Mid-Century Insurance Company v. Pizza By Marchelloni et al

Filing 20

ORDER & OPINION entered by Judge Joe Billy McDade on 9/26/2017. For the reasons stated above, Defendant Estate of Lynse Stokes's Motion toDismiss Amended Complaint for Declaratory Judgment (Doc. 9 ) is DENIED. Thiscase is referred back to Magistrate Judge Hawley for further non-dispositive pretrial proceedings. SO ORDERED. SEE FULL WRITTEN ORDER & OPINION. (JS, ilcd)

E-FILED

Tuesday, 26 September, 2017 03:05:34 PM
Clerk, U.S. District Court, ILCD

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF ILLINOIS
PEORIA DIVISION

MID-CENTURY INSURANCE
COMPANY,

)
)
)
Plaintiff,
)
)
v.
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PIZZA BY MARCHELLONI, ESTATE OF )
JOSE PADILLA and ESTATE OF
)
LYNSE STOKES, deceased, by SHANA )
KRIDNER,
)
)
Defendants.
)

Case No. 17-cv-1214

ORDER & OPINION
This matter is before the Court on Defendant Estate of Lynse Stokes’s Motion
to Dismiss Amended Complaint for Declaratory Judgment (Doc. 9). Plaintiff MidCentury Insurance Company has responded to the motion. For the reasons stated
below the Motion is DENIED.
LEGAL STANDARDS
Defendant Estate of Lynse Stokes has failed to identify an authority for its
motion. Because the motion challenges whether this Court can hear this matter, the
Court assumes the motion is one made under Federal Rule of Civil Procedure 12(b)(1),
which allows challenges to a district court’s subject-matter jurisdiction.
The standard of review for a Rule 12(b)(1) motion to dismiss for lack of subject
matter jurisdiction where there is no contention that the complaint is insufficient on
its face but rather that there are external facts that undermine a district court’s
jurisdiction is that the court “may properly look beyond the jurisdictional allegations

of the complaint and view whatever evidence has been submitted on the issue to
determine whether in fact subject matter jurisdiction exists.” Apex Digital, Inc. v.
Sears, Roebuck & Co., 572 F.3d 440, 444 (7th Cir. 2009). Nevertheless,
uncontroverted factual allegations are accepted as true for the purpose of deciding
such a motion. Buckley v. Cty. of Dupage, No. 88 C 1939, 1998 WL 832641, at *2 (N.D.
Ill. Nov. 23, 1998) (citing Cedars–Sinai Med. Ctr. v. Watkins, 11 F.3d 1573, 1583
(Fed.Cir. 1993).
FACTUAL BACKGROUND 1
On or about September 4, 2016, Jose Padilla (“Padilla”) was driving an
automobile northbound on Livingston County Road 1900 East in Livingston County,
Illinois. At that time, Padilla was in the process of delivering pizza for the defendant,
Pizza by Marchelloni (hereinafter “Marchelloni”). Lynse Stokes was a passenger in
the vehicle being driven by Padilla. At some point, Padilla attempted to turn left onto
Illinois Route 116, but in doing so, drove into the path of Leah Metz’s vehicle, which
was travelling eastbound on Route 116. A collision occurred between the vehicles that
resulted in the deaths of Lynse Stokes and Padilla. 2
The Estate of Lynse Stokes, maintained by her mother, Shana Kridner,
brought a state civil action in the Circuit Court of the Eleventh Judicial Circuit of

These facts come from the Amended Complaint (Doc. 3) and the Complaint in the
underlying litigation.
2 The Amended Complaint does not state that Padilla died as a result of the collision
but the Court takes judicial notice of an article published by the Pontiac Daily Leader
that states as much. Paul Westermeyer, Crash Results In Death Of Two Teens,
Pontiac Daily Leader (Sept. 6, 2016), available at
http://www.pontiacdailyleader.com/news/20160906/crash-results-in-death-of-twoteens.
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Illinois in Livingston County against the Estate of Jose Padilla and Marchelloni
alleging Wrongful Death against both defendants and survival counts for the pain
and suffering of Lynse Stokes prior to her death. (Doc. 3-2).
Plaintiff, Mid-Century Insurance Company (“Mid-Century”), is a California
insurance company that extended an insurance policy to Defendant Marchelloni and
Dale Stokes, Illinois residents, that was in effect at the time of the collision. The policy
has a businessowners liability coverage provision that states:
We will pay those sums that the insured becomes legally obligated to
pay as damages because of “bodily injury”, “property damage”, “personal
injury” or “advertising injury” to which this insurance applies. We will
have the right and duty to defend the insured against any “suit” seeking
those damages. However, we will have no duty to defend the insured
against any “suit” seeking damages for “bodily injury”, “property
damage”, “personal injury”, or “advertising injury” to which this
insurance does not apply.
(Doc. 3 at 4, Doc. 3-1 at 96).
Mid-Century claims it has no duty to defend or indemnify Marchelloni or the
Estate of Padilla in any suit seeking damages for bodily injury to which the policy
does not apply, and that the underlying lawsuit here is such a suit that is not covered
by the policy. (Doc. 3 at ¶27). Mid-Century specifically requests that this Court find
no coverage is available under the Mid-Century policy at issue for the Estate of
Padilla or Marchelloni and that Mid-Century has no duty to defend or indemnify the
Estate of Padilla or Marchelloni for the Underlying Lawsuit.
Defendant Estate of Stokes moves the Court to dismiss the Amended
Complaint on the ground that liability has not yet been resolved in the underlying
suit and so this matter is not yet ripe.

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DISCUSSION
Federal district courts are courts of limited jurisdiction, empowered by federal
statutes to hear only those matters they are specifically permitted to hear. Giancana
v. Johnson, 335 F.2d 366, 367 (7th Cir. 1964). One such statute, 28 U.S.C. § 1332,
confers jurisdiction upon district courts to hear civil actions involving controversies
exceeding the sum or value of $75,000 between citizens of different States. In this
case, Defendant Estate of Stokes does not challenge any of the aspects of the Court’s
diversity jurisdiction over this action. Instead, Defendant challenges whether this
action is ripe. Ripeness is a concept of justiciability.
The Declaratory Judgment Act incorporates justiciability within its text. The
Act provides in relevant part that “[i]n a case of actual controversy within its
jurisdiction,… any court of the United States,…

may declare the rights and other

legal relations of any interested party seeking such declaration, whether or not
further relief is or could be sought.” 28 U.S.C. § 2201(a) (emphasis added). “A suit
is ripe when the facts alleged, under all the circumstances, show that there is a
substantial controversy, between parties having adverse legal interests, of sufficient
immediacy and reality to warrant the issuance of a declaratory judgment.” Cent.
States, Se. & Sw. Areas Health & Welfare Fund by Bunte v. Am. Int'l Grp., Inc., 840
F.3d 448, 451 (7th Cir. 2016) (quoting Md. Cas. Co. v. Pac. Coal & Oil Co., 312 U.S.
270, 273 (1941)).
Generally speaking, cases in which insurers seek declarations as to whether
they have a duty to defend their insureds in active underlying litigation are ripe for
adjudication. Sears, Roebuck & Co. v. Zurich Ins. Co., 422 F.2d 587, 589 (7th Cir.
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1970) (“The question of an insurance company’s duty to defend plainly presents a
present controversy ripe for declaratory relief.”). This is so because there is a real,
concrete controversy between the parties over their legal rights. However, the duty
to defend is broader than the duty to indemnify. Ace Am. Ins. Co. v. RC2 Corp., 600
F.3d 763, 766 (7th Cir. 2010) (“An insurer’s duty to defend its insured is much broader
than its duty to indemnify”). And since the duty to indemnify only arises when the
purported indemnitee’s liability is established, an action seeking to determine a
purported indemnifier’s responsibility to indemnify an indemnitee is generally only
ripe at that point when the indemnitee’s liability is established. Cunningham Bros.,
Inc. v. Bail, 407 F.2d 1165, 1169 (7th Cir. 1969).
In Illinois 3, the law holds that “if an insurer owes no duty to defend, it owes
no duty to indemnify.” Metzger v. Country Mut. Ins. Co., 2013 IL App (2d Dist.)
120133, ¶ 19, 986 N.E.2d 756, 761. Thus, the approach of one district court in this
jurisdiction is to first determine whether a duty to defend exists. Cincinnati Ins. Co.
v. McLean County Unit Dist. # 5 Bd. of Dirs., No. 08-cv-2205, 2009 U.S. Dist. LEXIS
128359 at *7-8 (C.D.Ill. Feb. 25, 2009). If the Court finds that that the duty to defend
The parties did not cite to, nor was this Court able to locate within the policy, a
choice of law provision. In such cases where there is no choice of law provision in the
insurance contract, “insurance policy provisions are generally governed by the
location of the subject matter, the place of delivery of the contract, the domicile of the
insured or of the insurer, the place of the last act to give rise to a valid contract, the
place of performance, or other place bearing a rational relationship to the general
contract.” TIG Ins. Co. v. Reliable Research Co., 228 F. Supp. 2d 921, 926 (S.D. Ill.
2002), aff'd sub nom. TIG Ins. Co. v. Reliable Research Co., 334 F.3d 630 (7th Cir.
2003). All of those factors favor the application of Illinois law in this case. Moreover,
the Court’s decision to apply Illinois law is buttressed by the appearance in the policy
of several provisions specifically designated to apply in Illinois. (See, e.g., Doc. 3-1 at
74, 91, and 93.).
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does not exist then it can immediately resolve the question of an insurer’s duty to
indemnify, obviously in the negative. Id. If the Court finds the duty to defend does
exist, then the Court should put off consideration of the insurer’s duty to indemnify
until the resolution of the underlying lawsuit. Id. This Court is of the opinion that
the approach of the Cincinnati Ins. Co. court is proper and it will follow it. Thus, the
motion to dismiss for lack of justiciability is denied.
Lastly, the Court wishes to address the Defendant Estate of Stokes’s reply brief
(Doc. 12). The brief was filed without leave of court in direct contravention of Local
Rule 7.1(B)(3) (“No reply to the response is permitted without leave of Court.”), so the
Court would be well within its discretion to strike it. However, since Plaintiff has not
objected to the brief nor moved to strike it, the Court will not strike the brief.
Nevertheless, Defendant is admonished to familiarize itself with and to follow this
Court’s Local Rules.
Defendant cites in its reply brief the case of Insurance Company of West v. Cty.
of McHenry, No. 02 C 2291, 2002 WL 1803743 (N.D. Ill. Aug. 6, 2002) for the
proposition that “a duty to defend is moot when there is no active controversy.” (Doc.
12 at 1). This statement is nothing more than a tautology and reliance upon it is
misplaced. Of course a duty to defend is moot when there is no active controversy
concerning it. But that is not the case here.
In Insurance Company of West, the court recognized the general rule that “[a]
request for a declaratory judgment regarding an insurer’s duty to defend the insured
is considered to be ripe for adjudication during the pendency of a lawsuit implicating
that duty.” 2002 WL 1803743 at *2. However, the court found that the policy at issue
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contained no duty to defend and that the defendant insured there was estopped from
claiming in any legal proceeding that the insurer had a duty to defend. Id. Thus there
was no active controversy concerning the duty to defend.
Here, in stark contrast, the policy provides that there is a duty to defend at
issue. The policy states in relevant part:
We will pay those sums that the insured becomes legally obligated to
pay as damages because of “bodily injury”, “property damage”, “personal
injury” or “advertising injury” to which this insurance applies. We will
have the right and duty to defend the insured against any “suit” seeking
those damages. However, we will have no duty to defend the insured
against any “suit” seeking damages for “bodily injury”, “property
damage”, “personal injury”, or “advertising injury” to which this
insurance does not apply.
(Doc. 3 at 4, Doc. 3-1 at 96). It cannot be argued that the policy at issue does not
contain a duty to defend. Moreover, there is no claim that Defendants Marchelloni
and Estate of Padilla are estopped from claiming in any legal proceeding that MidCentury had a duty to defend. For these reasons, the argument put forth in Defendant
Estate of Stokes’s argument is without merit.
CONCLUSION
For the reasons stated above, Defendant Estate of Lynse Stokes’s Motion to
Dismiss Amended Complaint for Declaratory Judgment (Doc. 9) is DENIED. This
case is referred back to Magistrate Judge Hawley for further non-dispositive pretrial
proceedings. SO ORDERED.
Entered this 26th day of September, 2017.

s/ Joe B. McDade
JOE BILLY McDADE
United States Senior District Judge
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