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Executive Risk Indemnity Inc. v. Speltz & Weis

April 23, 2010

EXECUTIVE RISK INDEMNITY INC., PLAINTIFF,
v.
SPELTZ & WEIS, LLC A.K.A. WELLSPRING MANAGEMENT SERVICES LLC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Wayne R. Andersen United States District Judge

Wayne R. Andersen

MEMORANDUM, OPINION AND ORDER

This case is before the Court on cross-motions of defendants David Speltz and Timothy Weis (the "Individual Defendants") on the one hand, and defendants Huron Consulting Group, Inc., Huron Consulting Services LLC, and Wellspring Management Services LLC (the "Huron Defendants") on the other. Both the Individual Defendants and Huron Defendants filed motions for summary judgment to award and distribute proceeds of Executive Risk Miscellaneous Professional Liability Policy No. 6800-6777 (the "Policy") which has been deposited with the Court's registry. For the following reasons, the Individual Defendants' motion for summary judgment [53] is denied in part, and the Huron Defendants' motion for summary judgment [67] is granted in part.

PROCEDURAL BACKGROUND

This is an interpleader action in which plaintiff Executive Risk Indemnity Inc., ("Executive Risk") sought injunctive relief against competing claimants to a $2 million insurance policy. Because it faced competing claims by the Individual Defendants and Huron Defendants, Executive Risk brought this action under the Interpleader Act and filed a motion for summary judgment to be discharged pursuant to 28 U.S.C. § 2361. An interpleader action typically involves two stages. First, the Court determines that interpleader is warranted when the interpleading party faces real and conflicting claims. Aaron v. Mahl, 550 F.3d 659, 663 (7th Cir. 2008). On October 16, 2009, we granted Executive Risk's motion and held that all of Executive Risk's legal obligations to the claimants pursuant to Executive Risk Miscellaneous Professional Liability Policy No. 6800-6777 (the "Executive Risk Policy") were thus satisfied.

The second stage of an interpleader action contemplates resolution of the remaining parties' claims to the proceeds based upon the merits. Aaron, 550 F.3d at 663. The Individual Defendants and the Huron Defendants remain as insured claimants to the Executive Risk Policy. The background and merits of those claims are addressed below.

FACTUAL BACKGROUND

The Individual Defendants and the Huron Defendants came to be co-insureds under two insurance policies as a consequence of Huron Consulting Group's acquisition of the Individual Defendant's consulting firm, Speltz & Weis, LLC, in 2005. All of the parties are embroiled in litigation in New York relating to the management of the St. Vincent Hospital System. The respective defense costs incurred while defending that action easily exhaust the Executive Risk Policy's proceeds. At issue is how the proceeds of one of those polices, the Executive Risk Policy, should be apportioned.

The Executive Risk Policy provides $2 million in professional liability coverage including payment of defense costs. The Individual Defendants and Huron Defendants each have valid claims to the proceeds for payment of their defense costs. However, The Executive Risk Policy contains an "Other Insurance" clause that it "shall be specifically excess over . . . any other valid and collectible insurance . . . except insurance specifically in excess of this Policy." Executive Risk Miscellaneous Professional Liability 6800-6777, at ¶ H. The parties also are insured by Liberty Surplus Corporation under Miscellaneous Professional Liability Insurance Policy No. EJE-B71-078123-015 (the "Liberty Surplus Policy"). This is a surplus insurance policy and provides that it "shall apply only in excess of the amount of any . . . limits of liability under Executive Risk policy No. 68006777." Liberty Surplus Policy Endorsement No. 7.

Additionally, the Individual Defendants are insured by National Union Fire Insurance Company under Policy No. 673-45-54 (the "National Union Policy") which has a policy limit of $30 million. The National Union Policy, like the Executive Risk Policy, insures the Individual Defendants for professional liability and provides for payment of defense costs. The National Union Policy also contains an "Other Insurance" clause stating, "[s]uch insurance as provided by this policy shall apply only as excess over any valid and collectible insurance. This policy shall be specifically excess of any other policy pursuant to which any other insurer has a duty to defend." National Union Policy ¶ 14. The Huron Defendants are not insured under the National Union Policy.

STANDARD OF REVIEW

Summary judgment is proper when "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). A genuine issue of material fact exists only if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 277, 248 (1986). Summary judgment is appropriate when the non-moving party "fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex v. Catrett, 477 U.S. 317, 322 (1986). The existence of a factual dispute is not sufficient to defeat a summary judgment motion; instead, the nonmoving party must present definite, competent evidence to rebut the motion for summary judgment. See Butts v. Aurora Health Care, Inc., 387 F.3d 921, 924 (7th Cir. 2004). In reaching its holding, the court will consider the evidence in a light most favorable to the nonmoving party and draw all reasonable inferences in its favor. See Anderson, 477 U.S. at 255.

DISCUSSION

I. The "Other Insurance" Clauses and Contribution ...


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