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Parrillo v. Commercial Union Insurance Co.

June 5, 1996




Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 93-C-4685--James B. Zagel, Judge.

Before POSNER, Chief Judge, and KANNE and EVANS, Circuit Judges.

EVANS, Circuit Judge.



Robert Parrillo, the senior partner in the Chicago law firm of Parrillo, Weiss & O'Halloran, owned a beauty of a boat. Actually, "boat" doesn't do it justice; it was a yacht--and a 77-footer no less. Parrillo had it custom built in 1985 in Ziarregio, Italy, at a cost of one million dollars. He christened it the Lascia Fare, Italian for the French laissez-faire.

According to Parrillo, nothing on his million-dollar yacht was "off-the-shelf"; everything was "custom, custom, custom." Parrillo's pursuit of perfection is perhaps epitomized by the wood paneling and veneer throughout the vessel. All of the woodwork was of "the same finely grained wood, probably from the same tree." Despite his firm belief that the Lascia Fare had attained the desired state of perfection, Parrillo put her up for sale in 1990. His initial asking price of $1.5 million was lowered at least once, but still no buyer could be found. Parrillo began leasing a different boat, the Doubloon, while the Lascia Fare remained in wet storage at Bradford Marine in Florida. In the spring of 1993, Parrillo decided to resume using the Lascia Fare and told the captain to prepare the vessel for use. A week later, the Lascia Fare caught fire, suffering extensive damage. The disagreement between Parrillo and his insurance company over the price tag to put on that damage is the origin of the case before us.

From 1985 until the time of the fire, the Lascia Fare was insured by Commercial Union Insurance Company. The "agreed value" of the yacht under the annually renewed policy was a million dollars, and the policy carried a $100,000 deductible. After the fire, Commercial Union hired a surveying company, Pascoe & Associates, to determine the extent of the damage to the Lascia Fare, and to solicit bids for necessary repairs to the vessel. At the request of the parties, a total of four shipyards submitted bids. Bradford Marine, the marina which housed the Lascia Fare for the past few years, submitted a bid of $881,892.56. Chinook Marine, owned by an acquaintance of Parrillo, bid $906,767. Glass-Tech bid $520,000, but did not provide a detailed breakdown of its bid. The winning bid, "guaranteed not to exceed" $532,236.53, came from Cable Marine, Inc. of Fort Lauderdale, Florida.

Parrillo wanted Commercial Union to accept the Bradford bid. He felt it was impossible to restore the Lascia Fare for only half a million dollars, and preferred Bradford because "they take the attitude that the customer is always right." Of the Cable Marine bid, he said, "The bid is a joke. In the marine circles I know of, the ones I travel in, the bid is a joke." Commercial Union refused to pay more than the amount of the Cable bid, and offered Parrillo a choice between the three options set forth in his insurance policy. He could have Cable Marine do the work for the "not to exceed" price; he could pay someone else to do the work and be reimbursed up to the amount of the Cable bid; or he could sell the boat for salvage and take the amount of the Cable bid in cash. Parrillo found none of these options acceptable. Concerned that Cable would leave his boat looking "like a Winnebago," Parrillo wanted Commercial Union to guarantee that he would be "100 percent satisfied" with Cable's work, and to bear the cost of having the work completely redone if it didn't measure up to his expectations. Commercial Union refused to make a guarantee of personal satisfaction.

Cable Marine suggested that Parrillo hire his own surveyor to assuage his doubts about the quality of Cable's work, and recommended Gerald Slakoff. Parrillo took the recommendation, though he appears to have done so with an eye more toward litigation than toward restoring his boat. He asked Slakoff to take a look at the Lascia Fare, but to "only do a complete survey if you believe that you can render Cable's bid incomplete or if you believe that the survey will materially assist me in my law suit against Commercial Union." Slakoff testified that all of the bidders were reputable boatyards, and that Cable Marine had the facilities, expertise, and access to materials to do a good job on the Lascia Fare. He estimated that repairs would cost about $843,027, and that the salvage value of the boat was between $150,000 and $200,000.

Soon after Slakoff's survey, on August 25, 1993, Parrillo sold the boat for a salvage value of $312,000, and accepted payment in the amount of the Cable bid (minus a $100,000 deductible) from Commercial Union. After selling the boat and collecting the insurance (bagging $744,236.53), he claimed that the boat should have been declared a total loss. If it was a total loss Parrillo would be entitled to the full agreed value of the boat--one million dollars.

Parrillo sued Commercial Union, raising a number of claims based on what he said was misconduct by the insurer. He claimed breach of contract on the theory that the Lascia Fare was a constructive total loss under the terms of the policy. He alleged that Commercial Union violated the Illinois Consumer Fraud and Deceptive Practices Act by engaging in a "deceptive and malicious scheme" to defraud its insureds by deliberately procuring lowball bids. Finally, he sought damages of $15,000 per week for loss of use of the boat.

Commercial Union moved for summary judgment and the district court granted the motion on all counts. Specifically, the court found there was no evidence to support the "malicious conspiracy to defraud" claim, that Parrillo could not recover for loss of use, and that Commercial Union complied with the plain language of the insurance contract. Parrillo moved to vacate the judgment. The court denied the motion to vacate as "a document that seems to [have been] filed more out of disappointment . . . than a reasoned attempt to take a look at what might have been wrong in the first place." This appeal followed.

We review the district court's grant of summary judgment de novo, Smith v. Shawnee Library System, 60 F.3d 317 (7th Cir. 1995), drawing all reasonable inferences in favor of the losing party. Bratton v. Roadway Package System, Inc., 77 F.3d 168 (7th Cir. 1996). Summary judgment is appropriate only when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986); Roger v. Yellow Freight Systems, Inc., 21 F.3d 146 (7th Cir. 1994). Despite the glamorous yacht at the factual center of this case, the legal issues revolve around the less-than-glamorous task of interpreting an insurance policy. In Illinois, the interpretation of insurance contracts is a matter of law, Baker v. America's Mortgage Servicing, Inc., 58 F.3d 321 (7th Cir. 1995), and insurance cases are therefore often appropriate for summary judgment. Security Ins. Co. of Hartford v. Schipporeit, Inc., 69 F.3d 1377 (7th Cir. 1995). But even cases that hinge largely on contract interpretation may not be decided on summary judgment if the court is presented with disputed, material facts.

The district court stated that "Parrillo's failure to comply with Local Rule 12(n) means there are no material facts in dispute." Judge Zagel, who heard the case in the district court, was correct in noting that, had Parrillo failed to comply with the requirements of Rule 12(n), *fn1 he would be deemed to have admitted the facts as presented by Commercial Union. LaSalle Bank Lake View v. Seguban, 54 F.3d 387 (7th Cir. 1995). This statement, however, led to considerable dispute over the question of whether Parrillo had complied with Rule 12(n), whether Commercial ...

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