United States District Court, N.D. Illinois
April 13, 2004.
COMMONWEALTH INSURANCE COMPANY; HARTFORD FIRE INSURANCE COMPANY; NAVIGATORS INSURANCE COMPANY; EMPLOYERS INSURANCE COMPANY OF WAUSAU; and NEW YORK MARINE AND GENERAL INSURANCE COMPANY, Plaintiffs and Counterclaim Defendants,
STONE CONTAINER CORPORATION, Defendant and Counterclaimant
The opinion of the court was delivered by: CHARLES KOCORAS, District Judge
This matter comes before the court on the parties' motions in limine.
Plaintiff Commonwealth Insurance Company ("Commonwealth") has filed ll
motions; Defendant Stone Container Corporation ("Stone") has filed five.
Stone manufactures pulp, paper, and paper products. Part of the
manufacturing process involves pulp digesters, which turn wood chips into
pulp using chemicals, heat, and pressure. On April 13, 1994, a pulp
digester exploded in Stone's plant in Panama City, Florida, killing
several employees and causing an alleged $84 million of damage. Stone had obtained insurance for the calendar year 1994 with the
aid of a professional corporate insurance broker, Rollins Hudig Hall of
Illinois, Inc. (now Aon Risk Services, Inc. of Illinois ("Aon")). Stone
ultimately obtained a patchwork of insurance coverage for the 1994 year
that was split among different insurers, at different layers of coverage,
and between different types of insurance. For the first $20 million of
damage, Stone was covered for all risks including boiler and machinery
risks. Stone has received the full proceeds under these policies. For
damages in excess of $20 million, coverage was split between boiler and
machinery insurance provided by Hartford Steam Boiler Inspection and
Insurance Company ("HSB") and all-risk insurance, excluding boiler and
machinery risks, provided by several insurers including Commonwealth.
In February 1995 Commonwealth, along with several of Stone's other
insurers, filed an action seeking a declaratory judgment that their
policies did not cover Stone's losses incurred at the Panama City plant.
This suit was dismissed without prejudice so Stone could pursue an action
solely against HSB (the boiler and machinery insurer for damages in
excess of $20 million). Stone obtained summary judgment against HSB at
the trial level but lost on a reversal by the Court of Appeals. Stone
Container Corp. v. Hartford Steam Boiler Inspection and Ins., 165 F.3d 1157
(7th Cir. 1999)(Stone II) rev'g Stone Container Corp. v. Hartford Steam Bolier Inspection and
Ins., 936 F. Supp. 487 (N.D. Ill. 1996) (Stone I).
After the Seventh Circuit decided Stone II. Commonwealth and Stone's
other insurers renewed their declaratory judgment action against Stone.
Stone filed counterclaims as well as third-party claims against Aon and
another party. After ensuing motions for summary judgment and
settlements, only Commonwealth and Stone remain.
At the time of the accident, Commonwealth had not yet issued a policy.
As a temporary memorialization of its agreement to insure Stone, it
issued an insurance binder. All the binder stated with respect to boiler
and machinery perils was "B & M Sub-Limit $20,000,000." In deciding
the most recent motion for summary judgment, we determined this language
to be ambiguous, necessitating a trial to determine what the parties
actually intended in entering the insurance agreement. The parties have
filed a final pretrial order, which includes several motions in limine.
The power to exclude evidence pursuant to motions in limine is part and
parcel of a district court's authority to manage trials. Falk v. Kimberly
Servs., 1997 WL 201568, * l (N.D. Ill. Apr. 16, 1997), Motions in limine
should be granted only when the evidence under attack is clearly
inadmissible on all potential grounds. Hawthorne Partners v. A.T. & T. Technologies. Inc. 831 F. Supp. 1398, 1400 (N.D.
Ill. 1993). The admissibility of some proposed evidence cannot be
determined without a proper frame of reference, and motions in limine
pertaining to such evidence should be denied. See Tzoumis v. Tempel Steel
Co., 168 F. Supp.2d 871, 873 (N.D. Ill. 2001). Of course, such a denial
does not mandate that the subject evidence be admitted at trial; rather,
it allows the court to address pertinent questions of admissibility
within a proper context. Hawthorne Partners. 831 F. Supp. at 1400-01.
Moreover, a district court can alter a previous ruling on a motion in
limine. Luce v. U.S. 49 U.S. 38, 41-42, 105 S.Ct. 460 (1984). With these
principles in mind, we address the motions before us.
A. Commonwealth's Motions
1. Motion #1: Testimony Regarding Bodily Injuries and Deaths
Commonwealth moves to omit from the trial any evidence of the injuries
and deaths caused in the Panama City incident. They correctly point out
that this evidence is immaterial to any of the issues remaining in this
case. Stone agrees with this characterization. Accordingly,
Commonwealth's Motion #1 is granted.
2. Motion #2: Expert Testimony Regarding the Cause or Characterization of
the Panama City Incident
In its second motion, Commonwealth in essence argues that Stone and
its experts are limited to discussing the Panama City incident in terms
used in previous court decisions in this case, namely an "accident to an object" caused by
a "rupture." However, their reading of prior rulings is too narrow.
Although this court and the Seventh Circuit have applied these
descriptors to the underlying events, there is no corresponding
indication that those are the only available characterizations. For
example, Commonwealth interprets this Court's recognition of the Seventh
Circuit's determination that the Panama City incident involved the
rupture of a pressure vessel as an unequivocal statement that the sole
cause of the incident was a rupture. Their other arguments similarly
imbue meaning into earlier rulings that is simply not present in the
actual language. Clearly, Stone cannot relitigate the application of
terms such as "rupture" and "accident to an object," but evidence of what
caused the rupture or accident is relevant and not foreclosed as
Commonwealth argues. Thus, Commonwealth's Motion #2 is denied.
3. Motion #3: Testimony Regarding Stone's Understanding or Expectations
The third motion in limine filed by Commonwealth pertains to any
testimony or evidence regarding Stone's understanding or expectations of
the insurance coverage Aon brokered, the insurance binder Commonwealth
issued before the policy, or a policy provision they refer to as the
"Short Form Policy Wording." They argue that because Stone procured
coverage through a broker and consequently did not directly participate in the policy negotiations, none of Stone's employees
can offer competent testimony.
Commonwealth insists that under Illinois law, Stone's expectations do
not factor into a determination of coverage. However, the two cases cited
for this proposition are distinguishable. Both involved policy provisions
found to be unambiguous, and the courts refused to superimpose one
party's professed expectation in the absence of an ambiguity. Gen'l Ins.
Co. v. Robert B. McManus, Inc., 650 N, E, 2d 1080, 1084 (Ill. App. Ct.
1995): Ins. Co. of North America v. Adkisson, 459 N.E.2d 310, 313
(Ill.App. Ct. 1984).*fn1 By contrast, the main focus in this case is the
ambiguous term "B & M Sub-Limit $20,000,000." The jury must determine
what the parties intended by that phrase, and their Respective
expectations and understanding are clearly relevant to that issue. Even
if that was not the case, the motion is painted with such a broad brush
that it would be impossible to state that nothing within its ambit could
be admissible. Motion #3 is denied.
4. Motion #4: Testimony about Other Insurers
Commonwealth's fourth motion in limine is designed to preclude Stone
from eliciting information about statements made to its other insurers
during coverage negotiations; other insurers' acceptance or rejection of policy terms;
adjustments, settlements, or payments by other insurers; or the outcome
of Stone's earlier suit against Hartford Steam Boiler. Like Motion #3,
this request is very broad. None of the rules of evidence to which
Commonwealth refers are absolute bans on whole categories of evidence for
any purpose. We reiterate that this case involves an ambiguous policy
term, which opens the door to many types of evidence that would otherwise
be impermissible. Without a proper frame of reference, we cannot assess
the propriety of each component of the classes of information
Commonwealth has identified. Consequently, the motion is denied without
prejudice to representment at trial with respect to particular evidence.
5. Motion #5: Testimony Regarding the Procurement and Terms of the
HSB and London Excess Policies
The court will entertain brief oral argument on Commonwealth's fifth
motion in limine at time of trial.
6. Motion #6: Testimony on Aon's Proposed Wording for a Boiler &
Commonwealth's sixth motion in limine attempts to force Stone to define
its coverage in harmony with the Industrial Risk Insurers' Boiler &
Machinery Exclusion. Failing that, the motion requests that Stone be
prevented from arguing that the applicable exclusion clause is contained
within ¶ 11 of the London Excess Policies, As stated above, the main question to be addressed at trial is the
meaning of the phrase "B & M Sub-Limit $20,000,000." In essence, this
motion asks us to wholly or partially resolve the ambiguity at the heart
of this case in a factual vacuum as a matter of law, which we cannot do.
Accordingly, motion #6 is denied.
7. Motion #7: Testimony Regarding Draft Policies Prepared by Craig
Hurford in October 1994
The seventh motion in limine filed by Commonwealth attempts to preclude
any evidence of wording drafted by Commonwealth employees for Stone but
not ultimately sent to Stone or used within the policy. The arguments
advanced within the motion, such as internal rejection of proposed
wording and the drafters' lack of adequate knowledge of the history of
the parties' interactions, go to the weight that should be afforded this
evidence, not its admissibility. As Stone points out, the evidence at
issue in this motion is probative of Commonwealth's understanding of tire
terms within the binder. Motion #7 is denied.
8. Motion #8: Testimony of J.L. Sullivan
The eighth of Commonwealth's motions focuses on the testimony of J.L.
Sullivan, whom Stone has identified as an expert on the issue of
insurance coverage. None of the arguments is availing First, we disagree
with Commonwealth's contention that Sullivan does not have sufficient
qualifications to offer reliable testimony on the opinions within his report. Second, the assertion that this Court's
previous findings preclude Sullivan's proposed testimony suffers from the
same problems noted in the discussion of Motion #2. This characterization
is misleading in that it implies that this Court or the Seventh Circuit
has definitively established the exclusive cause of the accident in
Panama City; as discussed earlier, this is simply not the case. Third,
the statement that Sullivan's testimony encroaches upon areas reserved
solely for the court's decision is incorrect; our determination that
there is ambiguity within the parties' agreement transforms the
construction of the contested terms from a question of law into a
question of fact. Douglas v. Allied American Ins., 727 N.E.2d 376, 379
(Ill.App. Ct. 2000). Introduction of evidence on the meaning of the terms
is therefore appropriate. Commonwealth's final sticking point, Sullivan's
failure to make a determination about the cause of the loss, is easily
addressed with effective cross-examination. Accordingly, a wholesale
elimination of Sullivan's testimony is unnecessary and unwarranted, and
Motion #8 is denied.
9. Motion #9: Testimony of Robert Paterson
The ninth motion in limine filed by Commonwealth challenges the
testimony of Robert Paterson on four grounds. Grounds three and four seek
to restrict Paterson's testimony to the topics he was willing to discuss
in his deposition. To this extent, the motion is granted. However, the
first two grounds, centering on agreements and valuations performed in connection with the claims of other insurers and
Paterson's claimed reliance thereon in forming an opinion as to contested
damage amounts, are challenges to the probative value of Paterson's
opinion, not bars to its admissibility. As such, the motion is denied with
respect to these two grounds.
10. Motion #10: Testimony of Peter Kensicki and Roger Faulk
Motion #10 attacks Stone's ability to present testimony from Peter
Kensicki and Roger Faulk. The motion contends that these two witnesses
will present expert testimony but that they were not disclosed as expert
witnesses for Stone. Stone responds that Kensicki was disclosed as an
expert for Aon, he filed a timely report, he was fully deposed on the
contents of that report, and they notified Commonwealth that Aon's
experts might be called as experts for Stone. As such, we can see no
hindrance to Commonwealth's ability to effectively address Kensicki as a
witness or any unfairness that would result to Commonwealth in allowing
Kensicki to testily.
With respect to Faulk, Stone implicitly acknowledges that he was not
identified as an expert witness. Stone argues that Faulk is nonetheless
acceptable because they intend to present him as a fact witness, who
would not be subject to the rules of expert disclosure. The testimony
Stone proposes to elicit from Faulk involves the areas of boiler and
machinery and all-risk insurance coverage. They claim that he is a fact
witness in these areas because he served on a committee that drafted
standard policy forms used in the insurance industry. Despite Faulk's committee
experience, it is apparent even from the limited presentation Stone has
made that Faulk will be giving testimony in an area of specialized
knowledge. The value of his testimony to the jury does not come from his
five senses; it comes from his extensive background in the insurance
industry. Stone's recharacterization notwithstanding, we agree with
Commonwealth that Faulk would serve as an expert witness. Because he was
not properly disclosed as an expert, he cannot be permitted to testify.
Motion #10 is therefore denied as to Kensicki and granted as to Faulk.
11. Motion #11: Testimony on Stone's Claims for Interest and Attorneys'
Commonwealth's eleventh motion seeks to bar Stone from presenting to
the jury its claims for prejudgment interest under 815 ILCS 205/2 and for
attorneys* fees under 215 ILCS 5/155. Controlling case law from this
circuit makes clear that the court, not the jury, determines a party's
entitlement to these remedies. See Dallis v. Don Cunningham & Assocs.,
11 F.3d 713, 718 (7th Cir. 1993) (prejudgment interest pursuant to 815
ILCS 205/2); Homing Wire Corp. v. Home Indemnity Co., 8 F.3d 587, 590
(7th Cir. 1993) (attorneys' fees under 215 ILCS 5/155). Thus, it is both
unnecessary and improper for Stone to present evidence in support of
their claims to these amounts to the jury, and the motion is granted to
that extent. Correspondingly, consideration of other issues raised in
Commonwealth's motion, such as the time at which interest could be deemed to begin to accumulate and limitations on
recovery of attorneys' fees is unwarranted at this time. However, this
ruling does not hinder Stone's ability to present its claims to this
court (and Commonwealth to advance responsive arguments) at such a time
as may become appropriate.
B, Stone's Motions
1. Assertion of " Wear and Tear " as a Defense to Coverage
Stone moves to prevent Commonwealth from offering evidence in support
of a defense of a "wear and tear" exclusion to coverage in this case. As
Stone correctly notes, we decided that this exclusion did not apply to
this case in an earlier summary judgment motion. While this statement was
not specifically directed toward Commonwealth, it applies to their
contentions as much as it did to Stone's other insurers. Thus, this
motion is granted.
2. Deaths or Injuries, Lawsuits, or OSHA Proceedings Involving the
Panama City Incident
This motion is the companion to Commonwealth's Motion #1. To the extent
that it addresses the deaths and injuries stemming from the Panama City
incident and the existence of lawsuits pending out of the same, it is
granted. However, with respect to evidence pertinent to those lawsuits
that has applicability to the instant suit, it is denied. It is also
denied with respect to the OSHA proceedings referenced in the motion, as these may bear upon investigations into the cause of the
accident or other relevant information.
3. Extrinsic Evidence Concerning the Meaning of the Damages Provisions of
The court will entertain brief oral argument on this motion at time of
4. Assertion of a Damages Figure Lower than that Offered by Adjuster
This motion focuses on Commonwealth's damages expert, Steven
Rosenthal. Stone contends that any testimony Rosenthal could offer about
their damages has already been preempted by the figure calculated by
adjuster Drake Ratcliff. They base this argument on the premise that
Ratcliff had apparent authority to bind Commonwealth to an ultimate
number. Commonwealth disputes this idea. Having reviewed the evidence
Stone contends leaves "no doubt" that Ratcliff had apparent authority, we
conclude that it is exceedingly thin and in no way justifies complete
elimination of Rosenthal's ability to testify about the extent of Stone's
damages. Accordingly, this motion is denied.
5. Expert Testimony Regarding "Make-Up " Production Under Daubert v.
Merrell Dow Pharmaceuticals
The court will entertain brief oral argument on this motion at time of
trial. However, it is necessary to draw attention to the sweeping,
offhand comment in ¶ 13 of Commonwealth's response that "Daubert
does not apply to accountants." It is true that the putative expert in Daubert was not an accountant. But the notion
that the teaching of Daubert with respect to the application of
Fed.R.Evid. 702 is limited to experts in the "hard sciences" or that this
court's gatekeeping function in assessing expert testimony is somehow
relaxed when it comes to accountants flies in the face of controlling
precedent. See, e.g., Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137,
149, 119 S.Ct. 1167, 1175 (1999). Not only does Commonwealth misstate the
law, it completely misses the point of the discussion in the case it
cites to support its position, namely, that an putative expert does not
have to have a particular academic pedigree to be competent to offer
expert testimony. Tuf Racing Products, Inc. v. Am. Suzuki Motor Corp.,
223 F.3d 585, 591 (7th Cir. 2000).
Based on the foregoing analysis, Commonwealth's motions #1 and #11 are
granted as discussed in the above Memorandum Opinion. Its motions #9 and
#10 are granted in part and denied in part also as discussed. Motions
#2-#4 and #6-#8 are denied. Stone's motion regarding a "wear and tear"
defense is granted. Its motion regarding a damages figure lower than that
offered by Adjuster Ratcliff is denied. Its motion to preclude evidence
of deaths, injuries, lawsuits, or OSHA proceedings involving the Panama
City incident is granted in part and denied in part as discussed. The
court will entertain brief oral argument at time of trial on the
remaining motions, namely Commonwealth's motion #5 as well as Stone's motions regarding
extrinsic evidence concerning the meaning of the damages provisions of
the policies and pertaining to expert testimony regarding "make-up"
production under Daubert.