MONTHLY QUIZ: After spending the day drinking beer, taking Xanax and smoking marijuana at the beach, Insured and his friends return to Insured's house to hang out. During the party, Insured decides to brandish and display his loaded, street-purchased semi-automatic handgun, which discharges and kills Guest. Insured is charged and convicted of involuntary manslaughter of Guest, which crime is proven if the committed "acts are likely to cause death" and are performed "recklessly." Guest's Estate sues Insured under a homeowner's policy, which contains an exclusion for bodily injury "intended by, or which may reasonably be expected to result from the intentional or criminal acts of ... any insured." Insurer files a declaratory action. Does Insurer have a duty to defend Insured in a negligence claim filed by Guest's Estate? Is Guest's Estate estopped from contending that Insured's actions were not reasonably likely because of Insured's conviction? You be the judge (Answer below).
PERSONAL INJURY - CLOSELY INTERTWINED BUSINESS RELATIONSHIP COULD CONSTITUTE JOINT VENTURE: Manufacturer, a producer of extruded plastic sheets, employed Plaintiff-Employee as a plant worker. Seller, which operated one of its divisions next door to Employer's manufacturing plant, sold several of Manufacturer's products, including the plastic sheets. While making the plastic sheets, Plaintiff-Employee was seriously injured by a machine and sued Employer and several other defendants, including Seller. As to Seller, Plaintiff-Employee alleged that Seller was liable because it was engaged in a joint venture with and retained control over Manufacturer and that Seller had actual or constructive knowledge that the subject machine was unreasonably dangerous. Despite a Manufacturing Agreement that provided that neither Manufacturer nor Distributor was an agent of the other, the Illinois Supreme Court held that even if the parties disclaim an agency relationship, such as a joint venture, the factfinder may still find that such a relationship exists, based upon the parties' conduct. In reversing the appellate court, the Court analyzed the details of the relationship between the Seller and Manufacturer, ultimately concluding that the most it could say was that it was a "long-term, closely intertwined relationship, in which they dealt nearly exclusively with each other, jointly contributed equipment and raw material, and worked together to implement mutually beneficial 'cost improvements.'" Taken together, the evidence of the parties' unique business model raised a material fact question as to whether it was a joint venture, precluding summary judgment. (On a related note, the Appellate Court held that because Seller failed to assert the affirmative defense of the Workers' Compensation Act's exclusive remedy provision, it was therefore barred from arguing that it was immunized from liability if it were found to be engaged in a joint venture with Manufacturer.) Hiatt v. Western Plastics, Inc., 2014 IL App (2d) 140178 (December 29, 2014).
NEGLIGENCE / CAUSATION / RES IPSA LOQUITUR - LOSS OF MEMORY RESULTS IN LOSS OF CASE: Plaintiff-Driver suffered a serious head injury while picking up a load of freight from Customer and Customer's Employee. Driver testified that he had no memory of how he was injured, and Employee denied any knowledge of the injury. Driver sued Customer and Employee under the theory of negligence and, in an amended complaint, under the theory of res ipsa loquitur. The trial court granted summary judgment in favor of Customer and Employee on the negligence claim on the basis that the cause of Driver's injury remained a matter of speculation. The trial court subsequently dismissed Driver's res ipsa loquitor claim on res judicata grounds, in light of its prior dismissal of the negligence claim. On review, the Appellate Court affirmed, holding that, because Driver had no memory of how he injured his head, because Employee denied any knowledge about the injury and because Driver's injuries could have been caused in any number of ways (e.g. Driver could have fallen, bumped his head on the truck door, or collided with Employee), the cause of Driver's injury was a matter of speculation, and therefore Driver failed to establish proximate causation. The court further held that where there are differing possible causes for the injury and nothing in the evidence to suggest that defendants' negligence or the instrumentality under defendants' control was the most plausible explanation, res ipsa loquitur cannot be invoked. Rahic v. Satellite Air-Land Motor Service, Inc., 2014 IL App (1st) 132899 (December 30, 2014).
LEF WINS SUMMARY JUDGMENT WITH REGARD TO INSURER'S DUTY TO INDEMNIFY Congratulations to Howard Randell and Scott Wing who were recently awarded summary judgment with regard to an insurer's duty to indemnify its insured in a matter arising out of the theft of a shipment of cellular phones valued at more than $2 million. The insured, a motor carrier and logistics provider, was initially hired to transport the shipment from Illinois to Pennsylvania; however, due to a shortage of equipment, the insured retained a separate motor carrier to actually perform the transit. After accepting the load for delivery, the driver parked his truck near his home to take a brief rest, at which point the load was stolen, along with the cargo inside. Suit was filed by the owner of the cargo against its logistics provider which, in turn filed suit against the insured to recover the value of the stolen cargo. The insured tendered its defense and indemnity to its motor truck cargo insurer, which accepted the tender, subject to a reservation of its rights. LEF filed suit for declaratory judgment and, during the early stages of litigation, secured a summary judgment with regard to the insurer's duty to defend, with the court acknowledging that the subject policy extended the insurer a right, but not a duty to defend, at which point the insurer was able to withdraw its defense of the underlying case prior to extensive discovery and motion practice. The underlying case ultimately settled on the eve of trial, at which point LEF moved for summary judgment with regard to the insurer's duty to indemnify, citing the policy provision requiring that covered property be within the insured's "care, custody, and control" and a policy exclusion for the insured's liability as a "transportation broker." Following lengthy briefing and oral argument, the court agreed with LEF's position on both the "care, custody, and control" and transportation broker issues, ruling that the insurer had no duty to indemnify its insured for the underlying settlement. Hartford v. Atlas SN, Inc. et al., Case No. 12 CH 1633 (Cook).
ANSWER TO QUIZ: Insurer wins, Insured and Estate lose. The trial court's holding that Insurer was not required to defend or indemnify Insured affirmed. The criminal findings, that Insured's actions were reckless and likely to cause the death of Guest, were conclusive as to the issue of whether Insured's actions could be "reasonably expected" to cause Guest's death within the meaning of the policy. Note: Dissenting Opinion. Allstate Indemnity Co. v. Hieber, 2014 IL App (1st)132557.