Opinion
No. 98 C 5484
October 18, 2002
MEMORANDUM AND ORDER ON MOTIONS FOR SUMMARY JUDGMENT
On September 2, 1998, the plaintiff Commercial Underwriters Insurance Company (hereinafter "CUIC"), filed a "Complaint for Declaratory Judgment" against T.J. Lambrecht Construction, Inc. (hereinafter "Lambrecht") and Johnny Lucchetti, seeking a declaration that CUIC was not obligated to either defend Lambrecht in an underlying lawsuit or to or indemnify Lambrecht in the event of any adverse judgment in that underlying suit. (See Compl. for Declaratory J., filing 1). The plaintiff subsequently filed a Second Amended Complaint naming M.J.M. Cartage, Inc., Herlihy-Midcontinent Company (hereinafter "Herlihy"), and the Herlihy/T.J. Lambrecht Joint Venture (hereinafter "the Joint Venture") as additional defendants. (See, filing 23.) On October 12, 1999, Utica Mutual Insurance Company (hereinafter "Utica") was granted leave to file a petition to intervene in CUIC's declaratory judgment action. (See filing 34.) After a settlement agreement resolved the underlying lawsuit (see Cross-claim, filing 78, Ex. 7, 8), CUIC filed a cross-claim against Utica alleging causes of action based upon breach of contract, equitable contribution, and breach of an implied duty of good faith and fair dealing. (See Cross-claim, filing 78). CUIC and Utica filed cross-motions for summary judgment on CUIC's cross-claim (see filings 82, 89), but both motions were denied (see generally Mem. and Order on Cross-motions for Swum. J., filing 105). Now before me are "Utica's Motion for Summary Judgment," filing 111, and the "Supplemental Motion of Plaintift Commercial Underwriters Insurance Company Against Defendant, Utica Mutual Insurance Company," filing 115. I find that genuine issues of material fact prevent the full adjudication of the plaintiffs cross-claims on these motions, but that each party's motion will be granted in part.
I. BACKGROUND
The following summary is based upon the information presented in Utica's Statement of Material Facts in Support of Its Motion for Summary Judgment," (hereinafter "Utica's Facts"), filing 113, and "Plaintiff Commercial Underwriters Insurance Company's Supplemental Statement of Material Facts in Support of Its Supplemental Motion for Summary Judgment," (hereinafter "CUIC's Facts"), filing 115.
In 1995, Lambrecht and Herlihy formed a Joint Venture and entered into a contract with the Illinois Department of Transportation to complete a roadway construction project. (See Appendix 1, filing 112, Ex. W at "TJL0018.") On August 8, 1996, Johnny Lucohetti, an employee of M.J.M. Cartage, Inc., used a tractor-trailer owned by Lambrecht (hereinafter "the truck") to deliver a load of stone gravel to the construction site. The gravel was held in a steel dump box on the truck's trailer. Lucohetti approached the area where he was required to drop the gravel, and, at the direction of a spotter employed by Lambrecht, positioned the truck beneath an electrical wire. When the spotter directed Lucehetti to begin dumping the gravel, Lucchetti used the control buttons in the truck to raise the dump box on the trailer. When the box was approximately half-raised, an arc of electricity from the overhead wire struck the truck and injured Lucehetti. Lucehetti then filed a personal injury action against Lambrecht and Commonwealth Edison Company (hereinafter "Edison"), which was allegedly the owner of the high voltage wire that delivered the electrical current to the truck. (See filing 82, Ex. 3, Compl. ¶ 1.) Edison later filed a third-party complaint for contribution against M.J.M. Cartage, Herlihy, and the Joint Venture.
There is evidence that four different insurance policies naming either Lambrecht, Herlihy, or the Joint Venture (collectively, "the insureds") were in effect at the time of Lucehetti's injury. One of these was a comprehensive general liability policy that had been issued to Lambrecht by CUIC. Another was a commercial auto policy that was issued to Lambrecht by Utica. There is also evidence that general liability and auto liability policies were issued to the Joint Venture and to Herlihy by St. Paul Insurance. The truck that was involved in Lucchetti's accident was listed as a "covered auto" on the policy issued by Utica.
This policy also covered M.J.M. Cartage and the Joint Venture. (See Appendix I, filing 112, Ex. I at "Page 2 of 2.")
I have found that Lambrecht, Herlihy, and the Joint Venture are all insureds under the Utica policy. (See Mem. and Order Cross-motions for Summ. J., filing 105, at 6.)
After Lambrecht was sewed with Lucchetti's complaint, Lambrecht tendered a request for defense and indemnification to CUIC. On April 1, 1998, CUIC accepted Lambrecht's tender under a reservation of rights and retained counsel to represent Lambrecht. However, CUIC withdrew from its defense of Lambrecht on August 24, 1998, and filed the instant declaratory judgment action on September 2, 1998, seeking a determination that coverage was not owed to Lambrecht under the CUIC policy. After Edison filed its third-party complaint, M.J.M. Cartage and the Joint Venture tendered their request for defense and indemnification to CUIC. This resulted in CUIC's Second Amended Complaint for Declaratory Judgment, which added defendants M.J.M. Cartage, Herlihy, and the Joint Venture to the complaint.
Meanwhile, Utica had been informed of the Lucchetti accident and its associated lawsuit. It is undisputed that Lambrecht did not believe that Utica's policy provided coverage for the accident, but the parties dispute whether Lambrecht asked Utica to become involved in the litigation. Utica responded to Lambrecht's communications with a reservation of rights letter and began an investigation of the Lucehetti accident, but Utica did not participate in the defense of Lambrecht, Herlihy, or the Joint Venture or file for a declaratory judgment that it owed no duty to defend these three entities. Instead, on June 18, 1999, Utica filed a motion for leave to file a petition to intervene in CUIC's declaratory judgment action. This motion was granted. (See filings 30, 34.)
On May 11, 2000, Lambrecht, Herlihy, and the Joint Venture requested that "Utica contribute to the defense and indemnity of the Luechetti lawsuit in equal shares with St. Paul and [CUIC]." (Appendix I, filing 112, Ex. P at 1.) Utica rejected this request and did not participate in the settlement. Nevertheless, CUIC and St. Paul proceeded to settle the underlying lawsuit with Lucehetti, and Lucehetti's complaint was dismissed on July 28, 2000. The settlement document states as follows:
The defendant's Appendix contains two exhibits designated with the letter "P." (See Appendix I, filing 112.) All citations to Exhibit P in this memorandum refer to the "second" Exhibit P.
It is undisputed that Lambrecht, Herlihy, and the Joint Venture tendered a request for defense and indemnification to St. Paul on March 22, 1999, and that St. Paul accepted this tender.
It is the express intention of the parties that CUIC be assigned all rights and claims of all parties to this settlement as against Utica for its failure to defend and indemnify Lambrecht, Herlihy, Herlihy/Lambrecht, and that those claims survive this settlement.
(Filing 82, Ex. 1, "Release and Settlement" ¶ 3.) On September 1, 2000, CUIC filed its cross-claim against Utica, seeking defense and indemnification costs, taxable costs, attorneys fees, and an award of punitive damages. The parties each filed motions for summary judgment on CUIC's cross-claim, but their motions were denied. (See Mem. and Order on Cross-motions for Summ. J., filing 105.) The parties have now filed new motions for summary judgment. (See, filings 111 and 115.) My analysis of these motions follows.
II. STANDARD OF REVIEW
A motion for summary judgment shall be granted by the court when "there is no genuine issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of law." FED. R. CIV. P. 56(c). A genuine issue of material fact exists when the evidence favoring the party opposing the motion is sufficient to allow a jury to return a verdict for that party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In determining whether a genuine issue of material fact exists, the evidence is to be taken in the light most favorable to the nonmoving party. See Adickes v. S. H. Kress Co., 398 U.S. 144, 157 (1970). If the moving party meets its initial burden of establishing the nonexistence of a genuine issue, the burden shifts to the nonmoving party to produce evidence of the existence of a genuine issue for trial. See Celotex Corp. v. Catrelt, 477 U.S. 317, 323-24 (1986). The nonmoving party "must present affirmative evidence in order to defeat a properly supported motion for summary judgment," Anderson, 477 U.S. at 257, and may not rest upon mere allegation or denials of his pleading, but must set forth specific facts showing that there is a genuine issue for trial, id. at 256 (citing Federal Rule of Civil Procedure 56(e)).
III. ANALYSIS
The arguments raised by the plaintiff and defendant in support of their motions for summary judgment overlap considerably. Ordinarily, since each of the parties has the burden of establishing the absence of any genuine issue of material fact and an entitlement to judgment as a matter of law in order to prevail on its own motion for summary judgment, see. e.g.,ITT Industrial Credit Co. v. D.S. America, Inc., 674 F. Supp. 1330, 1331 (N.D. Ill. 1987); FED. R. CIV. P. 56(a)-(c), it would be appropriate to analyze each of the parties' motions serially. However, this strategy has proven to be problematic in this case. The problems I have encountered can be attributed partly to the complexity of the issues in this case, partly to the overlap in the parties' arguments, and partly to the parties' hybridization of their statements of facts. This "hybridization" is the result of the parties' deviation from the procedures set forth in Local Rule 56.1. Although Rule 56.1(b)(3)(B) states that a party opposing a motion for summary judgment "shall serve and file" a statement of additional facts that require the denial of the motion for summary judgment, Local Rule 56.1(b) (emphasis added), neither party has filed such a statement in this case. Instead, each party has filed only a statement of material facts in support of its own motion for summary judgment (see Local Rule 56.1(a)(3)) and a response to its opponent's Rule 56.1(a)(3) statement (see Local Rule 56.1(b)(3)(A)). Under these circumstances, analyzing each motion for summary judgment separately could lead to the paradoxical conclusion that neither party has properly opposed its opponent's motion. I find that I must consider the two summary judgment motions jointly in order to assemble all of the relevant evidence and argument.
Since the parties' motions must be considered jointly, I shall proceed by selecting the first issue raised in Utica's brief in support of its motion for summary judgment as a starting point. I shall analyze that issue by first reviewing the arguments presented in the materials associated with Utica's motion. Then I shall turn to the materials accompanying CUIC's motion to search for additional arguments or facts that are relevant to this issue. After all of the relevant evidence and argument has been assembled, I will present my analysis of the issue. I shall then return to Utica's brief to select the next issue, and I will repeat the process described above until all of the issues set forth in the materials associated with Utica's motion have been analyzed. When my review of each of the issues raised in Utica's motion is complete, I will turn to the brief submitted by CUIC in support of its motion for summary judgment to determine whether any additional issues remain to be analyzed.
A. Whether Lambrecht Selectively Tendered Its Request for Defense and Indemnity to CUIC Rather than Utica
Utica first argues that it is entitled to summary judgment because Lambrecht selectively tendered its request for coverage to CUIC and to St. Paul. Under Illinois law, insureds have a paramount . . . right to choose or knowingly forgo an insurer's participation in a claim. Richard Marker Associates v. Pekin Insurance Co., 743 N.E.2d 1078, 1081 (Ill.App.Ct. 2001). Although an insurer's duty to defend an insured is triggered when the insurer receives actual notice of the claim, see Cincinnati Cos. v. West American Insurance Co., 701 N.E.2d 499, 504-505 (Ill. 1998), "an insured may knowingly forgo the insurer's assistance by instructing the insurer not to involve itself in the litigation," Id. at 503-04. Such an instruction relieves the insurer of its duty to defend,see id. at 504, and, if the insured has invoked exclusive coverage with another insurer, that insurer cannot recover defense and indemnification costs from the insurer who has been relieved by the insured. See, e.g.,Richard Marker Associates, 743 N.E.2d at 1083; John Burns Construction Co. v. Indiana Insurance Co., 727 N.E.2d 211, 216-17 (Ill. 2000). Utica concedes that Lambrecht notified Utica of the Lucchetti accident and lawsuit, but claims that Lambrecht knowingly decided against Utica's involvement in the matter. Since Lambrecht chose to forgo Utica's participation in the defense of the Lucchetti case, Utica claims that CUIC is not entitled to recover costs from Utica.
The evidentiary materials provided by Utica partially support its argument that Lambrecht did not want Utica to participate in the Lucchetti defense. There is evidence that Mike Geers, the Administrative Manager at Lambrecht who was responsible for insurance-related matters, did not initially contemplate sending the Lucchetti complaint and summons to Utica, but instead directed it to CUIC. (See Appendix II, filing 112, Ex. FF, Geers Dep. at 21:3-22:9.) Although Geers testified that Lambrecht provided Utica with the Lucchetti complaint on April 14, 1998, in order to notify Utica of the suit, he added that Lambrecht did not intend for Utica to participate in the defense. (See id. at 30:17-31:24, 44:21-45:3.) Utica's own records also suggest that Lambrecht merely wanted to keep Utica informed of the Lucchetti litigation and was not seeking defense or policy coverage. (See id., Ex. HH, "Utica Claim Notes" at 1, 10, 15, 26, 27.) However, there is evidence clearly demonstrating that on May 11, 2000, Lambrecht, Herlihy, and the Joint Venture did demand that "Utica participate in a settlement proposal whereby Utica would contribute to the defense and indemnity of the Luechetti lawsuit in equal shares with St. Paul and [CUIC]." (Appendix I, filing 112, Ex. P at 1.) I find that the evidence set forth by Utica is sufficient to shift to CUIC the burden of coming forward with evidence demonstrating that there remains a genuine issue as to whether Lambrecht decided knowingly to forgo Utica's involvement prior to May 11, 2000. See FED. R. CIV. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986).
Utica admits, however, that Geers could not recall whether he had any conversations with Utica concerning the release of Utica from its duty to defend. (See, Utica's Reply Br., filing 121, at 2.)
In response to Utica's argument, CUIC first claims that "[t]here simply is a duty to defend once the insurer has actual notice of a suit sufficient to allow it to locate and defend the suit." (CUIC's Br. in Response to Utica Mutual Insurance Co.'s Mot. for Summ. J. (hereinafter "CUIC's Response Br.") at 3.) Since it is undisputed that Utica was notified of the suit, CUIC claims that Utica's duty to defend Lambrecht must have been triggered. In support of this argument, CUIC refers me toFederated Mutual Insurance Co. v. State Farm Mutual Insurance Co., 668 N.E.2d 627 (Ill.App.Ct. 1996). In Federated, the Appellate Court of Illinois rejected the rule that sophisticated insureds must tender requests for defense or indemnification to their insurers in writing, stating:
Such a rule requires an insured to jump through meaningless hoops towards an absurd end: telling the insurer something it already knows. Such a rule injects a degree of gamesmanship into the insurer-insured relationship without providing any valid corresponding benefit. In fact, the only benefit of such rule is to create a possibility — where none would otherwise exist — for an insurer to escape an obligation it otherwise owes its insured.Federated Mutual Insurance Co., 668 N.E.2d at 632-33.
While it is true that Federated stands for the proposition that actual notice of a lawsuit is sufficient to trigger an insured's duty to defend, this rule is not without exceptions. Stated in full, the court's holding was as follows:
For the foregoing reasons, we hold that an insurer's duty to defend claims potentially falling within the terms of a policy is triggered by actual notice of a lawsuit, regardless of whether the insured is sophisticated or unsophisticated — provided the insured has not selected one insurer to provide an exclusive defense and there is no prejudice to the insurer.Id. at 633 (emphasis added). Subsequent decisions by the Supreme Court of Illinois have confirmed this exception to the notice rule. See. e.g.,Cincinnati Cos. v. West American Insurance Co., 701 N.E.2d 499, 504 (Ill. 1998) ("We believe that the better rule is one which allows actual notice of a claim to trigger the insurer's duty to defend, irrespective of the level of the insured's sophistication, except where the insured has knowingly foregone the insurer's assistance."). Therefore, CUIC's suggestion that Utica's duty to defend was "simply" triggered when it received notice of the Luechetti matter must be rejected.
In the next section of CUIC's response brief, CUIC admits that Illinois law allows insureds to knowingly forego coverage, but claims that Utica cannot show that Lambrecht knowingly chose to forgo coverage in this case. Specifically, CUIC contends that there is no evidence that Lambrecht decided to forgo coverage under the Utica policy, and that in the case of ambiguity it is Utica's obligation to ask its insured directly whether it wants to forego defense coverage.
First, I have summarized the evidence supporting Utica's argument that it was asked not to provide a defense to Lambrecht, and I disagree with CUIC's suggestion that there is no evidence on this point. On the contrary, the evidence submitted in connection with Utica's motion for summary judgment supports the conclusion that Utica was asked not to participate in the defense or indemnification of Lambrecht until May 11, 2000.
Second, I find that CUIC's argument that Utica is obligated to defend and indemnify' Lambrecht because it failed to "forthrightly ask the insured for a decision," (CUIC's Response Br. at 4), must also be rejected. According to CUIC, Utica's evidence that Lambrecht did not want Utica to participate in the defense is "cryptic," "slanted," "ambiguous," and "irrelevant," because Utica failed to make "the necessary inquiry." (Id. at 5.) The "necessary inquiry," according to CUIC, consists of written correspondence from Utica asking Lambrecht whether it wanted defense assistance. (See id.) In support of its contention, CUIC refers me to Cincinnati Cos. v. West American Insurance Co., 701 N.E.2d 499, 504 (Ill. 1998), wherein the court stated as follows:
The duty to defend may be discharged simply by contacting the insured to ascertain whether the insurer s assistance is desired. If the insured indicates that it does not want the insurers s assistance, or is unresponsive or uncooperative, the insurer is relieved of its duty to defend. If after being contacted, the insured indicates that it desires the insurer's assistance, then the insurer's duty to defend continues
. . . .
. . . Where the insurer has actual notice of a claim against its insured, it would not be required to interpret the insured's silence as a desire for assistance. Rather, the insurer can simply ask the insured if the insurers s involvement is desired, thus eliminating any uncertainty on the question. Contrary to West American's argument, the insurer is not required to insinuate itself into the litigation at this stage. The insurer does not become liable simply by inquiring of the insured whether it desires the insurer to defend. The insurer is only potentially liable at this stage. Moreover, this potential liability is not a result of the insurer's contacting the insured, but of the insurance contract for which the insurer received consideration.Cincinnati Cos. v. West American Insurance Co., 701 N.E.2d 499, 504 (Ill. 1998) (citation omitted).
Cincinnati Companies instructs that insurers may contact their insureds to determine whether defense assistance is desired. However, it does not specify that this inquiry must be made in writing. Moreover, in this case the evidence does not show that Lambrecht was silent about its decision not to seek defense and indemnification from Utica. Although there is no evidence that Utica contacted Lambrecht to specifically ask it whether Utica's assistance was desired, there is evidence to support a finding that Lambrecht specifically told Utica that it was not seeking a defense from Utica. Cincinatti Companies does not hold that an insurer must formally ask whether its assistance is desired when it has already been told not to get involved in the defense by its insured. On the contrary, the court stated, "[A]n insured may knowingly forgo the insurers s assistance by instructing the insurer not to involve itself in the litigation." Cincinnati Cos., 701 N.E.2d at 503-04. The court continued, "The insurer would then be relieved of its obligation to the insured with regard to that claim." Id. at 504. It seems to me that if Utica's evidence suggesting that Lambrecht asked Utica not to involve itself in the defense of the Luechetti claim before May 11, 2000, were uncontradicted, it would be adequate to satisfy the exception to the rule that actual notice of a claim triggers an insurer's duty to defend.
In its materials submitted in opposition to Utica's motion, CUIC did not come forward with sufficient evidence to create a genuine issue as to whether Lambrecht asked Utica not to participate in its defense prior to May 11, 2000. Specifically, in these materials CUIC cited evidence stating only that Geers initially notified Utica of the complaint against Lambrecht in part because of the seriousness of the claims, and that Geers testified that he was "scrambling for coverage." First, the fact that Geers notified Utica of the suit in part because of the seriousness of Lucchetti's injuries does not seem material in light of Geers' unequivocal testimony that Lambrecht did not desire Utica's participation in the Lucchetti defense or indemnification. Second, Geers testified that he was "scrambling for coverage" only after CUIC denied coverage. (See Appendix II, filing 112, Ex. FF, Geers Dep. at 66:7-67:1.) This evidence does not create a genuine issue as to whether Lambrecht initially decided to forgo Utica's assistance. See John Burns Construction Co. v. Indiana Insurance Co., 727 N.E.2d 211, 217 (Ill. 2000) (holding that insurer who caused its insured to seek a defense from another insurer that had been previously excused by the insured cannot take advantage of its breach of its duty to defend).
I have also studied CUIC's statement of material facts that it submitted in support of its own motion for summary judgment, filing 115, and still I find no evidence that creates a genuine issue as to whether Lambrecht initially decided to forgo Utica's assistance. However, in CUIC's reply brief in support of its motion for summary judgment, filing 123, the plaintiff did refer me to evidence that raises a genuine issue on this point. First, CUIC's evidence shows that Utica's own claim notes contain entries that undermine Utica's argument that Lambrecht truly decided to forgo Utica's defense assistance. For example, one entry reads, "ITS NOT CLEAR IF HE IS NOW ASKING FOR COVG UNDER THE AUTH POLICY." (Appendix II, filing 112, Ex. HH, "Utica Claim Notes" at 10.) Another states, "I WOULD LIKE TO SEND FILE TO ATTY FOR UTICA TO REV COVG ISSUES AND THEN DECIDED IF WE NEED TO DEFEND." (Id.) In addition, it appears that Utica's reservation of rights letter, dated May 12, 1998, states in part as follows:
The original capitalization, punctuation, spelling, and usage have been preserved in each of the quotations taken from Utica's claim notes.
On April 14, 1998, we received notice of an occurrence which took place at 1-55 and Reed Road in Carol City, Illinois, on August 8, 1996. As a result of this occurrence, coverage has been requested under Policy No. CPP 1 31 64 85 which was issued to U Lambrecht Construction, Inc., by Utica National Insurance Company.
(Filing 115, Ex. 28 (emphasis added).)
This evidence leads me to conclude that there is a genuine issue as to whether Lambrecht exercised its right knowingly to forgo Utica's participation in its defense until May 11, 2000. If the trier of fact concludes that Lambrecht did forgo Utica's participation in its defense, the effect of the insureds' May 11, 2000, request that Utica participate in the Lucchetti settlement must then be determined. In addition, the parties do not seem to address the issue of whether Herlihy or the Joint Venture, who are insureds under the Utica policy, selectively tendered their request for defense and indemnification to CUIC or St. Paul. Indeed, although I have not been referred to any evidence indicating that Herlihy or the Joint Venture told Utica not to participate in their defense, I have also not been referred to any evidence showing that Herlihy or the Joint Venture ever notified Utica of the claims against them, thereby triggering Utica's duty to defend. Thus, it seems to me that there remains a genuine issue as to whether Utica's duty to defend Herlihy or the Joint Venture was triggered prior to May 11, 2000.
Utica speculates that the insureds' May 11, 2000, request for Utica's involvement was somehow compelled by CUIC. While speculation cannot properly support or oppose a motion for summary judgment, it does seem that under Illinois law, if it can be shown that the insureds originally decided to forgo Utica's assistance and sought Utica's involvement or "scrambl[ed] for coverage" (See Appendix II, filing 112, Ex. FF, Geers Dep. at 66:7-67:1) only after CUIC declined to represent them, CUIC would not be allowed to "take advantage of its own breach."John Burns Construction Co. v. Indiana Insurance Co., 727 N.E.2d 211, 217 (Ill. 2000). The parties have not adequately explored this issue in their motions, and therefore it may remain to be resolved at trial.
In paragraph $4 of its statement of facts, Utica states, "Herlihy and the Joint Venture never tendered the matter to Utica for defense or indemnification. ( See generally Exhibit DD)." (Utica's Facts ¶ 54.) In support of this statement of fact, Utica has referred me "generally" to an entire sixty-page deposition transcript. (See id.) It is doubtful that this practice complies with the requirement that the paragraphs included in a statement of facts be accompanied by specic references to their supporting materials. See Local Rule 56.1. Nevertheless, I have reviewed Exhibit DD, and I have been unable to find evidentiary support for paragraph 54 of the defendant's statement of facts.
The existence of a genuine issue as to whether Lambrecht exercised its right knowingly to forgo Utica's participation in its defense defeats Utica's first argument in favor of its motion for summary judgment. In addition, this disputed issue requires me to reject the first two substantive arguments presented in CUIC's motion for summary judgment. (See, Pl. Commercial Underwriters Insurance Co.'s Mem. in Supp. of Its Supplemental Mot. for Summ. J. (hereinafter "CUIC's Br."), filing 115, at 6-9.) Since neither party is entitled to summary judgment on this issue, I shall proceed to the next argument set forth in Utica's brief.
In passing, I note that CUIC repeatedly argues that since I have already determined that coverage was owed to the insureds under the Utica policy and that Utica had a duty to defend the insureds in the underlying litigation, Utica's argument that the insureds decided knowingly to forgo coverage is precluded. It seems to me that CUIC's argument exaggerates the implications of the findings set forth in the memorandum analyzing the parties' first motions for summary judgment (filing 105). Although I did previously find that Herlihy, Lambrecht, and the Joint Venture were all insureds under the Utica policy, that the allegations of Lucehetti's complaint disclosed potential coverage under the Utica policy, and that, for these reasons, Utica owed its insureds a duty of defense, I do not believe that these findings preclude Utica's argument that Lambrecht knowingly excused Utica from participating in the defense.
B. Whether Utica Is Estopped from Raising Policy Defenses and Denying Coverage
The estoppel doctrine provides that an insurer which contends that a complaint potentially alleging coverage is not covered under a policy which includes a duty to defend may not simply refuse to defend the insured. Such insurer must defend the suit under a reservation of rights or seek a declaratory judgment that there is no coverage. If the insurer fails to do this, and is subsequently found to have wrongfully denied coverage, it is estopped from later raising policy defenses to coverage. This principle is based upon the general principle of contract law that a party who has breached the terms of its contract may not rely on the terms of the same contract to avoid its obligations.Schal Bovis, Inc. v. Casualty Insurance Co., 732 N.E.2d 1179, 1192 (Ill.App.Ct. 2000) (citations omitted). Utica argues that the estoppel doctrine does not apply in this case for the following reasons: Lambrecht selectively tendered its request for defense to CUIC; Utica issued a timely reservation of rights letter; Utica conducted an immediate investigation; Utica hired defense counsel; and Utica intervened in CUIC's pending declaratory action. (See, Utica's Mem. of Law in Support of Its Mot. for Summ. J. (hereinafter "Utica's Br."), filing 111, at 5.)
As I explained previously, there remains a genuine issue as to whether Lambrecht selectively tendered its request for defense to CUIC. If it is determined that Lambrecht decided knowingly to forgo Utica's participation in its defense, then Utica was relieved of its duty to defend, see Cincinnati Cos. v. West American Insurance Co., 701 N.E.2d 499, 504 (Ill. 1998), and may raise policy defenses to coverage it allegedly owed to Lambrecht see Schal Bovis, Inc. v. Casualty Insurance Co., 732 N.E.2d 1179, 1192 (Ill.App.Ct. 2000). It however, it is determined that Utica's duty to defend its insureds was triggered and not knowingly excused, the question of whether Utica improperly refused to defend the insureds will be presented.
On this point, Utica first suggests that its issuance of a reservation of rights letter satisfied its duty to defend. This argument must be rejected. The issuance of a reservation of rights letter to an insured is not the equivalent of defending the insured under a reservation of rights.
Next, Utica suggests that it did in fact defend Lambrecht because Utica "attempted to participate in Lambrecht's defense, going so far as to retain defense counsel to monitor the matter on behalf of Lambrecht." (Utica's Br. at 6.) However, the evidence shows that the defense counsel retained by Utica "remain[ed] on the sidelines," (Appendix II, filing 112, Ex. OG, Wingenfeld Dep. at 68:23-24), and only occasionally made contact with the insureds true defense counsel, who was not provided by Utica. (See also id., Ex. JJ at 2 ("[W]e are referring this case to you to review and basically contact the insured's counsel just to let them know that you are involved.") (emphasis added).) (See also id. Ex. JJ (itemizing telephone conferences with "counsel for T.J. Lambrecht").) Moreover, I have already found that Utica did not defend Lambrecht, Herlihy, or the Joint Venture in the underlying suit (see Mem. and Order on Cross-motions for Summ. J., filing 105, at 2), and Utica has admitted as much (see Utica's Response to CUIC's Supplemental Statement of Material Facts, filing 120, ¶¶ 3, 31). Therefore, I reject Utica's arguments that it defended its insureds in the underlying suit.
Utica next suggests that its intervention in CUIC's declaratory judgment action was tantamount to "seek[ing] a declaratory judgment that there is no coverage." Schal Bovis, Inc. v. Casualty Insurance Co., 732 N.E.2d 1179, 1192 (Ill.App.Ct. 2000). In support of this argument, Utica refers me to Sportmart, Inc. v. Daisy Manufacturing Co., 645 N.E.2d 360 (Ill.App.Ct. 1994) and Village of Melose Park v. Nautilus Insurance Co., 574 N.E.2d 198 (Ill.App.Ct. 1991). In each of these cases, the insured, rather than the insurer, initiated a declaratory judgment action to determine coverage, but the court concluded that this fact did not estop the insurer from raising coverage defenses. See Sportmart, Inc., 645 N.E.2d at 635; Nautilus Insurance Co., 574 N.E.2d at 199. Presumably, Utica intends to suggest that even though it did not file for a declaratory judgment, its intervention in CUIC's existing declaratory judgment action should be considered adequate to prevent it from being estopped from asserting coverage defenses. Initially, I note that Illinois courts have not uniformly held that insurers who wait for their insureds to initiate declaratory judgment actions against them will not be estopped from raising coverage defenses. See, e.g., Bedoya v. Illinois Founders Insurance Co., 688 N.E.2d 757, 766 (Ill.App.Ct. 1997) ("The doctrine of estoppel against an insurer for failure to defend requires that `[w]hen an insured tenders a defense to an insurer, the insurer may not simply refuse to participate in the litigation and wait for the insured to institute litigation against the insurer to determine the insurers rights and duties.'") (quoting Shell Oil Co. v. AC S, Inc., 649 N.E.2d 946, 949 (Ill.App.Ct. 1995)). Moreover, in bothSportmart and Nautilus, the court noted that the insurers responded to their insureds' declaratory actions against them with motions for summary judgment seeking determinations of their responsibilities under their respective policies. See Sportmart, Inc., 645 N.E.2d at 635; Nautilus Insurance Co., 574 N.E.2d at 199. In this case, however, the record shows that although Utica did intervene in CUIC's declaratory judgment action, Utica did not promptly seek a judgment that there was no coverage under its policy. In fact, it seems that the earliest time that Utica arguably sought a determination of its duties under its policy was on October 13, 2000, when it answered CUIC's cross-claim. As I noted in the background discussion at the beginning of this memorandum, this cross-claim was filed after each of Utica's insureds entered into their settlement agreement with CUIC, St. Paul, and Lucehetti. An insurer cannot be allowed to wait until the underlying litigation is resolved and it is sued for costs before seeking a declaratory judgment regarding its coverage responsibilities. See Shell Oil Co. v. AC S, Inc., 649 N.E.2d 946, 949 (Ill.App.Ct. 1995). See also Schal Bovis, Inc. v. Casualty Insurance Co., 732 N.E.2d 1179, 1192 (Ill.App.Ct. 2000). Since Utica did not seek a declaratory judgment that it owed no coverage to its insureds until after the underlying litigation had been resolved, Utica's intervention into CUIC's declaratory judgment action was insufficient to forestall estoppel. See Employers Insurance of Wausau v. Ehlco Liquidating Trust, 708 N.E.2d 1122, 1138 (Ill. 1999) ("Where an insurer waits to bring its declaratory judgment action until after the underlying action has been resolved by a judgment or settlement, the insurer's declaratory judgment action is untimely as a matter of law.")
Finally, Utica argues that Lambrecht cannot demonstrate "detrimental reliance." Citing Western Casualty and Surety Co. v. Brochu, 475 N.E.2d 872 (Ill. 1985), Utica argues that a "party claiming the benefit of estoppel must have reasonably relied on the statement or conduct of the other party and must demonstrate prejudice." (Utica's Br. at 6.)
It seems to me that Utica's argument stretches Brochu beyond its intended context. In Brochu, the court did state that "[a]n insurer may be estopped from asserting a defense of noncoverage if it undertakes the defense of an action and that undertaking results in some prejudice to the insured," and that [t]he burden of establishing [prejudice] rests with the insured and must be proved by clear, concise, and unequivocal evidence. Western Casualty and Surety Co. v. Brochu, 475 N.E.2d 872, 879 (Ill. 1985) (emphasis added). That is, if an insurer undertakes its insured's defense and subsequently asserts policy defenses against coverage, the insurer is estopped from raising those defenses only if the insured can demonstrate that he has been prejudiced by the insurer's conduct. See. e.g., Brochu, 475 N.E.2d at 879; Maryland Casualty Co. v. Peppers, 355 N.E.2d 24, 29 (Ill. 1976). However, in the instant case it has been determined that Utica did not undertake the defense of any of its insureds. Under these circumstances, Illinois courts simply do not require the insured to demonstrate prejudice. See Employers Insurance of Wausau v. Ehlco Liquidating Trust, 708 N.E.2d 1122, 1138 (Ill. 1999).See also Schal Bovis, Inc. v. Casualty Insurance Co., 732 N.E.2d 1179, 1192 (Ill.App.Ct. 2000) ("An insured asserting estoppel against an insurer which has denied coverage need not show that it was prejudiced by the insurer's failure to provide coverage."); Aetna Casualty and Surety Co. v. Coronet Insurance Co., 358 N.E.2d 914, 917-18 (Ill.App.Ct. 1976).
In addition, it seems to me that Utica's argument that Lambrecht did not detrimentally rely upon Utica's conduct is based upon its claim that Lambrecht did not want Utica to participate in the defense. (See Utica's Br. at 6, 7.) As I discussed previously, this claim presents an issue that remains to be resolved by the trier of fact. (See supra Part III.A.)
For the foregoing reasons, I find that the issue of whether Utica will be estopped from raising coverage defenses cannot be resolved in favor of either party at this time. However, I do find that if it is determined that the insureds did not knowingly forgo Utica's assistance in their defense, Utica will be estopped from raising coverage defenses due to its failure to defend the insureds under a reservation of rights or seek a declaratory judgment prior to the resolution of the underlying litigation.
C. Whether Lambrecht Waived Its Right to Coverage Under the Utica Policy
Utica argues that because "Lambrecht lulled Utica into a false sense of security by assuring it that coverage under its auto policy was not being requested or sought" for two years, Lambrecht has waived its right to coverage under the Utica policy. (See Utica's Br. at 9.) Utica also contends that for the same reason, Lambrecht should be estopped from seeking coverage under Utica's policy.
I have determined that there is a genuine issue as to whether the insureds excused Utica from its duty to defend them in the underlying litigation. (See supra Part III.A.) It seems to me that this disputed issue is material to Utica's waiver and estoppel arguments. Therefore, I find that Utica has failed to demonstrate that it is entitled to summary judgment based upon a waiver or estoppel theory.
D. Whether Utica Owes a Duty to Indemnify Herlihy and the Joint Venture
Utica next argues that even though it has been determined that Utica owed Lambrecht, Herlihy, and the Joint Venture a duty to defend, it did not owe Herlihy or the Joint Venture a duty to indemnify "because the allegations which served as the basis for Utica's duty to defend have been refuted by the evidence." (Utica's Br. at 11.)
Utica's policy provided coverage for "bodily injury" or "property damage" . . . caused by an "accident" and resulting from the ownership, maintenance, or use of a covered "auto." (Appendix I, filing 112, Ex. Z at "Page 2 of 10.") Utica argues that neither the Joint Venture nor Herlihy can fall within the "use" provision because "[t]he Joint Venture has no employees whatsoever, and, on the day of the accident, there were no Herlihy employees working on the project," (Utica's Br. at 11), and claims that neither Herlihy nor the Joint Venture had any ownership interest in the truck or performed any maintenance work on it. (See id. at 12.) According to Utica, these facts suggest that Herlihy and the Joint Venture were not entitled to coverage under the Utica policy.
If it is determined that Utica breached its duty to defend its insureds, it will be estopped from raising these defenses to coverage.See Employers Insurance of Wausau v. Ehlco Liquidating Trust, 708 N.E.2d 1122, 1135 (Ill. 1999) ("Once the insurer breaches its duty to defend, however, the estoppel doctrine has broad application and operates to bar the insurer from raising policy defenses to coverage, even those defenses that may have been successful had the insurer not breached its duty to defend."); Schal Bovis, Inc. v. Casualty Insurance Co., 732 N.E.2d 1179, 1192 (Ill.App.Ct. 2000) ("If the insurer fails to take either of the actions required, (i.e., defending under a reservation of rights or seeking a declaratory judgment action), the insurer will be estopped from raising coverage defenses and will be liable for an award against the insured, because the duty to defend is broader than the duty [to] indemnify."). I have found that a genuine issue remains as to whether the insureds knowingly excused Utica from its duty to defend (see supra Part III.A), and that if Utica was not so excused, it has breached the duty of defense owed to Lambrecht, Herlihy, and the Joint Venture (see supra Part III.B). This issue precludes Utica's argument that it is entitled to summary judgment with respect to the indemnification claims of Herlihy and the Joint Venture.
E. Whether the CUIC and St. Paul "Auto Exclusion" Provisions Apply
CUIC's policy contains an "auto exclusion clause." This provision indicates that bodily injuries arising out of the ownership, maintenance, use, or entrustment to others of an auto are not covered by the policy. (See, Appendix I, filing 112, Ex. I at "Page 2 of 12.") Utica argues that Lucchetti's injuries do not fall within the CUIC policy's auto exclusion clause, and therefore CUIC owed coverage to the insureds. Presumably, Utica means to suggest that since CUIC owed coverage to the insureds, is not entitled to contribution from Utica.
It seems to me that there remains a genuine issue as to whether Utica is estopped from raising this argument, since it has yet to be determined whether Utica was excused from providing a defense to the insureds. As I have noted previously, if Utica was not knowingly excused from providing a defense to the insureds, Utica's failure to defend the insureds under a reservation of rights or seek a declaratory judgment action would estop Utica from denying its obligation to indemnify the insureds. See Employers Insurance of Wausau v. Ehlco Liquidating Trust, 708 N.E.2d 1122, 1135 (Ill. 1999); Schal Bovis, Inc. v. Casualty Insurance Co., 732 N.E.2d 1179, 1192 (Ill.App.Ct. 2000); Illinois Tool Works, Inc. v. The Home Indemnity Co., 998 F. Supp. 868, 873, 874 (N.D. Ill. 1998). Therefore, I find that summary judgment cannot be granted based upon Utica's argument that the Lucehetti incident was covered by the CUIC policy.
F. Whether the Lack of "Commonality of Risks" Prohibits CUIC's Claim for Contribution
CUIC's cross-claim against Utica includes a cause of action for equitable contribution. (See Cross-claim, filing 78, ¶¶ 36-37.) "In insurance law, contribution is an equitable principle arising among co-insurers which permits one who has paid the entire loss to be reimbursed from other insurers who are also liable for the loss." Schal Bovis, Inc. v. Casualty Insurance Co., 732 N.E.2d 1179, 1186 (Ill.App.Ct. 2000).
In order for an insurer to recover under a theory of equitable contribution, the insurer seeking contribution must prove: (1) all facts necessary to the claimant's recovery against the insured; (2) the reasonableness of the amount paid to the insured; and (3) an identity between the policies as to parties and insurable interests and risks.Id. Utica argues that CUIC cannot establish the third element of its equitable contribution claim because the Utica and CUIC policies do not insure against the same risks. I agree. Utica's policy provides coverage for claims resulting from the ownership, maintenance, or use of a covered "auto," (see Appendix I, filing 112, Ex. Z at "Page 2 of 10"), while the CUIC policy provides general liability coverage and excludes claims for bodily injuries arising out of the ownership, maintenance, use, or entrustment to others of an auto (see Appendix I, filing 112, Ex. I at "Page 2 of 12"). Since it is undisputed that the policies do not cover the same risks, I find as a matter of law that CUIC cannot obtain equitable contribution from Utica. See Schal Bovis, Inc., 732 N.E.2d at 1186; Cincinnati Insurance Co. v. River City Construction Co., 757 N.E.2d 676, 682 (Ill.App.Ct. 2001). It should be noted that Utica's argument that CUIC cannot prove the elements of its equitable contribution claim does not invoke any "coverage defenses," and thus it is viable regardless of whether or not Utica is eventually found to have breached its duty to defend the insureds. See. e.g., Schal Bovis, Inc., 732 N.E.2d at 1186-87, 1192 (finding that insurer could not seek equitable contribution from defendant insurer, although defendant insurers were estopped from raising coverage defenses after breaching their duties to defend).
CUIC argues in response that its "primary claim is for reimbursement from Utica." (CUIC's Response Br. at 10.) However, as CUIC itself recognizes, reimbursement "is a distinct remedy, different than equitable contribution." Schal Bovis, Inc., 732 N.E.2d at 1187. See also New Amsterdam Casualty Co. v. Certain Underwriters at Lloyds, London, 216 N.E.2d 665, 669 (Ill. 1966). CUIC did not include a cause of action for reimbursement in its cross-claim against Utica, (see generally Cross-claim, filing 78), and CUIC has provided me with no argument that such a claim ought to be allowed under these circumstances. Therefore, I find that CUIC is not entitled to summary judgment on a reimbursement theory.
Although Utica is entitled to summary judgment on CUIC's claim for equitable contribution, it appears that a question remains as to whether there is a St. Paul policy that insures Lambrecht, Herlihy, and the Joint Venture against the same risks as the Utica policy. (See Utica's Br. at 17-18.) If it is determined that Utica is not estopped from arguing that the Lucchetti accident was not an "auto" loss within the scope of its policy (it should be recalled that there remains a genuine issue on this point), and, further, if it is determined that the Lucchetti accident was in fact an "auto" loss, it may be the case that St. Paul, which assigned its rights to CUIC, is entitled to equitable contribution from Utica. From Utica's perspective, this would mean that if it is determined that Lucehetti's accident was covered by an auto policy, Utica would not have to bear the entire cost of indemnification alone, but instead could seek equitable contribution from St. Paul.
As I noted in the background section of this memorandum, two relevant insurance policies appear to have been issued by St. Paul. (See Appendix I, filing 112, Ex. X and Y.) The first of these policies was issued by St. Paul to the Joint Venture, (See, id., Ex. X at 1), but it appears that Lambrecht and Herlihy were added to the policy as additional insureds (See id. at Form 40502, "Page 1"). Although this policy is a general liability policy with an "auto exclusion," (see id. at "Page 2 of 18," "Page 9 of 18"), it does provide auto liability coverage for "hired autos" and "non-owned autos." (See id. at Form 44460, "Page 1.") The policy states that it "provides excess insurance for covered autos you don't own." (See id. at Form 44471, "Page 9 of 9.") Thus, it seems that this policy provides excess coverage to the Joint Venture, Herlihy, and Lambrecht for accidents involving non-owned autos. Since Lambrecht owned the truck involved in the Lucchetti accident, it seems that Lambrecht falls beyond the auto liability protection provided under this policy. Also, it should be noted that since the auto liability protection provided by this policy is "excess," the policy insures a different risk from the Utica policy. See Schal Bovis, Inc. v. Casualty insurance Co., 732 N.E.2d 1179, 1187 (Ill.App.Ct. 2000). This means that equitable contribution is unavailable between St. Paul and Utica based upon this policy. See id.
The second policy was allegedly issued by St. Paul to Herlihy, but this policy is not in evidence. (See Appendix I, filing 112, Ex. Y.) There remains a genuine issue as to whether this policy, if it exists, provides an avenue for equitable contribution between St. Paul and Utica.
For the foregoing reasons, 1 find that there remains a genuine issue as to whether CUIC, as St. Paul's assignee, is entitled to equitable contribution from Utica under the missing policy. However, Utica is otherwise entitled to summary judgment on CUIC's claim for equitable contribution.
C. Whether CUIC's Claims for Costs Are Limited to Costs Incurred After May 11, 2000
Utica next argues that if CUIC is entitled to any defense costs, its claim must be limited to those costs that arose after May 11, 2000. Specifically, Utica claims that the insureds formally requested Utica's participation in the Lucchetti litigation on May 11, 2000, and that CUIC cannot recover costs incurred prior to the triggering of Utica's duty to defend on that date.
In Illinois, the duty to defend is triggered when the insurer has "actual notice of the underlying lawsuit where the insured has not knowingly decided against that insurer's involvement." Alcan United, Inc. v. West Bend Mutual Insurance Co., 707 N.E.2d 687, 695 (Ill.App.Ct. 1999) (citing Cincinnati Cos. v. West American Insurance Co., 701 N.E.2d 499, 505 (Ill. 1998)). In this case, there remains a genuine issue whether the insureds had knowingly decided against Utica's involvement prior to May 11, 2000. (See supra Part III.A.) Therefore, there remains a genuine issue as to whether CUIC can recover defense costs incurred prior to May 11, 2000, and Utica's argument must be rejected.
H. Whether Utica Is Entitled to Summary Judgment on Count I of CUIC's Cross-claim
Count I of CUIC's cross-claim alleges that Utica breached its contract with Lambrecht, Herlihy, and the Joint Venture. (See Cross-claim, filing 78, ¶¶ 26-35.) "In order to show a breach of contract, a plaintiff must show that (a) a contract exists between plaintiff and defendant, (b) plaintiff performed [its] obligations under the contract, (c) defendant did not perform [its] obligations under the contract, and (d) damages resulted from the breach." Walker v. Ridgeview Construction Company, Inc., 736 N.E.2d 1184, 1187 (Ill.App.Ct. 2000). Utica argues that it is entitled to summary judgment on CUIC's breach of contract claim because Lambrecht did not want Utica to participate in its defense, and that even so, Utica performed its obligations under the insurance contract by reserving its rights, investigating the claim, retaining counsel, and intervening in CUIC's declaratory judgment action.
I have found that Utica did not defend the insureds and did not seek a declaratory judgment that it owed no duty to defend. (See supra Part III.3.) Therefore, Utica is clearly not entitled to summary judgment on Count I of CUIC's cross-claim based upon its argument that its actions satisfied its duty to defend the insureds. I have also concluded that there is a genuine issue as to whether Lambrecht knowingly asked Utica not to provided a defense. (See supra Part III.A.) This disputed issue prevents summary judgment from being granted in favor of either party on CUIC's breach of contract claim.
I. Whether Utica Is Entitled to Summary Judgment on Count III of CUIC's Cross-claim
Count III of the plaintiffs cross-claim alleges that Utica breached the duty of good faith and fair dealing it owed to Lambrecht. (See Cross-Claim, filing 78, ¶¶ 38-41.) Utica argues that it is entitled to summary judgment on Count III because Illinois does not recognize a cause of action for a breach of good faith, and, even if such a cause of action were recognized, there is no evidence to support it.
In Cramer v. Insurance Exchange Agency, 675 N.E.2d 897 (Ill. 1996), the Supreme Court of Illinois explained that an independent action in tort for breach of an implied covenant of good faith and fair dealing is unavailable except only "in the narrow context of cases involving an insurer s obligation to settle with a third party who has sued the policyholder." Voyles v. Sandia Mortgage Corporation, 751 N.E.2d 1126, 1131 (Ill. 2001) (discussing Cramer). These "duty to settle" cases arise when an insured relinquishes the defense of a suit against it to its insurer, and the insured's interest in avoiding the risk of trial and settling the claim against it within the policy's coverage limits conflicts with the insurer's incentive to decline a settlement offer and proceed to trial. See Cramer, 675 N.E.2d at 903. The facts of the instant case clearly do not present a "duty to settle" claim, since it has been found that Utica did not participate in its insureds' defense. Therefore, CUIC's cause of action based upon Utica's alleged breach of its duty of good faith is not allowed under Illinois law. Cramer, 675 N.E.2d at 903-904.
Illinois has provided a statutory remedy for insureds whose insurers "vexatious[ly] and unreasonabl[y]" refuse to recognize liability and pay a claim under a policy. 215 ILL. COMP. STAT. ANN. 5/155(1) (West 2002).See also Cramer, 675 N.E.2d at 900 (citing Kush v. American States Insurance Co., 853 F.2d 1380, 1385 (7th Cir. 1998) and UNR Industries, Inc. v. Continental Insurance Co., 607 F. Supp. 855, 863 (N.D. Ill. 1984)). A plaintiff who brings a breach of contract action to recover proceeds due under the policy may recover attorneys fees, costs, and a penalty under section 155. See Cramer, 675 N.E.2d at 901. In its memorandum in support of its motion for summary judgment, CUIC argues that section 155 provides a remedy in this case, (See CUIC's Br. at 11-12), but has not otherwise responded to Utica's argument that Utica is entitled to summary judgment on Count III of the cross-claim.
Count III of the cross-claim appears merely to allege an impermissible tort claim based upon the duty of good faith and fair dealing, and CUIC has not argued that Count III can be read to allege or somehow imply a claim under section 155. Under these circumstances, I find that CUIC has failed to raise a genuine issue for trial, and that Utica is entitled to judgment as a matter of law on Count III of the cross-claim.
Since Illinois does not recognize the claim raised in Count III of the cross-claim, I find that it is unnecessary to consider Utica's argument that there is insufficient evidence to support the claim.
J. CUIC's Motion for Summary Judgment
I have reviewed all of the arguments associated with each issue raised in Utica's motion for summary judgment, and I shall now turn to CUIC's motion to determine if any further arguments remain to be analyzed. In its motion, CUIC argues that it is entitled to summary judgment because: (1) Utica's duty to defend its insureds was triggered when it received notice of the Lucchetti accident; (2) Utica did not defend its insureds under a reservation of rights or file a declaratory judgment action, and the insureds did not knowingly forgo Utica's involvement in their defense; (3) Utica is estopped from denying coverage; (4) CUIC is entitled to equitable contribution because it defended the insureds and settled the underlying litigation despite the fact that the accident was within the CUIC and St. Paul policies' auto exclusions; (5) CUIC is entitled to fees and penalties under section 155. It seems to me that each of these arguments has been thoroughly addressed in the preceding sections of this memorandum.
IT IS ORDERED that:
1. Pursuant to Federal Rule of Civil Procedure 56(d), the facts presented in the background section of the memorandum accompanying this order are deemed established without substantial controversy;
2. Utica failed to defend Lambrecht, Herlihy, and the Joint Venture in the underlying action and did not seek a timely declaration that it owed no coverage to its insureds;
3. Utica is entitled to summary judgment on Count II of the plaintiffs cross-claim to the extent that the count is based upon the plaintiffs argument that it is entitled to equitable contribution under the CUIC and St. Paul general liability policies;
4. Utica is entitled to summary judgment on Count III of the plaintiffs cross-claim, and
5. "Utica's Motion for Summary Judgment," filing 111, and the "Supplemental Motion of Plaintiff, Commercial Underwriters Insurance Company Against Defendant, Utica Mutual Insurance Company," filing 115, are otherwise denied.