Owners Ins. Co. v. Colliers Bennett & Kahnweiler, LLC

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OWNERS INSURANCE COMPANY, Plaintiff, v. COLLIERS BENNETT & KAHNWEILER LLC, a foreign limited liability company, and INGRAM SERVICES, INC., an Illinois corporation, Defendants.

COLLIERS BENNETT & KAHNWEILER LLC, Cross-Claimant/Third-Party Plaintiff, v. INGRAM SERVICES, INC. Cross-Defendant/Third-Party Defendant.

No. 1:23-cv-02926

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

July 24, 2024

HEATHER K MCSHAIN, MAGISTRATE JUDGE

MEMORANDUM OPINION AND ORDER

JORGE ALONSO, UNITED STATES DISTRICT JUDGE

Plaintiff Owners Insurance Company (“Owners”) filed this lawsuit seeking a declaratory judgment that it does not owe insurance coverage to Defendant Colliers Bennett Kahnweiler LLC (“Colliers”) and seeking a reimbursement of defense fees and indemnity expended in Chmielewski v Walker Partners and Colliers Bennett & Kahnweiler LLC, Case No. 2018 L 013785 in the Circuit Court of Cook County, Illinois, County Department, Law Division (the “Underlying Litigation”). Shortly thereafter Colliers filed a third-party complaint against Ingram Services (“Ingram”) asserting claims for breach of contract. Ingram filed a motion to dismiss the third-party complaint for failure to state a claim (ECF No. 29).

Between the time of Ingram's motion and Colliers's response Owners added Ingram as a direct defendant. Therefore, Colliers answered the amended complaint and re-styled the third-party complaint to a crossclaim (the “Crossclaim”). (ECF No. 38.) However, because the pleading remained the same in substance, both parties proceeded with the briefing initially filed with respect to the third-party complaint. In accordance with the parties' wishes and in the interest of judicial economy and efficiency, the Court construes the motion to dismiss-initially filed with respect to the third-party complaint-as a motion to dismiss the Crossclaim. For the reasons that follow, the Court denies Ingram's motion [29].

Background

The Court takes the following facts from the Crossclaim, which are accepted as true for motion to dismiss purposes. See Lax v. Mayorkas, 20 F. 4th 1178, 1181 (7th Cir. 2021); Huntington Nat'l Bank v. Midwest Heart & Vascular Assocs., Inc., 683 F.Supp.3d 781, 783 (N.D. Ill. 2023). The Court also considers “documents attached to the [Crossclaim], documents that are critical to the [Crossclaim] and referred to in it, and information that is subject to proper judicial notice,” along with additional facts set forth in Colliers's brief opposing dismissal (ECF No. 40), so long as those additional facts “are consistent with the pleadings.” Phillips v. Prudential Ins. Co. of Am., 714 F.3d 1017, 1020 (7th Cir. 2013) (internal quotation marks omitted).

Colliers managed property owned by North Shore Industrial Holdings LLC (“North Shore”) and located at 7601-7661 New Gross Point Road in Skokie, Illinois (the “Property”). On November 10, 2014, North Shore, by and through its agent Colliers, entered into a Services Contract with Ingram under which Ingram agreed to provide snow and ice management services at the Property, which involved plowing and salting of parking lots and non-public roadways, including the ingress and egress routes and entrances to the parking lots. Colliers had the ability to give direction to Ingram under the Services Contract and to terminate the agreement.

Under Paragraph 16 of the Services Contract, Ingram agreed to the following indemnification provision (the “Indemnification Clause”):

[Ingram] shall indemnify, defend and hold Owner, [Colliers] and each of their respective parents, subsidiaries, affiliates, related entities, and all such officers, directors, trustees, managers, partners, members, agents, employees, representatives, successors, and assigns (collectively, the “Indemnitees”) harmless from and against any and all losses, costs, claims, damages, injuries, demands, settlements, judgments, expenses, fines, penalties, or liabilities of any nature or kind, including reasonable attorneys' fees, court costs, out of pocket expenses, and fees of expert witnesses (collectively “Claims”) arising from relating to, or in connection with: (a) [Ingram's] or Subcontractor's (including any party for whom [Ingram] or Subcontractor may be responsible at law) (collectively “Vendor”) performance or non-performance of the Services, (b) Vendor's acts that are outside the scope of this Contract, (c) Vendor's negligence, willful misconduct, violation of law, or breach of this contracts

(Crossclaim Ex. 1 at ¶ 16, ECF No. 38-1.)

Under Exhibit B of the Services Contract, Ingram was required to obtain primary commercial general liability (“CGL”) insurance, non-contributory with any other insurance available to Colliers, of not less than $1,000,000 per occurrence, $2,000,000 aggregate limits, and name Colliers as an additional insured on the CGL insurance coverage (the “Insurance Clause”). (Crossclaim Ex. 1 at Ex. B, ECF No. 38-1.) The Insurance Clause further states, “All policies are to protect [Colliers] from and against liabilities arising out of the operations of Contractor and any Subcontractors pursuant to this Contract ....” (Id.)

On December 21, 2018, Adam Chmielewski sued Colliers, among others, in the Underlying Litigation, asserting claims associated with Chmielewski's injuries resulting from a slip and fall that occurred on December 22, 2016. The Underlying Litigation alleges that Colliers negligently allowed the unnatural accumulation of water, ice, and snow on the Property; negligently failed to maintain the walkway, parking lot, and entranceway of the Property; and negligently allowed water, ice, and snow to remain on the Property. Ingram was not a party to the Underlying Litigation.

On January 18, 2019, Colliers tendered its defense in the Underlying Litigation to Ingram and its insurer, Owners. Owners accepted Colliers's tender of defense of the Underlying Litigation pursuant to a reservation of rights and provided Colliers a defense in the Underlying Litigation for four years. Owners filed the instant action on May 10, 2023, seeking a declaratory judgment that it did not owe insurance coverage to Colliers and seeking a reimbursement of the defense fees and indemnity expended in the Underlying Litigation. Owners paid $90,000 on behalf of Colliers to settle the Underlying Litigation, which was dismissed with prejudice by stipulation of the parties on June 26, 2023.

Colliers filed a third-party complaint against Ingram on July 27, 2023, which it re-styled to a Crossclaim on October 30, 2023. Colliers asserts two counts of breach of the Services Contract: one for failure to procure insurance and one for failure to defend and indemnify.

The Court has jurisdiction under 28 U.S.C. § 1332 because there is complete diversity of citizenship between the parties and the amount in controversy exceeds $75,000. Plaintiff Owners is a Michigan insurance corporation with a principal place of business in Lansing, Michigan, and is therefore a Michigan citizen. (Am. Compl. ¶ 3, ECF No. 35.) Defendant Colliers is a Delaware limited liability company which maintains its principal place of business in Rosemont, Illinois, and is manager operated. (Id. ¶ 4.) The managers of Colliers are three individuals who are citizens of California, Illinois, and Canada, respectively. (Id.) Colliers is therefore a citizen of California, Illinois, and Canada. Thomas v. Guardsmark, LLC, 487 F.3d 531, 534 (7th Cir. 2007). Defendant Ingram is an Illinois corporation with its principal place of business in Lincolnshire, Illinois, and is therefore an Illinois citizen. (Id. ¶ 5.) Chmielewski was a nominal party to this action and was dismissed on June 23, 2023. (ECF No. 7.)

Standard of Review

To survive a motion to dismiss under Rule 12(b)(6), a complaint must “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). This standard “is not akin to a ‘probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (quoting Twombly, 550 U.S. at 556). “Where a complaint pleads facts that are ‘merely consistent with' a defendant's liability, it ‘stops short of the line between possibility and plausibility of entitlement to relief.'” Id. (quoting Twombly, 550 U.S. at 557 (internal quotation marks omitted)).

When considering a motion to dismiss, courts “accept the allegations in the complaint as true, and . . . draw all reasonable inferences in favor of the plaintiff.” Crescent Plaza Hotel Owner, L.P. v. Zurich Am. Ins. Co., 20 F.4th 303, 307 (7th Cir. 2021) (citation omitted). But “allegations in the form of legal conclusions are insufficient” to survive a motion to dismiss, as are “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements.” Def. Sec. Co. v. First Mercury Ins. Co., 803 F.3d 327, 334 (7th Cir. 2015) (citations and internal quotation marks omitted).

A “complaint need not anticipate and overcome affirmative defenses, such as the statute of limitations. But dismissal is appropriate when the plaintiff pleads himself out of court by alleging facts sufficient to establish the complaint's tardiness.” Cancer Found., Inc. v. Cerberus Capital Mgmt., LP, 559 F.3d 671, 674-75 (7th Cir. 2009); Shuhaiber v. Dec, No. 17 C 5331, 2020 WL 6781798, at *1 (N.D. Ill. Nov. 17, 2020).

The parties agree that Illinois law applies in this diversity case.

Discussion

I. Claim Splitting

Ingram first argues that Colliers's breach of contract claim for failure...