Platinum Supplemental Ins., Inc. v. Guarantee Trust Life Ins. Co., 20-1906

• Decision Date: 02 March 2021
• Docket Number: No. 20-1906,20-1906
• Citation: 989 F.3d 556
• Parties: PLATINUM SUPPLEMENTAL INSURANCE, INC., Plaintiff-Appellee, v. GUARANTEE TRUST LIFE INSURANCE COMPANY, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

989 F.3d 556

PLATINUM SUPPLEMENTAL INSURANCE, INC., Plaintiff-Appellee,

v.GUARANTEE TRUST LIFE INSURANCE COMPANY, Defendant-Appellant.

No. 20-1906

United States Court of Appeals, Seventh Circuit.

Argued January 13, 2021

Decided March 2, 2021

Andrew R. Running, Attorney, Kirkland & Ellis LLP, Chicago, IL, Christopher J. Shannon, Attorney, Walker Wilcox Matousek LLP, Chicago, IL, for Plaintiff-Appellee.

Cornelius E. McKnight, Attorney, McKnight & Kitzinger, LLC, Chicago, IL, for Defendant-Appellant.

Before Flaum, Brennan, and Scudder, Circuit Judges.

Flaum, Circuit Judge.

The current dispute is the latest in a string of lawsuits involving plaintiff Platinum Supplemental Insurance, Inc. ("Platinum") and defendant Guarantee Trust Life Insurance Company ("GTL"). In 2002, GTL and Platinum began their professional relationship when GTL engaged Platinum to market its insurance products through a "Marketing Agreement." After a customer sued both parties in a costly lawsuit, GTL terminated the Marketing Agreement. The parties then entered their first settlement agreement, the "2015 Settlement Agreement." Around the same time, GTL sued Platinum for breaching the Marketing Agreement. In arbitration, GTL and Platinum settled their disputes in a second settlement agreement, the "2017 Settlement Agreement." That agreement resolved all their claims that had and could have been brought in that litigation. It further provided for "reasonably proportionate" attorneys'' fees to the prevailing party in any future litigation.

Two and a half months before the parties executed the 2017 Settlement Agreement, another customer had sued GTL in Missouri. After the 2017 Settlement Agreement took effect, GTL filed a third-party complaint against Platinum in that Missouri lawsuit based on claims that Platinum breached the Marketing Agreement. In turn, Platinum sued GTL in the district court because the claims in the third-party complaint mirrored those already resolved by the 2017 Settlement Agreement and were therefore barred. The district court granted Platinum summary judgment and awarded it $108,445.10 in attorneys' fees—or 150% of the underlying damages award. We affirm the district court's grant of summary judgment because the 2017 Settlement Agreement bars the claims in GTL's third-party complaint. We also affirm the grant of attorneys' fees because the award is "reasonably proportionate" to the underlying damages.

I. Background

Platinum markets and sells insurance policies. GTL is a mutual reserve company that underwrites insurance policies. In 2002, Platinum and GTL entered into the Marketing Agreement for Platinum to exclusively market and sell certain insurance products underwritten by GTL. Section 17 of the Marketing Agreement contained an arbitration clause requiring all disputes arising from the Marketing Agreement to "be submitted to binding, non-appealable arbitration." The agreement also contained an indemnification clause stating that Platinum would indemnify GTL for any liability connected to its conduct governed by the Marketing Agreement. Finally, the Marketing Agreement incorporated GTL's Advertising Policy and Code of Ethical Market Conduct by reference.

Platinum and GTL's business relationship began to deteriorate when both parties were sued in Colorado by a dissatisfied customer. Platinum had engaged Joanna Gaylord as one of its "Independent Solicitors."¹ Gaylord made a presentation to Michael Casper in August 2010. Casper expressed concerns that prior arterial blockages in his legs would disqualify him from coverage as advertised, but Gaylord reassured him he would be covered. Consequently, Casper bought the policy, only to have GTL later deny him benefits when he was diagnosed with prostate cancer

.

This denial of benefits gave rise to a Colorado state court lawsuit, the "Casper Litigation," in which Casper sued GTL for unreasonable denial of benefits and breach of contract. As part of this lawsuit, Casper also sued Gaylord and Platinum for negligent misrepresentation and fraud connected to their marketing of the policy he bought, but he settled with both. The case therefore went to trial as to GTL, which revealed that Platinum had used aggressive marketing tactics and certain materials that GTL had not pre-approved, as required under the Marketing Agreement. The trial court directed a verdict for Casper on his breach of contract claim against GTL. The jury then awarded him $1,716,799.40, and the court awarded $281,197.00 in attorneys' fees.

GTL terminated the Marketing Agreement effective July 17, 2015, because of Platinum's misconduct precipitating the Casper Litigation, and the parties entered into the 2015 Settlement Agreement to begin to resolve the disputes between them. The 2015 Settlement Agreement contained an arbitration clause providing that any disputes must be "resolved through arbitration as delineated in the Marketing Agreement." However, section 10 of the 2015 Settlement Agreement specifically listed "Excluded Matters" that were "not intended to be encompassed by this Settlement Agreement," meaning those matters could later be brought in litigation. Listed exclusions included "[s]uch indemnification rights as GTL may have, if any, arising out of existing and future claims as may from time to time be asserted against GTL attributable to the conduct of Platinum agents, brokers and representatives in connection with the offering and sale of insurance policies."

In December 2015, with the Casper Litigation still unfolding, GTL sued Platinum and its president and chief executive officer, Wayne A. Briggs, in the Circuit Court of Cook County, the "Cook County Litigation," for fraud, breach of contract, and breach of fiduciary duty, asking for rescission of the Marketing Agreement. The seven-count complaint alleged, inter alia , breaches of the Marketing Agreement and various common law duties connected to Platinum's training and supervision of its agents marketing GTL's insurance policies and a violation of GTL's Advertising Policy and Code of Ethical Market Conduct. One allegation, for example, posited that Platinum "recklessly disregarded that its supervision, management and training of its employees and the Independent Solicitors created the risk that applications would not be solicited and procured in compliance with all applicable local, state and federal laws and regulations and/or any rules and requirements established by GTL." GTL thus sought all damages for what it "suffered, and continues to suffer, as a direct and proximate result of Platinum's breaches of the Marketing Agreement." Specifically, GTL sought "the loss of use of amounts GTL paid in compensation and commissions to Platinum for services that it was obligated to, but did not provide; i.e., the solicitation and procurement of applications in compliance with all applicable local, state and federal laws and regulations and any rules and requirements established by GTL."

On a motion by Platinum and Briggs, the state trial court compelled GTL and Platinum to arbitrate their dispute, invoking the arbitration clauses from both the then-terminated Marketing Agreement and the 2015 Settlement Agreement.² The Illinois Appellate Court affirmed that decision. GTL filed a petition for leave to appeal to the Illinois Supreme Court, but in the interim the parties reached a new settlement, the 2017 Settlement Agreement, rendering the petition moot.

The Circuit Court of Cook County approved the 2017 Settlement Agreement and dismissed the action with prejudice on March 31, 2017, stating the "parties agree that all claims that were filed or could have been filed in the Cook County litigation shall be deemed settled and resolved." The 2017 Settlement Agreement itself contained nearly identical language: "all claims that were filed or could have been filed in the Cook County litigation shall be deemed to be settled and resolved by this AGREEMENT." Relevant on appeal, the agreement also rescinded section 10 of the 2015 Settlement Agreement, terminating GTL's previous reservation of the right to pursue indemnification claims through litigation. It further provided that "[t]he Parties agree that the prevailing Party in any lawsuit brought to enforce this Agreement shall be awarded its reasonable costs and attorneys' fees, but such an award must be reasonably proportionate to the ultimate relief secured by the prevailing Party."

On the tail end of the Cook County Litigation, on December 8, 2016, GTL-insured Thomas Grisham brought another lawsuit against GTL in federal court in Missouri, the "Missouri Litigation." He sued for: breach of contract for GTL improperly refusing to pay benefits owed to Grisham under a policy sold by Platinum and underwritten by GTL; defamation by GTL; and, under Missouri statutory law, a "vexatious refusal to pay." This lawsuit arose two and a half months before the 2017 Settlement Agreement's approval and the related dismissal of the Cook County Litigation in March 2017.

In October 2017, several months after the parties entered into the 2017 Settlement Agreement, GTL responded in the Missouri Litigation by filing a third-party complaint against Platinum for indemnification and contribution based on Platinum's alleged breaches of the Marketing Agreement and Fraud.³ GTL alleged that Platinum failed to ensure its contractors' compliance with applicable "laws and regulations," GTL's "rules, guidelines, and requirements" for advertising its insurance products, and GTL's Code of Ethical Market Conduct.

We now arrive at the instant lawsuit, which began when Platinum, invoking diversity jurisdiction, sued GTL in the Northern District of Illinois alleging that GTL breached the 2017 Settlement Agreement by filing the third-party complaint in the Missouri Litigation. Platinum then moved for summary judgment, arguing the claims for contribution and indemnification in the third-party complaint are barred by the 2017 Settlement Agreement because they could...