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Federated Dep't Stores, Inc. v. M.J. Clark

July 17, 2007

FEDERATED DEPARTMENT STORES, INC. AND BLOOMINGDALE'S, INC., PLAINTIFFS,
v.
M.J. CLARK, INC., JOHNSON CONTROLS WORLD SERVICES, INC., AND GLOBAL FIRE PROTECTION COMPANY, DEFENDANTS.



The opinion of the court was delivered by: Judge George M. Marovich

MEMORANDUM OPINION AND ORDER

Following a flood at the Bloomingdale's store at 900 N. Michigan Avenue in Chicago, plaintiffs Federated Department Stores ("Federated") and Bloomingdale's, Inc. ("Bloomingdale's") filed a five-count amended complaint against defendants M.J. Clark, Inc. ("M.J. Clark"), Johnson Controls World Services, Inc. ("Johnson Controls") and Global Fire Protection Company ("Global Fire"). The Court previously denied motions for summary judgment filed by plaintiff Bloomingdale's and defendant M.J. Clark. M.J. Clark has filed a motion for reconsideration of the Court's denial of summary judgment. For the reasons set forth below, the Court grants the motion to reconsider its previous decision and grants M.J. Clark's motion for summary judgment with respect to Counts I and III. The Court denies M.J. Clark's motion for summary judgment with respect to Count II.

I. Background

Unless otherwise noted, the following facts are undisputed. The Court previously outlined the facts of this case and mentions here only those facts relevant to the motion for reconsideration.

In March 2003, a sprinkler leak on the fifth floor of the Bloomingdale's store at 900 N. Michigan Avenue in Chicago damaged the first five floors of the store. Bloomingdale's and its owner, Federated, filed suit against M.J. Clark (the contractor), Global Fire (the subcontractor working on the sprinkler system) and Johnson Controls (the building manager responsible for the shutting down and drainage of the sprinkler system).

Plaintiff Bloomingdale's operates Bloomingdale's Department Stores, including the store at 900 N. Michigan Avenue in Chicago (the "Store"). Bloomingdale's is a wholly-owned subsidiary of Federated. When Federated wanted to remodel the fifth and sixth floors of the Store, it contracted with defendant M.J. Clark. The contract identifies Federated as the Owner and M.J. Clark as the "Contractor." The contract contains, among others, the following provisions:

General Conditions, Section 13(c): To the fullest extent permitted by law, Contractor shall indemnify, defend, and hold harmless Owner, Owner's affiliates, its employees, and authorized representatives and assigns of each from and against any and all suits, actions, legal or administrative proceedings, claims, debts, demands, liabilities, interest, costs and expenses of whatever kind or nature, whether arising during or after commencement or completion of the Work, which are in any manner caused, occasioned or contributed to in whole or in part, through any negligence or willful misconduct of the Contractor, any Subcontractor or Sub-subcontractor or anyone employed by any of them or anyone for whose acts any of them may be liable in connection with or incident to the Work, even though the same may have resulted from the joint, concurring or contributory negligence of Owner or any other person or persons, unless the same be caused by the sole negligence or willful misconduct of the party indemnified or held harmless hereunder provided that such claim, damage, loss or expense is attributable to injury or death to any person or persons and damage to any property, regardless of where located, including the property of Owner. In any and all claims against those indemnified hereunder, the indemnification obligation shall not be limited in any way by any limit on the amount or type of damage, compensation or benefits payable under any workers' compensation acts, disability benefit acts or other employee benefit acts.

General Conditions, Section 13(g): Owner and Contractor each waive any rights each may have against the other on the account of any loss or damages occasioned to Owner or Contractor, their respective property, or to the premises or its contents arising from any liability, loss, damage or injury caused by fire or other peril for which property insurance is carried or required to be carried pursuant to this Agreement. The insurance policies obtained by Owner and Contractor pursuant to this Agreement shall contain endorsements or other provisions, waiving any right of subrogation which the insurer may otherwise have against the other party. The provisions of this Section 13g shall not limit the indemnification for liability pursuant to Section 13c.

During the course of M.J. Clark's work at the 900 N. Michigan Bloomingdale's store, Federated was party to an "all-risk" insurance agreement with Lloyd's, London (the "Lloyd's Agreement"). The Lloyd's Agreement provided, in relevant part:

9. PERILS INSURED:

This policy insures against all risks of direct physical loss or damage, except as hereinafter excluded, occurring during the Policy Period.

10. PERILS EXCLUDED:

This policy does not insure against:

c. Ordinary wear and tear, gradual deterioration, inherent vice, latent defect, insects and vermin, depletion, erosion, corrosion, rust, wet rot, dry rot, mold, unless there is ensuing physical loss or damage from fire or explosion only.

d. Errors in design, faulty workmanship or use of faulty materials, unless there is ensuing physical loss or ...


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