Incinia Contracting v. Evanston Insurance Company and Markel Service

Background

Incinia Contracting, Inc. sued Evanston Insurance Company and Markel Service, Inc. over coverage under an insurance policy issued by Evanston. Incinia sought a declaration that Evanston was required to provide coverage to CityMeals on Wheels, Property LLC, and Hollister Construction Service, and alleged that Evanston breached its contract with Incinia by denying that coverage.

Incinia had been hired by Hollister to perform avian removal and asbestos abatement at a warehouse owned by CityMeals. The agreements between Incinia and Hollister required Incinia to obtain insurance naming CityMeals and Hollister as additional insureds and to defend and indemnify them against liability for bodily injury. Incinia purchased a general liability policy from Evanston.

An Incinia employee, Marlon Garcia, was injured by a falling object while performing asbestos removal. Garcia later sued CityMeals and Hollister, and those parties asserted claims against Incinia in the resulting underlying litigation. Travelers Insurance Company tendered the matter to Evanston on behalf of CityMeals and Hollister. A law firm representing Markel Service, which the opinion describes as Evanston’s claims service manager or claims administrator, sent a letter denying coverage for CityMeals.

Motion to Dismiss

The defendants moved to dismiss under Federal Rule of Civil Procedure 12. They argued that Incinia lacked standing, meaning a sufficient personal connection to bring the case; that the policy’s employee-injury exclusion barred coverage; and that the complaint failed to state a legally plausible claim against Markel Service.

Standing

The court rejected the standing argument. It reasoned that Incinia was asserting its own contractual rights against Evanston, not improperly suing on behalf of CityMeals or Hollister. Incinia alleged that Evanston violated the policy by refusing to indemnify those entities and that the alleged breach increased Incinia’s potential liability in the underlying litigation. The court held that these allegations were sufficient for Incinia to have standing at the motion-to-dismiss stage.

Insurance Coverage

The policy excluded coverage for bodily injury to Incinia’s employees. But the policy also contained an exception stating that the exclusion did not apply to liability assumed by the insured under an “insured contract.” The policy defined an insured contract to include an agreement under which the insured assumed another party’s liability for bodily injury.

The defendants argued that this exception applied only to breach-of-contract claims. The court rejected that interpretation. It focused on the policy’s language referring broadly to “liability assumed by the insured” and the Master Agreement’s requirement that Incinia defend, indemnify, and hold harmless CityMeals and Hollister from “any liability” for bodily injury. The court concluded that the policy language did not limit the exception to breach-of-contract liability. The court therefore denied the motion to dismiss Incinia’s claims against Evanston based on the defendants’ coverage arguments.

Markel Service

The court granted the motion to dismiss Markel Service from the action. The complaint did not allege that Markel Service signed the policy, was in a contractual relationship with Evanston, assumed or received an assignment of Evanston’s contractual obligations, participated in the coverage decision, or had authority to reverse it. The court held that the complaint did not state a plausible claim showing why Markel Service could be liable for Evanston’s alleged breach.

Disposition

The court granted the defendants’ motion to dismiss as to the dismissal of Markel Service from the action and denied the motion in all other respects. The court directed the Clerk of Court to terminate the motion docket entry.