MGN Logistics, Inc. D/B/A Laser Transportation Systems, Inc. v. Travelers Property Casualty Company of America, 1:16-cv-04301

Background

MGN (freight broker, doing business as Laser) arranged for Trans Logistics to carry copper coils; the trailer was left unattended overnight and the copper (worth $132,426) was stolen. MGN paid the shipper (Laars) and sought recovery.
Trans had a cargo policy from Essex showing $250,000 on the certificate, but that policy contained a "Special Theft Warranty Endorsement" capping certain unattended-theft losses (including copper) at $5,000 unless specified safeguards were present; those safeguards were not met here.
MGN also had a contingent cargo policy from Travelers that covers losses only if the carrier or its insurer cannot or will not pay; Travelers’ policy caps recovery at the least of several measures, including the carrier's "actual limits."
Essex offered to settle for $5,000 (less deductible); MGN refused. Travelers denied coverage, asserting its exposure is at most the carrier's actual applicable limit ($5,000).
MGN sued Travelers and Trans; Trans defaulted. Parties cross-moved for summary judgment on Travelers’ liability. Court granted Travelers’ partial summary judgment limiting Travelers’ exposure to $5,000, denied MGN’s motion except to declare Essex made no "payment," and invited MGN to seek default judgment against Trans.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Travelers must pay full contingent limit (≈$132k/$200k) despite carrier endorsement	Travelers’ contingent policy lists higher limits in declarations; MGN says Travelers must pay full limits and the Essex certificate shows $250k actual limits	Travelers says contingent coverage is limited by policy terms (E.2): it pays the least of several measures, including the carrier's "actual limits," which here are $5k due to Essex endorsement	Held: Travelers’ exposure is limited to $5,000 (the Essex policy limit that actually applies to this theft)
Whether the Essex certificate showing $250k controls over the Essex policy endorsement	MGN: certificate controls; it doesn’t disclose the endorsement, so $250k is the actual limit	Travelers: the certificate disclaims and references the policy; policy endorsements control the actual limits	Held: The certificate does not override the Essex policy; the endorsement governs, making the applicable Essex limit $5,000
Whether Essex’s $5k offer constituted a "payment" under Travelers’ policy (Section E.10)	MGN: Essex only offered, did not pay; therefore no carrier "payment" occurred and Travelers’ E.10 does not bar recovery	Travelers did not dispute that Essex did not pay but relies on other policy conditions (e.g., MGN’s duty to attempt collection and reasonableness) to limit recovery	Held: Court declares Essex did not make a "payment;" but whether MGN’s refusal of the $5k offer was a "reasonable and proper effort" to collect (a prerequisite for Travelers’ obligation) remains unresolved
Entitlement to attorney fees under 215 ILCS 5/155 for alleged vexatious refusal to pay	MGN: Travelers’ denial/unwillingness to pay is vexatious and unreasonable	Travelers: coverage dispute is bona fide; alternative policy defenses (assignment issue, reasonableness of collection efforts) are colorable, so not vexatious	Held: Denied — Travelers’ conduct not shown vexatious as a matter of law given genuine coverage dispute

Key Cases Cited

Founders Ins. Co. v. Munoz, 237 Ill. 2d 424 (explains Illinois contract/insurance interpretation principles)
Golden Rule Ins. Co. v. Schwartz, 203 Ill. 2d 456 (bona fide coverage dispute negates vexatious-and-unreasonable claim)
Thompson v. Gordon, 241 Ill. 2d 428 (court will not interpret contracts to render provisions meaningless)
Westfield Ins. Co. v. FCL Builders, Inc., 407 Ill. App. 3d 730 (insurance certificate may be controlled by underlying policy when certificate disclaims and references policy)
Pekin Ins. Co. v. Illinois Cement Co., LLC, 51 N.E.3d 812 (Ill. App. 2016) (enforcing policy over certificate where certificate defers to policy terms)
Selective Ins. Co. of S.C. v. Target Corp., 845 F.3d 263 (7th Cir. 2016) (give effect to each clause of insurance contract)
Poole v. U.S. Gen. Accounting Office, [citation="1 F. App'x 508"] (7th Cir. 2001) (facts in movant’s statement not specifically denied are deemed admitted)
Streit v. Metropolitan Cas. Ins. Co., 863 F.3d 770 (7th Cir. 2017) (distinguishable; cited on limits of exceptions under standard forms)