The opinion of the court was delivered by: Elaine E. Bucklo United States District Judge
MEMORANDUM OPINION AND ORDER
This court has already granted summary judgment to SRI Michigan Avenue Venture, LLC, SRI Michigan Avenue Management, Inc., Shorenstein Realty Services, L.P., Shorenstein Management, Inc. and Shorenstein Company, LLC (collectively "Shorenstein") and National Union Fire Insurance Company of Pittsburgh, PA ("National Union") on the grounds that Shorenstein was insured under the policies issue by United States Fidelity & Guaranty Company ("USF&G") and American Motorists Insurance Company ("AMICO"). Shorenstein and National Union have moved for summary judgment on damages, as well as on the issue of which Shorenstein entities are covered under the USF&G and AMICO policies. USF&G filed a cross-motion for summary judgment, which was joined by AMICO. For the reasons that follow, Shorenstein and National Union's motion is granted in part and denied in part, and USF&G and AMICO's cross-motion is denied.
This case centers around a tragic accident which took place on March 9, 2002 at the John Hancock Center in Chicago, Illinois. SRI Michigan Avenue Venture, LLC was the owner of the property and Shorenstein Realty Services, L.P. was the manager of the property. This accident happened in connection with a project for which Shorenstein had retained Eckland Consultants, Inc. ("Eckland"), which held a Business Foundation Policy from USF&G with primary and umbrella coverage parts. The USF&G policy had primary limits of $1 million and excess limits of $5 million. On the same project, Shorenstein retained McGinnis Chen & Associates, LLP ("MCA"), which was insured by AMICO under a Premier Businessowners Policy (the primary policy) and a Commercial Catastrophe Policy (the excess policy). The AMICO primary policy had a limit of $1 million and the excess policy had a limit of $5 million. In its contracts with Eckland and MCA, Shorenstein required that Eckland and MCA procure coverage for certain Shorenstein entities as additional insureds. Shorenstein itself held coverage that included a $1 million primary policy from The Hartford Fire Insurance Company and a $25 million excess policy from National Union.
AMICO originally agreed to defend Shorenstein under a reservation of rights in the underlying state lawsuit but subsequently refused to indemnify Shorenstein. USF&G refused to defend or indemnify Shorenstein. Ultimately, National Union paid $7,678,928.10 toward the settlement of the underlying lawsuit.
Summary judgment is appropriate 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 a judgment as a matter of law." Fed. R. Civ. P. 56(c). Once the moving party shows that there is no genuine issue of material fact, the burden of proof shifts to the nonmoving party to designate specific facts showing that there is a genuine issue for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986).
Shorenstein and National Union argue that National Union is equitably subrogated*fn1 to Shorenstein's rights against USF&G and AMICO. Under Illinois law, a party asserting equitable subrogation must show: (1) the defendant carrier must be primarily liable to an insured under a policy of insurance; (2) the plaintiff carrier must be secondarily liable to the insured for the same loss under its policy; and (3) the plaintiff carrier must have discharged its liability to the insured and at the same time extinguished the liability of the defendant carrier. See Home Ins. Co. v. Cincinnati Ins. Co., 821 N.E.2d 269, 280 (Ill. 2004).*fn2 Shorenstein and National Union assert that all three elements are met here.
A threshold issue presented by both motions for summary judgment centers on which of the Shorenstein entities listed in the settlement of the underlying state lawsuit are covered by the USF&G and/or AMICO insurance policies.*fn3 I start by looking at which entities were named as defendants in the underlying consolidated lawsuit. The Shorenstein defendants were: (1) Shorenstein Realty Services, L.P.; (2) SRI Michigan Avenue Venture, LLP; (3) Shorenstein Management, Inc.; and (4) SRI Michigan Avenue Management, Inc. However, when the parties settled the underlying lawsuit, the Settlement Agreement listed the following eight parties: (1) Shorenstein Realty Services, LP; (2) SRI Michigan Avenue Venture, LLP; (3) Shorenstein Management, Inc.; (4) SRI Michigan Avenue Management, Inc.; (5) Shorenstein Co., LP; (6) Shorenstein Company LLC; (7) Shorenstein Properties LLC; and (8) Shorenstein Michigan Avenue Venture LLC. Therefore, in addition to the four Shorenstein defendants in the underlying lawsuit, there were four additional Shorenstein entities listed in the Settlement Agreement.
Shorenstein and National Union argue that there were really only two true defendants in the underlying lawsuit -- owner SRI Michigan Avenue Venture, LLC and property manager Shorenstein Realty Services, L.P. -- and that only those two parties were truly released in the Settlement Agreement. With respect to the complaint in the underlying lawsuit, Shorenstein and National Union argue that although the fifth and sixth amended complaints name four Shorenstein entities, only SRI Michigan Avenue Venture, LLC and Shorenstein Realty Services, L.P. were potentially liable to plaintiffs. In support, Shorenstein and National Union point out that only these two entities filed appearances in the case and Shorenstein filed an answer and other documents with the following language: "Shorenstein Realty Services, L.P. ("SRS") and SRI Michigan Avenue Venture, LLC ("SRI") (individually and as improperly sued herein as Shorenstein Management, Inc., SRI Michigan Avenue Venture, LLP, Shorenstein Co., L.P. and SRI Michigan Avenue Management, Inc.)" Shor./Nat'l Union RSODF Ex. E. Through this phrasing, Shorenstein was alerting the state court to the fact that the property owner, SRI Michigan Avenue Venture, LLC, was incorrectly sued as an LLP, and also asserting that the entities Shorenstein Management, Inc. and Shorenstein Co., L.P. were improperly named as defendants. Shorenstein and National Union also point to the deposition testimony of Shorenstein Rule 30(b)(6) witness, attorney George B. Yankwitt, who, when asked about which Shorenstein entities were potentially at risk in the underlying lawsuit, stated, "I suppose that by naming entities in a complaint someone is making a claim against those entities. On the other hand, I don't recall a single communication with Mr. Clifford or any other attorney representing any plaintiff in any lawsuit in which anyone ever suggested that any entity other than the owner of the commercial portion of the Hancock, SRI Michigan Avenue Venture LLC, or Shorenstein Realty Services had any liability to any of the plaintiffs." USF&G SUF Ex. G, Yankwitt Dep. at 83:8-18. He then went on state that "the subject of whether any other entities had potential liability" "was not discussed" with any of the plaintiffs' lawyers or with any representatives of any of the insurance carriers. Id. at 83:19-25, 84:1-18.
Turning then to the eight Shorenstein entities listed in the Settlement Agreement, Shorenstein and National Union argue that because only SRI Michigan Avenue Venture, LLC and Shorenstein Realty Services, L.P. had any possible liability in the underlying lawsuit, only these two parties were truly released by the settlement. Shorenstein and National Union explain that the four additional Shorenstein entities (which were not even defendants in the underlying action) were included in the Settlement Agreement in an attempt to be "as overly inclusive as possible." Shor./Nat'l Union Mem. (#296) at 12. They argue that the "the parties first agreed on a settlement figure for the Shorenstein defendants, and then an attorney for the plaintiffs sent a draft release to Mr. Yankwitt and Mary Chang at Bryan Cave, having filled in the names of Shorenstein entities named as defendants, and asking them to fill in any other names they wished." Id.
In response, USF&G argues that all eight Shorenstein entities listed in the Settlement Agreement were potentially liable to the plaintiffs. See USF&G Mem. (#296) at 9. AMICO makes a different argument and maintains that only the four Shorenstein entities which were defendants in the underlying action could possibly be at risk in that suit, and could possibly trigger coverage.
For guidance, I turn to Harbor Insurance Co. v. Continental Bank Corp., 922 F.2d 357 (7th Cir. 1990), which involved two underlying securities lawsuits. One action named Continental Bank and five of its directors as defendants. The other named Continental Bank and 25 directors, officers and employees identified only as John Does. Continental settled the two cases and sought reimbursement of $15 million from insurer Harbor and the remaining $2.5 million from Allstate. The Seventh Circuit remanded the case back to the district court for a new trial and, in so doing, discussed in dicta the issue of damages. The Seventh Circuit considered the possibility that some portion of the $17.5 million settlement was attributable to individuals or activities that were not insured under the D&O policy. The court stated, "To the extent that the amount for which Continental settled was larger than it would have been but for the misfeasance of these other people-either noninsured persons or persons against whom no claim was made-Continental's entitlement to reimbursement in this suit would be cut down." Id. at 367.
Admittedly, the language in Harbor Insurance quoted above is dicta, and the instant case does not involve directors and officers of a company. Despite this, Harbor Insurance is analogous to the instant case in that both cases involve a settlement where some parties are insured and some are not.*fn4 Shorenstein and National Union have put forward undisputed evidence that attorneys for the plaintiffs and Shorenstein reached a "handshake" deal in which the parties agreed to settle for a certain amount. USF&G SUF Ex. G, Yankwitt Dep. at 73-74. After this agreement was reached, one of the plaintiffs' attorney's sent Shorenstein's attorneys Mary Chang and George Yankwitt "a draft of the general release with a request that we fill in the names of the entities what we want released." Id. Yankwitt also testified that the plaintiffs' attorney sent Mary Chang and Yankwitt "a draft of the Release and a request that we fill in the names of the Shorenstein entities that we wanted to be beneficiaries of the release. I do not -- I believe that what [the plaintiffs' attorney] sent was a marked up copy of the release he had used with AMS. I believe that he had already filled in the names of the entities that were named as Defendants in the underlying lawsuits, and he was saying that if you want anyone else specifically named, add ...