Chubb Indemnity Insurance Company v. Giannoulias et al

Filing 246

MEMORANDUM OPINION AND ORDER: For the reasons stated below, the Court denies the motion for reconsideration 217 , grants the motion to join Ground Engineering Consultants' motion for partial summary judgment 235 , and grants in part and denies in part the motion for partial summary judgment 224 . This matter is set for status on July 1, 2014, at 9:00 a.m. Signed by the Honorable Robert M. Dow, Jr on 6/12/2014. Mailed notice(tbk, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
CHUBB INDEMNITY INSURANCE
COMPANY, as subrogee of GORDON
SIEGEL, M.D. and CLARI WECHTER,

)
)
)
)
Plaintiff,
)
)
v.
)
)
21 EAST CEDAR, LLC; ICON DESIGN &
)
DEVELOPMENT, INC.; CODEX EXC, INC.; )
BILL KOKALIAS; SWAIN DEVELOPMENT )
CORPORATION; AXIOS ARCHITECTS &
)
CONSULTANTS, LTD d/b/a AXIOS
)
CONSULTANTS & DESIGN/BILL G.
)
KOKALIAS ARCHITECTS & DESIGN;
)
DEMETRIS GIANNOULIAS; GEORGE
)
GIANNOULIAS; GROUND ENGINEERING )
CONSULTANTS; GEO SERVICES, INC.;
)
and SHORELINE STEEL, INC.,
)
)
Defendants.
)
)

Case No. 10 CV 7111
Judge Robert M. Dow, Jr.

MEMORANDUM OPINION AND ORDER
Before the Court are Defendants Ground Engineering Consultants’ and Geo Services,
Inc.’s joint motion for reconsideration [217]; Defendant Ground Engineering Consultants’
motion for partial summary judgment [224], which Defendants Codex Exc, Inc., Geo Services,
Inc., Axios Architects & Consultants, Ltd., and Bill G. Kokalias have joined, see [232]; [245];
and Defendants Demetris Giannoulis, George Giannoulis, and 21 East Cedar, LLC’s joint motion
to join Defendant Ground Engineering Consultants’ motion for partial summary judgment [235].
For the reasons stated below, the Court denies the motion for reconsideration [217], grants the
motion to join Ground Engineering Consultants’ motion for partial summary judgment [235],
and grants in part and denies in part the motion for partial summary judgment [224]. This matter

is set for status on July 1, 2014 at 9:00 a.m.
I.

Background
Plaintiff Chubb Indemnity Insurance Co. (“Chubb”) provided property insurance to Dr.

Gordon Siegel and Clari Wechter (“the insureds”), who owned and resided in a single-family
residence located at 25 East Cedar Street, Chicago, Illinois. The insureds’ home sustained
significant damage contemporaneous with demolition, excavation, and construction taking place
on an adjacent lot located at 21 East Cedar Street. Plaintiff paid out policy benefits to the
insureds, who are not involved in the action, and is seeking to recover from Defendants in its
capacity as the insureds’ subrogee. Each Defendant allegedly had some involvement in the
project at 21 East Cedar Street.
Plaintiff’s fourth amended complaint [182] asserted claims under the Adjacent
Landowner Excavation Protection Act (“ALEPA”), 765 ILCS 140/1, against Defendants 21 East
Cedar, LLC (“21 East Cedar”), Demetris Giannoulias (“D. Giannoulias”), George Giannoulias
(“G. Giannoulias”), Swain Development Corporation (“Swain”), Icon Design & Development,
Inc. (“Icon”), Codex Exc (“Codex”), Bill G. Kokalias (“Kokalias”), Axios Architects &
Consultants, Ltd. (“Axios”), Ground Engineering Consultants (“Ground”), Geo Services, Inc.
(“Geo”), and Shoreline Steel, Inc. (“Shoreline”). See [182] (Counts I, IV, VII, IX, XII, XV, and
XVIII). Plaintiff also claimed that Defendants 21 East Cedar, D. Giannoulias, G. Giannoulias,
Swain, Codex, Kokalias, Axios, Ground, Geo, and Shoreline violated Chicago’s “Excavation
Work on Private Property” Ordinance, Mun. Code of Chi. §§ 13-124-380 et seq. (“the
Ordinance”). See id. (Counts II, V, X, XIII, XVI, and XIX). Plaintiff further alleged that
Defendants Swain, Icon, Codex, Kokalias, Axios, Ground, Geo, and Shoreline acted negligently.
See id. (Counts III, VI, VIII, XI, XIV, and XVII).

2

Defendants Axios, Kokalias, Geo, and Ground moved to dismiss the ALEPA counts
against them on the basis that they were not “owners or possessors of land” subject to liability
under the statute. These same four Defendants also moved to dismiss the Ordinance counts
against them on the basis that they did not actually “perform excavation work.” Defendant Geo
alone moved to dismiss the negligence count against it. The Court granted Defendants’ motions
as to the Ordinance counts but denied them as to the ALEPA and negligence counts. See [211].
Defendants Ground and Geo jointly have moved for reconsideration of the Court’s denial of their
motion to dismiss the ALEPA counts. See [217].
Defendant Ground also has moved for partial summary judgment “on the issue of
whether Plaintiff’s claimed damages are, as a matter of law, ensuing losses as defined under
Plaintiff’s first-party insurance policy.” [224] at 1. Defendants Geo [228], Codex [229], and
Axios and Kokalias [240] moved to join the motion. The Court granted their motions to join.
See [232]; [245]. The Court also grants Defendants 21 East Cedar’s, D. Giannoulias’s, and G.
Giannoulias’s joint motion [235] to join Ground’s motion for partial summary judgment.
II.

Motion for Partial Summary Judgment
A.

Local Rule 56.1

Local Rule of Civil Procedure 56.1 requires a party moving for summary judgment to file
“a statement of material facts as to which the moving party contends there is no genuine issue
and that entitle the moving party to a judgment as a matter of law.” N.D. Ill. R. 56.1(a)(3). The
statement “shall consist of short numbered paragraphs” that refer to “materials relied upon to
support the facts set forth.” N.D. Ill. R. 56.1(a). The party opposing summary judgment is then
required to file “a response to each numbered paragraph in the moving party’s statement,
including, in the case of any disagreement, specific references to the affidavits, parts of the

3

record, and other supporting materials relied upon.” N.D. Ill. R. 56.1(b)(3)(B).
“The obligation set forth in Local Rule 56.1 ‘is not a mere formality.’” Delapaz v.
Richardson, 634 F.3d 895, 899 (7th Cir. 2011) (quoting Waldridge v. Am. Hoeschst Corp., 24
F.3d 918, 924 (7th Cir. 1994)). “Because of the important function local rules like Rule 56.1
serve in organizing the evidence and identifying disputed facts,” the Seventh Circuit has
“consistently upheld the district court’s discretion to require strict compliance with those rules.”
F.T.C. v. Bay Area Bus. Council, Inc., 423 F.3d 627, 633 (7th Cir. 2005); see also Cracco v.
Vitran Exp., Inc., 559 F.3d 625, 632 (7th Cir. 2009); Waldridge v. Am. Hoechst Corp., 24 F.3d
918, 922 (7th Cir. 1994) (collecting cases).
Neither Defendant Ground, the initial movant, nor any of the Defendants who have
joined Ground’s summary judgment motion, filed the statement of facts required by Local Rule
56.1(a). Plaintiff nonetheless properly filed the responsive statement required by Local Rule
56.1(b)(3), see [237], which did not prompt Ground or any of the other moving Defendants to
correct their omission. Ordinarily, the party that neglects to file a Local Rule 56.1 statement is
the one responding to the motion for summary judgment. The consequence prescribed in Local
Rule 56.1 for that violation is that “[a]ll material facts set forth in the statement required of the
moving party will be deemed to be admitted unless controverted by the statement of the
opposing party.” N.D. Ill. R. 56.1(b)(3)(C); see also Apex v. Digital, Inc. v. Sears, Roebuck &
Co., 735 F.3d 962, 965 (7th Cir. 2013). Here, the Court is confronted with the more unusual,
reverse situation, in which the moving party failed to comply with Local Rule 56.1 by submitting
a statement of material facts in the first instance. Per the plain language of the rule, “[f]ailure to
submit such a statement constitutes grounds for denial of the motion.” N.D. Ill. R. 56.1(a).
“[I]t is clear that the decision whether to apply the rule strictly or to overlook any

4

transgression is one left to the district court’s discretion.” Little v. Cox’s Supermarkets, 71 F.3d
637, 641 (7th Cir. 1995). The Court is tempted to exercise its discretion to deny the motion in
light of Defendants’ violation of Local Rule 56.1. All of the Defendants that filed or signed on
to the motion are represented by counsel and should have been alerted to their omission by
Plaintiff’s responsive statement, which expressly averred that “Defendant, Ground Engineering
Consultants (‘GEC’), did not include a L.R. 56.1(a)(3) statement of undisputed material facts to
which Plaintiff can respond.” [237] ¶ 1. The Court finds it preferable at this juncture, however,
to address the motion on the merits and move this case forward to the extent that it can. In doing
so, the Court will deem admitted for purposes of this summary judgment motion the relevant
facts properly set forth in Plaintiff’s 56.1 statement. The Court also considers the terms of the
insurance policy at issue, which was placed in the record by both Plaintiff, see [237-3] & [2374], and Ground, see [226-1] & [226-2], and the other evidence in the record. See Fed. R. Civ. P.
56(c)(3).
B.

Facts

Plaintiff was party to an insurance contract with Dr. Siegel, who along with Clari
Wechter owned a home located at 25 East Cedar Street in Chicago. See [237] ¶¶ 2, 13. The
terms of the insurance contract were set forth in Policy No. 1319061701-000001 (“the policy”).
Id. ¶ 13. It is undisputed that the insureds’ house sustained damage. Evidence in the record
suggests, particularly when construed in the light most favorable to Plaintiff, that some
combination of Defendants’ actions at 21 East Cedar Street caused the damage. See [224] at 10
(“[N]othing in the court record contradicts the position that the damages sustained to the insured
residence were caused by Project-related construction activities.”).
Under the all-risk policy, a “covered loss” is defined as “all risk of physical loss to your

5

home or other property covered under this part of your Masterpiece Policy, unless stated
otherwise or an exclusion applies.” [237] ¶ 15. Terrence Young (“Young”), the claims adjustor
assigned to the insureds’ claim, see [237] ¶¶ 12, 13, determined that the damage to the insureds’
home was covered under the policy. Id. ¶ 16.
Defendants asked Young about several policy exclusions at his deposition. All of the
potentially relevant exclusions provide that “ensuing covered loss[es]” are covered.

For

instance, one of the exclusions provides:
Faulty planning, construction or maintenance. We do not cover any loss
caused by the faulty acts, errors or omissions of you or any other person in
planning, construction or maintenance. It does not matter whether the faulty acts,
errors, or omissions take place on or off the insured property. But we do insure
ensuing covered loss unless another exclusion applies. ‘Planning’ includes
zoning, placing, surveying, designing, compacting, setting specifications,
developing property, and establishing building codes or construction standards.
‘Construction’ includes materials, workmanship, and parts or equipment used for
construction or repair. [237-3] at B4-9.
The policy defines “caused by” to “mean any loss that is contributed to, made worse by, or in
any way results from that peril.” [237-3] at B4-7. The policy does not define “ensuing covered
loss” or “ensuing.”
Young testified that the “faulty planning, construction or maintenance” exclusion was not
applicable to the insureds’ losses because the work at 21 East Cedar Street “wasn’t work being
directed by our insured. It wasn’t work contracted by our insured.” [226] at 95:18-20; see also
[237] ¶ 17. Young further asserted that this exclusion and the others in the policy “apply to that
specific property” and do not “apply to a neighbor’s property, because a neighbor is performing
the work.” [226] at 97:10-12; [237] ¶ 17. Young later explained in an affidavit that the “purpose
of including a faulty planning, construction or maintenance exclusion * * * is that damage
stemming from such activity is deemed to occur. In that situation, the insured would look to the

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construction contracts and contractors to address the faulty construction.” [237-2] ¶ 4. Young
further reiterated his position that “this exclusion applies only for damages that result from
planning, construction or maintenance intended for the insured risk.” Id.; see also [237] ¶ 18. It
is undisputed that Plaintiff in fact paid benefits to the insureds under the policy and now seeks to
proceed as a subrogee.
C.

Legal Standard

Summary judgment is appropriate where “the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.
R. Civ. P. 56(a). In determining whether there is a genuine dispute of fact, the Court “must
construe the facts and draw all reasonable inferences in the light most favorable to the
nonmoving party.” Foley v. City of Lafayette, 359 F.3d 925, 928 (7th Cir. 2004). To avoid
summary judgment, the opposing party must go beyond the pleadings and “set forth specific
facts showing that there is a genuine issue for trial.” Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 250 (1986) (internal quotation marks and citation omitted).
Ground did not move for summary judgment on any particular claim or defense, or even
part of an identified claim or defense. See Fed. R. Civ. P. 56(a). It did not, for instance, argue
that it is entitled to judgment as a matter of law on Count XIV. To the contrary, Ground resisted
Plaintiff’s efforts to pin its motion to a particular theory or claim, see [238], and maintained that
it seeks partial summary judgment “on the issue of whether Plaintiff’s claimed damages are, as a
matter of law, ensuing losses as defined under Plaintiff’s first-party insurance policy.” [224] at
1. Ground’s motion may have been more effective in advancing the litigation had it sought
summary judgment as to a particular claim or on a fully developed (rather than merely alluded
to) theory of defense. However, courts may consider motions for partial summary judgment as

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to particular issues or facts in a case, even if those issues are not in and of themselves dispositive
of a claim or case. See, e.g., Jordan v. Jewel Food Stores, Inc., 743 F.3d 509, 513 (7th Cir.
2014); Gipson v. United States, 631 F.3d 448, 452 (7th Cir. 2011) (“Gipson should have been
able to move successfully for partial summary judgment, establishing a breach of the standard of
care and leaving only issues of causation and damages for further proceedings.”). The Court
does so here in an attempt to advance this protracted litigation.
D.

Analysis

Relying on an interrogatory answer and deposition testimony from Plaintiff’s claims
adjustor, Ground (and the other Defendants who have joined its motion) contends that Plaintiff
“has repeatedly stated that all of its insureds’ damages are ensuing losses and, accordingly,
covered under the policy.” [224] at 4. In Ground’s view, “[t]his position is legally untenable,
given the legal definition of ensuing loss,” id., which Ground asserts is “a hazard or occurrence
that is separate and independent from the original, direct loss.” Id. at 5. Ground thus contends
that “characterization of the damages as ensuing losses is a legal impossibility as there is no
subsequent, separate, or collateral damage following the damage caused to the residence at 25 E.
Cedar Street by the Project’s construction activity.” Id. at 2. In other words, the losses cannot
by definition be both direct and ensuing. In a similar vein, Ground additionally suggests that it is
inconsistent for Plaintiff to assert that the losses to the insureds’ home were both “ensuing” and
covered under the policy, because “[i]f a policy exclusion does not apply, its ensuing loss
provision is, necessarily, inapplicable.” Id. at 8. Plaintiff responds that the damages to the
insureds’ home were caused directly by the construction at 21 East Cedar Street and that the risk
of such damage was within the scope of – and covered by – the insureds’ policy. See [236] at 9-

8

11.1
The construction of the provisions of an insurance policy is a question of law for the
Court. Travelers Ins. Co. v. Eljer Mfg., Inc., 757 N.E.2d 481, 491 (Ill. 2001). In construing the
terms of a policy, “the court’s primary objective is to ascertain and give effect to the intent of the
parties to the contract.” Id. The Court construes the policy as a whole and “take[s] into account
the type of insurance purchased, the nature of the risks involved, and the overall purpose of the
contract.” Id. (quotation omitted). If the language of the policy is susceptible to more than one
meaning, it is considered ambiguous and must be construed in favor of the insured. Id. This rule
of construction only comes into play when a policy is ambiguous. Hobbs v. Hartford Ins. Co. of
the Midwest, 823 N.E.2d 561, 564 (Ill. 2005). The Court “will not strain to find ambiguity in an
insurance policy where none exists.” Travelers, 757 N.E.2d at 491 (quotation omitted). If policy
language is not ambiguous, the Court affords the terms their plain, ordinary, and popular
meaning, id., and applies the policy as written “unless it contravenes public policy.” Hobbs, 823
N.E.2d at 564.
The insureds’ policy was an “all-risk” policy that by its terms covered “all risk of
physical loss to your home or other property covered under this part of your Masterpiece Policy,
unless stated otherwise or an exclusion applies.” [237] ¶ 15. “Generally, an ‘all risk’ insurance
policy creates a special type of coverage extending to risks not usually covered under other
insurance, and recovery under an ‘all risk’ policy will, as a rule, be allowed for all fortuitous
losses not resulting from misconduct or fraud, unless the policy contains a specific provision
1

Plaintiff, evidently anticipating the next logical steps of Ground’s apparent legal strategy of challenging
Plaintiff’s position as a subrogee, also contends that its maintenance of this action is proper because the
insureds assigned their rights to Plaintiff, arguments pertaining to the “volunteer defense” have been
waived, and that even if such arguments are not waived they are not applicable in the context of
“conventional subrogation.” See [236] at 4-8. Ground replies that these arguments are “non-responsive”
and “immaterial to the issue,” [238] at 2, and, accordingly, does not engage them. See generally [238].
The Court need not and does not reach these arguments.

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expressly excluding the loss from coverage.” Cincinnati Ins. Co. v. Am. Hardware Mfrs. Ass’n,
898 N.E.2d 216, 236 (Ill. App. Ct. 1st Dist. 2008) (quotation omitted); see also TMW Enters.,
Inc. v. Fed. Ins. Co., 619 F.3d 574, 576 (6th Cir. 2010) (“As an ‘all-risk’ policy, this insurance
policy basically covers everything unless specifically excluded.”). The Illinois Appellate Court
has explained that “[f]ortuitous means “happening by chance or accident, or occurring
unexpectedly or without known cause.” Bd. of Educ. of Maine Twp. High Sch. Dist. 207 v. Int’l
Ins. Co., 684 N.E.2d 978, 981 (Ill. App. Ct. 1st Dist. 1997) (citing Black’s Law Dictionary 654
(6th ed. 1990)). “The determination of whether a loss is fortuitous is a legal question for the
court to determine.” Id. (quotation omitted).
The parties agree that the insureds’ losses were caused directly by the construction
activities at 21 East Cedar. Indeed, Ground has asked the Court to find, as a matter of law, “that
all the damages sustained to Chubb’s insureds’ premises are direct damages resulting from the
construction activities at 21 E. Cedar Street.” [224] at 16. Because the parties agree on this
issue, and, as Ground accurately notes, “nothing in the court record contradicts the position that
the damages sustained to the insured residence were caused by Project-related construction
activities,” [224] at 10, the Court grants in part the motion for partial summary judgment on this
issue. Accordingly, it will be established going forward in this case that some aspect of the
construction at 21 East Cedar was the cause of the damage to the insureds’ property. See Fed. R.
Civ. P. 56(g).
Claims adjustor Young repeatedly testified at his deposition that the damage to the
insureds’ home resulting from the construction was an “ensuing loss.” Plaintiff made the same
representation in an interrogatory response.

(“Here, the negligent conduct and statutory

violations of third parties caused direct physical damage to the insured building. Structural

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damage arising from the negligent or otherwise unlawful conduct of third parties is not expressly
excluded from the policy coverage anywhere. The damage that flowed from the negligent
conduct of others constitute[ed] an ensuing loss, which remained covered under the policy.”)
Ground seizes on this phrasing, which it links to the policy’s various exclusions stating that “we
do insure ensuing covered loss unless another exclusion applies,” despite Young’s failure to use
that policy term during his deposition2 and Plaintiff’s failure to invoke it in its interrogatory
answer. Ground suggests that Plaintiff’s “characterization of its damages as ensuing losses under
the policy is purely semantic and self-serving, designed to invoke the ensuing loss provision of
the Faulty Planning Exclusion in order to protect its coverage determination.” [224] at 14. The
Court disagrees.
Plaintiff’s legal position, as asserted by its counsel, is that “[d]amage to the Siegel home
arising from the negligent or otherwise unlawful conduct of third parties, as a risk, is not
expressly excluded from policy coverage anywhere. Therefore, Chubb appropriately paid for the
losses as the policy provided coverage. There is no exclusion in the Chubb policy that would
change this result.” [236] at 9-10. This position is consistent with Young’s testimony and
Plaintiff’s earlier interrogatory answer, both of which aver that the losses to the insureds’ home
ensued directly from the construction activities and were not barred by any policy exclusions. To
the extent that Young’s testimony could be understood as contrary, it at best amounts to a legal
conclusion from a lay witness. Young’s testimony that the losses were “ensuing losses” does not
necessarily mean that the losses were within the “ensuing covered loss” clause in the policy any
more than lay witness testimony that an act was negligent makes it legally so.
The “ensuing covered loss” provision by its terms applies only when coverage is
2

Young used the policy term “ensuing covered losses” only when reading from the policy at the direction
of defense counsel. Notably, defense counsel also neglected to use the policy term “ensuing covered
loss.” Instead, counsel asked Young about “ensuing loss.” See [224-2].

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excluded by the policy. See Bd. of Educ. of Maine Twp. High Sch. Dist. 207 v. Int’l Ins. Co., 684
N.E.2d 978, 984 (Ill. App. Ct. 1st Dist. 1997) (“[T]he ‘exceptions’ clause would bring within
coverage a loss from a covered peril that follows an excluded peril.”); cf. Friedberg v. Chubb &
Son, Inc., 691 F.3d 948, 953 (8th Cir. 2012) (interpreting identical “faulty planning” exclusion
containing “ensuing covered loss” clause under Minnesota law and concluding that “the ensuingloss provision excludes from coverage the normal results of defective construction, and applies
only to distinct, separable, ensuing losses” (quotation omitted)). Here, however, Ground has not
pointed to any evidence in the record, legal authority, or rules of construction to support the
predicate conclusion that any policy exclusion applies here. Plaintiff has proffered a reasonable
interpretation of its policy, namely that the “faulty planning” exclusion – the only one addressed
in Ground’s brief, see [224] at 10 – applies only to faulty planning, construction, or maintenance
related to work specifically related to and intended to improve or maintain the insured property.
See [236] at 10. This interpretation of the exclusion is reasonable in light of the type of
insurance purchased, the nature of the risks involved, and the overall purpose of the contract.
The exclusion conceivably could be read to apply to all “faulty acts, errors or omissions of you
or any other person in planning, construction or maintenance” that happen anywhere in the
world, but such an interpretation would contravene public policy and lead to absurd results.
All-risk insurance policies are intended to provide recovery for all fortuitous losses not
brought about by an insured’s own misconduct, unless the losses are expressly excluded. It
would not make sense to interpret the policy to exclude coverage for mishaps entirely outside of
the insureds’ knowledge, control, or potential supervision merely because they occur as a result
of another’s “construction” project rather than some other, equally fortuitous event.

For

instance, if a building were being erected two blocks away and a crane dropped materials on the

12

insureds’ home, the loss would be entirely fortuitous to the insured; coverage should not be
denied merely because the loss came about due to another’s “construction” project rather than,
say, a plane dropping the same materials on the home.
The bottom line is that the Court cannot conclude, as a matter of law, that the damage to
the insureds’ property fell within the single identified policy exclusion. Therefore, it is irrelevant
whether an “ensuing loss” is one that came about because of the construction – as Young
appeared to use and understand the term – or one that happened separate and distinct from a
“direct loss” that is not covered by the policy – as Ground maintains. Ground, not Plaintiff,
appears to be engaging in a “semantic and self-serving” characterization of the damages here.
Ground has not demonstrated its entitlement to judgment as a matter of law, so the Court denies
Ground’s motion for partial summary judgment on the issue of whether Plaintiff’s “damages
claimed in this litigation are ensuing losses under the subject first-party insurance policy.” [224]
at 16.
III.

Motion for Reconsideration
A.

Background

The Illinois Adjacent Landowner Excavation Protection Act (“ALEPA”), 765 ILCS
140/1, protects the owners of properties adjacent to properties that are being excavated. Proud v.
W.S. Bills & Sons, Inc., 255 N.E.2d 64, 68 (Ill. App. Ct. 3d Dist. 1970). In relevant part, the
ALEPA requires the “owner or possessor of land intending to make or to permit an excavation to
be made on his land” to “give due and reasonable notice in writing to the owner or owners of
adjoining lands and of adjoining buildings and other structures stating the depth to which the
excavation is intended to be made and when the excavation will begin.” 765 ILCS 140/1(1). If
the excavation depth is projected to be not more than eight feet below grade, see 765 ILCS

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140/1(4), the “owner or possessor” of the land to be excavated must give the owner of the
adjacent property at least 30 days to take protective measures to shore up his property. 765 ILCS
140/1(1). If the excavation depth is projected to be deeper than eight feet below grade, the
“owner or possessor of the land on which the excavation is being made, if given the necessary
license to enter on adjoining land and not otherwise, shall protect the said adjoining land and any
building or other structure thereon, without cost to the owner thereof, by furnishing lateral and
subjacent support to said adjoining land and all buildings and structures thereon.” 765 ILCS
140/1(5). “Owners” or “possessors” who fail to comply with these requirements are liable to the
“owner[s] of adjacent property for any damage to the land or to any buildings or other structure
thereon arising from such excavation.” 765 ILCS 140/1(2), (5).
Count XV of Plaintiff’s fourth amended complaint alleges that Defendants Ground and
Geo neither provided notice of the excavation nor provided adequate bracing of the insureds’
land. See [182]. Defendants Ground and Geo separately moved to dismiss this count, see [183];
[185], arguing that they are not an “owner or possessor of land” and therefore cannot be subject
to liability under ALEPA. In evaluating and ultimately rejecting this argument, the Court relied
on two Illinois Court of Appeals cases interpreting the ALEPA, Proud v. W.S. Bills & Sons, Inc.,
255 N.E.2d 64 (Ill. App. Ct. 3d Dist. 1970), and Lawry’s The Prime Rib, Inc. v. Metropolitan
Sanitary District of Greater Chicago, 563 N.E.2d 981 (Ill. App. Ct. 1st Dist. 1990). Based on its
reading of those cases, the Court concluded that Illinois courts have construed “owner or
possessor of land” to encompass those who have “possessed” land due to their involvement in an
excavation. Applying that definition, the Court denied the motion to dismiss after concluding
that Plaintiff’s allegations “reasonably suggest that each Defendant did more than provide oneoff consultations on the design of a single component of the project, and that each was involved

14

in at least some aspect of the on-site excavation.” [211] at 14.
Defendants Ground and Geo have moved for reconsideration of this order [217]. They
contend that the Court “made a manifest error of law” in denying their motions because “(1) it
failed to precedentially analyze and correctly define ‘possessor’ under ALEPA, and (2) it denied
the motions to dismiss notwithstanding that Chubb’s allegations did not aver that Movants were
‘possessors’ of the land under ALEPA.” [217] at 2.
B.

Legal Standard

Because Ground and Geo have moved for reconsideration of an interlocutory order rather
than a final judgment, their motion for reconsideration [217] is governed by Federal Rule of
Civil Procedure 54(b):
any order or other decision, however designated, that adjudicates fewer than all
the claims or the rights and liabilities of fewer than all the parties does not end the
action as to any of the claims or parties and may be revised at any time before the
entry of a judgment adjudicating all the claims and all the parties' rights and
liabilities.
Fed. R. Civ. P. 54(b). Accordingly, under Rule 54(b), the Court may exercise its inherent
authority to reconsider its interlocutory orders. See Moses H. Cone Mem’l Hosp. v. Mercury
Constr. Corp., 460 U.S. 1, 12 (1983) (“every order short of a final decree is subject to reopening
at the discretion of the district judge”); Trs. of Pension, Welfare, and Vacation Fringe Benefit
Funds of IBEW Local 701 v. Pyramid Elec., 223 F.3d 459, 469 (7th Cir. 2000).
It is well established, however, that “[m]otions for reconsideration serve a limited
function: to correct manifest errors of law or fact or to present newly discovered evidence.”
Conditioned Ocular Enhancement, Inc. v. Bonaventura, 458 F.Supp.2d 704, 707 (N.D. Ill. 2006)
(quoting Caisse Nationale de Credit Agricole v. CBI Indus., Inc., 90 F.3d 1264, 1269 (7th Cir.
1996)). In regard to the “manifest error” prong, the Seventh Circuit has explained that a motion

15

to reconsider is proper only when “the Court has patently misunderstood a party, or has made a
decision outside the adversarial issues presented to the Court by the parties, or has made an error
not of reasoning but of apprehension.” Bank of Waunakee v. Rochester Cheese Sales, Inc., 906
F.2d 1185, 1191 (7th Cir. 1990); see also Wiegel v. Stork Craft Mfg., Inc., 2012 WL 2130910, at
*2 (N.D. Ill. June 6, 2012) (“Reconsideration is not appropriate where a party seeks to raise
arguments that could have been raised in the original briefing.”); Oto v. Metro. Life Ins. Co., 224
F.3d 601, 606 (7th Cir. 2000) (“A ‘manifest error’ is not demonstrated by the disappointment of
the losing party,” instead it “is the ‘wholesale disregard, misapplication, or failure to recognize
controlling precedent.’”); Bilek v. Am. Home Mortg. Servicing, 2010 WL 3306912, at * 1 (N.D.
Ill. Aug. 19, 2010). And with respect to the second prong, the court of appeals has explained that
a motion to reconsider may be appropriate if there has been “a controlling or significant change
in the law or facts since the submission of the issue to the Court.” Bank of Waunakee, 906 F.2d
at 1191. Because the standards for reconsideration are exacting, our court of appeals has stressed
that issues appropriate for reconsideration “rarely arise and the motion to reconsider should be
equally rare.” Bank of Waunakee, 906 F.2d at 1191.
C.

Analysis

Ground and Geo primarily contend that the Court’s analysis of the phrase “owner or
possessor of land” as used in the ALEPA was deficient, particularly when compared to its
construction of the phrase “performed excavation work” as used in the Chicago Municipal Code.
Ground and Geo assert that, in the latter analysis, “the Court looked to the term’s definition
under Illinois decisional law, its usage in other sections of the Ordinance and the Municipal Code
at large, and its dictionary definitions.” [217] at 3. They contend that “the Court did not employ
a similar approach or apply comparable judicial rigor in defining ‘possessor’ under ALEPA.”

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Id. “In fact,” they contend, “the Court relied solely on two Illinois decisions, one of which
Movants argued was distinguishable,” and “did not explore the term’s usage in case law,
secondary sources, dictionaries, or other statutes.” Id. Ground and Geo argue that adequate
consideration of these types of sources “conclusively demonstrate[s] that Movants are not
‘possessors’ under ALEPA.”

Id.

They have directed the Court to several such sources,

including Illinois case law concerning personal injuries sustained on construction sites, see id. at
4-5, and Illinois statutory schemes using the term “possessor.” See id. at 6-7.
Neither Ground nor Geo previously directed the Court to any of these sources, or argued
that the Court should look any further than the Illinois Appellate Court’s decision in Lawry’s The
Prime Rib, Inc. v. Metropolitan Sanitary District of Greater Chicago, 563 N.E.2d 981 (Ill. App.
Ct. 1st Dist. 1990). Instead, both contended at the motion to dismiss stage that Lawry’s was
controlling and that, under Lawry’s, they were not subject to liability under the ALEPA. See
[95] at 3-6 (Ground); [98] at 7-9 (Geo); [120] at 3 (Ground); [121] at 3-5 (Geo); [183] at 7-10
(Geo); [185] at 3-6 (Ground). As Plaintiff points out, however, see [227] at 6, 8, the general rule
is that a motion for reconsideration is not an appropriate vehicle to present arguments that could
have been raised previously. Cf. Oto v. Metro. Life Ins. Co., 224 F.3d 601, 606 (7th Cir. 2000);
Moro v. Shell Oil Co., 91 F.3d 872, 876 (7th Cir. 1996); Wiegel v. Stork Craft Mfg., Inc., 2012
WL 2130910, at *2 (N.D. Ill. June 6, 2012) (“Reconsideration is not appropriate where a party
seeks to raise arguments that could have been raised in the original briefing.”). This is true even
where, as here, the new arguments were already advanced by other movants, see [191] at 7-8
(discussing O’Connell v. Turner Constr. Co., 949 N.E.2d 1105 (Ill. App. Ct. 1st Dist. 2011),
Madden v. F.H. Paschen/S.N. Nielson, Inc., 916 N.E.2d 1203 (Ill. App. Ct. 1st Dist. 2009), and
Restatement (Second) of Torts §§ 328E(a) & 343), and rejected by the Court. See [211] at 15

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n.1.
Moreover, this case arose under the Court’s diversity jurisdiction. The Court’s role in
such cases is to interpret and apply state substantive law as it predicts that the state’s highest
court would. See, e.g., In re Crane, 742 F.3d 702, 707-08 (7th Cir. 2013). Here, the Illinois
Supreme Court has interpreted neither the phrase “owner or possessor of land” as used in the
ALEPA nor the phrase “perform excavation work” as used in the Ordinance. “Where the state
supreme court has not ruled on an issue, decision of the state appellate courts control, unless
there are persuasive indications that the state supreme court would decide the issue differently.”
Lexington Ins. Co. v. Rugg & Knopp, Inc., 165 F.3d 1087, 1090 (7th Cir. 1999); see also Rodas
v. Seidlin, 656 F.3d 610, 626 (7th Cir. 2011). The parties directed the Court to two key Illinois
Appellate Court decisions interpreting the ALEPA: Proud and Lawry’s. The Court considered
those decisions, see [211] at 11-15, and concluded that Illinois courts construe the phrase “owner
or possessor of land” liberally to encompass even “fleeting” possession, Proud, 255 N.E.2d at
70, at least by those who had some on-site involvement in the challenged excavation. See [211]
at 13; Lawry’s, 563 N.E.2d at 985. Because these decisions squarely addressed the statutory
language at issue, and there were no “persuasive indications” that the Illinois Supreme Court
would interpret the ALEPA differently, the Court found Proud and Lawry’s controlling. The
Court was not (and is not now) persuaded that the Illinois Supreme Court would find more
instructive authority addressing duties of care owed to workers on construction sites or
interpreting different statutory regimes, particularly when both bodies of law were in existence
but not contemplated by the Proud or Lawry’s courts.
The Court’s analysis of the Ordinance necessarily took a different trajectory, as there did
not “appear to be any case law specifically addressing the contours of the Ordinance or clarifying

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these definitions [of ‘person performing the work,’ ‘performing the excavation work,’
‘performing,’ ‘excavation,’ or ‘work.’].” [211] at 22. In the absence of interpretative guidance
from the Illinois Supreme or Appellate Courts, the Court began its analysis from the ground up,
following the rules of statutory construction set forth by the Illinois Supreme Court. Thus, the
Court looked to the plain language of the statute, the ordinary and “settled legal” meanings of the
contested terms, the remainder of the statutory scheme, and the legislature’s intent. See [211] at
22-23 (citing People v. Johnson, 995 N.E.2d 986, 988 (Ill. 2013), and Brucker v. Mercola, 886
N.E.2d 306, 313 (Ill. 2007)). The Court is not persuaded that reconsideration of its analyses is
warranted here.
Ground and Geo next suggest that “the Court’s position that use of various forms of
‘excavation’ in Proud is ambiguous, while providing two pages of judicial narrative in the
October 17 order identifying the consistency with which the term ‘excavation’ has been legally
understood, is, itself, puzzling and conflicting.” [217] at 8; see also [231] at 3. The Court did
not conclude, however, that the meanings of the terms “excavator” or “possessor” were
ambiguous. Rather, the Court noted that the Proud court’s apparently interchangeable use of
such phrases as “contractor,” “excavating contractors,” “independent contractor making an
excavation,” and “independent contractor actually performing the job,” coupled with its approval
of American Jurisprudence 2d § 72, suggested that the ALEPA could apply to contractors
generally, not merely those who engaged in “excavation,” i.e., digging in the dirt. See [211] at
14-15.
Ground and Geo’s final argument is that “public policy supports reversal of the Court’s
denial of the motions to dismiss.” [217] at 9. They contend that the Court’s decision “runs the
risk of imposing new duties upon participants in an excavation/construction project which are

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completely incongruous with the legal liability of parties who are not ‘possessors of land.’” Id.
The Court recognizes Ground’s and Geo’s concerns that some participants in a project such as
the one at issue “may not even be aware that an excavation is, in fact, being made if their
involvement is merely design-related and/or ends prior to commencement of construction
activity.” [217] at 9-10. Indeed, the Court agrees that the duties imposed by the ALEPA “are
appropriate only for those with actual presence and control,” [217] at 10, and previously
recognized that Geo and Ground may “ultimately prevail after more evidence regarding their
actual degree of involvement in the project is adduced.” [211] at 15. No evidence to that end
properly has been submitted for the Court’s consideration at this juncture, however, and
Plaintiff’s allegations – which the Court must accept as true for purposes of a motion to dismiss
– plausibly suggest that both Ground and Geo had some responsibility for on-site excavation
activities.
IV.

Conclusion
For all of the foregoing reasons, the Court denies the motion for reconsideration [217],

grants the motion to join Ground Engineering Consultants’ motion for partial summary judgment
[235], and grants in part and denies in part the motion for partial summary judgment [224]. This
matter is set for status on July 1, 2014, at 9:00 a.m.

Dated: June 12, 2014

_______________________________
Robert M. Dow, Jr.
United States District Judge

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