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Platinum Supplemental Insurance, Inc. v. Guarantee Trust Life Insurance Co.

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

November 21, 2019

PLATINUM SUPPLEMENTAL INSURANCE, INC., Plaintiff,
v.
GUARANTEE TRUST LIFE INSURANCE COMPANY, Defendant. GUARANTEE TRUST LIFE INSURANCE COMPANY, Third-Party Plaintiff,
v.
PLATINUM SUPPLEMENTAL INSURANCE, INC., Third-Party Defendant.

          MEMORANDUM OPINION AND ORDER

          Robert M. Dow, Jr. United States District Judge.

         Currently before the Court is Plaintiff's motion for summary judgment [68] on both counts of its complaint and Defendant's outstanding claims against it. For the reasons set forth below, the Court grants the motion [68] and will enter judgment in favor of Plaintiff Platinum and against Defendant GTL on Counts I and II in Case No. 17-cv-8872, as well as on the claims for indemnification and contribution asserted by GTL against Platinum in Case No. 18-cv-3109, which was transferred to this district from the Eastern District of Missouri in May 2018 and reassigned to this Court as a related case in July 2018 [see 31]. Civil Case Nos. 17-cv-8872 and 18-cv-3109 are thus terminated.

         I. Background

         The Court takes the relevant facts from the parties' Local Rule 56.1 statements of undisputed material facts and supporting exhibits: [51], [76], [77], and [85-91]. The Court construes the facts in the light most favorable to the nonmoving party-here, the Defendant. The following facts are undisputed unless otherwise noted. “When we cite as undisputed a statement of fact that a party has attempted to dispute, it reflects our determination that the evidence cited in the response does not show that the fact is in genuine dispute.” King v. Chapman, 2013 WL 6709623, at *3 (N.D. Ill.Dec. 16, 2013). The Court has already found that it has jurisdiction over this case. See generally [38].

         This case arises out of a long-standing and multi-faceted dispute between the parties. Plaintiff Platinum Supplemental Insurance (“Platinum”) marketed and sold insurance policies underwritten by Defendant Guaranteed Trust Life Insurance (“GTL”). E.g [51, ¶ 1]. In 2002, GTL and Platinum executed a marketing agreement (“Marketing Agreement”), whereby Platinum and its agents agreed to sell policies underwritten by GTL. See generally [85]; see also [51, ¶ 1]; [76, ¶ 1]. The Marketing Agreement included an indemnification provision that “Platinum shall hold GTL * * * harmless against any damages, liabilities, claims, charges, attorneys' fees, or other costs arising from or in connection with any claim, action or proceeding relating to or arising from any act or omission or any negligent or intentional misconduct by Platinum, relating to the subject matter of this Agreement or failure to comply with the terms of this Agreement or any applicable law, rule, or regulation.” [85, ¶ 15(b).] The Marketing Agreement also required Platinum to obtain written approval from GTL for the use of any marketing materials and incorporated GTL's Advertising Policy and Code of Ethical Market Conduct by reference. [Id., ¶ 14.] Finally, Platinum was responsible for conforming its employees' and contractors' conduct to the terms of the Marketing Agreement. [Id., ¶ 6.]

         The business relationships between Platinum and GTL began to unravel when both parties were sued by Michael Casper, who had purchased a GTL policy from a Platinum marketer. [51-2, ¶ 40.] He brought various claims against both GTL and Platinum. [Id., ¶¶ 42, 45-46.] Casper's claim against GTL went to trial, where it was revealed that Platinum used certain aggressive marketing tactics and used marketing materials that were not pre-approved by GTL. [Id., ¶¶48- 49, 51-53.] GTL believed that several of these practices violated the Marketing Agreement. GTL contended that Platinum failed to run training materials by GTL and to ensure that its agents engaged in competent and ethical behavior. [Id., ¶¶ 58-61.]

         By May 2015, GTL informed Platinum that it wanted out of the Marketing Agreement. See [87, ¶ D]. The parties settled some of their outstanding disputes relating to termination of the Marketing Agreement in July 2015. See generally [id.] (the “2015 Settlement Agreement”). But the 2015 Settlement Agreement includes a section entitled “Excluded Matters, ” which included “such claims, if any, as GTL may have against Platinum stemming from the judgement entered in the matter of Michael D. Casper * * * [and] [s]uch indemnification rights as GTL may have, if any, arising out of existing and future claims as may from time to time be asserted against GTL attributable to the conduct of Platinum agents, brokers and representatives in connection with the offering and sale of insurance policies.” [Id., ¶ 10.][1]

         On December 11, 2015, GTL filed suit against Platinum and its president in Cook County Circuit Court (the “Cook County Action”) alleging, inter alia, that Platinum breached the Marketing Agreement by failing to adequately train and supervise its agents. See generally [51-2]. According to the complaint, “Platinum recklessly disregarded that its supervision, management and training of its employees and the [contractors] created the risk that applications would not be solicited and procured in compliance with all applicable local, state and federal laws and regulations and/or any rules and requirements established by GTL” and the fact that “its employees and [contractors] were soliciting and procuring applications in a manner that exposed GTL to claims similar to those made in the Casper Lawsuit.” [51-2. ¶¶ 65, 67.]

         Specifically, the breach of contract claim alleged that the Marketing Agreement required Platinum to “ensure that its employees and [contractors] solicited and procured applications in compliance with all applicable local, state and federal laws and regulations and any rules and requirements established by GTL.” [Id., ¶ 100.] According to GTL, however, Platinum “fail[ed] to ensure that its employees” did so, exposing GTL to legal liability. [Id., ¶ 101.] Such liability included the damages and litigation costs associated with the Casper lawsuit, as well as other “claims similar to those made in the Casper Lawsuit.” [Id., ¶¶ 102-03, 101]; see also [id., ¶¶ 57, 61-62, 65, 67, 69, 92-93] (repeatedly explaining that Platinum's alleged conduct opened GTL up to myriad potential suits similar to Casper's). GTL alleged additional harms in the form of “compensation and commission to Platinum for services that it was obligated to, but did not provide; i.e., the solicitation and procurement of applications in compliance with all applicable local, state and federal laws and regulations and any rules and requirements established by GTL.” [Id., ¶ 104.] According to GTL, it “paid Platinum compensation and commissions in excess of $226 million” over the years when the Marketing Agreement was in effect. [Id., ¶ 23.]

         Pursuant to the Marketing Agreement, the claims against Platinum were sent to arbitration, while the claims against Platinum's president were stayed pending resolution of the arbitration. See generally Guarantee Trust Life Insurance Company v. Platinum Supplemental Insurance, Inc., 68 N.E.3d 481 (Ill.App.Ct. 2016). While the parties were arbitrating the dispute, GTL amended its arbitration demand to include claims related to the breach of the 2015 Settlement Agreement [88, ¶¶ 5-15], and Platinum counter-claimed, contending (among other things) that GTL withheld commissions, defamed Platinum, and attempted to interfere with Platinum's relationships with its customers. [89 at 14-27.]

         GTL and Platinum settled their arbitral dispute and the Cook County Action on February 28, 2017, memorializing their agreement in a written settlement agreement (the “2017 Settlement Agreement”). See generally [90]. The 2017 Settlement Agreement provided that (unless otherwise noted) the 2015 Settlement Agreement should remain in force. [90, ¶ 11]. Importantly, the 2017 Settlement Agreement also included a provision that the “Parties agree that section 10 of [2015 Settlement Agreement] is hereby terminated and of no further force and effect”-that is, the parties terminated the “Excluded Matters” section, which carved out the various indemnification claims from the earlier settlement. The 2017 Settlement Agreement also contained a provision that “all claims that were filed or could have been filed in the Cook County Litigation shall be deemed to be settled and resolved by this AGREEMENT.” [90, ¶ 2.] After the 2017 Settlement Agreement was executed, the Cook County Circuit Court entered an order of dismissal, stating: “All claims in the above-captioned case are dismissed with prejudice as to all Defendants” and “[t]he parties agree that all claims that were filed or could have been filed in the Cook County litigation shall be deemed settled and resolved.” [51-1, ¶¶ 1-2.]

         Meanwhile, yet another suit related to Platinum's marketing of GTL's policies was brewing. Thomas Grisham filed a complaint against GTL in the United States District Court for the Eastern District of Missouri (the “Missouri Action”) claiming that GTL incorrectly refused to provide coverage for his insurance claim under a policy sold by Platinum and underwritten by GTL, vexatiously refused to pay, and defamed him. See generally [51-4]. The Missouri Action was filed on December 8, 2016 (that is, two and a half months before the 2017 Settlement Agreement was signed). Id. GTL, in turn, filed a third-party complaint against Platinum in the Missouri Action in October 2017. [5-3 at 1-7.] GTL alleged that if it were found liable to Grisham, Platinum would owe indemnification and contribution to GTL because Grisham's suit arose from Platinum's alleged breach of the Marketing Agreement. [Id., ¶ 14.] Specifically, the breach in question resulted from Platinum's alleged failure to ensure its employees' compliance “with all local, state, and federal laws and regulations, * * * all rules, guidelines, and requirements established by GTL, ” and “GTL's company procedures and rules concerning advertising policies, marketing guidelines, and GTL's code of ethical market conduct.” [Id., ¶¶7-8.]

         In response, Platinum filed the instant action against GTL, seeking a declaration that the 2017 Settlement Agreement and accompanying Circuit Court order barred GTL's cross-claim in the Missouri Action, and damages for GTL's alleged breach of the Settlement Agreements. See generally [1]. GTL's Missouri indemnification claim was then transferred to the Northern District of Illinois and consolidated with this case. [31.] The Court has already determined that it has subject matter jurisdiction and that abstention would be inappropriate. See generally [38]. At a status hearing held on February 5, 2019, the parties confirmed that while the case was still pending in Missouri, the underlying claim between the original plaintiff (Grisham) and GTL was settled, leaving only the third-party claim brought by GTL against Platinum pending. And, counsel explained, that claim presents the “flip side” of the threshold issue in this case, which the parties agreed to present through the briefing on the motion now before the Court, after engaging in a period of discovery which concluded by late June or early July [see 55. 66 (joint status reports on discovery)].

         In Platinum's motion [68], it seeks summary judgment on both counts in its complaint-declaratory judgment that the 2017 Settlement Agreement barred GTL's cross claim in the Missouri action (Count 1) and damages for breach of contract (Count 2). It also seeks summary judgment on GTL's related indemnification and contribution claims from the Missouri Action.

         II. Legal Standard

         Summary judgment is proper where “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” See Fed.R.Civ.P. 56(a). Rule 56 makes clear that whether a party asserts that a fact is undisputed or genuinely disputed, the party must support the asserted fact by citing to particular parts of the record, including depositions, documents, or affidavits. Fed.R.Civ.P. 56(c)(1). A party can also support a fact by showing that the materials cited do not establish the absence or presence of a genuine dispute or that the adverse party cannot produce admissible evidence to support the fact. Id. In determining whether summary judgment is appropriate, the Court must construe all facts in a light most favorable to the non-moving party and draw all reasonable inferences in that party's favor (here, GTL). Majors v. Gen. Elec. Co.,714 F.3d 527, 532 (7th Cir. 2013) (citation omitted). But Defendant “is only entitled to the benefit of inferences supported by admissible evidence, not those ‘supported by only speculation or conjecture.'” Grant v. Trs. of Ind. Univ.,870 F.3d 562, 568 (7th Cir. 2017) (citation and quotation marks omitted). Rule 56(a) “mandates the entry of summary judgment, after adequate time for discovery and upon motion, against any party who fails to make a showing sufficient to establish the existence ...


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