RSUI Indem. Co. v. JMT Dev. Inc.
| Decision Date | 10 November 2021 |
| Docket Number | 21 C 1566 |
| Citation | 572 F.Supp.3d 482 |
| Parties | RSUI INDEMNITY COMPANY, Plaintiff v. JMT DEVELOPMENT INC. d/b/a Off Track Pub, Defendant. |
| Court | U.S. District Court — Northern District of Illinois |
Neil E. Holmen, Cassandra L. Jones, Matthew W. Casey, Walker Wilcox Matousek LLP, Chicago, IL, for Plaintiff.
Mark Lee Shaw, Jennifer Craigmile Neubauer, Shaw Law Ltd., Waukegan, IL, for Defendant.
Plaintiff RSUI Indemnity Company ("RSUI") brings suit against JMT Development Inc. d/b/a Off Track Pub ("JMT") seeking declaratory judgment that it has no duty to defend or indemnify JMT in an underlying tort action in state court. Before the Court is RSUI's motion for judgment on the pleadings. (Dkt. 11). For the following reasons, RSUI's motion is granted.
On November 16, 2020, Robert Hayes filed a complaint in state court against the insured JMT, and other non-insured defendants Emilio Cundari and Robert McCullagh, after McCullagh allegedly assaulted Hayes at the Off Track Pub. (Dkt. 1 at ¶ 10, Ex. B). Hayes alleges Off Track Pub employees served McCullagh alcohol until he was intoxicated and then removed him from the bar "due to [McCullagh's] dangerous and violent behavior." (Id. at ¶ 12, Ex. B at 2). Nonetheless, McCullagh was permitted to return and thereafter assaulted Hayes with his fists and feet without cause or provocation. (Id. at ¶ 13, Ex. B at 2–3). Hayes sued JMT under Illinois's Dram Shop Act, 235 ILCS 5/6-21, and for negligence. (Id. at ¶ 15, Ex. B at 2–3). He seeks damages in excess of $50,000 for each count alleged against JMT. (Id. at ¶ 16, Ex. B 2–3). Hayes sued McCullagh for battery and Cundari under the Dram Shop Act as owner of the property where the Off Track Pub is located. (Id. at ¶ 15, Ex. B at 4–5).
RSUI issued an insurance policy providing liquor liability coverage to JMT for its insured premises, Off Track Pub. . The Policy provides:
We will pay those sums that you become legally obligated to pay as damages because of injury to which this insurance applies if liability for injury arises out of the selling, serving or furnishing of any alcoholic beverage. The sale, service and furnishing of the alcoholic beverage must take place at or from the insured premises.
) (emphasis in original). RSUI has "the right and duty to defend any suit" seeking such damages. (Dkt. 1 at ¶ 20, Ex. A at 7). Attached to the Policy is an Assault and Battery Limitation which states:
) (emphasis in original). "[W]ords and phrases that appear in bold face have special meaning." (Dkt. 1 Ex. A at 7). The Policy, however, does not define "damage" as used in the Limitation. .
On December 2, 2020, JMT sought coverage for the Hayes action under the Policy. (Dkt. 1 at ¶ 25). On January 4, 2021, RSUI denied the claim, explaining there is no coverage for the Hayes action by reason of the Assault and Battery Limitation. (Id. at ¶¶ 26–28, Ex. C). RSUI asked JMT to fill out a waiver of coverage form, but JMT did not respond. (Id. at ¶¶ 27, 31, Ex. C–D). On March 22, 2021, RSUI filed this action for a declaratory judgment that it is not required to defend or indemnify JMT for the Hayes action. (Dkt. 1).
Federal Rule of Civil Procedure 12(c) provides that "[a]fter pleadings are closed—but early enough not to delay trial—a party may move for judgment on the pleadings." "Judgment on the pleadings is appropriate when there are no disputed issues of material fact and it is clear that the moving party ... is entitled to judgment as a matter of law." Unite Here Local 1 v. Hyatt Corp. , 862 F.3d 588, 595 (7th Cir. 2017). "To survive a motion for judgment on the pleadings, ‘a complaint must state a claim to relief that is plausible on its face.’ " Bishop v. Air Line Pilots Ass'n, Int'l , 900 F.3d 388, 397 (7th Cir. 2018) (quoting Wagner v. Teva Pharm. USA, Inc. , 840 F.3d 355, 358 (7th Cir. 2016) ). A motion for judgment on the pleadings under Rule 12(c) is governed by the same standards as a motion to dismiss for failure to state a claim under Rule 12(b)(6). Adams v. City of Indianapolis , 742 F.3d 720, 727–28 (7th Cir. 2014). The Court accepts as true all facts alleged in the complaint and construes all reasonable inferences in favor of the non-moving party. See Pisciotta v. Old Nat. Bancorp , 499 F.3d 629, 633 (7th Cir. 2007) (citing Thomas v. Guardsmark , Inc., 381 F.3d 701, 704 (7th Cir. 2004) ).
As a threshold matter, JMT challenges this Court's diversity jurisdiction on grounds that RSUI has not adequately alleged that the amount in controversy exceeds $75,000. Where declaratory or injunctive relief is sought, "the amount in controversy is measured by the value of the object of the litigation." Hunt v. Wash. State Apple Adver. Comm'n , 432 U.S. 333, 347, 97 S.Ct. 2434, 53 L.Ed.2d 383 (1977) ; America's Moneyline, Inc. v. Coleman , 360 F.3d 782, 786 (7th Cir. 2004). In the insurance context, "both the cost of providing a defense and the potential cost of indemnifying Midland count toward the amount in controversy." Midland Mgmt. Co. v. Am. Alternative Ins. Corp. , 132 F. Supp. 3d 1014, 1019 (N.D. Ill. 2015) (citing Meridian Sec. Ins. Co. v. Sadowski , 441 F.3d 536 (7th Cir. 2006) ). "This remains the case even where—as here—the underlying lawsuit remains pending." Id. RSUI has the burden to plausibly allege that the amount at stake exceeds the jurisdictional requirement. Ware v. Best Buy Stores, L.P. , 6 F.4th 726, 732 (7th Cir. 2021). " ‘Once the proponent of federal jurisdiction has explained plausibly how the stakes exceed’ the amount-in-controversy threshold of a jurisdictional statute, ‘then the case belongs in federal court unless it is legally impossible for the plaintiff to recover that much.’ " Id. (quoting Spivey v. Vertrue, Inc. , 528 F.3d 982, 986 (7th Cir. 2008) ).
The Hayes action seeks "an amount in excess of $50,000 plus ... costs" on two separate counts: dram shop liability and negligence. (Dkt. 1, Ex. B at 2–4). The Dram Shop Act, however, is "the sole remedy against a dramshop for injuries caused by intoxicated patrons." Hopkins v. Powers , 113 Ill.2d 206, 100 Ill.Dec. 579, 497 N.E.2d 757, 759 (1986) ; Charles v. Seigfried , 165 Ill.2d 482, 209 Ill.Dec. 226, 651 N.E.2d 154, 158 (1995) (). For this reason, the Court declines to consider the amount of damages alleged in the negligence count against JMT towards the amount in controversy.
Even absent the negligence count, however, RSUI has shown that the amount in controversy will plausibly exceed $75,000. Hayes alleges he "suffered severe and permanent personal injuries, experienced great pain and mental anguish and has incurred and will in the future incur, medical expenses, and has been hindered in his employment, thereby losing wages that he would have otherwise earned." (Dkt. 1 Ex. B at 2). Such severe and lasting damage could easily exceed $75,000. See e.g., Midland Mgmt. , 132 F. Supp. 3d at 1019 (N.D. Ill. 2015) (). Hayes also seeks his own costs as damages, which if awarded would add to that amount. (Dkt. 1 Ex. B at 3). It is true, as JMT asserts, that the Dramshop Act limits liability for final judgments awarded on or after January 1, 2021 to $72,671.24. See 235 ILCS 5/6-21(a) (); Dram Shop Liability Limits, https://illinoiscomptroller.gov/agencies/resource-library/statutorily-required/dram-shop-liability-limits-2017-2021/). This does not, however, spell defeat for the Court's jurisdiction, for the costs of defending the suit must also be considered. Among other expenses, under the Policy, RSUI is obligated to pay as defense costs: (1) "[a]ll expenses [it] incur[s][;]" (2) [a]ll reasonable expenses incurred by [JMT] at [RSUI's] request to assist [RSUI] in the investigation or defense of the claim or suit, including actual loss of earnings up to $100 a day because of time off from work[;]" (3) [a]ll costs taxed against [JMT] in the suit[;]" and (4) pre and post-judgment interest. (Dkt. 1 Ex. A at 7). Additionally, to prove the extensive injuries he alleges, Hayes will likely need to elicit expert testimony. Thus, in addition to attorney's fees, RSUI may plausibly incur rebuttal expert fees to adequately defend JMT. If successful, Hayes’ damages will plausibly encroach on the statutory maximum and RSUI, given the broad definition of defense costs in the Policy, will plausibly incur at least a few thousand dollars (if not much more) defending the...
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