Hanover Ins. v. Northern Building. Co.
891 F. Supp. 2d 1019
N.D. Ill.2012Background
- FAA Midway air-traffic control tower upgrades; parties include Parsons (general contractor), Northern Building (subcontractor), Hanover (bond/indemnity insurer), McDaniel Fire Systems (sub-subcontractor), Rex Electric (final sub-subcontractor)
- Northern & McDaniel disagreed over payment for fire-alarm work; FAA inspection found deficiencies; Northern withheld payments; Parsons suspended Northern payments
- McDaniel sued Northern for nonpayment; McDaniel filed bankruptcy; trustee later pursued case; Hanover bonded Northern and required indemnity
- Hanover settled McDaniel claim for $127,452.78 on September 22, 2010; Parsons later reimbursed Hanover $127,086; Hanover seeks remaining costs ($53,504.44) from Northern
- Northern signed indemnity agreeing to reimburse Hanover for losses arising from bond claims; Hanover had exclusive right to settle/defend bond claims
- Complaint filed March 23, 2011; Hanover moves for summary judgment; Northern cross-moves; court grants Hanover’s summary judgment
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Northern breached the indemnity by not reimbursing Hanover | Hanover: indemnity covers settlements; Northern failed to reimburse | Northern: bond provisions/triggering events disputed; payment may be void | Yes; Hanover entitled to indemnification under clear terms |
| Whether federal jurisdiction exists (amount in controversy > $75,000 at filing) | Hanover: amount claimed at filing exceeded $75k | Northern: later reimbursements affect jurisdiction; claim may be below threshold | Jurisdiction proper; amount at filing supported by complaint; not reduced to abaixo by later events |
| Whether venue should be changed or transferred | N/A | Northern: argues improper venue in Illinois and Michigan transfer | Change of venue denied; Illinois proper given Midway project location |
| Whether Hanover’s strike/Rule 56.1 issues were proper or need denial | N/A | Northern: argues strike; not warranted | Motion to strike denied; ruling on merits stands |
Key Cases Cited
- Hart v. Schering-Plough Corp., 253 F.3d 272 (7th Cir.2001) (amount in controversy controls at filing date)
- Smith v. American General Life and Accident Ins. Co., 337 F.3d 888 (7th Cir.2003) (amount-in-controversy and bad-faith considerations)
- Grinnell Mut. Reinsurance Co. v. Shierk, 121 F.3d 1114 (7th Cir.1997) (diversity jurisdiction; timing of jurisdictional amount)
- Celotex Corp. v. Catrett, 477 U.S. 317 (1986) (summary judgment burden-shifting; movant must show absence of genuine dispute)
- United States Fidelity Guaranty Co. v. Klein Corp., 190 Ill.App.3d 250 (Ill.App.1st Dist.1990) (indemnity/guaranty contract interpretation; plain meaning governs)