The opinion of the court was delivered by: BLANCHE MANNING, District Judge
Plaintiff/Counter-Defendant Hartford Fire Insurance Co.
("Hartford") brought the instant action seeking a declaration of
its rights and obligations under a terminal liability insurance
Policy ("the Policy") which named Defendant/Counter-Plaintiff A.
Block Marketing, Inc. ("Block") as the insured. The present
matter comes before this Court on the parties' Cross Motions for
Summary Judgment.*fn1 For the reasons set forth herein, the
Court GRANTS Hartford's motion and DENIES Block's motion. BACKGROUND*fn2
This action stems from two events: (1) the issuance of a Policy
listing Block as the "named insured" (with no other additional
insureds); and (2) a separate action by Cargo Carriers ("CC"),
brought prior to the instant case, alleging that Wholesale Mulch
Products, Inc. ("Wholesale") and Barge Terminal Trucking, Inc.
("BTT") damaged several barges owned by CC ("the CC Action")
while unloading road salt at a shipping terminal in Lemont,
Illinois ("the Terminal").
After allegedly first learning of the CC Action, Block sought
coverage on the grounds that during the time the Policy was in
effect Wholesale, which "share[s] a common ownership" with Block,
was actually the party for whom Hartford assumed the risk because
it, not Block, loaded and unloaded barges at the Terminal.
Therefore, according to Block and Wholesale, because the Policy
provided coverage "for damage to barges and cargo in the care and
custody of the insured while at the Terminal," Wholesale, not
Block, should be the name insured.
According to Block, although both it and Wholesale conduct
business out of the Terminal, they operate "separate and distinct" lines of business.
According to Janice Rose, the co-president of Block and
Wholesale, "Wholesale runs the stevedore operation at the
Terminal," which includes loading and unloading cargo from
barges. The "primary function" of Block, on the other hand, "is
to market and sell" the cargo, mostly road salt and tree bark, to
Hartford contests the above characterization of the operations
of Wholesale and Block. After reviewing the pertinent portions of
the parties' Rule 56.1 statements, this Court finds that the
exact function of Wholesale and Block at the Terminal, during the
time the Policy was written and in effect, is not clear from the
record. Block's contention that Wholesale is a stevedore and that
Block sells the cargo is based upon the affidavit of its
co-president. At her deposition, however, the co-president
testified that Block employed the dock manager and several
stevedores at the Terminal and owned heavy equipment used in the
loading and unloading of cargo at the Terminal.*fn3 Needless
to say, if Block does not take part in the stevedore operations
at the Terminal, it is unclear why it would employ dock workers
and own stevedore equipment.
Additionally, as explained below, the broker for Block and
Wholesale ("the Broker") allegedly told Hartford that Block, not
Wholesale, unloaded all cargo at the Terminal, and that Wholesale
was the owner of the cargo. Indeed, the initial application for
insurance, completed by the Broker, sought stevedore coverage for
both Block and Wholesale. These facts beg the question of why Block would need stevedore coverage if it was not
After denying coverage, Hartford brought the instant action
seeking a ruling that it does not have an obligation to insure
Block or Wholesale for the damage to CC because: (1) Wholesale,
the plaintiff in the CC Action, is not a "named insured" under
the Policy; and (2) even if the Policy is reformed to include
Wholesale, neither Block nor Wholesale gave notice of "the
occurrence" "as soon as practicable" as required by the Policy.
In its counterclaim, Block seeks reformation of the Policy to
make Wholesale the named insured. Accordingly, in ruling on the
parties' cross-motions for summary judgment, this Court will
address the facts surrounding: (1) how the Policy came to be
written; and (2) when Block/Wholesale received notice of the
alleged damage to CC's barges.
According to the co-president of Block and Wholesale, in 1997,
Wholesale, through the Broker, sought to transfer its insurance
coverage for stevedore operations at the Terminal to Hartford.
Although Block and Wholesale claim that Wholesale was solely
responsible for stevedoring at the Terminal, the initial
application for coverage, placed in February of 1997 by the
Broker, sought stevedore insurance for both Block and Wholesale.
Hartford denied this application in a letter dated May 6, 1997.
Emma Carney, Hartford's "senior marine underwriter" at that time
("the Underwriter"), testified that this denial was based on two
factors. One, the cargo unloaded at the Terminal included "bark
mulch," which presents a risk of "spontaneous combustion."
Second, because Wholesale owned the bark mulch being unloaded,
Hartford was not willing to issue a stevedore policy covering
cargo owned by the stevedore thereby presenting "liability unto themselves."
After the initial denial, the Broker allegedly informed the
Underwriter that Block alone ran the stevedore operations at the
Terminal. In light of the reasons for the previous denial the
risks associated with Wholesale and bark mulch the Underwriter
allegedly told the Broker that Hartford would "revisit insuring
the terminal liability of Block only." The Underwriter testified
that based on her conversations with the Broker, she understood
that the coverage now sought was for Block, not Block and
Wholesale or Wholesale alone. After reviewing the risks for Block
alone, Hartford issued the Policy in May of 1997 with Block
listed as the only named insured. The Broker renewed the Policy