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Elmore v. Grinnell Mutual Reinsurance Co. and Howard Miller.

United States District Court, S.D. Illinois

July 27, 2015

GREGORY ELMORE, Plaintiff,
v.
GRINNELL MUTUAL REINSURANCE COMPANY and HOWARD MILLER, Defendants.

MEMORANDUM AND ORDER

STACI M. YANDLE, District Judge.

This matter comes before the Court on Defendant Grinnell Mutual Reinsurance Company's ("Grinnell") Motion for Summary Judgment (Doc. 23). For the following reasons, the motion is GRANTED.

Facts

While driving a 1994 Jeep Wrangler on his way to pick up a grain wagon to be utilized in connection with his farming operations, Plaintiff was involved in a motor vehicle collision with defendant Howard Miller on December 1, 2011 (Doc. 2-1, p 5). Plaintiff notified his insurer, Grinnell, of the accident and requested coverage on the day of the accident (Doc. 26, p 3). Thirteen days later, Grinnell notified Plaintiff that it was denying coverage for the accident. Id. On August 6, 2012, Miller filed suit against Plaintiff in Effingham County, Illinois. Grinnell refused to provide a defense to Plaintiff in the lawsuit under a Reservation of Rights. Id. On January 22, 2014, Plaintiff filed the instant declaratory judgment action seeking a declaration that Grinnell has a duty to defend and indemnify Plaintiff in the underlying litigation. Plaintiff's "Farm-Guard Policy: Farm and Personal Liability Protection" policy with Grinnell contains the following relevant exclusions to coverage:

"We" do not cover any "Motor Vehicle Liability" unless at the time of the "occurrence" the involved "motor vehicle" is... (c) Exempt from required registration for use on public roads or property by law or regulation issued by a government agency.
...
This exclusion does not apply to "bodily injury" or "property damage" arising out of the use of a "farm implement" for loading or unloading of a "motor vehicle" in the course of the "insured's" "farming" operations.

(Doc. 2-1, p. 16).

Grinnell denied coverage stating the following reason: "Due to the fact that you were operating a motor vehicle that is licensed for the road, unfortunately there is no coverage" (Doc. 2-1, p. 4). Plaintiff alleges that because the Jeep is a "farm implement" and he was in the process of loading the trailer, the motor vehicle exclusion does not apply. Plaintiff further alleges that Grinnell is estopped from raising policy defenses to defeat coverage because Grinnell failed and refused to file a declaratory judgment action to determine whether coverage exists under the policy. Grinnell has now filed its Motion for Summary Judgment arguing the plain language of the policy excludes coverage because the Jeep is a "motor vehicle" and not a "farm implement."

Analysis

Summary judgment is appropriate where "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a); see Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Spath v. Hayes Wheels Int'l-Ind., Inc., 211 F.3d 392, 396 (7th Cir. 2000). The reviewing court must construe the evidence in the light most favorable to the nonmoving party and draw all reasonable inferences in favor of that party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986); Chelios v. Heavener, 520 F.3d 678, 685 (7th Cir. 2008); Spath, 211 F.3d at 396. Where the moving party fails to meet its strict burden of proof, a court cannot enter summary judgment for the moving party even if the opposing party fails to present relevant evidence in response to the motion. Cooper v. Lane, 969 F.2d 368, 371 (7th Cir. 1992).

In Illinois, an insurer may not refuse to defend "unless it is clear from the face of the underlying complaint that the allegations fail to state facts which bring the case within, or potentially within, the policy's coverage." Emp'r. Ins. of Wausau v. Ehlco Liquidating Trust, 708 N.E.2d 1122, 1135 (Ill. 1999) (quoting U.S. Fid. & Guar. Co. v. Wilkin Insulation Co., 578 N.E.2d 926, 930 (Ill 1991)). When the underlying complaint alleges facts within or potentially within policy coverage, the insurer is obligated to defend even if the allegations are groundless. Emp'r. Ins. of Wausau, 708 N.E.2d at 1135.

The duty to defend requires an insurer to (1) defend the suit under a reservation of rights or (2) seek a declaratory judgment that there is no coverage. Id. If an insurer fails to do either and later is found to have wrongfully denied coverage, the insurer is estopped from raising policy defenses to coverage. Id. However, the estoppel doctrine only applies where the insurer breached its duty to defend, which means the court must first inquire whether a duty existed. Id.

When determining whether an insurance provider has a duty to defend, a court should apply an "eight corners rule." Farmers Auto. Ins. Ass'n v. Country Mut. Ins. Co., 722 N.E.2d 1228, 1232 (Ill. 2000). The four corners of the underlying complaint are compared with the four corners of the insurance contract, and the court must determine whether the facts alleged in the underlying complaint fall within, or potentially within, the insurance policy's coverage. Id. "The underlying complaint and the policy must be ...


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