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. (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 Ohio Casualty's Motion for Judgment on
the Pleadings asking the Court to enter judgment on the pleadings
against Madison County and Parente and find that Ohio Casualty
has no duty or obligation to defend Madison County and Parente in
the Fisher lawsuit. (Docs. 101 & 102). Defendants Madison
County and Parente oppose the motion. (Docs. 104 & 105). For
the reasons set forth below, the Court finds that Ohio Casualty
has no duty to defend Madison County and Parente in the Fisher
A. The Fisher Suit
Ohio Casualty's Third Amended Complaint for Declaratory
Judgment rests on the Fishers' Third Amended Complaint. (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,
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. There is no claim for negligence against
Madison County and Parente.
According to the Third Amended Complaint, Ohio Casualty has
refused the tender of defense by Madison County and Parente.
(Doc. 51, ¶ 11).
B. The Ohio Casualty Policy
Ohio Casualty issued its policy of insurance numbered BLO
(02)52616136 to O'Bryan as the named insured. (Doc. 51, Ex. A).
The policy provided for Commercial General Liability ("CGL")
insurance on a primary basis with an effective policy period of
October 29, 2001 to October 29, 2002, and reads in relevant part
SECTION I COVERAGES
COVERAGE A. BODILY INJURY AND PROPERTY DAMAGE
1. Insuring Agreement
a. We will pay those sums that the insured becomes
legally obligated to pay as damages because of
"bodily injury" or "property damage" to which this
insurance applies. We will have the right and duty to
defend the insured against any "suit" seeking those
damages. However, we will have no duty to defend the
insured against any "suit" seeking damages for
"bodily injury" or "property damage" to which this
insurance does not apply. We may at our discretion
investigate any "occurrence" and settle any claim or
"suit" that may result. But: (1) The amount we will pay for damages is limited and
described in Section III Limits Of Insurance; and
(2) Our rights and duty to defend end when we have
used up the applicable limit of insurance in the
payment of judgments or settlements under Coverages A
or B or medical expenses under Coverage C.
No other obligation or liability to pay sums or
perform acts or services is covered unless explicitly
provided for under SUPPLEMENTARY PAYMENTS COVERAGES
A and B.
b. This insurance applies to "bodily injury" and
"property damage" only if:
(1) The "bodily injury" or "property damage" is
caused by an "occurrence" that takes place in the
"coverage territory;" and
(2) The "bodily injury" or "property damage" occurs
during the policy period.
* * * *
The policy also includes definitions of "occurrence" and
"property damage," which provide, respectively, as follows:
"Occurrence" means an accident, including continuous
or repeated exposure to substantially the same
general harmful conditions.
"Property damage" means:
a. Physical injury to tangible property, including
all resulting loss of use of that property. All such
loss of use shall be deemed to occur at the time of
the physical injury that caused it; or
b. Loss of use of tangible property that is not
physically injured. All such loss of use shall be
deemed to occur at the time of the "occurrence" that caused
Finally, the policy contains the following pertinent
This insurance does not apply to:
a. Expected or Intended Injury
"Bodily injury" or "property damage" expected or
intended from the standpoint of the insured.
The policy also includes the General Liability Master Pak®
Endorsement CG 83 30 07 99. The Endorsement includes a section
entitled "Blanket Additional Insured (Owners, Contractors or
Lessors)" which states, in pertinent part, as follows:
1. BLANKET ADDITIONAL INSURED (Owners, Contractors,
WHO IS INSURED (Section II) is amended to include
as an insured any person or organization whom you are
required to name as an additional insured on this
policy under a written contract or agreement. The
written contract or agreement must be:
(a) currently in effect or becoming effective during
the term of this policy; and
(b) executed prior to the "bodily injury," "property
damage," or "personal and advertising injury."
The insurance provided the additional insured is
limited as follows:
1. That the person or organization is only an
additional insured with respect to liability arising
a. Real property you own, rent, lease, or occupy; or b. "your work" for that additional insured for or by
2. The limits of insurance applicable to the
additional insured are those specified in the written
contract or agreement or the limits available under
this policy whichever are less. These limits are
inclusive of and not in addition to the limits of
insurance available under this policy.
3. The insurance provided the additional insured does
not apply to liability arising out of the sole
negligence of the additional insured.
4. The insurance provided the additional insured does
not apply to:
a. "bodily injury",
b. "property damage",
c. "personal or advertising injury" or
d. defense coverage under the Supplementary Payments
section of the policy arising out of an architect's,
engineer's, or surveyor's rendering of or failure to
render any professional services including:
(1) The preparing, approving, or failing to prepare
or approve maps, shop drawings, opinions, reports,
surveys, field orders, change orders or drawing and
(2) Supervisory, inspection, architectural or
Any coverage provided hereunder shall be excess over
any other valid and collectible insurance available
to the additional insured whether primary, excess,
contingent or on any other basis unless a contract
specifically requires that this insurance be primary
or you request that it apply on a primary basis. III. Analysis
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.
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
(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. Ohio Casualty's Duty to Defend Madison County and Parente
in the Fisher suit
Illinois law treats the interpretation of an insurance policy
as a question of law that the court may resolve
summarily.*fn5 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.
Ohio Casualty argues that the Fishers' complaint alleges the
intentional and knowing conversion and destruction of real and
personal property and therefore fails to allege an "occurrence"
within the meaning of the policy, which defines "occurrence" as
"an accident, including continuous or repeated exposure to
substantially the same general harmful conditions." (Doc. 102,
Mem. of Law in Support of Pl.'s Motion for Judgment on the
Pleadings, at pp. 9-13). Ohio Casualty also argues that because
the Fishers' complaint alleges the knowing and intentional
destruction and conversion of property, the policy's intentional
act exclusion applies, which excludes "`property damage'*fn6
expected or intended from the standpoint of the insured." (Id. at pp. 14-17).*fn7
Madison County and Parente respond that they are not liable to
the Fishers because the demolition of the buildings was
authorized by Illinois statute, and the removal of personal
property from the Fishers' property was unauthorized. (Doc. 105,
Responding Brief of Defs. to Pl.'s Mot. For Judgment on Pleadings
on Third Amended Compl. at p. 4). With regard to the allegations
of improper destruction of buildings, Defendants contend their
actions "were not unlawful or intentional acts, but actions
lawful and pursuant to law and insured by" Ohio Casualty. (Id.
at p. 4). With regard to the allegations of improper removal of
personal property, Defendants reason that because it was not
pursuant to a contract or authorized by law, it could not be an
intentional act and must be an occurrence as a matter of law,
asserting the claim is at most one for negligent supervision.
(Id. at pp. 4-5). Defendants also contend that there are
questions of fact that remain precluding the Court from ruling on
the motion. (Id. at pp. 5-6).
While the Court is mindful of the uphill battle these
Defendants face in arguing for coverage, Defendants' arguments
suggest they misunderstand the standard for whether an insurer
has a duty to defend its insured. The key here is to compare the
allegations in the Fishers' complaint to the policy language,
see General Agents Insurance Co. of America, Inc. v. Midwest
Sporting Goods Co., No. 98814, ___ N.E.2d ___, 2005 WL 674685,
*5 (Ill. Mar. 24, 2005), not what the Fishers could have alleged
or what the evidence may later show. In Count I (the only count
against Madison County and Parente) the Fishers clearly allege
intentional conduct excluded by the policy. For example, the
Fishers allege Madison County and Parente 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. (Compl. at Count I ¶ 24). They further allege
that O'Bryan, "along with employees and agents of defendant,
Madison County, under the direction of defendant, Joseph D.
Parente, individually, acted intentionally to deprive the
plaintiffs of their Constitutional rights by converting
plaintiffs' personal property." (Id. at Count I ¶ 26). Unlike
the Fishers' allegations against O'Bryan, their claims against
Madison County and Parente preclude a finding of negligence and
therefore are excluded from coverage.
In the alternative, Madison County and Parente argue that the
policy's "Coverage B Personal and Advertising Injury Liability"
bring the Fishers' claims against them within the policy's
coverage. The policy covers "personal and advertising injury,"
defined as "injury, including consequential `bodily injury'
arising out of one or more of the following offenses: . . . c.
The wrongful eviction from, wrongful entry into, or invasion of
the right of private occupancy of a room, dwelling or premises
that a person occupies, committed by or on behalf of its owner, landlord or
lessor." (Doc. 51, Ex. A). As Ohio Casualty correctly points
out, "[t]he allegations here are not that the Fishers the
property owners wrongfully removed property or demolished
structures. Rather, the allegations are the County and Parente,
among others, wrongfully removed personal property and demolished
real property. There is simply no question that Coverage B has no
application to this case." (Doc. 113, Pl.'s Reply in Further
Support of Its Motion for Judgment on the Pleadings Against
Defs.' Madison County and Joseph D. Parente at pp. 6-7).
Moreover, even assuming coverage applied under this section,
Madison County and Parente would still be out of luck given the
Court's finding that the intentional act exclusion applies. Put
simply, Ohio Casualty has no duty to defend Madison County and
Parente in the Fishers' lawsuit.
In conclusion, the Court finds Ohio Casualty has no duty to
defend Madison County and Parente in the Fisher suit.
Accordingly, the Court GRANTS Ohio Casualty's Motion for
Judgment on the Pleadings. (Doc. 101). Ohio Casualty's Motion
to Strike Madison County and Joseph Parente's Affirmative
Defenses is DENIED as moot. (Doc. 78).
IT IS SO ORDERED.