United States District Court, W.D. Oklahoma
TIMOTHY D. DEGIUSTI UNITED STATES DISTRICT JUDGE.
matter comes before the Court on the parties'
cross-motions for summary judgment [Doc. Nos. 78, 90]. The
matter is fully briefed and at issue.
Indeck Power Equipment Company (Indeck) entered into a
contract with the Altus Municipal Authority to install
portions of a water treatment system to produce drinking
water for the residents of the City of Altus. A lawsuit was
subsequently filed against Indeck, Defendant Glenn Briggs and
Associates, and others in Jackson County District Court for
damages stemming from the system's construction and
maintenance (the Altus litigation). Pursuant to insurance
policies issued by Plaintiff Federal Insurance Company
(Federal) to Indeck, Federal agreed to defend Indeck subject
to a reservation of rights.
subsequently filed the present action, contending it had no
duty to defend or indemnify Indeck and sought to withdraw
from Indeck's defense in the Altus litigation. In sum,
Federal asserted that (1) it had no duty to defend Indeck
because the Altus plaintiffs did not seek any damages covered
by the policies and (2) Briggs did not qualify as an
“insured” under any insurance policy issued by
Federal to Indeck. See Third Amend. Compl., ¶ 2
[Doc. No. 55]. Indeck filed a counterclaim seeking a
declaration that Federal owed a duty to defend and indemnify
it with respect to the Altus litigation.
parties agreed to a bifurcated scheduling order in which they
would litigate the issue of whether Federal owed a duty to
defend Indeck before conducting any discovery on the issue of
bad faith. See Joint Status Report and Discovery
Plan, ¶ 14 [Doc. No. 31]. Pursuant to the order, Federal
and Indeck submitted the present cross-motions for summary
judgment addressing the duty to defend. According to Federal,
the policies at issue limit coverage to “property
damage” caused by an “occurrence, ” and
since the Altus litigation alleges the water system did not
work as promised under the contract and Indeck concealed
evidence that the plant did not work, there is no allegation
of “property damage” caused by an
“occurrence” as those terms are defined under the
applicable policies. See Pl. Mot. for Summ. J. at
5-11. In response, Indeck asserts that there are allegations
of “property damage” in the Altus litigation in
that the plaintiff there alleges damage to the water
treatment system caused by Indeck's acts and/or
omissions. Def. Cross-Mot. for Summ. J. at 6-17. After the
submission of their respective summary judgment motions, the
parties reached an agreement in principle in which Federal
agreed to pay Indeck's defense fees and costs. Moreover,
the Altus litigation settled.
summary judgment stage, the Court has a duty to determine
whether either party has demonstrated that there is no
genuine issue of material fact and it is entitled to summary
judgment as a matter of law. Hardscrabble Ranch, L.L.C.
v. United States, 840 F.3d 1216, 1219 (10th Cir. 2016).
An insurer has a duty to defend whenever it ascertains the
presence of facts that give rise to the potential of
liability under the subject policy. First Bank of Turley
v. Fidelity and Deposit Ins. Co. of Md., 1996 OK 105,
¶ 13, 928 P.2d 298, 303; State Auto Mut. Ins. Co. v.
Habitat Const. Co., 875 N.E.2d 1159, 1163 (Ill.App.Ct.
2007). The insurer's duty is determined on
the basis of information gleaned from the petition, other
pleadings, from the insured, and from other sources available
to the insurer at the time the defense is demanded, rather
than by the outcome of the third-party action. First Bank
of Turley, 928 P.2d at 303; Millers Mut. Ins. Assn
of Ill. v. Ainsworth Seed Co., Inc., 552 N.E.2d 254,
255-56 (Ill.App.Ct. 1989).
Court's view, the recent developments cited by the
parties materially affect the Court's determination of
whether a duty to defend existed. In light of these new
facts, the Court believes the better course, at this time,
would be to deny the parties' respective motions, with
leave to refile cross-motions for summary judgment as to the
remaining claims and the effect of Federal's payment, if
any, on the issue of whether a duty to defend existed.
the parties' cross-motions for summary judgment [Doc.
Nos. 78, 90] are DENIED as set forth herein. The parties may
file amended cross-motions for summary judgment on or before
April 17, 2017. Responses and reply briefs, if any, shall be
filed in accordance with LCvR 7.1(g), (i). By virtue of this
Order, Indeck's Motion to Stay Cross-Motions for Summary
Judgment [Doc. No. 137] is deemed moot.
 On January 11, 2017, Indeck filed a
motion asking that the Court stay its consideration of the
cross-motions for summary judgment [Doc. No. 137]. In that
motion, Indeck contended the duty to defend issue will become
moot if and when Federal pays its defense fees. Mot. to Stay
at 3-4. Furthermore, in light of recent developments during
discovery, Indeck stated its intent to file a supplemental
brief in support of its motion for summary judgment and a
second motion to compel seeking full disclosure of
Federal's claims file.
 There is a dispute over whether
Oklahoma or Illinois law applies to the claims at issue;
however, the law from the two jurisdictions is ...