RUAN TRANSPORT CORPORATION, an Iowa corporation v. Sentry Insurance A Mutual Company et al

Filing 55

MEMORANDUM Opinion and Order Signed by the Honorable John Z. Lee on 8/15/18.Mailed notice(ca, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
)
RUAN TRANSPORT CORPORATION,
)
)
Plaintiff,
)
)
v.
)
)
SENTRY INSURANCE A MUTUAL COMPANY, )
and CENTRAL STEEL AND WIRE COMPANY, )
)
Defendants.
)
)

16 C 11077
Judge John Z. Lee

MEMORANDUM OPINION AND ORDER
Plaintiff Ruan Transport Corporation (“Ruan”) has filed a complaint against
Defendants Sentry Insurance a Mutual Company (“Sentry”) and Central Steel and
Wire Company (“Central Steel”).

Ruan seeks a declaratory judgment that two

contracts between Ruan and Central Steel are void and unenforceable under 625 Ill.
Comp. Stat. 5/18-c4105(a)—an anti-indemnity statute in the Illinois Vehicle Code—
and that an agreement between the parties to settle related litigation violated Illinois
insurance law. In return, Defendants have filed a counterclaim for breach of contract
and seek a declaratory judgment that the contracts are enforceable under § 18c4105(a). The parties have cross-moved for summary judgment. For the reasons
stated herein, Defendants’ motion [46] and Ruan’s motion [41] are granted in part
and denied in part.

Factual Background1
The facts in this case are largely undisputed. In 1999, Ruan, a transportation
company, entered into an agreement to provide contract carriage services (the
“Transportation Agreement”) to Central Steel, a metal fabricator and distributor.
Defs.’ LR 56.1(a)(3) Stmt. ¶¶ 2–3, 8, ECF No. 49. The agreement contained an
indemnification provision, in which Ruan agreed to “defend, indemnify and hold
harmless” Central Steel for any loss arising from Ruan’s performance under the
agreement, regardless of Central Steel’s own responsibility for the loss. Id. ¶ 9. The
agreement also required Ruan to procure and maintain at least $5 million worth of
primary liability insurance, naming Central Steel as an additional insured. Id. ¶¶ 10,
12.
From May 2012 to May 2013, Ruan did not maintain the required $5 million
worth of primary liability insurance, instead procuring only $1 million in primary
liability insurance from National Interstate Insurance Company (“National”), with
Central Steel as an additional insured. Id. ¶¶ 14, 16. Ruan then procured $4 million
in excess coverage from Chubb Insurance. Id. ¶¶ 15, 17, 46. During this period,

The following facts are undisputed or deemed admitted. The Court notes that Ruan
did not submit a separate statement of material facts as required by LR 56.1(a)(3), instead
incorporating its factual statements in numbered paragraphs in its motion. ECF 41. No
harm/no foul, however, given that Defendants construed these numbered paragraphs as a LR
56.1(a)(3) statement and responded thereto. ECF 50. However, Ruan did not file a response
to Defendants’ own LR 56.1(a)(3) statement as required by LR 56.1(b)(3). Accordingly, to the
extent that Ruan wished to dispute the facts contained in Defendants’ statement of material
facts, Ruan waived its right to do so. See LR 56.1(b)(3) (“All 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.”); see also Smith v. Lamz, 321 F.3d 680, 683 (7th Cir.
2003) (“We have consistently held that a failure to respond by the nonmovant as mandated
by the local rules results in an admission.”).
1

2

Central Steel was also covered by a commercial general liability insurance policy
through Sentry. Id. ¶¶ 5, 48.
In June 2012, a Ruan employee died after falling from a vehicle on Central
Steel’s premises. Id. ¶ 19. The employee’s widow and estate filed a wrongful death
and personal injury lawsuit in July 2012 (the “Underlying Litigation”), naming
Central Steel as a defendant. Id. ¶¶ 19–20; see also Countercl., Ex. National Letter
of 1/22/2013 at 1, ECF No. 18-6. In August 2012, Central Steel tendered the defense
of the Underlying Litigation to Ruan, pursuant to the Transportation Agreement.
Defs.’ LR 56.1(a)(3) Stmt. ¶ 21; see also Countercl., Ex. National Letter of 12/13/2012
at 1, ECF No. 18-4. National, Ruan’s primary insurer, agreed to defend Central Steel
as an additional insured, subject to a reservation of rights based on a provision in its
policy permitting it to deny coverage for losses attributable solely to the negligence of
the additional insured. Defs.’ LR 56.1(a)(3) Stmt. ¶ 22.
Central Steel interpreted the provision as creating a disincentive for National
to explore Ruan’s potential liability in the Underlying Litigation. That disincentive,
according to Central Steel, represented a conflict of interest, which entitled Central
Steel to select independent counsel at National’s expense.
National disagreed with Central Steel’s position.

Id. ¶ 25.

Id. ¶ 24.

Ruan and

In February 2013,

National, Ruan, and Central Steel held a meeting to resolve the dispute over the
lawsuit’s defense. Id. ¶ 27.
In April 2013, as a result of negotiations that occurred at the February
meeting, Central Steel and Ruan entered into an agreement (the “Settlement

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Agreement”) to resolve the dispute2 as well as to prescribe the means by which any
settlement or judgment in the Underlying Litigation would be satisfied. Id. ¶ 31. In
the Settlement Agreement, Central Steel agreed to waive its claimed right to control
the defense of the Underlying Litigation and ceded control to Ruan, in return for
which Ruan agreed to indemnify Central Steel for any settlement or judgment in that
litigation. Id. ¶ 33. Ruan further agreed to waive any right of contribution it might
have against Central Steel or Central Steel’s insurers in connection with any
payments Ruan made pursuant to the agreement. Id.
The Settlement Agreement included terms acknowledging that the agreement
was neither “collateral to” nor “affecting a motor carrier transportation contract
between Central Steel and Ruan,” nor was it “void as against public policy” under
Illinois law. Id. ¶ 35. The agreement also contained a merger clause, which stated
that the agreement “supersedes any and all oral or written agreements or
understandings pertaining to” the matters covered by it. Id. Finally, the Settlement
Agreement provided that, “[i]n the event of any legal action between or among the
Parties arising out of or in relation to this Agreement, or to enforce this Agreement,
the prevailing party in such legal action shall be entitled to recover all of its costs and
expenses, including reasonable attorneys’ fees.” Id. ¶ 37.

The agreement included the following language: “The Parties desire to fully and
finally settle and compromise all disputes between them regarding the defense of the
[Underlying] Litigation and the means by which any settlement or judgment in that litigation
will be satisfied.” Compl., Ex. Settlement Agreement, Recitals § 9, ECF No. 1-2.
2

4

Over more than three years, Ruan exercised its right under the Settlement
Agreement to select counsel and control the defense of the Underlying Litigation. Id.
¶¶ 38–39. But in June 2016, shortly before a scheduled mediation in the Underlying
Litigation, Ruan informed Central Steel that it considered the Settlement Agreement
void and unenforceable under Illinois law. Id. ¶¶ 41, 45. In response, Central Steel
notified Ruan that it was in breach of the Transportation Agreement for failure to
procure adequate primary insurance. Id. ¶ 44. Finally, right before the mediation,
Ruan advised Defendants of its position that, under Illinois insurance law, National
was obligated to pay its limits first, followed by Sentry’s payment of its primary
limits, followed by payments, if any, by Chubb, Ruan’s excess carrier. Def.’s LR
56.1(b)(3) Stmt. ¶ 14, ECF No. 50.
The Underlying Litigation was settled at mediation in August 2016. Defs.’ LR
56.1(a)(3) Stmt. ¶ 46. The parties and their insurers agreed to fund the settlement
as follows: “(a) [National] would pay its limits; (b) [ ] Ruan and Sentry/[Central Steel]
. . . each would pay one-half of the next primary layer subject to a full reservation of
rights; and (c) Chubb . . . would contribute after the primary layers were exhausted.”3
Id.; Compl. ¶ 24, ECF No. 1. The reservation of rights by Ruan and Sentry/Central

The language quoted comes from the description of the agreement to fund the
litigation settlement as it appears in Ruan’s complaint, which is reproduced verbatim in
Defendants’ Statement of Fact, only citing to Ruan’s complaint for support. See Compl. ¶ 24;
Defs.’ LR 56.1(a)(3) Stmt. ¶ 46. Because Defendants’ agreed with Ruan’s description in their
answers to the complaint, the Court considers the details of the agreement to contribute to
the settlement fund to be judicial admissions. See Keller v. United States, 58 F.3d 1194, 1198
n.8 (7th Cir. 1995) (“[J]udicial admissions are formal concessions in the pleadings, or
stipulations by a party or its counsel, that are binding upon the party making them.”).
3

5

Steel included the right to pursue the other for reimbursement of settlement
payments.4 Defs.’ LR 56.1(a)(3) Stmt. ¶ 46; Pl.’s Answer Countercl. ¶ 39, ECF No.
22.
Legal Standard
“The court shall grant summary judgment 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). To survive summary judgment, the nonmovant
must “do more than simply show that there is some metaphysical doubt as to the
material facts,” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586
(1986), and instead must “establish some genuine issue for trial such that a
reasonable jury could return a verdict in her favor.” Gordon v. FedEx Freight, Inc.,
674 F.3d 769, 772–73 (7th Cir. 2012). In reviewing a motion for summary judgment,
the Court gives the nonmovant “the benefit of conflicts in the evidence and reasonable
inferences that could be drawn from it.” Grochocinski v. Mayer Brown Rowe & Maw,
LLP, 719 F.3d 785, 794 (7th Cir. 2013).
Analysis
I.

Declaratory Judgment Claims
Ruan seeks declaratory judgment that Defendants are required to reimburse

Ruan for payments made to the settlement fund in the Underlying Litigation because
(1) the Settlement Agreement (Count I) and the Transportation Agreement (Count

The Court further considers the fact of the parties’ reservation of rights to be a judicial
admission. See Keller, 58 F.3d at 1198 n.8.
4

6

II) are both contrary to Illinois public policy and void under 625 Ill. Comp. Stat. 5/18c4105(a); and (2) and the agreement to fund the settlement violated Illinois insurance
law (Count III). Compl. ¶¶ 34, 43, 55. Defendants’ counterclaim for declaratory
judgment asserts that the Settlement Agreement is enforceable under Illinois law
and that Ruan is therefore bound to indemnify Defendants for contributions they
made to the settlement fund in the Underlying Litigation (Count III). Countercl.
¶¶ 61, 64, ECF No. 18.
Ruan moves for summary judgment as to all three of its counts. Defendants
move for summary judgment on both Plaintiffs’ Count I and Defendants’ declaratory
judgment counterclaim.
Section 18-c4105(a) was added to the Illinois Vehicle Code in 2009 “to rectify
what many states . . . have perceived to be an inequitable ‘shift of risk’ in the shipper
and carrier relationship in motor carrier transportation contracts when a carrier is
contractually required to indemnify a shipper for the shipper’s own negligence.”
Burke v. John Maneely Co., No. 14 C 285, 2016 WL 454330, at *2 (N.D. Ill. Feb. 5,
2016) (quoting Ruiz v. Carmeuse Lime, Inc., No. 10 C 21, 2011 WL 3439221, at *5
(N.D. Ind. Aug. 4, 2011)). The statute voids any provision “contained in, collateral to,
or affecting a motor carrier transportation contract” that indemnifies the promisee
from liability for loss resulting from the promisee’s own negligence, action, or
inaction.

§ 18-c4105(a).

As defined by the statute, the term “motor carrier

transportation contract” includes contracts covering “[t]he transportation of property
for compensation or hire by the motor carrier.” § 18-c4105(b)(1)(A).

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A.

Enforceability of the Transportation Agreement

Section 18-c4105(a) clearly applies to the Transportation Agreement, a
contract carriage agreement between a shipper and a motor carrier. See id. The
indemnification provision in the Transportation Agreement is likewise squarely in
line with the kind of provision the statute deems void, as it states that Ruan “shall
defend, indemnify and hold harmless Central Steel” for any loss arising from Ruan’s
performance under the agreement, regardless of whether such loss was “caused in
part” by the negligence, action, or inaction of Central Steel, the promisee. Pl.’s Mot.
Summ. J., Ex. Transportation Agreement § 15(a), ECF No. 41-1. The statute only
voids the indemnification provision, however, and not the entire contract. See Burke,
2016 WL 454330, at *6 (voiding only the indemnification provision of a contract, not
the contract itself, under § 18-c4105(a)). The remainder of the contract is therefore
enforceable.
B.

Enforceability of the Settlement Agreement

Because the indemnity provision in the Transportation Agreement is void,
whether Ruan is bound to indemnify Central Steel in the Underlying Litigation turns
on the enforceability of the indemnity provision in the Settlement Agreement. Ruan
contends that the indemnity provision in the Settlement Agreement is void under
§ 18-c4105(a) either because the agreement is an “addendum” to the Transportation
Agreement and thus is itself a “motor carrier transportation contract,” Pl.’s Mot.
Summ. J. at 7, or because the Settlement Agreement was “collateral to” the
Transportation Agreement, Pl.’s Resp. at 1, ECF No. 52. It further contends that

8

enforcing the indemnity provision in the Settlement Agreement would violate public
policy as expressed by the Illinois legislature through § 18-c4105(a).
i.

Addendum to the Transportation Agreement

Ruan argues that the Settlement Agreement is an addendum to the
Transportation Agreement and therefore the indemnity provision is contained in a
“motor carrier transportation contract,” rendering § 18-c4105(a) applicable. As Ruan
sees it, the Settlement Agreement became an addendum to the Transportation
Agreement by way of the Settlement Agreement’s merger clause, which provided that
the agreement “supersede[d] any and all oral or written agreements or
understandings pertaining to” the matters covered by it. Pl.’s Mot. Summ. J. at 7–8.
According to Ruan, this language caused the Settlement Agreement to supersede the
Transportation Agreement, because both agreements contain provisions pertaining
to Ruan’s defense and indemnification of Central Steel. Id.; see also Pl.’s Reply ¶ 6.
The Settlement Agreement indeed superseded the indemnification obligations
from the Transportation Agreement as to the Underlying Litigation. See Settlement
Agreement § 7 (“This Agreement constitutes the sole agreement between the Parties
concerning the settlement of the matters covered by this Agreement and supersedes
any and all oral or written agreements or understandings pertaining to such
matters.”); id., Recitals § 9 (“The Parties desire to fully and finally settle and
compromise all disputes between them regarding the defense of the [Underlying]
Litigation and the means by which any settlement or judgment in that litigation will
be satisfied.”).

9

But it is unclear how the Settlement Agreement could, according to Ruan,
become an “addendum” to the Transportation Agreement by way of superseding some
portion of it.

Ruan does not explain, instead treating the conclusion as self-

explanatory. See Pl.’s Reply ¶¶ 6, 7; Pl.’s Mot. Summ. J. at 7–8.
In any event, Ruan presents no coherent argument for how the Settlement
Agreement, which resolves a particular dispute between and among Ruan, Central
Steel, and their respective insurers, that arose under the terms of the Transportation
Agreement as a result of the Underlying Litigation, became “part of” Ruan and
Central Steel’s motor carrier transportation contract. This is especially so given that
the parties expressly agreed that the Settlement Agreement was not an “agreement
contained in, collateral to, or affecting a motor carrier transportation contract”
(presumably referring to the Transportation Agreement) between Ruan and Central
Steel. See Settlement Agreement § 5; Mid-Century Ins. Co. v. Founders Ins. Co., 936
N.E.2d 780, 784 (Ill. App. Ct. 2010) (“It is the intent of the parties to a contract that
determines its scope.”). The Court therefore finds that the Settlement Agreement is
not an “addendum” to the Transportation Agreement.
ii.

Collateral to the Transportation Agreement

Undeterred, Ruan also contends that § 18-c4105(a) applies to the Settlement
Agreement, because the agreement was “collateral” to the Transportation Agreement.
Pl.’s Resp. ¶¶ 3–4. Ruan argues this is the case because the Settlement Agreement
“arose solely from” and “is derivative of” the Transportation Agreement. Id. Ruan
does not provide a source for its understanding of “collateral” as meaning “derivative.”

10

The statute does not define the term “collateral,” nor have Illinois courts
expressly construed the term. Black’s Law Dictionary defines the term “collateral
contract” as “[a] side agreement that relates to a contract that, if unintegrated, can
be supplemented by evidence of the side agreement; an agreement made before or at
the same time as, but separately from, another contract.” Collateral Contract, Black’s
Law Dictionary (10th ed. 2014).
Here, putting aside the fact that the parties themselves acknowledged that the
Settlement Agreement was not “collateral to” the Transportation Agreement, see
Defs.’ LR 56.1(a)(3) Stmt. ¶ 35, the Settlement Agreement cannot be collateral to the
Transportation Agreement because the Transportation Agreement was a complete,
integrated contract. See Midwest Builder Distrib., Inc. v. Lord & Essex, Inc., 891
N.E.2d 1, 18–19 (Ill. App. Ct. 2007) (holding that “[a] contract is integrated when the
parties intend it to be a final and complete expression of the agreement between
them” and explaining that the presence of a merger clause expressing the parties’
intention that the present agreement is final and complete “is strong evidence” of
integration). The Transportation Agreement was integrated because it was a detailed
seventeen-page document entered into by relatively sophisticated parties, contained
no obvious omitted terms so as to indicate incompletion, and included a merger clause
indicating the parties’ intent that the agreement “completely states the rights and
obligations of the parties hereto with respect to the subject matter hereof.” See Pl.’s
Mot. Summ. J., Ex. Transportation Agreement § 18; see also Midwest Builder, 891
N.E.2d at 18–19.

Moreover, the Settlement Agreement was not made

11

contemporaneously with the Transportation Agreement, but rather fourteen years
later. See Goldwater v. Greenberg, 95 N.E.3d 1237, 1242 (Whether an agreement is
collateral “depends upon when the agreement was made and the intent of the parties
at that time.”). As such, the Court finds that the Settlement Agreement was not
collateral to the Transportation Agreement.
iii.

Contrary to Public Policy

Ruan’s final argument is that enforcing the indemnity provision in the
Settlement Agreement would violate public policy as expressed by the Illinois
legislature through § 18-c4105(a). Where a statute advances a public policy interest,
parties are not free to privately contract around the statute. “[T]he public policy of
the state is not to be determined by ‘the varying opinions of laymen, lawyers or judges
as to the demands of the interests of the public.’” Mohanty v. St. John Heart Clinic,
866 N.E.2d 85, 93 (Ill. 2006) (quoting Groome v. Freyn Eng’g Co., 28 N.E.2d 274, 280
(Ill. 1940)). Thus, where “the Illinois General Assembly has made clear that . . . an
indemnification

provision

[contained

in

a

carrier

contract]

is

‘void

and

unenforceable,’” the Court cannot enforce the provision, even if the parties have
mutually agreed to disregard the statute. Burke, 2016 WL 454330, at *3.
But even Ruan does not go so far as to claim that the Settlement Agreement is
itself a motor transportation carrier contract. Nor, for the reasons discussed above,
can it be considered an addendum to the Transportation Agreement or an agreement
collateral to it. Ruan’s only remaining argument—thrown out in one sentence in its
reply brief—is that the Settlement Agreement should be void because it “affects” the
obligations set forth in the Transportation Agreement. Pl.’s Reply at ¶ 3. It is well12

established that such undeveloped arguments, and arguments made for the first time
on reply, are waived. See United States v. Cisneros, 846 F.3d 972, 978 (7th Cir. 2017)
(“We have repeatedly and consistently held that ‘perfunctory and undeveloped
arguments, and arguments that are unsupported by pertinent authority, are
waived.’” (quoting United States v. Berkowitz, 927 F.2d 1376, 1384 (7th Cir. 1991)));
Mendez v. Perla Dental, 646 F.3d 420, 423–24 (7th Cir. 2011) (“[I]t is well-established
that arguments raised for the first time in the reply brief are waived.”).
But even if Plaintiffs had not waived the argument, it would still fail for two
reasons. First, as Defendants point out, § 18-c4105(a) was intended only to address
bargaining power imbalance between shippers and carriers in the negotiation of
motor transportation carrier contracts. See Burke v. John Maneely Co., No. 14-CV285, 2016 WL 454330, at *2 (N.D. Ill. Feb. 5, 2016) (explaining that the purpose of
statutes such as § 18-c4105(a) “is to rectify what many states have perceived to be an
inequitable shift of risk in the shipper and carrier relationship in motor carrier
transportation contracts when a carrier is contractually required to indemnify a
shipper for the shipper’s own negligence” (citation and internal quotation marks
omitted)). Put simply, the Settlement Agreement is not a motor transportation
carrier contract. Rather, it is an agreement intended to resolve the specific claims
asserted between and among Ruan, Central Steel, and their respective insurers, that
arose out of the Underlying Litigation.
Second, Ruan’s overly broad construction of § 18-c4105(a) would lead to
nonsensical results. Consider, for example, a scenario where Shipper A enters into a

13

motor transportation carrier contract with Carrier B that complies with §18-c4105(a).
Two years later, an employee of Carrier B is injured while carrying out her duties on
Shipper A’s property; she sues both Shipper A and Carrier B for negligence. Shipper
A and Carrier B file cross-claims against one another. During the course of the
lawsuit, Shipper A and Carrier B enter into an agreement to settle their contribution
claims against one another. Under Ruan’s approach, this agreement would be barred
by §18-c4105(a). And, indeed, a dispute of this type between a shipper and carrier
could never be settled under any circumstances, but would always have to proceed to
trial.

Given the well-established public policy favoring settlements, Johnson v.

Hermanson, 582 N.E.2d 265, 267 (Ill. App. Ct. 1991), the Illinois General Assembly
could not have intended such a far-reaching result. See Ill. State Treasurer v. Ill.
Workers’ Comp. Comm’n, 30 N.E.3d 288, 298 (Ill. 2015) (stating that courts “have an
obligation to construe statutes in a way that will avoid absurd, unreasonable, or
unjust results”).
In sum, the Settlement Agreement is neither void or unenforceable under § 18c4105(a) nor under Illinois public policy. Accordingly, Defendants are entitled to be
reimbursed for contributions they made to the settlement fund, as well as costs and
expenses associated with this action, including reasonable attorneys’ fees. See Defs.’
LR 56.1(a)(3) Stmt. ¶¶ 33, 37.
C.

Enforceability of the Agreement to Fund the Settlement

In Count III, Ruan seeks declaratory judgment that the agreement to fund the
settlement reached in the Underlying Litigation violated Illinois insurance law, and
thus that Sentry must reimburse Ruan for its contributions to the settlement fund.
14

Compl. ¶ 55. Ruan contends that because the settlement required Ruan’s excess
insurer to contribute before Central Steel’s primary insurer had exhausted its limits,
the settlement violated Illinois law, which requires that primary insurance coverage
must be exhausted before any excess coverage becomes available. Pl.’s Mot. Summ.
J. at 10–11; see also Pl.’s Resp. ¶¶ 31–33.
The Court declines to reach Ruan’s arguments as to the validity of the
agreement to fund the settlement, because Ruan must reimburse Defendants
pursuant to the Settlement Agreement regardless of the validity of the agreement to
fund the settlement.

Pursuant to the Settlement Agreement, Ruan agreed to

indemnify Central Steel for any settlement of judgment in the Underlying Litigation,
regardless of whether National or any other insurer agreed to pay a portion or all of
the settlement or judgment. Defs.’ LR 56.1(a)(3) Stmt. ¶ 33. In addition, Ruan
waived any right of contribution it might have against Central Steel or its insurers
related to payments in connection with the litigation. Id. Defendants contributed
some unspecified fund toward the settlement fund, but reserved their rights to pursue
Ruan for reimbursement. See id. ¶ 46; Pl.’s Ans. Countercl. ¶ 39. Therefore, whether
the agreement to fund the settlement is valid or not, Defendants are entitled to
reimbursement from Ruan.
For the foregoing reasons, the Court denies Ruan’s motion for summary
judgment as to Counts I and III. It grants in part Ruan’s motion for summary
judgment as to Count II and declares that the Transportation Agreement’s indemnity
provision is void and unenforceable under § 18-c4105(a). The Court also grants

15

Defendants’ motion for summary judgment as to Count I and Counterclaim Count
III.
II.

Claim for Breach of Contract
In addition, Defendants claim that Ruan breached the Transportation

Agreement (Count I) by failing to procure adequate insurance, Countercl ¶ 47, and
breached the Settlement Agreement (Count II) by failing to indemnify Central Steel
for its liabilities in the settlement of the Underlying Litigation, id. ¶ 55.
Defendants now move for summary judgment on these counts. Defs.’ Cross
Mot. Summ. J. at 1. They argue that Central Steel’s contributions to the settlement
fund—as well as Sentry’s contributions on Central Steel’s behalf, as its insurer—are
costs that should have been borne by Ruan pursuant to its indemnification
obligations under the Settlement Agreement. Defs.’ Mem. Supp. at 17. They further
contend that, had Ruan procured adequate primary insurance as required by the
Transportation Agreement, its primary insurer would have covered the entirety of
the settlement fund in the Underlying Litigation, obviating Defendants’ need to
contribute. Id. at 20. Thus, according to Defendants, their contributions to the fund
represent their damages from Ruan’s breach of the Transportation Agreement. Id.
at 10.
As discussed earlier, the Settlement Agreement was intended to resolve all
disputes between the parties related to the defense of the Underlying Litigation and
the means by which any settlement or judgment in that litigation would be satisfied.
See Settlement Agreement § 7 (“This Agreement constitutes the sole agreement

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between the Parties concerning the settlement of the matters covered by this
Agreement and supersedes any and all oral or written agreements or understandings
pertaining to such matters.”) By signing the Settlement Agreement, Defendants lost
their ability to pursue Ruan for obligations, related to the Underlying Litigation, that
arose from the Transportation Agreement.

Any such obligations by Ruan were

replaced by obligations under the Settlement Agreement. The Court therefore denies
Defendants’ motion for summary judgment as to Counterclaim Count I.
As for Defendants’ claim for breach of contract as related to the Settlement
Agreement, the damages Defendants seek for that claim are the same damages that
flow from the declaratory judgment Defendants assert in Counterclaim Count III. As
the Court has already granted summary judgment to Defendants as to Counterclaim
Count III, Defendants have already been made whole and Counterclaim Count II is
duplicative. See Robinson v. Toyota Motor Credit Corp., 775 N.E.2d 951, 963 (Ill.
2002) (“It is well established that for one injury there should only be one recovery
irrespective of the availability of multiple remedies and actions.”).

The Court

therefore denies Defendants’ motion for summary judgment as to Counterclaim
Counts II as moot.
Conclusion
For the reasons provided herein, the Court grants in part and denies in part
Ruan’s motion for summary judgment [41] and Defendants’ cross-motion for
summary judgment [46]. The Court denies Ruan’s motion for summary judgment as
to Counts I and III, and grants in part and denies in part Ruan’s motion for summary

17

judgment as to Count II. The Court further grants Defendants’ motion for summary
judgment as to Count I and Counterclaim Count III and denies Defendant’s motion
for summary judgment as to Counterclaim Counts I and II. In accordance with those
rulings, the Court declares that (1) the Transportation Agreement’s indemnity
provision is void and unenforceable under § 18-c4105(a), but the remainder of the
Transportation Agreement is neither void nor unenforceable under the statute; (2)
the Settlement Agreement is neither void nor unenforceable under either § 18c4105(a) or Illinois public policy; and (3) pursuant to the Settlement Agreement, Ruan
must indemnify Defendants for contributions they made to the settlement fund in the
Underlying Litigation, as well as costs and expenses associated with this action,
including reasonable attorneys’ fees. No claims remain. Civil case terminated.

IT IS SO ORDERED.

ENTERED

8/15/18

__________________________________
John Z. Lee
United States District Judge

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