United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
MATTHEW F. KENNELLY UNITED STATES DISTRICT JUDGE.
case involves an insurance coverage dispute. Scottsdale
Insurance Company seeks a declaratory judgment that it has no
duty to defend or indemnify Chris Carpentry Company or its
owner, Krysiek Yowalkowski, in connection with a personal
injury lawsuit against them by Jan Bryjak, who is also a
defendant in the present case. Bryjak has moved for partial
judgment on the pleadings under Federal Rule of Civil
Procedure 12(c), and Yowalkowski has joined. For the reasons
stated below, the Court denies the motion.
from 2012 through mid-2019, Scottsdale issued to Chris
Carpentry a commercial general liability insurance policy,
which Scottsdale and Chris Carpentry renewed each July. The
policy at issue in this case (the Policy) provided coverage
from July 17, 2017 to July 17, 2018. It contained an
"Injury to Worker Exclusion Endorsement" stating
that the Policy did not cover a bodily injury to certain
persons, including employees, contractors, subcontractors,
and sub-subcontractors, "if such 'bodily injury'
arises out of and in the course of their employment or
retention" as contractors, subcontractors, or
sub-subcontractors, "regardless of whether or not [the
injury] is caused in part by" Chris Carpentry. Am.
Compl., dkt. no. 152, at 3. The Policy also included a
provision stating that if Scottsdale initially defended an
insured party or paid for the insured's defense but later
determined that the claim was not covered by the policy,
Scottsdale had "the right to reimbursement for the
defense costs" it incurred. Id. at 4.
to July 2016, the commercial general liability insurance
policies issued by Scottsdale to Chris Carpentry contained no
Injury to Worker Exclusion Endorsement. Scottsdale added that
Endorsement in the policy that took effect in July 2016. It
is undisputed that the addition of the Endorsement was a
material modification to the policy and that, when Scottsdale
made the modification, Scottsdale did not provide Chris
Carpentry with prior written notice of it.
Bryjak is a construction worker. He alleges that in March
2018, while working on a construction project in Hickory
Hills, Illinois, he fell through a hole in a floor and
sustained severe and permanent injuries. Chris Carpentry was
a subcontractor engaged on the project. At the time of his
injury, Bryjak was working for either Chris Carpentry or a
sub-subcontractor, PTS Construction Services, Inc.
18, 2018, Bryjak filed a personal injury lawsuit in the
Circuit Court of Cook County, Illinois in relation to his
fall (the Underlying Lawsuit). In the Underlying Lawsuit,
Bryjak asserts various claims against and seeks damages from
Chris Carpentry and Yowalkowski, as well as the owner of the
construction site and other contractors. Scottsdale is
defending Chris Carpentry and Yowalkowski in the Underlying
September 2018, Scottsdale sued Chris Carpentry, Yowalkowski,
and Bryjak in this Court based on diversity jurisdiction.
See 28 U.S.C. § 1332(a)(1). In its first
amended complaint Scottsdale asserts five counts, in each of
which it seeks a declaratory judgment regarding its duties in
the Underlying Lawsuit. Only count 2 is relevant to the
present order. In count 2, Scottsdale seeks a declaratory
judgment finding that it has no duty to indemnify Chris
Carpentry against any adverse judgment or settlement in the
answered the amended complaint and attached Scottsdale's
responses to Bryjak's requests to admit as exhibits. In
those responses, Scottsdale asserted that it issued the
Policy as a surplus line insurer and thus was not subject to
requirements under the Illinois Insurance Code for material
modifications to insurance policies, 215 ILCS 5/143.17a(b).
has moved for entry of judgment on the pleadings in its favor
on Count 2. Yowalkowski has joined Bryjak's motion.
the pleadings are closed-but early enough not to delay
trial-a party may move for judgment on the pleadings."
Fed.R.Civ.P. 12(c). "To survive a motion for judgment on
the pleadings (or a motion to dismiss), the complaint must
state a claim to relief that is plausible on its face."
ADM Alliance Nutrition, Inc. v. SGA Pharm Lab, Inc.,
877 F.3d 742, 746 (7th Cir. 2017) (internal quotation marks
omitted). "Judgment on the pleadings is 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). In assessing
the motion, a court is "confined to the matters
presented in the pleadings" and "must consider
those pleadings in the light most favorable to" the
nonmoving party. Id.
pleadings include the complaint, the answer, and any written
instruments attached as exhibits." N. Indiana Gun
& Outdoor Shows, Inc. v. City of S. Bend, 163 F.3d
449, 452 (7th Cir. 1998) (citing Fed.R.Civ.P. 10(c)). On a
motion for judgment on the pleadings, if "matters
outside the pleadings are presented to and not excluded by
the court, the motion must be treated as one for summary
judgment under Rule 56." Fed.R.Civ.P. 12(d). In this
case, the pleadings consist of the First Amended Complaint;
the insurance policy Scottsdale issued to Chris Carpentry for
the July 17, 2017 to July 17, 2018 period, attached as
Exhibit A to the First Amended Complaint; the complaint in
the Underlying Lawsuit and its exhibits, attached as Exhibit
B to the First Amended Complaint; Bryjak's answer and
four exhibits attached to it, including Scottsdale's
responses to Bryjak's requests to admit; and
Yowalkowski's answer. In response to Bryjak's motion
for judgment on the pleadings, Scottsdale filed an opposition
brief and attached an exhibit that is not part of the
pleadings. The Court declines to treat Scottdale's
opposition brief as a motion for summary judgment and thus
will not consider the exhibit attached to that motion.
parties dispute whether Scottsdale issued the Policy to Chris
Carpentry as an authorized or unauthorized insurer. To do
business in Illinois, an insurer must obtain a certificate of
authority from the state's Director of Insurance. 215
ILCS § 5/24. An insurer that holds such a certificate is
considered an authorized insurer. Id. §
5/445(1). A party seeking insurance may be unable to obtain
it from an authorized insurer, however, either because
authorized insurers do not provide the desired type of
coverage or because, after evaluating the insured's risk,
they decline to provide coverage. See 50 Ill. Adm.
Code § 2701.50(a) (describing situations where an
insurance agent may fail to procure insurance after making a
diligent effort); see also People ex rel. Madigan v.
Illinois Commerce Comm'n, 231 Ill.2d 370, 380, 899
N.E.2d 227, 232 (2008) ("Administrative rules and
regulations have the force and effect of law."). In
those situations, the insured may procure insurance from an
unauthorized insurer subject to certain requirements set
forth in section 445 of the Illinois Insurance Code;
insurance that meets those requirements is called surplus
line insurance. 215 ILCS § 5/445(1)-(1.5); see
also 50 Ill. Adm. Code § 2701.10; Corday's