United States District Court, S.D. Illinois
MEMORANDUM AND ORDER
M. YANDLE United States District Judge.
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.
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
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 -
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).
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).
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).
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
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
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.
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
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.”
26 Initial Disclosures
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).
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.
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
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).
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 ...