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St. Paul Fire & Marine Insurance Co. v. City of Cairo

July 8, 2008

ST. PAUL FIRE & MARINE INSURANCE COMPANY, PLAINTIFF,
v.
CITY OF CAIRO, AN ILLINOIS MUNICIPAL CORPORATION, PAUL F. FARRIS, JOSEPH BARGO, PATRICK J. COX, LINDA JACKSON, AND ELBERT PURCHASE, DEFENDANTS.



The opinion of the court was delivered by: J. Phil Gilbert District Judge

MEMORANDUM AND ORDER

This matter comes before the Court on Plaintiff's Motion for Judgment on the Pleadings pursuant to Federal Rule of Civil Procedure 12(c). (Doc. 50). Defendants have not responded, and the time for response has passed. For the following reasons, the Court GRANTS the motion.

BACKGROUND

Plaintiff St. Paul Fire & Marine Insurance Company ("St. Paul") issued a general liability insurance policy ("insurance policy") to the city of Cairo, Illinois. Defendants sought coverage under the policy after an underlying lawsuit was filed in state court. Plaintiff denied coverage to each Defendant and filed this declaratory judgment action to determine Plaintiff's duty to defend and indemnify Defendants.

Plaintiff attached the underlying complaint and the insurance policy to the complaint. This Court may properly examine the underlying complaint and St. Paul insurance policy because attachments to a complaint become part of it for all purposes. Fed.R.CivP. 10(c); Local 15, Int'l Bhd. of Elec. Workers, AFL-CIO v. Exelon Corp., 495 F.3d 779, 782 (7th Cir. 2007).

The following facts are based on the underlying complaint. For the purpose of this motion, the truth of the underlying complaint is not relevant. Linda Jackson and Elbert Purchase, both members of Cairo city council acting in their official capacity, filed a lawsuit against Defendants Patrick Cox, Paul F. Farris, and Joseph Bargo in state court on September 29, 2006, alleging that city money had been used to pay Cox's salary in violation of certain city ordinances. Farris served as the mayor for the city of Cairo, Illinois, at the time of the underlying complaint. Farris appointed Cox as Cairo's city attorney sometime around May 15, 2006, although the city council later failed to approve the appointment. Bargo served as the city treasurer.

The city of Cairo passed an appropriation ordinance on July 25, 2006, limiting the salary to be paid for the position of city attorney for the city of Cairo to $10,000 beginning May 1, 2006, and ending on April 30, 2007. Sometime thereafter Farris, acting as mayor, and Cox entered into a contract whereby Cox would be paid $105,996 annually for services rendered as city attorney. The underlying Plaintiffs, Jackson and Purchase, assert the contract was null and void since the city council failed to approve the appointment of Cox or to appropriate additional money to cover the contract. At the time Jackson and Purchase filed suit, Cox had been paid $35,332.

The underlying Plaintiffs requested two-fold relief:*fn1 First, they sought an injunction to stop Bargo or Farris from paying Cox additional salary in violation of the ordinance. Second, they requested an accounting of the salary paid to Cox and requested Cox return any overpaid salary.*fn2

Defendants Farris, Cox, and Bargo requested St. Paul defend them in the underlying lawsuit. St. Paul claimed no duty to defend existed, denied coverage to Farris, Cox, and Bargo, and filed this action.

ANALYSIS

A motion for judgment on the pleadings permits a party to move for judgment after the parties have filed the complaint and the answer. Fed.R.Civ.P. 12(c). The pleadings were closed, and Plaintiff subsequently filed this motion in a timely manner.

When determining a Rule 12(c) motion, the Court should view all factual allegations in favor of the non-moving party. Lofton v. General Motors Corp., 694 F.2d 514, 519 (7th Cir. 1982). This court should not grant a motion for judgment on the pleadings unless it appears the non-moving party cannot prove facts sufficient to support his position. Hous. Auth. Risk Retention Group, Inc. v. Chicago Hous. Auth., 378 F.3d 596, 600 (7th Cir. 2004).

Illinois law, which controls this case, "treats the interpretation of an insurance policy and the respective rights and obligations of the insurer and the insured as questions of law that the court may resolve summarily." Roman Catholic Diocese of Springfield in Ill. v. Maryland Casualty Co., 139 F.3d 561, 565 (7th Cir. 1998). To determine if a duty to defend exists, the court should compare allegations contained in the underlying complaint to the insurance policy. Hous. Auth. Risk Retention Group, Inc. v. Chicago Hous. Auth., 378 F.3d 596, 603 (7thCir. 2004); see also Guillen v. Potomac Ins. Co. of Ill., 785 N.E.2d 1, 7 (Ill. 2003). If the underlying complaint "alleges facts that fall or potentially fall within the coverage of the policy, then the insurance company is bound to supply a defense." Maryland Casualty, 139 F.3d at 565; see also Mount Vernon Fire Ins. Co. v. Heaven's Little Hands Day Care, 795 N.E.2d 1034, 1039 (Ill. App. Ct. 2003). Judgment on the pleadings is only appropriate where "it is clear from the face of the underlying complaint that the allegations do ...


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