Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Landmark American Insurance Co. v. Deerfield Construction, Inc.

United States District Court, N.D. Illinois, Eastern Division

May 3, 2018

LANDMARK AMERICAN INSURANCE COMPANY, Plaintiff,
v.
DEERFIELD CONSTRUCTION, INC., et al, Defendants.

          MEMORANDUM OPINION AND ORDER

          Ruben Castillo Chief Judge United States District Court.

         Following an adverse jury verdict in a personal injury lawsuit, a state court entered judgment against Deerfield Construction, Inc. ("Deerfield") and Shawn Graff, one of Deerfield's employees. (R. 192-1, Bunch Dep. Tr. at 133, 183-86.) Excess insurance provider Landmark American Insurance Company ("Landmark") brought this action against Deerfield and Graff seeking a declaratory judgment that Deerfield and Graff are not entitled to insurance coverage for the state court judgment under an excess insurance policy that Deerfield purchased from Landmark. (R. 1, Compl.) Deerfield then filed a third-party complaint against American States, Arthur J. Gallagher Risk Management Services, Inc. ("AJG"), the Law Offices of Meachum, Starck, Boyle & Trafman ("MSBT"), and David J. Olmstead, seeking to hold them responsible for the adverse judgment. (R. 28, Third-Party Compl.)

         Presently before the Court are: Landmark's motion for summary judgment against Deerfield and Graff; Deerfield's motions for summary judgment against American States and Landmark; and MSBT's, Olmstead's, and American States' motions for summary judgment against Deerfield. (R. 191; R. 198; R. 200; R. 205; R. 208.) Also before the Court is Deerfield's and Graffs motion to amend their third-party complaint. (R. 214, Mot. to Amend.) For the reasons stated below, Landmark's motion for summary judgment is granted, and the remaining claims are dismissed without prejudice for lack of jurisdiction. As a result, the Court denies all other pending motions as moot.

         RELEVANT FACTS

         The following facts are undisputed unless otherwise stated. The plaintiff, Landmark, is an Oklahoma company with its principal place of business in Georgia, (R, 1-4, Landmark Policy at 7.) Deerfield is a construction company with approximately 55 employees that specializes in construction projects within the telecommunications industry. (R. 223, Deerfield Resp. to Landmark Facts ¶ 25.) It is an Illinois corporation with its principal place of business in Illinois, and it has significant experience in dealing with insurance claims. (R. 192-1, Bunch Dep. Tr. at 53-55; R. 20, Deerfield Answer ¶ 8.) Graff is a Deerfield employee who resides in Illinois. (R. 20, Deerfield Answer ¶ 9; R. 203-8, Graff Dep. Tr. at 5.)

         American States is an Indiana corporation with its principal place of business in Massachusetts. (R. 62, Am. States Answer ¶ 3.) MSBT is the in-house legal department of Liberty Mutual Insurance Company, and its principal place of business is in Illinois.[1] (R. 203-7, Olmstead Dep. Tr. at 27; R. 106, MSBT Answer ¶ 5.) Olmstead is an Illinois attorney who has lived and worked in Illinois for over two decades. (R. 203-7, Olmstead Dep. Tr. at 9-28.) Working for MSBT at the time, Olmstead represented Deerfield and Graff in a personal injury lawsuit filed against them by Ryan Keeping related to injuries that Keeping suffered in an automobile accident. (Id. at 31-32, 45-46; R. 106, MSBT Answer ¶¶ 10, 13, 16, 23, 26, 35.)

         Laurus Strategies ("Lauras")-an insurance consultant who is not a party to this lawsuit-is Deerfield's insurance broker. (R. 225, Deerfield Resp. to MSBT Facts ¶ 10.) When Deerfield entered into construction contracts, Deerfield would work with Laurus to ensure that Deerfield satisfied any insurance coverage requirements for construction projects. (R. 223, Deerfield Resp. to Landmark Facts ¶¶ 33-35.)

         AJG is another insurance broker that Laurus used to acquire insurance policies for Landmark. (R. 192-1, Bunch Dep. Tr. at 64-65.) In February 2007, Laurus could no longer manage Deerfield's commercial insurance needs, and Laurus introduced Deerfield representatives to AJG representatives at an in-person meeting so that AJG could procure commercial insurance for Deerfield. (Id. ¶¶ 29-30; R. 223-1, Hulett Dep. Tr. at 25-27.) Laurus, working with AJG, procured for Deerfield a commercial automobile insurance policy from American States and an excess insurance policy from Landmark. (R. 223, Deerfield Resp. to Landmark Facts ¶¶ 36-38.) The American States insurance policy was in effect from March 1, 2007, to March 1, 2008, and had coverage limits of $1 million. (R. 225, Deerfield Resp. to MSBT Facts ¶ 8.) The Landmark insurance policy was in effect from March 1, 2007, to March 1, 2008, and had coverage limits of $10 million. (Id. ¶ 9.) The Landmark policy, however, only covered liability in excess of the American States policy's $1 million coverage limit. (R. 223, Deerfield Resp. to Landmark Facts ¶¶ 3-4.) Both the American States and Landmark insurance policies required Deerfield to give "prompt" notice to the insurer of any "accident, " "suit, " "claim, " or "loss, " and to "immediately" send the insurer copies of any documents concerning a claim or lawsuit. (R. 225, Deerfield Resp. to MSBT Facts ¶¶ 12-15.)

         Deerfield paid its initial premium payment for the Landmark policy to AJG, but thereafter paid the remainder of the Landmark policy through a finance company. (R. 192-1, Bunch Dep. Tr. at 70-71, 247-48; R. 223, Deerfield Resp. to Landmark Facts ¶ 40.) Although Deerfield had been introduced to AJG, it was Laurus that worked with AJG to acquire the Landmark policy for Deerfield, and Deerfield had no direct communication with AJG. (R. 192-1, Bunch Dep. Tr. at 66, ) Tom Sauriol was the Deerfield employee responsible for handling its insurance claims and he sent everything relating to insurance claims to Laurus; he did "not know anything about AJG." (R. 223, Deerfield Resp. to Landmark Facts ¶¶ 46-47.) Christopher Bunch, [2] Sauriol's superior, believed that AJG was the "conduit" to Landmark, but Bunch relied on Laurus-not AJG-to communicate with Landmark. (R. 192-1, Bunch Dep. Tr. at 65-66, 69, 102.) His belief that AJG was the "conduit" for communication to Landmark was based on "discussions with Andy Hulett from Laurus Strategies, " however, Bunch "never knew or understood the specifics as to why" this was the case. (Id. at 69.)[3] When Deerfield requested endorsements to the Landmark policy or requested that the coverage limits on the policy be increased, Deerfield would send these requests to Laurus who would then relay that information to AJG, who in turn communicated with Landmark. (Id. at 248-49.) Whenever Deerfield received any communications about the Landmark policy, Deerfield received it from Laurus through AJG. (Id. at 75-76.) During the 2007-2008 period the Landmark policy was in effect, Deerfield sought to increase its coverage limits under the Landmark policy from $5 million to $10 million. (Id., at 80.) All of the documentation needed to increase the limits, however, "went through Laurus" and the payment for the increase in coverage "went through [A]G]." (Id.)

         On January 16, 2008, Graff was involved in a car accident with Keeping, a truck driver. (R. 225, Deerfield Resp. to MSBT Facts ¶ 16; R. 203, Deerfield Facts ¶ 3.) Soon after the accident, Deerfield, through Laurus, notified American States and AJG of the accident. (R. 223, Deerfield Add'l Facts ¶ 8;[4] R. 192-1, Bunch Dep. Tr. at 163, 173.) Deerfield believed that "notice to AJG constituted notice to Landmark, " but Landmark never actually received notice of the Keeping accident at this time. (R. 225, Deerfield Resp. to MSBT Facts ¶ 24; R. 223, Deerfield Add'l Facts ¶¶ 13-14, 21.) Deerfield believed at this time that it only needed to notify Laurus because Laurus was "Deerfield's primary contact with the insurance companies, and any information provided to them would then be . .. forwarded to the next party." (R. 192-1, Bunch Dep. Tr. at 85, 89.) This was "the same procedure [Deerfield] followed on every other claim." (Id. at 87.) Deerfield was not certain that AJG received notice of the Keeping accident, just that "Laurus would have submitted notice or whatever [A]G] required." (Id. at 91.) Deerfield was not aware of any notice that Laurus provided to AJG, and instead submitted information regarding insurance claims to Laurus, allowing Laurus to "run with it." (Id.) Nor could Deerfield employees recall directly speaking to anyone from AJG in 2008. (Id. at 91-92.) Instead, any communication from AJG was only received by Lauras, who would then relay that communication to Deerfield. (Id. at 92.)

         Keeping then filed a lawsuit against Deerfield and Graff in the Circuit Court of Cook County, Illinois, on December 22, 2009, and served Deerfield and Graff soon thereafter. (R. 223, Deerfield Resp. to Landmark Facts ¶¶ 9-10, ) As soon as Deerfield was served, it notified Lauras of the lawsuit. (R. 225, Deerfield Resp. to MSBT Facts ¶ 23.) Deerfield believed that Lauras would then notify Deerfield's insurers of the lawsuit. (Id. ¶¶ 24-25.) Sometime between December 30, 2009, and January 19, 2010, Deerfield and Graff notified American States of the Keeping lawsuit. (R. 223, Deerfield Resp. to Landmark Facts ¶ 11.) During the pendency of the Keeping lawsuit, Deerfield still used Lauras as its primary source of information regarding the Landmark excess policy, reaching out to Lauras to obtain information about the Landmark insurance policy that it needed in order to respond to interrogatories. (R. 192-1, Bunch Dep. Tr. at 178.)

         Deerfield does not point to any evidence showing that it was aware that AJG was notified of the Keeping lawsuit after it was served on Deerfield. (Id. at 97, 99.) Deerfield, however, believed that notice of the lawsuit was given to Landmark "by virtue of the notice given to Lauras[.]" (Id. at 143.) Deerfield's "only indication" that Landmark received notice of the Keeping lawsuit was from an email Lauras sent to Deerfield in January 2015 "saying that notice was delivered to [A]G] who was the broker for Landmark."[5] (Id. at 212-14.)

         Olmstead was appointed to represent Deerfield and Graff in the Keeping lawsuit by American States and Liberty Mutual Insurance Company. (R. 106, MSBT Answer ¶¶ 10, 13, 16, 23, 26, 35; R. 192-2, Sauriol Dep. Tr. at 90-92.) The parties dispute whether Olmstead believed that the jury might award Keeping an amount exceeding the limits on the American States insurance policy. (R. 246, Am. States Resp. to Deerfield Facts ¶ 8.) Keeping's counsel asked the jury to return a verdict of $2.6 million against Deerfield, (id. ¶ 25), but the parties dispute whether the evidence presented at the Keeping trial was likely to persuade the jury to award Keeping an amount in excess of the American States policy's limits of $1 million, (Id. ¶¶ 22-24, 27-28.) Keeping offered Deerfield and Graff a "high-low" settlement that would have guaranteed a verdict within the coverage limits of the American States policy, but would have also guaranteed a significant recovery for Keeping. (R. 227-1, Madigan Dep. Tr. at 61-66.) Deerfield's counsel, however, rejected the settlement offer. (Id.)

         On December 5, 2014, while the Keeping suit was pending, AJG directly notified Landmark of the Keeping lawsuit. (R. 223, Deerfield Resp. to Landmark Facts ¶ 21; R. 225, Deerfield Resp. to MSBT Facts ¶ 43.) On December 12, 2014, Kevin O'Connor, Landmark's Vice President of claims, sent an email to AJG acknowledging receipt of the insurance claim related to the Keeping lawsuit. (R. 231, Landmark Resp. to Deerfield Facts ¶ 28.)

         More than a month later, on January 16, 2015, the jury entered a verdict against Deerfield and Graff in the amount of $2, 368, 000, which the trial court later reduced to $2, 339, 827. (Compare R. 203, Deerfield Facts ¶ 5, with R. 235, Am. States Resp. at 1.) The parties dispute whether this outcome was the result of MSBT's poor legal representation, or whether MSBT made informed, good-faith tactical decisions that nonetheless resulted in an adverse judgment in excess of the American States policy's coverage limits, (R. 225, Deerfield Resp. to MSBT Facts ¶¶ 38, 40-41; R. 225, Deerfield Add'l Facts ¶¶ 1-7.)

         On January 29, 2015, approximately two weeks after the verdict in the Keeping lawsuit, Landmark sent Deerfield a letter stating that it reserved its rights to deny coverage under the excess policy. (R. 225, Deerfield Resp. to MSBT Facts ¶ 55.) When Deerfield received the letter, it forwarded the letter to Laurus and asked Laurus why Landmark was not providing insurance coverage since Deerfield believed that Laurus had timely notified Landmark through AJG. (R. 192-1, Bunch Dep. Tr. at 162-63, 166.) Deerfield's understanding throughout the Keeping lawsuit was that "Laurus would speak with [A]G] who, in turn, would notify everyone[.]" (Id. at 173.) Deerfield communicated with no other party except for Laurus about Landmark's reservation of rights letter. (Id. at 175-76.)

         PROCEDURAL HISTORY

         On February 27, 2015, Landmark filed this action seeking a declaratory judgment that it is not required to indemnify Deerfield under the Landmark policy due to Deerfield's failure to provide timely notice of the Keeping accident and lawsuit. (R. 1, Compl.) On June 24, 2015, Deerfield and Graff filed counterclaims against Landmark for declaratory judgment and breach of contract seeking coverage under the Landmark policy and damages for Landmark's failure to indemnify Deerfield. (R. 22, Am. Answer & Countercls.)

         On July 22, 2015, Deerfield and Graff filed a third-party complaint against American States, AJG, MSBT, and Olmstead, seeking to hold those parties responsible for the excess verdict[6] in the Keeping lawsuit. (R. 28, Third-Party Compl.) The third-party complaint alleges that American States is liable to Deerfield for negligence and for acting in bad faith by failing to settle the Keeping lawsuit. (Id. ¶¶ 39-49.) As to AJG, the third-party complaint alleges that AJG was negligent and breached a fiduciary duty by failing to timely notify Landmark of the Keeping accident and lawsuit, (Id. ¶¶ 50-57.) Finally, as to Olmstead and MSBT, the third-party complaint alleges that they are liable to Deerfield for legal malpractice, and that they breached alleged fiduciary duties owed to Deerfield. (Id. ¶¶ 58-65.)

         On May 19, 2016, the Court dismissed all of Deerfield's third-party claims against AJG as well as Deerfield's claim for breach of fiduciary duty against MSBT and Olmstead. Landmark Am. Ins. Co. v. Deerfield Constr., Inc., No. 15 C 1785, 2016 WL 2977274, at *5-8 (N.D. Ill. May 19, 2016) [hereinafter Landmark I]. In the same order, the Court also ruled that it had subject-matter jurisdiction over the claims in Deerfield's third-party complaint. Id. at *3-5.

         On January 12, 2017, the Court denied Landmark's first motion for summary judgment, which argued that Deerfield failed to provide prompt notice as required under the Landmark policy, thereby relieving Landmark of any duty to provide coverage under the policy. Landmark Am. Ins. Co. v. Deerfield Constr., Inc., No. 15 C 1785, 2017 WL 157858, at *5-12 (N.D. Ill. Jan. 12, 2017) [hereinafter Landmark II]. The Court reasoned that there was a genuine factual dispute as to whether AJG was Landmark's apparent agent for accepting notice of claims or lawsuits because Landmark failed to show how it handled its day-to-day interactions with Deerfield. Id. at *11-12. The parties also submitted evidence showing that Landmark had a history of communicating with Deerfield through AJG, which was another consideration that resulted in the Court's denial of Landmark's first motion for summary judgment. Id.

         On November 10, 2017, Landmark filed another motion for summary judgment. (R. 191, Landmark Mot. for Summ. J. [hereinafter "MSJ"].) Three days later, Deerfield and Graff moved for summary judgment on their third-party claims against American States and their counterclaims against Landmark. (R. 198, Deerfield MSJ Am. States; R. 208, Deerfield MSJ Landmark.) On the same day, American States, Olmstead, and MSBT moved for summary judgment against Deerfield on its third-party claims. (R, 200, MSBT MSJ; R, 205, Am. States MSJ.)

         In its present motion, Landmark argues that it is entitled to summary judgment because there is no dispute that Deerfield failed to comply with the Landmark policy's notice provisions. (R. 191, Landmark MSJ at 4-5.) Landmark also argues-as it did in its first motion for summary judgment-that AJG lacked apparent authority to accept notice of claims on Landmark's behalf, because discovery conducted since the Court's denial of Landmark's first motion for summary judgment compels a different outcome. (Id. at 5-6.)

         Conversely, Deerfield submits that the Court should grant summary judgment in its favor because AJG was Landmark's agent and received prompt notice of Deerfield's insurance claim. (R. 208, Deerfield MSJ Landmark at 3, 12, ) Deerfield also argues that Landmark is estopped from denying coverage because Landmark remained silent about its coverage position when it finally learned of Deerfield's insurance claim. (Id. at 4.) In the alternative, Deerfield contends that ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.