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Ryan Companies Us, Inc. et al. v. Secura Insurance Company

July 21, 2011

RYAN COMPANIES US, INC. ET AL.
v.
SECURA INSURANCE COMPANY



Name of Assigned Judge Sitting Judge if Other or Magistrate Judge Elaine E. Bucklo than Assigned Judge

CASE TITLE

DOCKET ENTRY TEXT

Motion by defendant Secura Insurance Company for judgment on the pleadings as to Ryan Companies, Inc. [41] is denied. Discovery is ordered closed on 9/22/11. Ruling set for 7/22/11 is vacated. Status hearing set for 9/9/11 at 10:00 a.m.

O[ For further details see text below.] Docketing to mail notices.

STATEMENT

Plaintiffs Ryan Companies, Inc. ("Ryan"), Oak Brook Mechanical Services, Inc. ("Oak Brook"), and Westfield Insurance Company ("Westfield"), seek defense and indemnity from Secura Insurance Company ("Secura") as additional insureds under a policy issued by Secura to B&N Heating and Air Conditioning, Inc. ("B&N"). The complaint alleges that Ryan, the general contractor of a construction project in Hoffman Estates, hired Oak Brook as a subcontractor; that Oak Brook subsequently hired B&N as its own subcontractor; and that Oak Brook's agreement with B&N required B&N to add Oak Brook and Ryan as additional insureds to B&N's policy. When one of B&N's employees was injured on the job, he sued Ryan and Oak Brook in the Circuit Court of Cook County, Illinois. Ryan and Oak Brook tendered their defense and indemnity in the suit to B&N, citing the additional insured endorsement to the Secura policy, which provides:

Who is an insured is amended to include as an additional insured any person or organization for whom you are performing operations when you and such person or organization have agreed in writing in a contract or agreement that such person or organization be added as an additional insured on your policy.

After Secura rejected both tenders, Ryan and Oak Brook were defended in the underlying suit by Westfield. Plaintiffs filed this suit seeking a declaratory judgment that Secura owes Ryan and Oak Brook a duty to defend and indemnify, and asserting claims for equitable subrogation, equitable allocation of Ryan's defense expenses, and contractual subrogation.

STATEMENT

In April 2010, Secura moved to dismiss the complaint pursuant to Rule 12(b)(6), arguing that the additional insured endorsement required a written contract or agreement between B&N and the additional insured, and denying that any such written agreement existed between B&N and Oak Brook. I denied the motion, holding that plaintiffs had sufficiently alleged "that there was an agreement, evidenced by several written documents, among other things, showing a mutual understanding between the parties that Ryan and Oak Brook be named additional insureds on the Secura policy." Order at 2.

Advancing a slightly different argument, Secura now moves for a judgment on the pleadings as to Ryan under Rule 12(c). Secura points out that, under the plain language of the provision, there must be a written agreement not only between B&N and Oak Brook, but also between B&N and Ryan. According to Secura, the complaint's allegations show that a written contract existed only between B&N and Oak Brook.

In support of its position, Secura cites the Illinois Court of Appeals's recent decision in Westfield Ins. Co. v. FCL Builders, Inc., 948 N.E.2d 115 (Ill. App. Ct. 2011). The facts and questions presented in the case are virtually identical to those here. The relationship between the parties in Westfield -- FCL, Suburban, and JAK -- directly parallels the relationship between Ryan, Oak Brook, and B&N in this case. In addition, JAK's insurance policy with Westfield contained an "additional ensured" endorsement identical for all practical purposes to the one included in B&N's policy with Secura. Specifically, the endorsement provided that "Who Is an Insured is amended to include as an additional insured any person or organization for whom you are performing operations when you and such a person or organization have agreed in writing in a contract or agreement that such person or organization be added as an additional insured on your policy." Id. at 117. The court held that FCL was not covered as an additional insured under the policy because the endorsement's language unambiguously required a written contract between JAK and each person to be added as an additional insured. Since no written contract existed between FCL and JAK, FCL was not covered.

In reaching its holding, the court rejected all of the counterarguments that Ryan makes here in opposition to Secura's motion. For example, FCL argued that it was an additional insured because the terms of the contract between JAK and Suburban obligated JAK to include FCL as an additional insured on the Westfield policy. The court held that a contractual obligation between Suburban and JAK was not sufficient, since the additional insured provision specifically required a written contract between JAK and FCL. The court also refused to consider the deposition testimony of Suburban's owner and JAK's superintendent stating their intention that FCL be an additional insured under the Westfield policy. The court held that this was extrinsic evidence and could be considered only where the contractual language was ambiguous. Additionally, the court was unpersuaded by FCL's appeal to the certificate of insurance it had received which listed FCL as an additional insured. The court pointed to a disclaimer on the certificate (identical to the one here) stating: "THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND ORSTATEMENT ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW." Since there was no written contract between FCL and B&N, FCL was not an additional insured under the policy; and since the policy's terms were controlling, the certificate of insurance was of no moment.

Ryan advances a host of reasons why Secura's Rule 12(c) motion is procedurally improper. For example, Ryan argues that the motion should be denied because it effectively amounts to a motion to reconsider the denial of Secura's earlier 12(b)(6) motion. Along similar lines, Ryan contends that the denial of the 12(b)(6) motion constitutes the law of the case and must not be disturbed. These arguments fail because Secura does not seek to challenge the earlier question of whether a written contract exists between Oak Brook and B&N. Rather, Secura raises a distinct argument that there must be a written contract not only between B&N and Oak Brook, but also between B&N and Ryan. Nor has Secura waived the argument by virtue of the fact that it failed to present it in the Rule 12(b)(6) motion. See, e.g., U.S. ex rel. Washington v. Gramley, No. 97 C 3270, 1999 WL 446848, at *1 (N.D. Ill. June 21, 1999) ("Though Rule 12 generally requires a defendant to raise all available defenses in one motion to dismiss, ...


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