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Indiana Insurance Company v. Westfield Insurance Company

December 13, 2010

INDIANA INSURANCE COMPANY
v.
WESTFIELD INSURANCE COMPANY



The opinion of the court was delivered by: Magistrate Judge Amy J. St.Eve

Name of Assigned Judge or Sitting Judge if Other than Assigned Judge

CASE

TITLE

DOCKET ENTRY TEXT

Plaintiff's motion for leave to file its first amended complaint for declaratory judgment [29] is denied without prejudice.

O[ For further details see text below.] Notices mailed by Judicial staff.

STATEMENT

Plaintiff, Indiana Insurance Company, seeks leave to file its First Amended Complaint, which purports to seek "declaratory judgment" to the effect that Defendant, Westfield Insurance Company, owes Plaintiff damages. (R. 29.) Citing fatal deficiencies in Plaintiff's original complaint, the Court granted Defendant's motion to dismiss, without prejudice. (R. 27.) Because the First Amended Complaint fails plausibly to allege that Defendant breached a contract to which Plaintiff was either privy or an intended beneficiary, the Court denies Plaintiff's motion without prejudice.

Continued...

Courtroom Deputy KF Initials:

BACKGROUND

As the Court recounted in its Memorandum Opinion and Order of August 26, 2010, the present case arises from a tragic gas explosion that occurred at the home of Kim Bowen in 1996. (R. 28.) Subsequent litigation focused on the alleged negligence of general contractor, Richard Smykal, Inc., and subcontractor, Professional Plumbing, Inc. (Id. at 1-2.) At the time of the explosion, Plaintiff insured Smykal and Defendant insured Professional Plumbing. (Id. at 2.) After Defendant refused to defend Smykal, the latter filed a third-party complaint, seeking declaratory judgment. While the parties' cross-motions for summary judgment were pending, Defendant agreed to defend Smykal "without reservation as to coverage", though it did so reserving "its right to seek contribution, apportionment and/or reimbursement for any defense costs and/or payments made on behalf of Smykal . . . ." (Id.) Five years later, the Bowen Estate litigation settled. (Id. at 3.) During the settlement conference, Defendant agreed that it would "square up" with Plaintiff after the Brown Estate litigation was "put to rest and all releases and dismissal orders entered." (Id.) In settling the litigation, Defendant paid $2,525,000 on behalf of Professional Plumbing and Plaintiff paid $2,250,000 on behalf of Smykal. (R 29-1 at 18.) Plaintiff had a commercial general liability (CGL) policy with a $1 million limit that covered Smykal. (R. 28 at 3.) Defendant also had a CGL policy with a $1 million limit, as well as a commercial umbrella policy with a $10 million limit, both of which covered Professional Plumbing and its "additional insured," Smykal. (Id.) As Defendant agreed to defend Smykal without reservation as to coverage, Plaintiff contends that Defendant should have paid $1,250,000 under its $10 million CU policy after Plaintiff exhausted its $1 million in primary CGL policy limits. (Id.) According to Plaintiff, Defendant has not paid that sum. (Id.)

On April 30, 2010, Defendant removed the instant case from the Circuit Court of Cook County, premising the Court's jurisdiction upon diversity of citizenship. (R. 1.) The complaint "for declaratory judgment" sought recovery of damages from Defendant. (R. 1-2 at 4-15.) It alleged that Plaintiff had paid $1,250,000, which Defendant in fact owed under its commercial umbrella policy. (Id. at 14.) Plaintiff also sought $250,000 interest and $282,046.51 in defense fees and costs that it paid in the defense of Smykal. (Id. at 15.)

On May 21, 2010, Defendant filed a motion to dismiss, arguing, first, that the complaint, although purportedly seeking declaratory judgment, failed to plead facts ...


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