The opinion of the court was delivered by: SUZANNE CONLON, District Judge
MEMORANDUM OPINION AND ORDER
This dispute arises over a $125,000 insurance policy on Irish Shannon,
a show horse euthanized following her third surgery for gastrointestinal
impaction ("colic"). The horse's owners, Deborah Jahn and her Seven Oaks
Farm (collectively "plaintiffs"), seek a declaratory judgment they are
entitled to the insurance proceeds. The insurer, Great American Assurance
Company ("Great American"), denies coverage on the grounds that
plaintiffs failed to fully disclose Irish Shannon's significant history of
colic problems, and for failure to comply with the notice and post
mortem examination conditions of the policy. Cross-motions for summary
judgment are before the court.
Local Rule 56.1 requires litigants to follow a detailed procedure in
filing and responding to summary judgment motions. Both the moving and
non-moving parties must submit statements of material facts, including
"specific references to the affidavits, parts of the record, and other
supporting materials relied upon." Local Rule 56.1(a)(3); Local Rule
56.1(b)(3)(B). Facts not properly supported by the record evidence must
be disregarded. Brasic v. Heinemann's Inc., 121 F.3d 281, 284 (7th Cir. 1997). The parties' statements of facts and
their respective responses are peppered with legal and factual arguments
unsupported by record evidence. See Def. Facts ¶¶ 6, 19, 40, 42-49,
54-55, 58-59, 62-63, 66-67, 69-70, 71, 73-76, 81, 83-85, 88, 91, 95-96,
99; Pl. Facts ¶¶ 42; Def. Resp. Pl. Facts ¶¶ 9, 17, 20, 44-45, 52, 74, 76,
82, 84-86, 90, 95; Pl. Resp. Def. Facts ¶¶ 18-21, 24-25, 30, 33, 42,
45-47, 54, 59, 66-67, 70-71, 73-74, 78, 81, 83, 85, 87-88, 91, 96-97;
Def. Resp. PL Add. Facts ¶¶ 2, 11, 13-15, 20, 22, 24. "The purpose of the
56.1 statement is to identify for the Court the evidence supporting a
party's factual assertion in an organized manner; it is not intended as a
forum for factual or legal argument." Malec v. Sanford, 191 F.R.D. 581,
585 (N.D. Ill. 2000). The court considers only the parties' factual
statements to the extent they are properly supported by the record.
Great American relies on unauthenticated veterinary records to support
¶¶ 9, 13, 31, 43, 48, 49, 53, 54, 58, 60, 61, 62, 65, 68, 72, 75, 90, 91.
Woods v. City of Chicago, 234 F.3d 979, 988 (7th Cir. 2000)(evidence
submitted at the summary judgment stage must be admissible at trial).
Therefore, these paragraphs are disregarded to the extent that no other
record evidence, such as deposition testimony, supports these factual
assertions. In addition, plaintiffs improperly submit an unnumbered
factual statement between their response to Great American's statement of
facts and their own statement of additional facts. Pl.Resp. Def. Facts at
p. 35. The court disregards plaintiffs' unnumbered statement because it
fails to comply with the explicit language of Rule 56.1(b)(3)(B) and
Great American appropriately did not respond.
The following facts are undisputed unless otherwise noted. Great
American is an insurance company writing mortality and major medical
policies for horses. Def. Facts at ¶ 2. Jahn has been in the horse business for approximately 20 years and has read and
purchased equine mortality insurance policies. Def. Facts ¶¶ 4-5; Pl.
Resp. Def. Facts ¶ 5. In 1996, Jahn purchased Irish Shannon, a
registered American Saddlebred mare, for $150,000 through her horse
trainer, Lisa Strickland. PL Facts ¶¶ 4, 6-7. In 1998, Jahn established
Seven Oaks Farm for her horse business. PL Facts ¶ 3; Def. Facts ¶ 1.
A. Insurance Policy Application History
Irish Shannon was initially insured through the Plamp-Keen Insurance
Agency ("Plamp-Keen") for $150,000 from 1996 until May 2000. Id.
at ¶ 8. On November 13, 1998, Irish Shannon underwent surgery because
of colic. Pl. Facts at ¶ 14. As a result, the insurer excluded "death
as a direct or indirect result of colic" from Irish Shannon's insurance
policy when it was renewed in May 1999. Def. Facts ¶ 10; Pl. Facts
¶ 15. Jahn was later told that the exclusion would be eliminated from
the policy if Irish Shannon did not suffer from colic during the calendar
year following the November 1998 surgery. Def. Facts ¶¶ 10, 12; Pl.
Facts ¶ 16. However, on October 10, 1999, Irish Shannon underwent a
second surgery for colic. Pl. Facts ¶ 17. Jahn decided not to renew
Irish Shannon's insurance policy in May 2000 because the renewed policy
would necessarily contain a colic exclusion. Pl. Facts ¶ 18; Def.
Facts ¶ 14. Irish Shannon remained uninsured over the next several
months. Def. Facts ¶ 14-15.
After a discussion with Jahn in February 2001, Strickland contacted the
Independent Equine Agency about insuring Irish Shannon. Pl. Facts ¶ 19;
Def. Facts ¶ 15. In March 2001, Jahn completed and signed an insurance
application. Def. Facts ¶ 17; Pl. Facts ¶ 25. The application included
the following question: "Has animal ever been treated for accident,
illness or lameness? If yes, give date and description of treatment."
Def. Facts ¶ 18; Pl. Facts ¶ 27. In response, Jahn wrote "10/99 surgery for impaction." Def. Facts ¶ 18; Pl. Facts
¶ 28. Jahn signed and submitted the application to Independent Equine
Agency. Def. Facts ¶¶ 17, 21. The following legend appeared on the
application directly below the signature line:
I understand that the insurance being applied for, if
accepted by the Company, will be based on the
statements made in this application. If information is
withheld or falsely stated, any insurance issued may
be subject to rescission or modification as provided
by the law of the state in which the application was
accepted or policy issued,
Id at ¶ 20. For purposes of the application, Dr. Andrew Schmidt
completed a veterinary certificate of examination. Def. Facts ¶ 22. The
certificate included the following questions: "Any history or clinical
evidence of surgery? If yes explain below. Any colic within last 12
months?" Id Schmidt responded "yes" to the first question and "not to my
knowledge" to the second. Id Schmidt explained that Irish Shannon "has a
history of gri [?] colic and has had colic surgery. I am unsure of when,
and diagnosis. I sure [sic] you are aware of this fact." Id
Independent Equine Agency uses several different insurance
underwriters, including Great American. Def. Facts ¶ 16. The
relationship between Great American and Independent Equine Agency is
governed by contract. Pl. Facts ¶ 20; Def. Resp. Pl, Facts ¶ 20. Great
American maintains unwritten underwriting policies with respect to equine
mortality risks, including five colic guidelines that materially affect
its underwriting decisions. Pl. Facts ¶¶ 35-37. These guidelines require a
colic exclusion of approximately one year after a horse undergoes colic
surgery without intestinal resection. Def. Facts ¶ 25. The guidelines
strictly require a permanent colic exclusion if a horse has two or more
surgical colics, regardless whether an intestinal re-section was
performed. Def. Facts ¶ 25-26; Pl. Facts ¶ 38. Independent Equine Agency forwarded the application and veterinary
certificate for Irish Shannon to Great American with a memorandum
stating, "Please process a policy . . . at your earliest convenience.
Completed application and vet certs attached. Please let me know if any
problem regarding colic surgery on IRISH SHANNON 10/99." Def. Facts ¶
24. Great American approved Irish Shannon's insurance policy with a colic
exclusion; Independent Equine Agency requested reconsideration of the
exclusion. Pl. Facts ¶ 40; Def. Facts ¶ 28. Kris Knight, the CEO of
Independent Equine Agency, attested that the colic exclusion was
questioned because the 1999 surgery "the only surgery that we knew of
would not necessarily warrant a colic exclusion if no re-section were
performed and Irish Shannon remained colic free for twelve months
thereafter. Knight Dep. at 54-55; Def. Resp. Pl. Facts ¶ 42. In
response, Great American directed an agent for Independent Equine Agency
"to inquire about further episodes and surgeries." Pl. Facts at ¶ 43. As
a follow-up, Great American then sent written instructions to Independent
Equine Agency requesting that it determine whether Irish Shannon had any
reoccurrences of colic after the 1999 surgery. Pl. Facts at ¶ 44,
Independent Equine Agency did not inquire whether Irish Shannon had
undergone additional surgeries based on the fact that only one surgery
was disclosed on the application form. Def. Facts ¶ 29.
Independent Equine Agency notified Great American that Irish Shannon
had no reoccurrences after the October 1999 surgery. Def. Facts at ¶
30. This information was based on conversations Independent Equine
Agency's Chris Knight had with Jahn or Strickland. Def. Facts ¶ 21,
29. Contrary to Great American's version, Jahn maintains she did not
speak with Knight regarding Irish Shannon's medical history. Pl. Resp.
Def. Facts ¶ 29. Plaintiffs admit, however, that Strickland was asked
whether Irish Shannon had a recurrence of colic after October 1999. Pl.
Facts ¶ 50. Great American then issued an equine mortality and major medical
insurance policy without a colic exclusion for Irish Shannon through
Independent Equine Agency. Def. Facts ¶ 34; Pl. Facts ¶ 53. Jahn gave
the policy to Art Herbstman, her husband's business manager. Def. Facts
¶ 35. The policy was renewed on identical terms in 2002. Pl. Facts ¶
66. Herbstman was given the renewed policy. Def. Facts ¶ 38. In
connection with the renewal, plaintiffs were only required to submit an
updated veterinary certification of examination and information about
Irish Shannon's use and value. Def. Facts ¶ 36. The certification,
completed by Dr. Keith Merritt in February 2002, included the following
questions and answers;
Any history or clinical evidence of surgery? If
yes explain below, X Yes ___ No ___ NTMK Any colic
within last 12 months? ___ Yes X_No ___ NTMK Colic
surgery. Good prognosis & full recovery.
Def. Facts ¶ 37. Dr. ...