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AMCO Insurance Co. v. Swagat Group

February 9, 2009

AMCO INSURANCE CO., PLAINTIFF,
v.
SWAGAT GROUP, LLC, D/B/A COMFORT INN OF LINCOLN, CHOICE HOTELS INTERNATIONAL, VASANT PATEL, MARJORIE BRAUCHER, AND BONNIE E. LEISER, DEFENDANTS.



The opinion of the court was delivered by: Jeanne E. Scott, U.S. District Judge

OPINION

This matter comes before the Court on Plaintiff AMCO Insurance Company's Motion for Judgment on the Pleadings (d/e 20) (Motion). Defendants Swagat Group, LLC and Vasant Patel filed a Response to AMCO Insurance Company's Motion for Judgment on the Pleadings (d/e 28) (Swagat and Vasant Response) and Defendants Marjorie Braucher and Bonnie Leiser filed a separate Response to AMCO's Motion for Judgment on the Pleadings (d/e 32) (Braucher and Leiser Response). Defendant Choice Hotels did not file a Response. For the reasons stated below, the Motion is allowed in part and denied in part. The Court enters judgment on the pleadings in favor of AMCO and against Choice Hotels and Patel, but it denies AMCO's request for judgment against Swagat Group, Marjorie Braucher, and Bonnie Leiser.

FACTS

This is a declaratory judgment action regarding insurance coverage for two underlying lawsuits in which hotel guests allegedly contracted Legionnaire's disease after staying at the Comfort Inn of Lincoln, Illinois, d/b/a the Best Western of Lincoln, Illinois (the Hotel). Defendants Swagat Group, LLC, Choice Hotels International, and Vasant Patel were owners and operators of the Hotel. Plaintiff AMCO Insurance Co. issued an insurance policy to Swagat Group covering the period at issue. Defendants Marjorie Braucher and Bonnie E. Leiser are the plaintiffs in the underlying lawsuits.

AMCO has moved now for judgment on the pleadings under Rule 12(c). In deciding a Rule 12(c) motion, the Court may consider all pleadings, including a complaint, answers to the complaint, and attached exhibits. Fed. R. Civ. P. 12(c); N. Indiana Gun & Outdoor Shows, Inc. v. City of South Bend, 163 F.3d 449, 452 (7th Cir. 1998). The Court must accept as true all of the non-movants' well-pleaded factual allegations and draw all inferences in the light most favorable to them. Thomas v. Guardsmark, Inc., 381 F.3d 701, 704 (7th Cir. 2004).

In the underlying lawsuits here, Marjorie Braucher and Bonnie E. Leiser allege that the swimming pool and hot tub at the Hotel were infested with Legionella bacteria. See, e.g., Braucher v. Swagat Group, LLC, et al., Cent. Dist. Ill. Case No. 07-3253, Second Amended Complaint at Law (d/e 64), ¶ 14; Leiser v. Swagat Group, LLC, et al., Cent. Dist. Ill. Case No. 07-3254, Second Amended Complaint at Law (d/e 69), ¶ 16. Marjorie Braucher alleges that from February 11, 2006 to February 13, 2006, Georgia Braucher, a member of her family, stayed at the Hotel and came within the vicinity of the pool and hot tub. From contact with the Legionella bacteria, she alleges, Georgia Braucher contracted Legionnaire's disease and died. Bonnie Leiser's allegations are similar. She alleges that on January 14, 2006, she stayed at the Hotel and used the pool and hot tub. From her contact with the Legionella bacteria, she alleges, she contracted Legionnaire's disease and sustained permanent injuries and damages. In their underlying suits, both Marjorie Braucher and Bonnie Leiser have alleged numerous claims against Swagat Group, LLC, Choice Hotels International, Vasant Patel, and various employees and agents of the Hotel. All of the claims arise from the contraction of Legionnaire's disease from contact with the allegedly Legionella-infected pool and hot tub.

In the instant Complaint (d/e 1), AMCO alleges that it issued Swagat Group two policies of insurance for the period between February 21, 2005 and February 21, 2006: an umbrella policy and a general liability policy. Swagat's policies may cover Choice Hotels International and Patel as well. AMCO attached purported copies of these policies to its Complaint as Exhibits A and B. The copy of the umbrella policy AMCO submitted includes a specific provision excluding from coverage:

Any liability which would not have occurred, in whole or in part, but for the actual, alleged or threatened inhalation of, ingestion of, contact with, exposure to, existence of, or presence of, any "fungi" or bacteria on or within a building or structure, including its contents, regardless of whether any other cause, event, material or product contributed concurrently or in any sequence to such injury or damage.

Complaint, Exhibit A, Umbrella Policy, at 24. Similarly, the copy of the general liability policy AMCO submitted provides:

This insurance, including any duty we have to defend "suits", does not apply to:

Fungi or Bacteria

a. "Bodily injury" or "property damage" which would not have occurred, in whole or in part, but for:

1) The actual, alleged or threatened inhalation of, ingestion of, contact with, exposure to, existence of, or presence of, any "fungi" or bacteria on or within a building or structure, including its contents; or

2) The failure to warn or to disclose the presence of "fungi" or bacteria; regardless of whether any other cause, event, material or product contributed concurrently ...


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