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Chubb Indemnity Insurance Co. v. 21 East Cedar, LLC

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

June 12, 2014

CHUBB INDEMNITY INSURANCE COMPANY, as subrogee of GORDON SIEGEL, M.D. and CLARI WECHTER, Plaintiff,
v.
21 EAST CEDAR, LLC; ICON DESIGN & DEVELOPMENT, INC.; CODEX EXC, INC.; BILL KOKALIAS; SWAIN DEVELOPMENT CORPORATION; AXIOS ARCHITECTS & CONSULTANTS, LTD d/b/a AXIOS CONSULTANTS & DESIGN/BILL G. KOKALIAS ARCHITECTS & DESIGN; DEMETRIS GIANNOULIAS; GEORGE GIANNOULIAS; GROUND ENGINEERING CONSULTANTS; GEO SERVICES, INC.; and SHORELINE STEEL, INC., Defendants.

MEMORANDUM OPINION AND ORDER

ROBERT M. DOW, Jr., District Judge.

Before the Court are Defendants Ground Engineering Consultants' and Geo Services, Inc.'s joint motion for reconsideration [217]; Defendant Ground Engineering Consultants' motion for partial summary judgment [224], which Defendants Codex Exc, Inc., Geo Services, Inc., Axios Architects & Consultants, Ltd., and Bill G. Kokalias have joined, see [232]; [245]; and Defendants Demetris Giannoulis, George Giannoulis, and 21 East Cedar, LLC's joint motion to join Defendant Ground Engineering Consultants' motion for partial summary judgment [235]. For the reasons stated below, the Court denies the motion for reconsideration [217], grants the motion to join Ground Engineering Consultants' motion for partial summary judgment [235], and grants in part and denies in part the motion for partial summary judgment [224]. This matter is set for status on July 1, 2014 at 9:00 a.m.

I. Background

Plaintiff Chubb Indemnity Insurance Co. ("Chubb") provided property insurance to Dr. Gordon Siegel and Clari Wechter ("the insureds"), who owned and resided in a single-family residence located at 25 East Cedar Street, Chicago, Illinois. The insureds' home sustained significant damage contemporaneous with demolition, excavation, and construction taking place on an adjacent lot located at 21 East Cedar Street. Plaintiff paid out policy benefits to the insureds, who are not involved in the action, and is seeking to recover from Defendants in its capacity as the insureds' subrogee. Each Defendant allegedly had some involvement in the project at 21 East Cedar Street.

Plaintiff's fourth amended complaint [182] asserted claims under the Adjacent Landowner Excavation Protection Act ("ALEPA"), 765 ILCS 140/1, against Defendants 21 East Cedar, LLC ("21 East Cedar"), Demetris Giannoulias ("D. Giannoulias"), George Giannoulias ("G. Giannoulias"), Swain Development Corporation ("Swain"), Icon Design & Development, Inc. ("Icon"), Codex Exc ("Codex"), Bill G. Kokalias ("Kokalias"), Axios Architects & Consultants, Ltd. ("Axios"), Ground Engineering Consultants ("Ground"), Geo Services, Inc. ("Geo"), and Shoreline Steel, Inc. ("Shoreline"). See [182] (Counts I, IV, VII, IX, XII, XV, and XVIII). Plaintiff also claimed that Defendants 21 East Cedar, D. Giannoulias, G. Giannoulias, Swain, Codex, Kokalias, Axios, Ground, Geo, and Shoreline violated Chicago's "Excavation Work on Private Property" Ordinance, Mun. Code of Chi. §§ 13-124-380 et seq. ("the Ordinance"). See id. (Counts II, V, X, XIII, XVI, and XIX). Plaintiff further alleged that Defendants Swain, Icon, Codex, Kokalias, Axios, Ground, Geo, and Shoreline acted negligently. See id. (Counts III, VI, VIII, XI, XIV, and XVII).

Defendants Axios, Kokalias, Geo, and Ground moved to dismiss the ALEPA counts against them on the basis that they were not "owners or possessors of land" subject to liability under the statute. These same four Defendants also moved to dismiss the Ordinance counts against them on the basis that they did not actually "perform excavation work." Defendant Geo alone moved to dismiss the negligence count against it. The Court granted Defendants' motions as to the Ordinance counts but denied them as to the ALEPA and negligence counts. See [211]. Defendants Ground and Geo jointly have moved for reconsideration of the Court's denial of their motion to dismiss the ALEPA counts. See [217].

Defendant Ground also has moved for partial summary judgment "on the issue of whether Plaintiff's claimed damages are, as a matter of law, ensuing losses as defined under Plaintiff's first-party insurance policy." [224] at 1. Defendants Geo [228], Codex [229], and Axios and Kokalias [240] moved to join the motion. The Court granted their motions to join. See [232]; [245]. The Court also grants Defendants 21 East Cedar's, D. Giannoulias's, and G. Giannoulias's joint motion [235] to join Ground's motion for partial summary judgment.

II. Motion for Partial Summary Judgment

A. Local Rule 56.1

Local Rule of Civil Procedure 56.1 requires a party moving for summary judgment to file "a statement of material facts as to which the moving party contends there is no genuine issue and that entitle the moving party to a judgment as a matter of law." N.D.Ill. R. 56.1(a)(3). The statement "shall consist of short numbered paragraphs" that refer to "materials relied upon to support the facts set forth." N.D.Ill. R. 56.1(a). The party opposing summary judgment is then required to file "a response to each numbered paragraph in the moving party's statement, including, in the case of any disagreement, specific references to the affidavits, parts of the record, and other supporting materials relied upon." N.D.Ill. R. 56.1(b)(3)(B).

"The obligation set forth in Local Rule 56.1 is not a mere formality.'" Delapaz v. Richardson, 634 F.3d 895, 899 (7th Cir. 2011) (quoting Waldridge v. Am. Hoeschst Corp., 24 F.3d 918, 924 (7th Cir. 1994)). "Because of the important function local rules like Rule 56.1 serve in organizing the evidence and identifying disputed facts, " the Seventh Circuit has "consistently upheld the district court's discretion to require strict compliance with those rules." F.T.C. v. Bay Area Bus. Council, Inc., 423 F.3d 627, 633 (7th Cir. 2005); see also Cracco v. Vitran Exp., Inc., 559 F.3d 625, 632 (7th Cir. 2009); Waldridge v. Am. Hoechst Corp., 24 F.3d 918, 922 (7th Cir. 1994) (collecting cases).

Neither Defendant Ground, the initial movant, nor any of the Defendants who have joined Ground's summary judgment motion, filed the statement of facts required by Local Rule 56.1(a). Plaintiff nonetheless properly filed the responsive statement required by Local Rule 56.1(b)(3), see [237], which did not prompt Ground or any of the other moving Defendants to correct their omission. Ordinarily, the party that neglects to file a Local Rule 56.1 statement is the one responding to the motion for summary judgment. The consequence prescribed in Local Rule 56.1 for that violation is that "[a]ll material facts set forth in the statement required of the moving party will be deemed to be admitted unless controverted by the statement of the opposing party." N.D.Ill. R. 56.1(b)(3)(C); see also Apex v. Digital, Inc. v. Sears, Roebuck & Co., 735 F.3d 962, 965 (7th Cir. 2013). Here, the Court is confronted with the more unusual, reverse situation, in which the moving party failed to comply with Local Rule 56.1 by submitting a statement of material facts in the first instance. Per the plain language of the rule, "[f]ailure to submit such a statement constitutes grounds for denial of the motion." N.D.Ill. R. 56.1(a).

"[I]t is clear that the decision whether to apply the rule strictly or to overlook any transgression is one left to the district court's discretion." Little v. Cox's Supermarkets, 71 F.3d 637, 641 (7th Cir. 1995). The Court is tempted to exercise its discretion to deny the motion in light of Defendants' violation of Local Rule 56.1. All of the Defendants that filed or signed on to the motion are represented by counsel and should have been alerted to their omission by Plaintiff's responsive statement, which expressly averred that "Defendant, Ground Engineering Consultants (GEC'), did not include a L.R. 56.1(a)(3) statement of undisputed material facts to which Plaintiff can respond." [237] ¶ 1. The Court finds it preferable at this juncture, however, to address the motion on the merits and move this case forward to the extent that it can. In doing so, the Court will deem admitted for purposes of this summary judgment motion the relevant facts properly set forth in Plaintiff's 56.1 statement. The Court also considers the terms of the insurance policy at issue, which was placed in the record by both Plaintiff, see [237-3] & [237-4], and Ground, see [226-1] & [226-2], and the other evidence in the record. See Fed.R.Civ.P. 56(c)(3).

B. Facts

Plaintiff was party to an insurance contract with Dr. Siegel, who along with Clari Wechter owned a home located at 25 East Cedar Street in Chicago. See [237] ¶¶ 2, 13. The terms of the insurance contract were set forth in Policy No. 1319061701-000001 ("the policy"). Id. ¶ 13. It is undisputed that the insureds' house sustained damage. Evidence in the record suggests, particularly when construed in the light most favorable to Plaintiff, that some combination of Defendants' actions at 21 East Cedar Street caused the damage. See [224] at 10 ("[N]othing in the ...


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