United States District Court, N.D. Illinois
March 15, 2004.
FACTORY MUTUAL INSURANCE COMPANY, as Subrogee of WM. WRIGLEY JR. COMPANY, Plaintiff,
BOBST GROUP, INC., Defendant
The opinion of the court was delivered by: JAMES MORAN, Senior District Judge
MEMORANDUM OPINION AND ORDER
Plaintiff Factory Mutual Insurance Company (Factory Mutual), as
subrogee of William Wrigley, Jr. Company (WRICO), brought this action
against defendant Bobst Group, Inc. (Bobst) alleging strict liability,
negligence and breach of contract Bobst then filed a counterclaim against
Factory Mutual seeking contribution in the event it should have to pay
damages. Plaintiff filed a motion for summary judgment as to defendant's
counterclaim. For the following reasons, that motion is granted.
Plaintiff and its predecessor, Allendale Mutual Insurance Company, have
provided insurance to WRICO since before 1994. At all relevant times the
effective insurance contracts contained provisions designed to limit
Factory Mutual's liability with respect to inspections. Specifically, the
policies in effect from July 1, 1994 to July 1, 1999, provided:
The Company, at all reasonable times during this
policy period, shall be permitted but not
obligated to inspect the property insured by this
policy. Neither the Company's right to make
inspections nor the making thereof nor any report
thereon shall constitute any undertaking, on
behalf of or for the
benefit of the insured or others, to determine
or warrant that such property is safe or
The replacement policy, Issued July 1, 1999, contained similar
The Company, at all reasonable times, will be
permitted, but not have the duty, to inspect
A. right to make inspections;
B. making of inspections; or
C. analysis, advice or inspection reports,
will not constitute an undertaking, on behalf of
or for the benefit of the Insured or others, to
determine or warrant that the insured property is
safe or healthful. This company will have no
liability to the Insured or any other person
because of any inspection or failure to inspect.
In 1997, WRICO hired Bobst to design, manufacture and install a roto
cadet rotogravure printing press at WRICO's plant in Chicago, Illinois.
Pursuant to its contract rights, Factory Mutual conducted periodic
inspections of the press and occasionally reported its findings to WRICO
and Bobst. On August 16, 1999, the press exploded, damaging WRICO's
property and causing personal injury. Factory Mutual covered WRICO for
its losses, as required by the insurance policy, and then brought this
action against Bobst alleging that defects in the press caused the
explosion. In response to the complaint, Bobst filed a counterclaim
against Factory Mutual alleging negligence in the performance of
The court's function in ruling on a motion for summary judgment is
merely to determine if there is a genuine issue of material fact for
trial. Anderson v. Liberty Lobby. Inc., 477 U.S. 242, 249
(1986). Only if the evidence on file shows that no such issue exists and
that the moving party is entitled to judgment as a matter of law will the
motion be granted. Celotex
Corp. v. Catrett, 477 U.S. 317, 322-23 (1986);
Bennett v. Roberts, 295 F.3d 687, 694 (7th Cir. 2002).
To prevail on a claim for negligence, a party must prove facts that
establish the existence of a duty of care, a breach of that duty, and
resulting damages. Hills v. Bridgeview Little League Ass'n,
745 N.E.2d 1166, 1178 (Ill. 2000).
The Restatement (Second) of Torts § 324A provides:
One who undertakes, gratuitously or for
consideration, to render services to another which
he should recognize as necessary for the
protection of a third person or his things, is
subject to liability to the third person for
physical harm resulting from his failure to
exercise reasonable care to protect his
(a) his failure to exercise reasonable care
increases the risk of such harm, or
(b) he has undertaken to perform a duty owed by
the other to the third person, or
(c) the harm is suffered because of reliance of
the other or the third person upon the
In Illinois, to prove that plaintiff owed a duty of care under section
324A, the defendant must demonstrate that Factory Mutual undertook the
inspections for the benefit of some party other than itself. See
Frye v. Medicare-Glaser Corp., 605 N.E.2d 557
, 560 (Ill. 1992).
Any resulting liability imposed on plaintiff must be limited to the
extent of this undertaking. Id. Defendant claims that plaintiff
undertook Inspections of the plant for the benefit of WRICO and/or Bobst,
and that its failure to properly inspect led, at least partially, to the
The contract language explicitly forecloses the possibility of any such
duty to WRICO. Plaintiff had no duty to perform any inspections and, to
the extent it did so, its goal was simply to minimize its own risk in
paying out on the insurance policy. The language in question is nearly
identical to that in Riverbay Corp. v. Allendale Mut. Ins. Co.,
1998 WL 52783 (S.D).
N.Y.),*fn1 in which the court determined that the contract
effectively eliminated liability resulting from negligent Inspection.
Id. at *8.
Defendant argues that, notwithstanding the clear language in the
contract, plaintiff's actions created a duty of care to WRICO and its
employees.*fn2 It lists the inspection activities undertaken by the
plaintiff and claims that these actions somehow show that plaintiff was
acting for the benefit of third parties. Specifically, defendant points
to concerns that plaintiff had about "safety" and maintains that these
concerns necessarily involved WRICO employees at the plant We must,
however, look at these actions in the context of the contract.
Riverbay, 1998 WL 52783 at *8. As in Riverbay, the
evidence shows that inspections were conducted pursuant to the permissive
clause in the insurance agreement Even when acting to limit personal
injury, there is simply no evidence that plaintiff was acting to benefit
any party other than itself. The purpose of the inspections was simply to
minimize the risk of plaintiff's liability.
Likewise, there is nothing in the record to show that plaintiff owed
any such duty to Bobst Defendant claims that such a duty arose when
plaintiff contacted it regarding defective designs or parts on the press.
Again, there is no reason to believe that plaintiff was acting for any
reason other than to minimize its own liability. No reasonable jury could
Factory Mutual, by simply conducting periodic inspections of
WRICO's property as allowed by the insurance policy and reporting the
findings to Bobst, gratuitously assumed an affirmative duty to Bobst
(with which it had no other relationship) to inspect equipment to protect
Bobst from economic loss in the event of an accident.
Defendant primarily relies on Nelson v. Union Wire Rope
Corp., 199 N.E.2d 769 (Ill. 1964), in arguing that such a duty
exists under Illinois law. In Nelson, 18 employees who were
severely injured when a construction hoist collapsed brought suit against
the manufacturer of a cable that broke, the designer of the hoist and the
company that carried the employees' workmen's compensation insurance.
Id. at 772. They alleged that the insurance company had
negligently performed inspections of the construction equipment
Id. The court determined that the insurance company had
conducted gratuitous safety inspections and had advertised that it would
make the workplace safer for the employees. Id. at 776-78. As a
result, plaintiffs were entitled to rely on these inspections and expect
them to be performed with due care. Id. at 779-80.
Nelson is substantially different from the present case.
First; while decided by the Illinois Supreme Court, Nelson was
decided under Florida law. Id. at 773. Second, there is no
indication that the defendant in that case was protected from liability
by the insurance contract. Third, while employees of a plant may be
reasonably foreseeable plaintiffs In the case of an accident, there is no
indication that an insurer owes any duty to a third party who happened to
install the equipment that causes the damage. Finally, Nelson
deals with severe personal injury, while defendant here is merely seeking
to offset its own economic losses. There is simply no evidence that would
allow a jury to believe plaintiffs owed a duty of care
to WRICO, its employees, or the defendants, that would entitle
defendants to the contribution that they seek.
For the foregoing reasons, plaintiff's motion for summary judgment as
to defendant's counterclaim is granted.