damage losses totaling around $117,000. Ja | 54.
J.L. French argues that it is entitled to coverage for losses resulting from the physical
damage to die #19 under the policy’s “time element” provision, which states:
This policy insures TIME ELEMENT loss, as provided in the TIME ELEMENT
COVERAGES, directly resulting from physical loss or damage of the type insured
by this policy:

1) to property described elsewhere in this Policy and not otherwise excluded by
this Policy or otherwise limited in the TIME ELEMENT COVERAGES below;

2) used by the Insured, or for which the Insured has contracted use;

3) located at an Insured Location; and

4) during Periods of Liability described in this section.
Policy at 29. The “time element” provision covers lost income and expenses incurred due to
interruption of production or operation, Id. at 29-30.

There is a particularized exclusion of coverage regarding time element loss, which states
that

[t]his Policy does not insure against
Any loss during any idle period, including but not limited to when production,
operation, service or delivery or receipt of goods would cease, or would not have

taken place or would have been prevented due to:

1) physical loss or damage not insured by this Policy on or off of the Insured
Location.

2) planned or rescheduled shutdown.
3) strikes or other work stoppage.
4) any other reason other than physical loss or damage insured by this Policy.

Td, at 43,


this die. Jd. 4 42-43, 23.

J.L, French had an insurance policy issued by Factory Mutual Insurance Company. J.L.
French made a claim on the policy, but Factory Mutual declined coverage based on an exclusion
for losses resulting from contamination. J.L. French filed suit in state court, and Factory Mutual
removed the case to federal court based on diversity of citizenship. In an earlier ruling, the Court
held that the presence of human remains constituted contamination under the insurance policy
and that losses resulting from contamination were not covered. The Court therefore granted
summary judgment to Factory Mutual to that extent. iL. French had indicated, in a footnote in its
brief, that it could recover for losses resulting from physical damage to die 19. Because the
parties had not briefed that issue, the Court deferred it for later resolution. Following further
discovery, Factory Mutual moved for summary judgment on the remainder of J.L. French’s
claim.

Discussion

J.L. French’s damage claim includes $506,560 in costs of expediting freight. It claims
that to mitigate its losses, on September 28, it shipped one of the dies that was in maintenance to
its Sheboygan, Wisconsin plant to make up some production. The oil pans made at Sheboygan
were expedited to Glasgow so they could be machined and assembled and shipped to J.L.
French’s customer. Pitf. LR 56.1 Resp. J] 48-49. The damage claim also includes the costs of
expediting freight from Glasgow to Sheboygan ($147,945); the expense of temporary and
overtime labor ($380,220); and a “shutdown charge” imposed by J.L. French’s customer, General
Motors, due to delayed shipments ($132,500). All of these damages are claimed to fall within

the “time element” coverage discussed below. J.L. French's damage claim also includes property


JL. French has provided evidence from which a fact finder reasonably could determine
that absent the physical damage to die 19, the Glasgow plant would have been back at full
production of the 770 oil pan by no later than September 29 or 30. Specifically, it has provided
an affidavit from Daniel Iacconi, the Glasgow plant manager, to the effect that absent the
physical damage, the die would have been cleaned locally, not sent to Dieco, and would have
been back in production within hours after the coroner was finished examining the accident
scene. Iacconi Aff. {9. This evidence would permit a finding that any time element losses that
J.L. French suffered due to the production slowdown following September 29 or 30 was loss
“directly resulting from physical loss or damage of the type insured by the policy” within the
meaning of the time element coverage, and was not loss during an “idle period ... when
production would not have taken place or would have been prevented due to ... [a] reason other
than physical loss or damage insured by [the] Policy.”

Such a finding would suffice to permit coverage even under the construction of the policy
provisions that Factory Mutual urges in its motion for summary judgment. Specifically, Factory
Mutual contends that the idle period provision requires the court “to hypothesize a situation in
which no damage had been suffered by on-premises facilities. If, in that hypothetical situation,
there is a period when (for reasons other than the on-premises damage) goods would not have
been produced ..., then, as to that hypothetically ‘idle’ period there was no liability.” Dfdt.
Summ. Judg. Mem. at 7 (quoting Manufacturers Mut. Fire Ins. Co. v. Royal Indemnity Co., 501
F.2d 299, 301 (9th Cir. 1974)). Under the scenario offered by J.L. French, had there been no
physical damage, the only period during which goods would not have been produced or

production would have been reduced was the period through September 29 or 30, not October 5.


Mizute Ordes Form (0697)

United States District Court, Northern District of Illinois

Name of Assigned Jud; Sitting Judge if Othe1
oor Maghitate Judge Matthew F. Kennelly than Assigued dodge
CASE NUMBER 29479 DATE 12/20/2004
CASE J.L. French Automotive Castings, In vs. Factory Mutual Insurance Co.
TITLE
[In the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented.]
DOCKET ENTRY:
(D oO Filed motion of [ use listing in “Motion” box above.}
(2) QO Brief in support of motion due
3) o Answer brief to motion due. . Reply to answer brief due. .
(4) o Ruling/Hearing on set for at
6) gq Status hearing{held/continued to] [set for/re-set for] on set for at :
(6) Oo Pretrial conference[held/continued to] [set for/re-set for] on set for at :
(7) Oo Trial[set for/re-set for] on at
(8) Qa (Bench/Jury trial] [Hearing] held/continued to at
(9) a This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OOFRCP4(m) (Cl Local Rule 41.1 OOFRCP41(aX(1) CI FRCP41(a}(2).
| [Other docket entry) | Enter MEMORANDUM, OPINION AND ORDER: For the reasons
stated above, the Court denies defendant’s motion for summary judgment [29-1]. The case is set
for a status hearing on 1/4/2005 @ 9:30 a.m. for the purpose of setting a date for trial of any
remaining issues in the case.
(1) ff [For further detail see order attached to the original minute order.)

No notices required, advised in open court.

No notices required.

Notices mailed by judge's staff.
Notified counsel by telephone.
a | Docketing to mail notices.
Mail AO 450 form,

Bente cea
reed) =~:

Copy to judge/magistrate judge.
- 4 8.13
TSA deputy ot DEC 21 hit
initials oe
45 DEER TORE


It is conceivable that some of J.L. French’s losses are attributable entirely to the period,
through September 29 or 30, during which it appears to concede that full production was not
possible due to the need to clean the machines and recharge the central lubrication system. Such
losses are not covered under the “time element” provision, or alternatively would be excluded
under the “idle period” exclusion. But the Court cannot sort that out on the present record, and
determination will have to await trial.

Conclusion

For the reasons stated above, the Court denies defendant’s motion for summary judgment

[docket # 29-1]. The case is set for a status hearing on January 4, 2005 at 9:30 a.m. for the

purpose of setting a date for trial of any remaining issues in the case.

MATTHEW F. KENNELLY |
United States District Judge
Date: December 20, 2004


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION
J.L. FRENCH AUTOMOTIVE )
CASTINGS, INC., )
)
Plaintiff, )
)
vs. ) Case No. 02 C 9479
)
FACTORY MUTUAL INSURANCE CO., )
pocrerea
Defendant. ) ws 41 200h

MEMORANDUM OPINION AND ORDER

MATTHEW F. KENNELLY, District Judge:

J.L. French manufactures automotive parts. In late September 2001, it had in production
at its Glasgow, Kentucky plant fourteen press machines used to die cast parts. Pltf. LR 56.1
Resp. { 7. On September 27, 2001, an employee was accidentally crushed and killed in press
machine 9. Jd. ¢ 8. Machine 9 contained die number 19 (the number was later changed to 24),
which at the time was being used to produce a part called the 770 oil pan. Id. J] 9-12. As of that
date, the 770 oil pan production program included seven dies, five of which were being used in
production and two of which were undergoing standard maintenance. Id. J 13.

The entire Glasgow plant was shut down for a short period following the accident. Jd {
14, Machines 11 through 14 were put back into production in around two hours. Jd. 4 16.
Machines 1 through 10, which all used lubricant from the same common tank, were shut down
for a longer period, due at least in part to the need to dispose of the lubricant, which had been

contaminated with blood and bone particles, and to recharge the tank. /d. {{ 17-18. These

a}


machines were not available to resume production until the afternoon of Friday, September 28.
Jd, 419. Four of the machines were placed back in production that day using spray lubrication
units, an alternate method of lubrication. /d 22. All of the machines, except machine 9, were
back in operation on Sunday, September 30 using the central lubrication system. Jd. Jf 21, 24.

The county coroner released the accident scene ~ machine 9 ~ around 12:00 p.m. on
Saturday, September 29. Jd. 420. J.L. French contends that absent the physical damage that the
accident had caused to die 19, this machine would have been sent out for cleaning locally and
would have been back in production in “hours, not days.” Jd. J] 20, 32. Die 19 was sent out of
state to a company called Dieco for maintenance and, J.L. French says, repair of physical damage
that J.L. French contends was caused by the accident. /d. 730. J.L. French has offered evidence
that its personnel observed physical damage to the die on the morning of Friday, September 28.
Id.

Dieco had possession of die 19 beginning on September 29. d. J 33. It cleaned the die
on October 1, and between October | and 4, the die was disassembled for further cleaning and
evaluation. Id. [ 34,35. After disassembly, the full extent of the physical damage became
known. Jd. 936. The die, renamed die 24, was returned to J.L. French on October 19, Id. $28.

Despite the fact that it did not have die 19 until October 19, J.L. French was back up to
full production of the 770 oil pan by October 5. /d. 29. In this case, J.L. French claims
damages resulting from lost production of the 770 oil pan. /d. ¢ 41. It claims that if die 19 had
been available on and after September 29 at 1:00 p.m. — which J.L. French contends would have
been the case absent the physical damage — it would have had sufficient production to avoid the

losses it claims, because one of the hand spray lubrication units could have been used along with