General Insurance Co. of America v. Clark Mall Corp.
2011 U.S. App. LEXIS 9165
| 7th Cir. | 2011Background
- Discount Mega Mall, insured under a General Insurance CGL policy, faced a fire on Sept. 8, 2007 and a related first-party claim.
- Several tenants sued Discount Mall in Illinois state court alleging the mall’s negligence caused the fire.
- Discount Mall tendered defense to General Insurance, which denied defense and filed a declaratory-judgment action to determine duty to defend/indemnify.
- The district court held General Insurance owed a duty to defend under Illinois law and entered a final judgment to facilitate immediate appeal.
- Discount Mall and others counterclaimed for declaratory relief, indemnification damages, and claims under Illinois law (section 155, Consumer Fraud, common-law fraud).
- The magistrate judge found a duty to defend Discount Mall but not for Clark Mall Corporation, and noted a factual deficiency in proving the policy exclusion; the judgment’s broader language created a jurisdictional issue on appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Can insurer prove non-coverage with evidence beyond the underlying complaint? | General Insurance contends evidence may be used to show non-coverage when seeking a declaratory judgment. | Discount Mall argues the duty to defend is determined from the allegations in the underlying complaint, not evidence outside it. | Illinois law permits some evidentiary considerations, but final judgment issues precluded appeal. |
| Was the Rule 54(b) final-judgment declaration proper for immediate appeal? | General Insurance asked for a final judgment to enable an immediate appeal. | The district court should not certify a partial final judgment where counterclaims remain. | No proper Rule 54(b) final judgment; appeal dismissed for lack of jurisdiction. |
| Do remaining counterclaims preclude appellate review of the duty-to-defend ruling under Rule 54(b)? | Counterclaims premised on the duty to defend should not affect appellate review. | Counterclaims entangle the duty-to-defend issue with merits of remaining claims. | Counterclaims are substantively intertwined with the duty-to-defend issue, precluding a 54(b) appeal. |
| Is the district court's final judgment, as entered, truly final for purposes of 28 U.S.C. § 1291? | The judgment finalizes the duty-to-defend determination for immediate review. | Because unresolved counterclaims affect the duty-to-defend ruling, jurisdiction is improper. | The judgment was not truly final; appellate jurisdiction is lacking. |
Key Cases Cited
- Nautilus Ins. Co. v. 1452-4 N. Milwaukee Ave., LLC, 562 F.3d 818 (7th Cir. 2009) (duty-to-defend decisions at pleadings stage may be appropriate)
- Pekin Ins. Co. v. Wilson, 237 Ill.2d 446 (Ill. 2010) (Illinois Supreme Court permits insurer to present coverage evidence in declaratory actions)
- Am. Econ. Ins. Co. v. Holabird & Root, 382 Ill.App.3d 1017 (Ill. App. Ct. 2008) (duty to defend may be decided on pleadings or evidence depending on context)
- Fid. & Cas. Co. v. Envirodyne Eng'rs, Inc., 122 Ill.App.3d 301 (Ill. App. Ct. 1983) (early Illinois authority on coverage interpretation)
- Horn v. Transcon Lines, Inc., 898 F.2d 589 (7th Cir. 1990) (Rule 54(b) final-judgment standards)
- Marseilles Hydro Power, LLC v. Marseilles Land & Water Co., 518 F.3d 459 (7th Cir. 2008) (considerations for piecemeal appeals under Rule 54(b))
- Deering v. Nat'l Maint. & Repair, Inc., 627 F.3d 1039 (7th Cir. 2010) (final-judgment review principles under 1291)
- Sears, Roebuck & Co. v. Mackey, 351 U.S. 427 (Supreme Court 1956) (final-judgment rule considerations)
- Curtiss-Wright Corp. v. Gen. Elec. Co., 446 U.S. 1 (Supreme Court 1980) (Rule 54(b) interpretation and finality)
- Eberts v. Goderstad, 569 F.3d 757 (7th Cir. 2009) (constraints on bifurcated coverage/liability appeals)