Santa's Best Craft v. St. Paul Fire and Marine

• Citation: 353 F.Supp.2d 966
• Decision Date: 25 January 2005
• Docket Number: No. 04 C 1342.,04 C 1342.
• Parties: SANTA'S BEST CRAFT, LLC, a Delaware limited liability company; Santa's Best Craft, an Illinois general partnership; and H.S. Craft Manufacturing Co., a Taiwanese corporation (Republic of China), Plaintiffs, v. ST. PAUL FIRE AND MARINE INSURANCE COMPANY, a Minnesota corporation, Defendant.
• Court: U.S. District Court — Northern District of Illinois

353 F.Supp.2d 966

SANTA'S BEST CRAFT, LLC, a Delaware limited liability company; Santa's Best Craft, an Illinois general partnership; and H.S. Craft Manufacturing Co., a Taiwanese corporation (Republic of China), Plaintiffs, v. ST. PAUL FIRE AND MARINE INSURANCE COMPANY, a Minnesota corporation, Defendant.

No. 04 C 1342.

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

January 25, 2005.

COPYRIGHT MATERIAL OMITTED

David A. Gauntlett, Gauntlett & Associates, Irvine, CA, Mitchell Bryan, Levenfeld Pearlstein, Christopher Scott Griesmeyer, Levenfeld Pearlstein, Gary Irwin Blackman, Levenfeld Pearlstein, Chicago, IL, James Allen Lowe, Gauntlett & Associates, Irvine, CA, for Plaintiffs.

Shaun McParland Baldwin, Tressler, Soderstrom, Maloney & Priess, Dion Joseph Sartorio, Tressler, Soderstrom, Maloney & Priess, Jason Michael Craft, Tressler, Soderstrom, Maloney & Priess, Chicago, IL, for Defendant.

MEMORANDUM OPINION AND ORDER

GETTLEMAN, District Judge.

Despite this court's comment in a previous opinion in this matter expressing dissatisfaction with the "proliferation of motions" and labeling this "the type of litigation practice that gives lawyers a bad name and judges headaches," plaintiffs have brought a motion for partial summary judgment and defendant has filed a motion to stay that together have generated 77 pages of motions and briefs, accompanied by several hundred pages of affidavits and exhibits, which are riddled with premature, tangential, and redundant arguments and extraneous facts. The court's headache has increased in severity and the lawyers have done nothing to improve their performance. The court is thus burdened with deciding issues that could and should have been resolved in a more efficient, comprehensive manner.

Plaintiffs Santa's Best Craft, LLC, Santa's Best, and H.S. Craft Manufacturing Co. initiated the instant lawsuit against defendant St. Paul Fire and Marine Insurance Co. ("St.Paul"), seeking, inter alia, a declaratory judgment that defendant had a duty to defend plaintiffs in JLJ, Inc., et al. v. Santa's Best Craft, LLC, et al., which was pending in the Southern District of Ohio. According to plaintiffs, subsequent to the filing of the instant motion, the JLJ litigation settled in early December 2004 for $3.5 million to be paid by plaintiff. This court ruled, inter alia, in its July 30, 2004, Memorandum Opinion and Order that St. Paul had a duty to defend plaintiffs. Santa's Best Craft, et al. v. St. Paul Fire and Marine Ins. Co., 2004 WL 1730332 (N.D.Ill. July 30, 2004). Plaintiffs bring the instant motion for partial summary judgment quantifying defense expenses. On December 23, 2004, defendant filed a motion to vacate the date set for the court's January 27, 2005, ruling date on the pending motion and to stay the ruling. At a status hearing on January 4, 2005, the court denied without prejudice defendant's motion to vacate the court's ruling date and stay the action, but indicated that it would consider defendant's arguments in support of defendant's motion to stay with plaintiffs' motion for partial summary judgment.

For the reasons stated herein, the court denies plaintiffs' motion for partial summary judgment to quantify defense expenses, and the court grants defendant's motion to stay.

FACTS¹

The following are the facts relevant to the instant motion for partial summary judgment quantifying defenses expenses.² Plaintiffs Santa's Best (a partnership) and H.S. Craft Manufacturing Co. are two principal members of plaintiff Santa's Best Craft, LLC ("SBC"). Plaintiffs manufacture and distribute, among other things, seasonal decorative lighting products. Defendant St. Paul issued Santa's Best a Commercial General Liability Coverage policy no. CK01204882 for the period of January 1, 2002, through January 1, 2003 (the "2002 policy"). The 2002 policy lists Santa's Best as the first insured, and SBC is listed separately as an insured.

On November 5, 2002, JLJ, Inc., another company that manufactures and distributes seasonal decorative products, filed a five-count complaint against SBC in the Southern District of Ohio, alleging trade dress infringement and other violations of unfair competition laws of various states ("the JLJ action"). SBC tendered its defense in the JLJ action to defendant. In a December 23, 2002, letter, defendant denied coverage for the JLJ action. The JLJ plaintiffs filed an amended complaint adding Santa's Best, H.S. Craft, and Monogram Licensing, Inc. ("Monogram"), a licensee of Santa's Best.³ On January 13, 2004, defendant acknowledged receipt of an amended complaint in the JLJ action and reaffirmed its December 23, 2002, denial of a defense obligation. According to plaintiffs, plaintiffs agreed to pay for Monogram's defense in the JLJ suit, and to coordinate defense of the JLJ suit with Monogram. At least one of the law firms involved in the defense of the JLJ action was directly retained by Monogram and invoiced Monogram directly, which sent the invoices to SBC for reimbursement. Plaintiffs argue that defendant is obligated had duty to defend Monogram because Monogram is an indemnitee of plaintiffs.

On February 20, 2004, plaintiffs filed a action in this court seeking a declaratory judgment that defendant "was and is obligated to provide plaintiffs a prompt and complete defense" in the JLJ action. Plaintiffs filed an amended complaint on March 8, 2004. Plaintiffs and defendant filed motions for partial summary judgment. While these motions were pending, defendant filed a counterclaim for a declaratory judgment that it is not obligated to defend plaintiffs and an additional motion for partial summary judgment, and plaintiffs filed motions to strike defendant's counterclaim and second partial summary judgment motion. In its July 30, 2004, Memorandum Opinion and Order this court found, inter alia, that defendant had a duty to defend plaintiffs in the JLJ action, and denied plaintiffs motion to strike defendant's counterclaim. Santa's Best, 2004 WL 1730332.

Zurich American Insurance Company ("Zurich") insured plaintiffs for a period of time directly prior to the 2002 policy issued by defendant St. Paul. In November 2002, plaintiffs also tendered their defense in the JLJ action to Zurich. Zurich initially denied a defense, but subsequently agreed on May 3, 2003, to defend plaintiffs in the JLJ action. In January 2003, plaintiffs filed a suit against Zurich in the Circuit Court of Cook County, Chancery Division alleging that Zurich had paid only a portion of the defense costs and expenses in the JLJ action. See Santa's Best Craft, LLC v. Zurich American Ins. Co., case no. 04 CH 01885 ("the Zurich action"). Plaintiff's first amended complaint in the Zurich action was filed on or about July 23, 2004, and alleges that Zurich had paid one-third of plaintiffs' defense expenses to date. In August 2004, Zurich filed a third-party complaint against St. Paul in the Zurich action, seeking contribution. St. Paul has filed a motion to strike or dismiss Zurich's third-party complaint in the Zurich action.

On October 12, 2004, plaintiffs filed a motion for partial summary judgment in the Zurich action quantifying defense expenses. Plaintiffs' motion against Zurich seeks an order from the state court declaring that Zurich owes expense reimbursement for the attorneys' fees incurred by plaintiffs and Monogram from approximately December 2002 through June 30, 2004, in the amount of $1,411,617.64, which is $2,023,874.64 less $650,016.00 in payment of defense fees previously made by Zurich. Plaintiffs also seek interest on the $1,411,617.64.

Plaintiffs' instant motion in this court seeks a judgment that defendant St. Paul must reimburse all legal expenses and costs related to the JLJ action from plaintiffs' tender of their defense to defendant through June 30, 2004. Plaintiffs claim total expenses of $2,023,874.64. Plaintiffs also seek $99,378.37 in prejudgment interest through August 26, 2004, plus $277.24 in daily interest thereafter. Following the filing of plaintiffs' motion for partial summary judgment to quantify defense expenses, defendant paid plaintiffs $854,259.44 on August 26, 2004. According to defendant, this represents 50% of the total defense expenses claimed by plaintiffs, less allegedly duplicative charges and certain categories of charges for which defendant claims it is not responsible.

Because the parties have not exchanged their Rule 26(a)(1) initial disclosures or held a Rule 26(f) scheduling conference, no interrogatories or production requests have been served.

SUMMARY JUDGMENT STANDARD

A movant is entitled to summary judgment under Fed.R.Civ.P. 56 when the moving papers and affidavits show there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Unterreiner v. Volkswagen of America, Inc., 8 F.3d 1206, 1209 (7th Cir.1993). Once a moving party has met its burden, the nonmoving party must go beyond the pleadings and set forth specific facts showing there is a genuine issue for trial. See Fed.R.Civ.P. 56(e); Becker v. Tenenbaum-Hill Assoc., Inc., 914 F.2d 107, 110 (7th Cir.1990). The court considers the record as a whole and draws all reasonable inferences in the light most favorable to the party opposing the motion. See Fisher v. Transco Services-Milwaukee, Inc., 979 F.2d 1239, 1242 (7th Cir.1992).

A genuine issue of material fact exists when "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Stewart v. McGinnis, 5 F.3d 1031, 1033 (7th Cir.1993). However, the nonmoving party "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106...