United States District Court, N.D. Illinois, Eastern Division
January 10, 2005.
MIZUHO CORPORATE BANK (USA), (f/k/a IBJ Whitehall Bank & Trust Company), Plaintiff,
CORY & ASSOCIATES, INC., Defendant/Third-Party Plaintiff, v. SWETT & CRAWFORD OF ILLINOIS, INC. (f/k/a INSURANCE BROKERS SERVICE, INC.), Third-Party Defendant.
The opinion of the court was delivered by: WAYNE ANDERSEN, District Judge
MEMORANDUM, OPINION AND ORDER
This case is before the court on remand from the Seventh
Circuit Court of Appeals, 341 F.3d 644 (2003), which includes a
full discussion of the case. The Court of Appeals' remand
requires this court to adjudicate only Count IV of the
third-party complaint originally filed by Cory & Associates, Inc.
("Cory") against Swett & Crawford of Illinois, Inc. (formally
Insurance Brokers Service, Inc.) ("Swett"). Through settlement,
Cory has assigned all claims against Swett to plaintiff Mizuho
Corporate Bank (USA) (formerly IBJ Schroder Bank, later IBJ
Whitehall Bank and Trust) ("IBJW").
Third-party defendant Swett now has filed a motion for summary
judgment on Count IV, the only remaining count brought by
plaintiff IBJW on the assigned claims of third-party plaintiff Cory. Swett contends that the claim against it is barred by the
applicable Illinois two-year statue of limitations pursuant to
735 ILCS § 5/13-214.4. For the reasons below, we grant summary
STATEMENT OF FACTS
This suit arose out of a dispute involving an alleged
miscommunication about insurance coverage. Caribbean
Communications Corporation ("CCC") had purchased property
insurance for its newly acquired television cable operations in
the Virgin Islands. IBJW, as a lender to CCC, was to be an
additional insured. IBJW hired Cory as the retail insurance
broker to obtain the required insurance. In turn, Cory hired
Swett, an insurance producer providing wholesale broker services,
to obtain the necessary insurance. Cory expected Swett to procure
an insurance policy naming CCC as an insured for "BLANKET
PROPERTY-ALL RISK. FLOOD/EQ" with a coverage limit of $7,667,000.
Instead, Swett obtained a policy from Travelers Insurance with a
coverage limit of only $2,500,000.
Shortly thereafter on September 15, 1995, before Travelers had
issued the actual insurance policy, Hurricane Marilyn struck the
Virgin Islands and substantially damaged CCC's property. A letter
written by Cory, dated September 26, 1995, informed CCC and IBJW
of the discrepancy in the insurance coverage obtained from
Travelers. From that time forward, CCC and IBJW asserted that
Cory was liable for the shortfall. CCC subsequently filed for
bankruptcy and assigned IBJW its claims against Cory for failure
to procure adequate insurance. In the months that followed, Cory
gave notice to its own malpractice insurer and began incurring
attorneys' fees because of the claims. By the fall of 1995, Cory
knew of the insurance deficiency, knew claims were being asserted against it, knew it was incurring
attorneys' fees and knew that Swett was the broker source of the
$2,500,000 in coverage figure Cory believed was in error.
In August 1997, IBJW filed suit against Cory on behalf of all
lender banks as assignee of CCC, claiming negligence, breach of
fiduciary duty, breach of contract, and negligent
misrepresentation. In turn, Cory filed its third-party complaint
against Swett and Travelers on April 1, 1998. On May 18, 2001,
the eve of trial, IBJW and Cory reached a settlement. The
settlement called for IBJW to drop all claims against Cory and
for Cory to assign its claims against Swett to IBJW. The
third-party complaint, then between IBJW and Swett, went to trial
on Counts IV and V. The jury found Swett liable on Count IV but
not liable on Count V.
On appeal, Swett argued that the Illinois Insurance Placement
Liability Act, 735 ILCS § 5/2-2201, barred the action. That Act
took effect on January 1, 1997, and Swett believed that the
statute relieved it from "civil liability under standards
governing the conduct of a fiduciary or a fiduciary
relationship. . . ." 735 ILCS 5/2-2201(b). A fundamental issue
for the Seventh Circuit was: When did the cause of action alleged
in Count IV accrue? The Seventh Circuit recognized that, if Count
IV is an indemnity claim, it accrued at the time of the IBJW/Cory
settlement in May 2001, and the Insurance Placement Liability Act
might bar the fiduciary duty claim of Count IV. However, if Count
IV is a straight breach of fiduciary duty action that accrued in
the fall of 1995, as IBJW contended, then the Insurance Placement
Liability Act would have no applicability because it was not yet
effective. The Seventh Circuit determined that Count IV is a
simple breach of fiduciary duty claim that accrued in the fall of
1995, and therefore, that the Act did not apply. The case then was remanded to the district court for a new
trial. We subsequently granted Swett's motion to amend its answer
to include a statute of limitations affirmative defense. IBJW now
asserts that Swett has waived or should be estopped from
asserting a statute of limitations defense.
I. Standard For Summary Judgement
A court may award summary judgment to the moving party when
there is no genuine issue of material fact and the movant is
entitled to judgement as a matter of law. Fed.R.Civ.P. 56(c).
A genuine issue of material fact exists only when a reasonable
jury could return a verdict for the non-movant. Anderson v.
Liberty Lobby, Inc. 477 U.S. 242, 248 (1986). The movant "can
prevail just by showing that the other party has no evidence on
an issue which that party has the burden of proof." Brazinski v.
Amoco Petroleum Additives Co., 6 F.3d 1176, 1183 (7th Cir.
1993). In considering the motion, all reasonable inferences must
be drawn in favor of the non-moving party. See, e.g. Adickes v.
S.H. Kress & Co., 398 U.S. 144, 157 (1970); Bailor v. Salvation
Army, 51 F.3d 678, 681 (7th Cir. 1995). However, the party
opposing the motion may not avoid summary judgement by resting
upon the mere allegations of the pleadings, but instead must come
forward with specific evidence showing that there is a genuine
issue for trial. Bank Leumi Le-Israel, B.M. v. Lee,
928 F.2d 232, 236 (7th Cir. 1991).
II. The Statute Of Limitations Has Run.
IBJW does not dispute that Count IV was filed more than two
years after Hurricane Marilyn damaged CCC's property. Illinois'
applicable statute of limitations, 735 ILCS § 5/13-214.4, states: Actions against insurance producers, limited
insurance representatives, and registered firms. All
causes of action brought by any person or entity
under any statute or any legal or equitable theory
against an insurance producer, registered firm, or
limited insurance representative concerning the sale
placement, procurement, renewal, cancellation of, or
failure to procure any policy of insurance shall be
brought within 2 years of the date the cause of
Summary judgement is properly granted on the basis of a statute
of limitations defense if (1) the statute of limitations has run,
thereby barring the plaintiff's claim as a matter of law, and (2)
there exists no genuine issues of material fact regarding the
time at which plaintiff's claim has accrued and the application
of the statute to plaintiff's claim which may be resolved in
plaintiff's favor. Green v. United States, 765 F.2d 105, 107
(7th Cir. 1985).
According to the Seventh Circuit, Cory's claim accrued at the
time of the hurricane in the fall of 1995. Cory brought its
third-party complaint against Swett on April 1, 1998. Thus, the
cause of action accrued more than two years before the
third-party complaint was filed. Therefore, there exist no
genuine issues of material fact regarding the time at which
IBJW's claim accrued and the application of the statute of
limitations. Cory, however, argues that the statute of
limitations should not apply in this case.
III. Swett Did Not Waive Its Right To Assert A Statue Of
A. Swett's motion to amend its answer was timely filed.
Cory argues that Swett is estopped from asserting a statute of
limitations defense because Swett waited five years to amend its
answer. Delay alone, however, does not justify denial of a
defendant's motion for leave to amend its answer. Tamari v.
Bache & Co., 838 F.2d 904 (7th Cir. 1988). According to
Tamari, the principle that delay per se is not a bar is
established "in a number of cases, based on the liberal amendment
requirements of Rule 15. . . ." Id. at 909. Tamari holds that extreme delays can be prejudicial in some
cases if granting leave to amend will "by further delaying the
lawsuit, impair the public interest in the prompt resolution of
legal disputes." Id. That possibility does not apply to this
situation since the amendment here will shorten rather than
lengthen the litigation.
Similarly, in King v. Cooke, 26 F.3d 720 (7th Cir. 1994), the
Court of Appeals for the Seventh Circuit stated that "delay alone
will not generally justify denying a motion to amend a pleading
absent a showing of prejudice from the delay." Id. at 723. In
King, the plaintiff contended important evidence had gone stale
and he was unable to locate witnesses. Id. Unlike in King,
here there is no showing that the mere passage of time itself
caused any such prejudice, such as lost evidence or failed
B. Swett's delay was reasonable in light of the circumstances
surrounding the case.
The confusion surrounding Count IV made the delay in asserting
a statute of limitations defense reasonable. While Cory titled
Count IV as a breach of fiduciary duty claim, IBJW itself
repeatedly agreed post-settlement that such a claim was based on
indemnity principles. Subsequent to the settlement, IBJW twice
represented in writing that Cory's third-party claims essentially
sought indemnification and contribution from Swett. In its
opinion, the Seventh Circuit acknowledged that during the trial,
the district court characterized Count IV as a claim for breach
of fiduciary duty that involved "an indemnification type of
relationship." Mizuho Corporate Bank (USA) v. Cory & Associates,
Inc., 341 F.3d at 650. The Seventh Circuit further recognized
that in sustaining the settlement, the district court also
applied indemnity insurance principles to Count IV. Id.; see
also IBJ Whitehall Bank & Trust Co. v. Cory & Associates, Inc., 2001 WL 667816, at *2 (N.D. Ill. Jun. 7, 2001). Thus, given the
pronouncements from IBJW, Cory and the district court, Swett
reasonably understood Count IV to be an indemnification claim not
subject to a statute of limitations defense.
On appeal, however, the Seventh Circuit rejected IBJW's
argument, overturned the district court's reliance on the
indemnification cases and concluded that Count IV is a breach of
fiduciary duty claim that accrued in the fall of 1995. After the
Seventh Circuit held that Count IV was not a claim for
indemnification, upon remand to the district court, Swett
promptly filed a motion to amend its answer. It did so before any
substantive proceedings and even before IBJW proffered the
necessary amendments to its pleadings to be able to proceed at
all. Swett thus acted on a timely basis, was permitted to
interpose its statute of limitations defense, and now prevails on
For all of the foregoing reasons, defendant Swett & Crawford of
Illinois, Inc.'s motion for summary judgement is granted,
terminating the case. This is a final and appealable order.
It is so ordered.
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