Proassurance Specialty Ins. Co. v. Imperial Realty Co.

Decision Date22 June 2021
Docket NumberNo. 20-cv-1409,20-cv-1409
Citation545 F.Supp.3d 618
CourtU.S. District Court — Northern District of Illinois

William K. McVisk, Jennifer Marie Theodore, Tressler LLP, Chicago, IL, for Plaintiff.

James Joseph Hickey, Sean Michael Phillips, Kennedys Cmk LLP, Chicago, IL, for Defendant Imperial Realty Company.

David B. Honig, Hall, Render, Killian, Heath & Lyman, P.C., Indianapolis, IN, for Defendant Rogers Memorial Hospital, Inc.

Memorandum Opinion and Order

Elaine E. Bucklo, United States District Judge Paula Young, a clinical psychologist working as Clinical Director of the Rogers Behavioral Health Center, slipped and fell on a liquid left on the floor of the women's bathroom at her workplace and was injured. Ms. Young sued Imperial Realty Company ("Imperial"), the operator of her office building at 4711 Golf Road in Skokie, Illinois, in Cook County state court, claiming negligence and violations of the Illinois Premises Liability Act. See Young v. Imperial Realty Co. , No. 2018-L-012315 (Ill. Cir. Ct. Nov. 13, 2018); ECF No. 24-4. Imperial then filed a third-party complaint against Ms. Young's employer, Rogers Memorial Hospital, Inc. ("Rogers"), seeking contribution. ECF No. 24-6.

The instant insurance dispute relates to a health care facility liability insurance policy issued by Plaintiff ProAssurance Specialty Insurance Company, Inc. ("ProAssurance") to Ms. Young's employer, Rogers, Policy No. CH173. ECF No. 24-2. ProAssurance filed this suit seeking a declaration that it does not have a duty to defend or indemnify Rogers or Imperial under that insurance policy in connection with the underlying litigation in Cook County state court. ECF No. 24. Imperial, for its part, filed counterclaims seeking an opposite declaratory judgment—that ProAssurance does have a duty to defend and indemnify Imperial under the policy. ECF No. 29 ¶¶ 30-48.

Two motions are currently pending: Imperial's motion for summary judgment, ECF No. 40, and ProAssurance's cross motion for judgment on the pleadings under Federal Rule of Civil Procedure 12(c), ECF No. 42. Because I conclude that ProAssurance has no duty to defend or indemnify Rogers or Imperial under the insurance policy at issue, Imperial's motion for summary judgment is denied and ProAssurance's motion for judgment on the pleadings is granted.


Under Federal Rule of Civil Procedure 12(c), a party may move for judgment on the pleadings after the complaint and answer have been filed. Where, as here, "the movant seeks to ‘dispose of the case on the basis of the underlying substantive merits[,] ... the appropriate standard is that applicable to summary judgment, except that the court may only consider the contents of the pleadings.’ " U.S. Specialty Ins. Co. v. Vill. of Melrose Park , 455 F. Supp. 3d 681, 687 (N.D. Ill. 2020) (citing Alexander v. City of Chicago , 994 F.2d 333, 336 (7th Cir. 1993) ). Accordingly, "I apply the same standard to each of the pending motions, except that I may consider undisputed facts outside of the pleadings and their attachments to resolve [the] summary judgment motion." Admiral Ins. Co. v. Anderson , No. 19 C 3468, 2021 WL 1172241, at *3 (N.D. Ill. Mar. 29, 2021). That is, I will grant the motions only if "no genuine issues of material fact remain to be resolved and ... the [movant] is entitled to judgment as a matter of law." Alexander , 994 F.2d at 336.

As a preliminary matter, the parties disagree as to whether Illinois or Wisconsin law applies to this dispute. "As this suit was filed in Illinois, Illinois's choice of law rules will govern." Knoll Pharm. Co. v. Auto. Ins. Co. of Hartford , 152 F. Supp. 2d 1026, 1032 (N.D. Ill. 2001) (citing Jupiter Aluminum Corp. v. Home Ins. Co. , 225 F.3d 868, 873 (7th Cir. 2000) ). Under Illinois's rules, "an express choice of law clause in an insurance policy w[ill] determine which state's law to apply." Id. (citing Lapham-Hickey Steel Corp. v. Prot. Mut. Ins. Co. , 166 Ill.2d 520, 211 Ill.Dec. 459, 655 N.E.2d 842, 845 (1995) ). Here, the policy contains the following choice-of-law clause: "The policy shall be construed, and the legal relations between us and the insureds (and anyone claiming any interest in or rights under the policy) shall be determined, in accordance with the laws of the State in which the address of the policyholder, as specified in the Coverage Summary, is located...." ECF No. 24-2 at 13 § M (emphasis omitted). The coverage summary lists an address for the policyholder, Rogers, in Oconomowoc, Wisconsin. Id. at 3 § 1. Accordingly, pursuant to the policy's choice-of-law provision, Wisconsin law will apply.

Under Wisconsin law, insurance contracts are interpreted "in the same manner as other contracts—to give effect to the intent of the contracting parties." Water Well Sol'ns Serv. Grp., Inc. v. Consolidated Ins. Co. , 369 Wis.2d 607, 881 N.W.2d 285, 291 (2016). Insurance contracts often establish (1) an insurer's duty to defend against claims for damages, and (2) the duty to indemnify the insured against damages or losses. Id. When considering an insurer's duty to defend, "[l]ongstanding case law requires a court ... to compare the four corners of the underlying complaint to the terms of the entire insurance policy." Id. The "four-corners rule" precludes the court's consideration of extrinsic evidence. Id.

There is a three-step process for comparing the underlying complaint to the terms of the policy in duty-to-defend cases, explained by the Wisconsin Supreme Court as follows:

First, a reviewing court determines whether the policy language grants initial coverage for the allegations set forth in the complaint. If the allegations set forth in the complaint do not fall within an initial grant of coverage, the inquiry ends. However, if the allegations fall within an initial grant of coverage, the court next considers whether any coverage exclusions in the policy apply. If any exclusion applies, the court next considers whether an exception to the exclusion applies to restore coverage. If coverage is not restored by an exception to an exclusion, then there is no duty to defend.

Id. at 291-92 (internal citations omitted). Any ambiguity in the policy language is construed in favor of the insured. Id. at 291.

"The duty to indemnify is fairly straightforward. An insurer must indemnify an insured against losses that are covered under the terms of the policy." Olson v. Farrar , 338 Wis.2d 215, 809 N.W.2d 1, 7 (2012). "It is ... well-established than an insurer's duty to defend its insured is broader than its duty to indemnify.... [T]he insurer is under an obligation to defend only if it could be held bound to indemnify the insured, assuming that the injured person proved the allegations of the complaint, regardless of the actual outcome of the case.’ " Water Well , 881 N.W.2d at 292 (emphasis in original) (citations omitted).


ProAssurance's motion for judgment on the pleadings seeks, in part, a declaration that it has no duty to defend or indemnify Rogers in the underlying action. Accordingly, I turn first to the question of the duty to defend or indemnify Rogers, but I need not linger long on the question. After ProAssurance filed its motion, Rogers filed a notice in which it offered that it "has no objection to Proassurance's request for declaratory relief in this matter," and "does not oppose Proassurance's Motion ... or any relief requested therein."1 ECF No. 44 ¶¶ 4-5. Where a party fails to oppose a Rule 12(c) motion, it constitutes a waiver. See Wojtas v. Capital Guardian Tr. Co. , 477 F.3d 924, 926 (7th Cir. 2007). Accordingly, ProAssurance's motion for judgment on the pleadings is granted as to Defendant Rogers.


I turn next to the primary focus of both pending motions: whether there is a duty to defend Imperial under the policy. Imperial argues first that it qualifies as an "insured" under the policy as the "real estate manager" for the office building. The insurance policy includes under its definition of "insured": "any organization while acting as a real estate manager for the policyholder." ECF No. 24-2 at 23 (emphasis omitted). The parties agree that Imperial served as a property manager for CFO2 Skokie, LLC ("CFO2"), the landlord of the building at 4711 Golf Road where Ms. Young's injury occurred. See ECF No. 41 at 14; ECF No. 50 at 1. ProAssurance contends, however, that Imperial does not fall within the policy's definition of "insured" because Imperial served as the landlord's property manager, rather than a property manager "for the policyholder," Rogers. I agree. The plain language of the policy suggests that the contracting parties intended to provide coverage for real estate managers hired by Rogers, rather than for any and all real estate managers from whose services Rogers or its employees happened to benefit. At least one Wisconsin court interpreting a similar policy has agreed. See Mathison v. Kulhanek , No. 2019AP1568, 2021 WL 329930, at *3 (Wis. Ct. App. Feb. 2, 2021).

Imperial also argues that it is covered under the policy's blanket additional insured endorsement. That endorsement modified the policy's general liability coverage to add as additional insureds "[a]ll persons or organizations required to be named as additional insureds by written contract with the policyholder." ECF No. 24-2 at 72. Imperial points to a provision in the lease agreement between Rogers and its landlord, CFO2, which required Rogers to maintain, inter alia, general-liability and umbrella-liability insurance, and further required such insurance to "name Landlord (or any successor) [and] Landlord's property manager ... as ‘additional insureds.’ " ECF No. 24-3 § 14(A). Imperial contends that because Rogers was required to name Imperial, the property manager, as an additional insured under its lease, Imperial qualifies as an additional insured under the policy's blanket additional...

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