Am. Safety Cas. Ins. Co. v. City of Waukegan

776 F.Supp.2d 670

AMERICAN SAFETY CASUALTY INSURANCE COMPANY, Plaintiff,

v.CITY OF WAUKEGAN, Defendant.City of Waukegan, Counter–Plaintiff,

v.American Safety Casualty Insurance Company, Interstate Indemnity Company, Certain Underwriters at Lloyds of London, Northfield Insurance Companies, Westport Insurance Corporation, Evanston Insurance Company, S. Alejandro Dominguez, and Paul Hendley, Counter–Defendants.

Case No. 07 C 1990.

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

March 3, 2011.Opinion Denying Motion to Alter or Amend Judgment July 6, 2011.

Daile V. Grigaitis McCann, Jeffrey J. Asperger, John R. Bowley, Asperger Associates LLC, Chicago, IL, for Plaintiff.Paulette A. Petretti, Alicia Nichole Garcia, Anthony G. Scariano, Darcee Corinne Williams, Kimberly Payne, Scariano, Himes & Petrarca Chtd., Chicago, IL, Daniel Playfair Field, Scariano, Himes & Petrarca, Waukegan, IL, for Defendant, Counter–Plaintiff.Bruce A. Radke, Kevin J. Kuhn, Vedder Price P.C., Dana A. Rice, Jennifer Kristen Gust, Hinshaw & Culbertson LLP, Kent J. Cummings, Robert John Gibbons, Hinshaw & Culbertson LLP, Chicago, IL, Robert Paul Arnold, Walker Wilcox Matousek LLP, Michael John Duffy, Jeffrey Mark Alperin, Tressler LLP, Michael I. Kanovitz, Jonathan I. Loevy, Arthur R. Loevy, Loevy & Loevy, Bradley Stephen Block, Law Offices of Bradley Block, Lincolnshire, IL, for Counter–Defendants.

MEMORANDUM OPINION AND ORDER

VIRGINIA M. KENDALL, District Judge.

This insurance coverage dispute between the City of Waukegan, Illinois (“Waukegan” or “the City”) and its various insurers arises from a $9,063,000 verdict entered against Waukegan in a civil rights case brought by S. Alejandro Dominguez (“Dominguez”), who was convicted of rape in 1990 after an investigation by Waukegan police officers but exonerated by DNA evidence in 2002. The insurers issued to the City various primary and excess policies in effect between 1991 and 2006. The parties have filed summary judgment motions addressing whether the insurers should now indemnify Waukegan for its loss as a result of the Dominguez verdict, whether certain of Waukegan's carriers should have defended the City in the underlying case, and whether a subset of those insurers violated Section 155 of the Illinois Insurance Code by acting “unreasonably and vexatiously” in handling the Dominguez claim.

Plaintiff American Safety Casualty Insurance Company (“American Safety”) filed a Complaint against Waukegan on April 11, 2007, seeking a declaratory judgment that it does not owe coverage to Waukegan for its obligations in S. Alejandro Dominguez v. Paul Hendley et al., No. 04 C 2907 (N.D.Ill.) (“the Dominguez Civil Case”). On August 19, 2009, Waukegan filed its operative complaint, the Second Amended Counterclaim (Doc. 273), against Counter–Defendants American Safety, Interstate Indemnity Company (“Interstate”), Certain Underwriters at Lloyds of London (“Underwriters”), Northfield Insurance Companies (“Northfield”), Westport Insurance Corporation (“Westport”) (formerly Coregis Insurance Organizations), Dominguez, and Paul Hendley (“Hendley”). Two defendants, Scottsdale Insurance Company (“Scottsdale”) and Evanston Insurance Company (“Evanston”), were named in Waukegan's first counterclaim, but the Court granted Scottsdale's motion for summary judgment in March 2009 ( see Doc. 236) and Waukegan voluntarily dismissed Evanston without prejudice in July 2009 ( see Doc. 260).

American Safety (Doc. 563) and Interstate (Doc. 561) have each filed Motions to Strike portions of Waukegan's Rule 56.1 statements of material facts in connection with its summary judgment motions. The Court addressed these motions during its analysis of the pending summary judgment motions. For the reasons explained below, the Court grants in part and denies in part American Safety's motion, and grants Interstate's motion in its entirety.

In addition, American Safety (Doc. 444), Interstate (Doc. 448), and Westport (Doc. 460) have each filed motions for summary judgment against Waukegan, and Waukegan has cross-moved for summary judgment against each of them. (Docs. 458, 533 (amending 466), 539 (amending 476), respectively). Northfield and Underwriters have joined in three separate summary judgment motions, one addressing whether their policies were triggered (Doc. 450), one addressing their duty to defend Waukegan (Doc. 435), and the last addressing whether they had a duty to indemnify the City given its allegedly voluntary agreement to assume Hendley's liability (Doc. 429). Waukegan has cross-moved for summary judgment against Northfield and Underwriters separately (Docs. 535 (amending 491), 537 (amending 498), respectively).

For the reasons stated below, the Court:

1. grants in part American Safety's motion to strike portions of Waukegan's Local Rule 56.1 Statement supporting its motion for summary judgment against American Safety, as detailed below;

2. grants in its entirety Interstate's motion to strike portions of Waukegan's Local Rule 56.1 Statement supporting its motion for summary judgment against Interstate; 3. denies American Safety's motion for summary judgment against Waukegan in its entirety, and grants Waukegan's cross-motion for summary judgment as detailed below, finding American Safety (a) breached its duty to defend Waukegan, (b) must now indemnify Waukegan for the Dominguez verdict to the policy's limits, and (c) is liable under Section 155 of the Illinois Insurance Code for “unreasonable and vexatious” conduct in handling the Dominguez claim;

4. grants in part, and denies in part, Interstate's motion for summary judgment against Waukegan; and grants in part, and denies in part, Waukegan's cross-motion for summary judgment, finding that Interstate did not breach a duty to defend or violate Section 155, but must indemnify Waukegan for the Dominguez verdict;

5. grants in its entirety Northfield's and Underwriters' joint motion for summary judgment regarding whether their policies were triggered and denies Waukegan's cross-motions for summary judgment against Northfield and Underwriters, finding that the Northfield/Underwriters policies were not triggered by Dominguez's allegations in the underlying complaint, rendering moot Northfield's and Underwriters' joint motions for summary judgment regarding duty to defend and duty to indemnify;

6. grants in its entirety Westport's motion for summary judgment against Waukegan, and denies in its entirety Waukegan's motion for summary judgment against Westport, finding that the Westport policies were not triggered by Dominguez's allegations in the underlying complaint.

7. denies as moot Waukegan's objection (Doc. 781) to Magistrate Finnegan's Order of December 17, 2010 denying Waukegan's motion to compel.

I. MOTIONS TO STRIKE PORTIONS OF WAUKEGAN'S 56.1 STATEMENTS

As an initial matter, American Safety and Interstate have each moved to strike portions of Waukegan's Local Rule 56.1 statements in the City's cross-motions for summary judgment against them, arguing that they contain improper legal conclusions, rely on portions of Donald Brayer's Amended Expert Report that have been stricken by the Court's January 12, 2011 order, 2011 WL 98596, fail to provide adequate citation to the record, or are immaterial. Local Rule 56.1(a) provides that a party moving for summary judgment shall file a “statement of material facts” entitling it to judgment as a matter of law, “including within each paragraph specific references to the affidavits, parts of the records, and supporting materials relied upon to support the facts set forth in that paragraph.” See L.R. 56.1(a) (emphasis added). Nonconformity with the Local Rules and the standing orders of the Court is not without consequence. “A district court is entitled to expect strict compliance with Rule 56.1.” Ammons v. Aramark Uniform Servs., Inc., 368 F.3d 809, 817 (7th Cir.2004) (citing Bordelon v. Chicago School Reform Bd. of Trustees, 233 F.3d 524, 527 (7th Cir.2000)). Further, “a district court does not abuse its discretion, when, in imposing a penalty for a litigant's non-compliance with Local Rule 56.1, the court chooses to ignore and not consider the additional facts that a litigant has proposed.” Cichon v. Exelon Generation Co., L.L.C., 401 F.3d 803, 809–10 (7th Cir.2005).

First, with respect to American Safety's and Interstate's objections to paragraphs that contain or consist of legal conclusions, a party may not include legal opinions or conclusions of law in its statement of facts in support of summary judgment. See Judson Atkinson Candies, Inc. v. Latini–Hohberger Dhimantec, 529 F.3d 371, 382 n. 2 (7th Cir.2008) (“Local Rule 56.1 requires that statements of facts concerning summary judgment motions identify the evidence supporting a party's factual assertions. It is inappropriate to make legal arguments in a Rule 56.1 statement of facts.”); Cady v. Sheahan, 467 F.3d 1057, 1060 (7th Cir.2006) (finding a statement of material facts did not comply with Rule 56.1 because it failed to adequately cite the record and contained legal arguments).

The Court, therefore, strikes the following portions of Waukegan's statements of material facts because they address legal issues that are to be decided by this Court:

+-------------------------------------+
¦Document          ¦Statement Stricken¦
+-------------------------------------+

Waukegan's Statement of Material Facts  The second and forth sentences of
in support of its Motion for Summary    paragraph 34; the latter part of the
Judgment against American Safety        second sentence of paragraph 54
Waukegan's Statement of Additional      The first clause of paragraph 7
Material Facts in Opposition to         paragraph 9; paragraph 13; and the
American Safety's Motion for Summary    first sentence of paragraph 24
Judgment
                                        Paragraph 34; all but the first
                                        sentence of paragraph

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