Essex Insurance Company v. The Structural Shop, Ltd.

IN THE UNITED STATES DISTRICT COURT FOR THE

NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

ESSEX INSURANCE COMPANY, )

)

Plaintiff, )

)

v. ) No. 15 C 2806

)

THE STRUCTURAL SHOP, LTD., and ) Judge John Z. Lee

BLUE MOON LOFTS CONDOMINIUM )

ASSOCIATION )

)

Defendants. )

)

MEMORANDUM OPINION AND ORDER

Plaintiff Essex Insurance Company (“Essex”) sued Defendants, The Structural

Shop, Ltd. (“TSS”) and Blue Moon Lofts Condominium Association (“Blue Moon”) in

2015. Blue Moon had previously obtained a default judgment against TSS in the

Circuit Court of Cook County, and Essex––TSS’s insurer––sought a declaratory

judgment that it had no duty to indemnify TSS for that judgment. Blue Moon then

asserted a counterclaim for declaratory judgment to the contrary. In ruling on the

parties’ cross-motions for summary judgment, the Court granted Essex’s1 motion as

to Count I of its amended complaint, concluding that Essex had no duty to indemnify

TSS in the underlying litigation. Mem. Op. & Order, ECF No. 173 at 22. Blue Moon

now asks the Court to reconsider that decision. For the following reasons, Blue

Moon’s motion to reconsider [174] is denied.

1 Evanston Insurance Company (“Evanston”), successor by merger to Essex, brought

the summary judgment motion on Essex’s behalf. Pl.’s Mem. Supp. Mot. Summ. J. at 1, ECF

No. 158. The Court refers to Evanston as “Essex” throughout.

Background

As explained in greater detail in the Court’s summary judgment order, this

case arises out of a 2002 lawsuit in which Blue Moon sought damages from several

defendants, including TSS, for the allegedly defective design and construction of Blue

Moon Lofts. Id. at 2. Blue Moon obtained a default judgment against TSS in 2009.

Id. at 3. Subsequently, in 2012, TSS succeeded in having the judgment vacated on

the basis that it had not been properly served in 2002. Id. at 4. In 2015, however,

the circuit court concluded that TSS had, in fact, been properly served via its

registered agent at the time. Id. at 9.

Essex agreed to provide a defense to TSS through the appeal of the court’s 2015

order. Id. Essex stated, however, that it did not owe TSS indemnity coverage because

the “claim” was first made in 2002, before TSS’s liability insurance policy with Essex

went into effect. Id. That policy covered claims made between May 10, 2012, and

May 10, 2013. Id. at 3.

TSS and Blue Moon entered into a settlement agreement in 2015. Id. at 9.

Under that agreement, TSS assigned to Blue Moon any rights it had under its policy

with Essex. Id. Essex filed this action on March 31, 2015, seeking a declaratory

judgment that TSS’s claim arose outside of the policy period, that the claim was not

covered by the policy, and that Essex had no duty to defend or indemnify TSS for the

claim or underlying litigation. Id. at 9–10. In its summary judgment order, the Court

concluded, in pertinent part, that Essex was entitled to summary judgment on Blue

Moon’s affirmative defense of equitable estoppel, because Blue Moon had “failed to

present any clear, concise, and unequivocal evidence” that Essex’s role in TSS’s

defense had prejudiced TSS. Id. at 19.

Legal Standard

District courts have discretion to entertain motions to reconsider prior

decisions. See Patrick v. City of Chi., 103 F. Supp. 3d 907, 911 (N.D. Ill. 2015); Fed.

R. Civ. P. 54(b); see also Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460

U.S. 1, 12 (1983) (“[E]very order short of a final decree is subject to reopening at the

discretion of the district judge.”). But while motions for reconsideration are

permitted, “they are disfavored,” Patrick, 103 F. Supp. 3d at 911, and serve a very

limited purpose: correcting manifest errors of law or fact and presenting newly

discovered evidence. Caisse Nationale de Credit Agricole v. CBI Indus., Inc., 90 F.3d

1264, 1270 (7th Cir. 1996).

This is a heavy burden for the moving party and makes a motion for

reconsideration an inappropriate medium to “rehash” past arguments, Patrick, 103

F. Supp. 3d at 912 (citations omitted), or revisit improvident strategic decisions made

earlier, Birdo v. Dave Gomez, No. 13 C 6864, 2016 WL 6070173, at *1 (N.D. Ill. Oct.

17, 2016) (citation omitted). Accordingly, motions for reconsideration will be granted

only where “the Court has patently misunderstood a party, or has made a decision

outside the adversarial issues presented to the Court by the parties, or has made an

error not of reasoning but of apprehension.” Bank of Waunakee v. Rochester Cheese

Sales, Inc., 906 F.2d 1185, 1191 (7th Cir. 1990) (citation omitted). Given these

exacting standards, issues appropriate for reconsideration “rarely arise and the

motion to reconsider should be equally rare.” Id. (citation omitted).

Analysis

Blue Moon asks the Court to reconsider its conclusion that there was no

evidence from which a reasonable jury could conclude that Essex had controlled the

underlying litigation, resulting in prejudice to TSS. Def.’s Mem. Supp. Mot. Recons.

at 1, ECF No. 174. It contends that the Court erred in “failing to consider key

material facts on the prejudice issue that Blue Moon can establish at trial.” Id.

Specifically, Blue Moon argues that the Court failed to consider five points that—in

its view—demonstrate that Essex had “unfettered control” over the underlying

litigation. Id. at 2. This is incorrect. Each of the points Blue Moon raises now were

considered and rejected by the Court on summary judgment, and Blue Moon has not

identified any newly discovered evidence or manifest errors of law or fact requiring

reconsideration.

Blue Moon first argues that the Court failed to consider the significance of a

May 30, 2014, email message from Essex claims professional Melanie Brown to TSS’s

counsel, Doug Palandech. Id. Brown told Palandech to “go ahead and file” a motion

to dismiss in the circuit court case, rather than settle for $25,000. Id. at 3. Blue

Moon argues that the Court failed to consider a portion of the message in which

Brown stated that it would be less expensive to file the motion than to settle the case.

This, Blue Moon contends, shows that Essex controlled the litigation. Id.

Contrary to Blue Moon’s assertions, however, this Court previously considered

this argument and concluded that, although Brown’s email message to Palandech

indicated that Essex “had the opportunity to assert control if it desired,” it “[fell] short

of providing evidence from which a reasonable jury could conclude that Essex induced

TSS to ‘surrender [its] right to control [its] own defense.’” Mem. Op. & Order at 17.

The argument Blue Moon now repeats in its motion for reconsideration remains

unpersuasive, because there still exists no “clear, concise, and unequivocal evidence”

that Essex controlled TSS’s defense as Illinois law requires. Id. at 18.

Blue Moon further argues that the Court failed to consider and address Essex’s

refusal, denial, or disregard of Blue Moon’s second request to settle the case in July

2014. Def.’s Mem. Supp. Mot. Recons. at 2. According to Blue Moon, Essex never

informed TSS of the settlement offer, again demonstrating that Essex was in

complete control of the litigation and TSS was unable to defend itself. Id. at 4–5.

But the Court also addressed this argument in its order, Mem. Op. & Order at

7–8, concluding that there was “no evidence of . . . Essex advis[ing] or direct[ing] a

litigation approach that differed from what Palandech recommended or TSS

preferred.” Id. at 17. Further, while Blue Moon contends that TSS’s knowledge of

the settlement offer is a genuine issue of material fact, the Court determined that it

was unnecessary to decide the issue of knowledge when Blue Moon had “failed to

adduce facts from which a reasonable jury could find that it suffered prejudice.” Id.

at 19 n.11.

Finally, Blue Moon raises three points related to TSS’s representation by

attorney Doug Palandech, arguing that the Court failed to consider the significance

of (1) Essex’s order to Palandech to pursue a petition for relief from judgment in

October 2014; (2) the prior relationship between Palandech and Essex; and (3) Essex’s

hiring and firing power over Palandech. Def.’s Mem. Supp. Mot. Recons. at 2.

Again, these are the same arguments that Blue Moon made in its summary

judgment brief, and the Court has already considered and rejected them. In its

summary judgment order, the Court noted that Blue Moon failed to demonstrate that

Essex exercised control of the litigation through Palandech, because it was

“undisputed that TSS had already engaged Palandech’s firm to represent it in the

underlying litigation,” Palandech was independently associated with TSS, and that

association predated his involvement with Essex. Mem. Op. & Order at 16. The

Court concluded that Essex “may have, at most, implicitly approved of TSS’s choice

of counsel.” Id. Blue Moon has not identified any newly discovered evidence or

manifest error of law or fact2 providing a basis for reconsideration.

In sum, the arguments Blue Moon raises in its motion for reconsideration have

already been addressed and rejected by this Court on summary judgment. Blue Moon

2 Blue Moon argues that the Court erred in granting summary judgment because it

“[held] in its May 22, 2017 order that there are material issues of fact concerning whether

Palandech is Essex’s agent.” Def.’s Mem. Supp. Mot. Recons. at 6. But this mischaracterizes

that ruling, in which the Court barred Essex’s expert from testifying that Palandech “never

acted as an attorney or agent for Essex.” Mem. Op. & Order at 14, ECF No. 142. The basis

for that ruling was not that there existed material issues of fact concerning the relationship;

rather, the Court determined that the expert’s opinion was “entirely unnecessary and

potentially confusing” and noted that many courts have excluded expert testimony on the

existence of an attorney-client or agency relationship for similar reasons. Id. at 13–14.

has failed to meet the heavy burden required of a party moving for reconsideration;

it has not identified any manifest errors of law or fact, or any newly discovered

evidence, such that reconsideration of the Court’s prior decision is required. Rather,

Blue Moon’s motion simply “rehashles]” the arguments made on summary judgment.

Patrick, 103 F. Supp. 3d at 912, and fails to provide any basis for granting relief on

its motion to reconsider.

Conclusion

For the reasons stated herein, Blue Moon’s motion to reconsider [174] is denied.

IT IS SO ORDERED. ENTERED 10/31/18

JohnZ.Lee

United States District Judge