The opinion of the court was delivered by: JOAN LEFKOW, District Judge
MEMORANDUM OPINION AND ORDER
Plaintiff-insured, F.D. Stella Products Company ("Stella"),
filed suit against Defendant-insurer, General Star Indemnity
Company ("General Star"), for breach of an insurance contract.
General Star filed a counterclaim for declaratory judgment.
Diversity jurisdiction is properly invoked pursuant to
28 U.S.C. § 1332, as the amount in controversy exceeds $75,000, Stella is a
Michigan corporation with its principal place of business in
Michigan, and General Star is a Connecticut corporation with its
principal place of business in Connecticut. Venue is properly
invoked pursuant to 28 U.S.C. § 1391, as a substantial portion of
the events giving rise to this claim occurred in Lombard (DuPage
Because the General Star insurance policy in question does not
contain a choice of law provision, the court must look at the
choice of law factors set forth by the Illinois Supreme Court in
Lapham-Hickey Steel Corp. v. Protection Mut. Ins. Co.,
665 N.E.2d 842, 845 (Ill. 1995). These factors require the court to
consider (1) the location of the policy's subject matter; (2) the
place of the policy's delivery; (3) the domicile of the insured and
insurer; (4) the place of the last act giving rise to a valid
contract; (5) the location of performance; and (6) any other
place bearing a rational relationship to the general contract.
Because the policy's subject matter was at all relevant times
located in Lombard, Illinois and because the General Star policy
was underwritten and delivered in Illinois, the court holds that
Illinois law should be applied to resolve this dispute.
Before the court are Stella's and General Star's cross-motions
for summary judgment. For the reasons stated below, Stella's
motion is denied and General Star's motion is granted.
SUMMARY JUDGMENT STANDARDS
Summary judgment obviates the need for a trial where there is
no genuine issue as to any material fact and the moving party is
entitled to a judgment as a matter of law. Fed.R.Civ.P. 56(c).
To determine whether any genuine fact exists, the court must
pierce the pleadings and assess the proof as presented in
depositions, answers to interrogatories, admissions, and
affidavits that are part of the record. Fed.R.Civ.P. 56(c)
Advisory Committee's notes. The party seeking summary judgment
bears the initial burden of proving there is no genuine issue of
material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323
(1986). In response, the non-moving party cannot rest on bare
pleadings alone but must use the evidentiary tools listed above
to designate specific material facts showing that there is a
genuine issue for trial. Id. at 324; Insolia v. Philip Morris,
Inc., 216 F.3d 596, 598 (7th Cir. 2000). A material fact must be
outcome determinative under the governing law. Insolia,
216 F.3d at 598-99. Although a bare contention that an issue of fact
exists is insufficient to create a factual dispute, Bellaver v.
Quanex Corp., 200 F.3d 485, 492 (7th Cir. 2000), the court must
construe all facts in the light most favorable to the non-moving
party, as well as view all reasonable inferences in that party's
favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). On cross-motions for summary judgment, the court must
consider the merits of each motion and assess the burden of proof
that each party would bear on an issue at trial. Santaella v.
Metro. Life Ins. Co., 123 F.3d 456, 461 (7th Cir. 1997).
Stella leases and refurbishes restaurant equipment. (General
Star L.R. 56.1 ¶ 2). On or about March 11, 1997, Stella entered
into an agreement with Ser-Ven Pizza, Inc. d/b/a Venditti's
Ristorante to lease restaurant furniture, equipment, and fixtures
("the subject property"). (Stella L.R. 56.1 ¶ 7). Stella and
Bancorp Group, Inc. ("Bancorp") financed a portion of the lease
of the subject property, and, in return, both received a security
interest in the property. (Stella Ex. D). Sometime prior to
December of 1999, Ser-Ven Pizza ceased operating Venditti's
Ristorante and left the subject property at the premises. (Stella
L.R. 56.1 ¶ 8).
As of December 14, 1999, Chicago Pizza Kitchen occupied the
restaurant space formerly used by Venditti's Ristorante and used
the subject property in its restaurant operations with Stella's
and Bancorp's knowledge.*fn1 (General Star L.R. 56.1 ¶ 10).
Immediately thereafter, Stella sent documents related to the
financing of the subject property to Sam Miceli, owner of Chicago
Pizza Kitchen, but no agreement was reached regarding the lease,
sale or use of the subject property. Id. at ¶ 11. At some point between December 1999 and March 2001, Jason and
Anthony Brown ("the Browns") assumed ownership of Chicago Pizza
Kitchen. Id. at ¶ 12. The Browns, like their predecessor, used
the subject property in their restaurant operations with F.D.
Stella's and Bancorp's knowledge but without any agreement
between Chicago Pizza Kitchen and Bancorp or Stella for the
lease, sale or use of the subject property.*fn2 Id.
On June 19, 2000, Bancorp filed a replevin suit against Chicago
Pizza Kitchen, seeking, among other things, surrender of the
subject property and an order 1) declaring that Bancorp had a
superior right, title to, and interest in the property, 2)
ordering that Chicago Pizza Kitchen relinquish possession of the
subject property to Bancorp, and 3) empowering Bancorp to enter
the premises where the subject property was located to take
possession of it. Id. at ¶ 13. On November 15, 2000, the Court
granted all of Bancorp's requests. Id. at ¶ 14.
Effective March 2001, Bancorp assigned all of its rights,
title, and interest in the subject property to Stella. Id. at ¶
15. On March 21, 2001, Stella sent its agent to the Chicago Pizza
Kitchen premises to inventory the subject property. Id. at ¶
16. On April 1, 2001, Stella's agent reported to Stella that a
double deck pizza oven, espresso machine, vertical cutter mixer,
slicer, under-the-counter cash drawer, range, and glass washer
had been removed from the restaurant premises. Id. at ¶ 17;
see (Stella Ex. I). Of the subject property, a fire protection
system, shelving, refrigerators and freezers, a dish washer,
fryers, booths, and tables remained at the premises. Id. On or about April 16, 2001, Stella's attorney informed the
Browns by letter of the outcome of the replevin suit and of
Bancorp's assignment of all of its rights in the subject property
to Stella. Id. at ¶ 19. In the same letter, Stella advised the
Browns of its intention to remove the subject property from the
restaurant immediately unless adequate financial arrangements
were promptly made and Stella also informed the Browns that any
prior sale or transfer of the subject property without
authorization from Bancorp or Stella was fraudulent. Id.
Between April 2001 and August 2001, Stella attempted to negotiate
with the Browns regarding the lease or purchase of the subject
property. Id. (Stella L.R. 56.1 ¶ 16). Throughout this period,
the subject property remained in the Browns' custody at the
Chicago Pizza Kitchen. Id. at ¶ 21.
On August 8, 2001, Stella was notified that the Browns had
vacated the property without leaving a forwarding address and
removed all of the subject property from the restaurant premises.
Id. at ¶ 22. Subsequently, Stella filed a police report on
September 4, 2001 concerning the alleged loss or theft of the
subject property. Id. at ¶ 22; (Stella Ex. K).
Thereafter, on or about August 21, 2001, Stella submitted a
claim for coverage of the alleged theft of the subject property
from the restaurant premises to General Star. Id. at ¶ 24.
(Stella Ex. L). General Star denied coverage for Stella's claim
on October 22, 2002, because:
. . . loss or damage resulting from a criminal act by
anyone to whom you entrust property, voluntary
parting with any property if induced so by a
fraudulent scheme, trick or false pretense, and loss
or damage where the only evidence of loss is
determined upon taking inventory or any other
instance where there is no physical evidence to show