United States District Court, S.D. Illinois
June 2, 2005.
OHIO CASUALTY INSURANCE CO., Plaintiff,
MADISON COUNTY, ILLINOIS, an Illinois municipal corporation, JOSEPH D. PARENTE, and Defendants, O'BRYAN CONSULTING, INC., Defendant/Third-Party Plaintiff, v. ESSEX INSURANCE COMPANY, Third-Party Defendant/Counter-Plaintiff, v. MADISON COUNTY, ILLINOIS, an Illinois municipal corporation, JOSEPH D. PARENTE, and O'BRYAN CONSULTING, INC., Counter-Defendants.
The opinion of the court was delivered by: DAVID HERNDON, District Judge
MEMORANDUM AND ORDER*fn1
Plaintiff Ohio Casualty Insurance Company ("Ohio Casualty")
brought this declaratory judgment action pursuant to
28 U.S.C. § 2201 and 28 U.S.C. § 1332 against Madison County, Illinois
("Madison County") and Geraldine and Nevan Fisher (the
"Fishers").*fn2 (Doc. 1). On August 11, 2004, Ohio
Casualty filed its Third Amended Complaint against Madison
County, Joseph Parente ("Parente"), Administrator of the Madison
County Planning and Development Department, and O'Bryan
Consulting, Inc., ("O'Bryan") seeking a declaration that it has
no duty to defend them in a lawsuit filed by the Fishers, Fisher
v. County of Madison, Illinois, 03-CV-58-DRH (S.D. Ill. filed
Feb. 3, 2003) (Count I) and seeking reimbursement of the costs
for defending O'Bryan in the Fisher suit (Count II). (Doc.
51). By Memorandum and Order dated February 22, 2005, the Court
found Ohio Casualty had a duty to defend O'Bryan in the Fisher
suit. (Doc. 110).
On August 25, 2004, O'Bryan filed a Third Party Complaint for
Declaratory Judgment and Demand for Jury Trial against Essex
Insurance Company ("Essex") asking the Court to determine whether
Essex owes a duty to defend and/or indemnify O'Bryan in the
Fisher suit and to determine the respective responsibilities of
Essex and/or Ohio Casualty, among other things. (Doc. 61).
Essex in turn has filed a Counterclaim for Declaratory Judgment
against O'Bryan, Madison County, and Parente seeking a declaration that it has no duty to defend
or indemnify them in the Fisher suit (Count I) and seeking
reimbursement of the costs for defending O'Bryan in the Fisher
suit (Count II).*fn3 (Doc. 77).
Now before the Court is Essex's Motion for Judgment on the
Pleadings and Memorandum in Support.*fn4 (Doc. 103).
Counter-Defendants Madison County and Parente oppose the motion
(Docs. 107 & 108) by incorporating their response to Ohio
Casualty's motion for judgment on the pleadings. Similarly,
Counter-Defendant O'Bryan opposes the motion. (Doc. 116).
For the reasons set forth below, the Court grants in part
Essex's Motion for Judgment on the Pleadings with respect to
Count I of its Counterclaim (Doc. 103) and finds Essex has no
duty to defend and/or indemnify O'Bryan, Madison County or
Parente in the Fisher suit. The Court also dismisses Count II
of Essex's Counterclaim given the Illinois Supreme Court's
decision in General Agents Ins. Co. of America, Inc. v. Midwest
Sporting Goods Co., ___ N.E.2d ___, No. 98814, 2005 WL 674685,
at *11 (Ill. March 24, 2005). Further, because the Court finds Essex has no duty to defend or indemnify O'Bryan, the Court
dismisses O'Bryan's Third Party Complaint with prejudice.
A. The Fisher Suit
Essex's Counter claim rests on the Fishers' Third Amended
Complaint.*fn5 (Doc. 51, Ex. B).
In their Third Amended Complaint the Fishers allege sometime
prior to October 18, 2001 Madison County Planning and Development
Department sent an undated notice to the Bank of Edwardsville, as
Successors Trustee under the Land Trust Agreement, stating the
building or buildings on 3733 Ridgeview Road, Edwardsville,
Illinois, were hazardous and were to be repaired or demolished
within thirty (30) days or Madison County would undertake the
task. (Doc. 51, Third Amended Complaint and Jury Demand
("Compl.") at Count I ¶ 11, Count II ¶ 10). The Fishers owned
the land subject to the notice via a land trust. (Compl. at
Count I ¶ 10, Count II ¶ 9).
On November 12, 2001, Nevan Fisher sent notice to Parente
regarding his contract to have the house, garage, and corn crib
demolished and removed from the premises. (Id. at Count I ¶
12, Count II ¶ 11). On November 15, 2001, Geraldine Fisher
obtained demolition permit numbers B01-1413 and B01-1414 from the Madison County Planning and Development Department to
demolish the house, garage, and corn crib on the Fishers'
property. (Id. at Count I ¶ 13, Count II ¶ 12).
Between November 16-23, 2001, Scott Schmidt Excavating and
Hauling performed the demolition of the alleged "dangerous
structures" on the Fishers' property. (Id. at Count I ¶ 14,
Count II ¶ 13). Approximately two months after the Fishers
allegedly corrected the ordinance violations on their property,
Madison County, under the direction of Parente, solicited bids
for the demolition of the Fishers' property. (Id. at Count I ¶
15, Count II ¶ 14). On January 26, 2002, O'Bryan submitted a bid
to the Madison County Community Development Board to demolish the
Fishers' property. (Id. at Count I ¶ 16, Count II ¶ 15). On
January 30, 2002, Madison County awarded a demolition contract to
O'Bryan. (Id. at Count I ¶ 17, Count II ¶ 16). On February 7,
2002, O'Bryan signed a contract, obtained the relevant permits,
and demolished two barns and one metal shed on the Fishers'
property. (Id. at Count I ¶¶ 18, 19; Count II ¶¶ 17, 18).
During the demolition, the Fishers allege Madison County,
Parente, and O'Bryan also took two antique vehicles owned by the
Fishers, wood from one of the demolished barns, twenty truck
loads of clean concrete, and street-sweeping vehicle parts from
the metal shed on their property. (Id. at Count I ¶ 20, Count
II ¶ 18). On April 3, 2002, Madison County, under the direction
of Parente, tendered payment of $2,900.00 to O'Bryan and filed a
lien against the Fishers' property for that amount. (Id. at
Count I ¶ 22, 23).
Count I of the Fishers' complaint is a claim against Madison
County, Parente, and O'Bryan for deprivation of property under
42 U.S.C. § 1983. The Fishers allege that Madison County,
Parente, and O'Bryan, individually and collectively, acted to
violate their constitutional rights to their property in one or
more of the following manners: (1) knowingly and intentionally or
with reckless disregard destroyed their property; (2) knowingly
and intentionally or with reckless disregard converted their
personal property; or (3) entered upon the Fishers' land to
destroy their property and to convert their personal property
without due process of law. (Id. at Count I ¶ 24). The
Fishers ask for actual damages in excess of $75,000, attorneys'
fees, and costs.
Count II of the complaint is a negligence claim (added by an
amendment to the Fishers' complaint) against O'Bryan only. The
Fishers allege that O'Bryan was negligent in one or more of the
following: (1) negligently or with reckless disregard for the
Fishers' rights destroyed their property; (2) negligently or with
reckless disregard for the Fishers' rights converted their
personal property; (3) negligently and carelessly entered upon
the Fishers' land to destroy their property; or (4) failed to
review Madison County records prior to demolishing the Fishers'
property to determine whether the dangerous structures had
previously been demolished. (Id. at Count II ¶ 20). The
Fishers allege as a result of O'Bryan's negligence they were
deprived of their property. (Id. at Count II ¶ 21). The
Fishers ask for actual damages in excess of $75,000 and costs. According to Essex's Counterclaim for Declaratory Judgment,
O'Bryan subcontracted a portion of its work to Levco, C.D.S.
("Levco"). (Doc. 77, Essex Insurance Co.'s Answer to O'Bryan
Consulting, Inc.'s Third Party Complaint for Declaratory Judgment
and Counterclaim for Declaratory Judgment at p. 4). As part of
its subcontract, Levco was required to include O'Bryan and
Madison County Community Development as additional insureds.
(Id. at p. 5) O'Bryan has tendered the defense of the
Fishers' action to Essex. (Id.) Essex has accepted O'Bryan's
tender, subject to a full reservations of rights. (Id.) Madison
County and Parente have not tendered their defense of the
Fishers' action to Essex. (Id.)
B. The Essex Policy
Essex issued Policy No. 3AQ6174 to Levco as the named insured.
(Doc. 77, Ex. A). The policy provided for Commercial General
Liability ("CGL") coverage with an effective policy period of
July 29, 2001 to July 29, 2002. Both O'Bryan and Madison County
Community Development were additional insureds on Levco's policy
with Essex. The Additional Insured Endorsement provides as
THIS ENDORSEMENT CHANGES THE POLICY.
Section II WHO IS AN INSURED of the Commercial
General Liability Form is amended to include:
Person or Entity:
O'Brian [sic] Consulting 50 Bend Road E. St. Louis,
Interest of the Above: Job Owner
as an additional insured under this policy, but only
as respects negligent acts or omissions of the Named
Insured and only for occurrences, claims or coverage
not otherwise excluded in the policy.
It is further agreed that where no coverage shall
apply herein for the Named Insured, no coverage nor
defense shall be afforded to the above-identified
Moreover, it is agreed that no coverage shall be
afforded to the above-identified additional insured
for an "bodily injury," "personal injury," or
"property damage" to any employee of the Named
Insured or to any obligation of the additional
insured to indemnify another because of damages
arising out of such injury.
(Doc. 77, Ex. A, Endorsement M/E 009). An identical
endorsement adds Madison County Community Development as an
additional insured to the Essex Policy.
A. Motion for Judgment on the Pleadings Standard
RULE 12(c) permits a party to move for judgment on the
pleadings after the close of the pleadings. FED. R. CIV. P.
12(c);*fn6 Northern Indiana Gun & Outdoor Shows, Inc. v. City of South Bend, 163 F.3d 449, 452
(7th Cir. 1998) (citation omitted). As in RULE 12(b) motions,
courts grant a RULE 12(c) motion only if "`it appears beyond
doubt that the plaintiff cannot prove any facts that would
support his claim for relief.'" City of South Bend,
163 F.3d at 452 (quoting Craigs, Inc. v. General Elec. Capital Corp.,
12 F.3d 686, 688 (7th Cir. 1993)). Thus to succeed, the moving
party must demonstrate that there are no material issues of fact
to be resolved. Id. The court "`will view the facts in the
complaint in the light most favorable to the nonmoving party,'
GATX Leasing Corp. v. National Union Fire Ins. Co.,
64 F.3d 1112, 1114 (7th Cir. 1995); `[h]owever, [the court is] not
obliged to ignore any facts set forth in the complaint that
undermine the plaintiff's claim or to assign any weight to
unsupported conclusions of law.'" Id. (R.J.R. Serv., Inc. v.
Aetna Cas. & Sur. Co., 895 F.2d 279, 281 (7th Cir. 1989)).
B. Essex's Duty to Defend
Illinois law treats the interpretation of an insurance policy
as a question of law that the court may resolve
summarily.*fn7 See Connecticut Indem. Co. v. DER Travel
Service, Inc., 328 F.3d 347, 349 (7th Cir. 2003) (citing Crum
& Forster Managers Corp. v. Resolution Trust Corp.,
620 N.E.2d 1073, 1077 (Ill. 1993)). Whether an insurer must defend the insured is a question resolved
by comparing the allegations of the underlying complaint to the
insurance policy. Id. (citing Lapham-Hickey Steel Corp. v.
Protection Mut. Ins. Co., 655 N.E.2d 842, 847 (Ill. 1995)). If
the underlying complaint alleges facts within or potentially
within policy coverage, the insurer is obligated to defend its
insured, even if the allegations are groundless, false, or
fraudulent. United States Fidelity & Guaranty Co. v. Wilkin
Insulation Co., 578 N.E.2d 926, 930 (Ill. 1991). However, an
insurer has no duty to defend where it is "`clear from the face
of the underlying complaint that the allegations fail to state
facts which bring the case within, or potentially within, the
policy's coverage.'" Connecticut Indem. Co., 328 F.3d at 349
(quoting United States Fidelity & Guaranty Co.,
578 N.E.2d at 930). The legal labels used by a plaintiff in the underlying
case are not dispositive as to whether a duty to defend exists.
Id. (citing Lexmark Int'l, Inc. v. Transp. Ins. Co.,
761 N.E.2d 1214, 1221 (Ill.App.Ct. 2001)). Furthermore, if the
insurer relies on an exclusionary provision, it must be "clear
and free from doubt" that the policy's exclusion prevents
coverage. See Bituminous Casualty Corp. v. Fulkerson,
571 N.E.2d 256, 262 (Ill.App.Ct. 1991). The Court must liberally
construe the underlying complaint and the insurance policy in
favor of the insured. See United States Fidelity & Guaranty
Co., 578 N.E.2d at 930. Keeping these principles in mind, the
Court now turns to comparing the allegations of the underlying
complaint with the policy.
Essex argues, among other things, the Fishers' complaint does
not allege negligent acts or omissions of Essex's Named Insured, Levco. The
Endorsement that adds O'Bryan and Madison County Community
Development as additional insured specifically limits coverage to
"negligent acts or omissions of [Levco], and only for
occurrences, claims or coverage not excluded by the policy." It
further provides that "where no coverage shall apply herein for
the Named Insured, no coverage nor defense shall be afforded to
the additional insured." Essex points out that Levco is not a
defendant in the Fisher complaint, asserting that there is simply
no indication that the Fishers' claims against Madison County or
O'Bryan are based upon negligence on the part of Levco.
Counter-Defendants O'Bryan, Madison County and Parente fail to
address this critical argument.
After reviewing the record in this case,*fn8 the Court
finds there are simply no allegations of negligent acts or
omissions by Levco in the Fishers' complaint. Accordingly, based
on the plain language of Essex's policy requiring negligence on
the part of its Named Insured, Levco, for coverage of additional
insureds, the Court finds Essex has no duty to defend (and also
no duty to indemnify) O'Bryan, Madison County, or Parente in the
Fisher suit. See Crum & Forster Managers Corp. v. Resolution
Trust Corp., 620 N.E.2d 1073, 1081 (Ill. 1993) (where there is
no duty to defend, there is also no duty to indemnify). C. O'Bryan's Third-Party Complaint Against Essex
As noted above, O'Bryan has filed a Third Party Complaint for
Declaratory Judgment and Demand for Jury Trial against Essex
asking the Court to determine whether Essex owes a duty to defend
and/or indemnify O'Bryan in the Fisher suit and to determine
the respective responsibilities of Essex and/or Ohio Casualty.
Because the Court has found that Essex does not owe a duty to
defend O'Bryan, Essex has no duty to indemnify O'Bryan. See Crum
& Forster Managers Corp., 620 N.E.2d at 1081. Put simply,
Essex has no responsibility to defend or indemnify O'Bryan in the
In conclusion, the Court GRANTS in part Essex's Motion for
Judgment on the Pleadings with respect to Count I of its
Counterclaim (Doc. 103) and finds Essex has no duty to defend
and/or indemnify O'Bryan, Madison County or Parente in the
Fisher suit. The Court DISMISSES with prejudice Count II of
Essex's Counterclaim. Further, because the Court finds Essex has no duty to defend
O'Bryan, the Court DISMISSES with prejudice O'Bryan's Third
Party Complaint for Declaratory Judgment and Demand for Jury
Trial. (Doc. 61).
IT IS SO ORDERED.