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Atlantic Casualty Insurance Co. v. Paszko Masonry, Inc.

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

May 8, 2014

ATLANTIC CASUALTY INSURANCE COMPANY, Plaintiff,
v.
PASZKO MASONRY, INC., CHICAGO MASONRY CONSTRUCTION, INC., PRINCE CONTRACTORS, INC., 4929 FOREST, LLC, and ROBERT RYBALTOWSKI, Defendants.

MEMORANDUM OPINION & ORDER

JOAN B. GOTTSCHALL, District Judge.

Atlantic Casualty Insurance Company sued four construction companies-Paszko Masonry, Inc.; Chicago Masonry Construction, Inc.; Prince Contractors, Inc.; and 4929 Forest, LLC-seeking a declaratory judgment that it had no duty to defend or indemnify the companies in connection with a personal injury action filed by Robert Rybaltowski in state court. This court granted Atlantic's motion for summary judgment, and three of the defendant companies (Chicago Masonry, Prince, and Forest) appealed. On appeal, the Seventh Circuit reversed this court's judgment as to the three appellants, but did not address the judgment as to Paszko, as Paszko had not appealed.

Chicago Masonry now moves to vacate the judgment that this court entered against Paszko. Because the reasoning of the Seventh Circuit's decision applies equally to that judgment, the court grants Chicago Masonry's motion and vacates the judgment against Paszko pursuant to Federal Rule of Civil Procedure 60(b)(6).

I. BACKGROUND

Robert Rybaltowski suffered a traumatic brain injury on a construction site when a piece of masonry equipment fell and struck him on the head. Paszko employees were operating the crane that was hoisting the masonry equipment when it fell. Rybaltowski brought a negligence action against Paszko in state court. He also sued three other companies working at the construction site that day (Chicago Masonry, Prince, and Forest), alleging that they were negligent in failing to require Paszko to secure the area where it was lifting the equipment.

Paszko had a liability insurance policy with Atlantic. The policy provided that Atlantic would indemnify and defend "insureds" against any lawsuit seeking damages for bodily injury. Although Atlantic issued the policy only to Paszko, the three other defendant companies requested that Atlantic defend them as well, claiming that they too qualified as "insureds" under the terms of the policy. Atlantic refused on the ground that the three companies did not qualify as "insureds" and that, in any event, Atlantic was not responsible for coverage to anyone because Rybaltowski was a contractor and therefore fell under an exclusion in the policy for injuries to contractors. Atlantic then filed suit in this court, seeking a declaratory judgment that:

Chicago Masonry, Prince and/or Forest are not named insureds, additional insureds, and do not otherwise qualify as insureds under the Atlantic Policy... [;]
[The] Atlantic policy precludes any coverage for any bodily injury to any contractor and/or employee, including Robert Rybaltowski, for which any entity, including Paszko, Chicago Masonry, Prince and/or Forest[] may become liable in any capacity; [and]
Atlantic has no duty to defend or indemnify Paszko, Chicago Masonry, Prince, and/or Forest under the Atlantic Policy....

(Am. Compl. ΒΆΒΆ B, D, G, ECF No. 9.)

Paszko never appeared in this case, and the court entered an order of default against it. The remaining parties filed cross-motions for summary judgment on the issue of whether Rybaltowski was a "contractor" and thus fell under the policy's exclusion for coverage. The court granted Atlantic's motion and entered judgment in favor of Atlantic and against all five defendants. Three of the five defendants (Chicago Masonry, Prince, and Forest) appealed.

On appeal, the Seventh Circuit reversed, finding that the policy was sufficiently ambiguous to warrant interpreting the policy in favor of the insured. The Seventh Circuit remanded the case to this court to determine whether the defendants qualified as "insureds" under the policy. Before briefing that issue, the parties attempted to negotiate a settlement, but those negotiations broke down when Atlantic took the position that the judgment that this court had entered against Paszko remained intact notwithstanding the Seventh Circuit's ruling. Chicago Masonry then moved to vacate the judgment that was entered against Paszko. Prince, Forest, and Rybaltowski have joined in the motion.

II. ...


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