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North River Insurance Co. v. Marietta Drapery & Window Coverings Co.

July 31, 2008


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


Before the Court is plaintiffs' motion for summary judgment (Doc. 72) to which defendant, Marietta Drapery & Window Coverings Co., Inc., (Marietta Draperies) has filed a response and cross-motion for summary judgment (Doc. 75), and plaintiffs a response to the cross-motion (Doc. 78).


In this action plaintiffs, The North River Insurance Company ("North River") and United States Fire Insurance Company ("U.S. Fire"), seek declaratory judgment from this Court to determine their rights and obligations under commercial general liability (CGL) insurance policies as those policies pertain to claims alleged against the defendant, Marietta Drapery in a related case, Ronald Alsup, Robert Crews and Magnum Properties LLC v. 3-Day Blinds, Inc. The Alsup case, was originally filed in the Circuit Court for the Third Judicial Circuit, Madison County, Illinois, and was removed to this Court and assigned to Judge Murphy, 06-244-GPM. Alsup is a class action in which the plaintiffs seek recovery against some 62 manufacturers and distributors and retailers of miniblinds which allegedly had cord lengths which were negligently designed in such a manner that there were a number of cord loop and inner cord strangulations of children and infants. The Alsup case was remanded to Madison County by Judge Murphy for lack of subject matter jurisdiction (See Memorandum & Order of June 8, 2006, Doc. 110).

Marietta Drapery manufactures and distributes draperies and window blinds. North River issued various CGL policies to Marietta Drapery covering the years from 1994 to 1995, and 1998 to 2001. U.S. Fire issued various umbrella liability policies to Marietta Drapery covering the period from 2000 to 2002. Marietta Drapery seeks summary judgment in this declaratory judgment action, arguing that North River and U.S. Fire are obligated to defend and indemnify it against the claims alleged in the state court Alsup litigation. The specific claims asserted by the plaintiffs in the Alsup litigation include: common law fraud, fraudulent omission, negligent omission, breach of the Illinois Consumer Fraud and Deceptive Practices Act, concert of action, civil conspiracy, breach of implied warranties, negligence, and declaratory judgment.


A district court will grant summary judgment "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 judgment as a matter of law." Fed. R. Civ. P. 56(c): see also Celotex Corp. v. Catrett, 477 U.S. 317, 322--23 (1986); Springer v. Durflinger, 518 F.3d 479, 483-84 (7th Cir. 2008); Popovits v. Circuit City Stores, Inc., 185 F.3d 726, 731 (7th Cir. 1999). The moving party initially bears the burden to demonstrate an absence of genuine issues of material fact, indicating that judgment should be granted as a matter of law. See, Lindemann v. Mobil Oil Corp., 141 F.3d 290, 294 (7th Cir. 1999) (citing Celotex, 477 U.S. at 323). Once a motion for summary judgment has been made and properly supported, however, the non-movant has the burden of setting forth specific facts showing the existence of a genuine issue for trial. See, id. In determining whether a genuine issue of material fact exists, the Court construes all facts in the light most favorable to the nonmoving party and draws all reasonable and justifiable inferences in that party's favor. See, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). In ruling on a motion for summary judgment, the Court will not resolve factual disputes, weigh conflicting evidence, or make credibility determinations. See, Ritchie v. Glidden Co., 242 F.3d 713, 723 (7th Cir. 2001); Miranda v. Wis. Power & Light Co., 91 F.3d 1011, 1014 (7th Cir. 1996). "A genuine issue of material fact arises only if sufficient evidence favoring the nonmoving party exists to permit a jury to return a verdict for that party." Durflinger, 518 F.3d at 483 (quoting Brummett v. Sinclair Broad. Group, Inc., 414 F.3d 686, 692 (7th Cir. 2007)). The nonmoving party must do more than "simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,, 475 U.S. 574, 586 (1986) (quoted in Durflinger, 513 F.3d at 484).

Under Illinois law, the "construction of an insurance policy and a determination of the rights and obligations thereunder are questions of law for the court which are appropriate subjects for disposition by way of summary judgment." Nichols v. Certain Underwriters at Lloyd's London, 771 N.E.2d 595, 599 (Ill. App. Ct. 2002) (citing Crum & Forster Managers Corp. v. Resolution Trust Corp., 620 N.E.2d 1073, 1077 (Ill. 1993)).


An insurer's duty to defend is broader than its duty to indemnify. Country Mut. Ins. Co. v. Carr, 867 N.E.2d 1157, 1160 (Ill. App. Ct. 2007). Under Illinois law, whether an insurer has a duty to defend is determined by comparing the allegations in the underlying complaint to the language of the insurance policy at issue. Id. (citing Outboard Marine Corp. v. Liberty Mut. Ins. Co., 607 N.E.2d 1204, 1220 (Ill. 1992)). Allegations in the complaint are to be construed in favor of the insured and the provisions of the insurance policy are to be liberally construed in favor of coverage. Id. Should even one of the theories of recovery under the complaint fall within the potential coverage of the policy, then the insurer has a duty to defend the insured on all the theories of recovery alleged in the complaint. Id. (citing Nat'l Union Fire Ins. Co. of Pittsburgh, Pa v. Glenview Park Dist., 632 N.E.2d 1039, 1042-43 (Ill. 1994)).

Under Illinois law, "the duty to indemnify arises only when the insured becomes legally obligated to pay damages in the underlying action that gives rise to a claim under the policy." Zurich Ins. Co. v. Raymark Indus., Inc., 514 N.E.2d 150, 163 (Ill. 1987). In other words, the issue of whether there is a duty to indemnify arises only "once the insured had incurred liability as a result of the underlying claim." Travelers Ins. Co. v. Eljer Mfg., Inc., 757 N.E.2d 481, 492 (Ill. 2001). Because there has yet to be a determination of any liability in the state-court Alsup litigation, this Court cannot yet not determine whether North River and U.S. Fire have a duty to indemnify Marietta Drapery.

North River's CGL policy states that its coverage extends to "'bodily injury' or 'property damage' only if:

(1) The "bodily injury" or "property damage" is caused by an "occurrence" that takes place in the ...

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