Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Perma-Pipe, Inc. v. Liberty Surplus Insurance Corporation

United States District Court, Seventh Circuit

September 24, 2013

PERMA-PIPE, INC., Plaintiff,


RONALD A. GUZMN, District Judge.

Plaintiff sues defendant for breach of contract and the Illinois Insurance Code. Defendant has filed a motion to dismiss this case in favor of a suit that was filed before it in the Northern District of California or to transfer this case to the Northern District of California pursuant to 28 U.S.C. § 1404. For the reasons set forth below, the Court denies the motion.


Defendant, a New Hampshire corporation with its principal place of business in Massachusetts, issued commercial general liability policies to plaintiff, a Delaware corporation that manufactures pre-insulated piping systems in Illinois, for the period November 1, 2007 to March 31, 2010. (Compl. ¶¶ 2-4, 8-9.) Each policy has a per-occurrence limit of $1 million and an aggregate limit of $2 million. ( Id. ¶ 10.)

On October 26, 2010, the University of California sent a letter to Ranger Pipelines, Inc., a contractor that had installed plaintiff's pipes on the University's Mission Bay campus, claiming that Ranger was liable for damages caused by the pipes' "catastrophic failure." ( Id., Ex. A, Letter from Univ. to Ranger (Oct. 26, 2010).) Ranger, in turn, sent a letter to plaintiff demanding indemnification for any damages Ranger had to pay the University. ( Id., Ex. B, Letter from Ranger to Pl. (Jan. 25, 2011).) The University's insurer estimated that the cost of repairs would exceed $50 million. (Compl. ¶ 18.)

On March 1, 2011, defendant told plaintiff that it would "continue to handle [the claims against plaintiff arising from the University project] under a reservation of rights." ( Id., Ex. C, Letter from Def. to Pl. at 7 (Mar. 1, 2011).) Pursuant to the reservation of rights, defendant allowed plaintiff to choose the counsel that would defend it. (Compl. ¶ 36.)

On February 9, 2012, one of the University's insurers, Lexington Insurance Company, sued RMF Engineering Inc., the project designer, in California state court to recover the damages caused by the pipe failure. ( Id. ¶¶ 31-33.) A few days later, the University filed a separate suit in California state court against RMF, Ranger and plaintiff, asserting the same claims and seeking the same relief as in the Lexington suit. ( Id. ¶¶ 20-27.) RMF filed a cross-claim for indemnification against plaintiff in each suit. ( Id. ¶¶ 28-29, 34.)

On October 8, 2012, defendant sent a letter to plaintiff withdrawing its reservation of rights, agreeing to pay all defense costs arising out of the California lawsuits and agreeing to pay any indemnity up to the policy's per-occurrence limit of $1 million. ( Id. ¶ 37.) Defendant also told plaintiff that, because it was now controlling plaintiff's defense, it was terminating the counsel chosen by plaintiff and assigning counsel of defendant's choosing. ( Id. ¶ 38.)

On October 31, 2012, plaintiff sent defendant a letter asserting that "under controlling Illinois law, a serious conflict still exists due to the real possibility of a judgment or settlement in excess of the Liberty policy limits, mandating that Perma-Pipe be allowed to continue to retain independent counsel at Liberty's expense." ( Id., Ex. J, Letter from Pl. to Def. at 2 (Oct. 31, 2012)) (emphasis original) (footnote omitted). Plaintiff concluded the letter by saying:

If Liberty fails to notify Perma-Pipe and Laurie & Brennan [plaintiff's chosen counsel] within two weeks of receipt of this correspondence that it agrees to provide independent counsel of Perma-Pipe's choosing, and deactivate its retention of Archer Norris, Perma-Pipe will take whatever action is necessary to protect its rights and interests. This may include filing a suit seeking to compel Liberty to agree to pay for independent counsel and to recover any associated costs or fees.

( Id. at 5) (emphasis original). Liberty did not respond to the letter. (Compl. ¶ 43.)

On January 29, 2013, defendant wrote a second letter to defendant, enclosing a recent Illinois case concerning a conflict between an insurer and its insured and reiterating its demand that it be permitted to choose its own counsel. ( Id., Ex. K, Letter from Pl. to Def. (Jan. 29, 2013).) Plaintiff asked defendant to respond to the letter by February 12, 2013. ( Id. at 2.)

On February 14, 2013, defense counsel told plaintiff that he would confer with defendant "in the next week, " and defendant would "provide a response [to plaintiff] shortly thereafter." ( Id., Ex. N, Letter from Def. to Pl. (Feb. 14, 2013).)

On February 28, 2013, defendant filed a one-count complaint against plaintiff in the Northern District of California seeking a declaration that it "has the right to appoint and control Perma-Pipe's defense counsel... and that it is not obligated to pay counsel selected by Perma-Pipe from and after the date of the agreement to defend without reservation of rights." ( Id., Ex. O, Compl. ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.