Westfield Insurance Co. v. TCFI Bell Spe III LLC

          ENTRY ON DEFENDANT TCFI'S MOTION FOR SUMMARY JUDGMENT

         TANAYA WALTON PRATT, JUDGE UNITED STATES DISTRICT COURT.

         This matter is before the Court on Defendant TCFI Bell SPE III LLC's (“TCFI”) Motion for Summary Judgment on Its Request for Order of Attachment, (Filing No. 116), filed pursuant to Federal Rules of Civil Procedure 56 and 69. TCFI is a judgment creditor of co-defendant Bell Aquaculture LLC (“Bell”). TCFI obtained a default judgment against Bell in state court. Bell purchased a policy of insurance from Plaintiff Westfield Insurance Company (“Westfield”) and filed a claim under the insurance policy after Bell suffered a loss at its business facility. Pursuant to its default judgment, TCFI seeks an attachment lien or garnishment against any proceeds that Bell might obtain on its insurance claim under the Westfield insurance policy. TCFI filed the instant Motion for Summary Judgment to obtain the attachment lien or garnishment. For the following reasons, the Motion is granted in part and denied in part, without prejudice to refile.

         I. BACKGROUND

         The following facts are not necessarily objectively true, but as required by Federal Rule of Civil Procedure 56, the facts are presented in the light most favorable to Westfield and Bell as the non-moving parties. See Zerante v. DeLuca, 555 F.3d 582, 584 (7th Cir. 2009); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).

         This matter involves an insurance coverage dispute between Westfield and Defendants TCFI and Bell for damages suffered following a disruption of electrical power to parts of the building at Bell's fish farm, located at located in Albany, Indiana. Bell purchased from Westfield and Westfield issued to Bell a commercial insurance policy, which was effective during the policy period of August 15, 2014 to August 15, 2015 (Filing No. 100 at 2; Filing No. 100-1 at 16). On July 22, 2015, an independent adjusting firm contacted Westfield to submit a property loss notice, indicating that Bell had provided a description of a loss and damage Bell claimed had occurred that day (Filing No. 100 at 3). Bell subsequently submitted proofs of loss to Westfield for its claim. Id. at 6.

         On April 18, 2016, TCFI filed a complaint in the Marion Superior Court (Indiana), requesting judgment on an unpaid debt owed by Bell to TCFI (Filing No. 1-1 at 1). On June 2, 2016, TCFI filed its application for default judgment in the state court (Filing No. 1-2 at 29). Then on July 19, 2016, the state court entered an order granting default judgment to TCFI against Bell in the amount of $7, 715, 649.70. Id. at 56, 59.

         Based on its understanding that Bell had asserted claims against Westfield, TCFI filed a “Verified Motion for Entry of Asset Garnishment Order” in the state court on August 4, 2016, less than a month after obtaining the default judgment against Bell (Filing No. 1-2 at 60, 62). In its Verified Motion, TCFI asked the state court to set a hearing for entry of an attachment and garnishment order. And then, following the hearing, enter an order garnishing any proceeds Bell might recover under its insurance policy issued by Westfield as well as a continuing attachment lien against any insurance proceeds to satisfy TCFI's default judgment. It also asked the state court to prohibit Bell from transferring or settling any of its insurance claims without TCFI's consent. Westfield was named as a “garnishee-defendant” on the Verified Motion. Id.

         On August 25, 2016, Westfield removed the case to federal court based on diversity jurisdiction (Filing No. 1). After an October 13, 2016 status conference, this Court entered an “Order Realigning Parties” (Filing No. 23), which realigned Westfield as the plaintiff and TCFI as a defendant with co-defendant Bell. The Order also required Westfield to file a complaint on or before October 28, 2016. On October 28, 2016, Westfield filed a Complaint for Declaratory Judgment and Damages (Filing No. 26).

         On November 18, 2016, TCFI filed an Answer to Westfield's Complaint (Filing No. 27).

         TCFI asserted:

TCFI takes no position at this time with respect to Westfield's “Demand for Relief” but respectfully requests that the Court enter an order (i) granting TCFI a continuing attachment lien against any insurance proceeds payable by Westfield to Bell, (ii) requiring Westfield to pay such proceeds, if any, directly to TCFI to be applied toward satisfaction of the Judgment, and (iii) forbidding Bell from transferring its claims against Westfield without written consent of TCFI or order of the Court.

Id. at 2. Approximately one year later, on November 10, 2017, TCFI filed its Motion for Summary Judgment on its Request for Order of Attachment (Filing No. 116).

         II. SUMMARY JUDGMENT STANDARD

         Federal Rule of Civil Procedure 56 provides that summary judgment is appropriate if “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Hemsworth v. Quotesmith.com, Inc., 476 F.3d 487, 489-90 (7th Cir. 2007). In ruling on a motion for summary judgment, the court reviews “the record in the light most favorable to the non-moving party and draw[s] all reasonable inferences in that party's favor.” Zerante, 555 F.3d at 584 (citation omitted). “However, inferences that are supported by only speculation or conjecture will not defeat a summary judgment motion.” Dorsey v. Morgan Stanley, 507 F.3d 624, 627 (7th Cir. 2007) (citation and quotation marks omitted). Additionally, “[a] party who bears the burden of proof on a particular issue may not rest on its pleadings, but must affirmatively demonstrate, by specific factual allegations, that there is a genuine issue of material fact that requires trial.” H ...