February 17, 2016
from the United States District Court for the Northern
District of Illinois, Eastern Division. No. 14 C 9547 Sharon
Johnson Coleman, Judge.
Wood, Chief Judge, and Bauer and Williams, Circuit Judges.
an insurance coverage dispute. Michael Stampley, a truck
driver, sued Altom Transport, Inc., alleging that Altom had
failed to pay him enough for driving his truck for it. Altom
turned to its insurer, Westchester Fire Insurance Co., for
coverage in the suit. Westchester denied coverage; Altom
handled its own defense; and the parties tried to settle the
case. At that point, counsel for both Stampley and Altom
tried to pull Westchester back into the case, by making
settlement offers within the limits of the Westchester policy
and seeking Westchester's approval. Westchester was
having none of it, however, so Altom sued in state court for
a declaratory judgment establishing that Westchester had a
duty to defend, that it wrongfully had failed to do so, and
that its handling of the matter had been unreasonable and
removed the insurance coverage dispute to federal court. Once
there, it filed a motion to dismiss the coverage dispute for
failure to state a claim. The district court granted that
motion, and we affirm. Stampley's suit arises from his
contract with Altom, and so it falls within a policy
exclusion that Westchester is entitled to invoke.
is an interstate motor carrier that focuses on the hauling of
liquid products throughout North America. It typically hires
independent-contractor drivers to handle its business.
Stampley was one of those drivers. He owned and operated his
own truck and leased his services to Altom.
wake of various disputes, Altom terminated its contract with
Stampley on March 24, 2014. On May 21, Stampley sued Altom,
alleging that Altom had wrongfully withheld payment from him
and other similarly situated owner-operator drivers who
leased their services to Altom. Stampley offered three
theories in support of this claim: (1) that the contract
violated the Department of Transportation's regulations,
49 C.F.R. § 376.12, because it failed to include aspects
of how Stampley's compensation would be calculated; (2)
that Altom breached the contract by failing to pay the
required compensation; and (3) that Altom unjustly enriched
itself by failing to pay Stampley and other drivers 70% of
the gross revenue per shipment, as contractually required.
had purchased an ACE Express Private Company Management
Insurance Policy from Westchester, effective August 3, 2013
through August 3, 2014. When the Stampley litigation came
along, Altom promptly asked Westchester to defend against the
suit and indemnify it pursuant to the policy. Westchester
denied coverage, and so Altom defended itself. On October 14,
2014, Stampley submitted a settlement demand to Altom for
$1.9 million, an amount within the Westchester policy limits.
Altom delivered the demand to Westchester and asked
Westchester to reconsider its denial of coverage. Westchester
was silent. Stampley then withdrew his settlement demand and
replaced it with a higher one, for $2.3 million. Altom again
delivered the demand to Westchester, and Westchester again
did not respond.
point, Altom sued Westchester in state court for a
declaratory judgment. Altom alleged that Westchester had
wrongfully refused to defend it, in violation of § 155
of the Illinois Insurance Code, 215 ILCS 5/155, and that
Westchester was estopped from asserting noncoverage. Altom
also named Stampley as a defendant, because it believed it
was required to name as a defendant any party with a stake in
the insurance policy proceeds, based on M.F.A. Mut. Ins.
Co. v. Cheek, 363 N.E.2d 809, 811 (Ill. 1977).
removed the suit to federal court and moved to dismiss
Altom's complaint for failure to state a claim.
Fed.R.Civ.P. 12(b)(6). Westchester argued that the
policy's plain language excluded coverage for
Stampley's suit because the suit was covered by two
policy exceptions: one for claims about unpaid wages, and the
other for claims based on a contract. The unpaid wages
Insurer shall not be liable for Loss under this Coverage
Section on account of any Claim:
(m) alleging, based upon, arising out of, attributable to,
directly or indirectly resulting from, in consequence of, or
in any way involving:
(i) improper payroll deductions, unpaid wages or other
compensation, misclassification of employee status, or any
violation of any law, rule or regulation, or amendments