United States District Court, N.D. Illinois, Eastern Division
THE HILLSHIRE BRANDS COMPANY, formerly known as Sara Lee Corporation and Consolidated Foods Corporation, Plaintiff,
TRAVELERS CASUALTY AND SURETY COMPANY, formerly known as The Aetna Casualty and Surety Company, Defendant.
J. Tharp, Jr. United States District Judge
reasons stated below, defendant Travelers Casualty and Surety
Company's Rule 56(d) motion  is granted. As a result,
plaintiff The Hillshire Brands Company's motion for
partial summary judgment  is denied without prejudice. A
status hearing is set for December 7, 2016 at 9 a.m. to
establish a discovery schedule.
The Hillshire Brands (“Hillshire”) sued Travelers
Casualty and Surety Company (“Travelers”) for
declaratory relief, breach of contract, and Illinois
Insurance Code violations based on Travelers' alleged
failure to defend Hillshire from a number of asbestos suits.
See Am. Compl. ¶ 1-2, ECF No. 17. Hillshire
claims that under its insurance policies, issued by the
predecessor of Travelers, Travelers owes a duty to defend
Hillshire in all of the asbestos suits listed in the
complaint. Id. at ¶ 2. Just 11 days after filing
its amended complaint (and only two months after the filing
of this case), Hillshire moved for summary judgment as to
Count I of its complaint, requesting a declaratory judgment
regarding Travelers' duty to defend. See Mot.
for Summ. J. at 1-2. No disclosures or discovery had taken
place when the motion for summary judgment was filed.
Hillshire noted that because an insurer's duty to defend
is generally a question of law that essentially compares the
underlying lawsuits to the terms of the insurance policy, no
discovery was needed. See id. at 8; Ill. Tool
Works Inc. v. Travelers Cas. & Sur. Co., 26 N.E.3d
421, 424 (Ill.App.Ct. 2015).
than reply to Hillshire's motion for summary judgment,
Travelers filed a Rule 56(d) motion and affidavit asking for
discovery. See Rule 56(d) Mot., ECF No. 35. Rule
56(d) provides that a nonmovant may present an affidavit or
declaration that it “cannot present facts essential to
justify its opposition, ” at which point the Court may
deny or defer the motion for summary judgment. Fed.R.Civ.P.
56(d). Rule 56(d) motions are inappropriate if they are
“based on nothing more than mere speculation and would
amount to a fishing expedition.” Davis v. G.N.
Mortg. Corp., 396 F.3d 869, 885 (7th Cir. 2005). On the
other hand, summary judgment should “be refused where
the nonmoving party has not had the opportunity to discover
information that is essential to his opposition.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250
n.5 (1986). Courts are generally lenient in granting Rule
56(d) motions when the party has been diligent during any
previous discovery and especially so when discovery has not
yet commenced. See, e.g., Burlington N. Santa Fe R.R. v.
Assiniboine & Sioux Tribes of the Fort Peck
Reservation, 323 F.3d 767, 773 (9th Cir. 2003);
Wichita Falls Office Assocs. V. Banc One Corp., 978
F.2d 915, 919 n.4 (5th Cir. 1992); Signal Prod., Inc. v.
Am. Zurich Ins. Co., No. 2:13-CV-04581-CAS, 2013 WL
6814847, at *8 (C.D. Cal. Dec. 19, 2013); Lekkas v.
Mitsubishi Motors Corp., No. 97 C 6070, 2000 U.S. Dist.
LEXIS 12016, at *5 (N.D. Ill. Aug. 15, 2000).
the Court should deny the Rule 56(d) motion only if the
issues at stake are purely legal such that no facts could
make a difference in the outcome of the case. See Howard
v. Securitas Sec. Servs., No. 08 C 2746, 2008 U.S. Dist.
LEXIS 106690, at *9 (N.D. Ill. Oct. 20, 2008). Hillshire
suggests this is just such a case - that the duty to defend
an insured is triggered if the underlying complaint raises
potential coverage, the complaints do here, and there the
story should end. See Mot. in Opp. at 4, ECF. No.
41. Indeed, in a typical insurance case, the duty to defend
is determined primarily by comparing the underlying complaint
to the policy as a matter of law. See Gen. Agents Ins.
Co. of Am., Inc. v. Midwest Sporting Goods Co., 828
N.E.2d 1092, 1098 (Ill. 2005).
for Hillshire, Travelers has introduced a significant wrinkle
- a 1996 settlement agreement in which Travelers was released
from the duty to defend certain types of asbestos claims
(particularly relevant here, premises liability claims).
See Settlement Agreement ¶ 3.4, ECF No. 35 Ex.
A. The first question to be resolved, then, is the meaning of
the settlement agreement and whether its release of claims
overrides the background rule cited by Hillshire that the
presence of any covered claim requires an insurer defend
against all claims, covered or not. “A settlement
agreement is a contract and as such, the construction and
enforcement of settlement agreements are governed by
principles of local law applicable to contracts
generally.” Air Line Stewards & Stewardesses
Assoc., Local 550 v. Trans World Airlines, 713 F.2d 319,
321 (7th Cir. 1983) (internal quotation marks omitted). In
Illinois, “[a] court's duty in construing a
settlement agreement is to effectuate the intent of the
parties to the agreement.” Vill. of Sauk v.
Turner, No. 1-12-2720, 2013 IL App (1st) 122720-U,
¶ 22. Although intent is generally determined by the
language of a contract, a court may require extrinsic
evidence (and allow the discovery to locate such evidence)
when the language is ambiguous and could be interpreted
multiple ways. See, e.g., Cox v. U.S. Fitness, LLC,
2013 IL App (1st) 122442, ¶ 13; Motorola Solutions,
Inc. v. Zurich Ins. Co., 2015 IL App (1st) 131529,
the settlement agreement says that its purpose is to
“terminate and exhaust all coverage potentially
available” for “Cumulative Injury Claims”
arising from premises liability. See Settlement
Agreement ¶ 1. The question then becomes what the term
“claims” means and whether “all
coverage” includes paying for the defense of premises
claims if there are also products claims (which Travelers is
still required to defend). “Claims” are
unhelpfully defined in the settlement agreement as
“claims, cross-complaints, asserted rights, demands,
requests, suits, lawsuits, administrative proceedings,
actions, causes of action and orders.” Id. at
¶ 2.3. “Coverage” is not defined in the
settlement agreement, although it notes the insurer
“shall have no further obligations. . . to pay any
Claims for, or to make indemnity or defense payments with
respect to, Cumulative Injury Claims.” Id. at
¶ 3.4. No part of the settlement agreement appears to
address what the parties expected would happen if, as
happened in the Lopez suit, a lawsuit is brought
with both products liability claims and premises liability
claims. It is doubly uncertain what they intended to have
happen, as again happened in the Lopez suit, when
the products claims were (allegedly) clearly baseless and the
plaintiff later amended his complaint to leave only premises
liability claims. The original insurance policy had agreed to
cover “groundless, false, or fraudulent claims, ”
but does that mean Travelers is on the hook for the defense
of claims it paid to be absolved from defending until the
complaint is formally modified? See Insurance Policy
at 28, ECF No. 21 Ex. 4. The parties agree that Travelers
stopped being responsible for any part of defending the
Lopez suit when the complaint was amended, but
Travelers would like not to be held liable for any work done
after it was clear that only the (released) premises claims
would be moving forward (and perhaps any dedicated work done
exclusively for those claims beforehand). The Court finds the
language of the settlement agreement to be ambiguous with
regards to whether products and premises liability in a
single suit should be treated as separate
“claims” or a single “claim, ” how
defense costs should be apportioned (if at all) when both
types of claims are present, and how to determine (if suits
like Lopez are a single “claim”) when a
“claim” becomes a “Cumulative Injury
Claim.” Discovery may well be needed for all of these
questions to be answered.
submitted an affidavit from Neal Thompson, one of their
attorneys, stating that in order to fully understand the
impact of the settlement agreement, Travelers requires
discovery. Travelers contends it needs discovery regarding
the Lopez suit so that it is not forced to pay
expenses regarding the premises liability claims covered by
the Settlement Agreement. Thompson Aff. at 3, ECF No. 35.
Traveler's is not required to defend premises claims
under the Settlement Agreement, so exactly how much of the
defense Travelers needs to pay for depends on several facts
not currently in the record. Specifically, Travelers requests
discovery concerning “1) when and how Hillshire knew
that it faced no product liability; 2) how and through what
means it conveyed that information to the Lopez plaintiffs;
3) to what extent is that information applicable to all of
the underlying cases, and 4) how long has Hillshire known
this?” Id. Travelers gives further examples of
questions it would like answered in its motion, including
what separate efforts Hillshire's counsel took in the
underlying suits to respond to products and premises
liability claims. Rule 56(d) Mot. at 14. Depending on the
answers to these questions, the ambiguities in the contract
may be more or less important. For example, if the lawyers
defending Hillshire worked only on issues common to both
premises and products claims, then perhaps there is no issue
of whether defense costs should be apportioned between
premises and products claims (since the work would have had
to get done even if there were no premises claims). On the
other hand, if Hillshire knew immediately that the products
claim was junk and spent hours upon hours strategizing
regarding the premises claims, then Travelers may well have a
better argument that the Lopez “claim”
was effectively a “Cumulative Injury Claim”
released by the settlement agreement early on in the defense.
This discovery is especially relevant because Travelers has
already paid significant sums to Hillshire for the defense of
the underlying suits. See Id. at 5. If Travelers is
not required to pay for the portion of the defense dedicated
to premises liability, it may have satisfied its obligation,
making declaratory judgment moot.
these reasons, the Court finds that discovery is necessary
before the parties can proceed to summary judgment.
Therefore, Travelers' Rule 56(d) motion is granted. The
Court intends to provide only one period of discovery for
all discovery that may be necessary in this case,
not simply the discovery originally requested by Travelers,
so that this case can be resolved expeditiously. Thus, the
Court denies without prejudice Hillshire's underlying
partial motion for summary judgment until the parties have
had a reasonable time to engage in discovery.
 The five asbestos suits listed in the
complaint are: London v. A.W. Chesterton, Inc., et
al., Case No. 14-L-0101, Third Judicial Circuit Court,
Madison County, Illinois; Dioneff, Individually and as
Special Administrator of the estate of Barbara Green v.
AERCO International, Inc., et al., Case No. 14-L-179,
Third Judicial Circuit Court, Madison County, Illinois;
Lopez v. Asbestor Corporation, Ltd., et al., Case No.
RG-14721622, Alameda County Superior Court, California; Habib
v. John Crane Inc., et al., Case No. 14-L-1014, Third
Judicial Circuit Court, Madison County, Illinois; and Smith