IN THE UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF ILLINOIS 

EASTERN DIVISION 

LYNN KRUIS, ) 

 ) 

 Plaintiff, ) 

 ) Case No. 12-cv-5675 

 vs. ) 

 ) Judge Manish S. Shah 

TARGET CORPORATION, a foreign ) 

corporation, et al., ) Magistrate Judge Susan E. Cox 

 ) 

Defendants. ) 

TARGET’S REPLY TO HUSSMANN CORPORATION’S RESPONSE 

TO TARGET’S MOTION FOR PARTIAL SUMMARY JUDGMENT 

 NOW COMES Defendant/Cross-Plaintiff, TARGET CORPORATION (hereinafter, 

“Target”), by and through one of its attorneys, Robert M. Burke of Johnson & Bell, Ltd., and for its 

reply to the response of Hussmann Corporation (hereinafter, “Hussmann”) in opposition to 

Target’s motion for partial summary judgment, states the following: 

I. Introduction 

Hussmann entered into a contract with Target wherein it agreed to insure, defend, and 

indemnify Target for, inter alia, any claims or lawsuits arising from the subject matter of the contract. 

The subject matter of the contract was the sale of refrigeration and freezer cases to be used in 

Target’s retail stores. This lawsuit and claim involve the alleged failure of a freezer case which leaked 

water onto the sales floor of the Melrose Park Target store causing Plaintiff to slip and fall and 

sustain injuries. Target has tendered its defense to Hussmann and its insurers; however, they have 

refused to comply with their contractual obligations to defend and indemnify Target. Target has 

incurred damages in fees and costs associated with its defense of this case. Target is, therefore, 

entitled to summary judgment as to Counts VI (indemnity) and VII (breach of contract) of its 

Crossclaim. 
2 

II. Legal Argument 

A. The most recent, controlling authority espoused by the Eighth Circuit 

Court of Appeals mandates that this Court reject Hussmann’s arguments, 

which are based on non-precedential decisions premised on an analysis 

specifically rejected by the Eighth Circuit, and enforce the clear and 

unambiguous indemnity agreement as written. 

Hussmann completely ignores the most recent pronouncement of Minnesota law by the 

Eighth Circuit Court of Appeals regarding indemnity agreements, Harleysville Ins. Co. v. Physical 

Distrib. Servs., 716 F.3d. 451 (8th Cir. 2013)1, and relies predominantly on a non-precedential, 

unreported, District Court opinion to support its contention that the indemnity provision at issue 

here is unenforceable. It is well settled that unreported decisions are not precedential authority. 

United States SEC v. All Know Holdings, Ltd., 949 F. Supp. 2d 814 (N.D. Ill. 2013); Chemetron Corp. v. 

Jones, 72 F.3d 341 (3rd Cir. 1995). To further bolster its argument, Hussmann cites an unpublished 

Minnesota appellate court decision which, by Minnesota statute, also is not precedential. (See Minn. 

Stat. § 480A.08.) Both courts employed an analysis that has been specifically rejected by the Eighth 

Circuit, sitting in Minnesota and applying Minnesota law. Hussmann’s plea that this Court follow 

those non-precedential, unreported decisions, in the face of contrary, binding authority, is 

incompatible with the obligation of District Courts to adhere to the decisions of superior courts. 

In the unreported, non-precedential case of Brown v. Target Corp., the District Court relied on 

the following footnote from Yang v. Voyagaire Houseboats, Inc., 701 N.W.2d 783 (Minn. 2005): 

Strictly construed, the indemnification clauses do not contain language that (1) 

specifically refers to negligence, (2) expressly states that the renter will indemnify 

Voyagaire for Voyagaire’s negligence, or (3) clearly indicates that the renter will 

indemnify Voyagaire for negligence occurring before the renter took possession 

of the houseboat. 

2013 U.S. Dist. LEXIS 151771, *8 (N.D. Ill. Oct. 22, 2013). Based on this footnote, the Court, 

finding that the language in the contract at issue was “very similar to the language the Supreme 

 

1 Harleysville has been cited approvingly five times since its publication and has not been criticized or overturned. 
3 

Court of Minnesota rejected in Yang” and because “nothing in the clause mentions negligence or 

that [third-party defendant] must indemnify Target for Target's own negligence,” held that the 

contract did not clearly and unequivocally require that party to defend and/or indemnify Target for 

Target’s own alleged negligence. Id. at 9. 

 The Eighth Circuit, in an opinion district courts are required to follow, has rejected the same 

analysis employed in Brown. It explicitly rejected the notion that the footnote in Yang could be 

construed to require specific language stating that an indemnitor would indemnify an indemnitee for 

the latter’s own negligence before an indemnity agreement could be found to be enforceable. Noting 

that Yang was decided on public policy grounds, the Eighth Circuit rejected the proposition that the 

footnote somehow required a specific statement that the indemnitor agrees to indemnify the 

indemnitee for its own negligence. Instead, the Court held that normal rules of contractual 

construction applied: 

Harleysville argues Yang renders the indemnification provision in this case 

unenforceable under Minnesota law. Harleysville’s reliance on Yang is 

misplaced. The Minnesota Supreme Court decided Yang on the public policy 

ground that a guest is never liable for an innkeeper’s negligence. The inferences 

Harleysville draws from a footnote in Yang are mistaken. Properly read in context, 

the footnote simply reaffirmed settled Minnesota law that an indemnification 

agreement must be “clear and unequivocal.” In stark contrast to PDSI, the 

indemnitor in Yang was an individual who signed a rental agreement he professedly 

“did not understand.” The corporate indemnitee in Yang sought to hold the 

individual indemnitor liable for the corporate indemnitee’s prior negligence. The 

Yang provision was insufficient to “fairly apprise[ ]” the individual indemnitor of 

potential liability for negligence by the corporation occurring before the agreement 

was signed. By contrast, the parties in this case are sophisticated businesses who 

fully understood the terms of the agreement, and the indemnification provision 

gave PDSI clear notice of an obligation to indemnify Miller for future personal 

injury claims arising from Miller’s negligence. 

Harleysville, 716 F.3d at 457-58 (emphasis added; internal citations omitted). Thus, it was the 

defendant’s status as an innkeeper, not any insufficiency with the indemnity agreement, and the 

difference in the sophistication of the parties, not the failure of the contract to be sufficiently clear, 
4 

that prompted the Minnesota Supreme Court to decline to enforce the indemnity agreement at issue 

in Yang. 

As the Eighth Circuit plainly held, under Minnesota law, notice is the main consideration in 

determining whether an indemnity agreement shall be enforced. Id. at 457. The indemnification 

language must fairly apprise the indemnitor of its obligation to the indemnitee. Id. Where the parties 

are sophisticated businesses who are able to fully understand the terms of the agreement, and the 

agreement gives the indemnitor clear notice of its obligation to indemnify, the agreement will be 

enforced. Id. at 458. “Magic words” stating that the indemnitor will indemnify the indemnitee for its 

own negligence are not required. Unequivocal terms will be enforced as written. Id. at 463. The term 

“any” means just that, and the Court will not “manufacture ambiguity where none exists.” Id. at 458. 

The indemnity agreement the Eighth Circuit found to be enforceable read: 

[PDSI] hereby indemnifies and saves MILLER harmless from any and all 

claims, actions, or causes of action in any way relating to personnel assigned to 

MILLER, including, but not limited to, personal injury, workers 

compensation, third party claims ...

Id. at 455-56 (emphasis added). The indemnity agreement between Target and Hussmann was part 

of a Supplier Qualification Agreement, which provided, in relevant part: 

[Hussmann] shall defend, indemnify and hold harmless Target ... from and 

against any liabilities, losses, claims, suits, damages, costs and expenses 

(including without limitation reasonable attorneys’ fees and expenses) ... 

arising out of or otherwise relating to the subject matter of this Agreement ... 

(Target SOF [Dkt. No. 252] 20-21 (emphasis added).) Neither indemnity agreement contains any 

reference to “negligence” or an obligation to indemnify the indemnitor for its own negligence. The 

Eighth Circuit squarely rejected the argument, espoused here by Hussmann, that such language is a 

prerequisite to the enforceability of an indemnity provision, and no superior court decision has been 

rendered to justify ignoring this application of Minnesota law by the Eighth Circuit. 
5 

 Simply put, the word “any” means any. Id. at 458. The indemnity agreement between Target 

and Hussmann applies to any claims, suits, etc. It cannot be contended that the claims against Target 

in this suit do not fall within the broad penumbra of “liabilities, losses, claims, suits, damages, costs

and expenses” which trigger Hussmann’s duty to indemnify Target. Similarly, the Eighth Circuit held 

that the phrase “arising out of” is the equivalent of “but for” causation. Id. at 459, citing Faber v. 

Roelofs, 250 N.W.2d 817 (Minn. 1977). In other words, there would be no claim but for the subject 

matter of the agreement—the sale of the freezer case to Target, which leaked and allegedly caused 

Plaintiff’s accident. This triggered Hussmann’s duty to indemnify Target and all conditions to apply 

the indemnity obligation between these sophisticated businesses have been satisfied. 

While it is clear that this Court is not bound to follow an unreported District Court decision, 

it is equally clear that this Court is bound to follow a U.S. Circuit Court of Appeals decision, 

especially when that Court sits in Minnesota and applied Minnesota law in an opinion involving the 

issue of indemnification. “In a hierarchical system, decisions of a superior court are authoritative on

inferior courts. Just as the court of appeals must follow decisions of the Supreme Court whether or 

not we agree with them, so district court judges must follow the decisions of this court whether or 

not they agree.” Reiser v. Residential Funding Corp., 380 F.3d 1027, 1029 (7th Cir. 2004 (internal 

citations omitted)). Conclusive deference should be given to a federal appeals court’s interpretation 

of the law of a state within its circuit unless the court overlooked a prior state court decision or the 

decision was superseded by a later pronouncement from the state legislature or a higher court. 

Desiano v. Warner-Lambert & Co., 467 F.3d 85, 89 (2nd Cir. 2006) and Booking v. General Star Mgmt. 

Co., 254 F.3d 414, 421 (2nd Cir. 2001). This is known as the “home circuit” rule, in which even 

federal appellate courts “defer to the local circuit’s view of the law of a state in its jurisdiction when 

that circuit has made a reasoned inquiry into state law, unless we are convinced that the court has 

ignored clear signals emanating from the state courts.” Charter Oil Co. v. American Employers’ Ins. Co., 
6 

69 F.3d 1160, 1164 (D.C. Cir. 1995). See also, 17A-124 Moore's Federal Practice - Civil § 124.22 [4] 

(3rd ed.) (“When a higher federal court has ruled on a particular point of state law, a lower court 

must ordinarily follow that decision in the absence of an intervening authoritative state decision”).

Hussmann’s contention that this Court should adopt and follow the non-precedential 

decision of a District Court sitting in Illinois where the basis for that decision has been specifically 

repudiated by the Eighth Circuit, sitting in Minnesota and applying Minnesota law, must be rejected. 

Moreover, as the Harleysville Court pointed out, U.S. District Courts are not bound by intermediate 

state court decisions, even published ones. Harleysville, 716 F.3d at 457. The unpublished and nonprecedential Minnesota appellate court decision cited by Hussmann dealt with an indemnity 

provision very different from the one at issue here and also was based on that court’s interpretation 

of the same Yang footnote repudiated by the Eighth Circuit. Certainly, two unpublished, nonprecedential decisions do not constitute the clear signals emanating from the state’s highest court 

justifying an application of those cases in the face of a binding, precedential Eighth Circuit decision. 

Hussmann’s argument that the indemnity agreement “links the indemnity to the acts or 

omissions or failures of Hussmann” (Hussmann Rsp., p. 15) is nothing more than an attempt to rewrite the agreement as Hussmann would now like it to read by omitting the very language which 

triggers the indemnity obligation. The clause actually provides that the duty to indemnify Target is 

triggered by claims “arising out of or otherwise relating to the subject matter of the 

Agreement, Supplier’s performance or failure to perform as required by this Agreement, Supplier’s 

acts or omissions, or Supplier’s failure to comply with any of Supplier’s representations or 

warranties[.]” (Target SOF [Dkt. No. 252] 20-21 (emphasis added).) Hussmann wants either to 

change the word “or” to “and” or to have this Court delete the triggering duty to indemnify even 

though Hussmann itself agreed to the broad language requiring it to indemnify Target not only for 

claims based on Hussmann’s fault, but for any claims arising from or related to the contract. It is a well-
7 

settled that when construing a contract, every provision must be given effect and it is presumed that 

each clause is included for a reason. State v. Great N. Ry. Co., 119 N.W. 202 (Minn. 1908). 

Hussmann’s plea that the clause which triggers its duty to defend and indemnify Target be written 

out of the contract is contrary to basic rules of contract construction and simply has no legal basis 

whatsoever. 

As the Harleysville Court explained, three fundamental rules must be followed in construing a 

contract: first, unambiguous words will be given their plain and ordinary meaning; second, the 

contract is read as a whole document; and third, common sense must not be abandoned. 716 F.3d at 

459. The parties agreed to a broad indemnification provision. It applies to any claim arising out of 

the subject matter of the contract, not just claims where Target is not alleged to be at fault. 

Hussmann’s unwarranted and restrictive interpretation of a contractual provision clearly intended to 

provide broad protection is not supported by the plain language of the contract, by the Eighth 

Circuit’s ruling on the interpretation and enforcement of indemnity agreements, or by basic rules of 

contract construction. As the Eighth Circuit and the Supreme Courts of both Illinois and Minnesota 

have held, the Court should not create an ambiguity where none exists. Id. at 458; Grzeszczak v. 

Illinois Farmers Ins. Co., 659 N.E.2d 952, 959 (Ill. 1995); Savela v. City of Duluth, 806 N.W.2d 793, 799 

(Minn. 2011). 

B. Whether Minnesota or Illinois law applies, the result is the same. 

 As Target noted in its memorandum, the contract provides that Minnesota law shall govern 

all matters arising out of or related to the contract. [Dkt. No. 241, p. 7.] Forum selection clauses 

normally are applied, but not always. For instance, a clause making a construction contract subject to 

another state’s laws is not enforceable in Illinois. 815 ILCS 665/10. Target’s brief demonstrated that 

there was no public policy prohibition against enforcing the indemnity provision at issue here and 

that there is no difference between Illinois and Minnesota law on this issue. Hussmann has made no 
8 

showing of any relevant difference. Thus, this Court need not “entangl[e] itself in messy issues of 

conflict of laws” because Illinois and Minnesota law are in accord with respect to the contract issues 

at hand. Barron v. Ford Motor Co. of Canada, 965 F.2d 195, 197 (7th Cir. 1992). 

C. The issue of Hussmann’s duty to indemnify is ripe for ruling. 

Illinois and Minnesota law are again in accord on the issues of when the duty to defend and 

pay defense costs arises and when the duty to pay a judgment or settlement, pursuant to an 

indemnification provision, is triggered. In determining whether a duty to defend exists, the Court 

will compare the allegations of the complaint to the relevant language of the insurance contract. The 

duty to defend is broader than the duty to indemnify for damages. A duty to defend generally covers 

those claims that arguably fall within the relevant language of the insurance contract. Meadowbrook, 

Inc. v. Tower Ins. Co., 559 N.W. 2d 411, 415 (Minn. 1997); Ill. State Bar Ass’n Mut. Ins. Co. v. Cavenagh, 

983 N.E.2d 468 (Ill. App. 2012). Where an underlying action settles before trial, the party seeking 

indemnification need only show it could have been liable at trial, not whether it would have been liable. 

Netherlands Ins. Co. v. Main St. Ingredients, LLC, 745 F.3d 909, 913 (8th Cir. 2014). As in Illinois, the 

obligation to defend is contractual in nature and is determined by the allegations of the complaint 

under Minnesota law. Prahm v. Rupp Constr. Co., 277 N.W.2d 389, 390 (Minn. 1979). If any part of a 

cause of action is arguably within the scope of coverage, the insurer must defend. Prahm, 277 N.W. 

2d at 390; Bedoya v. Illinois Founders Ins. Co., 668 N.E.2d 757 (Ill. App. 1997). Any ambiguity is

resolved in favor of the insured, and the burden is on the insurer to prove that the claim clearly falls 

outside the coverage afforded by the policy. Id. If the claim is not clearly outside coverage, the 

insurer has a duty to defend. Id. 

 The interpretation of an insurance policy and application of the policy to the facts of a case 

are questions of law. Remodeling Dimensions, Inc. v. Integrity Mut. Ins. Co., 819 N.W.2d 602, 610 (Minn. 

2012). Insurance policies are contracts and, absent statutory provisions to the contrary, general 
9 

principles of contract law apply. Id. at 611. Likewise, indemnity agreements are contracts. Minnesota 

and Illinois courts are charged with interpreting contracts in such a way as to give effect to the 

parties’ intent. Residential Funding Co. v. Terrace Mortg. Co., 725 F.2d 910, 916 (8th Cir. 2013) (citing 

Motorsports Racing Plus, Inc. v. Arctic Cat Sales, Inc., 666 N.W.2d 320, 323 (Minn. 2003)); Smith v. West 

Suburban Med. Ctr., 922 N.E. 2d 549 (Ill. App. 2010). This is especially so where the intent of the 

parties is clear and unambiguous. Hanover Ins. Co. v. Smith, 796, 538 N.E.2d 710, 712 (Ill. App. 1989); 

Thommes v. Milwaukee Ins. Co., 641 N.W.2d 877, 882 (Minn. 2002). 

Just as with an insurance policy, whether a duty to defend exists is to be determined by the 

terms of the contract and the allegations contained in the pleadings.2 The Illinois Appellate Court 

explained this rule in McNiff v Millard Maint. Serv. Co., 715 N.E. 2d 247 (Ill. App. 1999), in which the 

Court held that the use of the word “defend” in the indemnity agreement required the indemnitor to 

protect the indemnitee against the allegations of the complaint and that whether such a duty is 

triggered depends solely on the allegations in the complaint Id. at 251. The Court held: 

JMB [Indemnitee] asserts that it is entitled to reimbursement of its 

attorney’s fees and costs based upon the above-quoted contract provision, 

specifically, that portion which states that Millard would “protect, defend, 

*** and hold [JMB] harmless *** from and against any and all claims, 

actions, liabilities, losses, damages, costs and expenses relating to any and 

all claims.” JMB emphasizes the use of the word “defend” in the 

agreement, arguing that Millard’s obligation to defend it from plaintiff’s 

allegations necessarily included providing the legal services necessary to 

rebuff McNiff’s suit. ... We agree that the use of the word “defend” in the 

agreement requires Millard to protect JMB against the allegations of 

plaintiff’s suit relating to Millard’s work. 

 

2

 Hussmann’s contention that the duty to indemnify cannot be determined until the underlying case has been resolved 

(Hussmann Rsp. at p. 8) confuses the duty to defend pursuant to an indemnification agreement with the duty to 

indemnify the indemnitee for damages paid to a third party. The duty to defend is triggered by the allegations of the 

pleadings. The cases relied upon by Hussmann discuss the duty to indemnify an insured for damages assessed against the 

insured, not the duty to indemnify for defense costs and attorneys’ fees. Obviously, the duty to indemnify for damages 

incurred by way of judgment or settlement is not defined or recoverable until the damages have been assessed. Medline 

Indus., Inc. v. Ram Medical, Inc., 892 F. Supp. 2d 957, 964-965 (N.D. Ill. 2012), relied upon by Hussmann, specifically 

provides that “a claim for breach of duty to defend is ripe during the pendency of the underlying suit.” 
10 

Id. at 251. Like the language interpreted by the McNiff Court, the indemnity agreement at issue here 

requires Hussmann to defend, indemnify, and hold harmless Target for, inter alia, claims, suits, costs, 

damages, and expenses, including attorneys’ fees, arising from the contract. The Target/Hussmann 

contract contains an even broader indemnity obligation than did the one in McNiff: 

[Hussmann] shall defend, indemnify and hold harmless Target ... from 

and against any liabilities, losses, claims, suits, damages, costs and 

expenses (including without limitation reasonable attorneys’ fees and 

expenses) ... arising out of or otherwise relating to the subject matter of 

this Agreement ... 

(Target SOF 22, Docket 242-1, p. 14 of 21 (emphasis added).) Very simply, a suit has been filed and 

Target has incurred defense costs and expenses in defending it. The clear and unambiguous language 

in the contract states that the obligation to defend arises when a claim or suit is made or filed, not 

when it has been resolved. Hussmann is required to provide Target with a defense against claims 

and suits, not proven claims or resolved suits. Plaintiff claims that within two months of the installation 

of the Hussmann equipment and the opening of that section of the subject Target store, the 

equipment failed and leaked water onto the floor. (Dkt. No. 155, p. 1325-1326). Plaintiff alleges she 

was caused to slip and fall because water leaked from a broken drain on a Hussmann freezer, caused 

by Hussmann’s negligent manufacture, construction, and installation of the drain on its equipment. 

(Dkt. No. 155, p. 1331-1335). Plaintiff further asserts that Hussmann is strictly liable for her injuries 

due to the defective product it sold to Target. (Dkt. No. 155, p. 1335-1337.) The subject matter of 

the agreement between Target and Hussmann was the sale of the freezer and refrigeration cases that 

are alleged to have caused Plaintiff’s injuries. It is indisputable that Plaintiff’s claim and Target’s 

damages arise out of and are related to the subject of the agreement. Nothing about the contract’s 

indemnity requirement, in light of the allegations of the complaint, is unclear or ambiguous. Thus, 

the duty to defend has been triggered. Hussmann has breached its duty by refusing to defend and 

indemnify Target. Target has incurred damages in that it has had to expend considerable sums of 
11 

money defending itself. While the full amount of Target’s damages may not be determined at this 

time, the fact that damages have been incurred is not subject to dispute. In Smith, the Court 

explained that even though the claim at issue had not yet been resolved, it was the claim itself, not its

ultimate resolution, which triggered the duty to provide a defense. A claim has been made and a 

lawsuit has been filed. Under the clear and unambiguous language of the indemnity agreement, the 

duty to defend has been triggered. The determination of whether Hussmann has a duty to indemnify 

Target for its defense costs and fees is not premature. The ultimate damages have not yet been 

determined, so the ultimate indemnification owed for any settlement or judgment paid cannot 

presently be determined. This does not mean there is no duty to indemnify for the costs and fees 

incurred or that it is premature to make such a determination. “A claim for breach of duty to defend 

is ripe during the pendency of the underlying suit.” Medline Indus., 892 F. Supp. 2d at 964-65. 

 Moreover, the phrase “arising out of” in the contract does not mean it must be proved that 

Hussmann’s conduct proximately caused the damages for which indemnification is sought. To the 

contrary, the decisions discussed at length at pages 11-12 of Target’s memorandum illustrate 

conclusively that if the accident would not have occurred but for the product being used, the duty to 

indemnify exists whether the product was defective or not and whether the freezer sold by 

Hussmann “caused” the incident or not. The fact is that the water was on the floor because of the 

use of the Hussmann cooler, which is sufficient to trigger the indemnity obligation contained in the 

contract. As the Court held in West Am. Ins. Co. v. Bedwell, 715 N.E. 2d 759, 763 (Ill. App. 1999): 

We also disagree with West American’s assertion that the injury was not 

caused by the golf cart and, therefore, it owes no duty to Curtis. The policy 

uses the language “arising out of” when describing its coverage. The phrase 

‘arising out of’ is both broad and vague, and must be liberally construed in 

favor of the insured; accordingly, ‘but for’ causation, not necessarily 

proximate causation, satisfies this language. ‘Arising out of’ has been held to 

mean ‘originating from,’ ‘having its origin in,’ ‘growing out of’ and ‘flowing 

from.’ 
12 

In that case, the golf cart was neither defective nor the cause of the plaintiff’s injury, yet the duty to 

defend was imposed because of the broad meaning attributed to the phrase “arising out of.” 

Similarly, Hussmann’s duty to defend and indemnify Target has been triggered by the agreement 

that Hussmann would defend and indemnify Target if a claim or suit was brought against Target 

“arising out of or otherwise relating to” the subject matter of the agreement—the sale of the 

refrigeration equipment. In both Illinois and Minnesota, “arising out of” has the same meaning in 

indemnity agreements as in insurance policies. Smith, 922 N.E. 2d at 1002; Faber, 250 N.W.2d at 822; 

Harleysville, 716 F.3d. at 459. 

D. Hussmann has failed to provide Target with a defense to this lawsuit and 

by failing to do so has breached the contract. 

Hussmann agreed to obtain an insurance policy naming Target as an additional insured. The 

policy was to provide Target with coverage for third party claims, such as Plaintiff’s claim here, 

whether such claims are brought directly against Target or against Target and Hussmann as codefendants. In addition, the policy was required to cover products and completed operations, as 

involved here.3 The coverage also was required to be primary and to provide for severability of 

interests and to cover claims “arising out of this Agreement.” The actual provision is set out below: 

7.2 Commercial General Liability Insurance Requirements. 

 Supplier’s Commercial General Liability insurance shall designate Target as 

an additional insured by endorsement acceptable to Target. Designation of Target as 

an additional insured shall include as an insured with respect to third party claims or 

actions brought directly against Target or against Target and Supplier as codefendants and arising out of this Agreement. Supplier’s insurance shall include 

products and completed operations liability coverage, contractual liability coverage 

for liabilities assumed by Supplier under this Agreement, and coverage for property 

in the care, custody, or control of Supplier. Supplier’s insurance shall be primary and 

required to respond to and pay prior to any other available coverage of Target. 

Supplier’s insurance also shall provide for severability of interests. 

 

3

 Hussmann contends that punitive damages are not insurable. (Hussmann Rsp. at p. 9.) In fact, both Illinois and 

Minnesota allow a party to obtain insurance for punitive damages if the damages are awarded based on vicarious liability. 

Minn. Stat. § 60A.06; Perl v. St. Paul Fire & Marine Ins. Co., 345 N.W. 2d 209, 216 (Minn. 1984); International Surplus Lines 

Ins. Co. v. Pioneer Life Ins. Co., 568 N.E. 2d 9, 17 (Ill. App. 1990). 
13 

(Target SOF 24 and Ex. A.) As has been set forth in detail above, both Minnesota and Illinois courts 

define the phrase “arising out of” extremely broadly. Again, there would be no claim to defend here 

but for the subject matter of the agreement – the sale of the freezer case to Target, which leaked and 

allegedly caused Plaintiff to slip and fall. If Hussmann had procured the insurance policy required 

under the contract, Target would be afforded a defense under said policy. Target’s tender of defense 

has never been accepted; thus, Hussmann is in breach of its contractual obligation to provide 

coverage to Target for the instant claim, pursuant to both the agreement to insure Target and the 

indemnity agreement. 

Presumably because it is the entity ultimately liable for any damages its insurer must pay on 

Target’s behalf, Hussmann argues, based on the endorsement, that the insurance it procured did not 

afford Target coverage for Plaintiff’s claim. (Hussmann Rsp. at p. 11). While this is not a declaratory 

judgment action to determine whether the policy affords coverage to Target, it is readily apparent 

that Hussmann agreed, through its contract with Target, to procure comprehensive general liability 

insurance naming Target as an additional insured for third party claims “arising out of the 

Agreement,” which includes the instant claim. As set forth above, if an insurance policy would 

afford coverage to an insured under any set of facts consistent with the allegations needed to 

support recovery on any theory raised in the complaint, the insurer cannot simply refuse to defend. 

Prahm, 277 N.W.2d at 390; American Country Ins. Co. v. James McHugh Constr. Co., 801 N.E.2d 1031 (Ill. 

App. 2003). Hussmann self-insured its obligations through a fronting insurance policy (Target SOF 

34) and now refuses to honor its obligation to afford Target a defense for Plaintiff’s claim. 

Hussmann attempts to avoid its duty by again arguing that this Court should ignore basic 

rules of contract construction and re-write its contractual obligation to focus only on the first 

sentence of the insurance provision. It claims that because it obtained a policy with an endorsement 

that limited the coverage afforded to Target to claims “with respect to liability to the extent caused 
14 

by you and arising out of your operations or premises owned by or rented to you,” its contractual 

obligation to insure Target against claims arising out of the Agreement has somehow been negated. 

There is no evidence whatsoever that Target ever approved the endorsement or was even provided a 

copy of it prior to defense counsel obtaining it in this case. 

Moreover, despite Hussmann’s argument to the contrary, the endorsement is certainly broad 

enough that when the pleadings and the endorsement are compared, Target is owed a defense. The 

additional insured endorsement, when compared with the allegations of the complaint, wherein 

Plaintiff alleges a defect in the Hussmann freezers caused her injuries, certainly constitutes liability

caused by Hussmann and certainly arises out of Hussmann’s operations—selling the very equipment 

which purportedly caused Plaintiff to be injured. When the contract is read as a whole document, 

giving meaning to every provision therein, it is clear that the parties intended that Hussmann would 

defend and indemnify Target for claims related to the equipment sold by Hussmann. Both the 

indemnity provisions and the insurance provisions of the contract required Hussmann to provide a 

defense to Target for the instant lawsuit. Hussmann has refused to honor its contractual obligation 

to provide Target with a defense of this action; therefore, it has breached its contractual obligations.

Target has been damaged due to Hussmann’s failure to provide Target with a defense in that 

Target has incurred defense fees and costs which Hussmann agreed to pay through the indemnity 

agreement and through the purchase of an insurance policy affording coverage to Target “with 

respect to third party claims or actions brought directly against Target or against Target and Supplier 

as co-defendants and arising out of this Agreement.” The contract clearly and unambiguously 

required Hussmann to procure an insurance policy naming Target as an additional insured on a 

primary and noncontributory basis. Hussmann has denied that it is obligated to defend Target or to 

indemnify Target for any damages it may become liable to pay as a result of this litigation through 

the fronting insurance policy it procured or through its indemnity obligations. It matters not 
15 

whether the policy is ultimately determined to afford coverage to Target, thus requiring that Target 

be reimbursed for its fees and costs and liability for damages, or whether Hussmann failed to 

procure the broad insurance it agreed to provide. Under either scenario, Target’s fees and expenses 

would have been paid if Hussmann had complied with its contractual obligations. Hussmann 

unquestionably has breached its contractual obligations, thus entitling Target to summary judgment 

as a matter of law as to Count VII of its Crossclaim. 

III. Conclusion 

When the contract is read, as a whole document, giving meaning to each and every phrase 

and word, it is clear that the intent of the parties was that Target would be afforded a defense and 

indemnification by Hussmann and its insurer for any damages assessed against Target. Here, 

Hussmann has self-insured the risks covered by the insurance policy, has acknowledged, through 

ESIS, the tender of defense and request for indemnification (Target SOF 30), and has failed to 

provide a defense as required by applicable law. For the reasons set forth above and in Target’s 

memorandum of law in support of its motion for partial summary judgment, Target is entitled to 

summary judgment as to Counts VI and VII of Target’s Crossclaim. 

WHEREFORE, Defendant/Cross-Plaintiff, TARGET CORPORATION, pursuant to 

Federal Rule of Civil Procedure 56, respectfully prays this honorable Court grant its motion for 

partial summary judgment. 

 Respectfully submitted, 

 JOHNSON & BELL, LTD. 

 By: /s/ Robert M. Burke 

 One of the attorneys for Target Corporation 

Robert M. Burke 

JOHNSON & BELL, LTD. 

33 W. Monroe St., Suite 2700 

Chicago, Illinois 60603 

(312) 372-0770 

burker@jbltd.com 
16 

NOTICE OF FILING AND CERTIFICATE OF SERVICE 

 I hereby certify that on March 6, 2015, I electronically filed the foregoing Target’s Reply to 

Hussmann Corporation’s Response to Target’s Motion for Partial Summary Judgment with 

the Clerk of the United States District Court for the Northern District of Illinois using the 

CM/ECF system and that a copy of said filing was on the same date to be served upon all counsel 

of record by the same CM/ECF system. 

 /s/ Robert M. Burke