State Auto Property and Casualty Insurance Co. v. Brumit Services, Inc.

          Argued October 26, 2017

         Appeal from the United States District Court for the Southern District of Illinois. No. 3:15-cv-00956 - Nancy J. Rosenstengel, Judge.

          Before Flaum, Ripple, and Manion, Circuit Judges.

          Manion, Circuit Judge.

         In this insurance dispute, insurer State Auto Property and Casualty Insurance Company seeks a declaratory judgment that it has no duty to defend insured Brumit Services, Inc., because the latter failed to provide prompt notice of an accident that eventually led to a lawsuit. The district court concluded that the insured's 21-month delay in notifying the insurer was reasonable and awarded judgment to the insured. We disagree. Brumit's failure to provide prompt notice of the accident was inexcusable under Illinois law. Therefore, we reverse the judgment of the district court.

         I. Background

         Carl Brumit owns Brumit Services, Inc., a small business that performs residential concrete construction work. The company has two employees and operates out of Brumit's home. On behalf of the company, Brumit purchased a Business Auto Liability insurance policy from State Auto to cover the truck he used for the business. ^[1] Like most auto insurance policies, Brumit's policy provided that State Auto would defend and indemnify Brumit in the event he was sued for an accident causing bodily injury or property damage. However, State Auto had "no duty to provide coverage" unless Brumit complied with his duties under the policy, one of which was that Brumit "must give [State Auto] prompt notice of the 'accident' or Toss.'"

         On September 6, 2013, Brumit was in the parking lot of a Phillips 66 gas station in Columbia, Illinois, with the covered truck. When he backed out of his parking space, he unwittingly struck 68-year-old Del ores Menard with the truck's tailgate. Menard fell and suffered scrape wounds on her elbow and knee. She was treated by an EMT and declined a trip to the hospital, instead choosing to drive herself home. For his part, Brumit was unaware that he had hit Menard until a bystander alerted him as he was driving away. He then came back to the scene, called for an ambulance, and provided the police officer at the scene with a statement. He observed that Menard was sitting down and "may have had a scratch on her knee."

         After everyone parted ways, Brumit thought the incident so minor that he was not required to report it to State Auto. But on June 22, 2015, he was served with a lawsuit in Illinois state court in connection with the accident. Menard alleged in the state court complaint that the accident caused her to "sustain severe, permanent and permanently disabling injury; including injuries to her back and spine and the soft tissue structures thereof." She sought damages in excess of $50, 000. Her husband also sued Brumit, alleging, among other things, loss of consortium.

         The next day, Brumit notified State Auto that he had been sued. State Auto then sought a declaratory judgment in the district court that it had no duty to defend Brumit in the lawsuit because Brumit had breached the policy's notice requirement. The parties filed cross-motions for summary judgment; the district court granted Brumit's motion and denied State Auto's. State Auto Prop. & Cas. Ins. Co. v. Brumit Servs., Inc., 245 F.Supp.3d 1048 (S.D. 111. 2017). The court concluded that Brumit's 21-month delay in notifying State Auto about the accident was reasonable as a matter of law. This appeal followed.

         II. Analysis

         A. Standard of Review and Governing Law

         This case comes to us on cross-motions for summary judgment with no disputed facts, so we review the district court's legal conclusions de novo. "Where facts are not disputed, if a district court grants one party's motion for summary judgment and denies the other party's cross-motion, this court can reverse and award summary judgment to the losing party below." Glass v. Dachel, 2 F.3d 733, 739 (7th Cir. 1993). The parties agree that Illinois law applies. Our job is to apply Illinois law to the undisputed facts of this case.

         B. Overview ...