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Capitol Specialty Insurance Corp. v. Whitaker

September 10, 2009


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


This matter comes before the Court on the motion for summary judgment filed by plaintiff Capitol Specialty Insurance Corporation ("Capitol") (Doc. 30). Capitol argues it owes no duty to defend or indemnity defendants Charles Whitaker and Rodney Moore in an underlying tort suit because the liquor liability insurance policy it issued to Whitaker and Moore does not cover the wrongful action alleged in that suit. Whitaker and Moore have responded to the motion (Doc. 35), and Capitol has replied to that response (Doc. 37).

I. Summary Judgment Standard

Summary judgment is appropriate where "the pleadings, the discovery and disclosed materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c); see Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Spath v. Hayes Wheels Int'l-Ind., Inc., 211 F.3d 392, 396 (7th Cir. 2000). The reviewing court must construe the evidence in the light most favorable to the nonmoving party and draw all reasonable inferences in favor of that party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986); Chelios v. Heavener, 520 F.3d 678, 685 (7th Cir. 2008); Spath, 211 F.3d at 396. Where the moving party fails to meet its strict burden of proof, a court cannot enter summary judgment for the moving party even if the opposing party fails to present relevant evidence in response to the motion. Cooper v. Lane, 969 F.2d 368, 371 (7th Cir. 1992). In responding to a summary judgment motion, the nonmoving party may not simply rest upon the allegations contained in the pleadings but must present specific facts to show that a genuine issue of material fact exists. Fed. R. Civ. P. 56(e)(2); Celotex, 477 U.S. at 322-26; Johnson v. City of Fort Wayne, 91 F.3d 922, 931 (7th Cir. 1996).

II. Facts and Procedural History

The essential facts in this case are not in dispute. This matter arose after defendant Michael Taylor and his son were assaulted by two assailants in a proverbial "bar fight" on November 12, 2006, in Club Elite, a tavern in Cairo, Illinois. The fight began when Taylor, who was drinking alcohol served by Club Elite, threw the bottle of alcohol from which he was drinking at another patron, who then punched him in the jaw. Taylor was seriously injured in the assault, lost wages as a result of his injuries and incurred over $45,000 in medical bills treating those injuries.

On September 25, 2008, Taylor sued defendants Whitaker and Moore, the owners of Club Elite, in state court. See Taylor v. Whitaker, No. 2008 L 9 (Ill. Cir. Ct. Alexander Co.). The state law suit advanced a premises liability negligence theory, that is, it charged that the defendants were negligent in their affirmative duty as business-owners inviting people onto the business's premises for business purposes to aid or protect their patrons against unreasonable risk of physical harm. Marshall v. Burger King Corp., 856 N.E.2d 1048, 1058 (Ill. 2006); see Restatement (Second) of Torts § 344 (1965). Specifically, the complaint in the underlying action alleges Whitaker and Moore were negligent in:

a. Failing to provide adequate security;

b. By Failing to act and/or failing to act appropriately once the two individuals, Brandon Childs and Jason Cross, began to assault the Plaintiff and his son; and

c. By failing to warn of the existence of the danger posed by Brandon Childs and Jason Cross, two individuals generally known for violence.

(Petition ¶ 6; Doc. 2-3). The underlying complaint did not mention whether any of the parties had consumed alcohol sold, served or furnished by Club Elite. Capitol retained counsel to defend Whitaker and Moore, but now seeks a determination from the Court whether the representation is required.*fn1

Capitol brought this case under the Declaratory Judgment Act, 28 U.S.C. § 2201, seeking a declaration that a liability insurance policy covering Whitaker and Moore (No. CS00322809) ("Policy") does not cover liability from the November 12, 2006, assault and that, as a consequence, it is not obligated to defend or indemnify Whitaker or Moore. The Policy contains two parts: a commercial general liability insurance ("CGL") part and a commercial liquor liability ("CLL") part. The parties agree that the CGL part of the Policy does not require Capitol to defend or indemnify Whitaker and Moore because of an exclusion for injuries arising from assault or battery. They disagree, however, whether the CLL part of the Policy provides coverage. The CLL part provides insurance coverage where liability "is imposed on the insured by reason of the selling, serving or furnishing of any alcoholic beverage." Policy, § I, ¶1.a, CG 00 33 12 04 (Doc. 2-4 at 62). Capitol has filed this declaratory judgment action seeking a declaration that it, along with the rest of the policy, does not.

III. Analysis

Under Illinois law, which all parties agree applies to this action, an insurer can owe two distinct duties to an insured: "(1) the duty to defend him if a claim is made against him; and (2) the duty to indemnify him if he is found legally liable for the occurrence of a covered risk." Chandler v. Doherty, 702 N.E.2d 634, 637 (Ill. App. Ct. 1998). The duty to defend is broader than the duty to indemnity; if an insured owes no duty to defend, it cannot have a duty to indemnity. Crum & Forster Managers Corp. v. Resolution Trust Corp., 620 N.E.2d 1073, 1081 (Ill. ...

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