Ohio Sec. Ins. Co. v. Truck Tire Sales, Inc., 16 cv 11045

• Decision Date: 26 November 2019
• Docket Number: No. 16 cv 11045,16 cv 11045
• Citation: 425 F.Supp.3d 982
• Parties: OHIO SECURITY INSURANCE COMPANY and the Ohio Casualty Insurance Company, Plaintiff, v. TRUCK TIRE SALES, INC., Julicia Lee, Individually and as Special Administrator of the Estate of Samyra Marie Lee, Eric W. Rice, Society Insurance, the City of Chicago, and Klafter Northern Insurance Service, Ltd., Defendants. City of Chicago, Counter-Plaintiff v. Ohio Security Insurance Company and the Ohio Casualty Insurance Company, Counter-Defendants.
• Court: U.S. District Court — Northern District of Illinois

425 F.Supp.3d 982

OHIO SECURITY INSURANCE COMPANY and the Ohio Casualty Insurance Company, Plaintiff,

v.TRUCK TIRE SALES, INC., Julicia Lee, Individually and as Special Administrator of the Estate of Samyra Marie Lee, Eric W. Rice, Society Insurance, the City of Chicago, and Klafter Northern Insurance Service, Ltd., Defendants.

City of Chicago, Counter-Plaintiff

v.Ohio Security Insurance Company and the Ohio Casualty Insurance Company, Counter-Defendants.

No. 16 cv 11045

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

Signed November 26, 2019

James A. Morsch, Kellie Y. Chen, Saul Ewing Arnstein & Lehr LLP, for Plaintiff.

Matthew O'Neill Sitzer, Riley C. Mendoza, Shook, Hardy & Bacon LLP, Chicago, IL, for Plaintiff/Counter-Defendants.

Thomas B. Underwood, Emma Catherine Nowacki, Michael Duane Sanders, Richard Jacob VanSwol, Purcell & Wardrope, Chtd., Richard F. Egan, Michael Edward Crane, Costello, McMahon, Burke & Murphy, Ltd., William H. Jones, Canel King & Jones, Monica Fazekas, Leahy, Eisenberg & Fraenkel, Ltd., Chicago, IL, for Defendants.

David Ian Walters, Adam Harold Mccabe, Leahy, Eisenberg & Fraenkel, Ltd., Chicago, IL, For Defendants/Counter-Plaintiff.

MEMORANDUM ORDER AND OPINION

REBECCA R. PALLMEYER, United States District Judge

In this action, Plaintiff insurers seek a declaration that they are not liable to defend or indemnify Defendant Truck Tire Sales for a fatal accident that occurred in May 2016. As explained here, the court concludes that the Plaintiffs' policies do not cover the loss and therefore grants judgment in favor of the insurers.

INTRODUCTION

In May 2016, Defendant Eric Rice allegedly struck two pedestrians, Julicia and Samyra Lee, while performing weed-cutting work for his employer, Defendant Truck Tire Sales, Inc. ("Truck Tire"), pursuant to Truck Tire's contract with the City of Chicago. Samyra Lee died as a result of the collision. Defendant Truck Tire had a commercial general liability insurance policy with Plaintiff Ohio Security Insurance Company ("Ohio Security") and an umbrella policy with Plaintiff Ohio Casualty Insurance Company ("Ohio Casualty"), both affiliates of Liberty Mutual Insurance. Truck Tire had a second commercial general liability policy with Defendant Society Insurance ("Society"). After the Lee accident, Defendant Truck Tire tendered the claim to Defendant Society who agreed to provide a defense in the underlying lawsuit brought by Julicia Lee as administrator of her daughter's estate.¹ Later, Defendant Truck Tire tendered the claim to Plaintiffs as well.

Plaintiffs Ohio Security and Ohio Casualty contend they have no obligation to defend or indemnify Truck Tire, Rice, or the City in connection with the Lee lawsuit. Both sides (the insurers and the insured business) seek summary judgment, and the City seeks summary judgment on its counterclaim for a declaration that it is an additional insured under Plaintiffs' policies. Because Plaintiffs' insurance policies unambiguously provide coverage only for Truck Tire's tire sales and service operations, and not for Truck Tire's weed-cutting operations, Plaintiffs' motion for summary judgment is granted.

BACKGROUND

Defendant Truck Tire Sales, Inc. is based in Chicago, Illinois and is owned by Edward Gomez. Its business operations include tire sales and services, weed-cutting under a contract with the City of Chicago, and transportation for engineers engaged in water main testing for the City of Chicago. (Truck Tire Defs.' Resp. to Pls.' 56.1 Statement ("TTD 56.1 Resp.") [187] ¶ 3; City 56.1 Statement of Material Facts ("City 56.1 Statement") [179] ¶ 20.) Truck Tire conducts these operations through a single corporation and uses a single Federal Employer Identification Number ("FEIN") for tax purposes. (TTD 56.1 Resp. ¶ 3.) Plaintiffs contend that Truck Tire runs these operations as three separate lines of business—referring internally to the tire sales and service business as "Truck Tire Sales 1," the weed-cutting business as "Truck Tire Sales 2," and the water main testing business as "Truck Tire Sales 4."² (Pls.' Rule 56.1 Statement of Material Facts ("Pls.' 56.1 Statement") [172] ¶ 3.) The Truck Tire Defendants respond that Truck Tire runs only one operation, with portions performing different types of work. (TTD 56.1 Resp. ¶ 3.) Notably, however, in faxes Edward Gomez himself has referred to his business as three "companies" working under the same FEIN. (TTD 56.1 Statement ¶¶ 21, 24.) He explained in his deposition that it was simpler not to incorporate the operations separately but that he "work[s] it [his business] individually." (Gomez Dep. at 27:1–6, Ex. C to City 56.1 Statement.)

I. Overview of Truck Tire's Insurance Policies

Truck Tire had three separate commercial general liability ("CGL") insurance policies to cover its business operations. (TTD 56.1 Resp. ¶ 16.) The three CGL policies were with Plaintiff Ohio Security, Defendant Society, and Colony Insurance Company. The Truck Tire Defendants acknowledge that "Truck Tire had insured its tire sales and repair operations, its weed-cutting operations, and transportation operations with separate insurance policies," but assert that Gomez's main goal was to make sure that Truck Tire was fully insured. (Id. ; see also Gomez Dep. at 69:1–10, Ex. 1 to Pls.' 56.1 Statement.) Richard Friedenberg of Klafter Northern Insurance, who acted as Truck Tire's insurance broker, testified in his deposition to his understanding that the three business operations were insured by three separate policies: Plaintiffs covered Truck Tire Sales (the tire sales and service operation), Society covered Truck Tire Sales 2 (the weed-cutting operation), and Colony covered Truck Tire Sales 4 (the water main transportation operation). (Truck Tire Defs.' Rule 56.1 Statement of Material Facts ("TTD 56.1 Statement") [175] ¶ 11; Pls.' 56.1 Statement ¶ 18.)

Plaintiff Ohio Security issued a CGL policy, number BKS 55698923, and Plaintiff Ohio Casualty issued a commercial umbrella policy, number USO 55698923, to the named insured "Truck Tire Sales, Inc." (Pls.' 56.1 Statement ¶¶ 1–2.) Plaintiffs' underwriter, Debby Clayton, testified at a deposition that it was her understanding that Plaintiffs' policies were "issued to cover the tire dealer." (Id. at ¶ 41.) Defendant Society issued a CGL policy with a $1 million per occurrence limit to the named insured "Truck Tire Sales, Inc. d/b/a Truck Tire Sales 2." (Id. at ¶¶ 4, 64.) Though the Society policy did not include language expressly limiting its coverage, Society's underwriter, Austin Beigel, testified that Society's policy was issued to insure only Truck Tire's weed-cutting operations. (TTD 56.1 Resp. ¶¶ 47, 48.) Truck Tire's broker, Friedenberg, testified that he obtained a third CGL policy from Colony Insurance to cover only Truck Tire's water main transportation operations. (Id. at ¶ 52.) The Colony policy contained a Business Description Limitation Endorsement that limited the scope of coverage for bodily injuries under its policy to those related to Truck Tire's water main transportation work with the City of Chicago. (TTD 56.1 Statement ¶ 50.)

As part of Truck Tire's weed-cutting contract with the City of Chicago, the City required Truck Tire to have $2 million of commercial general liability insurance and to name the City as an additional insured. (City 56.1 Statement ¶ 21.) The City of Chicago is named as an additional insured in the Society policy (that is, the one directed at weed-cutting operations), but not in Plaintiffs' policies or the Colony policy. (TTD 56.1 Resp. ¶ 59; City 56.1 Resp. ¶ 59.) In January 2014, Truck Tire provided a certificate of insurance to the City that identifies Society (but not Plaintiffs or Colony) as Truck Tire's general liability insurer. (Pls.' 56.1 Statement ¶ 77; City 56.1 Resp. ¶¶ 59, 64.) The amended certificate of insurance issued in January 2016 contains the same information. (TTD 56.1 Resp. ¶ 59.)

II. The Lee Lawsuit

On May 27, 2016, Defendant Eric Rice, an employee of Truck Tire, allegedly struck Julicia Lee and her daughter Samyra Lee while driving a Mahindra tractor owned by Truck Tire. (Id. at ¶ 68.) Samyra Lee died as a result of the collision. At the time of the accident, Rice was performing weed-cutting services in Chicago pursuant to Truck Tire's contract with the City. (Id. ) Truck Tire hired Rice as a seasonal employee solely to perform weed-cutting services, and he had no responsibilities related to Truck Tire's tire sales and service or water main transportation work. (Id. at ¶ 69.) The Mahindra tractor Rice was driving was owned by Tire Truck in connection with its weed-cutting operations.³ (Id. at ¶ 70.)

After the incident, Defendant Julicia Lee sued Truck Tire, Rice, and the City, alleging wrongful death and negligence. (Lee Compl. at 3, 5, Ex. D to Pls.' Am. Compl. [64-4].) Friedenberg, on behalf of Truck Tire, tendered the Lee claim to Society on the day of the accident. (TTD 56.1 Resp. ¶ 72.) Society accepted the claim and agreed to provide a defense for Truck Tire in the Lee lawsuit. (Id. at ¶ 74.) Society later agreed to provide a defense to the City of Chicago as an additional insured under its policy. (Pls.' 56.1 Statement ¶ 78.) Society's claim adjuster, Julie Tubikanec, later asked Friedenberg to notify Truck Tire's other insurance companies of the incident. (TTD 56.1 Resp. ¶ 75.) On June 24, 2016 Friedenberg, on behalf of Truck Tire, notified Plaintiffs of the accident. (Pls.' 56.1 Statement ¶ 75.) The City tendered its claim to Plaintiffs on October 17, 2017. (Id. at ¶ 79.)

On July 7, 2016, Friedenberg tendered the claim to Colony, as well. (Id. at 76.) Colony promptly sought and won a declaration from the Circuit Court of Cook County that the Lee accident was not covered by its policies. (TTD 56.1 Resp. ¶ 53; Colony Ins. Co. v. Truck Tire Sales, Inc. , 2016 CH 12022 (Cook Cty. Ch. Ct. 2016).) The state court concluded that the Business Description Limitation in the...