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Ohio Casualty Insurance Co. v. Wholesale Mulch Products

January 10, 2006

OHIO CASUALTY INSURANCE COMPANY, PLAINTIFF,
v.
WHOLESALE MULCH PRODUCTS, INC., HONORABLE DAVID H. COAR AN ILLINOIS CORPORATION, DEFENDANT.



The opinion of the court was delivered by: David H. Coar United States District Judge

MEMORANDUM OPINION AND ORDER

When sued by a company named Cargo Carriers, Wholesale Mulch Products, Inc. ("Defendant" or "Wholesale Mulch") tendered the defense to its insurer, Ohio Casualty Insurance Company ("Plaintiff" or "Ohio Casualty"). Ohio Casualty now comes before this Court for a declaratory judgment that it had no duty to defend Wholesale Mulch in that action. Both Parties have moved summary judgment pursuant to Federal Rules of Civil Procedure 56. For the reasons stated below, Plaintiff Ohio Casualty's motion for summary judgment is DENIED. Defendant Wholesale Mulch's motion for summary judgment is GRANTED.

I. SUMMARY JUDGMENT STANDARD

Celotex, 477 U.S. at 324.

II. FACTS*fn1

Plaintiff Ohio Casualty is an Ohio insurance corporation with its principal place of business in Fairfield, Ohio. At all relevant times, the corporation was licensed to transact insurance business in the State of Illinois. Defendant Wholesale Mulch is an Illinois corporation that does business in Arlington Heights and Lemont, Illinois.

American National Fire Insurance Company issued its Business Pro Policy to A. Block Marketing, Inc. and Wholesale Mulch as the named insureds for the period of May 31, 2000 to May 31, 2001 (the "Policy"). The Policy provided property, general liability, crime, inland marine, boiler and machinery, auto, and umbrella coverage. Ohio Casualty is the successor in interest to the Policy.

Two years ago, Cargo Carriers filed suit against Wholesale Mulch in this Court. See Cargo Carriers v. Barge Terminal, et al., 04-CV-950 (N.D. Ill. filed Feb. 6, 2004). The dispute stemmed from the damage caused when Wholesale Mulch unloaded road salt from two barges owned by Cargo Carriers. Cargo Carriers alleged that Wholesale Mulch negligently operated the hydraulic backhoe used to discharge the road salt from the barges, causing property damage to the barges in the amount of $114,889.92. The lawsuit was dismissed pursuant to a stipulation of voluntary dismissal on March 7, 2005.

Wholesale Mulch tendered the defense of the underlying lawsuit to Ohio Casualty, which refused to accept the tender. Ohio Casualty cited Sections 2(g) and 2(j)(6) ("Exclusion (g)" and "Exclusion j(6)") of the Policy, which Ohio Casualty claims exclude coverage for property damage "arising out of the loading or unloading of watercraft" and property damage to property that must be restored, repaired, or replaced because Wholesale Mulch's work was incorrectly performed on it. The Policy states as follows:

Section I - COVERAGES COVERAGE A. BODILY INJURY AND PROPERTY DAMAGE LIABILITY

2. Exclusions

*****

This insurance does not apply to:

g. Aircraft, Auto or Watercraft "Bodily injury" or "property damage" arising out of the ownership, maintenance, use or entrustment to others of any aircraft, "auto" or watercraft owned or operated by or rented or loaned to any ...


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