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LIBERTY MUTUAL INS. CO. v. TOKIO MARINE AND FIRE INS. CO.

September 21, 2004.

LIBERTY MUTUAL INSURANCE COMPANY, Plaintiff,
v.
TOKIO MARINE AND FIRE INSURANCE COMPANY, LIMITED, Defendant.



The opinion of the court was delivered by: RONALD GUZMAN, District Judge

MEMORANDUM OPINION AND ORDER

Plaintiff Liberty Mutual Insurance Co. ("Liberty") brought this action for declaratory judgment against Defendant Tokio Marine and Fire Insurance Co., Ltd. ("Tokio") to determine their respective obligations to provide indemnity in the settlement of a lawsuit brought against E.W. Howell Co., Inc. ("Howell") and Sanyo North American Corporation ("Sanyo"). Liberty and Tokio have made cross motions for summary judgment. Tokio has also moved to strike references to (1) Exhibit 1 to Liberty's Response to Tokio's Statement of Facts in Support of Its Motion for Summary Judgment and (2) the April 22, 2004 affidavit of Peter Jushka and its supporting documents. For the reasons set forth below, the Court: (1) denies Liberty's motion for summary judgment; (2) grants Tokio's motion for summary judgment; and (3) denies Tokio's motions to strike as moot.

I. TOKIO'S MOTIONS TO STRIKE

  Exhibit 1 to Liberty's Response to Tokio's Statement of Facts in Support of Its Motion for Summary Judgment is a letter dated August 22, 2001, apparently sent by Mark FitzGerald, a representative of Tokio, to William Hare, a lawyer for Howell and Sanyo. Tokio moved to strike the letter, arguing that it cannot be used to support Liberty's Statement of Facts under Local Rule 56.1 because it is not verified by a sworn statement or affidavit. (Tokio's Reply Supp. Mot. Summ. J. at 1-2.) Liberty attached an affidavit from its representative, Peter Jushka, to its Response to Tokio's Motion to Strike; in the affidavit Mr. Jushka states that he received a letter from an attorney for Tokio that referred to the August 22, 2001 letter and enclosed a copy of it. (Liberty's Resp. Tokio's Mot. Strike, Ex. A, Jushka Aff. of 4/22/04 ¶¶ 9-10.) Liberty also introduced four other documents attached to the affidavit: the settlement agreement in the underlying case; the checks paid pursuant to the agreement; a November 29, 1995 letter from Tokio's, Howell's, and Sanyo's attorney to Liberty, enclosing copies of portions of the Liberty certificate of insurance to which Howell and Sanyo were made additional insureds; and the settlement petition and order for the worker's compensation claim in the underlying case. Tokio has moved to strike this affidavit and its attached documents, arguing (1) the affidavit contradicts Mr. Jushka's deposition testimony; (2) the documents were not identified in Liberty's Rule 26 disclosures; and (3) the worker's compensation settlement was negotiated in bad faith. (Reply Supp. Tokio's Mot. Strike ¶¶ 3-11.) Although Liberty argues that the motion to strike Mr. Jushka's affidavit is untimely because Tokio allowed a month to elapse, the Court can find no authority stating that the passage of a month is too long to raise an objection, and Liberty cites none. The Court will address the motion on its merits.

  Tokio does not point to any deposition testimony or affidavit denying that its representative wrote and sent the August 22, 2001 letter. Even if a document is not properly authenticated, a party is not acting in good faith in raising an objection if the party knows that the document is nevertheless authentic. Fenje v. Feld, 301 F. Supp. 2d 781, 789 (N.D. Ill. 2003). Nonetheless, Tokio correctly points out that documents submitted to support or defeat a summary judgment motion must be authenticated to be admissible. Scott v. Edinburg, 346 F.3d 752, 759-61 (7th Cir. 2003). The Court will address Tokio's objections.

  Authentication "is satisfied by evidence sufficient to support a finding that the matter in question is what its proponent claims." FED. R. EVID. 901(a). Liberty argues that the letter is "self-authenticating" because it was prepared by the opposing party. However, the letter does not fall within any category of self-authenticating documents enumerated in the Federal Rules of Evidence. See FED. R. EVID. 902. Though Liberty does not cite to any cases to support its argument, it seems to have in mind the rule that documents produced by an opponent during discovery may be treated as authentic. E.g., Fenje, 301 F. Supp. 2d at 809 (citing Int'l Paper Co. v. Androscoggin Energy LLC, No. 00 C 6215, 2002 WL 31155069 at *2 (N.D. Ill. Sept. 26, 2002)). That rule is inapplicable here because the letter was produced by Liberty, not Tokio.

  Liberty next attempts to authenticate the letter with an affidavit from its claims representative, Peter Jushka. Mr. Jushka's affidavit states that the August 22, 2001 letter was enclosed in a letter to him from Timothy M. Thornton, Jr., an attorney for Tokio. (Liberty's Resp. Tokio's Mot. Strike, Ex. A, Jushka Aff. of 4/22/04 ¶¶ 9-10.) Despite the customary preface to his affidavit claiming personal knowledge of all facts set forth, Mr. Jushka does not state any facts such as would be required by Federal Rule of Civil Procedure 56(e) to establish that he has personal knowledge that the letter purporting to be from Mr. Thornton is authentic. He does not state, for example, that he was present when the letter was written, that he spoke to or communicated with Mr. Thornton in any way about the letter, that he was familiar with Mr. Thornton's signature, or that the letter was a reply to a letter he himself wrote to Mr. Thornton and that it made reference to privileged information contained therein. The affidavit is insufficient to authenticate Mr. Thornton's letter. See Morrow v. Wal-Mart Stores, 152 F.3d 559, 563 (7th Cir. 1998) ("`Rule 56 demands something more specific than the bald assertion of the general truth of a particular matter, rather it requires affidavits that cite specific concrete facts establishing the existence of the truth of the matter asserted.'") (quoting Hadley v. Co. of Du Page, 715 F.2d 1238, 1243 (7th Cir. 1983)). The Court need not determine whether Mr. Thornton's letter is sufficient to qualify as a party admission that the August 22, 2001 letter is authentic; neither letter is admissible. Nonetheless, it is unnecessary to strike references to the August 22, 2001 letter or the letter from Mr. Thornton; to the extent any statement is not adequately supported, it will not be incorporated into the facts taken as true for the purpose of ruling on the motions for summary judgment. See Fenje, 301 F. Supp. 2d at 789; Ogborn v. United Food & Commercial Workers, Local No. 881, No. 98 C 4623, 2000 WL 1409855, at *3 (N.D.Ill. Sept. 25, 2000).

  Tokio seeks to strike the April 22, 2004 affidavit of Peter Jushka because it contains statements that Tokio alleges are in conflict with Mr. Jushka's deposition. In his February 11, 2004 deposition, Mr. Jushka replied in the affirmative to Tokio's question as to whether when he settled the claim of Mr. Adamczewski and his wife, he had an understanding that the settlement would relieve the liability of Howell, Sanyo, and Tiffiny. (Tokio's LR 56.1(b)(3)(A) Stmt., Ex. 1, Jushka Dep. at 177.)*fn1 Mr. Jushka also stated that he did not know at the time of the deposition what damages Liberty attributed to Sanyo, Howell, and Tiffiny. (Id. at 52.)*fn2 Later in the deposition, in response to a question from Liberty, Mr. Jushka stated that Liberty paid $1.2 million off of its policies "to settle the claims of Howell and Sanyo who were the named defendants in the lawsuit." (Id. at 230.) Tokio objected to the question, pointing out that Mr. Jushka had already said he did not know whether the $1,200,000 was paid on behalf of Howell and Sanyo. (Id. at 229-30.) Liberty terminated the deposition shortly thereafter. In an affidavit taken the same day, Mr. Jushka stated that Liberty paid its limits of $1,000,000 under Liberty's primary policy and $200,000 under Liberty's excess policy on behalf of Howell and Sanyo in connection with the settlement of the Adamczeski suit. (Liberty's LR 56.1(a)(3) Stmt., Ex. G, Jushka Aff. of 2/11/04 ¶¶ 5-6.) This accords with Mr. Jushka's April 22, 2004 affidavit, in which he stated: "Liberty Mutual paid a total of $1,200,000 on behalf of its insureds Howell and Sanyo to settle the Adamczewski lawsuit." (Liberty's Resp. Tokio's Mot. Strike, Ex. A, Jushka Aff. of 4/22/04 ¶ 5.)

  As Tokio correctly points out, affidavits cannot be used to correct embarrassing deposition testimony; to the extent they are in conflict with prior sworn testimony, affidavits must be disregarded. See Kalis v. Colgate-Palmolive Co., 231 F.3d 1049, 1056 (7th Cir. 2000). Mr. Jushka stated in his deposition that it was his understanding that the $1,200,000 settlement relieved the liability of Tiffiny as well as Howell and Sanyo. There is nothing in his affidavits that explains why he contradicts this testimony. Mr. Jushka does not explain, for example, that upon review of his claim notes, he can clarify his earlier confusion. In fact, the settlement agreement attached to the April 22, 2004 affidavit, to which Mr. Jushka refers in support of his statement that the settlement was paid on behalf of Howell and Sanyo, addresses not only the lawsuit against Howell and Sanyo, but the worker's compensation claim brought against Tiffiny. (Liberty's Resp. Mot. Strike, Ex. A, Jushka Aff. of 4/22/04, Ex. 1, Settlement Agreement and Release of 11/3/01 ¶¶ A-C.) The agreement states that the plaintiffs will dismiss the worker's compensation claim for a contract reciting $1.00 consideration. (Id. ¶ 1.) Tiffiny and its insurer agreed to pay certain of the plaintiff's medical expenses "[a]s a further part of this agreement." (Id.) It is not clear whether dismissal of the worker's compensation claim was exchanged for payment of the medical expenses as a further — and separate — part of the agreement to dismiss the lawsuit in exchange for $1,200,000, or whether the payment of the medical expenses is a further part of the agreement to dismiss the lawsuit and worker's compensation claim in exchange for $1,200,000. (Id.) It is therefore not clear whether some part of the $1,200,000 was in fact paid on behalf of Tiffiny under the worker's compensation insurance issued by Liberty. (Liberty's LR 56.1(a)(3) Stmt., Ex. E, Policy TH1-141-403362-0339 at 2.) The settlement agreement cannot support Mr. Jushka's statement that the $1,200,000 was paid on behalf of Howell and Sanyo, and the affidavits cannot be used to contradict Mr. Jushka's deposition testimony. Reliance on the settlement agreement may also be barred by procedural objections. Tokio argues that the documents attached to Mr. Jushka's affidavit cannot be admitted because they were not included in Liberty's Rule 26 disclosures. Rule 26 provides in relevant part:
[A] party must, without awaiting a discovery request, provide to other parties: . . . a copy of, or description by category and location of, all documents . . . that are in the possession, custody, or control of the party and that the disclosing party may use to support its claims or defenses, unless solely for impeachment . . . A party is under a duty to supplement at appropriate intervals its disclosures . . . if the party learns that in some material respect the information disclosed is incomplete or incorrect and if the additional or corrective information has not otherwise been made known to the other parties during the discovery process or in writing.
FED. R. CIV. P. 26(a)(1)(B), (e)(1). Information that without substantial justification is not disclosed as required by Rule 26(a) or (e) may not, unless such failure is harmless, be used as evidence on a motion. FED. R. CIV. P. 37(c)(1). Rule 26(e) applies regardless of whether discovery has closed. Episcopo v. Gen. Motors Corp., No. 02 C 8675, 2004 WL 628243, at *7 (N.D. Ill. Mar. 29, 2004). Where a party failed to produce a document during the discovery process, it is proper for a court to refuse to consider it on motion for summary judgment. Id. The purpose of Rule 26 is to prevent any unfair, prejudicial surprise. Scranton Gillette Communications, Inc. v. Dannhausen, No. 96 C 8353, 1998 WL 566668, at *2 (N.D. Ill. Aug. 26, 1998). Liberty argues that disclosure of the documents during discovery was not required by Rule 26 because they address issues raised for the first time by Tokio in the motions for summary judgment. (Liberty's Resp. Tokio's Reply Supp. Mot. Strike at 3-4.) Liberty also argues that these documents fall within the Rule 26 exception for documents used solely for impeachment. (Id. at 4.) With regard to the settlement agreements and checks, the argument is not persuasive. It is essential to Liberty's claim that Liberty prove the limits of its primary policy were exceeded, and Tokio does not raise a new issue by contending that Liberty has not met its burden. The settlement agreement and checks should have been identified during discovery, and they cannot be relied upon to support Liberty's claim now.

  The remaining document attached to Mr. Jushka's affidavit is a November 29, 1995 letter from Donna Kajsta, legal assistant to Robert C. Moore, an attorney for Tokio, Howell, and Sanyo, to Bob Klesta, a representative of Liberty. Liberty attaches the November 29, 1995 letter and enclosures to support its denial of Tokio's assertion that under the contract between Howell and Tiffiny, Howell and Sanyo were named additional insureds on $4,000,000 of primary coverage issued to Tiffiny. (Liberty's Resp. Tokio's LR 56.1(b)(3)(B) ¶¶ 4-5.) The exhibit is intended to show that Howell was aware that the Liberty insurance policy provided only $1 million of primary coverage. (Id. ¶ 5.) Insofar as Tokio argues that Howell was unaware of the insurance policy, the letter may be used for impeachment, in accordance with Rule 26. FED. R. CIV. P. 26(a)(1)(B).

  In sum, the motions to strike (1) references to Exhibit 1 of Liberty's Response to Tokio's Statements of Facts in Support of Its Motion for Summary Judgment (the August 22, 2001 letter from Mark FitzGerald) and (2) the April 22, 2004 affidavit of Peter Jushka and its supporting documents are denied. However, the documents to which Tokio objects, and any references to them, will not be considered in ruling on the motions for summary judgment except insofar as the November 29, 1995 letter attached to Mr. Jushka's April 22, 2004 affidavit may be necessary for impeachment.

  II. CROSS MOTIONS FOR SUMMARY JUDGMENT

  On February 20, 2004, Liberty and Tokio filed cross motions for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure and Rule 56.1 of the Local Rules of the United States ...


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