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Continental Insurance Co. v. TKT

July 14, 2008

CONTINENTAL INSURANCE COMPANY, AS SUBROGEE OF GDB INTERNATIONAL, INC., PLAINTIFF,
v.
TKT, INC., D/B/A NORRENBERNS TRUCK SERVICE, DEFENDANT.



The opinion of the court was delivered by: Murphy, District Judge

MEMORANDUM AND ORDER

Plaintiff's motion for summary judgment was heard June 9, 2008, and is granted for the following reasons.

BACKGROUND

Plaintiff, Continental Insurance Company ("Continental"), is subrogated to the rights of GDB International ("GDB"). GDB is in the business of buying, processing, and reselling salvaged paint products. Defendant TKT, Inc., d/b/a Norrenberns Truck Service ("Norrenberns"), is a warehouseman that provides storage for hire in Nashville, Illinois.

On May 1, 2004, Norrenberns entered into a contract with GDB to store the latter's paint products for a fee at its warehouse in Nashville, Illinois.

On June 7, 2006, the warehouse and paint products were destroyed by fire. The nature, cause, and origin of the fire are unknown. The Illinois Environmental Protection Agency ordered all evidence of the fire destroyed. There was no lightning in the area that day, the weather was dry and clear, and the winds were light. There were no alarms, sprinklers, flame detectors, gas detectors, or smoke detectors. (See Doc.36-6 and 36-7, Ex. 6 and 7).

Continental made good on its insurance policy and paid GDB $423,230.03 ($424,230.03, less a $1,000 deductible) for the damages caused by the fire. Continental has two claims against Norrenberns: (1) breach of contract; and (2) negligent bailment - Res Ispa Loquitor.

ANALYSIS

Summary judgment may be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P 56 (c). In considering a summary judgment motion, a court must review the entire record and draw all reasonable inferences in the light most favorable to the non-moving party. See NLFC, Inc. v. Devcom Mid-America, Inc., 45 F.3d 231, 234 (7th Cir. 1995); Enquip, Inc. v. Smith-McDonald Corp., 655 F.2d 115, 118 (7th Cir. 1981).

Subject matter jurisdiction is based on 28 U.S.C. § 1332 as there is complete diversity of citizenship between the parties: Continental is a New Hampshire corporation with its principal place of business in New York; GDB is a New Jersey corporation with its principal place of business in New Jersey; and Norrenberns is an Illinois corporation with its principal place of business in Illinois. The amount in controversy exceeds $75,000, exclusive of interest and costs. Venue is appropriate here because the loss occurred in this district, and Norrenberns resides in this district. The parties agree that Illinois law applies pursuant to the terms of their contract.

Norrenberns disputes which contract was binding at the time of the fire, but the only contract signed by both parties is dated February 21, 2004, and effective May 1, 2004, through May 1, 2008, titled, "CONTRACT FOR WAREHOUSE SPACE, OFFICE SPACE AND TRANSPORTATION SERVICES" ( "warehouse contract"). A term of this contract is that Norrenberns is only liable for those damages caused by its failure to exercise the care that a reasonably careful man under similar circumstances would exercise. (See Doc. 34-2, Ex. 1). In other words, Norrenberns is only liable for damages caused by its own negligence.

So the only issue in this case is whether the fire the was caused by Norrenberns's negligence. The resolution of this issue resolves both claims, as a finding of negligence constitutes a breach of Norrenberns's duty of care as a bailee.

The bailment claim places a rebuttable presumption of negligence on Norrenberns. In Indemnity Ins. Co. of North America v. Hanjin Shipping Co., et al., 348 F.3d 628 (7th Cir. 2003), the court stated:

In order to prevail on a bailment claim, [plaintiff] must show (1) an express or implied agreement to create a bailment, (2) delivery of the property in good condition, (3) acceptance of the property by the bailee, and (4) the bailee's failure to return the property, or the return of the property in damaged condition. Once the plaintiff has satisfied these requirements, there is a presumption of bailee negligence that may be rebutted if the defendant-bailee presents ...


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