Sonoco Bldgs., Inc., Div. of Sonoco Products Co. v. American Home Assur. Co.

• Decision Date: 27 June 1989
• Docket Number: No. 88-1398,88-1398
• Citation: 877 F.2d 1350
• Parties: SONOCO BUILDINGS, INC., a DIVISION OF SONOCO PRODUCTS COMPANY, Plaintiff-Appellee, v. AMERICAN HOME ASSURANCE COMPANY, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1350

877 F.2d 1350

SONOCO BUILDINGS, INC., a DIVISION OF SONOCO PRODUCTS COMPANY, Plaintiff-Appellee, v. AMERICAN HOME ASSURANCE COMPANY, Defendant-Appellant.

No. 88-1398.

United States Court of Appeals, Seventh Circuit.

Argued April 5, 1989.

Decided June 27, 1989.

Mark D. Koss, Kasdorf Lewis & Swietlik, S.C., James M. Ryan, Milwaukee, Wis., for defendant-appellant.

Russell M. Lein, Howard Peterman Solochek Grodin & Nashban, S.C., Milwaukee, Wis., for plaintiff-appellee.

Before BAUER, Chief Judge, WOOD, Jr., Circuit Judge, and WILL, Senior District Judge. ^*

HARLINGTON WOOD, Jr., Circuit Judge.

This appeal involves a cargo of building construction panels transported from Wisconsin to Missouri pursuant to a shipping contract in which time was of the essence. The panels never reached the Missouri construction site but turned up five months later in an Illinois truck depot. Sonoco Buildings, Inc. (Sonoco), the panels manufacturer, sued American Home Assurance Company (American), the carrier's insurer, for the loss. The district court granted summary judgment in favor of Sonoco. American appeals, claiming that the loss was excluded from coverage because it was caused by delay and that, even if the loss was not excluded, American did not receive timely notice of the loss. We affirm in part and reverse in part.

I. FACTS

On May 1, 1984 Sonoco contracted with Western Transport Crane and Rigging (Western Transport) to deliver fourteen bundles of twenty-six gauge galvalume panels from Waukesha, Wisconsin to Noel, Missouri. A bill of lading, naming Western Transport as the carrier and stipulating that the panels were to be delivered by 2:00 p.m. on May 3, 1984, was issued. Time was of the essence because a construction crew awaited the shipment. Western Transport co-brokered with Nationwide Transport, Inc. (Nationwide), who in turn contracted with Thunderbird Motor Freight Lines, Inc., (Thunderbird), to carry the panels to Missouri.

Thunderbird picked up the panels at Sonoco's premises on May 1, 1984. On July 11, 1984 the builder in Missouri notified Sonoco that the panels had not yet arrived. After Western Transport confirmed that the panels could not be located, Sonoco manufactured and shipped new panels to replace those that were missing. On approximately December 20, 1984 Sonoco discovered that the panels were unharmed and sitting in Thunderbird's truck yard in South Roxana, Illinois. Sonoco refused to accept the panels back, however, claiming that the panels were specifically designed for the Missouri job and were now useless.

On April 23, 1985 Sonoco sued Western Transport, Nationwide, Thunderbird, and United States Fidelity and Guaranty Company to recover $30,115.36, the replacement cost and penalties for late shipment. Eventually all defendants were dismissed except Thunderbird. The trial court granted Sonoco summary judgment against Thunderbird on October 26, 1986, even though Thunderbird had shut down business in October 1985.

During the course of litigation, however, on approximately April 30, 1986, attorneys stating that they represented Thunderbird's insurer contacted Sonoco's attorneys but did not identify the insurer. Thereafter, Sonoco sent copies of its motion for summary judgment and brief to the insurer's attorneys. Eventually the attorneys identified defendant American as the insurer by sending Sonoco a copy of American's insurance policy that covered the defunct Thunderbird.

On January 16, 1987 Sonoco sued American claiming that, as Thunderbird's insurer, American was responsible for the expenses incurred with regard to the lost panels. American moved to dismiss the complaint on the grounds that it had not received proper notice of the loss and that the policy did not cover the loss because the panels were eventually recovered. Sonoco, in response, filed a motion for summary judgment. The district judge granted Sonoco summary judgment on February 4, 1988 in the amount of $30,115.36. American appeals.

II. ANALYSIS

A. The Conflicts of Law Issue

Before we reach the merits of American's appeal, we first must determine which state's laws to apply in this diversity suit. Sonoco argues that the insurance contract entered into by Thunderbird and American expressly provides that we should apply the law of the state where the policy was issued, in this case--Texas. American contends that Illinois law is applicable.

Sonoco chose Wisconsin as the forum for this lawsuit, therefore we apply Wisconsin's conflicts of law rules. Pittway Corp. v. Lockheed Aircraft Corp., 641 F.2d 524, 526 (7th Cir.1981); see also SCA Services, Inc. v. Lucky Stores, 599 F.2d 178, 180 (7th Cir.1979). Under Wisconsin law, the parties to a contract may expressly agree that the law of a particular jurisdiction will control the contractual relationship. First Wisconsin Nat'l Bank v. Nicolaou, 85 Wis.2d 393, 397 n. 1, 270 N.W.2d 582, 584 n. 1 (Ct.App.1978), appeal dismissed, 87 Wis.2d 360, 274 N.W.2d 704 (1979). Sonoco is correct that the insurance policy was issued in Texas, but the insurance policy provision cited by Sonoco does not indicate that the parties stipulated to Texas as the source of law for interpreting the terms of the policy. The provision cited by Sonoco merely indicates an intent to avoid inconsistencies between the statutory laws of the state in which the policy was issued and the terms of the policy. The insurance policy provision states:

Conformity to Statute: Terms of this policy which are in conflict with the statutes of the state wherein this policy is issued are hereby amended to conform to such statutes.

We do not infer from this provision that American and Thunderbird intended to adopt Texas' common law. Sonoco has not directed us to any Texas statute that speaks on the issues raised; the provision therefore is irrelevant in determining which state's laws to apply in this diversity action.

If there is no contractual provision indicating a choice of law preference, Wisconsin uses a "significant contacts" approach that emphasizes both the quality and quantity of the contacts between the subject matter of the lawsuit and a particular state. See Belland v. Allstate Ins. Co., 140 Wis.2d 391, 397-98, 410 N.W.2d 611, 613-14 (Ct.App.1987). The factors that Wisconsin directs us to consider include the place of contracting, the place of performance, the location of the subject matter of the contract, the place of business of the parties, and the law under which the contract will be most effective. Belland, 140 Wis.2d at 397, 410 N.W.2d at 614.

Considering these factors, we believe that Illinois is the appropriate source of law. Thunderbird's insurance contract was issued in Texas but was delivered to Illinois. Illinois was also the location of the insured Thunderbird's headquarters, truck depot, and the site at which the panels were finally located. In comparison, other states have only limited contacts with the insurance contract at issue. New York is American's principal place of business; Wisconsin is the home of Sonoco (who was not a party to the insurance policy but now seeks recovery); and Missouri was the intended destination for the panels. Out of all these contacts, we consider the most pertinent to be the insured's place of business and the likely location of the subject matter of the contract. Because Thunderbird was located in Illinois and most of its trucks and their contents probably travelled through or were stored in Illinois, we look to Illinois law to interpret the insurance contract.

B. Loss or Loss Due to Delay

The district court entered summary judgment in favor of Sonoco. The district court may enter summary judgment if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). See Greer Properties, Inc. v. LaSalle Nat'l Bank, 874 F.2d 457, 459 (7th Cir.1989). Furthermore, the Illinois Supreme Court has stated that "when facts are undisputed, the question of whether those facts fall within the provisions of an insurance policy is a matter of interpretation, the province of the court rather than the fact finder." United Farm Bureau Mut. Ins. Co. v. Elder, 86 Ill.2d 339, 342-43, 56 Ill.Dec. 47, 49, 427 N.E.2d 127, 129 (1981); see also Uhwat v. Country Mut. Ins. Co., 125 Ill.App.3d 295, 303, 80 Ill.Dec. 618, 624, 465 N.E.2d 964, 970 (1984). In reviewing a summary judgment, we view the record and the inferences drawn from it in the light most favorable to the non-moving party. Schlifke v. Seafirst Corp., 866 F.2d 935, 937 (7th Cir.1989). We review de novo the district court's entry of summary judgment. Greer Properties, 874 F.2d at 459.

American argues that the costs incurred when Thunderbird failed to deliver the panels to the Missouri construction site are losses due to delay that are excluded from coverage; Sonoco argues that the panels were simply lost and, therefore, covered by the policy. The insurance policy covers loss but specifically excludes loss caused by delay; yet it fails to define either term.

If provisions of an insurance policy are clear and unambiguous, the court must enforce them according to their plain meaning. Uhwat, 125 Ill.App.3d at 302, 80 Ill.Dec. at 624, 465 N.E.2d at 970. Where an insurance policy is subject to more than one reasonable interpretation, however, it is ambiguous and must be construed against the insurer. Economy Fire & Casualty Co. v. Kubik, 142 Ill.App.3d 906, 909, 97 Ill.Dec. 68, 70, 492 N.E.2d 504, 506 (1986). The Illinois Supreme Court has noted, "An insurance policy is not to be interpreted in a vacuum; it is issued under given factual circumstances. What at first blush might appear unambiguous in the insurance contract might not be such in the particular factual setting in which the contract was issued." Glidden v....