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Mid-Century Insurance Co. v. Pizza by Marchelloni

United States District Court, C.D. Illinois, Peoria Division

May 10, 2018

MID-CENTURY INSURANCE COMPANY, Plaintiff,
v.
PIZZA BY MARCHELLONI, ESTATE OF JOSE PADILLA and ESTATE OF LYNSE STOKES, deceased, by SHANA KRIDNER, Defendants.

          ORDER & OPINION

          JOE BILLY MCDADE UNITED STATES SENIOR DISTRICT JUDGE.

         This matter is before the Court on competing motions for judgment on the pleadings filed by Plaintiff Mid-Century Insurance Company (hereinafter “Mid-Century”) and Defendant Estate of Lynse Stokes, deceased, by Shana Kridner (hereinafter “Estate of Stokes”). For the reasons discussed below, “Mid-Century Insurance Company's Motion For Judgment On The Pleadings Pursuant To Federal Rule Of Civil Procedure 12(C)” (Doc. 45) is GRANTED and the “Estate Of Stokes' Motion For Judgment On The Pleadings Pursuant To Federal Rule Of Civil Procedure 12(C)” is DENIED.

         LEGAL STANDARDS

         A party may move for judgment on the pleadings after “the pleadings are closed-but early enough not to delay trial.” Fed. R. Civ. Pro. 12(c). Rule 12(c) motions are generally governed by the same standard as motions to dismiss for failure to state a claim under Rule 12(b)(6). Lodholtz v. York Risk Srvs. Group, Inc., 778 F.3d 635, 639 (7th Cir. 2015). Therefore, “the court must treat all well-pleaded allegations as true and draw all inferences in favor of the non-moving party.” In re marchFIRST Inc., 589 F.3d 901, 904 (7th Cir. 2009). However, where the movant attempts “to dispose of the case on the basis of the underlying substantive merits, ” the more appropriate standard of adjudication is that of a motion for summary judgment.[1]Alexander v. City of Chicago, 994 F.2d 333, 336 (7th Cir. 1993) (citing Nat'l Fidelity Life Ins. Co. v. Karaganis, 811 F.2d 357, 358 (7th Cir. 1987). Thus, judgment on the pleadings is only appropriate when there are no disputed issues of material fact and it is clear that the moving party… is entitled to judgment as a matter of law. Unite Here Local 1 v. Hyatt Corp., 862 F.3d 588, 595 (7th Cir. 2017) citing Karaganis, 811 F.2d at 358. The district court is confined to the matters presented in the pleadings. 862 F.3d at 595. However, “documents attached to a motion to dismiss are considered part of the pleadings if they are referred to in the plaintiff's complaint and are central to his claim.” Adams v. City of Indianapolis, 742 F.3d 720, 729 (7th Cir. 2014) (adjudicating a motion for judgment on the pleadings by utilizing motion to dismiss standards).

         BACKGROUND

         This case arose out of a car accident that occurred on September 4, 2016. Jose Padilla (“Padilla”) was driving an automobile northbound on Livingston County Road 1900 East in Livingston County, Illinois. At that time, Padilla was delivering a pizza for Pizza by Marchelloni[2]. Lynse Stokes was a passenger in the vehicle being driven by Padilla. A collision occurred that resulted in the deaths of both Stokes and Padilla. The Estate of Stokes, maintained by Shana Kridner, brought a state civil action in the Circuit Court of the Eleventh Judicial Circuit of Illinois in Livingston County against the Estate of Padilla and S.L.D., INC., doing business as Pizza by Marchelloni, alleging wrongful death against both defendants and survival counts for the pain and suffering of Lynse Stokes prior to her death. (Doc. 57-1).

         Mid-Century extended an insurance policy to Dale Stokes, which was in effect at the time of the collision. The policy has a businessowners' liability coverage provision that states:

We will pay those sums that the insured becomes legally obligated to pay as damages because of “bodily injury”, “property damage”, “personal injury” or “advertising injury” to which this insurance applies. We will have the right and duty to defend the insured against any “suit” seeking those damages. However, we will have no duty to defend the insured against any “suit” seeking damages for “bodily injury”, “property damage”, “personal injury”, or “advertising injury” to which this insurance does not apply.

(Doc. 45-2 at 96). The policy goes on to list specific exclusions, amongst which was an automobile exclusion:

         B. Exclusions

         1. Applicable To Business Liability Coverage

         This insurance does not apply to:

g. Aircraft, Auto Or Watercraft
“Bodily injury” or “property damage” arising out of the ownership, maintenance, use or entrustment to others of any aircraft, “auto” or watercraft owned or operated by or rented or loaned to any insured. Use includes operation and “loading or unloading”.

(Doc. 45-2 at 98, 100).

         Based on the exclusion above, Mid-Century claims it has no duty to defend or indemnify Pizza by Marchelloni or the Estate of Padilla in any suit seeking damages for bodily injury to which the policy does not apply. (Doc. 3 at ¶¶21-27). Mid-Century requests that this Court find no coverage is available under the Mid-Century policy at issue for the Estate of Padilla or Pizza by Marchelloni and that Mid-Century has no duty to defend or indemnify the Estate of Padilla or Pizza by Marchelloni for the underlying lawsuit. Conversely, the Estate of Stokes asks this Court to find that Mid-Century owes Pizza by Marchelloni coverage under the policy, which means in practical terms that Mid-Century has a duty to indemnify Pizza by Marchelloni for any judgment amount the Estate of Stokes secures in the underlying lawsuit.

         Pizza by Marchelloni and the Estate of Padilla admitted that Pizza by Marchelloni and Padilla were “insureds” as defined by the policy in their Answers to the Amended Complaint. (Doc. 24 and 18). The Estate of Stokes did not expressly admit or deny the assertion that Pizza by Marchelloni or Padilla were “insureds” as defined by the policy; instead it answered the assertion was a legal conclusion that needed no response. (Doc. 27 at 6). Both the Estate of Stokes and Pizza by Marchelloni now contend in their responses to Mid-Century's motion for judgment on the pleadings that the Mid-Century policy was issued to Pizza by Marchelloni's owners, Dale and Leticia Stokes, individually, not to S.L.D., Inc., which was the legal entity that allegedly employed Padilla. (See Docs. 54 at 1-2, 52 at 1-2, 51 at 1-2). Consequently, they contend that Padilla is not an “insured” under the policy to which the Auto-Exclusion provision of the policy applies, yet was an agent of the business such that his tort, which arose out of the business, should be attributed to Pizza by Marchelloni.

         DISCUSSION

         In Illinois, the law holds that “if an insurer owes no duty to defend, it owes no duty to indemnify.” Metzger v. Country Mut. Ins. Co., 2013 IL App (2d Dist.) 120133, ¶ 19, 986 N.E.2d 756, 761; see also Solo Cup Co. v. Fed. Ins. Co., 619 F.2d 1178, 1184 (7th Cir. 1980) (“If the broader duty to defend has not been triggered, it is because the underlying action is not potentially within the coverage of the policy, and there could be, as a practical matter, no duty to indemnify in such a situation.”). Therefore, the Court will begin its analysis with ascertaining whether the Mid-Century policy requires Plaintiff to defend Defendants Estate of Padilla and S.L.D., Inc. doing business as Pizza by Marchelloni, in the underlying lawsuit.

         Courts compare the allegations in an underlying complaint with the coverage provisions of the insurance policy at issue in order to determine whether an insurer owes a duty to defend. St. Paul Fire and Marine Ins. Co. v. Village of Franklin Park, 523 F.3d 754, 756 (7th Cir. 2008); Guillen v. Potomac Ins. Co. of Ill., 785 N.E.2d 1, 7 (Ill. 2003). The interpretation of an insurance policy is a question of law that can be disposed of without a trial. See Illinois Sch. Dist. Agency v. Pac. Ins. Co., 471 F.3d 714, 719 (7th Cir. 2006) (“In Illinois, the interpretation of an insurance policy is a question of law. See, e.g., Zurich Ins. Co. v. Walsh Constr. Co. of Ill., Inc., 816 N.E.2d 801, 805 (2004)”).

An insurance policy is a contract, and the general rules governing the interpretation of other types of contracts also govern the interpretation of insurance policies. Accordingly, our primary objective is to ascertain and give effect to the intention of the parties, as expressed in the policy language. If the policy language is unambiguous, the policy will be applied as written, unless it contravenes public policy. Whether an ambiguity exists turns on whether the policy language is subject to more than one reasonable interpretation. Although “creative possibilities” may be suggested, only reasonable interpretations will be considered. Thus, we will not strain to find an ambiguity where none exists. Although policy terms that limit an insurer's liability will be liberally construed in favor of coverage, this rule of construction only comes into play when the policy is ambiguous.

Hobbs v. Hartford Ins. Co. of the Midwest, 823 N.E.2d 561, 564 (Ill. 2005) (citations omitted).

         Here, the underlying complaint alleges that “Defendant Jose Padilla, was driving a 1997 Nissan 200SX for Pizza By Marchelloni” and that “Lynse Stokes was a passenger in the vehicle.” (Doc. 57-1 at 1-2). It alleged further that Padilla was in the process of delivering a pizza for Pizza by Marchelloni when he caused a ...


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