Continental Western Insurance v. Country Mutual Insurance Comp
3 F.4th 308
7th Cir.2021Background
- In 1989 Hamel Fire and Alhambra Fire formed the Alhambra‑Hamel Ambulance Service (the Service) to provide joint ambulance services.
- On Sept. 17, 2012 a Service‑operated 2010 Freightliner ambulance collided with a semi; three lawsuits followed naming various parties including Hamel Fire and the Service.
- Country Mutual insured the Service (policy listed the ambulance in the "Autos You Own" schedule); Continental insured Hamel Fire (its schedule did not list the ambulance). Both policies provided primary coverage for owned autos and excess coverage for non‑owned autos.
- Continental defended Hamel Fire after Country Mutual ignored tenders, paid defense fees, and sued Country Mutual for reimbursement under diversity jurisdiction; the district court granted summary judgment for Continental, finding the Service owned the ambulance and Country Mutual had primary duty to defend.
- On remand the district court awarded Continental $240,146.18 in attorney’s fees and defense costs (plus prejudgment interest), and this Court affirmed both the ownership ruling and the fee award.
Issues
| Issue | Plaintiff's Argument (Continental) | Defendant's Argument (Country Mutual) | Held |
|---|---|---|---|
| Who owned the ambulance? | Service owned the ambulance (supported by Bill of Sale, Certificate of Title, and Country Mutual policy listing the ambulance). | The 1989 joint‑service agreement assigned property acquired under the agreement equally to Hamel and Alhambra, so Hamel (and Alhambra) co‑owned the ambulance. | Service owned the ambulance; insurance documents, title, and purchase records show intent that the Service was the owner; 1989 agreement did not rebute that intent. |
| Effect of certificate of title and burden of proof | Certificate of title and other contemporaneous documents create a presumption that the Service owned the vehicle. | The 1989 agreement and an affidavit from Hamel treasurer rebut the presumption. | Certificate of title creates prima facie presumption of ownership; Country Mutual failed to rebut with competent evidence. |
| District court’s evidentiary rulings (striking late affidavit and denying hearing) | Court properly enforced deadlines; the late Mudge affidavit was untimely and a hearing would merely rehash submitted materials. | The court abused its discretion by striking the affidavit and denying an evidentiary hearing on fee objections. | Affirmed: district court did not abuse its discretion in striking untimely affidavit or declining an evidentiary hearing. |
| Reasonableness of attorney’s fees and costs award | Fees were paid, supported by detailed line‑item billing and a Continental affidavit confirming payment; paid bills are prima facie reasonable under Illinois law. | Fees were excessive and duplicative; billing entries insufficiently documented and should be reduced. | Affirmed: award was reasonable. Paid, detailed invoices and factor‑based analysis satisfied Illinois standards; Country Mutual failed to identify specific, improper entries. |
Key Cases Cited
- Vedder v. Cont'l W. Ins. Co., 978 N.E.2d 1111 (Ill. App. Ct. 2012) (insurer of the automobile owner generally bears primary liability)
- Kajima Const. Servs., Inc. v. St. Paul Fire & Marine Ins. Co., 879 N.E.2d 305 (Ill. 2007) (horizontal exhaustion requires primary limits be exhausted before excess coverage applies)
- Pekin Ins. Co. v. U.S. Credit Funding, Ltd., 571 N.E.2d 769 (Ill. App. Ct. 1991) (certificate of title gives rise to a prima facie presumption of ownership)
- Sheary v. State Farm Mut. Auto. Ins. Co., 566 N.E.2d 794 (Ill. App. Ct. 1991) (ownership for insurance purposes governed by parties’ intent as of the time of collision)
- Clarendon Nat'l Ins. Co. v. Medina, 645 F.3d 928 (7th Cir. 2011) (insurance policies are contracts; general contract‑interpretation rules apply)
- Hobbs v. Hartford Ins. Co. of the Midwest, 823 N.E.2d 561 (Ill. 2005) (courts give effect to parties’ intent expressed in insurance policy language)
- Arthur v. Catour, 833 N.E.2d 847 (Ill. 2005) (paid attorney bills are presumptive evidence of reasonable market value)