Pontanini et al v. Northfield Insurance Company
Filing
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ORDER: Plaintiffs' motion to remand 19 is granted. Defendant's motion to stay proceedings on Plaintiffs' motion to remand 21 is denied. This case is remanded to the Circuit Court of Cook County. See Statement. Civil case terminated. Signed by the Honorable Sara L. Ellis on 9/28/2015:Mailed notice(rj, )
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
ANTHONY PONTANINI and ANGELA
PONTANINI,
Plaintiffs,
v.
NORTHFIELD INSURANCE COMPANY,
Defendant.
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No. 15 C 6141
Judge Sara L. Ellis
ORDER
Plaintiffs’ motion to remand [19] is granted. Defendant’s motion to stay proceedings on
Plaintiffs’ motion to remand [21] is denied. This case is remanded to the Circuit Court of Cook
County. See Statement.
STATEMENT
Plaintiffs Anthony and Angela Pontanini (collectively, the “Pontaninis”) filed this action
in the Circuit Court of Cook County against Defendant Northfield Insurance Company
(“Northfield”), seeking coverage under a liability insurance policy Northfield issued to
Advanced Equipment Services, Inc. (“AESI”). 1 AESI assigned its rights and interests under the
policy and any causes of action it had against Northfield to the Pontaninis as part of its
settlement of litigation the Pontaninis brought against AESI and for which Northfield had denied
coverage. 2 Northfield removed the case to federal court based on diversity jurisdiction, 28
U.S.C. §§ 1332 & 1441, and then filed a motion to dismiss [14], arguing that it had no duty to
defend AESI and so the Pontaninis, as AESI’s assignees, cannot state a claim against Northfield.
After Northfield filed its motion to dismiss, the Pontaninis filed a motion to remand the
case to state court based on the service of suit provision in the insurance policy [19]. The
provision reads:
1
ICW Group Insurance Companies (“ICW”) filed a complaint in intervention against Northfield. ICW
has not participated in the briefing of the motions at issue in this Order or expressed any position on the
issues before the Court.
2
Specifically, the settlement agreement provided that AESI is obligated to pay the Pontaninis $4,760,000,
which, with the exception of $10,000 paid by AESI to the Pontaninis, is to be satisfied through the
assignment of AESI’s rights under the Northfield policy and any causes of action AESI has against
Northfield and several other entities. Doc. 2-1 at 21–22.
In the event of our failure to pay any amount claimed to be due
hereunder, we, at the request of the Insured (or reinsured), will
submit to the jurisdiction of any court of competent jurisdiction
within the United States and will comply with all requirements
necessary to give such court jurisdiction and all matters arising
hereunder shall be determined in accordance with the law and
practices of such court.
Doc. 2-1 at 37. The service of suit provision functions as a waiver of the insurer’s right to
remove a case filed by the insured in state court. Logan v. Associated Int’l Ins. Co., 131 F. Supp.
2d 986, 988 (N.D. Ill. 2001) (“The key words in the clause plainly mean that the insurers will
submit to the jurisdiction of the insured’s choosing.”); see also Russell Corp. v. Am. Home
Assurance Co., 264 F.3d 1040, 1047 (11th Cir. 2001) (“[T]he collective holdings of all federal
courts that have addressed similar service of suit clauses would support a remand in this case
because First State consented to be sued in any jurisdiction chosen by Russell thereby waiving its
right to remove this case to federal court.”); City of Rose City v. Nutmeg Ins. Co., 931 F.2d 13,
15 (5th Cir. 1991) (“[B]y including the ‘Service of Suit’ endorsement in the general liability
policy it issued to Rose City, Nutmeg ceded to Rose City (and therefore its assignees) the right to
choose the forum in which any dispute would be heard, and has foregone its right to remove the
action.”).
Northfield does not contest this general proposition but instead argues that the Pontaninis,
as AESI’s assignees, cannot enforce the service of suit provision because the insurance policy
contains an anti-assignment provision. See Doc. 2-1 at 31 (“Your rights and duties under this
policy may not be transferred without our written consent except in the case of death of an
individual named insured.”). Accordingly, Northfield filed a motion to stay proceedings on the
Pontaninis’ motion to remand [21]. Northfield maintains, without citing to caselaw, that absent a
breach of the policy by Northfield, AESI could not assign its rights to the Pontaninis without
Northfield’s consent, and so the Court must address the motion to dismiss before determining
whether Northfield waived the right to remove the case to federal court. 3 But the Court does not
find this to be the appropriate sequencing of decisions, for the Court must first determine in
which forum the case should proceed before reaching the merits of whether Northfield had a
duty to defend or indemnify AESI. See Tuminaro v. Garland Co., No. 11-cv-203-bbc, 2011 WL
10501186, at *3 (W.D. Wis. May 6, 2011) (“What purpose would it serve to send a case to
another forum after the court decided that the noncompete agreement was enforceable? Issues
such as jurisdiction and venue are decided before the merits.”). Therefore, Northfield’s motion
to stay [21] is denied. In order to evaluate the remand issue, however, the Court must still
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Northfield’s argument may be that if it did not breach its duty to defend, then AESI needed to obtain its
consent to settle with the Pontaninis and so if Northfield did not breach its duty to defend, the settlement
is not binding on it and the Pontaninis cannot enforce the settlement against it. See Guillen ex rel. Guillen
v. Potomac Ins. Co. of Illinois, 785 N.E.2d 1, 6–7, 203 Ill. 2d 141, 271 Ill. Dec. 350 (2003) (“[I]f [the
insurer] did not breach its duty to defend the [insured], then the [insured’s] decision to settle with [the
assignee] has no binding effect upon [the insurer].”). But this argument does not address the issue of the
proper venue in which to decide whether Northfield had a duty to defend AESI. Nor would it affect the
assignment of AESI’s claim against Northfield to the Pontaninis, which was made “as is” and “with all
faults, and without any representation or warranty.” Doc. 2-1 at 21. Rather, this argument goes to the
merits of the Pontaninis’ claim.
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determine whether the anti-assignment provision prevents the Pontaninis from enforcing the
service of suit provision.
An anti-assignment clause does not prohibit assignment of a claim for a loss under the
policy once a claim has arisen, as that constitutes an assignment of policy proceeds. Illinois Tool
Works, Inc. v. Commerce & Indus. Ins. Co., 962 N.E.2d 1042, 1054, 2011 IL App (1st) 093084,
357 Ill. Dec. 141 (2011) (“[N]otwithstanding the existence of an anti-assignment or consent
provision, a policy may be assigned after a loss without notice to or consent of the insurer[.]”);
Cincinnati Ins. Co. v. Am. Hardware Mfrs. Ass’n, 898 N.E.2d 216, 234, 387 Ill. App. 3d 85, 325
Ill. Dec. 483 (2008) (allowing assignee to pursue insured’s right to defense costs from insurer
despite existence of anti-assignment clause). Northfield even admits that AESI could assign its
claim for policy proceeds to the Pontaninis. But it contends that AESI’s assignment does not go
beyond the right to collect policy proceeds to allow the Pontaninis to enforce the service of suit
provision of the policy, which Northfield maintains is a right personal to AESI. But as AESI’s
assignee, the Pontaninis stepped into the shoes of AESI, taking all of AESI’s rights under the
policy to the extent contemplated by AESI and the Pontaninis’ settlement agreement. Brandon
Apparel Grp. v. Kirkland & Ellis, 887 N.E.2d 748, 756, 382 Ill. App. 3d 273, 320 Ill. Dec. 604
(2008) (“The assignment transfers to the assignee all the right, title or interest of the assignor in
the thing assigned. Thus, the assignee stands in the shoes of the assignor.” (citation omitted)
(internal quotation marks omitted)). Here, the settlement agreement assigned the Pontaninis the
“rights under AESI’s Northfield commercial general liability insurance policy(ies), which rights
may include, without limitation, [AESI’s] right to a legal defense, [and] payment and
indemnification from Northfield arising out of the claims asserted against AESI in the Lawsuit
and the Consent Judgment (hereafter defined) to be entered against it therein[.]” Doc. 2-1 at 19.
The assignment of rights under the settlement agreement is broad, and Northfield provides the
Court with no reason why the assignment excludes the Pontaninis’ right to enforce the service of
suit provision. Cf. Pine Top Receivables of Illinois, LLC v. Banco De Seguros del Estado, No.
12 C 6357, 2013 WL 677986, at *2–3 (N.D. Ill. Feb. 25, 2013) (assignee could not enforce
arbitration provision where assignment agreement stated that it “shall not be construed to be a
novation or assignment of the Policies”). Thus, the Court finds that the Pontaninis may enforce
the service of suit provision. See City of Rose City, 931 F.2d at 15 (allowing assignee to enforce
service of suit provision against insured, even though service of suit provision did not specify
that it applied to assignees); U.S Fire Ins. Co. v. Arch Specialty Ins. Co., No. WDQ-08-1249,
Doc. 22 at 6–7 (D. Md. July 15, 2008) (finding that anti-assignment clause did not bar transfer of
the policy and enforcement of service of suit clause by assignee). This requires remand of the
case to state court, where Northfield’s motion to dismiss may be addressed. Logan, 131 F. Supp.
2d at 988; U.S. Fire Ins. Co., Doc. 22 at 6–7.
Date: September 28, 2015
/s/__Sara L. Ellis______
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