National Union argues that the clear and unambiguous language
of Exclusion O applies to American’s claim, denying coverage
because of the Abrams’ lawsuit, which was pending at the time of
American’s application. While American does not dispute that the
language of Exclusion O is clear and unambiguous, it does dispute
the application of that exclusion to its claim. Exclusion Oo
provides that coverage will be denied for “any claim arising out of
any litigation pending and/or prior to November 1, 2001 or any
fact, circumstance or situation alleged in such litigation.”
National Union states that the arbitration between American and
Diamond, and therefore American’s claim, arises out of the Abrams’
lawsuit. American argues that the claim instead arises out of
American’s contractual duties to Diamond, as spelled out in the
1998 Agreement.

American’s claim is precisely the type of claim Exclusion 0
was intended to prevent. For a claim to arise out of another claim
or from a fact, circumstance, or situation, the claim must
originate or come into being from that claim, fact, circumstance,
or situation. Bzack’s Law Dicrionary 108 (6t* ed. 1991). If not for
the lawsuit and subsequent settlement between Diamond and the
Abrams, American’s claim would not exist.

American argues that while the Abrams’ claim and settlement
provides the background or context for the arbitration, the

arbitration and resulting claim with National Union result solely



American, pursuant to the 1998 Agreement. Arbitration between
American and Diamond began on April 23, 2002 and is currently
pending. In July 2002, American demanded coverage from National
Union for any amount it might be forced to pay as a result of the
arbitration with Diamond, pursuant to the 2001 Policy. National
Union refused. American then filed suit seeking a declaratory
judgment that National Union is obligated to defend and indemnify
American in its arbitration with Diamond. National Union moves for
summary judgment, and I Grant that motion.

Summary judgment is appropriate where the record and
affidavits, if any, show that there is no genuine issue of material
fact and that the moving party is entitled to judgment as a matter
of law. Lexington Ins. Co. v. Rugg & Knopp, 165 F.3d 1087, 1090
(7% Cir. 1999); Feo. R. Civ. P. 56(c). I must construe all facts in
the light most favorable to the non-moving party and draw all
reasonable and justifiable inferences in favor of that party.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).
Interpretation of an insurance contract is a matter of law. WNat’l
Wrecking Co. v. St. Paul Surplus Lines Ins. Co., 11 F.3d 685, 687
(7 Cir. 1993). While Illinois law requires that ambiguities be
resolved against the insurer, id., clear and unambiguous contract
terms should be applied as written. United States Fire Ins. Co. v.
Schnackenberg, 429 N.E.2d 1203, 1205 (111. 1981). A “court should

not search for an ambiguity where there is none.” Id.


from American’s contractual duties to Diamond. Those duties would
not have been called into question, however, but for the Abrams’
claim, and the resolution of the adequacy of American’s response
relies heavily on the facts of that claim. See, e.g., Comm. Found.
for Jewish Educ. v. Fed. Ins. Co., No. 98-C7680, 2000 WL 520924, at

*6 (N.D. Ill. 2000). I grant National Union’s motion for summary

judgment.

ENTER ORDER:

Elaine E. Bucklo

United States District Judge
Dated: July QE , 2004


,_ Minute Orde, “70m (06097)

United States District Court, Northern District of Illinois

Name of Assigned Judge Elaine E. Bucklo Sitting Judge if Other
or Magistrate Judge . than Assigned Judge
CASE NUMBER 03 C 7257 DATE 7/28/2004
CASE American Equine Insurance Group vs. National Union
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:

(1) Oo Filed motion of [ use listing in “Motion” box above]

(2) oO Brief in support of motion due

(3) im Answer brief to motion due. Reply to answer brief due

(4) a Ruling/Hearing on set for at

(5) im} Status hearing{held/continued to] [set for/re-set for]on set ffor_— 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

(8) a [Bench/Jury trial] [Hearing] held/continued to at

(9) oO This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]

COFRCP4(m) CLocalRule 41.1 COFRCP41(a)(1) CFRCP41(a)(2).

(io) of [Other docket entry} Enter Memorandum Opinion and Order granting National Union’s motion for
summary judgment. Judgment is therefore entered in favor of National Union Fire Insurance Company
of Pittsburgh and against American Equine Insurance Group and John Hart. The counter claim is
dismissed as moot. Any pending motion in this case is terminated as moot and all schedules including
pretrial conference set for 9/10/04 and trial set for 10/4/04 are also vacated.

(11) (For further detail see order attached to the original minute order.

No notices required, advised in open court.
2
No notices required. umber of natices
o | Notices mailed by judge’s staff,
Notified counsel by telephone.
Docketing to mail notices.
v | Mail AO 450 form,
Copy to judge/magistrate judge. o
date mailed notice
courtroom
MPs deputy’s - ne sagen Mey
initial + it
suas ‘Date/linte’reddived in
central Clerk’s Office tualing deputy iials



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

AMERICAN EQUINE INSURANCE GROUP,
INC., a Delaware corporation,
and JOHN HART, individually,

Plaintiffs,

No. 03 C 7257

. 3
NATIONAL UNION FIRE INSURANCE cA Q
COMPANY OF PITTSBURGH, PA., a € a,
Pennsylvania corporation, ee a

2?
Defendant. eS

MEMORANDUM OPINION AND ORDER

Plaintiffs American Equine Insurance Corp. (“American”) and
John Hart allege that defendants National Union Fire Insurance Co.
(“National Union”) and AIG Technical Services, Inc. (“AIG”)} have
a duty to defend plaintiffs in an ongoing arbitration with another
insurance company. In June 1998, Diamond State Insurance Company
(“Diamond”) and American entered into a Insurance Underwriting and
Claims Management Agreement (“1998 Agreement”), stating that
American would act as Diamond’s claims manager for claims submitted
under Diamond’s animal mortality policies. In August 1999, Diamond
issued an equine mortality policy (“1999 Policy”) to Clem and Dia
Abram for the period starting August 31, 1999 and ending August 31,

2000. The policy provided life insurance in the amount of $24,000

' AIG has since been dismissed as a party. a4


for the Abrams’ horse, Ocean Pacific. On November 5, 1999, Ocean
Pacific died, and the Abrams filed a claim with Diamond under the
1999 Policy. Pursuant to the 1998 Agreement, American undertook
the management of the Abrams’ claim. On September 15, 2000, the
Abrams filed suit against Diamond for not promptly administering
their claim. American, though not named as a defendant by the
Abrams, also handled the litigation on behalf of Diamond.

In 2001, American applied to National Union for an insurance
agents and brokers professional liability policy (“2001 Policy”).
In its application, American disclosed the pending lawsuit by the
Abrams against Diamond, and stated that even a successful effort by
the Abrams would not result in costs to American or National Union.
On November 13, 2001, National Union issued the 2001 Policy to
American for the period starting November 1, 2001 and ending
November 1, 2002. The 2001 Policy included a number of exclusions,
including one (“Exclusion 0”) that stated that National Union would
provide no coverage for

any claim arising out of any litigation pending and/or prior

to November 1, 2001 or any fact, circumstance or situation

alleged in such litigation, and furthermore, this policy does
not apply to any future claim arising out of any of the
foregoing.

In November 2001, Diamond became more involved with the
pending Abrams litigation. On January 4, 2002, at a court-ordered

settlement conference, Diamond agreed to settle the Abrams’ claims

for $1 millon. Diamond then demanded indemnification from