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Midwest Family Mutual Insurance Co. v. Merz Hearing & Air Conditioning, Inc.

United States District Court, S.D. Illinois

April 21, 2017



          Michael J. Reagan United States District Judge.

         A. Introduction

         On August 30, 2015, a fire occurred in the duct system above a wood-burning stove/broiler/grill (“grill”) in the kitchen of the Firefly Bar & Grill in Effingham, Illinois. The fire resulted in significant damage to the restaurant and necessitated replacement of ductwork in the grill's exhaust system.

         The Firefly, owned by Niall Campbell, made a claim under an insurance policy issued by Midwest Family Mutual Insurance Company. Midwest paid its insured, the Firefly, $100, 472.33 under the policy and then, as subrogee, filed this negligence action to pursue claims against two companies Midwest alleges are responsible for the fire - (1) Merz Heating and Air Conditioning, Inc., who designed and installed the ductwork over the grill at the Firefly, and (2) Rock Solid Surface Restoration, Inc., who cleaned and maintained the ductwork and exhaust system.

         The Court enjoys subject matter jurisdiction under the federal diversity statute, 28 U.S.C. 1332. The first amended complaint (Doc. 12) indicates that Plaintiff Midwest is an Iowa citizen (incorporated and maintaining its principal place of business there), both Defendants are Illinois citizens (incorporated and maintaining a principal place of business there), and the amount in controversy suffices. The case is now before the Court on motions for summary judgment separately filed by Defendants on February 13, 2017 (Docs. 27-28). Midwest responded to both motions on March 21, 2017 (Docs. 35, 36). Merz and Rock Solid filed authorized reply briefs on April 3, 2017 and April 4, 2017, respectively (Docs. 39-40). For the reasons stated below, the Court denies Merz's motion and partially grants/partially denies Rock Solid's motion.

         B. Overview of Key Allegations, Evidence, and Arguments

         According to Midwest, in 2005, Merz designed and installed the original ductwork used to carry exhaust from the wood-fired grill out of the Firefly. (In its answer, Merz denied that it designed the original ductwork; see Doc. 16, p. 2.) Following a fire at the Firefly in January 2011, Merz designed and installed new ductwork for the grill. This new ductwork contained several 90-degree angles to vent the exhaust from the grill. Shortly after the 2011 ductwork was installed, the owners of the Firefly hired Rock Solid to periodically clean various portions of the restaurant, including the ductwork on the grill. Rock Solid last cleaned the ductwork on July 28, 2015. Approximately one week later (on August 3, 2015), Rock Solid's owner (Barry Brown) installed an additional access panel on the ductwork.

         On August 30, 2015, a fire started in the ductwork above the grill. The fire caused significant damage to the building, required the Firefly to cease operations for a period, and resulted in replacement of the ductwork. This current ductwork exits directly from the grill through the building and does not contain any 90-degree angled sections or bends.

         In Count I of the amended complaint, Midwest alleges that Merz was negligent in failing to exercise reasonable care in the design, manufacture, and installation of the ductwork so as to prevent excessive build-up of flammable materials in the ductwork and ensure the ductwork would not ignite and expose the property to damage. More specifically, Midwest alleges that Merz failed to comply with design and industry standards and failed to install adequate access panels in the ductwork to allow it to be properly cleaned.

         In Count II of the amended complaint, Midwest alleges that Rock Solid failed to exercise reasonable care in the cleaning and maintenance of the ductwork at the Firefly. More specifically, Midwest alleges that Rock Solid negligently maintained the ductwork and exhaust system, failed to timely notify the Firefly of any difficulties in cleaning the ductwork, failed to install adequate access panels in the ductwork to allow for proper cleaning, improperly installed an additional access panel in the ductwork, failed to comply with known industry standards, and failed to adequately inspect and supervise its employees' work on the system.

         Seeking summary judgment, Merz contends that the testimony of Midwest's own expert “eliminates any genuine issue to be determined” by a trier of fact, as there is no evidence of proximate cause between the actions of Merz (i.e., designing/ installing ductwork that had angles or bends and designing/installing ductwork with insufficient access points to facilitate cleaning) and the fire that damaged the Firefly in August 2015. Merz emphasizes that Midwest's own expert testified that an applicable safety standard (the “NFPA 96” standard for ventilation control and fire protection of commercial cooking operations) requires inspections for grease build-up every 30 days, that those inspections are the responsibility of the restaurant owner, and that inspections did not timely occur here in the lead-up to the subject fire.

         In its motion for summary judgment, Rock Solid asserts that Midwest has produced no evidence to support the contention that Rock Solid was negligent in cleaning the ductwork system or that Rock Solid's installation of an extra access panel in any way caused or contributed to the loss. Rock Solid maintains that Midwest cannot meet its burden of proving that its damages were proximately caused by Rock Solid, because (1) the undisputed evidence establishes that the insured failed to have the ductwork cleaned in compliance with NFPA 96, and (2) Midwest offers only unfounded speculation that the ductwork was not sufficiently or properly cleaned by Rock Solid 33 days before the fire. Analysis starts with reference to the legal standards governing resolution of the pending motions.

         C. Applicable Legal Standards

         Because the undersigned exercises diversity jurisdiction in this action, state substantive law applies and federal procedural rules apply. See, e.g., Doermer v. Callen, 847 F.3d 522, 529 (7th Cir. 2017), citing Goesel v. Boley Int'l (H.K.) Ltd., 806 F.3d 414, 419 (7th Cir. 2015), and Erie Railroad Co. v. Tompkins, 304 U.S. 64 (1938). See also Great West Cas. Co. v. Robbins, 833 F.3d 711, 715 (7th Cir. 2016).

         Federal courts deciding state law claims apply the forum state's choice of law rules to select the applicable state substantive law, and if no party has raised the choice-of-law issue, “the federal court may simply apply the forum state's substantive law.” Selective Ins. Co. of South Carolina v. Target Corp., 845 F.3d 263, 266 (7th Cir. 2016), quoting McCoy v. Iberdrola Renewables, Inc., 760 F.3d 674, 684 (7th Cir. 2014). As Rock Solid points out (Doc. 28, p. 5), no one disputes that Illinois substantive law applies here.

         To prevail on a negligence claim under Illinois law, the plaintiff must prove the existence of a duty of care owed by the defendant to the plaintiff, a breach of that duty by the defendant, and an injury to plaintiff proximately caused by the breach. Vesely v. Armslist LLC, 762 F.3d 661, 664 (7th Cir. 2014), citing Buechel v. U.S., 746 F.3d 753, 763-64 (7th Cir. 2014), and Thompson v. Gordon, 948 N.E.2d 39, 45 (Ill. 2011). The existence of a duty is a question of law which the court must decide. Id. The issues of breach and proximate cause are questions of fact for the jury to decide, “provided there is a genuine issue of material fact regarding those issues.” Hollenbeck v. City of Tuscola, -- N.E.3d --, 2017 WL 977157 ( Ill. App. March 13, 2017), quoting Espinoza v. Elgin, Joliet & Eastern Ry. Co., 649 N.E.2d 1323, 1326 (Ill. 1995). Accord Furry v. U.S., 712 F.3d 988, 992 (7th Cir. 2013) (usually breach and proximate cause are factual matters for the jury, but when “there is no material issue regarding the matter or only one conclusion is clearly evident, ” breach and proximate cause “become questions of law.”).

         Federal Rule of Civil Procedure 56 governs motions for summary judgment. Summary judgment is appropriate where the admissible evidence shows that there is no genuine dispute as to any material fact, and the movant is entitled to judgment as a matter of law. Taylor-Novotny v. Health Alliance Medical Plans, Inc., 772 F.3d 478, 488 (7th Cir. 2014). Accord Archdiocese of Milwaukee v. Doe, 743 F.3d 1101, 1105 (7thCir. 2014), citing Fed. R. Civ. P. 56. A "material fact" is a fact that affects the outcome of the lawsuit, i.e., it is outcome-determinative under the applicable substantive law. Taylor-Novotny, 772 F.3d at 488; Hanover Ins. Co. v. Northern Bldg. Co., 751 F.3d 788, 791 (7th Cir.), cert. denied, 135 S.Ct. 280 (2014).

         A genuine issue of material fact remains (and summary judgment should be denied), “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Miller v. Gonzalez, 761 F.3d 822, 827 (7th Cir. 2014), quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). However, if the factual record taken as a whole could not lead a reasonable jury to find for the non-moving party, there is nothing for the jury to do, and summary judgment is properly granted. Bunn v. Khoury Enterpr., Inc., 753 F.3d 676, 682 (7th Cir. 2014), citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).

         In assessing whether a genuine issue of material fact exists, this Court views the record in the light most favorable to the non-moving party. Bunn, 753 F.3d at 682. See also 520 South Michigan Ave. Associates, Ltd. v. Unite Here Local 1, 760 F.3d 708, 718 (7th Cir. 2014). The undersigned examines the competent evidence of record “in the light reasonably most favorable to the non-moving party, ” giving the non-movant the benefit of reasonable, favorable inferences and resolving conflicts in the evidence in the non-movant's favor. Spaine v. Community Contacts, Inc., 756 F.3d 542, 544 (7th Cir. 2014).

         D. Analysis of Merz's Motion for Summary Judgment

         To succeed on a negligence claim under Illinois law, a plaintiff must prove that the defendant owed a duty to the plaintiff, that the defendant breached that duty, and that the breach was the proximate cause of the plaintiff's injuries. Furry, 712 F.3d at 992, citing First Springfield Bank & Trust v. Galman, 720 N.E.2d 1068, 1071 (Ill. 1999). In this case, Merz takes issue only with the element of proximate cause - the connection between Merz's actions and the August 2015 fire that damaged the Firefly.

         To establish proximate cause, the plaintiff bears the burden of affirmatively showing that the defendant's alleged negligence caused the injury or damage for which the plaintiff seeks to recover. Berke v. Manilow, 63 N.E.3d 194, 204 ( Ill. App. 2016). Illinois law defines proximate cause as “a cause that, in the ordinary course of events produced the plaintiff's injury, ” but it “need not be the only or last cause; rather, the combination of multiple causes may result in the injury.” Atchley v. University of Chicago Medical Center, 64 N.E.3d 781, 794 ( Ill. App. 2016).

         Proximate cause is comprised of two distinct requirements -- “cause in fact” and “legal cause.” Id.; Jones v. Live Nation Entertainment, Inc., 63 N.E.3d 959, 973-94 ( Ill. App. 2016). In Illinois negligence actions, causation requires proof of both cause in fact and legal cause. Thacker v. UNR Industries, Inc., 603 N.E.2d 449, 455 (Ill. 1992).

         Cause in fact exists if a there is a reasonable certainty that the defendant's acts caused the injury (i.e., if “the defendant's conduct was a material and substantial factor in bringing about the claimant's injury”). Atchley, 64 N.E.3d at 794, citing Abrams v. City of Chicago, 811 N.E.2d 670 (Ill. 2004). Conduct constitutes a “material and substantial factor” if the injury would not have occurred absent the defendant's conduct. Id. Stated another way, courts often use two tests when assessing cause in fact - the substantial-factor test and the traditional but-for test. Union Planters Bank, N.A. v. Thompson Coburn LLP, 935 N.E.2d 998, 1021 ( Ill. App. 2010).

         In contrast, legal cause looks to whether the injury/damage is one that a reasonable person would consider to be a likely consequence of his conduct or, instead, whether the injury/damage is so highly extraordinary that imposing liability is not justified (although a person need not be able to foresee the precise way the injury would occur or the extent of the injury). Id., citing Young v. Bryco Arms,821 N.E.2d 1078 (Ill. 2004), and Hooper v. County of Cook,851 N.E.2d 663 ( Ill. App. 2006). Legal cause presents a policy question and exists if the defendant's conduct is closely enough ...

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