Philadelphia Indemnity Insurance Company, Plaintiff, Counterdefendant-Appellee,
The Chicago Trust Company, as Administrator of the Estate of Kianna Rudesill, and The Baby Fold, Defendants, Counterplaintiffs-Appellants.
April 16, 2019
Appeals from the United States District Court for the
Northern District of Illinois, Eastern Division. No. 16 C
10161 - Joan Humphrey Lefkow, Judge.
EASTERBROOK, KANNE, and SCUDDER, Circuit Judges.
EASTERBROOK, CIRCUIT JUDGE.
Baby Fold is a nonprofit corporation that provides
foster-care services in Illinois. In 2010 Baby Fold placed
three-year-old Kianna Rudesill in the care of Joshua and
Heather Lamie. Heather killed Kianna in May 2011 and has been
convicted of murder. The Chicago Trust Company, as
administrator of Kianna's estate, maintained a wrongful
death action in Illinois state court against Baby Fold for
its failure to supervise and protect Kianna. In February 2019
Chicago Trust and Baby Fold settled their dispute for $4
question in this case is what portion of the settlement (and
any other losses related to Kianna's death) must be paid
by Baby Fold's insurer. Philadelphia Indemnity filed this
declaratory-judgment suit under the diversity jurisdiction
and asked the judge to declare how much it owes under two
policies covering Baby Fold at the time of Kianna's
death. We refer to the policies as the primary policy and the
excess policy. The insurer asked for a declaration that its
maximum indemnity is $1 million under the primary policy and
$250, 000 under the excess policy. Baby Fold and Chicago
Trust filed counterclaims: They agree that the primary policy
provides $1 million of coverage but contend that the excess
policy's limit is $5 million, not $250, 000. Philadelphia
moved to dismiss Chicago Trust's counterclaim under
Fed.R.Civ.P. 12(b)(6). The district judge concluded that the
policies' language favors the insurer and granted the
motion to dismiss. The opinion declared that
Philadelphia's potential liability under the excess
policy is $250, 000. 2018 U.S. Dist. LEXIS 165071 at *25-26
(N.D. Ill. Sept. 26, 2018).
the district court entered a judgment that does not declare
the parties' rights. Instead the judgment reads:
"Case is dismissed." This means that Philadelphia
loses (contradicting the judge's opinion) and that the
wrong parties have appealed, jeopardizing our appellate
jurisdiction. We asked counsel for both sides at oral
argument about this incongruity. They surmised that the
opinion and judgment, taken together, fully resolve the case
in Philadelphia's favor. That's wrong. A judgment
must provide the relief to which a prevailing party is
entitled. See, e.g., Greenhill v. Vartanian, 917
F.3d 984, 987 (7th Cir. 2019) (collecting authority). This
judgment does the opposite, awarding the prevailing party a
loss. And Fed.R.Civ.P. 58(a) prohibits an opinion from
serving as a declaratory judgment. See Foremost Sales
Promotions, Inc. v. Director, Bureau of Alcohol, Tobacco
& Firearms, 812 F.2d 1044, 1045-46 (7th Cir. 1987).
also speculated that this document represents a take-nothing
judgment for the counterclaims. But this would mean that
Philadelphia's claim remains unresolved, and if so the
suit is not over. Moreover, this judgment suffers from other
problems. It fails to mention one defendant (Chicago Trust).
It does not address the counterclaims. And it transgresses
Rule 58(b) because it was entered by a clerk. District judges
must review all judgments other than simple judgments on jury
verdicts and judgments entirely in the defendants' favor.
This judgment does not fall under those exceptions and thus
requires the district judge's approval. Rule 58(b)
requires this judicial inspection to ensure the entry of
proper judgments, especially when dispositions are
complicated. See Rush University Medical Center v.
Leavitt, 535 F.3d 735, 737 (7th Cir. 2008). And lawyers
must alert judges to problems with judgments. We are
disappointed by counsel's failure to adhere to our
repeated admonitions on this subject. See, e.g., Azeez v.
Fairman, 795 F.2d 1296, 1297 (7th Cir. 1986).
remanded with instructions to enter a new judgment that
implements the district judge's opinion, abides by Rule
58, and resolves the whole case. The district judge complied,
and the revised judgment provides Philadelphia with the
declaratory relief described in the opinion. It also
dismisses the defendants' counterclaims. With the new
judgment in hand we turn to the merits.
Trust and Baby Fold contend that the excess policy provides a
$5 million limit, or at least that the language is ambiguous
and thus must be construed in favor of more coverage under
Illinois law. See, e.g., Gillen v. State Farm Mutual
Automobile Insurance Co., 215 Ill.2d 381, 393 (2005).
But the policies' language supports Philadelphia's
primary policy comprises several "coverage parts,"
each of which outlines specific types of losses. One part
covers losses arising out of Baby Fold's negligent
supervision of foster parents who commit physical abuse; both
sides agree that this part provides $1 million of coverage.
The excess policy then provides an additional layer of
insurance with a general limit of $5 million. The excess
policy, however, contains a sublimit for physical abuse
or Physical Abuse or Molestation Liability Coverage Form
This endorsement modifies insurance provided under the
following: COMMERCIAL EXCESS LIABILITY POLICY
This policy is intended to include the Sexual or Physical
Abuse or Molestation Coverageform [sic], but only with the
limits set forth below. These limits are included within, and
not excess of, nor in addition to ...