Auto Club Ins. Ass'n v. Menard, Inc.

MEMORANDUM OPINION AND ORDER

JEFFREY T. GILBERT UNITED STATES MAGISTRATE JUDGE

This matter is before the Court on a complaint and counterclaim that assert mirror causes of action for declaratory judgment brought pursuant to 28 U.S.C §§ 2201 and 2202. Plaintiff/Counter-Defendant Auto Club Insurance Association (“ACIA”) filed its complaint for declaratory judgment seeking a finding that ACIA does not have any duty to defend or indemnify Defendants/Counter-Plaintiffs Menard, Inc. (“Menard”) and its authorized agent/employee Saber Ali (“Ali”) under its Policy No. AUTO 48817858 for an underlying negligence lawsuit brought against Menard and Ali by ACIA's insured, Robert Estopinan (“Estopinan”). See ACIA's Complaint for Declaratory Judgment [ECF No. 1]. Defendants/Counter-Plaintiffs

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Menard and Ali answered the complaint and filed a counterclaim for declaratory judgment, seeking a finding that ACIA does have a duty to defend them in the underlying negligence lawsuit. See Menard's and Ali's Corrected Answer and Counterclaim [ECF No. 10]. The parties filed cross-motions for summary judgment. See [ECF Nos. 26, 30]. The motions are full briefed and ripe for decision.

BACKGROUND

I. Underlying Lawsuit

The following facts are taken from Menard's and Ali's Statement of Uncontested Facts in Support of their Motion for Summary Judgment and their Statement of Additional Facts in Opposition to ACIA's Motion for Summary Judgment, which are not disputed by ACIA.^[1] This matter arises from an underlying civil lawsuit (“Underlying Lawsuit”) filed by Estopinan in the Circuit Court of DuPage County, Illinois on October 2, 2019, which is captioned Robert Estopinan v. Menard, Inc. d/b/a Menards, Case No. 2019 L 001104. Menard's and Ali's SOF [ECF No. 31], at ¶28; ACIA's Responses to Menard's and Ali's SOF [ECF No. 37], at ¶28. The operative pleading in the Underlying Lawsuit is Estopinan's Second Amended Complaint (“SAC”), which was filed on December 11, 2019 and contains two negligence counts. Menard's and Ali's SOF [ECF No. 31], at ¶32; ACIA's Responses to Menard's and Ali's SOF [ECF No. 37], at ¶32.

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The following facts are alleged in Estopinan's SAC. See generally ACIA's Complaint for Declaratory Judgment [ECF No. 1], Ex. D. On September 2, 2018, Estopinan visited the Menard retail store located at 521 E. North Avenue, Glendale Heights, Illinois (“Menard Store”) to pick up a special order of several interior doors. Menard's and Ali's SOF [ECF No. 31], at ¶13; ACIA's Responses to Menard's and Ali's SOF [ECF No. 37], at ¶13. Ali was an employee at the Menard Store who helped Estopinan load the doors onto his vehicle. Menard's and Ali's SOF [ECF No. 31], at ¶¶3, 24; ACIA's Responses to Menard's and Ali's SOF [ECF No. 37], at ¶¶3, 24. Estopinan alleges that Ali failed to properly secure or fasten the doors to the order selector he used to move the doors close to Estopinan's truck, and that Ali negligently operated the order selector while he loaded the doors onto Estopinan's vehicle. Menard's and Ali's SOF [ECF No. 31], at ¶31; ACIA's Responses to Menard's and Ali's SOF [ECF No. 37], at ¶31.

In the process of loading the doors onto his truck, Estopinan was hit by a door that had fallen from the order selector, and he was injured. Menard's and Ali's SOF [ECF No. 31], at ¶26; ACIA's Responses to Menard's and Ali's SOF [ECF No. 37], at ¶26. Estopinan alleges that the doors were improperly set against the rail of the order selector. Menard's and Ali's SOF [ECF No. 31], at ¶27; ACIA's Responses to Menard's and Ali's SOF [ECF No. 37], at ¶27 Estopinan also alleges Ali negligently failed to warn him about the “dangerous condition of the unsecured or improperly loaded wooden doors” that were being placed onto his vehicle. Menard's and Ali's

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SOF [ECF No. 31], at ¶31(f); ACIA's Responses to Menard's and Ali's SOF [ECF No. 37], at ¶31.

On or about June 5, 2020, Menard notified ACIA of the Underlying Lawsuit and tendered its defense pursuant ACIA's Policy No. AUTO 48817858 (the “Policy”) issued to Estopinan. Menard's and Ali's SOF [ECF No. 31], at ¶35; ACIA's Responses to Menard's and Ali's SOF [ECF No. 37], at ¶35. On August 4, 2020, ACIA filed its complaint for declaratory judgment seeking a finding that it does not have a duty to defend or indemnify Menard or Ali pursuant to its Policy for the claims and losses alleged in the Underlying Lawsuit. See ACIA's Complaint for Declaratory Judgment [ECF No. 1]. On October 6, 2020, Menard and Ali filed their answer and counterclaim for declaratory judgment, again seeking to trigger ACIA's duty to defend them under the Policy. See [ECF No. 8]. Menard and Ali filed a corrected answer and counterclaim on November 4, 2020. See Menard's and Ali's Corrected Answer and Counterclaim [ECF No. 10].

II. The ACIA Insurance Policy

ACIA issued Policy No. AUTO 48817858 to Estopinan, and that Policy was effective from June 11, 2018 to December 11, 2018. Menard's and Ali's SOF [ECF No. 31], at ¶5; ACIA's Responses to Menard's and Ali's SOF [ECF No. 37], at ¶5.

The ACIA Policy is attached as Exhibit A to ACIA's Complaint for Declaratory Judgment and contains the following language:

INSURING AGREEMENT

1. Subject to the Definitions, Exclusions, Conditions and Limits of Liability of this policy, we will pay compensatory damages for which

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an insured person is legally liable because of bodily injury or property damage arising out of an accident involving an insured car to which this coverage applies

2. We will defend an insured person in any civil action to which this coverage applies, with the attorneys of our choice or settle any claim for these damages as we think appropriate. We will choose either our staff attorneys or private attorneys; both shall exercise their independent professional judgment in the defense of an insured person However, we will not defend or settle after we have paid or offered our Limit of Liability for this coverage

See ACIA's Complaint for Declaratory Judgment [ECF No. 1], at ¶14 and Exhibit A; see also Menard's and Ali's SOF [ECF No. 31], at ¶6; ACIA's Responses to Menard's and Ali's SOF [ECF No. 37], at ¶6. The ACIA Policy also contains the following definition of persons insured under the Policy:

Insured Person(s) means:

1. For use of your car

a. you and any resident relative,

b. any other person using it with your permission;

See ACIA's Complaint for Declaratory Judgment [ECF No. 1], at ¶15 and Exhibit A; see also Menard's and Ali's SOF [ECF No. 31], at ¶7; ACIA's Responses to Menard's and Ali's SOF [ECF No. 37], at ¶7.

STANDARD OF REVIEW

Courts grant summary judgment when the movant shows that no genuine dispute of material fact remains and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). “A factual dispute is ‘genuine' only if a reasonable jury could find for either party.” Nichols v. Mich. City Plant Planning Dept., 755 F.3d 594, 599 (7th Cir. 2014) (internal quotation marks and citation omitted). Courts

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appropriately grant summary judgment when “no reasonable jury could rule in favor of the nonmoving party.” See Bagwe v. Sedgwick Claims Mgmt. Servs., Inc., 811 F.3d 866, 879 (7th Cir. 2016) (citation omitted). On cross-motions for summary judgment, each movant must satisfy these requirements. See Cont'l Cas. Co. v. Northwestern Nat'l Ins. Co., 427 F.3d 1038, 1041 (7th Cir. 2005).

When considering ACIA's Motion for Summary Judgment [ECF No. 26], the Court views all evidence in the light most favorable to Menard and Ali, and when considering Menard's and Ali's Motion for Summary Judgment [ECF No. 30], the Court views all evidence in the light most favorable to ACIA. See e.g., Hinsdale v. Village of Westchester, Illinois, No. 15 C 4926, 2017 WL 991489, at *3 (N.D. Ill. Mar. 15, 2017) (citing Int'l Bhd. Of Elec. Workers, Local 176 v. Balmoral Racing Club, Inc., 293 F.3d 402, 404 (7th Cir. 2002)). Nonmoving parties still must put forth enough evidence to support reasonable inferences, as courts “draw only the reasonable inferences” and “are not required to draw every conceivable inference from the record.” Smith v. Hope School, 560 F.3d 694, 699 (7th Cir. 2009) (internal quotations and citations omitted); see also Cordon v. Centex Homes, 835 F.Supp.2d 543, 548 (N.D. Ill. 2011).

DISCUSSION

The dispositive issue before the Court is whether the ACIA Policy is triggered on the facts alleged in the Underlying Lawsuit and whether ACIA thus has a duty to defend and/or indemnify Menard and Ali in the Underlying Lawsuit. The parties agree that Illinois law controls the construction and application of the Policy's terms.

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In Illinois, “the interpretation of an insurance policy is a question of law that is properly decided by way of summary judgment.” JAR Labs. LLC v. Great Am. E & S Ins. Co., 945 F.Supp.2d 937, 942 (N.D. Ill. 2013) (citing BASF AG v. Great American Assur. Co., 522 F.3d 813, 818-19 (7th Cir. 2008)).

I. ACIA Has a Duty to Defend Menard and Ali in the Underlying Lawsuit

The fundamental premise of ACIA's argument is that it does not have any obligation to defend or indemnify Menard and Ali in the Underlying Lawsuit because, pursuant to the terms of its Policy, insurance coverage has not been triggered. In response, Menard and Ali argue that the facts alleged in the Underlying Lawsuit do trigger insurance coverage under ACIA's Policy, and ACIA does have a duty to defend them. The Court agrees with Menard and Ali that ACIA has an obligation to defend them in the Underlying Lawsuit.

The Court begins its...