United States District Court, S.D. Illinois
MEMORANDUM AND ORDER
J. ROSENSTENGEL United States District Judge
matter comes before the Court on the Motion for Summary
Judgment filed by GEICO Indemnity Company
(“GEICO”) (Doc. 33). On November 18, 2015, GEICO
filed a Complaint for Declaratory Judgment in this Court
seeking a judgment that it owed no duty to defend its insured
Nathan Dodd in a lawsuit involving an automobile accident
that occurred while Dodd was delivering prescription drugs
for CVS (Doc. 1). At the time, GEICO was defending Dodd in
the underlying lawsuit under a reservation of rights. The
Complaint also requested that the Court declare CVS had a
duty to reimburse GEICO for defense costs related to the
underlying lawsuit (Id.).
September 14, 2016, the Court granted summary judgment to
GEICO, finding that it owed no duty to defend Dodd (Doc. 31).
The Court did not, however, address GEICO's request for
reimbursement of defense costs it incurred in defending Dodd.
GEICO now seeks an order directing CVS to reimburse it for
the expenses and attorney fees incurred in defending Dodd.
GEICO claims it expended $8, 893.63 for Dodd's defense,
despite having no duty to defend him. Accordingly, GEICO
argues, it is now entitled to reimbursement of those defense
fees under the theory of unjust enrichment. In response, CVS
argues it offered to take over the defense of Dodd, which
GEICO refused. Thus, GEICO's theory of unjust enrichment
must fail. CVS also disputes some of the costs for which
GEICO requests reimbursement, arguing the charges were
incurred with regard to the coverage action rather than
defending the underlying lawsuit. Finally, CVS asserts
GEICO's motion is procedurally improper, as the Court has
already entered judgment, and no motion to alter or amend the
judgment was filed pursuant to Rule 59(e) of the Federal
Rules of Civil Procedure.
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); Black Agents & Brokers Agency, Inc.
v. Near North Ins. Brokerage, Inc., 409 F.3d 833, 836
(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. Adickes v. S.H. Kress
& Co., 398 U.S. 144, 160 (1970); see also
Lawrence v. Kenosha County, 391 F.3d 837, 841 (7th Cir.
Court first addresses CVS's argument that GEICO's
motion is procedurally improper. On September 14, 2016, the
Court entered judgment in this case after holding that GEICO
had no duty to defend Dodd in the underlying lawsuit (Doc.
32). Although the Court found in GEICO's favor on this
issue, GEICO's request in the Complaint for a declaration
that CVS had a duty to reimburse GEICO for defense costs
related to the underlying lawsuit remained pending. Thus, it
was a mistake, though inadvertent, for the Court to enter
judgment at that time.
argues that because GEICO failed to file a motion to alter or
amend the judgment pursuant to Rule 59(e) of the Federal
Rules of Civil Procedure, the judgment must stand. That is
incorrect. Pursuant to Rule 60(a), the Court, on its own, may
correct a mistake arising from oversight or omission whenever
one is found in a judgment. Under this rule, the Court can
correct the judgment based on its oversight even though no
motion was filed by GEICO under Rule 59(e). Because it was a
mistake for the Court to enter judgment with a claim still
pending, the September 14, 2016 Judgment (Doc. 32) will be
to the substantive arguments, GEICO argues, under a theory of
unjust enrichment, that it is entitled to reimbursement of
the costs it expended to defend Dodd despite having no duty
to do so. GEICO claims CVS accepted the benefit of GEICO
paying those costs while also refusing to contribute to the
defense. CVS asserts it owes nothing because it offered to
take over the defense in the underling litigation, but GEICO
refused to accept the offer and instead instructed its
appointed counsel to remain on the case. Thus, principles of
equity weigh in favor of denying GEICO reimbursement for the
costs it incurred.
support of its position, GEICO cites to National Casualty
Co. v. White Mountains Reinsurance Co. of America, 735
F.3d 549, 559 (7th Cir. 2013). In that case, the district
court found that the defendant, White Mountains, had a duty
to defend in the underlying lawsuit and ordered it to
reimburse the plaintiff, National Casualty, for all defense
fees and costs expended since White Mountains was on notice
of the underlying claims. Id. at 553. On appeal, the
Seventh Circuit affirmed, holding that the theory of unjust
enrichment applied because there was no express contract
between the two entities. Id. at 560. Specifically,
the Seventh Circuit found that because White Mountains was
liable for the defense costs, but National Casualty was not,
National Casualty's contributions to the defense costs
constituted a benefit to White Mountains. Id.
Accordingly, it would be “inequitable for White
Mountains to benefit from National Casualty's attempt to
do the right thing . . . .” Id. Finding that
White Mountains was unjustly enriched by National
Casualty's payment of the defense costs, White Mountains
was ordered to reimburse National Casualty. Id. at
attempts to distinguish National Casualty by noting
that, unlike White Mountains, CVS did “do the right
thing” when it offered to take over Dodd's defense
in the underlying litigation. As GEICO points out, however,
CVS offered to take over the defense of Dodd only on the
condition that GEICO tender its full policy limits to CVS.
Indeed, a letter from counsel for CVS to counsel for GEICO,
dated August 20, 2015, “proposes that GEICO provide its
full policy limits to CVS and allow it to defend the matter
globally.” (Doc. 35-1). Given that GEICO had no duty
to tender its full policy limits in this instance, CVS's
claim that it offered to take over the defense, and therefore
is not responsible for GEICO's costs, is not well taken.
GEICO had no duty to defend Dodd, its contributions to
Dodd's defense constituted a benefit to CVS. To allow CVS
to retain that benefit would be inequitable. Thus, GEICO is
entitled to reimbursement from CVS.
further disputes many of the specific costs incurred by
GEICO, claiming they were incurred with respect to the
declaratory judgment action and not Dodd's defense in the
underlying lawsuit. CVS claims that such costs should not be
recoverable by GEICO, but cites no authority to support its
position. In response, GEICO argues that any costs related to
the coverage issue were necessarily incurred because CVS
incorrectly insisted that GEICO's exclusion did not apply
and refused to defend Dodd unless GEICO first paid its policy
review of the costs submitted by GEICO reveals several
entries that appear to relate solely to the declaratory
judgment action, not the defense of Dodd in the underlying
matter. For example, on October 27, 2015, appointed counsel
spent one hour in a conference with Dodd and GEICO's
coverage counsel discussing “coverage issues”
(Doc. 33-4). Other entries specifically reference the
“Declaratory Judgment suit.” (Id.).
Still others, however, reference the obligation to defend but
are insufficiently detailed to determine whether they relate
to the ...