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ELECTRIC INSURANCE CO. v. NATIONAL UNION FIRE INSURANCE CO.

November 22, 2004.

ELECTRIC INSURANCE COMPANY and CONTINENTAL CASUALTY COMPANY Plaintiffs,
v.
NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, Defendant.



The opinion of the court was delivered by: RUBEN CASTILLO, District Judge

MEMORANDUM OPINION AND ORDER

This case involves a dispute between three insurance companies arising out of a tragic accident at one of Commonwealth Edison's ("ComEd") nuclear power plants. Gerald Vance, a pipefitter and welder, was severely injured while working at the power plant and secured a $744,497.83 personal injury judgment ("the Vance judgment") against ComEd. Plaintiffs, Electric Insurance Company ("EIC") and Continental Casualty Company ("Continental"), demand that Defendant National Union Fire Insurance Company of Pittsburgh ("National Union") pay a pro rata share of this judgment. Both parties have filed motions for summary judgment. For the reasons provided below, we grant Plaintiffs' summary judgment motion, (R. 14-2), and deny National Union's summary judgment motion, (R. 19-1).

RELEVANT FACTS

  ComEd hired Power Systems Energy Services, Inc. ("PSESI"), General Electric ("GE"), and GD Staff & Associates ("GDS") as contractors at its Dresden nuclear power plant in Grundy County, Illinois. (R. 20, Def.'s Resp. ¶ 8.) These three contractors all obtained commercial general liability insurance. (Id.) PSESI obtained insurance from National Union. (Id. ¶ 23.) Under this policy, ComEd was named as an additional insured, "but only with respect to liability arising out of [PSESI's] operations or premises owned by or rented by [PSESI]." (Id. ¶¶ 25, 27.) GE was also insured by National Union, but GE's policy was reinsured by EIC. (Id. ¶¶ 29-30.) GDS was insured by Continental. (Id. ¶ 28.) The GE and GDS policies both contained subrogation clauses. (Id. ¶¶ 33-34.) The GE subrogation clause provided that:
If the insured has rights to recover all or part of any payment the Company has made under this Coverage Part, those rights are transferred to the Company. the [sic] insured must do nothing after loss to impair them. Upon request, the insured will bring suit or transfer those rights to the Company and help enforce them.
(Id. ¶ 33.) The GDS subrogation clause provided that:
If the insured has rights to recover all or part of any payment we have made under this Coverage Part, those rights are transferred to us. The insured must do nothing after loss to impair them. At our request, the insured will bring "suit" or transfer those rights to us and help us enforce them.
(Id. ¶ 34.) Both policies also named ComEd as an additional insured. (Id. ¶¶ 8, 28.)

  ComEd hired PSESI to protect its employees from radiation exposure. (Id. ¶ 9.) As part of its contract, PSESI determined the radiological condition of scrap materials being removed from a heat exchanger room undergoing demolition. (Id. ¶¶ 12-14.) PSESI instructed the carpenters on how to erect scaffolding and the pipecutters on how to cut pipe to ensure that all work complied with its radiation work permit. (Id. ¶¶ 13-14.) PSESI also advised ComEd on how to safely remove, transport, and store the radioactive scrap material. (Id. ¶ 12.)

  On April 21, 1997, Vance was severely injured when he fell off of some scaffolding in the heat exchanger room. (Id. ¶¶ 16-21.) Vance went into the room to inspect a weld — identified as field weld 57 — that he had made earlier that day. (Id.) Before entering the room, he told Richard Fults, a PSESI radiation technician, that he needed to check field weld 57, and Fults went with him to perform his own inspection. (Id.) Fults climbed to the top of the heat exchanger and was waiting for Vance to join him to identify field weld 57. (Id.) Vance, however, fell on his way to the top of the heat exchanger.*fn1 (Id.)

  Vance explained his accident in the following way:
And I told him [Fults], I said I've got to go in and check something on Field Weld 57. He said I'll go take a smear. I said well, it's new pipe. I don't know — you, know, you can if you want to. I'll go take a smear so come go with me. So, we go in, and he's ahead of me. He said where is it at? And I said it's up on top of that heat exchanger up there. The way he goes. He went right up the side of that pipe, right up on that heat exchanger. Well, I followed him up.
. . .
He's standing there waiting on me because he don't know where Field Weld 57 is. Well, as I started to go on and try to get on up, this hand slipped off the top of that pipe. . . . But I tried out of reflex to stop myself, and all it amounted to is it spun me around a little bit and I dropped straight down and landed right straddle of that six-inch pipe stub.
(R. 18, Def.'s Opp'n, Ex. B, Vance Trial Transcript at 59-60, 62.) And Fults, the only witness to Vance's accident, described it as follows:
We entered the heat exchanger — actually Mr. Vance approached me at our control point that we have established in the RC, radiation controlled, area; told me about some work that he needed to performed [sic] in the heat exchanger room; proceeded to follow him into the room. I went up the scaffold, and then as I turned around, Mr. Vance was coming up on the back side of the scaffold on the outside and slipped or lost his footing or hold as he went to reach slipped backwards and landed on — and I think I stated in my deposition it was approximately a ten-inch pipe that he kind of straddled and landed on that pipe.
. . .
I didn't know the location of the field well [sic]. I mean he described the number. They were all designated by numbers, and when they would approach, they would say we are going to field well [sic] such and such, so I knew the number, but I didn't know where it was in the room, and that's why Mr. Vance was going with me to show me where the field well [sic] was.
(Id., Ex. C, Fults Trial Transcript at 4-5, 7-8.) Fults was also asked if it was his "intention at the time to wait until Mr. Vance climbed up on the scaffold to then tell you where field well [sic] 57 was located," and he answered:
Just to see where they were. It was a lot of the stuff we are doing was real small, so you almost had to be real specific when you pointed stuff out if you were doing something specific like that.
(Id., Ex. C, Fults Trial Transcript at 8.)

  Vance sued ComEd for his personal injuries. (Id. ¶ 35.) Plaintiffs agreed to defend and indemnify ComEd for any liability arising out of Vance's injury. (R. 26, Pls.' Resp. ¶¶ 13, 16.) ComEd requested that National Union also share the cost of its defense with EIC and Continental on a pro rata basis in January 2001 and February 2002. (R. 20, Def.'s Resp. ¶¶ 36-37.) National Union agreed in August 2002 to defend ComEd under a reservation of rights. (Id. ¶ 39.) Vance prevailed at trial and obtained a $744,497.83 judgment against ComEd, which Plaintiffs paid. (R. 26, Pls.' Resp. ¶¶ 15-16.) National Union asserts that it has no duty to indemnify ComEd because Vance's injury did not arise out of PSESI's operations, so it has not paid any part of the Vance judgment. (R. 20, Def.'s Resp. ¶ 43; R. 26, Pls.' Resp. ¶ 18.)

  LEGAL STANDARDS

  Summary judgment is appropriate when the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R. Civ. P. 56(c). When determining whether a genuine issue of material fact exists, this Court evaluates all admissible evidence and draws all reasonable inferences in the light most favorable to the non-moving party. Treadway v. Gateway Chevrolet Oldsmobile Inc., 362 F.3d 971, 975 (7th Cir. 2004). This Court will only grant summary judgment if a trial is not required because no rational trier of fact could rule in the non-moving party's favor. Buie v. Quad/Graphics, Inc., 366 F.3d 496, 502 (7th Cir. 2004).

  ANALYSIS

  Plaintiffs filed a motion for judgment on the pleadings or, in the alternative, summary judgment, and National Union filed its own summary judgment motion. We do not address Plaintiffs' motion for judgment on the pleadings because it is more efficient to directly address the cross summary judgment motions. No motions to dismiss were filed in this case, so we must first determine whether Plaintiffs have stated an actionable claim. If we find that they have, we will then determine whether National Union has a duty to indemnify ComEd and whether National Union is estopped from raising any coverage defenses.

  I. Plaintiffs' Amended Complaint

  Plaintiffs' amended complaint seeks damages under five alternate legal theories: (1) breach of contract; (2) equitable contribution; (3) equitable subrogation; (4) unjust enrichment; and (5) declaratory judgment. Throughout this section we assume that National Union has a duty to indemnify ComEd in order ...


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