Liberty Mutual Insurance Company v. Dometic Corporation

Filing 72

OPINION AND ORDER GRANTING 64 MOTION for Summary Judgment by Counter Claimant Dometic Corporation and ORDERING both parties to submit briefs with supporting documentation on the issue of damages on this claim within 21 days of the date of this order. Signed by Judge Robert L Miller, Jr on 2/13/2020. (bas)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
SOUTH BEND DIVISION
LIBERTY MUTUAL INSURANCE
COMPANY,

)
)
)
Plaintiff/
)
Counter-Defendant )
)
VS.
)
)
DOMETIC CORPORATION,
)
)
Defendant/
)
Counter-Plaintiff
)

CAUSE NO. 3:17-CV-882 RLM-MGG

OPINION AND ORDER
Liberty Mutual Insurance Company brought this suit seeking a
declaratory judgment that it had no duty to defend or indemnify Dometic
Corporation in three putative class action suits filed against Dometic in other
districts. The court ruled in March 2019 that Indiana substantive law controls
this dispute, and under Indiana law, Liberty Mutual had a duty to defend
Dometic under three unexhausted commercial general liability policies covering
November 2001 to October 2004. Dometic now moves for summary judgment on
its three breach of contract counterclaims, alleging that Liberty Mutual has failed
to pay all reasonable defense costs. The court heard arguments on the motion
on February 10, 2020. For the following reasons, the court grants the motion.
Summary judgment is appropriate when “the pleadings, depositions,
answers to the interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue of material fact and that

the moving party is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c).
A genuine issue of material fact exists whenever “there is sufficient evidence
favoring the nonmoving party for a jury to return a verdict for that party.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). In deciding whether
a genuine issue of material fact exists, we accept the non-movant’s evidence as
true and draw all inferences in his favor. Id. at 255. The existence of an alleged
factual dispute, by itself, won’t defeat a summary judgment motion; “instead, the
nonmovant must present definite, competent evidence in rebuttal,” Parent v.
Home Depot U.S.A., Inc., 694 F.3d 919, 922 (7th Cir. 2012), and “must
affirmatively demonstrate, by specific factual allegations, that there is a genuine
issue of material fact that requires trial.” Hemsworth v. Quotesmith.com, Inc.,
476 F.3d 487, 490 (7th Cir. 2007); see also Fed. R. Civ. P. 56(e)(2).
Dometic argues that all of the costs it incurred defending itself between
May 2017 and March 2019 are reasonable as a matter of law. It contends that
Liberty Mutual has breached its duty to defend under the policies because it
refuses to pay $86,931.84 of the defense costs.1 Liberty Mutual counters that
under the terms of the policies, it was only required to pay Dometic’s reasonable
defense costs, and the fees it refuses to pay are unreasonable.
A federal court sitting in diversity must apply state substantive law as
determined by the highest court in the state. Allstate Ins. Co. v. Menards, Inc.,

By an agreement between the parties and Dometic’s other insurers, Liberty Mutual
is responsible for 25 percent of Dometic’s defense fees. Liberty Mutual’s percentage o
the remaining fees is $86,931.84.

1

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285 F.3d 630, 637 (7th Cir. 2002). If there isn’t any prevailing authority from the
state’s highest court, “federal courts ought to give great weight to the holdings of
the state’s intermediate appellate courts[.]” Id. In this case, the court looks to the
Indiana Court of Appeals’ decision in Thomson Inc. v. Insurance Co. of North
America, 11 N.E.3d 982 (Ind. Ct. App. 2014). The court ruled that when a
policyholder is defending itself without assurance that it will be reimbursed, its
costs “are presumed to be ‘reasonable and necessary’” because under those
circumstances, the insured serves as a proxy for the market. Id. at 1023-1024
(citing Taco Bell Corp. v. Cont’l Cas. Co., 388 F.3d 1069, 1075 (7th Cir. 2004)).
Dometic argues that like the plaintiff in Thomson, it proceeded with its defense
without knowing whether Liberty Mutual would reimburse its costs.
Liberty Mutual counters that this case is distinguishable because it had
agreed to defend Dometic, so Dometic knew Liberty Mutual would pay its
reasonable

costs.

This

argument

is

unpersuasive.

Liberty

Mutual’s

representation included a reservation of rights, and it filed and maintained this
suit, seeking a declaration that it no duty to defend. As long as Liberty Mutual
had a chance of prevailing on its position that there was no duty to defend, which
it did until the court’s March 2019 ruling, Dometic had to proceed as though it
could be stuck with the bills.
Accordingly, the court:
(1) GRANTS Dometic’s motion for summary judgment [Doc. No. 64]; and

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(2) ORDERS both parties to submit briefs with supporting documentation
on the issue of damages on this claim within 21 days of the date of this
order
SO ORDERED.
ENTERED:

February 13, 2020
/s/ Robert L. Miller, Jr.
Judge, United States District Court

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