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California Northern Railroad Co. v. Gunderson Rail Servs., LLC

United States District Court, N.D. Illinois, Eastern Division

April 17, 2013

CALIFORNIA NORTHERN RAILROAD COMPANY, Plaintiff,
v.
GUNDERSON RAIL SERVICES, LLC, f/k/a GUNDERSON RAIL SERVICES, INC., Defendant

For California Northern Railroad Company, Plaintiff: James A. Fletcher, LEAD ATTORNEY, Thomas Chrysostomos Paschalis, Fletcher & Sippel, LLC, Chicago, IL.

For Gunderson Rail Services LLC, formerly known as Gunderson Rail Services, Inc., Defendant: John William Patton, Jr., LEAD ATTORNEY, David F. Ryan, Patton & Ryan, LLC, Chicago, IL.

OPINION

Gary Feinerman, United States District Judge.

Page 825

Memorandum Opinion and Order

This opinion follows and assumes familiarity with the court's earlier opinion in this case brought by California Northern Railroad Company against Gunderson Rail Services, LLC. 912 F.Supp.2d 662, 2012 WL 6107654 (N.D. Ill.Dec. 10, 2012). To review, Count I of the complaint alleges that Gunderson had and breached a duty under an indemnification provision in the parties' Freight Car Inspection & Repair Contract (" Agreement" ) to defend California Northern in Walters v. The Belt Railway Co. of Chicago, No. 2006 L 7349 (Cir. Ct. Cook Cnty., Ill., filed July 13, 2006), a suit in which both California Northern and Gunderson were named as defendants. The indemnification provision states:

Section 12. Indemnification (a) Contractor [Gunderson] does hereby assume liability for, and does hereby unconditionally agree to indemnify, protect, save and keep harmless, Railroad [California Northern] and its directors, officers, representatives and employees from and against and agrees to pay, when due, any and all claims and losses arising out of Contractor's work as described in this Agreement. In no event will Contractor be required to indemnify Railroad's [ sic ] for Railroad's negligence.
(b) In like manner, Railroad does hereby assume liability for, and does hereby unconditionally agree to indemnify, protect, save and keep harmless Contractor and its directors, officers, representatives and employees from and against and agrees to pay, when due, any and all claims and losses arising out of Railroad's possession, use and operation of cars.

Doc. 1-1 at 4 (emphasis added). Count II of the complaint alleges that Gunderson had and breached a duty under the provision to indemnify California Northern in the Walters suit.

The court's earlier opinion denied California Northern's motion for summary judgment on Count I. 2012 WL 6107654, at *9. In so doing, the court observed that the rationale underlying its decision--that the indemnification provision, by virtue of its requiring in § 12(a) that Gunderson defend California Northern and in § 12(b) that California Northern defend Gunderson in the Walters suit, is so indefinite as to be unenforceable--appeared to entail that summary judgment should be entered against California Northern on both counts

Page 826

of the complaint. Ibid. (The court assumed without deciding that § 12(a), standing alone and putting aside any conflict with § 12(b), required Gunderson to defend California Northern.) But because Gunderson had not moved for summary judgment, the court did not grant summary judgment in Gunderson's favor and instead notified the parties of its views and gave them a chance to respond pursuant to Federal Rule of Civil Procedure 56(f). Ibid. ; see Doc. 95.

The parties have filed their Rule 56(f) briefs. Docs. 97, 100, 102. California Northern does not dispute the court's view that, if indeed § 12 required Gunderson to defend California Northern and California Northern to defend Gunderson in the Walters suit, the provision is too indefinite to be enforced and summary judgment should be granted to Gunderson. Rather, California Northern offers several reasons why the court should reconsider its view that § 12(b) required California Northern to defend Gunderson in Walters. Because California Northern's arguments do not undermine the court's view in that regard, the indemnification provision is fatally indefinite and summary judgment is granted to Gunderson.

First, California Northern argues that the court improperly compared the scope of § 12(b) to the Walters complaint's allegations against California Northern, when it should have looked only to the allegations against Gunderson. Doc. 97 at 4-9. As California Northern correctly observes, " [w]hether an insurer has a duty to defend ... is determined by comparing the terms of the insurance policy with the allegations of the complaint against the insured. " Drake v. Mutual of Enumclaw Ins. Co., 167 Ore.App. 475, 1 P.3d 1065, 1068 (Or.App. 2000) (emphasis added). Because Gunderson is the " insured" under § 12(b), the relevant factual allegations are those that the Walters complaint makes against Gunderson. The inquiry is complicated somewhat because the Walters complaint states claims against both California Northern and Gunderson. Doc. 15-8 at pp. 7-15. But there are separate counts against ...


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