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State Auto Property & Casualty Insurance Co. v. Brumit Services, Inc.

United States District Court, S.D. Illinois

March 28, 2017

STATE AUTO PROPERTY & CASUALTY INSURANCE COMPANY, Plaintiff,
v.
BRUMIT SERVICES, INC., CARL E. BRUMIT, JR., DELORES M. MENARD, and ALLEN W. MENARD, Defendants.

          MEMORANDUM AND ORDER

          NANCY J. ROSENSTENGEL United States District Judge

         This insurance coverage dispute stems from an accident that occurred when Carl Brumit was backing his truck out of a parking space at a gas station and he hit Delores Menard as she walked through the parking lot. At the time of the accident, Brumit was insured through a business auto liability policy issued by State Auto Property and Casualty Insurance Company (“State Auto”). Twenty-one months later, Mrs. Menard and her husband Allen filed suit against Brumit for injuries she allegedly sustained as a result of the accident. State Auto then filed this lawsuit seeking a declaration that it has no duty to defend Brumit or his business, Brumit Services Inc., in the underlying lawsuit filed by the Menards because Brumit failed to promptly notify the company about the accident as required by the insurance policy (Doc. 1). State Auto also seeks reimbursement of the costs it has incurred in defending Brumit and Brumit Services (Doc. 1). Brumit and Brumit Services then filed a counterclaim against State Auto basically seeking a declaration that the notice to State Auto was timely, and therefore State Auto does, in fact, have a duty to defend them in the underlying lawsuit (Doc. 29). This matter is currently before the Court on the cross-motions for summary judgment filed by Plaintiff State Auto Insurance, Defendants Delores and Allen Menard, and Defendants Carl Brumit and Brumit Services, Inc. (Docs. 66, 68, 70).[1] The only issue presented by the cross-motions is whether Carl Brumit breached the notice provision of his insurance policy. The Court has carefully reviewed the briefs and exhibits submitted by the parties. For the reasons explained below, the motion for summary judgment filed by State Auto is denied, and the motions filed by Carl Brumit and Brumit Services[2] and the Menards are granted.

         Background

         The Policy

         This case concerns the business auto liability insurance policy issued by State Auto to Carl Brumit doing business as Brumit Services, Inc. (Doc. 1-1). The policy was effective for the period of June 1, 2013 to June 1, 2014 (Doc. 1-1).

         The coverage section of the policy provides, in pertinent part:

SECTION II-LIABILITY COVERAGE
(A) Coverage
We will pay all sums an “insured” legally must pay as damages because of “bodily injury” or “property damage” to which this insurance applies, caused by an “accident” and resulting from the ownership, maintenance or use of a covered “auto”. . . .
We have the right and duty to defend any “insured” against a “suit” asking for such damages . . . . However, we have no duty to defend any “insured” against a “suit” seeking damages for “bodily injury” or “property damage” . . . to which this insurance does not apply. We may investigate and settle any claim or “suit” as we consider appropriate.

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

         The portion of the policy referred to as the “notice provision” provides:

SECTION IV-BUSINESS AUTO CONDITIONS
The following conditions apply in addition to the Common Policy Conditions:
(A) Loss Conditions . . .
(2) Duties in the Event of Accident, Claim, Suit Or Loss We have no duty to provide coverage under this policy unless there has been full compliance with the following duties:
(a) In the event of “accident”, claim, “suit” or “loss”, you must give us or our authorized representative prompt notice of the “accident” or “loss”. Include:
(1) how, when and where the “accident” or “loss” occurred.
(2) the “insured's” name and address; and
(3) to the extent possible, the names and addresses of any injured persons and witnesses

(Doc. 1-2, p. 7).

         The policy does not define “prompt” (see Docs. 1-2, 1-3, 1-4, 1-5). The policy also does not define “accident, ” but indicates that an accident “includes continuous or repeated exposure to the same conditions resulting in ‘bodily injury' or ‘property damage'” (Doc. 1-2, p. 8). The Accident & Underlying Lawsuit On September 6, 2013, Delores Menard parked her vehicle at a Phillips 66 gas station located in Columbia, Illinois (Doc. 70-3). She got out of her vehicle and began walking across the parking lot to the gas station's convenience store (Id.). Carl Brumit was backing his truck out of a parking space and, according to Mrs. Menard, the tailgate of his truck “tapped” her left shoulder (Id.). Mrs. Menard fell to the ground and scraped her right elbow and right knee on the parking lot (Id.). She testified that it was a “low-velocity” impact, but she suffered a “hard fall” (Doc. 70-3).

         Brumit did not even realize what had happened, and he began to exit the parking lot (Doc. 70-2; Doc. 70-3). Another driver in a passing car alerted him, however, that “a lady was on the ground, ” and he circled back around and parked his truck (Doc. 70-2). Mrs. Menard indicated that she did not need an ambulance and was not hurt, but Brumit nevertheless called 911 and asked the dispatcher to send an ambulance (Docs. 70-2, 70-3). The paramedics arrived and bandaged Mrs. Menard's elbow, checked her knee, and gave her an ice pack (Doc. 70-3). Mrs. Menard declined to have the paramedics transport her to a hospital because she did not think she was seriously hurt (Id.).

         Columbia Assistant Police Chief, Jerry Paul, was at the convenience store at the time of the accident (Doc. 70-5). He viewed the footage from the gas station's security cameras and spoke with both Carl Brumit and Delores Menard (Id.). He did not complete a police report at the scene (see Id.). Instead, Officer Paul advised Mrs. Menard that she could obtain a copy of the police report in a couple days at the Columbia police station (Id.; Doc. 70-3). Officer Paul does not recall if he relayed that same information to Brumit (Doc. 70-5). According to Brumit, Officer Paul never told him that he could obtain a copy of the report, let alone that a report would be completed (Doc. 70-2).

         Officer Paul did not issue a traffic citation to Brumit, and Brumit was permitted to leave the gas station (Docs. 70-2, 70-5). Delores Menard also was permitted to leave the gas station, and she walked herself to her car and drove away (Doc. 70-3; see Doc. 70-5). Brumit did not report the accident to State Auto because he “was under the impression that [Mrs. Menard] was not injured, ” much less “injured in a way that she would have to file a claim or pursue a lawsuit” (Doc. 70-2). Brumit did not have any further contact with Mrs. Menard, the Columbia Police Department, or anyone else about the accident (see Docs. 70-2, 70-3, 70-5).

         Although Delores Menard did not believe her injuries were serious at the time of the accident, she testified that a “couple days later” she developed impact trauma to her low and mid back as a result of the impact with Carl Brumit's truck and her fall (Doc. 70-3). Eventually, her back injuries required surgery in April 2015. On June 18, 2015, Mrs. Menard filed a lawsuit against Carl Brumit and Brumit Services in the Circuit Court of St. Clair County, Illinois (Doc. 2). Brumit was served with summons and a copy of the complaint on June 23, 2015. (Doc. 70-7). Around that same time, he received a lien letter and a copy of the police report from Mrs. Menard's attorney (Id.). On June 24th, Brumit contacted his insurance agent and turned all of the papers over to him, who in turn sent all of the papers to the State Auto claims department on June 25th (Id.).

         Within three days of receiving the papers, State Auto decided to provide a defense to Brumit and Brumit Services in the lawsuit under a full reservation of rights (Doc. 29-4; Docs. 72, 73, 78-1). On August 27, 2015, State Auto filed this lawsuit seeking a declaration that it has no duty to defend Brumit and Brumit Services and that it is entitled to reimbursement of the money it has already spent on the defense of the underlying lawsuit (Doc. 1).

         Summary Judgment Standard

         Summary judgment is only appropriate “if 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.” Spurling v. C & M Fine Pack, Inc., 739 F.3d 1055, 1060 (7th Cir. 2014) (quoting Fed. R. Civ. P. 56(a)). Once the moving party has set forth the basis for summary judgment, the burden then shifts to the nonmoving party, who must go beyond mere allegations and offer specific facts showing that there is a genuine issue of fact for trial. Fed.R.Civ.P. 56(e); see Celotex Corp. v. Catrett, 477 U.S. 317, 332-24 (1986). The nonmoving party must offer more than “[c]onclusory allegations, unsupported by specific facts, ” to establish a genuine issue of material fact. Payne v. Pauley, 337 F.3d 767, 773 (7th Cir. 2003) (citing Lujan v. Nat'l Wildlife Fed'n, 497 U.S. 871, 888 (1990)).

         In determining whether a genuine issue of fact exists, the Court must view the evidence and draw all reasonable inferences in favor of the party opposing the motion. Bennington v. Caterpillar Inc., 275 F.3d 654, 658 (7th Cir. 2001); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). A genuine issue exists “when ‘the evidence is such that a reasonable jury could return a verdict for the ...


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