99 F.4th 978
7th Cir.2024Background
- Tommy Harris contracted bacterial sepsis due to repeated infections during dialysis treatment at Metro East Dialysis clinic in Belleville, Illinois, partly due to alleged negligent cleaning by Durham Enterprises, the facility's janitorial company.
- Harris filed a state-court malpractice suit and later added Durham as a defendant. Durham’s insurer, Ohio Security Insurance, denied coverage based on a bacteria exclusion in its policy.
- Harris and Durham entered into an agreement: Durham would not defend itself, and Harris would pursue recovery only against the insurer.
- An uncontested bench trial in state court resulted in over $2 million judgment against Durham, with findings that Ohio Security had breached its duty to defend.
- After the judgment, Harris added Ohio Security as a defendant; the insurer removed the case to federal court for a declaration on coverage obligations. The district court found the bacteria exclusion precluded coverage.
- Harris (later, his estate) and Durham appealed, raising both jurisdictional (Rooker-Feldman) and coverage issues.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Applicability of Rooker-Feldman doctrine | Federal court lacks subject-matter jurisdiction due to previous state-court judgment. | Doctrine does not apply since Ohio Security was not a party to state-court case. | Not applicable; jurisdiction secure. |
| Duty to defend under insurance policy | Policy’s bacteria exclusion does not bar coverage; insurer failed to fairly investigate; bodily consumption exception applies. | Bacteria exclusion clearly applies; claims adjuster acted properly; no evidence bodily consumption exception applies. | Bacteria exclusion applies; no duty to defend. |
| Whether evidence outside complaint affects duty to defend | Coverage should consider more facts; insurer should have investigated further. | Only relevant facts are those known or ascertainable at outset; no facts support coverage. | No evidence investigation would find coverage-favoring facts. |
| Application of policy’s ‘bodily consumption’ exception | Exception ‘could’ apply, vaguely suggested at oral argument (dialysis machines). | No product intended for consumption identified; argument waived/undeveloped. | Exception does not apply; argument waived. |
Key Cases Cited
- Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280 (Rooker–Feldman doctrine applies only to federal cases seeking review of state-court judgments by losers in that proceeding)
- Lance v. Dennis, 546 U.S. 459 (Rooker–Feldman does not bar claims by nonparties to a state-court judgment)
- Johnson v. De Grandy, 512 U.S. 997 (Absent a party in state court may litigate in federal court; Rooker-Feldman inapplicable)
- Allen v. Bryers, 512 S.W.3d 17 (Mo. 2016) (Duty to defend triggered by possibility or potential for coverage based on complaint or known facts)
- Trainwreck W. Inc. v. Burlington Ins. Co., 235 S.W.3d 33 (Mo. Ct. App. 2007) (Duty to defend determined from complaint at the time action commences)