Insurance Coverage

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7^th Circuit Court of Appeals

Case Name: Shemika Mitchell v. Durham Enterprises, Inc.

Case No.: 22-1983

Officials: Sykes, Chief Judge, and Wood and Scudder, Circuit Judges.

Focus: Insurance Coverage

Tommy Harris developed bacterial sepsis due to recurring infections during dialysis treatment at a Belleville, Illinois clinic. Harris initiated a malpractice lawsuit against the clinic operators and later added Durham Enterprises, Inc., the janitorial service responsible for cleaning the facility, to the claim. The central issue revolves around Durham’s insurance coverage.

Durham forwarded the lawsuit to its insurer, Ohio Security Insurance Company, which denied coverage citing an exclusion in the policy for injuries caused by fungi or bacteria. Subsequently, Harris and Durham reached an agreement wherein Durham agreed not to contest the lawsuit, and Harris agreed to solely pursue recovery from the insurer. The state trial judge, upon motion, separated Harris’s claim against Durham for a bench trial, which resulted in a judgment against Durham exceeding $2 million.

Ohio Security was not directly involved in the state court proceedings, and the insurance policy was not part of the record. However, the consent judgment addressed insurance matters, asserting that the insurer breached its duty to defend and is estopped from raising policy defenses. After the judgment was finalized, Harris amended the complaint to include Ohio Security as a defendant. Ohio Security then moved the case to federal court seeking clarification on its coverage obligations. The district court ruled that the bacteria exclusion in the policy negated coverage.

On appeal, Harris and Durham jointly contested the coverage denial while also raising a delayed objection on subject-matter jurisdiction under the Rooker–Feldman doctrine. The court dismissed the jurisdictional challenge, stating that the doctrine doesn’t bar federal jurisdiction over claims by nonparties to state-court judgments. Furthermore, it affirmed the district court’s decision that the bacteria exclusion in the policy precludes coverage for this claim.

Affirmed.

Decided 04/24/24

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