West Side Salvage, Inc. v. RSUI Indemnity Company

In the
United States Court of Appeals
For the Seventh Circuit
____________________ȱ
No.ȱ16Ȭ3928ȱ
WESTȱSIDEȱSALVAGE ,ȱINC.,ȱ
PlaintiffȬAppellant,ȱ
v.ȱ
RSUIȱINDEMNITYȱC OMPANY,ȱ
DefendantȬAppellee.ȱ
____________________ȱ
AppealȱfromȱtheȱUnitedȱStatesȱDistrictȱCourtȱforȱtheȱ
SouthernȱDistrictȱofȱIllinois.ȱ
No.ȱ15ȬcvȬ0442ȬMJRȬSCWȱ—ȱMichaelȱJ.ȱReagan,ȱChiefȱJudge.ȱ
____________________ȱ
A RGUEDȱNOVEMBERȱ1,ȱ2017ȱ—ȱD ECIDEDȱD ECEMBERȱ18,ȱ2017ȱ
____________________ȱ
BeforeȱMANION,ȱKANNE ,ȱandȱR OVNER ,ȱCircuitȱJudges.ȱ
KANNE ,ȱCircuitȱJudge.ȱInȱ2014,ȱweȱheldȱthatȱWestȱSideȱSalȬ
vage,ȱInc.ȱwasȱsolelyȱliableȱforȱtheȱinjuriesȱthatȱthreeȱworkersȱ
sufferedȱinȱaȱgrainȬbinȱexplosion.ȱWeȱalsoȱheldȱthatȱWestȱSideȱ
wasȱliableȱforȱ$3ȱmillionȱinȱpropertyȱdamageȱtoȱtheȱbin,ȱwhichȱ
wasȱownedȱbyȱConAgraȱFoods,ȱInc.ȱȱ
WestȱSideȱhadȱanȱ$11ȱmillionȱexcessȱinsuranceȱpolicyȱwithȱ
RSUIȱIndemnityȱCompany.ȱWestȱSideȱsuedȱRSUI,ȱallegingȱthatȱ

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2ȱ No.ȱ16Ȭ3928ȱ
RSUIȱbreachedȱitsȱdutyȱtoȱsettleȱConAgra’sȱpropertyȬdamageȱ
claim.ȱTheȱdistrictȱcourtȱgrantedȱsummaryȱjudgmentȱtoȱRSUI.ȱ
WestȱSideȱappeals.ȱWeȱaffirm.ȱ
I. BACKGROUNDȱ
Inȱ2010,ȱConAgraȱdiscoveredȱaȱhotȱgrainȱbin—aȱbinȱwithȱ
risingȱgrainȱtemperaturesȱthatȱposesȱaȱriskȱofȱfireȱandȱexploȬ
sion—atȱitsȱChester,ȱIllinoisȱfacility.ȱItȱhiredȱWestȱSideȱtoȱfixȱ
theȱproblem,ȱbutȱtheȱgrainȱbinȱexplodedȱwhileȱWestȱSideȱwasȱ
workingȱonȱit.ȱTheȱexplosionȱcausedȱsevereȱburnsȱandȱinjuriesȱ
toȱthreeȱworkersȱandȱdamagedȱtheȱbin.ȱTheȱinjuredȱworkersȱ
suedȱ Westȱ Sideȱ andȱ ConAgra,ȱ andȱ ConAgraȱ filedȱ aȱ
crossȬclaimȱagainstȱWestȱSideȱforȱpropertyȱdamageȱtoȱtheȱbin.ȱ
WestȱSideȱhadȱaȱ$1ȱmillionȱprimaryȱinsuranceȱpolicyȱwithȱ
ColonyȱInsuranceȱandȱanȱ$11ȱmillionȱexcessȱinsuranceȱpolicyȱ
withȱ RSUI.ȱAtȱ theȱ outsetȱ ofȱ theȱ explosionȱ litigation,ȱ Colonyȱ
tenderedȱitsȱlimitsȱandȱremovedȱitselfȱfromȱtheȱcase.ȱButȱaȱColȬ
onyȬhiredȱattorneyȱcontinuedȱtoȱrepresentȱWestȱSideȱthroughȱ
trialȱ afterȱ Westȱ Sideȱ receivedȱ reservationȱ lettersȱ fromȱ RSUI.ȱ
Theȱ lettersȱ reflectedȱ RSUI’sȱ positionȱ thatȱ ConAgra’sȱ propȬ
ertyȬdamageȱclaimȱagainstȱWestȱSideȱmayȱpotentiallyȱfallȱoutȬ
sideȱofȱcoverage.ȱRelevantȱtoȱthisȱappeal,ȱWestȱSide’sȱpolicyȱ
withȱRSUIȱincludesȱaȱdamageȬtoȬpropertyȱclause,ȱwhichȱexȬ
cludesȱcertainȱpropertyȬdamageȱclaimsȱfromȱcoverage.ȱ
TheȱpartiesȱtriedȱbutȱneverȱreachedȱaȱsettlementȱinȱtheȱexȬ
plosionȱlitigation.ȱAfterȱaȱjuryȱtrial,ȱWestȱSideȱandȱConAgraȱ
wereȱfoundȱliableȱforȱtheȱworkers’ȱinjuries,ȱandȱWestȱSideȱwasȱ
foundȱliableȱforȱtheȱpropertyȱdamageȱtoȱConAgra’sȱgrainȱbin.ȱȱ
Bothȱ Westȱ Sideȱ andȱ ConAgraȱ appealed,ȱ andȱ inȱ Jentzȱ v.ȱ
ConAgraȱFoods,ȱInc.,ȱ767ȱF.3dȱ688ȱ(7thȱCir.ȱ2014),ȱweȱreversedȱ
theȱ personalȬinjuryȱ judgmentȱ asȱ toȱ ConAgraȱ andȱ heldȱ thatȱ

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No.ȱ16Ȭ3928ȱ 3ȱ
Westȱ Sideȱ wasȱ solelyȱ liableȱ forȱ theȱ workers’ȱ injuries.ȱ Weȱ afȬ
firmedȱ theȱjudgmentȱ againstȱ Westȱ Sideȱ onȱ ConAgra’sȱpropȬ
ertyȬdamageȱ claim.ȱ Thisȱ leftȱ Westȱ Sideȱ withȱ significantlyȱ
greaterȱliabilityȱthanȱwhatȱitsȱinsuranceȱpoliciesȱcovered.ȱ
BeforeȱweȱdecidedȱJentz,ȱWestȱSideȱfiledȱaȱcomplaintȱinȱdisȬ
trictȱcourt,ȱarguingȱthatȱRSUIȱshouldȱhaveȱsettledȱtheȱexploȬ
sionȬlitigationȱ claimsȱ withinȱ policyȱ limitsȱ andȱ breachedȱ itsȱ
dutyȱtoȱsettleȱinȱnotȱdoingȱso.ȱTheȱdistrictȱcourtȱdismissedȱthatȱ
actionȱ withoutȱ prejudice.ȱ Afterȱ weȱ decidedȱ Jentz,ȱ Westȱ Sideȱ
andȱRSUIȱprivatelyȱsettledȱWestȱSide’sȱclaimȱthatȱRSUIȱshouldȱ
haveȱsettledȱtheȱinjuredȱworkers’ȱclaimsȱwithinȱpolicyȱlimits.ȱ
Butȱ thatȱ settlementȱ didȱ notȱ addressȱ theȱ propertyȬdamageȱ
claim.ȱInstead,ȱWestȱSideȱfiledȱtheȱactionȱfromȱwhichȱthisȱapȬ
pealȱwasȱtaken,ȱallegingȱthatȱRSUIȱbreachedȱitsȱdutyȱtoȱsettleȱ
theȱpropertyȬdamageȱclaimȱwithinȱpolicyȱlimits.ȱȱ
RSUIȱmovedȱforȱsummaryȱjudgment,ȱadvancingȱtwoȱarguȬ
ments.ȱItȱprincipallyȱarguedȱthatȱtheȱinsuranceȱpolicyȱdoesn’tȱ
coverȱtheȱpropertyȬdamageȱclaim,ȱinȱpartȱbecauseȱthereȱisȱaȱ
damageȬtoȬpropertyȱexclusionȱinȱtheȱpolicyȱthatȱapplies.ȱItȱarȬ
guedȱinȱtheȱalternative,ȱthough,ȱthatȱevenȱifȱtheȱclaimȱisȱcovȬ
eredȱbyȱtheȱinsuranceȱpolicy,ȱWestȱSideȱcouldȱnotȱpresentȱevȬ
idenceȱthatȱRSUIȱbreachedȱitsȱdutyȱtoȱsettle.ȱTheȱdistrictȱcourtȱ
rejectedȱtheȱfirstȱargumentȱbutȱacceptedȱtheȱsecond.ȱTheȱcourtȱ
reasonedȱthatȱanȱinsurerȱonlyȱhasȱaȱdutyȱtoȱsettleȱwhenȱthereȱ
isȱanȱofferȱtoȱsettleȱallȱclaimsȱagainstȱtheȱinsuredȱatȱtheȱsameȱ
timeȱthatȱthereȱisȱaȱreasonableȱlikelihoodȱtheȱinsuredȱwillȱfaceȱ
liabilityȱexceedingȱtheȱpolicyȱlimits.ȱTheȱcourtȱfoundȱthatȱWestȱ
Sideȱ didȱ notȱ showȱ thereȱ wasȱ aȱ timeȱ whenȱ theseȱ conditionsȱ
wereȱ satisfied,ȱ andȱ itȱ grantedȱ summaryȱ judgmentȱ toȱ RSUI.ȱ
WestȱSideȱappeals.ȱȱ
ȱ

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4ȱ No.ȱ16Ȭ3928ȱ
II.A NALYSISȱ
Weȱreviewȱaȱdistrictȱcourt’sȱgrantȱofȱsummaryȱjudgmentȱdeȱ
novo,ȱconstruingȱtheȱfactsȱandȱmakingȱreasonableȱinferencesȱ
inȱ favorȱ ofȱ theȱ nonmovant,ȱ here,ȱ Westȱ Side.ȱ Seeȱ Perezȱ v.ȱ
Thorntons,ȱInc.,ȱ731ȱF.3dȱ699,ȱ703ȱ(7thȱCir.ȱ2013).ȱWeȱmayȱaffirmȱ
“onȱ anyȱ groundȱ supportedȱ inȱ theȱ record,ȱ soȱ longȱ asȱ thatȱ
groundȱwasȱadequatelyȱaddressedȱinȱtheȱdistrictȱcourtȱandȱtheȱ
nonmovingȱ partyȱ hadȱ anȱ opportunityȱ toȱ contestȱ theȱ issue.”ȱ
Cardosoȱv.ȱRobertȱBoschȱCorp.,ȱ427ȱF.3dȱ429,ȱ432ȱ(7thȱCir.ȱ2005).ȱȱ
Inȱthisȱcourt,ȱRSUIȱrepeatsȱtheȱtwoȱargumentsȱitȱmadeȱinȱ
itsȱmotionȱforȱsummaryȱjudgmentȱasȱalternativeȱbasesȱforȱafȬ
firmance:ȱthatȱtheȱinsuranceȱpolicyȱdoesn’tȱcoverȱConAgra’sȱ
propertyȬdamageȱ claimȱ andȱ that,ȱ evenȱ ifȱ thereȱ isȱ coverage,ȱ
WestȱSideȱcan’tȱshowȱRSUIȱbreachedȱitsȱdutyȱtoȱsettle.ȱȱ
Inȱ supportȱ ofȱ itsȱ firstȱ argument,ȱ RSUIȱ contendsȱ thatȱ theȱ
damageȬtoȬpropertyȱclauseȱinȱtheȱpolicyȱexcludesȱConAgra’sȱ
claimȱagainstȱWestȱSideȱfromȱcoverage.ȱWeȱagree.ȱȱ
WeȱinterpretȱtheȱdamageȬtoȬpropertyȱexclusionȱinȱaccordȬ
anceȱwithȱtheȱlawȱofȱtheȱforumȱstate,ȱIllinois.ȱUnderȱIllinoisȱ
law,ȱtheȱdamageȬtoȬpropertyȱclauseȱexcludesȱConAgra’sȱclaimȱ
againstȱWestȱSideȱfromȱcoverage.ȱAndȱRSUIȱhadȱnoȱdutyȱtoȱ
settleȱaȱclaimȱthatȱtheȱinsuranceȱpolicyȱdoesn’tȱcover.ȱSeeȱAm.ȱ
FamilyȱMut.ȱIns.ȱCo.ȱv.ȱWestfieldȱIns.ȱCo.,ȱ962ȱN.E.2dȱ993,ȱ1000ȱ
(Ill.ȱApp.ȱCt.ȱ2011).ȱȱ
A. IllinoisȱlawȱappliesȱtoȱtheȱanalysisȱofȱtheȱdamageȬtoȬpropertyȱ
exclusion.ȱȱ
Asȱaȱfederalȱcourtȱsittingȱinȱdiversity,ȱweȱturnȱtoȱstateȱlawȱ
toȱ determineȱ whetherȱ anȱ insuranceȱ coverageȱ exclusionȱ apȬ
plies.ȱSee,ȱe.g.,ȱNeth.ȱIns.ȱCo.ȱv.ȱPhusionȱProjects,ȱInc.,ȱ737ȱF.3dȱ
1174,ȱ1177ȱ(7thȱCir.ȱ2013);ȱCincinnatiȱIns.ȱCo.ȱv.ȱFlandersȱElec.ȱ

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No.ȱ16Ȭ3928ȱ 5ȱ
MotorȱServ.,ȱInc.,ȱ40ȱF.3dȱ146,ȱ150ȱ(7thȱCir.ȱ1994).ȱButȱtheȱpartiesȱ
disputeȱwhichȱstateȱlawȱweȱshouldȱapply,ȱsoȱweȱturnȱfirstȱtoȱaȱ
choiceȬofȬlawȱanalysisȱusingȱtheȱrulesȱofȱtheȱforumȱstate,ȱhere,ȱ
Illinois.ȱKlaxonȱv.ȱStentorȱElec.ȱMfg.ȱCo.,ȱ313ȱU.S.ȱ487,ȱ496ȱ(1941).ȱ
Illinoisȱ courtsȱ engageȱ inȱ aȱ choiceȬofȬlawȱ analysisȱ onlyȱ ifȱ
thereȱisȱaȱconflictȱbetweenȱIllinoisȱlawȱandȱtheȱlawȱofȱanotherȱ
stateȱsuchȱthatȱ“aȱdifferenceȱinȱlawȱwillȱmakeȱaȱdifferenceȱinȱ
theȱ outcome.”ȱ Townsendȱ v.ȱ Sears,ȱ Roebuckȱ &ȱ Co.,ȱ 879ȱ N.E.2dȱ
893,ȱ898ȱ(Ill.ȱ2007).ȱTheȱpartyȱwhoȱseeksȱaȱchoiceȬofȬlawȱdeterȬ
minationȱmustȱestablishȱtheȱexistenceȱofȱanȱoutcomeȬdetermiȬ
nativeȱ conflict.ȱ Bridgeviewȱ Healthȱ Careȱ Ctr.,ȱ Ltd.ȱ v.ȱ Stateȱ Farmȱ
Fireȱ&ȱCas.ȱCo.,ȱ10ȱN.E.3dȱ902,ȱ905ȱ(Ill.ȱ2014).ȱIfȱtheȱpartyȱfailsȱ
toȱestablishȱtheȱexistenceȱofȱsuchȱaȱconflict,ȱtheȱcourtȱappliesȱ
theȱlawȱofȱtheȱforumȱstate.ȱSeeȱid.;ȱGleimȱv.ȱRoberts,ȱ919ȱN.E.2dȱ
367,ȱ370ȱ(Ill.ȱApp.ȱCt.ȱ2009).ȱȱ
WestȱSideȱarguesȱthatȱaȱconflictȱexistsȱbetweenȱIllinoisȱandȱ
IowaȱlawȱthatȱaffectsȱwhetherȱtheȱdamageȬtoȬpropertyȱexcluȬ
sionȱbarsȱcoverageȱforȱConAgra’sȱpropertyȬdamageȱclaim.ȱInȱ
supportȱofȱthisȱcontention,ȱWestȱSideȱpointsȱtoȱNationalȱSuretyȱ
Corp.ȱv.ȱWestlakeȱInvestments,ȱLLC,ȱ880ȱN.W.2dȱ724ȱ(Iowaȱ2016).ȱ
Westlakeȱ addressedȱ whetherȱ anȱ insuranceȱ policyȱ coveredȱ aȱ
propertyȬdamageȱ claimȱ arisingȱ afterȱ constructionȱ workȱ wasȱ
completed.ȱWhenȱaȱpropertyȬdamageȱclaimȱarisesȱafterȱworkȱisȱ
completed,ȱ whetherȱ thatȱ claimȱ isȱ coveredȱ byȱ theȱ policyȱ deȬ
pendsȱonȱtheȱapplicationȱofȱtheȱ“damageȱtoȱ‘yourȱwork’”ȱexȬ
clusion.ȱ Id.ȱ atȱ 739–40ȱ (Theȱ “‘yourȱ work’ȱ exclusionȱ generallyȱ
excludesȱfromȱcoverageȱpropertyȱdamageȱarisingȱoutȱofȱcomȬ
pletedȱworkȱperformedȱbyȱorȱonȱbehalfȱofȱtheȱinsured.”).ȱȱ
ButȱConAgraȱbroughtȱaȱclaimȱforȱpropertyȱdamageȱcausedȱ
byȱ ongoingȱ operations,ȱ notȱ completedȱ work.ȱ Whenȱ aȱ propȬ
ertyȬdamageȱclaimȱarisesȱduringȱongoingȱoperations,ȱwhetherȱ

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6ȱ No.ȱ16Ȭ3928ȱ
thatȱclaimȱisȱcoveredȱbyȱtheȱpolicyȱdependsȱonȱtheȱapplicationȱ
ofȱ theȱ damageȬtoȬpropertyȱ exclusion,ȱ instead.ȱ Seeȱ id.ȱ atȱ 739ȱ
(notingȱthatȱtheȱdamageȬtoȬpropertyȱexclusionȱgenerallyȱexȬ
cludesȱ fromȱ coverageȱ propertyȱ damageȱ dueȱ toȱ workȱ incorȬ
rectlyȱperformedȱonȱit,ȱbutȱitȱgenerallyȱdoesȱnotȱapplyȱifȱtheȱ
propertyȱ damageȱ arisesȱ outȱ ofȱ completedȱ work).ȱ Thus,ȱ
WestlakeȱisȱnotȱoutcomeȬdeterminativeȱinȱthisȱcase.ȱȱ
Inȱ theȱ absenceȱ ofȱ aȱ demonstratedȱ conflict,ȱ weȱ applyȱ theȱ
lawȱ ofȱ theȱ forumȱ stateȱ (Illinois)ȱ toȱ determineȱ whetherȱ theȱ
damageȬtoȬpropertyȱ exclusionȱ appliesȱ toȱ ConAgra’sȱ propȬ
ertyȬdamageȱclaimȱagainstȱWestȱSide.ȱ
B. Theȱ damageȬtoȬpropertyȱ provisionȱ excludesȱ ConAgra’sȱ
claimȱagainstȱWestȱSideȱfromȱcoverage.ȱȱ
Thoughȱaȱcourtȱmustȱconstrueȱexclusionsȱliberallyȱinȱfavorȱ
ofȱtheȱinsuredȱandȱagainstȱtheȱinsurer,ȱ“ifȱanȱexclusionȱisȱclearȱ
andȱunambiguousȱandȱdoesȱnotȱcontraveneȱpublicȱpolicy,ȱitȱ
mustȱ beȱ appliedȱ asȱ written.”ȱ Pekinȱ Ins.ȱ Co.ȱ v.ȱ Willett,ȱ 704ȱ
N.E.2dȱ923,ȱ925ȱ(Ill.ȱApp.ȱCt.ȱ1998).ȱWestȱSideȱdoesȱnotȱargueȱ
thatȱtheȱdamageȬtoȬpropertyȱexclusionȱisȱambiguousȱorȱconȬ
travenesȱpublicȱpolicy.ȱThus,ȱweȱapplyȱtheȱexclusionȱasȱitȱisȱ
written.ȱȱ
Theȱ damageȬtoȬpropertyȱ exclusionȱ eliminatesȱ insuranceȱ
coverageȱforȱpropertyȱdamageȱto:ȱ
“(5)ȱ [t]hatȱ particularȱ partȱ ofȱ realȱ propertyȱ onȱ
whichȱyouȱorȱanyȱcontractorsȱorȱsubcontractorsȱ
workingȱdirectlyȱorȱindirectlyȱonȱyourȱbehalfȱareȱ
performingȱoperations,ȱifȱtheȱ‘propertyȱdamage’ȱ
arisesȱoutȱofȱthoseȱoperations;ȱorȱ

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No.ȱ16Ȭ3928ȱ 7ȱ
(6)ȱ [t]hatȱ particularȱ partȱ ofȱ anyȱ propertyȱ thatȱ
mustȱbeȱrestored,ȱrepairedȱorȱreplacedȱbecauseȱ
‘yourȱwork’ȱwasȱincorrectlyȱperformedȱonȱit.”ȱ
(R.ȱ 1ȱ atȱ 30–31.)ȱ Theȱ contractȱ definesȱ “propertyȱ damage”ȱ asȱ
“[p]hysicalȱinjuryȱtoȱtangibleȱproperty,”ȱ(R.ȱ1ȱatȱ40),ȱandȱitȱdeȬ
finesȱ“yourȱwork”ȱasȱ“[w]orkȱorȱoperationsȱperformedȱbyȱyouȱ
orȱonȱyourȱbehalf,”ȱ(R.ȱ1ȱatȱ41).ȱThisȱexclusionȱisȱ“premisedȱonȱ
theȱtheoryȱthatȱliabilityȱpoliciesȱareȱnotȱintendedȱtoȱprovideȱ
protectionȱagainstȱtheȱinsured’sȱownȱfaultyȱworkmanshipȱorȱ
product,ȱwhichȱareȱnormalȱrisksȱassociatedȱwithȱtheȱconductȱ
ofȱtheȱinsured’sȱbusiness.”ȱStateȱFarmȱFireȱ&ȱCas.ȱCo.ȱv.ȱTillerȬ
son,ȱ777ȱN.E.2dȱ986,ȱ992ȱ(Ill.ȱApp.ȱCt.ȱ2002).ȱ
Theȱdistrictȱcourtȱreadȱtheseȱprovisionsȱnarrowly,ȱconcludȬ
ingȱthatȱtheȱexclusionȱonlyȱappliedȱifȱtheȱinsuredȱwasȱsuedȱforȱ
propertyȱdamageȱcausedȱbyȱworkȱonȱthatȱparticularȱpieceȱofȱ
property.ȱToȱreachȱthisȱconclusion,ȱtheȱdistrictȱcourtȱdidȱnotȱ
applyȱIllinoisȱlawȱandȱinsteadȱreliedȱonȱColumbiaȱMutualȱIns.ȱ
Co.ȱv.ȱSchauf,ȱ967ȱS.W.2dȱ74ȱ(Mo.ȱ1998)ȱ(enȱbanc).ȱInȱthatȱcase,ȱ
aȱpainterȱwasȱhiredȱtoȱpaintȱallȱinteriorȱandȱexteriorȱsurfacesȱ
ofȱaȱhome.ȱSchauf,ȱ967ȱS.W.2dȱatȱ76.ȱAfterȱtheȱpainterȱusedȱaȱ
sprayingȱcompressorȱtoȱpaintȱtheȱkitchenȱcabinets,ȱheȱbeganȱ
cleaningȱtheȱcompressorȱinsideȱtheȱhomeȱbeforeȱheȱleftȱforȱtheȱ
day.ȱId.ȱTheȱequipmentȱstartedȱaȱfireȱthatȱdamagedȱtheȱhome,ȱ
andȱtheȱhomeownersȱsuedȱtheȱpainterȱforȱthatȱdamage.ȱId.ȱInȱ
aȱdeclaratoryȱactionȱbroughtȱbyȱtheȱpainter’sȱinsurer,ȱtheȱcourtȱ
heldȱthatȱonlyȱdamageȱtoȱtheȱkitchenȱcabinetsȱwasȱexcludedȱ
fromȱcoverageȱbecauseȱthatȱwasȱtheȱonlyȱpartȱofȱrealȱpropertyȱ
onȱwhichȱtheȱpainterȱwasȱperformingȱoperations.ȱId.ȱatȱ80.ȱ
ApplyingȱSchaufȱtoȱthisȱcase,ȱtheȱdistrictȱcourtȱfoundȱthatȱ
“aȱreasonableȱinterpretationȱofȱtheȱfactsȱcouldȱleadȱtoȱtheȱconȬ
clusion”ȱ thatȱ Westȱ Sideȱ wasȱ notȱ workingȱ onȱ theȱ grainȱ binȱ

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8ȱ No.ȱ16Ȭ3928ȱ
whenȱitȱexplodedȱbutȱinsteadȱwasȱonlyȱhandlingȱtheȱgrainȱinȬ
sideȱofȱit.ȱ(R.ȱ65ȱatȱ13.)ȱBecauseȱConAgraȱsuedȱforȱtheȱdamageȱ
toȱtheȱbin,ȱnotȱforȱtheȱlossȱofȱtheȱgrain,ȱaȱjuryȱcouldȱfindȱthatȱ
ConAgra’sȱpropertyȬdamageȱclaimȱwasȱstillȱcoveredȱbyȱtheȱinȬ
suranceȱpolicyȱdespiteȱtheȱdamageȬtoȬpropertyȱexclusion.ȱȱ
Weȱdeclineȱtoȱadoptȱtheȱdistrictȱcourt’sȱinterpretationȱandȱ
insteadȱ holdȱ thatȱ theȱ damageȬtoȬpropertyȱ exclusionȱ appliesȱ
here.ȱUnderȱIllinoisȱlaw,ȱtheȱdamageȬtoȬpropertyȱexclusionȱisȱ
notȱ interpretedȱ soȱ narrowly.ȱ “Theȱ exclusion[]ȱ do[es]ȱ notȱ exȬ
cludeȱcoverageȱforȱdamageȱdoneȱonlyȱtoȱtheȱpreciseȱareaȱofȱ
theȱ propertyȱ beingȱ workedȱ on.ȱ Rather,ȱ theȱ exclusion[]ȱ
appl[ies]ȱtoȱpropertyȱdamageȱcausedȱbyȱpoorȱworkmanship.”ȱ
Willett,ȱ704ȱN.E.2dȱatȱ926.ȱ
InȱWillett,ȱtheȱhomeownersȱhiredȱaȱworkerȱtoȱemptyȱtheirȱ
swimmingȱpool,ȱpaintȱit,ȱandȱfillȱitȱwithȱwaterȱandȱchemicalsȱ
toȱprepareȱitȱforȱuse.ȱId.ȱatȱ924.ȱAfterȱtheȱworkerȱemptiedȱandȱ
paintedȱtheȱpool,ȱbutȱbeforeȱheȱfilledȱit,ȱtheȱpoolȱpushedȱoutȱ
ofȱtheȱgroundȱfromȱaȱheavyȱrainstorm.ȱId.ȱTheȱhomeownersȱ
filedȱaȱcomplaintȱagainstȱtheȱworker,ȱallegingȱthatȱheȱfailedȱtoȱ
fillȱtheȱpoolȱinȱaȱtimelyȱmannerȱandȱthatȱthisȱfailureȱcausedȱ
damageȱtoȱtheȱpoolȱwhileȱheȱwasȱworkingȱonȱit.ȱId.ȱatȱ926.ȱWilȬ
lett’sȱinsuranceȱcompanyȱbroughtȱanȱactionȱseekingȱaȱdeclaraȬ
tionȱ thatȱ Willett’sȱ insuranceȱ policyȱ didȱ notȱ coverȱ theȱ homeȬ
owner’sȱclaimȱagainstȱhim.ȱTheȱcourtȱheldȱthatȱtheȱpolicyȱexȬ
cludedȱ theȱ homeowner’sȱ claimȱ fromȱ coverage,ȱ restingȱ itsȱ
holdingȱ onȱ theȱ applicabilityȱ ofȱ damageȬtoȬpropertyȱ proviȬ
sionsȱthatȱareȱidenticalȱtoȱtheȱonesȱhere.ȱId.ȱȱ
JustȱasȱWillett’sȱinsuranceȱpolicyȱdidȱnotȱcoverȱtheȱdamageȱ
toȱtheȱswimmingȱpoolȱbecauseȱheȱ“performedȱhisȱworkȱincorȬ
rectlyȱ byȱ failingȱ toȱ fillȱ theȱ poolȱ inȱ aȱ timelyȱ manner,”ȱ Westȱ
Side’sȱinsuranceȱpolicyȱdoesȱnotȱcoverȱtheȱdamageȱtoȱtheȱgrainȱ

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No.ȱ16Ȭ3928ȱ 9ȱ
binȱbecauseȱWestȱSideȱperformedȱitsȱworkȱincorrectlyȱbyȱfailȬ
ingȱ toȱ reduceȱ theȱ grainȱ temperatureȱ inȱ aȱ timelyȱ manner.ȱ Id.ȱ
EvenȱifȱitȱisȱtrueȱthatȱWestȱSideȱwasȱonlyȱworkingȱonȱtheȱgrainȱ
whenȱtheȱexplosionȱoccurred,ȱitȱisȱimmaterial.ȱTheȱdamageȬ
toȬpropertyȱexclusionȱdoesȱnotȱapplyȱonlyȱtoȱtheȱpreciseȱareaȱ
ofȱtheȱpropertyȱbeingȱworkedȱonȱifȱtheȱworkȱperformedȱwasȱ
poor.ȱSeeȱid.ȱ
Holdingȱotherwiseȱwouldȱundermineȱtheȱbasicȱpremiseȱofȱ
theȱdamageȬtoȬpropertyȱexclusion:ȱthatȱgeneralȱliabilityȱpoliȬ
ciesȱareȱnotȱintendedȱtoȱprotectȱtheȱinsuredȱfromȱtheȱnormalȱ
risksȱofȱitsȱbusiness.ȱSeeȱTillerson,ȱ777ȱN.E.2dȱatȱ992.ȱTheȱdamȬ
ageȱthatȱWestȱSideȱcausedȱwasȱoneȱofȱtheȱnormalȱrisksȱassociȬ
atedȱwithȱitsȱbusinessȱofȱremedyingȱhotȱgrainȱbinsȱbeforeȱtheyȱ
explode.ȱSeeȱAutoȬOwnersȱIns.ȱCo.ȱv.ȱChorakȱ&ȱSons,ȱInc.,ȱNo.ȱ07ȱ
Cȱ4454,ȱ2008ȱWLȱ3286986,ȱatȱ*4ȱ(Ill.ȱApp.ȱCt.ȱ2008)ȱ(notingȱthatȱ
theȱ insuredȱ wasȱ askingȱ theȱ insurerȱ toȱ provideȱ coverageȱ forȱ
damageȱ thatȱ wasȱ theȱ resultȱ “ofȱ theȱ normalȱ risksȱ associatedȱ
with”ȱ theȱ activityȱ theȱ insuredȱ wasȱ performingȱ andȱ holdingȱ
thatȱ theȱ damageȬtoȬpropertyȱ exclusionȱ appliedȱ toȱ barȱ suchȱ
coverage).ȱ
C. BecauseȱRSUIȱdidn’tȱcoverȱConAgra’sȱclaimȱagainstȱWestȱ
Side,ȱRSUIȱhadȱnoȱdutyȱtoȱsettleȱit.ȱȱ
“[The]ȱ dutyȱ toȱ actȱ inȱ goodȱ faithȱ inȱ respondingȱ toȱ settleȬ
mentȱoffersȱ…ȱonlyȱexistsȱwhereȱthereȱisȱcoverageȱunderȱtheȱ
policy.”ȱ Am.ȱ Familyȱ Mut.ȱ Ins.ȱ Co.ȱ v.ȱ Westfieldȱ Ins.ȱ Co.,ȱ 962ȱ
N.E.2dȱ993,ȱ1000ȱ(Ill.ȱApp.ȱCt.ȱ2011).ȱTheȱdamageȬtoȬpropertyȱ
exclusionȱ removedȱ ConAgra’sȱ claimȱ fromȱ coverageȱ underȱ
WestȱSide’sȱpolicyȱwithȱRSUI,ȱsoȱRSUIȱhadȱnoȱdutyȱtoȱactȱinȱ
goodȱfaithȱinȱrespondingȱtoȱanȱofferȱtoȱsettleȱthatȱclaim.ȱWestȱ
Side’sȱthreeȱargumentsȱthatȱRSUIȱshouldȱnonethelessȱbeȱheldȱ
accountableȱforȱfailingȱtoȱsettleȱtheȱclaimȱareȱunavailing.ȱȱ

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10ȱ No.ȱ16Ȭ3928ȱ
WestȱSideȱfirstȱcontendsȱthatȱthereȱisȱanȱapplicableȱexcepȬ
tionȱtoȱtheȱdamageȬtoȬpropertyȱexclusion.ȱInȱsupport,ȱitȱpointsȱ
toȱanȱexceptionȱtoȱanȱentirelyȱdifferentȱexclusion—theȱ“yourȱ
work”ȱexclusion.ȱTheȱexceptionsȱtoȱtheȱdamageȬtoȬpropertyȱexȬ
clusionȱdoȱnotȱapply.ȱ(SeeȱR.ȱ1ȱatȱ30–31.)ȱȱ
Next,ȱWestȱSideȱarguesȱthatȱ“RSUIȱisȱestoppedȱfromȱassertȬ
ingȱlackȱofȱcoverageȱasȱaȱdefense,”ȱbecauseȱ“RSUIȱtookȱoverȱ
[theȱdefense]ȱandȱinsistedȱonȱhandlingȱtheȱsettlementȱdiscusȬ
sions.”ȱ(Appellant’sȱReplyȱBr.ȱatȱ10–11.)ȱButȱifȱ“anȱunderlyingȱ
complaintȱpresentsȱanȱissueȱofȱpotentialȱinsuranceȱcoverage,ȱ
andȱ theȱ insurerȱ believesȱ thatȱ theȱ policyȱ doesȱ notȱ coverȱ theȱ
claim,ȱtheȱinsurerȱmayȱnotȱrefuseȱtoȱdefendȱtheȱinsured,ȱbutȱ
mustȱ eitherȱ defendȱ theȱ suitȱ underȱ aȱ reservationȱ ofȱ rightsȱ orȱ
seekȱaȱdeclarationȱofȱnoȱcoverage.”ȱSeeȱMobilȱOilȱCorp.ȱv.ȱMd.ȱ
Cas.ȱCo.,ȱ681ȱN.E.2dȱ552,ȱ560ȱ(Ill.ȱApp.ȱCt.ȱ1997).ȱInȱthisȱcase,ȱ
RSUIȱsentȱWestȱSideȱreservationȱlettersȱbeforeȱitȱbeganȱtoȱdeȬ
fendȱtheȱsuit.ȱ(Appellant’sȱReplyȱBr.ȱatȱ10.)ȱȱ
Additionally,ȱWestȱSideȱwasȱrepresentedȱthroughȱtrialȱbyȱ
independentȱ counselȱhiredȱ byȱ itsȱ primaryȱ insuranceȱ carrier,ȱ
notȱRSUI.ȱ(R.ȱ59ȱatȱ3.)ȱSeeȱHomeȱIns.ȱCo.ȱv.ȱThreeȱIȱTruckȱLine,ȱ
Inc.,ȱ95ȱF.ȱSupp.ȱ2dȱ901,ȱ905–06ȱ(N.D.ȱIll.ȱ2000)ȱ(afterȱrecognizȬ
ingȱthatȱaȱreservationȱofȱrightsȱmayȱnotȱinsulateȱaȱdefenseȱofȱ
nonȬcoverageȱifȱtheȱinsurerȱprejudicesȱtheȱinsuredȱduringȱtheȱ
defenseȱofȱtheȱaction,ȱnotingȱthatȱanȱinsuredȱshouldȱacquireȱ
itsȱ ownȱ counselȱ toȱ avoidȱ theȱ insurerȱ “subvert[ing]ȱ theȱ inȬ
sured’sȱabilityȱtoȱprotectȱitsȱownȱinterests”);ȱseeȱalsoȱTwinȱCityȱ
FireȱIns.ȱCo.ȱv.ȱCountryȱMut.ȱIns.ȱCo.,ȱ23ȱF.3dȱ1175,ȱ1179ȱ(7thȱCir.ȱ
1994)ȱ(notingȱthatȱIllinois’sȱdutyȱtoȱsettleȱisȱanȱ“impliedȱcorrelȬ
ative”ȱofȱtheȱinsurer’sȱcontrolȱoverȱtheȱdefense).ȱBecauseȱRSUIȱ
tookȱ sufficientȱ stepsȱ toȱ ensureȱ thatȱ itȱ wouldȱ notȱ prejudiceȱ
Westȱ Side’sȱ defenseȱ evenȱ thoughȱ RSUIȱ wasȱ involvedȱ inȱ it,ȱ

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No.ȱ16Ȭ3928ȱ 11ȱ
RSUIȱisȱnotȱestoppedȱfromȱassertingȱaȱdefenseȱofȱnonȬcoverȬ
age.ȱȱ
Finally,ȱWestȱSideȱarguesȱthatȱRSUIȱisȱliableȱforȱConAgra’sȱ
$3ȱmillionȱjudgmentȱagainstȱWestȱSide—“evenȱifȱConAgra’sȱ
propertyȱdamageȱclaimȱwasȱuncovered”—becauseȱtheȱjudgȬ
mentȱ wasȱ aȱ consequentialȱ damageȱ arisingȱ fromȱ RSUI’sȱ badȱ
faithȱfailureȱtoȱsettleȱtheȱinjuredȱworkers’ȱclaims.ȱ(Appellant’sȱ
ReplyȱBr.ȱatȱ12.)ȱButȱWestȱSideȱcannotȱrecoverȱanyȱdamages,ȱ
includingȱconsequentialȱdamages,ȱforȱaȱclaimȱthatȱitȱdidȱnotȱ
evenȱbring:ȱWestȱSideȱandȱRSUIȱprivatelyȱsettledȱWestȱSide’sȱ
claimȱ thatȱ RSUIȱ failedȱ toȱ settleȱ theȱ injuredȱ worker’sȱ claims.ȱ
(Appellant’sȱBr.ȱatȱ27.)ȱWestȱSide’sȱargumentȱthatȱitȱisȱnowȱenȬ
titledȱ toȱ consequentialȱ damagesȱ fromȱ thatȱ claimȱ isȱ withoutȱ
merit.ȱȱ
III.CONCLUSIONȱ
Weȱ mayȱ affirmȱ summaryȱ judgmentȱ onȱ anyȱ basisȱ supȬ
portedȱbyȱtheȱrecord,ȱsoȱlongȱasȱtheȱgroundȱwasȱadequatelyȱ
addressedȱbelow.ȱRSUIȱadvancedȱtwoȱargumentsȱforȱwhyȱitȱ
wasȱentitledȱtoȱsummaryȱjudgmentȱonȱWestȱSide’sȱclaimȱthatȱ
itȱ breachedȱ itsȱ dutyȱ toȱ settleȱ ConAgra’sȱ propertyȬdamageȱ
claim:ȱthatȱtheȱinsuranceȱpolicyȱdoesȱnotȱcoverȱtheȱclaimȱand,ȱ
inȱ theȱ alternative,ȱ thatȱ Westȱ Sideȱ can’tȱ proveȱ thatȱ RSUIȱ
breachedȱitsȱdutyȱtoȱsettleȱevenȱifȱtheȱpolicyȱcoversȱtheȱclaim.ȱ
Summaryȱjudgmentȱwasȱappropriateȱonȱtheȱfirstȱground,ȱsoȱ
weȱneedȱnotȱreachȱtheȱmeritsȱofȱtheȱsecond.ȱȱ
AFFIRMED.ȱ

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