United States District Court, C.D. Illinois, Springfield Division
MYERSCOUGH, U.S. DISTRICT JUDGE:
matter comes before the Court on Indemnity Insurance Company
of North America's (Indemnity) Motion for Reconsideration
Under Rule 59(e) Regarding (I) Finding of Equitable
Contribution Liability During Period of Deactivation; and
(II) Findings Pertaining to Star's Duty to Defend (Case
No. 16-3298 d/e 112, Case No. 14-3040 d/e 122) (Motion). To
prevail, Indemnity must demonstrate a manifest error of law
or fact, or present newly discovered evidence. Fed. R.
Civ. P. 59(e); LB Credit Corp. v. Resolution Trust
Corp., 49 F.3d 1263, 1267 (7th Cir. 1995).
Indemnity argues that the Court made manifest errors and does
not present any newly discovered evidence. For the reasons
set forth below, the Court sees no manifest error of law or
fact. The Motion is DENIED.
Bradshaw, Eric Bradshaw, and Hollis Shafer owned confined
area feeding operations (Hog Facilities or CAFO) in Scott
County, Illinois, known as Sandstone North, LLC, and
Sandstone South, LLC (collectively Sandstone). At various
times, Indemnity and Westfield issued insurance policies to
Sandstone. Westfield issued policies that covered Sandstone
up to November 12, 2008. Thereafter, Sandstone switched its
coverage to Indemnity. On August 2, 2009, Sandstone was also
made an additional insured on a policy issued by Star to a
company called Red Oak Hill. Brian Bradshaw also owned Red
Oak Hill. In 2010, Sandstone's neighbors brought a
nuisance suit against Sandstone in Scott County, Illinois
Circuit Court, Alvin Marsh, et al. v. Brian Bradshaw, et
al., Scott County Case No. 2010-L-3 (Underlying Action).
See Opinion entered October 28, 2019 (Case No. 16-3298
d/e 111, Case No. 14-3040 d/e 121) (Summary Judgment
Opinion), at 2-3, 14-15. The Complaint in the Underlying
Action (Underlying Action Complaint) alleged various injuries
to the neighbors from the wrongful operations of the Hog
Facilities from 2007 onward.
August 6, 2010, Sandstone tendered the defense of the
Underlying Action to the Indemnity, Westfield, and Star. On
November 2, 2010, Sandstone withdrew the tender to Indemnity
of the defense of the Underlying Action. On December 17,
2013, Sandstone re-tendered the defense to Indemnity. This
Court determined at summary judgment that Sandstone could
re-tender the defense to Indemnity and that Sandstone's
re-tender in this case was effective because it was within a
reasonable time under the circumstances. As a result,
Indemnity owed Sandstone a duty to defend the Underlying
Action. Summary Judgment Opinion, at 15-23, 57-58.
attorneys secured a complete dismissal of all claims against
Sandstone. Westfield and Star paid for the defense of the
Underlying Action. Westfield and Star asked this Court to
require Indemnity to pay a pro rata share of the defense
costs. The Court determined Indemnity was required to pay a
pro rata of the defense costs because the re-tender was
effective and was made within a reasonable time. Summary
Judgment Opinion, at 57-62. The Court determined that
Westfield and Star were entitled to prejudgment interest from
the date that Sandstone re-tendered the defense to Indemnity,
December 17, 2013. The Court directed the parties to meet and
confer to submit an agreed calculation of Indemnity's
share of the defense costs and prejudgment interest.
Summary Judgment Opinion, at 64.
asks the Court to reconsider two aspects of the decision.
Indemnity asks the Court to reconsider its decision that
Indemnity is liable for defense costs that occurred before
the re-tender on December 17, 2013. Second, Indemnity asks
the Court to reconsider its findings regarding whether Star
had a duty to defend.
Court sees no error in its determination that Indemnity had a
duty to defend the entire Underlying Action. The Court
determined as a matter of first impression that an insured
that had relieved an insurer of the obligation to defend a
lawsuit under Illinois law's “targeted tender
doctrine” could re-tender the lawsuit to the insurer
and require the insurer to defend. The Court explained that
the targeted tender doctrine existed to protect the
insured's right to decide which insurer should provide a
defense to a particular lawsuit. In order to protect an
insured's right to so choose, the Court determined that
the insured must be entitled to re-tender a defense to an
insurer. Summary Judgment Opinion, at 47-49.
Court further determined that the re-tender must be made
within a reasonable time under existing principles of
Illinois for the tender of a defense to an insured. The Court
applied the principles for determining the timeliness of a
tender approved by the Illinois Supreme Court in West
American Ins. Co. v. Yorkville Nat. Bank, 238 Ill.2d
177, 185, 939, 939 N.E.2d 288, 293 (Ill. 2010), and
determined that Sandstone's re-tender to Indemnity was
within a reasonable time under the circumstances. Summary
Judgment Opinion, at 49-58. Because the re-tender was
within a reasonable time under the circumstances, Indemnity
had a duty to defend the Underlying Action. A tender of a
defense within a reasonable time effectively requires an
insurer to pay all the defense costs, even those incurred
before the date of the tender of the defense. See West
American Ins. Co. v. Yorkville Nat. Bank, 939 N.E.2d at
292, 296. Indemnity's duty to defend Sandstone,
therefore, extended to all of Sandstone's costs in the
Underlying Action, not just those after December 17, 2013.
Because Indemnity had a duty to Sandstone to pay all the
defense costs, Westfield and Star were entitled to require
Indemnity to pay a pro rata share of the costs. There was no
argues that the Court erred because the Illinois Supreme
Court held that under the targeted tender doctrine an insurer
relieved of the duty to defend, such as Indemnity, could not
be required to pay contribution to other insurers that also
had duties to defend, such as Westfield and Star. Indemnity
cites as support for its argument the Illinois Supreme Court
decisions in Kajima Const. Servs., Inc. v. St. Paul Fire
& Marine Ins. Co., 227 Ill.2d 102, 108, 879 N.E.2d
305, 310 (2007); John Burns Const. Co. v. Indiana Ins.
Co., 189 Ill.2d 570, 578, 727 N.E.2d 211, 217 (2000).
The insureds in Kajima and John Burns
Const. selected one insurer to provide the defense of
the underlying lawsuit and relieved another insurer from
paying those costs. The Kajima and John Burns
Const. decisions stated the insured had the right to
choose which insurer would pay for the defense. The
Kajima and John Burns Const. decisions also
stated that allowing the insurer selected to pay defense
costs to seek contribution would interfere with the
insured's right to choose. Summary Judgment
Opinion, at 37; see John Burns Const., 189
Ill.2d at 577, 727 N.E.2d at 217 (“In the present case,
however, Burns [the insured] made clear that it did not want
Royal [insurer] to become involved in the matter and that the
defense was being tendered solely to Indiana [the other
insurer]. Therefore, Indiana was foreclosed from seeking
equitable contribution from Royal.”).
case, the insured, Sandstone, effectively re-tendered the
defense to Indemnity. Sandstone chose Indemnity to defend the
Underlying Action along with Westfield and Star. Allowing
Westfield and Star to recover a pro rata share of all the
costs from Indemnity furthered the insured Sandstone's
decision that all three companies should provide the defense.
The Court's ruling is consistent with Kajima and
John Burns Const. because the outcome protects the
insured's right to decide which insurance company will
provide the defense to a lawsuit. There was no error.
argues that starting the accrual of prejudgment interest on
the date of the re-tender, December 17, 2013, was
inconsistent with finding that Indemnity was liable for a
share of all defense costs from the beginning of the
Underlying Action. Indemnity is mistaken. The right to
prejudgment interest accrues when the right to payment is
liquidated and easily ascertainable. See New Hampshire
Ins. Co. v. Hanover Ins. Co., 296 Ill.App.3d 701, 709,
696 N.E.2d 22, 28 ( Ill. App. 1st Dist. 1998).
Westfield and Star's right to contribution was not
liquidated until Sandstone made a re-tender to Indemnity.
That occurred on December 17, 2013. Prejudgment interest
properly accrued from that date. There was no inconsistency
or error in the Summary Judgment Opinion.
also asks the Court to reconsider its analysis of
Indemnity's Other Insurance provisions and its impact on
Indemnity's duty to defend. An insurer has a duty to
defend if the complaint in the underlying lawsuit alleges
fact which, if proven, could give rise to coverage under the
insurer's policy. Summary Judgment Opinion, at
31, (citing Outboard Marine Corp. v. Liberty Mut. Ins.
Co., 154 Ill.2d 90, 108, 607 N.E.2d 1204, 1212 (Ill.
1992)). Indemnity's Other Insurance provisions excluded
coverage for certain circumstances when other insurance
applied to cover the claims alleged in a lawsuit. The Court
determined that the Underlying Action Complaint alleged
facts, which if proven, could have established liability that
was not subject to Indemnity's Other Insurance
provisions. The Underlying Action Complaint alleged
continuing wrongful acts from 2007 onward. Indemnity was the
only insurer that issued policies to Sandstone covering the
claims in the Underlying Action for alleged wrongful acts
that occurred from November 12, 2008 until August 2, 2009.
Because Indemnity was ...