Court Opinion

ID: 3001964
Source: CourtListenerOpinion
Date Created: 2015-09-24 20:23:07.217358+00
Date Added: 2024-06-11T12:18:32.060062
License: Public Domain

In the
 United States Court of Appeals
              For the Seventh Circuit
                        ____________

No. 07-3104
LYLE LYERLA, d/b/a WILDEWOOD CONSTRUCTION,
                                              Plaintiff-Appellant,
                               v.

AMCO INSURANCE CO.,
                                            Defendant-Appellee.
                        ____________
           Appeal from the United States District Court
               for the Southern District of Illinois.
            No. 06 cv 679—G. Patrick Murphy, Judge.
                        ____________
      ARGUED APRIL 15, 2008—DECIDED AUGUST 4, 2008
                        ____________

 Before CUDAHY, KANNE and SYKES, Circuit Judges.
  CUDAHY, Circuit Judge. AMCO Insurance Company
(AMCO) issued a commercial general liability (CGL) policy
to Lyle Lyerla, d/b/a Wildewood Construction (Lyerla).
When Lyerla was sued in a dispute arising out of a con-
struction contract, he tendered notice of the suit to AMCO.
AMCO refused to defend Lyerla and after he settled the
underlying lawsuit, Lyerla sued AMCO for breach of
contract. The district court granted summary judgment
for AMCO and this appeal followed. For the reasons
set forth below, we affirm.
2                                                 No. 07-3104

                       I. Background
  In March 2001, Scott Riddlemoser and Kathleen McNulty
(Owners) hired Lyerla to build a residential dwelling
according to particular plans and specifications. The
construction contract required that construction be com-
pleted by July 31, 2001. The contract also gave the Owners
20 days after the house was completed to provide Lyerla
“with a list of any defects, incomplete or unsatisfactory
items (the ‘Punchlist Items’) with respect to Contractor’s
Work.” Lyerla was obligated to cure any Punchlist
Items within 20 days of receiving the list. Lyerla war-
ranted and guaranteed his work and promised to repair
any defects within seven days of receiving notice. In
addition, the contract required Lyerla to pay liquidated
damages if the project was not completed on time—$100
per day for the first 14 days and $150 per day for each day
thereafter.
  On January 24, 2002, the Owners sued Lyerla for breach
of contract, alleging that he had failed to construct the
building pursuant to the agreed-upon plans and specifica-
tions; had failed to complete Punchlist Items within the
time frame provided under the contract; had failed to
build the home in a workmanlike manner; had failed to
correct defects in seven days, as required by the contract;
and had failed to pay liquidated damages. The Owners
sought to recover costs they incurred completing Lyerla’s
work as well as storage fees, finance charges, loss of
work, attorneys’ fees and court costs. On March 15, 2002,
Lyerla tendered notice of the lawsuit to AMCO. AMCO
denied coverage in July 2002. Lyerla settled with the
Owners for $53,000.
  Lyerla subsequently brought this lawsuit against AMCO
in Illinois state court for breach of contract and for violating
No. 07-3104                                              3

the Illinois Insurance Code. AMCO removed the action to
federal court and filed a counterclaim against Lyerla
seeking a declaration that the underlying claim was not
covered by the policy and that AMCO had no duty to
defend or indemnify Lyerla.
   Both parties moved for summary judgment. In April
2007, the district court held a hearing on the motions
and the case was taken under advisement. On May 25,
2007, Lyerla moved to file a supplemental motion for
summary judgment based on a recent decision of the
Illinois Appellate Court, Country Mut. Ins. Co. v. Carr,
867 N.E.2d 1157 (Ill. App. Ct. 2007), and “additional
information about the policy in question and additional
legal authority that has not yet been given to this court.”
The court granted Lyerla’s motion in part, allowing Lyerla
to file a supplemental brief to address recent case law.
When Lyerla filed his supplemental brief, AMCO moved to
strike on the grounds that rather than simply ex-
plaining the relevance of recent case law, Lyerla sought
to relitigate issues and presented new arguments in his
supplemental brief. The district court granted AMCO’s
motion but indicated that it would consider Carr.
  In July 2007, Lyerla moved to amend his complaint
in order to add two counts of breach of fiduciary duty.
The district court denied this motion and granted summary
judgment for AMCO. It concluded that the underlying
complaint did not allege an “occurrence” or “property
damage” as defined by Lyerla’s CGL policy. Lyerla
appeals the district court’s decision. The basis of federal
4                                                     No. 07-3104

jurisdiction is diversity of citizenship.1 The parties agree
that Illinois law governs their dispute.

                          II. Analysis
  We review an entry of summary judgment de novo,
construing all facts and drawing all inferences in the light
most favorable to the non-moving party. Abstract & Title
Guar. Co., Inc. v. Chicago Ins. Co., 489 F.3d 808, 810 (7th
Cir. 2007). “Summary judgment is appropriate where the
evidence before the court indicates that there are no
genuine issues of material fact and the moving party is
entitled to judgment as a matter of law.” Id. The construc-
tion of an insurance policy is a question of law which we
review de novo. Sokol & Co. v. Atl. Mut. Ins. Co., 430 F.3d
417, 420 (7th Cir. 2005). “Unambiguous policy language is
given its ‘plain, ordinary, and popular meaning.’ ” Id.
(citing Outboard Marine Corp. v. Liberty Mut. Ins. Co., 607
N.E.2d 1204, 1212 (Ill. 1992)).
  Illinois insurance law provides that an insured’s duty to
defend is broader than its duty to indemnify. Outboard
Marine Corp., 607 N.E.2d at 1220. An insurer is obligated to
defend its insured if the underlying complaint contains

1
  Lylera is domiciled in Illinois and is an Illinois citizen.
Wildewood Construction is a sole proprietorship operated by
Lyerla and its citizenship for diversity purposes is that of Lyerla.
AMCO is an Iowa corporation with its principal place of
business in Iowa. Lyerla sought to recover $53,000, the amount
of his settlement with the Owners, as well as $50,000 in costs
he incurred defending the lawsuit. Thus, the amount in con-
troversy exceeds the jurisdictional minimum of $75,000.
28 U.S.C. § 1332.
No. 07-3104                                                  5

allegations that potentially fall within the scope of cover-
age. Gen. Agents Ins. Co. of Am., Inc. v. Midwest Sporting
Goods Co., 828 N.E.2d 1092, 1098 (Ill. 2005). In order to
determine whether an insurer has a duty to defend its
insured, we must compare the allegations in the underlying
complaint to the language of the insurance policy. Id. “If
the underlying complaint alleges facts within or potentially
within policy coverage, an insurer is obligated to defend its
insured even if the allegations are groundless, false or
fraudulent.” Id. “An insurer may not justifiably refuse to
defend an action against its insured unless it is clear from
the face of the underlying complaint[ ] that the allegations
fail to state facts which bring the case within, or potentially
within, the policy’s coverage.” United States Fid. & Guar. Co.
v. Wilkin Insulation Co., 578 N.E.2d 926, 930 (Ill. 1991)
(emphasis in original). We begin our examination of
AMCO’s obligations under the CGL policy mindful that
“[t]he underlying complaint[ ] and the insurance polic[y]
must be liberally construed in favor of the insured.” Id.
  The policy that Lyerla purchased from AMCO provides
that AMCO “will pay those sums that the insured becomes
legally obligated to pay as damages because of ‘bodily
injury’ or ‘property damage’ to which this insurance
applies.” The policy :
    applies to “bodily injury” and “property damage” only
    if:
    1) The “bodily injury” or “property damage” is caused
    by an “occurrence” that takes place in the “coverage
    territory”; and
    2) The “bodily injury” or “property damage” occurs
    during the policy period.
6                                                 No. 07-3104

“Occurrence” is defined as “an accident, including continu-
ous or repeated exposure to substantially the same general
harmful conditions.” “Property damage” is defined as:
    a. Physical injury to tangible property, including
       all resulting loss of use of that property. All such
       loss of use shall be deemed to occur at the time
       of the physical injury that caused it; or
    b. Loss of use of tangible property that is not physi-
       cally injured. All such loss of use shall be deemed
       to occur at the time of the “occurrence” that caused
       it.
AMCO’s duty to defend turns on whether the underlying
complaint alleges “property damage” that was caused by
an “occurrence,” that is, an “accident.” If it does, AMCO’s
obligations to Lyerla will be triggered unless a particular
policy exclusion eliminates coverage. See Viking Constr.
Mgmt., Inc. v. Liberty Mut. Ins. Co., 831 N.E.2d 1, 6 (Ill. App.
Ct. 2005).

A. “Property damage” caused by an “occurrence” under
   Illinois law
   Lyerla contends that the district court erred in con-
cluding that the underlying complaint in the Owners’
lawsuit against him did not allege “property damage”
caused by an “occurrence” as defined by Lyerla’s CGL
policy. Although Lyerla’s CGL policy defines an “occur-
rence” as an “accident,” it does not define “accident.”
Illinois courts construing insurance policies have defined
“accident” as “an unforeseen occurrence, usually of an
untoward or disastrous character or an undesigned,
sudden, or unexpected event of an inflictive or unfortunate
No. 07-3104                                                        7

character.” Westfield Nat’l Ins. Co. v. Cont’l Cmty. Bank &
Trust Co., 804 N.E.2d 601, 605 (Ill. App. Ct. 2003) (citing
Aetna Cas. & Sur. Co. v. Freyer, 411 N.E.2d 1157, 1159 (Ill.
App. Ct. 1980)). In cases involving the interpretation of
CGL policies like the one at issue in this case, Illinois
courts have reasoned that damage to a construction
project resulting from construction defects is not an
“accident” or “occurrence” because it represents the
natural and ordinary consequence of faulty construction.2

2
   There is considerable disagreement among the states as to
whether defective work can constitute an “occurrence” under a
standard CGL policy. Some states have concluded that damage
to the work of the insured caused by faulty workmanship is
not fortuitous and therefore is not an “accident” or “occur-
rence.” See, e.g., Auto-Owners Ins. Co. v. Home Pride Cos., 684
N.W.2d 571, 577 (Neb. 2004) (“faulty workmanship, standing
alone, is not covered under a standard CGL policy”); Oak Crest
Constr. Co. v. Austin Mut. Ins. Co., 998 P.2d 1254, 1257-58
(Or. 2000) (no “occurrence” where insured sought cost of
correcting subcontractor’s deficient work); Kvaerner Metals Div.
of Kvaerner U.S., Inc. v. Commercial Union Ins. Co., 908 A.2d 888,
899-900 (Pa. 2006) (no “occurrence” where complaint “avers
only property damage from poor workmanship to the work
product itself”); L-J, Inc. v. Bituminous Fire & Marine Ins. Co., 621
S.E.2d 33, 35-36 (S.C. 2005) (no “occurrence” where only dam-
age alleged was to roads constructed by the insured and
where the damage allegedly resulted from faulty work).
Recently, however, the highest courts of several states have
concluded that faulty workmanship that damages the insured’s
work can constitute an “occurrence.” See, e.g., United States
Fire Ins. Co. v. J.S.U.B., Inc., 979 So. 2d 871, 883-86 (Fla. 2007)
(noting the analytical inconsistency of treating faulty work that
damages third-party property as an “occurrence” but treating
                                                     (continued...)
8                                                   No. 07-3104

  For example, in Monticello Ins. Co. v. Wil-Freds Constr.,
Inc., 661 N.E.2d 451 (Ill. App. Ct. 1996), a contractor that
had entered into an agreement with the City of Naper-
ville to build a municipal building and adjoining park-
ing garage sought coverage under a CGL policy after the
city sued it for breach of contract. The city alleged various
construction defects, including: cracks in the walls of
the garage; leaking in the garage; water damage to the
building and basement; defective doors; and other “miscel-
laneous construction defects.” Id. at 452. The court con-
cluded that the defects “[were] the natural and ordinary
consequences of the improper construction techniques
of Wil-Freds and its subcontractors and, thus, [did] not
constitute an occurrence within the definition in the CGL
policy.” Id. at 456.
  More recently, in Viking Construction Management, Inc., a
school district contracted with Viking to manage the
construction of a school. Portions of a wall collapsed as a
result of inadequate bracing that had been installed by a
subcontractor, causing property damage and injuring a
construction worker. The school district sued Viking for
breach of contract and sought damages that included the
cost of repairing and replacing the damaged portion of
the building. The court concluded that Liberty Mutual

2
  (...continued)
faulty work that damages the insured’s work as foreseeable
and hence, not accidental); Lamar Homes, Inc. v. Mid-Continent
Cas. Co., 242 S.W.3d 1, 9 (Tex. 2007) (same); Am. Family Mut. Ins.
Co. v. Am. Girl, Inc., 673 N.W.2d 65, 70 (Wis. 2004) (damage to
warehouse caused by soil settlement beneath the building and
occurring because of subcontractor’s faulty advice was “prop-
erty damage” resulting from an “occurrence”).
No. 07-3104                                                    9

did not have a duty to defend Viking because “the dam-
ages claimed by [the district] were the natural and ordi-
nary consequences of defective workmanship and, ac-
cordingly, did not constitute an ‘occurrence.’ ” Viking
Constr. Mgmt., 831 N.E.2d at 16; see also Stoneridge Dev. Co.,
Inc. v. Essex Ins. Co., 888 N.E.2d 633, 654 (Ill. App. Ct. 2008)
(cracks that developed in home “were not an unforeseen
occurrence that would qualify as an ‘accident,’ because
they were the natural and ordinary consequences of
defective workmanship”); State Farm Fire & Cas. Co. v.
Tillerson, 777 N.E.2d 986, 991 (Ill. App. Ct. 2002) (“Where
the defect is no more than the natural and ordinary con-
sequences of faulty workmanship, it is not caused by
an accident.”); Indiana Ins. Co. v. Hydra Corp., 615 N.E.2d 70,
73 (Ill. App. Ct. 1993) (no “occurrence” where the
defects in the underlying complaint, “the cracks in the
floor and the loose paint on the exterior of the building[,]
are the natural and ordinary consequences of installing
defective concrete flooring and applying the wrong type
of paint”); Bituminous Cas. Corp. v. Gust K. Newberg Constr.
Co., 578 N.E.2d 1003, 1010 (Ill. App. Ct. 1991) (no “occur-
rence” where underlying complaint alleged faulty air
conditioning system had been installed in state building
because the allegations of extreme “temperatures in the
building are no more than the natural and ordinary
consequences of installing an inadequate HVAC system”).
Precedent thus strongly supports the district court’s
conclusion that the Owners’ allegations of defective
work do not constitute an “accident” or “occurrence.”
   Despite this line of authority, however, there is some
support for the position that negligently performed work
or defective work can give rise to an “occurrence” in
Illinois. In Prisco Serena Sturm Architects, Ltd. v. Liberty Mut.
10                                             No. 07-3104

Ins. Co., 126 F.3d 886 (7th Cir. 1997), we concluded that a
construction manager’s negligent performance of its
work resulted in an “occurrence.” Id. at 891. But that
case relied on the fact that “occurrence” as defined by the
policy included continuous or repeated exposure to
conditions. The insured’s negligence in uncovering
defects in the construction constituted “continuous or
repeated exposure to substantially the same general
harmful conditions,” and thus, an “occurrence.” Id.; see
also Wilkin Insulation Co., 578 N.E.2d at 932 (“the continu-
ous exposure of the buildings and their contents to re-
leased asbestos fibers” constituted an “accident” that
resulted in “property damage”). In Country Mutual Insur-
ance Co. v. Carr, which was the impetus for Lyerla’s sup-
plemental summary judgment memorandum, home-
owners sued a general contractor for allegedly negligently
placing inappropriate backfill around the basement
walls of their home and negligently operating equip-
ment near those walls, resulting in damage to the base-
ment walls and to other parts of the home. 867 N.E.2d at
1159. Country Mutual argued that the underlying com-
plaint against the contractor did not allege an “occurrence”
and the trial court agreed, granting the insurer’s motion
for judgment on the pleadings.
   On appeal, the court acknowledged that a number of
Illinois courts have concluded that the “natural and
ordinary consequences of an act do not constitute an
accident,” but stated that in determining whether an act or
event is an “accident,” “the real question is whether the
person performing the acts leading to the result intended
or expected the result. If the person did not intend or
expect the result, then the result was the product of an
accident.” Id. at 1162 (citing Wilkin Insulation Co., 578
No. 07-3104                                                     11

N.E.2d at 932; Yates v. Bankers Life & Cas. Co., 111
N.E.2d 516, 517-18 (Ill. 1953); Lyons v. State Farm Fire & Cas.
Co., 811 N.E.2d 718, 723 (Ill. App. Ct. 2004)). The court
concluded that the underlying complaint did not allege
“that defendant, his employees or agents, or subcon-
tractors intended or expected, by their use of allegedly
inappropriate backfill material or their allegedly
negligent operation of heavy earthmoving equipment
near the basement walls, that the walls would move or
be damaged.” Id. at 1162-63. Therefore, the complaint
alleged an “accident.”
  Thus, Carr suggests that work that is performed negli-
gently can cause an “occurrence” resulting in “property
damage.”3 Ultimately, however, Carr does not help Lyerla.

3
  AMCO argues that the court’s analysis in Carr has no bearing
on this case because in Carr, the underlying lawsuit was a
negligence action. In this case, as in Wil-Freds and Viking, the
underlying complaint alleges breach of contract. We recog-
nize that Illinois courts have stated that in general, CGL
policies do not provide coverage for breach of contract claims.
See, e.g., Viking Construction, 831 N.E.2d at 9; Hydra Corp., 615
N.E.2d at 73. But, as courts in other jurisdictions have noted,
CGL policies do not distinguish between tort and contract
claims. See, e.g., J.S.U.B., Inc., 979 So. 2d at 884; Am. Girl,
673 N.W.2d at 77 (“ ‘Occurrence’ is not defined by reference to
the legal category of the claim. The term ‘tort’ does not appear
in the CGL policy.”). Although breach of contract actions
may not be covered because the underlying complaint does not
allege “property damage” caused by an “occurrence,” see Hydra
Corp., 615 N.E.2d at 73-75, or because one of the so-called
“business risk” exclusions applies, see Western Cas. & Sur. Co. v.
Brochu, 475 N.E.2d 872, 878 (Ill. 1985), “[t]he factual allegations
                                                     (continued...)
12                                              No. 07-3104

In the present case, the underlying complaint alleges that
Lyerla:
     failed to construct the building and other improve-
     ments pursuant to the plans and specifications at-
     tached to the Construction Contract.
     [F]ailed to Substantially Complete the building and
     other improvements on or before July 31, 2001.
     ****
     failed to complete said Punch List Items as required
     within 20 days.
     ****
     failed to construct the building and other improve-
     ments in a “good workmanship manner.”
     ****
     failed to correct defects within 7 days as required in
     Section 3.04 of the Construction Contract.
The complaint avers that Lyerla’s work did not satisfy his
contractual obligations and does not contain any facts
alleging “property damage” caused by an “occurrence.”
The Owners did not allege a physical injury to tangible
property, since “tangible property suffers a ‘physical’
injury when the property is altered in appearance, shape,
color or in other material dimension.” Travelers Ins. Co. v.
Eljer Mfg., Inc., 757 N.E.2d 481, 496 (Ill. 2001). The com-
plaint alleges nothing of the kind. In Carr, the underlying

3
  (...continued)
of the complaint, rather than the legal theories, determine a
duty to defend.” Lyons, 811 N.E.2d at 722.
No. 07-3104                                                13

complaint alleged that the negligence of the contractor
or his subcontractors resulted in damage to the home-
owners’ basement walls and other parts of their home. As
the court in that case recognized, the homeowners
“allege[d] physical injury to tangible property, their
basement walls.” 867 N.E.2d at 1162. Thus, the under-
lying complaint alleged “property damage” triggering
coverage under the contractor’s CGL policy. Id. In the
present case, the underlying complaint alleges that the
work called for under the contract was performed im-
properly or incompletely; that is, it alleges faulty workman-
ship, not faulty workmanship that damaged property. The
cost of repairing or replacing defective work is not “prop-
erty damage.” See Viking Constr. Mgmt., 831 N.E.2d at 17;
Tillerson, 777 N.E.2d at 991 (no “property damage” where
homeowners sought “either the repair or the replacement
of defective work or the diminishing value of the home”);
Diamond State Ins. Co. v. Chester-Jenson Co., 611 N.E.2d 1083,
1089 (Ill. App. Ct. 1993) (“Mere allegations of repair and
modification without any allegations of physical injury are
insufficient to invoke coverage under the physical injury
prong of the property damage provision.”).
   Lyerla argues that the underlying complaint alleged
“property damage” because the Owners sought to recover
storage fees and liquidated damages. As defined by the
policy, “[p]roperty damage” includes the “[l]oss of use of
tangible property that is not physically injured.” Lyerla
reasons that by attempting to recover storage fees and
liquidated damages, the Owners alleged “loss of use,” and,
therefore, “property damage.” The liquidated damages
do not represent costs incurred by the Owners for loss of
use of tangible property; they are costs imposed on Lyerla
pursuant to the contract for failure to complete the
14                                                   No. 07-3104

project on time. As for the storage fees, even if we con-
strue the Owners’ claim for storage fees as alleging a “loss
of use” of the house, the policy makes clear that a “loss
of use shall be deemed to occur at the time of the ‘occur-
rence’ that caused it.” Lyerla’s failure to complete con-
struction on time is not an “occurrence” within the mean-
ing of the policy.4
  Lyerla alleges that the defects that gave rise to the
Owners’ lawsuit resulted from the faulty work of subcon-
tractors, which he did not foresee. Therefore, he reasons,
the underlying complaint alleges “property damage” to the
completed project caused by an “occurrence.” But whether
Lyerla expected his subcontractors to perform their
work properly is irrelevant where the complaint clearly
does not allege any “property damage.” Finally, in an
attempt to avoid the adverse result dictated by our
analysis of the CGL policy language, Lyerla contends
that AMCO is estopped from raising policy defenses
because it did not defend the suit under a reservation of

4
  Lyerla urges us to find coverage in this case based on the
subcontractor exception to one of the “business risk” exclusions.
Exclusion (l) eliminates coverage for “ ‘[p]roperty damage’ to
‘your work’ arising out of it or any part of it and included in the
‘products-completed operations hazard.’ ” The exclusion “does
not apply if the damaged work or the work out of which the
damage arises was performed on your behalf by a subcontrac-
tor.” The analysis of exclusions and exceptions thereto only
becomes relevant once coverage is established; that is, only if
the underlying complaint alleges “property damage” caused
by an “occurrence.” Because the underlying complaint does
not contain allegations creating coverage, we need not con-
sider an exception that restores coverage.
No. 07-3104                                               15

rights or seek a declaratory judgment prior to his settle-
ment with the Owners. The estoppel doctrine provides
that an insurer who wrongfully denies coverage “is
estopped from raising policy defenses to coverage.”
Employers Ins. of Wausau v. Ehlco Liquidating Trust, 708
N.E.2d 1122, 1133 (Ill. 1999). But the doctrine applies only
if the insurer wrongfully refuses to defend the insured.
    Application of the estoppel doctrine is not appropriate
    if the insurer had no duty to defend, or if the insurer’s
    duty to defend was not properly triggered. These
    circumstances include where the insurer was given
    no opportunity to defend; where there was no insur-
    ance policy in existence; and where, when the policy and
    the complaint are compared, there clearly was no coverage
    or potential for coverage.
Id. at 1135 (emphasis added); see also Gould & Ratner v.
Vigilant Ins. Co., 782 N.E.2d 749, 758 (Ill. App. Ct. 2002)
(same). Because the Owners’ complaint does not contain
allegations that potentially trigger AMCO’s duty to defend,
AMCO is not estopped from raising policy defenses to
coverage.

B. Lyerla’s supplemental memorandum and motion to file
   an amended complaint
  Having concluded our analysis of AMCO’s obligations
under the CGL policy, we turn to Lyerla’s challenges to the
district court’s rulings. Lyerla argues that the court erred
in striking his supplemental memorandum and in refusing
to allow him to amend his complaint. We review these
decisions of the district court for abuse of discretion. See
Cleveland v. Porca Co., 38 F.3d 289, 297 (7th Cir. 1994).
16                                              No. 07-3104

   Southern District of Illinois Local Rule 7.1 provides: “An
adverse party shall have thirty (30) days after the
service . . . of the movant’s motion in which to serve and
file an answering brief. Failure to timely file an answering
brief to a motion may, in the court’s discretion, be con-
sidered an admission of the merits of the motion.” Lyerla
did not file a response to AMCO’s Motion for Summary
Judgment within 30 days. Instead, more than one month
after the district court heard arguments on the parties’
summary judgment motions, Lyerla sought leave to file
a supplemental motion for summary judgment, stating
that “[a] recent decision of the Illinois Appellate Court
(Country Mutual Ins. Co. v. Carr, 2007 WL 899486 (4th Dist.
2007)) prompted a review of the pleadings and legal
authority previously cited to this court.” Lyerla also
represented to the court that “[t]here is additional infor-
mation about the policy in question and additional legal
authority that has not yet been given to this court that
supports summary judgment for plaintiffs in this matter.”
The court granted Lyerla’s motion in part and gave him
leave to file a supplemental brief addressing recent case
law. Lyerla’s supplemental memorandum was twenty
pages long (his motion for summary judgment was just
six pages long) and most of it discussed case law that
was available when Lyerla filed his first summary judg-
ment memorandum. AMCO moved to strike the sup-
plemental memorandum. Although it granted AMCO’s
motion, the court indicated that it would consider Carr
in resolving the coverage dispute. Lyerla argues that this
decision constitutes an abuse of discretion. We disagree.
  AMCO suggests that Lyerla attempted to use the sup-
plemental memorandum to compensate for his failure to
respond to AMCO’s motion for summary judgment, a
plausible interpretation of Lyerla’s actions. As AMCO
No. 07-3104                                                   17

points out, Lyerla’s motion for summary judgment was
much shorter than the supplemental memorandum and
most of it discussed case law that was available when
Lyerla filed his motion for summary judgment. In any
case, whatever Lyerla’s motivation, the supplemental
memorandum reargued issues after the district court
had taken the summary judgment motions under advise-
ment in disregard of the court’s order that Lyerla could
file a supplemental memorandum to address recent case
law. Lyerla points out that he filed a copy of the proposed
supplemental memorandum when he sought leave to
file it, and contends that the court was on notice that the
substance of the memorandum exceeded the single
issue of Carr’s relevance. But the court made clear that
Lyerla was given leave to file a supplemental memoran-
dum to address recent case law. Lyerla had notice of the
scope of the proposed supplemental memorandum.
Even after striking the supplemental memorandum, the
court indicated that it considered the Carr case, the
only case Lyerla cited that had been decided after
Lyerla’s motion for summary judgment was filed. The
court’s decision to strike the memorandum was not an
abuse of discretion.5

5
  Lyerla attempts to rely on Edwards v. Honeywell, Inc., 960 F.2d
673 (7th Cir. 1992), but that case does not support the conclu-
sion that the district court abused its discretion in striking
the supplemental memorandum. In Honeywell, we held that,
where Honeywell filed a supplemental memorandum raising
a new ground in support of its motion for summary judgment,
the plaintiff had 13 days to respond to that new argument be-
fore the court could enter summary judgment on that ground.
                                                  (continued...)
18                                                 No. 07-3104

   Lyerla also challenges the district court’s refusal to allow
him to amend his complaint. A district court’s denial of a
motion for leave to amend a complaint “will be reversed
only if no reasonable person could agree with its decision.”
Porca Co., 38 F.3d at 297 (quoting Lac du Flambeau Band
of Indians v. Stop Treaty Abuse-Wis., Inc., 991 F.2d 1249, 1257
(7th Cir. 1993)). The district court determined that be-
cause AMCO’s duty to defend had never been triggered,
allowing Lyerla to amend his complaint to allege that
AMCO breached its fiduciary duty to him was “pointless.”
  In Illinois, “it is well settled that no fiduciary relationship
exists between an insurer and an insured as a matter
of law.” Martin v. State Farm Mut. Auto. Ins. Co., 808 N.E.2d
47, 51 (Ill. App. Ct. 2004) (citing Nielsen v. United Servs.
Auto. Ass’n, 612 N.E.2d 526, 530 (Ill. App. Ct. 1993)). The
mere fact that Lyerla and AMCO were parties to an
insurance contract is, therefore, “insufficient to support
a finding of a fiduciary relationship.” Id. at 52. Lyerla
argues that Beatty v. Doctors’ Co., 871 N.E.2d 138 (Ill. App.
Ct. 2007) supports his contention that AMCO had a fidu-
ciary duty to him. In Beatty, the court considered the duty
of the insurance company to its insured once the duty to
defend had been triggered. Id. at 145. In this case, AMCO
did not have a duty to defend Lyerla in the underlying
lawsuit. The district court acted within its discretion in

5
  (...continued)
Otherwise the plaintiff would be deprived of the opportunity
to respond to Honeywell’s latest arguments. Id. at 675.
Honeywell’s holding is inapposite to the facts in the present
case. Here, the court did not deprive Lyerla of the opportunity
to respond to AMCO’s arguments in favor of summary judg-
ment.
No. 07-3104                                             19

denying Lyerla’s request to amend his complaint more
than a year after he filed his initial complaint and months
after the court had taken the parties’ summary judg-
ment motions under advisement.

                     III. Conclusion
  For the foregoing reasons, we AFFIRM the district court’s
grant of summary judgment for AMCO.

                   USCA-02-C-0072—8-4-08