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Illinois National Insurance Co. v. Banc One Acceptance Corp.

December 29, 2008


The opinion of the court was delivered by: Norman A. Mordue, Chief U.S. District Judge



Plaintiff Illinois National Insurance Company ("Illinois National" or "plaintiff") commenced this action seeking judgment pursuant to 28 U.S.C. § 2201 declaring that under the terms of Illinois National Commercial Umbrella Policy No. BE 8714362 ("the policy") plaintiff has no duty to defend or indemnify defendant Banc One Acceptance Corporation ("Banc One" or "defendant") in connection with an underlying personal injury action pending in the Supreme Court for the State of New York. (Dkt. No. 1).

Presently before the Court are three motions: (1) defendant's motion (Dkt. No. 17) for a transfer of venue to the United States District Court for the Northern District of Illinois pursuant to 28 U.S.C. § 1404(a)*fn1; (2) plaintiff's cross-motion (Dkt. No. 24) pursuant to Fed. R. Civ. P. 56(c) seeking an award of summary judgment on the first and second claims in its complaint; and (3) defendant's cross-motion (Dkt. No. 35) for summary judgment.*fn2


The following facts are undisputed.*fn3 Plaintiff is an Illinois corporation. Defendant is an Ohio corporation with its principle place of business in Ohio. Defendant is registered to do business in New York.

I. Illinois National Policy

In August 2001, Aon Risk Specialists, Inc. ("Aon"), on defendant's behalf, submitted an application for an excess liability policy to American Home Assurance Company ("American

Home"). At the relevant period, Douglas Garfinkel, the vice president of Aon (located in Illinois), was involved in the procurement of the policy for defendant. At the relevant period, American Home was responsible for underwriting and issuing policies for member insurance companies of American International Group ("AIG") including plaintiff. Defendant's application was received by Christopher R.M. Sinden at American Home's office in New York.*fn4 Mr. Sinden was the lead underwriter for the policy. Mr. Garfinkel and Mr. Sinden negotiated the terms and conditions of the policy.*fn5 Robert Lund, an AIG client service representative, was also involved in the negotiations. At the relevant period, Mr. Lund allegedly resided and worked in Illinois.*fn6

In October 2001, plaintiff issued a Commercial Umbrella Policy to defendant for the period from October 2, 2001 to April 2, 2003 (the "policy"). Paragraph F of Section VI. of the

Policy states:

F. Duties in the Event of an Occurrence, Claim, or Suit:

1. You must see to it that we are notified as soon as practicable of an Occurrence which may result in a claim under this policy. To the extent possible, notice should include:

a. how, when, and where the Occurrence took place;

b. the names and addresses of any injured persons and witnesses; and

c. the nature and location of any injury or damage arising out of the Occurrence.

2. If a claim is made or suit is brought against any Insured that is reasonably likely to involve this policy you must notify us in writing as soon as practicable.

3. You and any other involved Insured must:

a. Immediately send us copies of any demands, notices, summonses or legal papers received in connection with the claim or suit;

b. authorize us to obtain records and other information;

c. cooperate with us in the investigation, settlement or defense of the claim or suit; and

d. assist us, upon our request, in the enforcement of any right against any person or organization which may be liable to the Insured because of injury or damages to which this insurance may also apply.

The policy was issued from American Home's office in New York. The cover page of the policy lists Illinois National's company address as 500 West Madison Street, Chicago, Illinois and the executive office address as 70 Pine Street, New York, New York.

II. Underlying Action

On December 13, 2002, Robert Hoadley ("Hoadley"), a New York resident, was involved in a motor vehicle accident in Owasco, New York. Mr. Hoadley was a passenger in a 1998 Chrysler Neon operated by Gary M. Clark. The subject vehicle was leased to Thomas C. Blair and Bonny J. Blair by Fox Imports, Inc, d/b/a Fox Toyota Subaru ("Fox"). The lease was subsequently assigned to defendant.

On February 23, 2004, Hoadley commenced an action in New York Supreme Court, Cayuga County. The action is entitled Robert M. Hoadley v. Banc One Acceptance Corporation, Thomas C. Blair and Bonny J. Blair and Gary M. Clark ("Hoadley action"). Hoadley alleged that Mr. Clark lost control of the vehicle while attempting to effectuate a left turn causing the vehicle to leave the roadway, strike several trees and turn over.

In March 2004, defendant received a copy of the Summons and Complaint in the Hoadley action. Upon receipt of the Summons and Complaint, defendant notified its claims administrator and insurance consultant, Paige-Ruane, Inc. ("Paige-Ruane").*fn7 On March 18, 2004, Paige-Ruane forwarded the Summons and Complaint to State Farm Mutual Automobile Insurance Company ("State Farm").*fn8 Paige-Ruane requested that State Farm appoint separate counsel to represent defendant. The law firm of Mackenzie Hughes, LLP ("Mackenzie Hughes"), located in Syracuse, New York, was retained to represent defendant in the underlying lawsuit. Defendant also retained the law firm of Wilson, Elser, Moskowitz, Edelman & Dicker, LLP ("Wilson Elser"), located White Plains, New York, to monitor the underlying action.

In June 2004, after a dispute regarding ownership of the Blair vehicle, Hoadley moved for summary judgment. Defendant cross moved for summary judgment arguing that the lease agreement was a "secured transaction" and therefore, defendant was not the true owner of the vehicle.*fn9 On August 16, 2004, the Honorable Peter J. Corning granted defendant's motion for summary judgment and dismissed Hoadley's complaint as against Banc One. The court held that defendant did not have a possessory interest in the vehicle and that a party who holds only a security interest in a vehicle cannot be held vicariously liable.*fn10 On August 31, 2004, Hoadley served a verified bill of particulars and discovery responses upon defense counsel alleging personal injuries as a result of the accident. Plaintiff's alleged injuries included spinal cord injuries and vertebral fractures that resulted in tetraplegia and confinement to a wheelchair. In September 2004, Hoadley's counsel filed a Notice of Appeal. In March 2005, the Appellate Division, Fourth Department overturned the Order of the Supreme Court and reinstated Hoadley's complaint against defendant.*fn11 On April 25, 2005, the Order was served upon Mackenzie Hughes.

On June 7, 2005, Mildred R. Jackson, Senior Claims Representative for JP Morgan Chase, forwarded a letter to AIG Domestic Claims, Inc. At the relevant time period, AIG Domestic Claims, Inc. was a claims administrator for plaintiff. The correspondence was sent from Ms. Jackson's office in Illinois to AIG's office in New York. Ms. Jackson "notif[ied] AIG of an automobile accident that took place on December 13, 2002" and enclosed a copy of the Summons and Complaint in the action entitled Hoadley v. Banc One, et. al.

On July 12, 2005, Tracey Kelley, an employee of AIG Domestic Claims, Inc., forwarded a letter addressed to "Janice K. Richards, Bank One Corporation" advising that plaintiff would deny coverage based upon defendant's late notice of the alleged accident, claim and suit. The correspondence was sent from AIG's office in New York to Ms. Richard's office in Illinois.

III. Other Relevant Insurance Policies

A. State Farm Policy

The Blairs were insured with State Farm Mutual Automobile Insurance Company ("State Farm") under Policy No. 0001-0160-52 with a primary limit of $100,000 for each occurrence. Defendant was an additional insured under the State Farm policy.

B. Sirius Policy

Banc One was insured under Sirius America Insurance Company Policy No. 0404-10372 (the "Sirius Policy") for the period of October 2, 2002 until April 2, 2003 with primary limits of $100,000 for each occurrence and an excess limit of $1,000,000 for each occurrence. The Sirius Policy provided that the excess limit of $1,000,000 was reduced by the greater of:

1. Bodily Injury Limit of Liability $100,000 each person $300,000 each accident Property Damage Limit of Liability $50,000 each accident or

2. The aggregate amount of all valid and collectible insurance available to the Named Insured whether primary, excess, ...

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