Cincinnati Insurance Company v. Vita Food Products, Inc. et al
Filing
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MEMORANDUM Opinion and Order signed by the Honorable Edmond E. Chang. For the reasons stated in the Opinion, Plaintiff's motion for summary judgment 38 is granted as against Defendants Vita Food, Nardo Ovando, and Karina Baez. Judgment is entered against Defendant Vita Food on its counterclaim. The status hearing of 02/18/2015 is vacated. Civil case terminated. Emailed notice(slb, )
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
CINCINNATI INSURANCE COMPANY,
Plaintiff,
v.
VITA FOOD PRODUCTS, INC., NARDO
OVANDO, and KARINA BAEZ,
Defendants.
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No. 13 C 05181
Judge Edmond E. Chang
MEMORANDUM OPINION AND ORDER
In this diversity action, Cincinnati Insurance Company seeks a declaratory
judgment that it is not obligated either to defend or indemnify Vita Food Products,
Inc., in a personal-injury lawsuit filed in state court by Nardo Ovando, an employee
of a third-party contractor who fell while working at one of Vita Food’s stores, and
Ovando’s wife, Karina Baez.1 Cincinnati now moves for summary judgment. For the
reasons given below, the motion is granted.
1The
Court exercises subject-matter jurisdiction under 28 U.S.C. § 1332 based on the
complete diversity of the parties (Cincinnati Insurance Company is an Ohio corporation
with its principal place of business in that state, while Vita Food Products’ citizenship is
Illinois, as is Ovando’s and Baez’s). R. 17. In light of the seriousness of the injury alleged in
the underlying lawsuit, the amount-in-controversy exceeds $75,000.
I. Background
On June 30, 2011, Nardo Ovando was working at a Vita Food premises in
Chicago when he was injured in a fall. R. 40, PSOF ¶ 5.2 Ovando was an employee
of Painters USA, Inc., which had been retained by Vita Food to carry out contract
work on the site. Id. ¶ 6. Ovando sued Vita Food for negligence in Cook County
Circuit Court, and Baez also brought a loss of consortium claim in the same case.
See R. 1-2, First Am. Compl., Case No. 12 L 012605. This federal suit turns on
whether Cincinnati, which had issued a commercial general liability coverage and
commercial umbrella liability policy to Painters for that June 2011 time period,
PSOF ¶¶ 9-11, is obligated to cover Vita Food under that policy. Vita Food concedes
that it was not an explicitly named insured on Painters’ policy with Cincinnati,
PSOF ¶ 15, but asserts that it was a covered party under the terms of the policy’s
endorsement of automatic additional insureds, Def.’s Resp. PSOF ¶ 15.
Painters’ policy with Cincinnati states in relevant part that:
(1) Any person or organization … whom you [Painters] are required to add as
an additional insured under this Coverage Part by reason of:
(a) A written contract or agreement; or
(b) An oral agreement or contract where a certificate of insurance
showing that person or organization as an additional insured has
been issued,
2Citations
to the docket are “R.” followed by the entry number and, when necessary,
the page/paragraph number. Citations to the parties’ Local Rule 56.1 Statements of Fact
are “PSOF” (for Cincinnati’s Statement of Facts) [R.40]; “DSOF” (for Vita Food’s Statement
of Additional Facts) [R. 41 at 11-12]; Def.’s Resp. to PSOF (for Vita Food’s Response to
Cincinnati’s Statement of Facts) [R. 41 at 1-11]; Pl.’s Resp. to DSOF (for Cincinnati’s
Response to Vita Food’s Statement of Additional Facts) [R. 44]. Where a fact is admitted by
the responding party, the Court cites only to the asserting party’s Statement of Facts.
2
is an insured, provided:
(a) The written or oral contract or agreement is:
1) Currently in effect or becomes effective during the policy
period; and
2) Executed prior to an “occurrence” or offense to which this
insurance would apply.
R. 40-1, Painters’ Policy at 10-11 (Paragraph 9: Automatic Additional Insures–
Specified Relationships) (emphases added). The question is whether Vita Food can
show any set of facts by which it was an insured party under these terms,
specifically the provision for an oral agreement. In presenting the relevant factual
background to resolve the issue, the Court sets forth the following evidence in the
light most favorable to Vita Food as the non-moving party. Matsushita Elec. Indus.
Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
Sometime before Ovando’s fall, Vita Food and Painters entered into an oral
agreement for Painters to perform painting services at the Vita Food location in
question. DSOF ¶ 1.3 Following the oral agreement, Painters submitted a written
3 Cincinnati
objects to all of Vita Food’s Statements of Additional Fact as not
complying with Local Rule 56.1. Many of Cincinnati’s blanket objections are without basis.
For instance, in response to Vita Food’s statement that Vita Food and Painters entered into
an oral argument for the underlying painting services, Cincinnati offers a premature attack
on the sufficiency of the record—targeting a “self-serving” affidavit contradicting prior
deposition testimony—on an unrelated point concerning whether the agreement included
additional insured coverage for Vita Food. Pl.’s Resp. DSOF ¶ 1. First, it is a “misconception
that evidence provided in a ‘self-serving affidavit’ is never sufficient to thwart a summary
judgment motion.” Payne v. Pauley, 337 F.3d 767, 773 (7th Cir. 2003) (“[A] self-serving
affidavit is an acceptable method for a non-moving party to present [otherwise acceptable]
evidence of disputed material facts.”). Second, the portions of the record Cincinnati points
to do not reveal the contradictions alleged (because Cincinnati does not actually respond to
the discrete fact raised in the statement). Cincinnati does not therefore properly respond to
this fact, which is deemed admitted (in any event, at the summary judgment stage, the
Court must view the facts in the light most favorable to Vita Food as the non-moving
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proposal to Vita Food offering the terms and conditions of the services. Id. Vita Food
accepted some of these, but informed Painters that it would not go forward with the
project unless Painters made Vita Food an additional insured under Painters’
insurance policy; Painters agreed to the condition. Id. ¶¶ 2-4.4 Although Cincinnati
disputes that Painters so agreed, it concedes that Peter Cook, vice president of
Painters, testified that he “may have” discussed Vita Food’s need to be covered by
Painters’ insurance during contract negotiations. DSOF ¶ 8. The parties agree that
there was no written contract or agreement ever signed specifying Vita Food’s
coverage requirement. DSOF ¶ 7; Pl.’s Resp. DSOF ¶ 7.
With this backdrop in place, fast forward to June 30, 2011. Ovando’s fall
occurred between around two and four o’clock in the afternoon. PSOF ¶ 21; Def.’s
Resp. PSOF ¶ 21. At 4:43 p.m. that same afternoon, according to the record, a
party). See id. (emphasizing that doing so does not mean the court vouches for their truth)
(citation omitted).
4Again,
Cincinnati objects on the basis that these facts are supported only by a selfserving affidavit by Martin Morse, Vita Food’s maintenance manager who was responsible
for negotiating third-party contracts, which also contradicts his previous deposition
testimony. Pl.’s Resp. DSOF ¶¶ 3, 4. But the testimony cited to by Cincinnati is not in fact
contradictory. Morse acknowledged only that “[i]t’s not common practice, but it does
happen” that projects like the painting work involved here could begin before Vita Food was
named as an additional insured. R. 40-2, Morse Tr. at 27. This testimony does not conflict
with the statement in his affidavit that Vita Food made the request for coverage to Painters
for this specific project and that the request in that case was granted.
By contrast, Morse’s assertion that, in 2011, as a matter of company policy, it
required contractors to provide additional insured coverage before beginning work, DSOF
¶ 5, does contradict his earlier deposition testimony, which belied the existence of any such
official policy (speaking instead of a vague practice that was not necessarily followed in
every case). That assertion is therefore struck. See Bordelon v. Chicago Sch. Reform Bd. of
Trustees, 233 F.3d 524, 527 (7th Cir. 2000) (confirming district court’s authority to strike a
contradictory statement from consideration during summary judgment). Morse also
asserted that Vita Food did allow at times contractors to begin work before a certificate of
insurance (which apparently Vita Food views as different from the underlying contract or
agreement) is issued. DSOF ¶ 6.
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Painters’ employee named Theressa Jirka sent an email to the office of Painters’
insurance agent, with the subject line “Urgent Request: Certificate of Insurance.” R.
40-3, Theressa Jirka Email; R. 40-2, Cook Tr. at 19-20 (explaining who Jirka is and
identifying Painters’ insurance agent). The email requested that the agent mail an
original and email a copy of the certificate, listing Vita Food as the additional
insured on Painters’ policy, and reiterated “[n]eeded today if at all possible!!!” Jirka
Email (three exclamation points in the original). The next morning, July 1, at 8:44
a.m., the certificate was emailed to Jirka. R. 40-3, Evelyn Full Email. The certificate
lists Vita Food as the certificate holder and is dated July 1, 2011. R. 40-2, Cert.
Insurance. Painters asserts that it caused the certificate to be issued after receiving
a request that was made by someone at Vita Food’s on the afternoon of June 30
following Ovando’s fall; Vita Food purports to challenge this assertion by pointing
out that there is no evidentiary support in the record to show that it made the
request at that time. PSOF ¶¶ 22, 23; Def.’s Resp. PSOF ¶¶ 22, 23.
II. Standard of Review
Summary judgment must be granted “if 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). A genuine issue of material fact exists if “the
evidence is such that a reasonable jury could return a verdict for the nonmoving
party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In evaluating
summary judgment motions, courts must view the facts and draw reasonable
inferences in the light most favorable to the non-moving party. Scott v. Harris, 550
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U.S. 372, 378 (2007). The Court may not weigh conflicting evidence or make
credibility determinations, Omnicare, Inc. v. UnitedHealth Grp., Inc., 629 F.3d 697,
704 (7th Cir. 2011), and must consider only evidence that can “be presented in a
form that would be admissible in evidence,” Fed. R. Civ. P. 56(c)(2). The party
seeking summary judgment has the initial burden of showing that there is no
genuine dispute and that they are entitled to judgment as a matter of law.
Carmichael v. Village of Palatine, 605 F.3d 451, 460 (7th Cir. 2010); see also Celotex
Corp. v. Catrett, 477 U.S. 317, 323 (1986); Wheeler v. Lawson, 539 F.3d 629, 634 (7th
Cir. 2008). If this burden is met, the adverse party must then “set forth specific
facts showing that there is a genuine issue for trial.” Anderson, 477 U.S. at 256.
III. Discussion
To begin, it is undisputed that no written agreement or contract governing
Vita Food’s insured-status through Painters’ policy with Cincinnati ever existed.
DSOF ¶ 7; Pl.’s Resp. DSOF ¶ 7. Cincinnati argues that it is entitled to summary
judgment because Vita Food cannot show that there was an oral agreement in place
requiring Painters to add Vita Food as an additional insured or, alternatively, even
if an oral agreement existed, Vita Food does not qualify under the policy because it
requested and received a certificate of insurance only after Ovando’s accident. R. 39,
Pl.’s Br. at 5-6. Although Cincinnati is incorrect on the first point, it prevails on the
second.
Given the standard of review at the summary judgment stage, there is a
genuine dispute over whether an oral agreement was reached about Painters’
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insurance obligations as part of its painting work for Vita Food. Cincinnati believes
that Vita Food’s reliance on the affidavit and deposition testimony of Vita Food’s
manager, Martin Morse, is insufficient to make the showing. It is true that
“[c]onclusory allegations, unsupported by specific facts, will not suffice” to stave off
summary judgment. Payne, 337 F.3d at 773 (citing Lujan v. Nat’l Wildlife Fed’n,
497 U.S. 871, 888 (1990)). But Vita Food has put forth specific facts—Morse’s
avowal that oral negotiations did cover the additional-insured issue and that
Painters agreed to extend its coverage (and this representation is not contradicted
by prior deposition testimony, see supra n.3). This assertion may strike Cincinnati
as self-serving, but in a classic he said, she said dispute, particularly over an oral
contract, each side’s assertion will always seem self-serving. All that matters is that
Morse has presented a more-than conclusory account of his negotiations with
Painters based on his personal knowledge. See Payne, 337 F.3d at 772-73; Fed. R.
Civ. P. 56(c)(4). “[W]here the facts specifically averred by [a non-moving] party
contradict facts specifically averred by the movant, the motion [for summary
judgment] must be denied.” Lujan, 497 U.S. at 888. Vita Food even acknowledged
that its vice president, Cook, “may have” discussed the question during
negotiations, DSOF ¶ 8: thus, a textbook example of a question of fact for a jury, as
arbiter of credibility, to resolve. See Johannesen v. Eddins, 963 N.E.2d 1061, 1066
(Ill. App. Ct. 2011) (citation omitted) (“The existence of an oral contract, its terms,
and the intent of the parties are questions of fact.”); see also Schrock v. Learning
Curve Int’l, Inc., 744 F. Supp. 2d 768, 774 (N.D. Ill. 2010) (finding summary
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judgment inappropriate where each party asserts evidence supporting its own
position about contents of oral bargaining).
That said, this issue of fact is not enough to change the ultimate outcome in
Vita Food’s favor. The problem is that, even if it could show that there was an oral
agreement for Painters to include Vita Food as an additional insured, the policy
language requires more that Vita Food cannot establish. Remember that the
additional-insured endorsement states that a party is covered by reason of “[a]n oral
agreement or contract where a certificate of insurance showing that person or
organization as an additional insured has been issued.” Painters’ Policy at 11
(emphasis added). “[P]rovided,” the policy continues, that the “oral contract or
agreement is … executed prior to an ‘occurrence’ or offense to which this insurance
would apply.” Id. (emphasis added). These clauses are the shoals on which Vita
Food’s ship flounders.
“The construction of an insurance policy’s provisions is a question of law” and
where “the terms in the policy are clear and unambiguous, the court must give them
their plain, ordinary, popular meaning.”5 Outboard Marine Corp. v. Liberty Mut.
Ins. Co., 607 N.E.2d 1204, 1212, 1217 (Ill. 1992). It is the burden of the allegedly
insured party to prove coverage under the terms of the policy. See, e.g., Village of
Hoffman Estates v. Cincinnati Ins. Co., 670 N.E.2d 874, 876 (Ill. App. Ct. 1996).
Here, the policy’s terms are clear and unambiguous. First, the policy language that
states “where a certificate of insurance … has been issued” plainly means that an
5The
parties assume that Illinois law governs, and the Court will proceed on that
basis. See Checkers Eight Ltd. P’ship v. Hawkins, 241 F.3d 558, 561 (7th Cir. 2001).
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oral agreement about coverage is only one element necessary for an additional
party’s insured-status to become effective. The other, contingent element is the
issuance of the certificate: only if (that is, “where”) one exists does the oral
agreement then make any difference. What’s more, the use of the past perfect tense
(“has been issued”) makes clear that the certificate’s issuance needs to happen
before the additional party can be considered insured. Vita Food’s assertion to the
contrary that no “restriction is placed on the time that the Certificate of Insurance
must be issued,” R. 42, Def.’s Resp. Br. at 7, is without justification. The language of
the policy requires “an oral agreement or contract where a certificate … has been
issued,” not “an oral agreement or contract, where a certificate … shall be issued,”
or even “is (eventually) issued.”6 And here, the record indicates that the certificate
of insurance was issued to Vita Food on July 1, 2011, meaning Vita Food was not an
additionally insured party before that date, including on June 30 when Ovando was
injured. See Cert. Insurance. Vita Food’s attempts to cast doubt on this issuance
date by asserting that there is no further evidence authenticating it. Def.’s Resp.
PSOF ¶ 24. But Vita Food misapprehends the applicable standard of review.
6By
Vita Food’s reading, which requires the text to mean that the certificate “has
been issued” relative to the date a claim is eventually filed (as opposed to relative to when
the party becomes effectively insured, as the language indicates), one wonders what
purpose a certificate of insurance would even serve. Rather, given that the two avenues to
additional-covered status are a written contract or an oral agreement, the specification that
the latter requires at least a certificate of insurance makes objective sense. The certificate
is not a written contract/insurance policy in itself (indeed, the certificate issued to Vita Food
specifically states that it “is issued as a matter of information only” and “does not
affirmatively or negatively amend, extend, or alter the coverage afforded” by the underlying
policy), but it does provide, like a written agreement, some protection against the
predictable disputes, as demonstrated by this very case, about whether a party was truly
covered on a certain date.
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Cincinnati has met its initial burden of entitlement to summary judgment by
setting forth the certificate dated July 1, and that means Vita Food must now set
forth specific facts showing that there is a genuine issue for trial on the question of
the issuance date. Anderson, 477 U.S. at 256. It has not.
Second, the related requirement that the oral agreement must be “executed
prior to an occurrence” triggering a claim is equally damaging to Vita Food. Vita
Food argues that all that matters is that the underlying oral agreement by Painters
to cover Vita Food, irrespective of the certificate of insurance, was reached prior to
Ovando’s accident. Def.’s Resp. Br. at 7. But this interpretation stretches the
language of the policy, which, in describing the “oral agreement” as needing to be
executed before an occurrence, refers back to its immediately prior use of the term
“oral agreement,” which has a corresponding requirement of a certificate of
insurance having been issued. In other words, what must be executed before any
claim-producing incident is the set of two conditions already described, the oral
agreement and an issued certificate of insurance. In any event, even if for some
reason “oral agreement” was interpreted to mean something different from its use
in the preceding clause, as Vita Food suggests, it still would not help—there still is
the requirement that coverage is extended only “where a certificate has been
issued.” Because Vita Food cannot show that the certificate was issued before
Ovando’s fall, the “occurrence” in question, it cannot show that it was an insured
party at that time.
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IV. Conclusion
For the reasons described above, Cincinnati’s motion for summary judgment
is granted and a declaratory judgment is entered in its favor that it is not obligated
to defend or indemnify Vita Food in Ovando and Baez’s Cook County Circuit Court
action. Judgment is also necessarily entered against Vita Food’s counterclaim, and
the judgment also binds Nardo Ovando and Karina Baez, who were served long ago
and have defaulted. See R. 6, 7, Waivers of Service.
ENTERED:
s/Edmond E. Chang
Honorable Edmond E. Chang
United States District Judge
DATE: January 30, 2015
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