Employers Preferred Insurance Company v. C&K Hotel Group, LLC et al
ORDER & OPINION entered by Judge Joe Billy McDade on 11/13/2017. For the reasons stated, this Court made no manifest errors of law or fact, nor are there any extraordinary circumstances present to warrant relief from the Courts Opinion and Order dat ed September 14, 2017 52 that denied CKsMotion for Summary Judgment 46 and granted EPICs Motion for SummaryJudgment 45 . Therefore, Defendant C&K Hotel Group, LLCs Motion AndBrief In Support Of Its Motion To Reconsider Or Otherwise Re-Hear, Amend,Vacate The Courts September 14, 2017 Summary Judgment 54 is DENIED.See full Order & Opinion attached.(RK, ilcd)
Monday, 13 November, 2017 02:14:03 PM
Clerk, U.S. District Court, ILCD
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF ILLINOIS
C&K HOTEL GROUP, LLC and
Case No. 15-cv-1500
Honorable Joe B. McDade
ORDER & OPINION
This matter is before the Court on Defendant C&K Hotel Group, LLC’s
“Motion And Brief In Support Of Its Motion To Reconsider Or Otherwise Re-Hear,
Amend, Vacate The Court’s September 14, 2017 Summary Judgment” (Doc. 54).
Plaintiff, Employers Preferred Insurance Company (hereinafter “EPIC”) has filed a
brief in opposition and the matter is ready for decision. For the reasons stated
below, C&K Hotel Group, LLC’s motion (Doc. 54) is DENIED.
There is no actual motion to reconsider contemplated by the Federal Rules of
Civil Procedure. Nevertheless, Federal Rules of Civil Procedure 59 and 60 allow
judgments to be modified and, in some cases, vacated when necessary. A motion to
alter or amend judgment pursuant to Rule 59(e) may only be granted if a movant
clearly establishes that the court made a manifest error of law or fact, or presents
newly discovered evidence. Sigsworth v. City of Aurora, Ill., 487 F.3d 506, 512 (7th
Cir. 2007) (citing LB Credit Corp. v. Resolution Trust Corp., 49 F.3d 1263, 1267 (7th
Cir. 1995)). “[A] Rule 59(e) motion is not properly utilized ‘to advance arguments or
theories that could and should have been made before the district court rendered a
judgment.’” Id. (quoting LB Credit Corp., 49 F.3d at 1267). Rule 60(b) allows a party
relief from a final judgment or order for a number of reasons. CK asserts that it
makes its motion pursuant to Rule 60(b)(1) and (6).
Rule 60(b)(1) allows a court to correct mistakes, inadvertences, surprises, or
issues of excusable neglect in final orders or judgments while (b)(6) allows the court
correct such final judgments or orders for any justifiable reason. Fed. R. Civ. P. 60.
The substance of CK’s contentions reveal that CK is not complaining of mere
clerical mistakes under Rule 60(b)(1) but rather is complaining of alleged errors in
this Court’s application of the law and its understanding of the facts. The catchall
provision of Rule 60(b)(6) has an even more demanding standard than that of Rule
59(e); it requires that a movant to show “extraordinary circumstances” justifying
the reopening of a final judgment. Gonzalez v. Crosby, 545 U.S. 524, 535, 125 S. Ct.
2641, 2649, 162 L. Ed. 2d 480 (2005); Arrieta v. Battaglia, 461 F.3d 861, 865 (7th
Cir. 2006). Therefore, Rule 59(e)’s standard is more applicable here. However, since
CK has invoked both Rules 59(e) and 60, the Court will consider whether any
extraordinary circumstances are present to warrant relief from the Court’s Opinion
and Order dated September 14, 2017 (Doc. 52) as well as whether the Court made
any manifest errors of law or fact in its decision.
EPIC is an insurance company that extended a workers’ compensation
insurance policy and renewal policy to C&K Hotel Group, LLC (hereinafter “CK”) in
conjunction with a hotel that CK owns and operates in Bloomington, Illinois. That
hotel does business as the Hawthorn Suites and Conference Center. In August of
2014, Corine Watts filed an Application for Adjustment of Claim with the Illinois
Workers’ Compensation Commission, alleging that she was injured on July 11, 2014
while putting away a sofa bed as part of her duties for her employer, CK, in its
EPIC provided workers’ compensation insurance to CK under an insurance
policy numbered EIG 1594376-00, which was effective from November 16, 2012 to
November 16, 2013 (hereinafter the “00 policy”) and was conditioned upon payment
of specific premiums payable in future installments subject to annual audit for
retrospective premiums. The 00 policy contained a provision stating that it would
automatically be extended for one year unless EPIC gave CK sixty days’ notice that
it was not renewing the policy. The 00 policy was so extended and a renewal policy
was issued by EPIC to CK on November 16, 2013, and given the number EIG
1594376-01 (hereinafter the “01 policy”), which was also conditioned upon payment
of specific premiums payable in future installments subject to annual audit for
retrospective premiums. Both the 00 and the 01 policies (Doc. 4-1) contained
identical operative provisions. For a detailed discussion of those provisions, see this
Court’s Opinion and Order (Doc. 52) dated September 14, 2017.
The crux of this case was that EPIC claimed it cancelled the operative policy
issued to CK before Ms. Watts sustained an injury and thus it claimed it had no
duty either to defend CK in the underlying workers compensation lawsuit brought
by Ms. Watts or to indemnify CK for any damages CK must ultimately pay Ms.
Watts. CK argued that EPIC did not comply with Illinois law in attempting to
cancel the policy and EPIC waived its right to contend the policy was cancelled for a
variety of reasons. The Court found in favor of EPIC. Now CK contends that the
Court erred in its ruling and reconsideration is necessary.
As an initial matter, the Court must point out that it finds CK’s motion and
supporting brief to be difficult to follow. While the Court can discern the substance
of CK’s contentions, its citations to other documents and the disjointed placement of
its arguments make the document hard to read and cumbersome to sort through.
For these reasons, the Court will primarily address the issues in the order EPIC has
presented them in its opposition brief.
The Court Did Not Err In Its Treatment Of CK’s Factual Assertions
CK’s first point of error is that the Court erred in treating its purported
disputed facts as undisputed for its failure to comply with Local Rule 7.1(D). The
Court found that Defendant CK responded to EPIC’s facts in a confusing manner
inconsistent with Local Rule 7.1(D). CK listed several facts as both undisputed and
disputed. Moreover, the Court also found CK failed to support each claim of
disputed fact with evidentiary documentation by specific page as directed by the
local rule. CK’s failure to comply with the local rule confused the Court, hindered
the Court’s ability to discern the import of CK’s statements and impeded an
efficient disposition of the cross-motions.
The Court did not summarily enter summary judgment for EPIC based upon
CK’s failure to comply with the local rule, rather it merely deemed certain factual
assertions to be admitted, as it was well within its discretion to do. The Seventh
Circuit has repeatedly upheld the strict enforcement of the local rules and has
sustained the entry of summary judgment when the non-movant has failed to
submit a factual statement in the form required by the local rules. Waldridge v.
American Hoechst Corp., 24 F.3d 918, 922 (7th Cir. 1994) see also Ehrhart v.
Secretary of Health & Human Services, 969 F.2d 534, 537 (7th Cir. 1992) (“Once
again we observe that compelling the court to take up a burdensome and fruitless
scavenger hunt for arguments is a drain on its time and resources.”). For these
reasons, the Court did not err in its treatment of the facts of this case.
The Court Did Not Err When It Considered Evidence of the Amount In
Next, CK takes issue with this Court’s acceptance of certain evidence bearing
on this Court’s diversity jurisdiction over the action. CK argued that the ultimate
amount of Ms. Watts’ worker’s compensation claim was not conclusively determined
and thus there is no way this Court could determine that the $75,000 jurisdictional
minimum was met. EPIC presented evidence that Ms. Watts’ workers’
compensation attorney made a demand via email correspondence on EPIC to pay
Ms. Watts in excess of $500,000 for damages she suffered as a result of the accident
she endured while in the employ of CK. (Doc. 48-1 at 3). CK claims this evidence is
hearsay and inadmissible. CK also argues this Court erred in giving any credence to
Ms. Watts’ admission to EPIC’s allegation that “the amount of recovery she is
seeking in the workers’ compensation claim, including medical expenses, lost wages
and compensation for pain and suffering, exceeds the sum of $75,000.” (Doc. 18 at 1,
Doc. 4 at ¶¶ 4 and 5) because such evidence is allegedly insufficient to prevail on a
motion for summary judgment. (Doc. 54 at 3).
First, assuming arguendo that the correspondence from Watts’ attorney to
EPIC’s attorney was hearsay, such evidence would still be admissible for purposes
of determining jurisdiction. Rising-Moore v. Red Roof Inns, Inc., 435 F.3d 813, 816
(holding that settlement offers can be used in evidence for the purpose of
determining diversity jurisdiction by establishing the amount in controversy); see
also, Knowles Pub. v. Am. Motorists Ins. Co., 248 F.3d 1139 (5th Cir. 2001)
(“although the affidavits may be hearsay or are conclusory statements … this
circuit’s precedent indicates that they are admissible for proving the amount in
controversy necessary for federal subject matter jurisdiction.”).
Second, the statement is not hearsay. Hearsay is a statement that a party
offers into evidence to prove the truth of the matter asserted in the statement. Fed.
R. Evid. 801(c). The correspondence was not offered to prove that Ms. Watts
suffered damages in the amount of $500,000 or that CK is liable for Ms. Watts’
damages. The statement was offered into evidence to show there was a good faith
basis to estimate the amount at issue between EPIC and CK would exceed $75,000
even though the amount had not been conclusively determined.
Finally, Ms. Watts’ admission to EPIC’s allegation that “the amount of
recovery she is seeking in the workers’ compensation claim, including medical
expenses, lost wages and compensation for pain and suffering, exceeds the sum of
$75,000” (Doc. 18 at 1, Doc. 4 at ¶¶ 4 and 5), is absolutely admissible and relevant.
“The Seventh Circuit has firmly held that in jurisdictional determinations the Court
may consider any evidence submitted on the issue, as well as the jurisdictional
allegations in the Complaint.” Salmi v. D.T. Mgmt., Inc., No. 02 C 2741, 2002 WL
31115581, at *2 (N.D. Ill. Sept. 23, 2002).
For these reasons, the Court did not err in accepting and consulting the
evidence offered by EPIC in support of the amount in controversy to establish
The Evidence Established That EPIC Complied with Illinois law
Regarding Cancellation of the Policy.
CK’s third point of alleged error is that the Court erred in considering EPIC’s
proof of mailing sufficient to warrant summary judgment. Illinois law holds that
proper cancellation requires proper mailing of notice and retention of proper proof of
notice. 215 Ill. Comp. Stat. 5/143.14(a). Proof of actual receipt of the notice is not
required. See, e.g., Ragan v. Columbia Mut. Ins. Co., 701 N.E.2d 493, 497 (Ill. 1998)
(“The language of section 143.14(a) is clear and unambiguous. First, it requires that
the insurance company mail a notice of cancellation to the insured, and if
applicable, to certain other parties. Second, the statute requires that “[t]he company
shall maintain proof of mailing.” (Emphasis added.) 215 ILCS 5/143.14(a) (West
1994). There is no alternative method for proving compliance with the proof of
mailing requirements other than to maintain the proof of mailing. To allow other
methods of proving compliance would circumvent the language and purpose of the
statute…. The statute, therefore, requires proof of mailing rather than proof of
receipt by the insured.”).
EPIC provided an affidavit from one of its employees, Wayne Piotrowski, 1 in
which he averred that EPIC provided notice of the pending cancellation of CK’s
policy to the National Council on Compensation Insurance (“NCCI”) and that the
notice was received by the NCCI on May 28, 2014 (more than 10 days before the
effective date of cancellation). (Doc. 45-9). “The NCCI is an organization which the
IWCC contracted with to delegate some of its duties, including receiving and
maintaining certificates of insurance and notices of termination of insurance
coverage under section 4 of the Workers’ Compensation Act.” Hastings Mut. Ins.
Co., 2012 IL App (1st) 101751, ¶ 4, 965 N.E.2d at 659. Piotrowski further averred
that EPIC has an affiliation agreement with the NCCI, through which the NCCI
has agreed to transmit insurance policy information from EPIC, including notices of
policy cancellations, to the IWCC.
EPIC also submitted the affidavit of Timothy Spears, Vice-President of
Underwriting for EPIC, to verify that the NOC provided by EPIC (Doc. 4-3) was a
CK takes issue with this Court’s consideration of Piotrowski’s affidavit. The Court
already explained in its Order and Opinion (Doc. 52 at 29-32) why the affidavit was
proper. The Court need not revisit the issue. CK also claims the affidavit does not
provide that the IWCC received the NOC. CK is simply wrong as the affidavit
clearly provided that EPIC met the requirement that the IWCC receive the NOC by
sending the NOC to the NCCI per an agreement allowed under the law as discussed
true and accurate copy of the actual NOC generated on May 27, 2014. In his
affidavit, Spears also averred that he had personal knowledge of the facts set forth
in the document. He stated that EPIC maintains a duplicate copy of each NOC it
sends to insureds in an electronic system called Image Right. He stated he
personally reviewed the records maintained in Image Right and based on such
review, he attested that that the NOC provided by EPIC (Doc. 4-3) was a true and
accurate copy of the actual NOC generated on May 27, 2014.
In his deposition, Spears testified that he did not know how the actual NOC
that was mailed to CK would have been placed in an envelope. Spears also testified
there was someone in the mailroom who would have placed the actual NOC in the
mail, although he could not confirm who or how the actual NOC would have been
placed in the envelope. (Doc. 45-4 at 63-64). The Court found that was not an actual
fact in genuine dispute because CK produced nothing to establish that EPIC failed
to place the NOC in the mail. CK seizes on this purported failure to argue that
summary judgment is inappropriate, but CK is incorrect.
In Hunt v. State Farm Mut. Auto. Ins. Co., 2013 IL App (1st) 120561, ¶¶ 3442, 994 N.E.2d 561, 570–72, an Illinois appellate court rejected an insured’s
arguments that its policy had not been effectively cancelled. The Hunt court relied
heavily on Ragan, 701 N.E.2d 493—as did this Court—to conclude that State Farm
complied with Section 5/143.14(a). In holding that the circuit court had not erred
when it found that State Farm complied with 215 Ill. Comp. Stat. 5/143.14(a), the
Hunt court rejected the plaintiff’s arguments, one of which was that even though
the proof of mailing showed that a letter was mailed, it did not show that the letter
contained the actual cancellation notice. See 2013 IL App (1st) 120561, ¶¶ 34-42,
see also 2012 WL 10235579 (Ill. App. Ct. 1 Dist.), 15 (Brief of Defendant/Appellee
State Farm Fire and Casualty Company). Thus, both Hunt and Ragan not only
support, they compel the conclusion that Spears’ alleged failure to account for what
was actually in the envelope mailed to CK is of no significance.
CK also offers a version of form FS 3877 that was not even in use at the time
of the mailing to try to demonstrate that the form offered into evidence by EPIC
was somehow deficient. CK ignores that the court in Hunt also concluded that the
same proof of mailing form that was used by EPIC here is a recognized U.S. Post
Office proof-of-mailing form or, at the least, one “acceptable to the U.S. Post Office”
for purposes of complying with the statute’s “proof of mailing” requirement. 2013 IL
App (1st) 120561, ¶ 42, 994 N.E.2d 561, 572. Thus, CK’s arguments have no merit.
There Has Been No Violation Of Substantial Justice.
As a final volley, CK contends that EPIC’s actions in maintaining this action
while staying the underlying workers’ compensation action “shocks the conscious”
and “derails the very notion of fairness and substantial justice that is the backbone
of the administrative and judicial systems of the state of Illinois and United States
of America”. (Doc. 54 at 8).
The Court empathizes with CK but a quick search through the Federal and
Illinois case reporters reveals that it is not in any way abnormal for insurers to seek
declaratory judgments that they need not defend nor indemnify insureds under
various factual scenarios and legal theories before the underlying actions are
concluded. This Court does not see how CK has been deprived of justice. 2
For the reasons stated above, this Court made no manifest errors of law or
fact, nor are there any extraordinary circumstances present to warrant relief from
the Court’s Opinion and Order dated September 14, 2017 (Doc. 52) that denied CK’s
Motion for Summary Judgment (Doc. 46) and granted EPIC’s Motion for Summary
Judgment (Doc. 45). Therefore, Defendant C&K Hotel Group, LLC’s “Motion And
Brief In Support Of Its Motion To Reconsider Or Otherwise Re-Hear, Amend,
Vacate The Court’s September 14, 2017 Summary Judgment” (Doc. 54) is DENIED.
Entered this 13th day of November, 2017.
s/ Joe B. McDade
JOE BILLY McDADE
United States Senior District Judge
It bears mentioning that if anyone deprived CK of what can be deemed “justice” as
the facts have been presented to this Court, it would be the representative of
Northern Illinois Insurance Agency who flippantly, yet not illegally, refused to
request a reinstatement or any accommodation when so asked. (Doc. 46-3 at 25).
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