The opinion of the court was delivered by: GEORGE M. MAROVICH
MEMORANDUM OPINION AND ORDER
Plaintiff Hermitage Insurance Company ("Hermitage") brought this declaratory judgment action against defendants Action Marine, Inc. ("Action Marine") and Riccardo Benvenuto ("Benvenuto") to determine the degree to which Hermitage was obliged to indemnify Action Marine under an insurance policy that Hermitage sold to Action Marine. This dispute centers around the validity of a Special Multi-Peril Liability Policy issued by Hermitage (the "Policy") to Action. Hermitage contends that Exclusion (k)(3) ("Exclusion") within the Policy applies to the present case and therefore bars Action from recovering damages to the mast that was damaged at Action's marina. Action alleges that the Exclusion does not apply to the facts of this case, that it is ambiguous, and thus void. Action further counterclaims that Hermitage exercised bad faith and vexatious conduct and sought relief under Ill. Rev. Stat. ch. 73, para. 767 (1991) (now codified at 215 ILCS 5/155 (West 1992)).
Hermitage filed a motion to dismiss Count II of Action Marine's counterclaim. Hermitage alleged that Action Marine failed to state any facts that would support a claim for vexatious conduct. Hermitage and Action Marine then filed cross-motions for summary judgment on their respective claims. For the following reasons, we grant Hermitage's motion for summary judgment and its motion to dismiss Count II of Action Marine's counterclaim, and we deny Action Marine's motion for summary judgment with respect to both of its counts.
SUMMARY JUDGMENT AND LOCAL RULE 12
Before we address the background and issues of this case, we must first address a threshold issue of procedure.
When analyzing a motion for summary judgment, we engage in a two-step process. We first decide whether there exists a genuine issue of material fact. If we conclude that no material issue of fact exists, than we must decide whether the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(e); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). When analyzing the facts presented, a court must view the record and all inferences to be drawn from it in a light most favorable to the non-movant. Griffin v. Thomas, 929 F.2d 1210, 1212 (7th Cir. 1991). When presented with cross-motions for summary judgment, we have a more difficult task because we must consider two separate factual scenarios. As applied to this case, we must in the first instance construe the facts in the light most favorable to Hermitage; in the second we must construe the facts in a light most favorable to Action Marine. Phaup v. Pepsi-Cola General Bottlers, Inc., 761 F. Supp. 555, 557 n.5 (N.D. Ill. 1991).
In this district, Local Rules 12(m) and 12(n) require the parties moving for and opposing summary judgment under Rule 56 of the Federal Rules of Civil Procedure to state the material facts of the case. Local Rule 12(m) requires the moving party to provide a supporting memorandum of law, including a statement of material facts as to which that party contends there is no genuine issue and which entitle that party to summary judgment as a matter of law. The movant is required to set each fact in a short numbered paragraph and include a specific reference to the record to support that fact.
Local Rule 12(n) requires the party opposing summary judgment to submit a supporting memorandum of law, including a supporting statement responding to each numbered paragraph in the movant's statement of material facts. The party opposing summary judgment must state any disagreement to the material facts set forth by the moving party. If the party opposing summary judgment fails to state any disagreement with the facts set forth in the movant's statement, those facts are deemed admitted. These requirements have been strictly enforced in this district. See Pasant v. Jackson Nat'l Life Ins. Co., 768 F. Supp. 661, 663 (N.D. Ill. 1991); Davis v. Frapolly, 756 F. Supp. 1065, 1069-70 (N.D. Ill. 1991), and in the Court of Appeals. See Brown v. United States, 976 F.2d 1104, 1108 (7th Cir. 1992); Schulz v. Serfilco, Ltd., 965 F.2d 516, 519 (7th Cir. 1992); Capitol Converting Equip., Inc. v. LEP Transp., Inc., 965 F.2d 391, 394-95 (7th Cir. 1992); Bell, Boyd and Lloyd v. Tapy, 896 F.2d 1101, 1103 (7th Cir. 1990).
In response to Action Marine's motion, memorandum and 12(m) statement, Hermitage failed to file a 12(n) statement contesting the material facts alleged by Action Marine. Hermitage's response to Action Marine's motion consisted of a memorandum alleging facts supported by the record. Hermitage failed to contest any of the individual paragraphs in which Action Marine set forth material facts. Thus, under strict application of Local Rule 12(n), Hermitage has admitted the material facts alleged by Action Marine for the purposes of Action Marine's motion for summary judgment. However, the material facts set forth in Action Marine's 12(m) statement do not entitle Action Marine to summary judgment as a matter of law.
Hermitage's motion for summary judgment includes a statement of material facts that, with minor exception,
complies with Local Rule 12(m). Action Marine responded with a 12(n) statement contesting certain facts set forth in Hermitage's motion and agreeing to others. The following statement of facts is drawn from a careful consideration of Hermitage's motion for summary judgment, Action Marine's 12(n) statement, and the record of this case.
Hermitage sold the Policy to Action Marine, which provides servicing and storage for boats. Generally, the Policy provided bodily injury and property damage protection for incidents arising from operations necessary to Action Marine's business. The Policy was subject to expressed conditions and Exclusions, and it was in effect for a period of one year beginning October 17, 1990.
As the crane lifted the mast, Benvenuto and his associates assisted Action Marine employees by "walking" the butt of the mast toward the dock so that the mast could clear the boat's rail. Once the mast was clear of the boat, Auriema continued to raise the mast on the signal given by Jesus Bucera ("Ramone"), an Action Marine employee. At this point, the manila line broke, and the mast fell, causing damage to both boat and mast.
Benvenuto then filed suit in this court, alleging negligence on the part of Action Marine and its employees and seeking compensation for damage to both boat and mast. Pursuant to the Policy, Hermitage provided a defense to Action Marine in the underlying action under a reservation of rights to contest the scope of the Policy's coverage. Hermitage then informed Action Marine that it would not indemnify it for damage to the mast itself.
Hermitage based this denial of coverage upon Exclusion (k)(3) within the Policy. The Exclusion ...