Chicago Business Litigation Lawyer Blog
Where an agreement between two corporations specified that the parties were required to obtain subrogation waivers for enumerated insurance policies, and the claim was later made to the insurance company under a non-listed type of policy, the insurance company was entitled to recover the amount paid out under claim from the liable party.
ArcelorMittal leased lift truck tractors from Gallo Equipment Co. under a written contract. The contract was entered into in January 2011. In September 2012, one of the tractors caught fire at one of ArcelorMittal’s steel mills. The tractor was maintained by Arcelor mechanics under the supervision of a Gallo employee, and Arcelor was responsible for the loss. Arcelor offered to compensate Gallo for the loss, but Gallo rejected the offer as too low. Gallo then submitted a claim to its insurer, Travelers Property Casualty Company. Travelers settled the claim for $305,625.
In June 2015, Travelers, as subrogee of Gallo, filed a complaint against Arcelor in the Circuit Court of Cook County for negligence and breach of contract. Travelers later dismissed its negligence claim. Travelers alleged that Arcelor was responsible for any damage to the tractor and that Arcelor was responsible for the cost to replace or repair the tractor. Travelers thus sought recovery for the amount it paid to Gallo.
After discovery, Arcelor moved for summary judgment, arguing that Travelers was barred from asserting its claim because the contract required Gallo to obtain waivers from its insurers for claims arising out of the supply contract. Travelers filed a cross-motion for summary judgment. The circuit court denied Arcelor’s motion and granted Travelers’ motion. Arcelor then appealed.
The appellate panel began by finding that Arcelor’s argument that the contract required Gallo to obtain subrogation waivers for all of its insurance policies was not supported by the plain language of the contract. The panel stated that the contract required Gallo to obtain subrogation waivers only for five named types of insurance listed in the supply agreement and that the inland marine policy under which Gallo submitted a claim to Travelers was not one of the listed insurance types.
The panel, therefore, determined that Travelers, as subrogee, was entitled to recover the amount it paid to Gallo for the damage sustained to the tractor. The panel, therefore, determined that summary judgment for Travelers was appropriate, and affirmed the decision of the circuit court.
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