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Scottsdale Insurance Company v. Walsh Construction Company

September 29, 2011


The opinion of the court was delivered by: Judge Virginia M. Kendall


Scottsdale Insurance Company ("Scottsdale") and Walsh Construction Company ("Walsh) cross-move for summary judgment as to whether Scottsdale has a duty to defend Walsh in an underlying personal injury claim made by Dallas Shippy ("Shippy"), an employee of its subcontractor, Luise, Inc. ("Luise"). Shippy claimed in the underlying complaint (the "Complaint") that while he was operating his dump truck, he had to stop due to a bulldozer operated by a Walsh employee, who did not see him and backed the bulldozer into the dump truck, causing a collision and his injury. Shippy alleged that Walsh was negligent. Scottsdale alleges that negligence falls squarely within the exclusion to its insurance coverage for sole negligence. For the reasons set forth below, the Court denies Walsh's motion for summary judgment and grants Scottsdale's motion for summary judgment. Scottsdale, however, cannot recover defense fees as set forth below.


A. Underlying Lawsuit

On September 2, 2008, Dallas Shippy sued Walsh in the Circuit Court of Cook County seeking damages for personal injuries he suffered in the crash while employed in the excavation of the McCook Reservoir in Willow Springs, Illinois. (Doc 79, Scottsdale 56.1 ¶¶ 1, 2; Doc. 83, Walsh 56.1 Resp ¶¶ 1, 2.) Shippy was an employee of Luise, Inc., a sub-contractor hired to provide material hauling services to the general contractor, Walsh Construction, Inc. (Scottsdale 56.1 ¶¶ 2-4; Walsh 56.1 Resp ¶¶ 2-4.) Shippy was assigned to drive an off-road dump truck on a gravel road that ran between a backhoe, where he would pick up a load of dirt, rock and soil, and a trap loader, where he would dump the load for separation. (Doc. 74, Walsh 56.1 ¶ 7, 16; Scottsdale 56.1 Resp ¶ 7.) Shippy claimed that on August 31, 2006, while driving the dump truck on the sole gravel road to the backhoe, he was required to stop because his path was blocked by a D10 bulldozer operated by a Walsh employee. (Scottsdale 56.1 ¶¶ 5-7, 16; Walsh 56.1 Resp ¶¶ 5-7, 16; Doc 79, Scottsdale 56.1 Exhibit A, Shippy Complaint 9, 12-13.) Shippy claimed that while his dump truck remained stopped, the Walsh employee did not see him and backed the bulldozer into the dump truck, causing a collision that threw the dump truck into the air with great force "causing it to hit the ground with the same great force." (Scottsdale 56.1 ¶¶ 8-9, 17; Walsh 56.1 Resp ¶¶ 8-9, 17; Shippy Complaint 13, 15-16.) Shippy sued Walsh, McCook Reservoir and the Metropolitan Water Reclamation District of Chicago negligence.*fn1 (Scottsdale 56.1 ¶ 10; Walsh 56.1 Resp ¶ 10.) Shippy also claimed that Walsh, as general contractor, owed him a duty to keep the premises in a reasonably safe condition and had the right to control the reservoir roads and the manner in which the Luise employees performed their work. (Complaint ¶ 18.) Scottsdale alleges that Walsh breached its legal duty by: failing to warn and/or signal plaintiff that the operator of the bulldozer was backing up so as to avoid collision; failing to maintain a proper lookout while backing up; failing to operate and/or control its bulldozer in a safe manner; failing to brake; failing to oversee and supervise the use of a gravel road; and was otherwise negligent, all of which proximately caused the injuries. (Complaint ¶ 19.) The Complaint does not directly allege any negligence or breach of duty by Shippy's employer Luise. (Scottsdale 56.1 ¶ 18; Walsh 56.1 Resp ¶ 18.)

B. Present Coverage Dispute

On May 16, 2008, Walsh tendered the underlying Shippy lawsuit to Scottsdale, requesting that Scottsdale defend and indemnify Walsh as an additional insured pursuant to the terms of Luise's policy (the "Policy"). (Scottsdale 56.1 ¶ 31; Walsh 56.1 Resp ¶ 31.) Scottsdale initially refused Walsh's tender, then subsequently accepted it on April 16, 2009, pursuant to a full reservation of rights, including its right to withdraw upon receipt of additional information that Luise's policy did cover the Shippy lawsuit and to recover its defense fees. (Scottsdale 56.1 ¶ 32; Walsh 56.1 Resp ¶ 32; Doc. 79-1 Exhibit F.) On February 8, 2010, Scottsdale informed Walsh that Scottsdale was withdrawing its defense due to the Illinois Court of Appeals decision in National Fire Insurance of Hartford v. Walsh Construction Co., 392 Ill.App.3d 312, 909 N.E.2d 285 (Ill.App.Ct. 1st Dist. 2009). (Scottsdale 56.1 ¶ 33; Walsh 56.1 Resp ¶ 33; Doc. 79-1 Exhibit G.) On September 30, 2008, Walsh answered the Complaint and filed affirmative defenses, the content of which Scottsdale argues cannot be considered by this Court in determining the outcome of the present coverage lawsuit. (Doc. 83, Walsh Additional Facts ¶ 39; Doc. 105, Scottsdale Resp ¶ 39.) Walsh subsequently filed a third-party complaint for contribution against Luise, and amended its affirmative defenses to the Complaint. (Walsh Additional Facts ¶ 46-47; Doc. 105, Scottsdale Resp ¶ 46-47.)

C. Relevant Terms of the Insurance Policies at Issue

Scottsdale issued a liability policy to Luise that expressly provided coverage for damages because of "bodily injury" caused by an "occurrence." (Scottsdale 56.1 ¶ 26-27; Walsh 56.1 Resp ¶ 12-13.) The policy contains a blanket endorsement that includes as an additional insured any organization that Luise was required to add pursuant to a written contract. (Scottsdale 56.1 ¶ 29; Walsh 56.1 Resp ¶ 29.) The endorsement is subject to several limitations, including the following relevant exception: "Coverage is not provided for bodily injury . . . arising out of the sole negligence of the additional insured." (Scottsdale 56.1 ¶ 30; Walsh 56.1 Resp ¶ 30.) The Policy does not contain an express provision that Scottsdale could recover its defense costs. (Walsh 56.1 ¶ 30 ; Scottsdale 56.1 Resp ¶ 30.)


The parties agree the Court should apply Illinois law. (Doc. 86, Scottsdale Additional Facts in Opposition to Walsh's Motion for Summary Judgment ¶ 20.) See Auto-Owners Ins. Co. v. Websolv Computing, Inc., 580 F.3d 543, 547 (7th Cir. 2009) ("Courts do not worry about conflict of laws unless the parties disagree on which state's law applies.") (internal citation and quotation marks omitted). Specifically, the Court will "apply the law that [it] believe[s] the Supreme Court of Illinois would apply if the case were before that tribunal rather than before this court." Help at Home, Inc. v. Med. Capital, L.L.C., 260 F.3d 748, 753 (7th Cir. 2001). Under Illinois law, "[t]he construction of an insurance policy and a determination of the rights and obligations thereunder are questions of law for the court which are appropriate subjects for disposition by way of summary judgment." Crum & Forster Managers Corp. v. Resolution Trust Corp., 156 Ill. 2d 384, 620 N.E.2d 1073, 1079, 189 Ill. Dec. 756 (Ill. 1998).

Summary judgment is proper when "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c)(2). In determining whether a genuine issue of fact exists, the Court must view the evidence and draw all reasonable inferences in favor of the party opposing the motion. See Bennington v. Caterpillar Inc., 275 F.3d 654, 658 (7th Cir. 2001); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). However, the Court will "limit its analysis of the facts on summary judgment to evidence that is properly identified and supported in the parties' [Local Rule 56.1] statement." Bordelon v. Chicago Sch. Reform Bd. of Trustees, 233 F.3d 524, 529 (7th Cir. 2000). Where a proposed statement of fact is supported by the record and not adequately rebutted, the court will accept that statement as true for purposes of summary judgment. An adequate rebuttal requires a citation to specific support in the record; an unsubstantiated denial is not adequate. See Albiero v. City of Kankakee, 246 F.3d 927, 933 (7th Cir. 2001); Drake v. Minn. Mining & Mfg. Co., 134 F.3d 878, 887 (7th Cir. 1998) ("Rule 56 demands something more specific than the bald assertion of the general truth of a particular matter[;] rather it requires affidavits that cite specific concrete facts establishing the existence of the truth of the matter asserted.") (citations omitted).

The Court grants Scottsdale's motion to strike the following paragraphs for failure to comply with Local Rule 56.1: in Walsh's Statement of Material Facts, paragraphs 8, 10-24, 29-31, 33, 39, 45, 46, 48 for alleging multiple facts, paragraphs 23-25 as unsupported by evidence, paragraphs 38-47 for presenting legal conclusions; in Walsh's Response to Scottsdale's 56.1 Statement of Uncontested Facts, paragraphs 7, 21, 23, 24 for including additional facts and opinions; in Walsh's Statement of Additional Facts, paragraphs 41-57, 59, 61, 63 for presenting ...

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