NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with
Fed. R. App. P. 32.1
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Argued January 8, 2008
Decided July 23, 2008
Before
JOEL M. FLAUM, Circuit Judge
KENNETH F. RIPPLE, Circuit Judge
DANIEL A. MANION, Circuit Judge
No. 03‐2473 Appeal from the United States District
Court for the Northern District of
Miller’s Blasting Service, Inc., an Illinois, Western Division
Illinois corporation, Ronald D. Miller,
and Mildred A. Miller, No. 99 C 50246
Plaintiffs‐Appellants,
v. Philip G. Reinhard, Judge.
Texas AGA, Inc., a foreign corporation,
Jack Zogg, and Legion Insurance
Company,
Defendants‐Appellees.
O R D E R
Miller’s Blasting Service, Inc. (“MBS”) sued Texas AGA, Inc. (“AGA”), Jack Zogg,
an AGA sales representative, and Legion Insurance Company asserting breach of
contract, negligence, and state statutory claims surrounding MBS’s workers’
No. 03‐2473 Page 2
compensation insurance coverage. The district court entered summary judgment in
favor of the defendants. MBS appeals, and we affirm.
I.
Co‐owned by Ronald D. Miller (“Ronald”) and Mildred A. Miller (“Mildred”),
MBS provides drilling services in quarries in Illinois and Wisconsin. Mildred handled
the insurance matters for MBS. On May 4, 1997, when MBS’s insurance company,
Nobel Insurance Company (“Nobel”), informed Mildred that it was no longer going to
perform agency functions for its insureds, Nobel advised Mildred that someone from
Texas AGA, Inc. would be contacting her. On July 8, 1997, AGA agent Jack Zogg met
with Mildred and Ronald for the first time to discuss the possibility of AGA becoming
MBS’s insurance broker. During the course of that meeting, Zogg explained that AGA
could not obtain a workers’ compensation insurance quote without MBS first supplying
AGA certain information, including documented workers’ compensation claim histories
known as “loss runs.” Mildred, in turn, informed Zogg that MBS’s current workers’
compensation policy was scheduled to expire on August 6, 1997.1 Mildred also told
Zogg to “get her insurance,” and Zogg responded that he would “take care of her.”
On three separate dates, July 21, July 24, and August 4, AGA representatives
phoned MBS to request loss runs. Mildred stated that she was working on it and would
provide AGA with loss runs. On August 4, 1997, AGA sent MBS an insurance proposal
package which included various coverage types, but not workers’ compensation, noting
that a quote had not been obtained for this type of insurance. Regarding the absence of
a workers’ compensation quote, AGA explained, “we have not received the workers
[sic] compensation loss runs. If we can be of any assistance here please let us know as
we will pursue this as soon as they are received.” Mildred testified at her deposition
that after receiving this letter she relayed to Zogg and another AGA representative that
she needed assistance in obtaining the loss runs. AGA agreed to assist Mildred, but did
not provide any assurances that it would obtain the loss runs. Mildred testified at her
deposition that she was “just waiting for [AGA] to get [workers’ compensation
insurance]” for MBS and did not continue to call MBS’s prior insurance carrier, despite
1
In fact, MBS’s workers’ compensation policy had already expired on August 2, 1995.
No. 03‐2473 Page 3
knowing that the policy had lapsed.2 Through the efforts of AGA employees, loss runs
were eventually obtained on August 29, 1997, via facsimile time‐stamped 3:05 p.m.,
which were forwarded to Legion Insurance Company on September 2, 1997.3
On September 3, 1997, MBS employee Mark Owens suffered fatal injuries while
on a drilling job. The next day, September 4, 1997, Mildred phoned AGA to inquire
whether AGA had secured workers’ compensation insurance coverage. Zogg informed
her that a quote had just been obtained the day before and that he was forwarding it on
to her for her review. When Mildred inquired about whether the policy could be
backdated, Zogg told her that could not be done. Legion Insurance Company
(“Legion”) issued MBS a workers’ compensation policy on September 4, 1997, and MBS
paid the requisite premium. Initially, Legion listed the coverage dates as September 1,
1997, through September 1, 1998, but later re‐wrote the policy in December 1997 to
reflect a coverage period of September 4, 1997, through September 4, 1998.
In accordance with the Illinois Workers’s Compensation Act, 820 ILCS 305/1 et
seq., MBS paid Mark Owens’s medical and burial expenses and a weekly death benefit
to his widow. MBS filed suit in the Northern District of Illinois against AGA, Zogg, and
Legion with subject matter jurisdiction premised on diversity of citizenship asserting
breach of contract, negligence, and statutory claims. Legion filed a counterclaim for
recision. The district court entered summary judgment in favor of the defendants.
Because this appeal involves only MBS’s claims against AGA and Zogg, we will only
address the district court’s analysis as it relates to these defendants. On the breach of
contract claim, the district court concluded that there was no enforceable contract
between MBS and AGA because they had not entered into an agreement to procure
insurance. Also, even assuming there was a promise to secure insurance, the essential
term for an enforceable agreement of premium amount was absent. The district court
2
Even if Mildred did not know her insurance had lapsed in 1995, she knew it had lapsed
at this point because of her belief that MBS was covered until August 6, 1997.
3
August 29, 1997 was the Friday before Labor Day, a national holiday in the United
States. September 2 in that same year was the Tuesday after Labor Day. See United
States Office of Personnel Management, 1997 Federal Holidays,
http://www.opm.gov/Operating_Status_Schedules/fedhol/1997.asp (last visited May 24,
2008).
No. 03‐2473 Page 4
concluded that MBS’s negligence claim also failed because AGA and Zogg repeatedly
notified MBS that they needed MBS’s loss runs to procure a workers’ compensation
policy, thereby fulfilling whatever duty they had to MBS. Regarding MBS’s claim for
insurance placement liability pursuant to 735 ILCS 5/2‐2201, the district court concluded
that it was a duplicate of MBS’s negligence claim. MBS appeals.
II.
We review a district court’s grant of summary judgment de novo. Vallone v. CNA
Fin. Corp., 375 F.3d 623, 631 (7th Cir. 2004). All reasonable inferences from the evidence
are drawn in the light most favorable to the non‐moving party. Id. We may affirm a
district court’s grant of summary judgment on any ground supported by the record,
even if it is differs from the district court’s reasoning. See Slaney v. The Int’l Amateur
Athletic Fed’n, 244 F.3d 580, 597 (7th Cir. 2001). The parties agree that Illinois law
applies in this diversity action.
On appeal, MBS asserts that the district court erred in granting summary
judgment in favor of AGA and Zogg on both its breach of contract and negligence
claims. MBS addresses these claims in tandem, asserting that their premise is similar.
Specifically, MBS argued “that despite being requested by Miller’s Blasting service,
through Mildred A. Miller, to obtain workers’ compensation insurance for both Illinois
and Wisconsin, Texas AGA and Jack Zogg failed to do so timely, and further failed in
their fiduciary duties to Millers.” For the sake of clarity, we will address MBS’s contract
and negligence claims separately.
Under Illinois law, “[t]o establish a contract to procure insurance, the proposed
insured must allege that one of the parties proposes to be insured, the other party
agrees to insure, and the subject, the period, the amount, and the rate of the insurance
are ascertained or understood and the premium is paid if demanded.” Lake County
Grading Co. of Libertyville, Inc. v. Great Lakes Agency, 589 N.E.2d 1128, 1130 (Ill. App. Ct.
1992). “The essential elements can be established by implication if they are not stated
explicitly.” Id. at 1131; see Scarsdale Villa Assoc. v. Korman Assoc., 533 N.E.2d 81, 83 (Ill.
App. Ct. 1988). An oral contract to insure may be formed even in the absence of
duration and premium based on what had been assigned in prior policies and on
custom and practice. Devers v. Prudential Prop. & Cas. Ins. Co., 408 N.E.2d 462, 464 (Ill.
App. Ct. 1980) (citing Cont’l Ins. Co. v. Roller, 101 Ill. App. 77 (1901)). Further, while price
is an essential term of an insurance contract, “even if the amount of the premium is not
No. 03‐2473 Page 5
fixed, the contract is enforceable if the insured simply agrees to pay the amount to be
charged by the insurer.” Id. at 464‐65.
MBS contends that the district court erred in concluding that there was no
contract because the parties had no agreement on rates or premiums. In support, MBS
asserts that Mildred did not have anyone else searching for workers’ compensation
insurance, that she engaged AGA and Zogg to procure insurance, and that she believed
that she would accept whatever workers’ compensation insurance that AGA procured.
The first two facts do not point to the existence of a premium as required under Illinois
law to establish a contract to procure insurance. The latter fact, however, might be
enough to establish a contract, but MBS cites no evidence that Mildred communicated
her intent to accept whatever insurance AGA obtained at whatever cost. Because there
is no evidence that AGA had knowledge that MBS would accept whatever rate it
quoted, MBS cannot establish a meeting of the minds about premiums, as Illinois law
requires. Moreover, because AGA was working with MBS for the first time in 1997
there was no custom or practice upon which a premium could be inferred. Therefore,
in the absence of an agreement on this essential term, there was no contract to procure
workers’ compensation insurance between AGA and MBS.
Even if MBS and AGA had entered into a contract to procure insurance, MBS’s
claim still fails because it did not supply AGA with loss runs, a condition precedent to
this contractual relationship. “A condition precedent is defined as a condition in which
performance by one party is required before the other party is obligated to perform.”
Midwest Builder Distrib., Inc. v. Lord and Essex, Inc., — N.E.2d —, 2007 WL 3341696 at *18
(Ill. App. Ct. 2007) (citation omitted). At their first meeting, Zogg informed Mildred
that AGA needed MBS’s loss runs before it could provide MBS with a quote for
workers’ compensation insurance. MBS was on notice from the beginning of its
relationship with AGA that in order to secure workers’ compensation insurance it first
needed to provide AGA with loss runs so a quote could be obtained. In addition to the
initial notice, AGA representatives phoned MBS three separate times requesting loss
runs, and still MBS did not provide them to AGA. Finally, after receiving AGA’s
August 4th letter informing MBS that it did not provide a workers’ compensation quote
because of the lack of loss runs, Mildred contacted Zogg and requested that AGA
obtain them. Zogg responded that AGA would try, but could not be definite that AGA
could obtain them. AGA personnel sought and ultimately received loss run
information from MBS’s previous insurance agent. Once AGA finally did obtain the
No. 03‐2473 Page 6
loss runs on the afternoon of August 29th, it acted without delay by submitting them to
Legion the next business day in order to obtain a quote. After MBS dropped the ball,
AGA acted promptly and efficiently. MBS failed to satisfy the condition precedent of
supplying AGA with the loss runs. Therefore, even if MBS and AGA had entered into a
contract, AGA did not breach a contract to procure insurance.
Turning to MBS’s negligence claim, MBS contends that defendants were
negligent by failing to advise it to renew any other workers’ compensation coverage it
may have had in place. An insurance broker has a fiduciary duty to negotiate and
procure insurance on behalf of the insured with skill and competence. Lake County
Grading Co., 589 N.E.2d at 1132. “Inherent in the obligation to seek coverage are the
duties to act with promptness and to notify the customer if the insurer declines to
insure the risk so that the insured customer will not be lulled into a false feeling of
security or suffer prejudicial delay in seeking coverage elsewhere.” Id. MBS claims that
AGA breached these duties because Mildred had informed AGA that while she had
renewed the Wisconsin policy, MBS still needed coverage. However, as Mildred herself
acknowledged in her deposition, AGA repeatedly informed MBS that it was unable to
obtain workers’ compensation insurance quotes without the requested loss runs. This
included a specific written reminder on August 4, 1997. All of these notifications took
place before August 6th, the date upon which Mildred had informed Zogg that MBS’s
workers’ compensation policy was to expire. MBS does not demonstrate any efforts
that it made to provide defendants with this necessary information. Yet, MBS contends
that AGA and Zogg lulled it into a false sense of security by engaging in certain
affirmative conduct, specifically an application AGA faxed to InsurAmeriCorp on July
17, 1997. This assertion is unavailing. First, the application was only a partial
application made in the process of putting together a proposal. More importantly, any
significance MBS assigns to it is undermined by the fact that after the date of this
application AGA continued to notify MBS that it needed MBS’s loss runs, specifically
citing their absence when presenting MBS with an insurance proposal that notably did
not include workers’ compensation coverage. Finally, once AGA received the required
loss run documents, it promptly and efficiently obtained the promised workers’
compensation insurance quotation. Therefore, AGA was not negligent in procuring
workers’ compensation insurance for MBS.
In addition to seeking relief under breach of contract and negligence theories,
MBS also cites 735 ILCS 5/2‐2201(a), an insurance placement liability statute, which
No. 03‐2473 Page 7
codifies the ordinary care required of insurance producers under common law
negligence.4 MBS does not assert additional arguments in support of its statutory
claim, but merely references the arguments set forth in its breach of contract and
negligence discussions. Therefore, for the reasons set forth above, we conclude that the
district court properly granted summary judgment in favor of AGA and Zogg on this
claim as well.
III.
There was no contract to procure insurance between AGA and MBS. However,
even if there was such a contract, MBS failed to satisfy the condition precedent by not
providing AGA with loss runs. MBS also was not negligent in seeking workers’
compensation insurance coverage for MBS. Therefore, the district court did not err in
granting summary judgment in favor of Zogg and AGA on MBS’s contract, negligence,
and statutory claims. We AFFIRM.
4
735 ILCS 5/2‐2201(a) provides: “An insurance producer, registered firm, and limited
insurance representative shall exercise ordinary care and skill in renewing, procuring,
binding, or placing the coverage requested by the insured or proposed insured.”