861 F.3d 661
7th Cir.2017Background
- In May 2008 Christopher Drake’s truck collided with Joseph Burley’s motorcycle; Burley offered to settle for the $25,000 policy limit but the offer lapsed; litigation followed and a 2010 mediation failed.
- On September 14, 2010 Burley’s lawyer sent a letter to Drake’s counsel referencing extra-contractual exposure and stating intent to discuss extra-contractual aspects; Horace Mann (Drake’s insurer) treated the letter as raising potential extra-contractual exposure.
- Horace Mann had a professional-liability policy with Lexington covering claims that "accrued" and were timely reported; Horace Mann communicated with its broker Aon in Aug–Sept 2010 about reporting the Burley matter, then asked Aon to withdraw reporting after concluding no written extra-contractual allegation existed.
- Horace Mann instructed Aon again in Dec. 2010; Aon notified Lexington in Jan. 2011. A Florida jury returned a $17 million verdict in Feb. 2011; Horace Mann later settled with Burley for $7 million.
- Lexington issued a reservation-of-rights denying coverage, asserting Horace Mann’s "claim" accrued by Sept. 14, 2010 (before the operative 2010–2011 policy began) and filed a declaratory-judgment action seeking no duty to indemnify; Horace Mann counterclaimed for breach, declaratory relief, and Illinois §155 damages and sued Aon for negligence.
- At trial the district court granted judgment as a matter of law for Lexington and Aon on Horace Mann’s claims under Rule 50(a); Horace Mann appealed. The Seventh Circuit affirmed, largely on Rule 50(b) forfeiture and sufficiency grounds.
Issues
| Issue | Horace Mann's Argument | Lexington/Aon Argument | Held |
|---|---|---|---|
| Whether the Sept. 14, 2010 letter was a "claim" that accrued before the 2010–2011 Lexington policy | The letter did not constitute an accrued "claim" giving rise to coverage problems until early 2011 | The letter put Horace Mann on notice of extra-contractual exposure, so the "claim" accrued before the operative policy | Forfeited on appeal: Horace Mann failed to preserve sufficiency challenge by not renewing Rule 50(b); district-court rulings for Lexington on contract/declaratory claims stand |
| Whether Horace Mann preserved its entitlement to judgment as a matter of law after the court entered adverse Rule 50(a) rulings without a post-trial renewal | Horace Mann contends Cone is inapplicable because opposing Rule 50(a) motions were granted and the jury did not decide the case | Lexington contends Rule 50(b) renewal was required; appellate relief barred without it | Held for Lexington: Rule 50(b) renewal required; failure to renew forfeited sufficiency-of-evidence arguments on appeal (Cone/Globe Liquor/Unitherm principles applied) |
| Whether Horace Mann proved Aon’s negligence (faulty reporting advice or failure to follow instructions) proximately caused its damages | Aon’s advice delayed reporting and prevented earlier file-opening by Lexington, which would have eliminated Lexington’s defenses and produced coverage | Aon argues lack of but-for causation and no proof Lexington wouldn’t have asserted other coverage defenses | Held for Aon: Horace Mann failed to prove but-for causation; judgment for Aon affirmed |
| Whether Rule 50 was an appropriate vehicle to relitigate Lexington’s already-dismissed declaratory complaint | Horace Mann moved under Rule 50(a) arguing no evidence supported Lexington’s dismissed claim | Lexington noted the claim had been resolved at summary judgment and that no trial evidence was needed | Held: Rule 50 was not appropriate; nothing to relitigate—district court’s prior summary-judgment disposition stands |
Key Cases Cited
- Cone v. West Virginia Pulp & Paper Co., 330 U.S. 212 (U.S. 1947) (appellate relief on directed-verdict grounds limited where Rule 50(b) renewal not sought)
- Globe Liquor Co. v. San Roman, 332 U.S. 571 (U.S. 1948) (Rule 50(b) applies equally when judgment for one party was directed at trial)
- Unitherm Food Sys., Inc. v. Swift-Eckrich, Inc., 546 U.S. 394 (U.S. 2006) (a party cannot raise entitlement to judgment as a matter of law on appeal unless it renewed its Rule 50(a) motion under Rule 50(b))
- Campbell v. Miller, 499 F.3d 711 (7th Cir. 2007) (standard for judgment as a matter of law review)