Wausau Underwriters Ins. Co. v. Cincinnati Ins. Co.
| Decision Date | 05 May 2020 |
| Docket Number | Case No. 17-cv-5952 |
| Parties | WAUSAU UNDERWRITERS INSURANCE COMPANY, a Wisconsin company, and EMPLOYERS INSURANCE COMPANY OF WAUSAU, a Wisconsin company, Plaintiffs, v. THE CINCINNATI INSURANCE COMPANY, an Ohio company, Defendant. |
| Court | U.S. District Court — Northern District of Illinois |
MEMORANDUM OPINION AND ORDER
This is an insurance coverage dispute arising out of a personal injury case brought against Vita Food Products, Inc. by an employee of Painters USA, Inc. The employee was seriously injured while working at a Vita Food facility in Chicago and brought a negligence action in state court against Vita Food. After trial, a jury reached a verdict in favor of the employee. Plaintiff insurance companies in this case paid the $8.96 million judgment on behalf of Vita Food. Plaintiffs filed this lawsuit seeking a declaratory judgment that Defendant Cincinnati Insurance Company is liable to contribute its share of the judgment. Parties have filed cross motions for summary judgment.
For the reasons stated below, Plaintiffs' motion for summary judgment [36] is denied and Cincinnati's motion for summary judgment [43] is granted.
Summary judgment is proper where "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). A genuine dispute as to any material fact exists if "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 (1986). The substantive law controls which facts are material. Id. After a "properly supported motion for summary judgment is made, the adverse party must set forth specific facts showing that there is a genuine issue for trial." Id. at 250 (internal quotations omitted).
The Court "consider[s] all of the evidence in the record in the light most favorable to the non-moving party, and [] draw[s] all reasonable inferences from that evidence in favor of the party opposing summary judgment." Skiba v. Ill. Cent. R.R. Co., 884 F.3d 708, 717 (7th Cir. 2018) (internal citation and quotations omitted). In doing so, the Court gives the non-moving party "the benefit of reasonable inferences from the evidence, but not speculative inferences in [its] favor." White v. City of Chi., 829 F.3d 837, 841 (7th Cir. 2016) (internal citations omitted). "The controlling question is whether a reasonable trier of fact could find in favor of the non-moving party on the evidence submitted in support of and opposition to the motion for summary judgment." Id. (citation omitted).
When cross-motions for summary judgment are filed, the Court construes all facts and draws all reasonable inferences in favor of the party against whom the motionwas filed. Indianapolis Airport Auth. v. Travelers Prop. Cas. Co. of Am., 849 F.3d 355, 361 (7th Cir. 2017). The Court treats the motions "separately in determining whether judgment should be entered in accordance with Rule 56." Marcatante v. City of Chi., 657 F.3d 433, 439 (7th Cir. 2011). See also Kreg Therapeutics, Inc. v. VitalGo, Inc., 919 F.3d 405, 416 (7th Cir. 2019) ().
In early 2011, Vita Food's Maintenance Manager Martin Morse ("Morse") contacted Painters USA, Inc. ("Painters") to obtain a bid for a painting project planned for the Vita Food Facility in Chicago. (PSOF ¶ 8).2 Painters' Vice President, Paul Cook ("Cook"), visited the facility and sent a proposal for the work. (PSOF ¶ 9). After work was underway, on June 30, 2011, Painters' employee, Nardo Ovando ("Ovando"), was injured in an accident at the Vita Food Facility and experienced a traumatic brain injury ("Ovando Accident"). (PSOF ¶28; DSOF ¶21). Ovando and his wife sued Vita Food in the Circuit Court of Cook County (the "Underlying Action").At trial, Ovando alleged a negligence claim and sought damages from Vita Food for his injuries, pain and suffering, and for medical care and services. His wife brought a loss of consortium claim. (PSOF ¶32). When the complaint was filed against it, Vita Food demanded insurance coverage (defense and indemnity) from Cincinnati as an additional insured under the commercial package insurance policy Cincinnati issued to Painters. (PSOF ¶33). Cincinnati initially refused to defend or indemnify Vita Food. (PSOF ¶34).
In February 2017, a jury returned a verdict in favor of Ovando and his wife and against Vita Food. (PSOF ¶36). On February 9, 2017, a money judgment was entered against Vita Food for $8.96 million. (PSOF ¶37). Cincinnati has not paid any part of that judgment. (PSOF ¶39).
Plaintiffs Wausau Underwriters Insurance Company ("Wausau") and Employers Insurance Company of Wausau ("Employers") are Wisconsin corporations with their principal places of business in Boston, Massachusetts. (PSOF ¶¶1-2). Defendant Cincinnati Insurance Company ("Cincinnati") is an insurance company organized and existing under the laws of the state of Ohio, with its principal place of business in Fairfield, Ohio. (PSOF ¶3).
Cincinnati issued Policy No. EPP 000 91 32 to Painters for the policy period of January 15, 2011 to January 15, 2012 (the "Cincinnati Policy"). (PSOF ¶ 19). The Cincinnati Policy contains Commercial General Liability ("CGL") and Commercial Umbrella/Excess Liability. (PSOF ¶20). The CGL coverage part of the CincinnatiPolicy provides primary-level coverage with limits of liability of $1,000,000 per occurrence subject to a $2,000,000 general aggregate and a $2,000,000 products-completed operations aggregate. (Id.). The Cincinnati Policy contains an endorsement regarding coverage afforded to additional insureds. (DSOF ¶13).
Vita Food's only means to seek coverage under the Cincinnati Policy, as provided by the Additional Insured Endorsement, is to demonstrate that an agreement or contract was entered into between Painters and Vita Food requiring such insurance coverage. (DSOF ¶17). The terms of the Cincinnati Policy require that the contract or agreement, whether oral or written, requiring additional insured coverage be in effect and that it be executed prior to the "occurrence" for which coverage is sought. (DSOF ¶19). The Certificate of Insurance, which lists Vita Food as the Certificate Holder, was issued July 1, 2011, the day after the Ovando Accident. (DSOF ¶24).
Wausau issued to Vita Food a CGL policy, Policy No. TBJ-Z91-449649-031, with a policy period of June 19, 2011 to June 19, 2012 (the "Wausau Policy"). The Wausau Policy provides CGL coverage with limits of liability of $1,000,000 per occurrence subject to a $2,000,000 general aggregate and a $2,000,000 products-completed operations aggregate. (PSOF ¶23). Employers issued to Vita Food a commercial umbrella policy, Policy No. THC-Z91-449649-041, with a policy period of June 19, 2011 to June 19, 2012 (the "Employers Policy"). The Employers Policy provides umbrella liability coverage with limits of liability of $10,000,000 per occurrence subject to a $10,000,000 aggregate. (PSOF ¶24).
On July 19, 2013, Cincinnati filed a declaratory judgment action, Cincinnati Insurance Co. v. Vita Food Products, Inc., No. 1:13-cv-5181, N.D. Ill., seeking a declaration that it did not owe coverage to Vita Food under the policy it issued to Painters. (PSOF ¶40). The District Court granted summary judgment in favor of Cincinnati (2015 U.S. Dist. LEXIS 11521 (N.D. Ill. Jan. 30, 2015)) but on appeal, the Seventh Circuit reversed and remanded the case for further proceedings (808 F.3d 702). (PSOF ¶42). The Seventh Circuit held that "if Vita can prove that there was an oral agreement to add it as an additional insured prior to the accident in Ovando, it will be entitled to coverage under Cincinnati Insurance's policy." (DSOF ¶42).
Following the Seventh Circuit decision, Vita Food and Cincinnati agreed to settle the duty to defend claim and Cincinnati agreed to pay a portion of Vita Food's defense costs in the Underlying Action. (PSOF ¶43). Cincinnati and Vita Food reached this agreement in 2016 subject to a reservation of rights with respect to possible indemnity coverage. (DSOF ¶43).3 The parties dispute whether Vita Food and Cincinnati later reached an oral settlement agreement in January 2017 to settle Vita Food's claim that it was an additional insured and was owed indemnity coverage by Cincinnati under the Cincinnati Policy. After the jury verdict in the UnderlyingAction, Cincinnati sent a settlement check to Vita Food on February 15, 2017 but Vita Food did not cash it. (PSOF ¶54).
Plaintiffs argue that because they paid the entirety of the $8.96 million judgment in the Underlying Action on Vita Food's behalf, Vita Food's rights to recover from Cincinnati under its policy, in full or partial satisfaction of the judgment, are transferred to Plaintiffs. (Dkt. 37 at 12). They request judgment on all counts against Cincinnati: (1) Count I (Declaratory Judgment as to Cincinnati CGL Coverage); (2) Count II (Declaratory Judgment as to Cincinnati Commercial Umbrella/Excess Liability Coverage); (3) Count IV (Equitable Contribution); and, in the alternative, (4) Count V (Equitable Subrogation). Plaintiffs also request summary judgment in their favor on Cincinnati's fifth affirmative defense (prior settlement). (Id. at 7).4 In its motion, Cincinnati argues that it is entitled to summary judgment because Vita Food was not an additional insured on its policy and because it had an oral settlement agreement with Vita Food, and therefore it owes no sums to Plaintiffs based on their claims of equitable contribution and equitable...
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