

In 2013, South Shore was providing steel components for a job site in Rochelle, Illinois (the "Rochelle Project").South Shore manufactured the steel components and then loaded the components onto flatbed trailers at its facility in Chicago.South Shore did not transport the loaded trailers to the Rochelle Project.Rather, South Shire hired various trucking companies—including GD Carriers—to transport the loaded trailers.

On November 4, 2013, Delgado drove a tractor owned by GD Carriers to South Shore's facility to pick up a trailer loaded with steel beams for delivery to the Rochelle Project.After Delgado arrived at South Shore's premises, he connected GD Carrier's tractor to the trailer that he was assigned to transport.At the time Delgado connected GD Carrier's tractor to the trailer, it was still being loaded with steel beams by South Shore employees.Once the trailer was fully loaded, Delgado began securing the load of steel beams for transport to the Rochelle Project.GD Carrier's tractor remained parked and connected to the trailer while Delgado was attempting to secure the load—the tractor/trailer never moved.While Delgado was attempting to secure the load on the trailer, he fell to the ground and was injured.

On November 25, 2013, Delgado filed the Underlying Lawsuit against South Shore and other parties in the Circuit Court of Cook County.Delgado's fourth amended complaint in the Underlying Lawsuit, filed on April 15, 2016, alleged that his injury was the result of South Shore's negligent acts or omissions, including: South Shore "[i]mproperly loaded the flatbed trailer requiring [Delgado] to climb on top of the load in order to secure it"; South Shore "[p]ainted the steel beams which [Delgado] was to haul, causing them to become dangerously slippery"; and South Shore "failed to warn [Delgado] of the dangerously slippery condition of the recently painted steel beams."Pl.'sSOMF ¶¶ 27-28. Ex. C (the "Underlying Complaint")¶¶ 5-9.Delgado also alleged that on the date of his injury he was "working as a truck driver employed by GD Carriers ... assigned to pick up a trailer of steel beams at ... South Shore['s] plant," and that he"was a business invitee on the premises of [South Shore] for the benefit of [South Shore]."Id.¶¶ 2-3.

Prior to Delgado's injury, National Casualty issued a commercial auto policy to GD Carrier's, Policy Number OP00042008, effective from July 15, 2013 to July 15, 2014, with a liability coverage limit of $1,000,000 (the "Policy").The Policy provides as follows, in relevant part:

1.WHO IS AN INSURED

The following are "insureds":

a. You for any covered "auto".

b. Anyone else while using with your permission a covered "auto" you own, hire or borrow except:

(4) Anyone other than your "employees", partners (if you are a partnership), members (if you are a limited liability company), a lessee or borrower of a covered "auto" or any of their "employees", while moving property to or from a covered "auto".

d. The owner or anyone else from whom you hire or borrow a covered "auto" that is a "trailer" while the "trailer" is connected to another covered "auto" that is a power unit, or, if not connected, is being used exclusively in your business.

Compl., Ex. Aat 64.

By letter dated June 18, 2015, South Shore tendered the Underlying Lawsuit to National Casualty for a defense and indemnification.By letter dated July 31, 2015, National Casualty denied South Shore's tender of the Underlying Lawsuit on the basis that South Shore did not qualify as an "insured" under the Policy.National Casualty did not defend South Shore in the Underlying Lawsuit based on a reservation of rights or otherwise.National Casualty filed the instant declaratory judgment action on July 22, 2016.

On January 9, 2018, after the parties filed their initial briefs for the present motions, South Shore settled the Underlying Lawsuit with Delgado for $2.5 million.Pl.'s Resp. to Def.'s SOMF, Ex. H.That same day, the Circuit Court of Cook County dismissed the Underlying Lawsuit with prejudice and retained jurisdiction only to effectuate the settlement.Id., Ex. I.

II.DISCUSSION

A.Standard of Review

"Summary judgment is appropriate when ‘the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.’ "Northfield Ins. Co. v. City of Waukegan, 701 F.3d 1124, 1128(7th Cir.2012)(quotingFed. R. Civ. P. 56(a) );seealsoCelotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265(1986)."A genuine issue of material fact exists when the evidence is such that a reasonable jury could return a verdict for the nonmoving party."Wells v. Coker, 707 F.3d 756, 760(7th Cir.2013)(internal quotation marks and citation omitted)."On summary judgment a court may not make credibility determinations, weigh the evidence, or decide which inferences to draw from the facts; these are jobs for a factfinder."Payne v. Pauley, 337 F.3d 767, 770(7th Cir.2003)(citingAnderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202(1986) ).The Court must view "the record in the light most favorable to the nonmovant and [avoid] the temptation to decide which party's version of the facts is more likely true."Id.

Where parties file cross-motions for summary judgment, the standard of decision does not change.Selective Ins. Co. of S.C. v. Target Corp., 845 F.3d 263, 265(7th Cir.2016), as amended(Jan. 25, 2017).The Court"take[s] the motions one at a time,"Black Earth Meat Mkt., LLC v. Vill. of Black Earth, 834 F.3d 841, 847(7th Cir.2016), and "construe[s] all facts and inferences therefrom in favor of the party against whom the motion under consideration is made."Target Corp., 845 F.3d at 265(internal quotation marks and citation omitted).

B.National Casualty Has Breached Its Duty to Defend South Shore and Has a Duty to Indemnify South Shore For the Settlement of the Underlying Lawsuit

The dispositive issue in this case is whether South Shore qualifies as an insured under the language of the Policy.As explained infra , if South Shore qualifies as an insured, National Casualty has breached its duty to defend South Shore and owes a duty to indemnify South Shore, up to the Policy limit of $1,000,000, for the settlement of the Underlying Lawsuit.There is also a secondary issue raised by the parties regarding whether the Court may examine evidence beyond the Underlying Complaint in determining National Casualty's duty to defend South Shore.

National Casualty argues that South Shore does not qualify as an insured under the Policy because: (1) South was not "using" GD Carrier's tractor, as required by the Policy; (2) even if South Shore was "using" GD Carrier's tractor, coverage is precluded by an exception in the Policy that removes insured status for certain persons, including South Shore, while "moving property" to or from a covered auto; and (3) GD Carriers did not "hire" or "borrow" the trailer from South Shore, as required by the Policy.Additionally, accordingly to National Casualty, the Court may properly consider evidence outside of the Underlying Complaint in determining its duty to defend and indemnify.

Conversely, South Shore argues that it does qualify as an insured under the Policy because: (1) South Shore was "using" GD Carrier's tractor when Delgado was injured; (2) the Policy's "moving property" exception does not apply; and (3) GD Carriers was "borrowing" the trailer in question from South Shore.Further, according to South Shore, the Court is constrained to examining the Underlying Complaint alone in determining whether National Casualty breached its duty to defend.Finally, South Shore argues...