United States District Court, S.D. Illinois
SUPERIOR FUELS, INC., an Illinois Corporation, Plaintiff/Counter-Defendant,
NATIONWIDE AGRIBUSINESS INSURANCE COMPANY, Defendant/Counter-Plaintiff.
MEMORANDUM AND ORDER
M. YANDLE DISTRICT JUDGE.
matter comes before the Court on Defendant Nationwide
Agribusiness Insurance Company’s
(“Nationwide”) Motion for Summary Judgment on its
Counterclaim for Declaratory Judgment and on
Plaintiff’s Amended Complaint for Declaratory Judgment
(Doc. 59). Plaintiff Superior Fuels, Inc.
(“Superior”) filed a Memorandum in Opposition
(Doc. 64). For the reasons that follow, Defendant’s
motion is GRANTED.
issued an insurance policy providing various types of
coverage to Plaintiff including property, general liability
and a liability umbrella among others. Doc. 20, p. 2. During
the course of coverage in 2010 and 2011, Plaintiff purchased
biodiesel fuel from e-Biofuels, LLC-a subsidiary of Imperial
Petroleum. Id. at p. 4. The fuel was purported to be
B100 fuel with Renewable Identification Numbers
sold the biofuel and attached RINs to its customers under the
presumption that the RINs were valid. Doc. 59, p. 2-7.
However, on or about December 18, 2013, the Environmental
Protection Agency (“EPA”) deemed a series of RINs
attached to the purchased biofuel invalid and/or fraudulent.
Id. E-Biofuels filed for bankruptcy in 2012.
Id. Beginning in January 2014, Plaintiff began
receiving claims from its customers for compensation for the
invalidated RINs. Id. Plaintiff advised Defendant of
the claims and requested that it provide a defense for the
resulting litigation. Doc. 20, p. 5. Defendant refused to
defend Plaintiff, and Plaintiff filed this declaratory
now seeks a summary finding from the Court that it owes no
duty to defend or indemnify Plaintiff with respect to the
sale of the invalidated RINs under any of the policies issued
by Defendant. In response Plaintiff argues that, pursuant to
established Illinois law, an insurer must defend unless the
allegations clearly demonstrate that the claim is beyond
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).
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.
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 construed in favor of the
insured, with all doubts resolved in the insured’s
favor.” Emp’r. Ins. Of Wausau, 708
N.E.2d at 1135.
rule of construction that policy terms are liberally
construed in favor of coverage only comes into play when the
policy is ambiguous. Hobbs v. Hartford Ins., 823
N.E.2d 561, 564 (Ill. 2005). Whether an ambiguity exists
depends on whether the policy language is subject to more
than one reasonable interpretation. Id. When a
policy includes a section with definitions, a court should
enforce the definitions as stated in the policy. Farmers
Auto. Ins. Ass’n, 722 N.E.2d at 1232.
Plaintiff emphasizes the “Fraud and Deceit”
section of the Commercial Output Program Property policy.
This section, found at Paragraph 5 of the “Covered
Extensions” section of the Commercial Property policy,
“We” pay up to $5, 000 for “theft” of
covered property when “you, ” “your”
agents, customers, or consignees are fraudulently induced to
part with the covered property:
a. to persons who falsely represent themselves as the proper
persons to receive the property; or b. by the acceptance of