IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

NATIONAL LIABILITY & FIRE ) 

INSURANCE CO., ) 

 ) 

 Plaintiff, ) 

 ) 

vs. ) Case No. 20 C 3767

 ) 

LAD LOGISTICS, INC., ZHEN ) 

FENG LIN, and LI CHEN, ) 

 ) 

 Defendants. ) 

MEMORANDUM OPINION AND ORDER

MATTHEW F. KENNELLY, District Judge:

National Liability and Fire Insurance Co. (National Liability) has filed suit against 

Zhen Feng Lin and his wife, Li Chen,1 seeking a declaratory judgment regarding the 

extent of its liability to the couple under a liability insurance policy that National Liability 

issued to Lin's employer LAD Logistics, Inc. (LAD). Lin and Chen's claim relates to a 

May 2017 traffic collision in which Lin was seriously injured while driving a truck owned 

by his other employer, Win Win Seafood Wholesale, LLC (Win Seafood). Lin and Chen 

sued Katherine Chickey—the underinsured non-party who was legally responsible for 

the collision—in state court and obtained a $100,000 settlement from Chickey's insurer. 

Lin also made a workers' compensation claim against Win Seafood, on which he 

obtained a $301,259.90 settlement. Finally, Lin and Chen asserted a claim for 

underinsured motorist coverage (UIM) under an insurance policy issued by Win

1 Defendants' counsel refers to the defendants as Lin and Chen, so the Court will do the 

same.

Case: 1:20-cv-03767 Document #: 138 Filed: 01/03/23 Page 1 of 12 PageID #:6026
2

Seafood's insurer, Hartford Accident and Indemnity Co, for which they received 

$672,060.82. 

The claim Lin and Chen assert under the National Liability policy is similar to their

claim under the Hartford Accident policy in that it is based on the UIM coverage

provision of LAD's policy with National Liability. National Liability alleges that the policy 

does not afford coverage to Lin and Chen for their injuries resulting from the collision. 

Lin and Chen have asserted a counterclaim, two counts of which survived National 

Liability's motion to dismiss. In count 2, a breach of contract claim, Lin and Chen seek 

to recover $750,000, the limit of coverage under the UIM coverage term of the 

insurance policy; they allege that National Liability has failed to pay despite the fact that 

it is liable. Count 3 of Lin and Chen's counterclaim is a claim under 215 ILCS 5/155 for 

vexatious refusal to pay or vexatious delay in paying. 

National Liability has moved for this Court to enter summary judgment in its favor 

on count 1 of its complaint and on counts 2 and 3 of Lin and Chen's counterclaim. Lin 

and Chen have filed a cross motion for summary judgment on counts 2 and 3 of their 

counterclaim. For the reasons set forth below, the Court grants National Liability's 

motion for summary judgment and denies Lin and Chen's motion. 

Background

In May 2017, Lin worked as a truck driver for two food retailers, Win Seafood and 

LAD. Both companies operate the trucking aspect of their businesses out of the same 

location, 7131 W. 61st Street, Chicago. At the time of the accident, Lin was driving a

truck from his final delivery to a restaurant in Fort Wayne, Indiana and returning to 7131 

W. 61st Street. It is undisputed that the truck Lin was driving was a 2011 Hino truck 

Case: 1:20-cv-03767 Document #: 138 Filed: 01/03/23 Page 2 of 12 PageID #:6027
3

(VIN No. 5PVNJ8JT7B4S53094) co-owned by Win Seafood and its owner, Gordon 

Zheng, and insured by Hartford Accident. The parties' dispute concerns whether the 

Win Seafood truck is a "covered auto" under LAD's policy with National Liability and 

whether Lin can qualify as "an insured" under the UIM coverage portion of that policy. 

The UIM coverage provided by National Liability's insurance policy is attached to 

the policy as an "endorsement." The limit of that coverage is $750,000 per accident. 

See Pl.'s Ex. A, (insurance policy), Form HA 00 25 06 15 at 4. The UIM Endorsement 

provides coverage only for bodily injuries sustained by an "insured" caused by the 

owner or driver of an underinsured motor vehicle. Because LAD is a corporation, only 

the following individuals qualify as an "insured":

a. Anyone "occupying" a covered "auto" or a temporary substitute for a 

covered "auto." The covered "auto" must be out of service because of 

its breakdown, repair, servicing, "loss" or destruction.

b. Anyone else "occupying" an "auto" [LAD] do[es] not own who is an 

"insured" for Covered Autos Liability Coverage under the Coverage 

Form, but only at times when that person is an "insured" for Covered 

Autos Liability Coverage under the Coverage Form.

c. Anyone for damages he or she is entitled to recover because of "bodily 

injury" sustained by another "insured."

Id. at 50-51. Subsection (c) is inapplicable here, and whether Lin qualifies as an 

insured under subsection (a) is disputed because National contends that the Win 

Seafood was not a temporary substitute auto for one of its covered autos. 

Regarding subsection (b), persons who qualify as an "insured" for Covered Autos 

Liability Coverage include LAD "for any covered 'auto'" or '[a]nyone else while using with 

[LAD's] permission a covered 'auto'" [LAD] owns, hires, or borrows." Autos that are 

deemed "covered 'autos'" under the policy's Liability Coverage include: (1) autos that 

Case: 1:20-cv-03767 Document #: 138 Filed: 01/03/23 Page 3 of 12 PageID #:6028
4

are listed on the Schedule of Covered Autos; (2) an auto that LAD acquires after the 

policy begins, but only if (i) National Liability already covers all autos owned by LAD or t 

replaces an auto LAD previously owned that had that coverage; and (ii) LAD tells 

National within 30 days after it acquires the auto that it wants National to cover it; and 

(3) any auto that is not owned by LAD "while used with the permission of its owner as a 

temporary substitute for a covered 'auto' [LAD] owns that is out of service . . . ." Id. at 

37.

Because it is undisputed that the truck here was not listed on the Schedule of 

Covered Autos and was not newly acquired by LAD after the policy period started, the 

only relevant provision under which the truck would be covered is section C.3, which 

covers temporary substitute autos. Thus, a showing that the Win Seafood truck was 

being used as a temporary substitute auto for a covered, out-of-service LAD truck is the 

only avenue that would allow Lin and Chen to be considered covered—whether as

"insureds" or as "insureds" operating a "covered auto." 

Lin and Chen contend that at the time of the accident, Lin was making deliveries 

for, and therefore working on behalf of, both Win Seafood and LAD even though the 

truck was a Win Seafood truck. Lin contends that he was using a Win Seafood truck as 

a substitute for LAD deliveries because at least one of LAD's trucks was out of service 

and that it was common for the two companies to use their trucks interchangeably. 

National Liability disputes this and maintains that LAD had nothing to do with the 

accident, the truck, or the deliveries being made on that day. It has offered evidence 

that on May 24, 2017, Lin was driving only on behalf of Win Seafood, in a Win Seafood 

truck, making deliveries of exclusively Win Seafood products, and that he was not paid 

Case: 1:20-cv-03767 Document #: 138 Filed: 01/03/23 Page 4 of 12 PageID #:6029
5

for any work done on behalf of LAD for that day. The parties also dispute and have 

provided contrary evidence for Lin and Chen's contention that, in keeping with the 

alleged practice, the truck was being used as a temporary substitute for a covered LAD 

vehicle that was out of service. 

Discussion

Summary judgment is appropriate if there is no genuine dispute of material fact 

and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a); 

Martinsville Corral, Inc. v. Soc'y Ins., 910 F.3d 996, 998 (7th Cir. 2018). The Court 

views the evidence and draws all reasonable inferences in the nonmoving party's favor. 

Cervantes v. Ardagh Grp., 914 F.3d 560, 564 (7th Cir. 2019). If the nonmoving party

fails to establish the existence of an element essential to its case on which it would bear 

the burden of proof at trial, summary judgment must be granted to the moving party. Id.

The primary issues on the parties' cross motions for summary judgment involve 

the interpretation of the terms of an insurance policy. Construction of an insurance 

policy is typically a question of law appropriately decided on summary judgment. 

Twenhafel v. State Auto Prop. & Cas. Ins. Co., 581 F.3d 625, 628 (7th Cir. 2009).

An insurance policy is a contract, and the rules governing interpretation of 

contracts govern the interpretation of insurance policies. Clarendon Nat'l Ins. Co. v. 

Medina, 645 F.3d 928, 933 (7th Cir. 2011). In particular, if the terms of an insurance 

policy are clear and unambiguous, a court gives those terms their plain meaning and 

applies the policy as it is written. Berrey v. Travelers Indem. Co. of Am., 770 F.3d 591, 

595 (7th Cir. 2014); Medina, 645 F.3d at 933. If, on the other hand, a policy term that 

limits an insurer's liability is ambiguous—in other words, susceptible of more than one 

Case: 1:20-cv-03767 Document #: 138 Filed: 01/03/23 Page 5 of 12 PageID #:6030
6

reasonable interpretation—the term is liberally construed in favor of coverage. Medina, 

645 F.3d at 933. 

1. Declaratory judgment claim

a. Policy terms

Lin and Chen contend that they qualify as insureds under the policy, which in the 

case of a corporate insured like LAD defines covered "insureds" as including anyone 

occupying a covered auto owned by LAD or a temporary substitute or a replacement for 

a covered auto. Lin and Chen further contend that National Liability cannot show that 

Lin was not occupying a temporary substitute for one of LAD's covered autos. But it is 

well settled that the insured has the burden of proving that a claim falls within the 

coverage of a policy. Travelers Personal Ins. Co. v. Edwards, 2016 IL 141595, ¶ 22, 48 

N.E.3d 298, 303; see also Sherrod v. Esurance Ins. Servs., Inc., 2016 IL 150083, ¶ 15, 

65 N.E.3d 471, 475. Lin and Chen have erroneously attempted to shift the burden to 

National Liability to prove a negative.

Lin and Chen contend that the truck driven by Lin must have been a temporary 

substitute because LAD "did not know which trucks were out of service" in May of 2017 

and "no records existed." Dkt. 120 at 8. First, it's inaccurate to say that LAD has no 

knowledge or records about which of its vehicles was out of service at the time, or that 

any lack of documentation would inevitably prove that the Win Seafood truck was a 

substitute. National Liability has offered evidence in the form of auto shop receipts and 

admissions that show: (1) which vehicles were out of service from March 1, 2017 to May 

31, 2017; and (2) that any of the LAD trucks that needed service received that service 

prior to May 24, 2017. National Liability also offered deposition testimony and 

Case: 1:20-cv-03767 Document #: 138 Filed: 01/03/23 Page 6 of 12 PageID #:6031
7

admissions to the effect that the truck was not a substitute for an out-of-service LAD 

truck because whenever one of its trucks was out of service, LAD only used trucks 

rented from national rental companies, not spare Win Seafood trucks. 

Second, even if National Liability has offered no records relating to LAD's out-ofservice vehicles, that would not be dispositive. As indicated, it is Lin and Chen's burden 

to offer evidence that would permit a reasonable factfinder to determine that there was 

coverage. Trade Fin. Partners, LLC v. AAR Corp., 573 F.3d 401, 407 (7th Cir. 2009)

("the nonmoving party must point to specific facts showing that there is a genuine issue 

for trial; inferences relying on mere speculation or conjecture will not suffice."). As the 

parties with the burden of persuasion on coverage, Lin and Chen cannot merely point to 

the absence of evidence; they have to offer evidence that would permit a finding that a 

particular auto on the policy was out of service on May 24, 2017 and that LAD was 

using the Win Seafood truck as a temporary substitute for that covered auto. See State 

Farm Mut. Auto. Ins. Co. v. Osborne, 2020 IL App (5th) 190060, ¶ 31, 148 N.E.3d 84, 

92 (absent evidence that a covered vehicle is "out of service," the insurer is not 

obligated to provide coverage because it would be assuming the risk of two vehicles for 

one premium). Other temporary substitute cases have held that the insured was 

required to offer specific evidence that the covered vehicle was actually withdrawn from 

any use, not just that it was "out of service." Id. ¶ 32-35, 148 N.E.3d at 92; see also, 

Prudence Mut. Cas. Co. v. Sturms, 37 Ill. App. 2d 304, 307, 185 N.E.2d 366, 366

(1962); Atkinson v. State Farm Mut. Auto. Ins. Co., 18 Ohio App. 3d 59, 480 N.E.2d 

819, 821 (1984); Erickson v. Genisot, 322 Mich. 303, 353, 33 N.W.2d 803, 803 (1948). 

Lin and Chen have failed to offer evidence that would permit a reasonable 

Case: 1:20-cv-03767 Document #: 138 Filed: 01/03/23 Page 7 of 12 PageID #:6032
8

factfinder to determine that the Win Seafood truck was being used as a temporary 

substitute for a covered LAD truck, let alone that the LAD truck supposedly being 

substituted was actually withdrawn from use. Moreover, the unambiguous language of 

National Liability's policy indicates an intent to extend coverage in this situation only to 

an LAD covered vehicle or a temporary substitute, not to both at the same time. 

Because Lin and Chen have not offered evidence that indicates the existence of 

genuine factual dispute regarding whether the truck Lin was driving was, at the time, a 

substitute for a covered LAD vehicle within the meaning of the National Liability policy, 

they have not met their burden for purposes of summary judgment. 

Lin and Chin also contend that "coverage would also exist if Lin was driving a 

'borrowed' auto." Dkt. 118 at 7. But National Liability is correct that the operative 

clause of the policy states that an "insured" includes "[a]nyone else while using with 

[LAD's] permission a covered 'auto' [LAD] owns, hires, or borrows." Pl.'s Ex. A at 37

(emphasis added). Borrowing of the Win Seafood truck is an avenue to coverage only if 

that truck itself is covered, which it was not. 

Finally, Lin and Chen contend that Lin qualifies as an insured under the policy 

because he was listed as a driver on the policy. They do not, however, cite to any page 

or provision in the policy—presumably because Lin's name does not appear anywhere 

in the policy. Instead, they cite to portions of deposition testimony by the following three 

persons: National Liability's claim examiner, Kelsey Downes, Pl.'s Ex. B, Downes Dep, 

p. 68:5-17; National Liability's underwriter, Josh Stubbendick, Pl.'s Ex. C, Stubbendick 

Dep, p. 11:7-12:21; and Ming Ngai, the person responsible for obtaining insurance for 

LAD, Pl.'s Ex. D, Ngai Dep, p. 77:5-22. But the cited testimony does not support Lin 

Case: 1:20-cv-03767 Document #: 138 Filed: 01/03/23 Page 8 of 12 PageID #:6033
9

and Chen's contention. Downes testified that her understanding was that Lin was a 

driver for LAD and was not driving a covered auto. Stubbendick and Ngai's testimony 

indicates only that Lin's name was provided on a list of drivers submitted in its 

application for insurance. In other words, his name was included for underwriting 

purposes, which does not make him a named insured under the policy. And even if Lin

is listed somewhere in the policy itself, the Court finds the caselaw cited in National 

Liability's brief distinguishing a listed driver from an "insured" persuasive. Dkt. 128 at 5-

6. For these reasons, Lin does not fall within the policy's definition of an insured. 

In sum, the Court concludes that Lin and Chen are not entitled to coverage under

LAD's National Liability policy because Lin does not qualify as an insured and was not 

occupying a covered auto at the time of the accident. 

b. Anti-stacking and setoff provisions

Because the Court finds that Lin and Chen are not entitled to UIM

coverage under LAD's policy with National Liability, it need not address the 

parties' arguments regarding the policy's anti-stacking and set off provisions. 

c. Elliot Flood's opinion

National Liability asks the Court to strike all of Lin and Chen's statements of fact2

that rely on the opinions of their insurance expert, Elliot Flood, on the ground that they 

amount to impermissible legal conclusions that are outcome-determinative. The Court 

need not address this motion because even after considering the portions of Flood's 

opinion at issue, the Court finds that National Liability is entitled to summary judgment. 

As previously discussed, the primary issues on the parties' cross motions for summary 

2 Dkt. 117, ¶¶ 4, 31-34, 36-38, 40, and Dkt. 121, ¶¶ 13, 27-30, 33-34.

Case: 1:20-cv-03767 Document #: 138 Filed: 01/03/23 Page 9 of 12 PageID #:6034
10

judgment involve the interpretation of the terms of an insurance policy, which is a 

question of law. Twenhafel, 581 F.3d at 628. The rules governing interpretation of 

insurance policies are well settled, and there are no ambiguities in this policy for Flood 

to opine about. In short, his opinions are not probative on the legal questions at hand. 

Thus, even if the Court were to deny the National Liability's motion to strike Flood's 

opinions and take them into consideration, National Liability still would be entitled to 

summary judgment. National Liability's motion to strike is therefore denied as moot. 

2. Section 155 claim

Lin and Chen contend that National Liability denied their claim on the policy 

without conducting a thorough investigation, in violation of section 155 of the Illinois 

Insurance Code. Section 155 states in relevant part:

In any action by or against a company wherein there is in issue [1] the 

liability of a company under a policy or policies of insurance or [2] the 

amount of the loss payable thereunder, or [3] for an unreasonable delay in 

settling a claim, and it appears to the court that such action or delay is 

vexatious and unreasonable, the court may allow as part of the taxable 

costs in the action reasonable attorney fees [and] other costs.

215 Ill. Comp. Stat. 5/155 (2020). An insurer's conduct is not vexatious and

unreasonable if: (1) there is a bona fide dispute concerning the scope and application 

of insurance coverage, Green v. Int'l Ins. Co., 238 Ill. App. 3d 929, 935, 605 N.E.2d 

1125, 1129 (1992); (2) the insurer asserts a legitimate policy defense, Cummings 

Foods, Inc. v. Great Central Ins. Co., 108 Ill. App. 3d 250, 259, 439 N.E.2d 37, 44 

(1982); (3) the claim presents a genuine legal or factual issue regarding coverage, 

Lazzara v. Esser, 622 F. Supp. 382, 386 (N.D. Ill. 1985); or (4) the insurer takes a 

reasonable legal position on an unsettled issue of law. Martz v. Union Labor Life Ins. 

Co., 573 F. Supp. 580, 586 (N.D. Ill. 1983), rev'd on other grounds, 757 F.2d 135 

Case: 1:20-cv-03767 Document #: 138 Filed: 01/03/23 Page 10 of 12 PageID #:6035
11

(1985). See also, Citizens First Nat. Bank of Princeton v. Cincinnati Ins. Co., 200 F.3d 

1102, 1110 (7th Cir. 2000). 

National Liability's conduct vis-à-vis Lin and Chen's claim was neither vexatious 

nor unreasonable. Lin and Chen make several contentions regarding the insufficiency 

of claim examiner Downes's investigation, including evidence they contend Downes 

purposely overlooked or steps they think she should have taken. For example, Lin and 

Chen contend that Downes never made an effort to speak to anyone at LAD despite 

reviewing the pleadings in the Hartford matter that suggest Lin may have been working 

for LAD on the day of the accident. They also contend that Downes had a file in her 

possession from BerkleyNet, LAD's worker's compensation provider, that contained 

additional information suggesting that Lin was working for LAD when the accident 

occurred. National Liability disputes both points and contends that Downes did make 

several attempts to contact LAD. National Liability also correctly points out that 

assuming Lin was working within the scope of his employment with LAD at the time of 

the accident, that is not determinative of coverage because he was not occupying a 

covered auto or a temporary substitute for a covered auto, nor did he qualify as an 

insured. 

Even if Lin and Chen are correct about National Liability's investigation, these 

shortcomings would not amount to vexatious or unreasonable action that would render 

National Liability liable under section 155. As addressed earlier, National Liability 

genuinely disputed coverage in this matter. Because of this bona fide dispute, National 

Liability asserted a legitimate defense to coverage, which the Court has now resolved in 

the insurer's favor. In addition, National Liability began its investigation promptly upon 

Case: 1:20-cv-03767 Document #: 138 Filed: 01/03/23 Page 11 of 12 PageID #:6036
12

being notified of the claim approximately three years after the accident occurred. For 

these reasons, as a matter of law, National Liability's conduct was neither vexatious nor 

unreasonable. 

Conclusion

For the reasons stated above, the Court grants plaintiff's motion for summary 

judgment [103] and denies the defendants' cross motion [122] and concludes that 

neither Lin nor Chen are entitled to UIM coverage under LAD's policy with National 

Liability. The Clerk is directed to enter judgment in favor of plaintiff National Liability & 

Fire Insurance Company and against defendants LAD Logistics, Inc., Zhen Feng Lin, 

and Li Chen on all claims and counterclaims and declaring that there is no coverage 

under the National Liability insurance policy issued to LAD Logistics for the May 2017 

collision involving Zhen Feng Lin.

Date: January 3, 2023

________________________________

MATTHEW F. KENNELLY

 United States District Judge

Case: 1:20-cv-03767 Document #: 138 Filed: 01/03/23 Page 12 of 12 PageID #:6037