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Turubchuk v. E.T. Simonds Construction Co.

United States District Court, S.D. Illinois

January 31, 2017

LILIYA TURUBCHUK, et al., Plaintiffs,


          STACI M. YANDLE United States District Judge.

         Pending before the Court is Plaintiffs' Motion for Partial Summary Judgment (Doc. 106). Defendants filed responses (Docs. 125 and 126). For the following reasons, the motion is GRANTED in part and DENIED in part.


         In 2007, Plaintiffs filed a negligence action in this Court seeking to recover for injuries resulting from a single vehicle rollover accident which occurred on August 21, 2005 (“the underlying action”) (see Doc. 106-1; see also Turubchuk v. E.T. Simonds Const. Co., 07-CV-216-WDS). Plaintiffs sued Defendants E.T. Simonds Construction Company (“ETS”) and Southern Illinois Asphalt Company, Inc. (“SIAC”), asserting that the defendants were contractors on a State of Illinois road construction project and were responsible for repaving a stretch of Interstate 24. Plaintiffs alleged that the vehicle in which they were riding went off the paved road in the construction zone, slipped off of a severe edge drop-off, left the highway and rolled. Plaintiffs further alleged that the defendants were negligent in performing the repaving.

         At the time of the accident, ETS and SIAC were insured as a joint venture through an insurance policy issued by Bituminous Insurance Company, Policy CLP3216156 (policy limits $1, 000, 000) (Doc. 106-5). ETS was individually insured by a Zurich Commercial Umbrella Liability, Policy AUC 930332403 (policy limits $10, 000, 000) and another Bituminous policy, Policy CLP320823B (policy limits $1, 000, 000) (Docs. 106-8, 106-9). Similarly, SIAC had additional insurance policies, including: Liberty Mutual Insurance Company, Policy RG-2-631-004090-605 (policy limits $2, 000, 000), Clarendon National Insurance Company Excess (Umbrella) Liability Policy XLB00411049 (policy limits of $2, 000, 000), Liberty International Underwriters Insurance Company, Excess Liability Policy LQ1-B71-073-091-051 (policy limits $25, 000, 000) and ACE American Insurance Company Excess Liability Policy XCP G22082589 (policy limits $25, 000, 000) (Docs. 106-21 - 106-24).

         Following the 2005 accident, ETS notified the Tedrick Group, its insurance broker (Doc. 106-10, pp. 32-38). During his deposition, Roger Tedrick testified that the Tedrick Group opened a claim because it was their policy to put the insurance company on notice following a fatality. Id. The accident was immediately reported to Bituminous. Id. After the underlying action was filed in 2007, the Tedrick Group notified ETS's umbrella coverage insurer, Zurich, of the claim because it implicated a potential policy limits case. Id. SIAC also notified Bituminous and Liberty Mutual Insurance Company of the underlying action (Doc. 106-12, pp. 25-29).

         Attorney Richard Green was retained to represent SIAC and ETS. Plaintiffs were represented by Komron Allahyari. On April 25, 2007, Green entered his appearance for “Defendants E.T. Simonds Construction and Southern Illinois Asphalt Company, Inc., joint venture” (see Doc. 118-37). On May 13 or 14, 2007, Allahyari and Green discussed the underlying action (see Doc. 106-4). According to Allahyari, Green affirmatively represented that the defendants were performing the repaving as a joint venture and that there was only one insurance policy, the Bituminous policy, with policy limits in the amount of $1, 000, 000 per occurrence. Id. Based on his belief, following the May 13 or 14, 2007 telephone conversation with Green, that $1, 000, 000 represented the limits of all insurance policies applicable to the claims made by Plaintiffs in the underlying action, Allahyari made a policy-limit demand on May 14, 2007 (Docs. 106-4, 106-16, pp. 37-38).

         As discussed in their telephone conversation, Green emailed Allahyari Defendants' Rule 26(a)(1) disclosures on May 15, 2007 which identified only the Bituminous joint venture policy (Doc. 106-13). Defendants never disclosed any of their other insurance policies to the plaintiffs in the underlying action (Doc. 106-14).

         In his deposition taken in this case, Green testified that he did not inquire whether SIAC or ETS had any additional insurance policies (Doc. 106-14, pp. 27-28). Rather, it was his policy to identify all available insurance policies later in the discovery process after receiving interrogatories and a request to produce (Doc. 106-13, pp. 42-43). At some point following his retention Green became aware that SIAC had notified Liberty Mutual of the underlying action (Doc. 106-12, pp. 55-57, 61). However, the defendants never amended their disclosures to reflect additional insurance coverage (Doc. 106-17).

         Allahyari testified that he would have withdrawn the May 14, 2007 settlement demand had he known about the additional policies (Doc. 106-4, 106-16, p. 38). The case settled for the Bituminous joint venture $1, 000, 000 policy limits (Doc. 106-17) and the action was dismissed at the parties' request in June 2007 (see Turubchuk v. E.T. Simonds Const.Co., 07-CV-216-WDS).

         Nearly six years later, Plaintiffs filed the instant action seeking damages for Defendants' failure to disclose their individual policies in the underlying action. Plaintiffs allege that if Defendants had disclosed the individual policies, Plaintiffs would not have settled for the “policy limits” of the only policy disclosed to them. Plaintiffs assert claims for intentional misrepresentation, fraudulent concealment, negligent misrepresentation and constructive fraud.


         In the present motion, Plaintiffs request that this Court find, as a matter of law, that Defendants' initial disclosures in the underlying action were inaccurate and therefore violated Rule 26. In addition, Plaintiffs seek a ruling that Defendants' violation of Rule 26 constituted either negligent misrepresentation or intentional misrepresentation. Plaintiffs further seek a summary determination that the newly disclosed policies would have provided coverage for the claims in the underlying action. Finally, Plaintiffs request that this Court find, as a matter of law, that Plaintiffs were damaged due to Defendants' failure to disclose the additional policies in that they were induced to settle the underlying action for $1, 000, 000 - an amount they would not have accepted if the additional insurance policies had been disclosed.

         Summary judgment is proper only if the moving party can demonstrate that there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); see also Ruffin Thompkins v. Experian Information Solutions, Inc., 422 F.3d 603, 607 (7th Cir. 2005). The moving party bears the burden of establishing that no material facts are in genuine dispute; any doubt as to the existence of a genuine issue must be resolved against the moving party. Lawrence v. Kenosha County, 391 F.3d 837, 841 (7th Cir. 2004). A moving party is entitled to judgment as a matter of law where the non-moving party “has failed to make a sufficient showing on an essential element of her case with respect to which she has the burden of proof.” Celotex, 477 U.S. at 323. “[A] complete failure of proof concerning an essential element of a nonmoving party's case necessarily renders all other facts immaterial.” Id.

         Rule 26 Initial Disclosures

         Plaintiffs contend that the defendants' individual policies should have been disclosed in the underlying action because each defendant was named individually, not as a joint venture and that each defendant owed an independent duty of reasonable care to Plaintiffs, irrespective of the alleged joint venture. As such, their individual policies should have been disclosed pursuant to Rule 26(a)(1)(A)(iv).

         On the other hand, Defendants assert that at the time of the settlement, the joint venture policy provided coverage while none of the individual umbrella/excess policies provided indemnity. Defendants further assert that no other insurance was providing a defense at the time of the settlement and therefore, they were under no obligation to produce the individual policies. Moreover, although SIAC put Liberty Mutual on notice of the suit, SIAC asserts that it had not made a claim on the policy as of the date of settlement. Liberty Mutual had been asked to open a “file only” on April 5, 2007.

         Even if a joint venture relationship was established by the defendants, it did not relieve them of their individual duties to third parties, including Plaintiffs. A significant feature of a joint venture is the individual liability of the members for the acts done in the scope of the venture. “Every member of a joint venture is liable to third persons for acts of his fellow ventures done in the course of the enterprise.” Tassan v. United Development Co., 410 N.E.2d 902, 908 (1980) (holding that if the plaintiff could show a joint venture between a developer and contractor, the contractor would be jointly liable for the developer's breach).

         The Agreement between ETS and SIAC also contemplates individual liability: “Each respective contractor shall indemnify and hold harmless the joint venture and their agents from and against all claims, damages, losses, and expenses including attorney's fees arising out of or resulting from the performance of that contractor's work.” Thus, the existence or absence of a joint venture relationship between the defendants is not determinative of their disclosure obligation under Rule 26(1)(A)(iv).

         That said, the Federal Rules of Civil Procedure are to be given their plain meaning. Pavelic & LeFlore v. Marvel Entertainment Group, 493 U.S. 120, 123, 110 S.Ct. 456, 458, 107 L.Ed.2d 438 (1989). As with a statute, the Court's inquiry is complete if it finds the text of the Rule to be clear and unambiguous. Id. Rule 26(a)(1)(A)(iv) provides in relevant part:

…a party must, without awaiting a discovery request, provide to the other parties:
(iv) …[A]ny insurance agreement under which any person carrying on an insurance business may be liable to satisfy all or part of a possible judgment in the action or to indemnify or reimburse for payments made to ...

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