Bituminous Casualty Corporation v. Plano Molding Company
33 N.E.3d 658
Ill. App. Ct.2015Background
- Bituminous insured Plano Molding Company under a CGL policy; Plano ordered two steel injection molds from China.
- World arranged shipment; bill of lading identified Plano as consignee and defined merchant broadly.
- Bill of lading required warranty that stowage/seals were safe and suitable, with indemnity for breach of that warranty.
- Molds shipped worldwide, derailed freight train in 2005, causing claims against K-Line and Union Pacific.
- K-Line/Union Pacific sued, defendant tendered defense to Bituminous under policy; Seventh Circuit later limited claims to contract under bill of lading.
- Both sides moved for summary judgment on policy exclusion for insured contracts; trial court granted defendant’s cross-motion; appellate reversal sought.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the bill of lading an insured contract under the policy? | Bill of lading not an insured contract; indemnity limited to own breach, not third-party negligence. | Bill of lading is an insured contract since indemnifies for tort losses of K-Line/Union Pacific. | Not an insured contract; indemnity limited to defendant's breach; plaintiff wins. |
Key Cases Cited
- Kawasaki Kisen Kaisha, Ltd. v. Plano Molding Co., 696 F.3d 647 (7th Cir. 2012) (affirmed contract-based basis for claims under bill of lading)
- Virginia Surety Co. v. Northern Insurance Co. of New York, 224 Ill. 2d 550 (2007) (overruled Michael Nicholas/West Bend; insured contract requires clear language indemnifying own negligence)
- Hankins v. Pekin Insurance Co., 305 Ill. App. 3d 1088 (1999) (indemnity contracts limited to indemnitor’s own negligence; requires explicit language)
- Michael Nicholas, Inc. v. Royal Insurance Co. of America, 321 Ill. App. 3d 909 (2001) (indemnity may cover more than negligence; interaction with Kotecki cap)
- Buenz v. Frontline Transportation Co., 227 Ill. 2d 302 (2008) (an insured contract must expressly limit indemnification to indemnitee’s actions; context matters)
- West Bend Mut. Ins. Co. v. Mulligan Masonry Co., 337 Ill. App. 3d 698 (2003) (clarifies interpretation of insured contract language and indemnity scope)
- Westinghouse Electric Elevator Co. v. LaSalle Monroe Building Corp., 395 Ill. 429 (1947) (early guidance on indemnity language and contract interpretation)