United States District Court, S.D. Illinois
MEMORANDUM AND ORDER
M. YANDLE UNITED STATES DISTRICT JUDGE
before the Court is Defendant Alan Campbell's Motion to
Dismiss Pursuant to F.R.C.P. 12(b)(6) (Doc. 8).
Plaintiff Shelter Mutual Insurance Co.
(“Shelter”) responded (Doc. 15). For the
following reasons, the Motion is DENIED.
declaratory judgment action arises from an incident which
took place on May 24, 2016 (Doc. 1 ¶ 7). On that date,
Jerry Knobeloch went to 115 East 2nd Street, Centralia, IL,
to help Campbell start the engine of his motor home (Doc. 1
¶ 7). Campbell tried to get the engine to start by
pouring gasoline into the carburetor (Doc. 1 ¶ 13). The
gasoline exploded in a burst of flames (Doc. 1 ¶ 13). As
a result, Knobeloch sustained burns (Doc. 1 ¶ 13).
time of the incident, Campbell had several insurance policies
from Shelter, including: automobile, homeowners, and general
liability (Doc. 1 ¶ 1). On August 3, 2016, as a result
of his injuries, Knobeloch sued Campbell in state court for
negligence (Doc. 1 ¶ 12). Shelter accepted defense of
the claim under Campbell's auto policy (Doc. 1 ¶
December 12, 2016, counsel for Knobeloch, through written
correspondence, asserted that in addition to Campbell's
auto policy, Campbell's homeowners and general liability
policies cover the underlying litigation (Doc. 1 ¶ 21).
The correspondence served as a demand for coverage in an
amount exceeding Campbell's auto policy limits, should
Knobeloch's civil action prevail (Doc. 1 ¶ 21).
maintains that the terms of the homeowners policy issued to
Campbell expressly exclude damages arising from “the
ownership, maintenance, operation, use or entrustment,
” of “land motor vehicles” or
“motorized vehicles” (Doc. 1 ¶¶ 23-32).
Similarly, Shelter contends there is an exclusion for
injuries arising out of the ownership, or maintenance of an
automobile, owner or operated by any insured under
Campbell's general liability policy (Doc. 1 ¶ 30).
On April 21, 2017, Shelter filed a two-Count Complaint with
this Court, seeking a declaration that it has no duty to
defend or indemnify Campbell under the homeowners and general
liability policies (Doc. 1 ¶ 1).
survive a Rule 12(b)(6) motion to dismiss, the Complaint must
give enough factual information to “state a claim to
relief that is plausible on its face.” Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 547 (2007). Relative to
the claim in this case, an insurer's duty to defend is
determined by comparing the allegations in the underlying
Complaint to the relevant provisions of the insurance policy.
Health Care Indus. Liab. Ins. Program v. Momence Meadows
Nursing Ctr., Inc., 566 F.3d 689, 694 (7th Cir. 2009).
“An insurer is obligated to defend its insured if the
underlying complaint contains allegations that potentially
fall within the scope of coverage.” Gen. Agents
Ins. Co. of Am., Inc. v. Midwest Sporting Goods Co., 828
N.E.2d 1092, 1098 (2005).
insurer may refuse to defend only if “it is clear from
the face of the underlying complaint that the allegations set
forth in the complaint fail to state facts that bring the
case within, or potentially within, the coverage of the
policy.” Id. at 360. Whether an insurer's
indemnity obligation is premature depends on whether it has
been determined that the insurer is liable to someone,
subject to court's discretion, when asking for
declaratory relief. Bankers Trust v. Old Republic Ins.
Co., 959 F.2d 677, 680 (7th Cir. 1992).
Campbell contends that Plaintiff's request for
declaratory judgment is moot, abstract, advisory, and as
such, should be denied. He relies on a variety of cases to
support his contentions. First, Campbell cites Aetna Life
Ins. Co. v. Haworth, 57 S.Ct. 461, 81 L.Ed. 617 (1937).
In Aetna, the insurance company sought a declaratory
judgment where there was no underlying litigation. The
“[…] sole object of [the] proceeding [was] to
furnish plaintiff an opportunity to establish […] its
alleged defense to such anticipated litigation
[…]” Id. at 697. Here, however, there
is a justiciable underlying civil action in State court.
Moreover, Knobeloch has notified Shelter that he is seeking
payment for his damages from Campbell's homeowners and
general liability policies, in addition to his auto policy.
Knobeloch's demand seeks monetary damages that exceed his
auto policy limits.
also cites Atlanta Intern. Ins. Co. v. Atchison, Topeka
and Santa Fe Ry. Co., 938 F.2d 81 (7th Cir. 1991), in
which the Seventh Circuit upheld the dismissal of a
declaratory judgment action, for lack of subject matter
jurisdiction. The trial court had entered judgment against
the insured for Sherman Act violations; however, no payment
had been demanded from the insurance company at the time
judgment was entered. Id. at 83. In other words, the
insurer sought a declaratory judgment based on the
potential that the prevailing parties would demand
payment from them. Id. at 83. Again, this case is
distinguishable as Shelter's claim involves an actual
case and controversy.
other cases cited by Campbell also provided no support for
his contentions. For example, Campbell relies on Zessar
v. Keith, 536 F.3d 788 (7th Cir. 2008) for the
proposition that Shelter's request for a declaratory
judgment is moot. In Zessar, the court concluded
that an amendment to a relevant statute rendered the issue
before it moot. As such, Zessar has no bearing on
the issues presented here. Similarly, Campbell cites
Johnson-Kennedy Radio Corp. v. Chicago Bears Football
Club, Inc., 97 F.2d 223 (7th Cir. 1938) - a case in
which the plaintiff requested an injunction where no
underlying case or controversy existed. Id. at 224.
correctly points out that once they were put on notice that
their insured was being sued, and that Knobeloch was filing a
claim under Campbell's homeowners and general liability
policies in addition to his auto policy, they were required
either defend Campbell under a reservation of rights or to
seek a declaration of ...