MOTION FOR ENTRY OF RULE 58 JUDGMENT ORDER

JOHN ROBERT BLAKEY, Judge.

NOW COMES Defendant National Decorating Service, Inc. ("National Decorating") by and through its attorneys, Kevin R. Sido and Kent J. Cummings of Hinshaw & Culbertson LLP, and for its Motion for Entry of a Rule 58 Judgment Order, states as follows:

The Court having granted summary judgment in favor of National Decorating, James McHugh Construction Co., 200 North Jefferson LLC, and MCZ/Jameson Development Group, LLC, (collectively, the "insured defendants"), National Decorating seeks entry of a Rule 58 judgment order consistent with and in furtherance of the Court's findings and declarations in its November 25, 2015 Memorandum Opinion and Order. Specifically, said Rule 58 judgment order should reflect the Court's declaration that Westfield Insurance Company ("Westfield") has a duty to defend the insured defendants with respect to the underlying action Board of Managers of 200 North Jefferson Tower Condominium Association v. 200 Jefferson, LLC, Case No. 12 L 480, pending in the Circuit Court of Cook County, Illinois (the "underlying lawsuit"), and it should order Westfield to pay the reasonable defense costs of the insured defendants, with an immediate award to National Decorating of monetary damages in the amount of $84,687.51, and, pursuant to 28 U.S.C. § 2202, allowing the insured defendants to apply in the future for additional awards pursuant to the Court's declaratory judgment. In further support of this Motion, National Decorating attaches as Exhibit "A," the Affidavit of Kevin Sido, establishing the amounts billed to National Decorating as of December 2015 and the reasonableness of the amounts billed in relation to issues raised in the underlying lawsuit, and National Decorating also offers to tender to the Court for in camera review the invoices reflecting the amounts billed to National Decorating for the defense of the underlying lawsuit as of December 2015.

A proposed Order is being submitted pursuant to the Court's standing Order, concomitantly with this motion.

WHEREFORE, Defendant National Decorating Service, Inc., respectfully prays that this Honorable Court enter a Rule 58 judgment order as described above and award such further and additional relief to National Decorating as the Court deems appropriate in light of the law, facts, and circumstances.

EXHIBIT A

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

AFFIDAVIT OF KEVIN R. SIDO

Kevin R. Sido of Hinshaw & Culbertson LLP as counsel for Defendant National Decorating Service Inc. submits his affidavit in this regard, stating that if called as a witness in this matter, he would and could testify to the following facts of his personal knowledge:

1. I am Kevin R. Sido, one of the attorneys of record for National Decorating Service Inc. in this case.

2. I have been a member of the bar of the Supreme Court of Illinois since 1975 and became a member of the bar of the United States District Court for the Northern District of Illinois in 1975, later joining the trial bar thereof upon its inception. I became a member of the bar of the Seventh Circuit (1977) and the Supreme Court (1979). I am a member of the bars of the Central and Southern Districts of Illinois, the Northern District of Indiana, and the Eastern and Western Districts of Michigan.

3. I began my legal career with Hinshaw & Culbertson LLP in 1975 and have been a partner since 1982. Since nearly the very beginning my practice has long focused on construction law. I have represented design professionals, contractors, construction managers and owners in litigation and transactional matters. In addition, over the years I have represented lawyers, condominium directors and officers, and school officials as well as handled products liability matters. I have also had many matters involving insurance issues including policy drafting and declaratory judgment actions. I have handled a wide variety of jury trials and often have served as counsel on appeals.

4. I have been on the panel of ADR Systems of America, LLC where I am available to serve as a mediator or arbitrator. I have mediated many matters involving construction, condominiums and/or insurance as a core issue. I am on the mediation panel of the Northern District of Indiana, available to serve regarding professional liability or construction issues.

5. I am the editor of the third edition of Architect and Engineer Liability, Claims Against Design Professionals (Aspen 2006). I authored chapters in that book as well as in other books, State-By-State Guide to Construction Contracts and Claims (Aspen 2006) and The Design Build Deskbook (4th edition, ABA 2010). I co-authored a chapter for IICLE in its Construction Law: Transactional Considerations (2010) and have authored or co-authored for over 25 years several other chapters for IICLE on subjects of pleadings, third-party practice and condominium litigation.

6. I have lectured Illinois and national groups of architects, engineers, professional land surveyors and other construction professionals on dozens of occasions on the subjects of ethics, licensing laws, risk prevention and related topics. In addition I have authored dozens of articles in professional magazines concerning the same, as well as mediation and arbitration.

7. I am a professional affiliate member of the American Society of Civil Engineers as well as the Structural Engineers Association of Illinois. I am a member of several bar and professional organizations including the Society of Illinois Construction Attorneys, ABA Forum on Construction and the Chicago Committee on High Rise Buildings.

8. The Illinois Supreme Court and the Illinois Appellate Court have granted motions to receive amicus curiae briefs I have authored on behalf of my clients American Institute of Architects Illinois Council, Illinois Society of Professional Engineers, Illinois Professional Land Surveyors Association, American Council of Engineering Companies — Illinois, and Structural Engineers Association of Illinois. Recent examples include Thompson v. Gordon, 241 Ill.2d 428, 948 N.E.2d 39 (2011) and Christopher B. Burke Engineering Ltd. v. Heritage Bank, 2015 IL 118955.

9. A true and complete copy of my resume is found here: http://www.hinshawlaw.com/attorneys-Kevin-Sido.html.

10. For over 25 years I have served as counsel for National Decorating Services Inc. on matters involving corporate management issues, employment, breach of contract matters, insurance, negligence and other litigated matters.

11. I have served as the lead counsel in the defense of National Decorating in the lawsuit brought by the Board of Managers of the 200 North Jefferson Tower Condominium Association, the matter which is referred to by this Court as the "Underlying Action" in its Memorandum Opinion and Order of November 25, 2015 at page 3 of 18 (Document # 126). Without divulging any client confidences or work product, this Underlying Action has involved many interesting, difficult and even novel issues of construction law requiring an analysis of statutes of limitations, spoliation, "flow-down" clauses, indemnity, additional insured status, the Minton doctrine for implied warranty of habitability, and condominium law issues. I have directed the factual investigation of our defense with visits to the building site. The factual analysis has involved our retaining a consultant the identity, opinions, and work product of which at this time remain confidential per Illinois Supreme Court Rule 201(b)(3). The consultant has assisted us in determining whether National Decorating may have breached its subcontract and if so whether that purported breach has resulted in the damages claimed. The consultant has assisted us in other defenses. In my role as the lead counsel I have brought my experience in dealing with construction experts to bear in fashioning our defense strategy.

12. Should the case not settle at the mediation now set for February 24, 2016, I would be the trial lawyer for National Decorating. This lawsuit is of great importance to National Decorating as it is a family-owned business and the claims of damages of some $4 million would cause it great financial difficulties if any such judgments entered against National Decorating were not covered by insurance.

13. Shortly after the Underlying Action began, on behalf of National Decorating I tendered its defense to three insurance carriers my client identified to me: Liberty Mutual, Westfield and Iowa Mutual (also known as Iowa American or Iowa National). Westfield declined to defend and instituted the declaratory judgment action which is before this Court. Liberty and Iowa issued reservations of rights letters and have agreed to defend. True copies of the reservations of rights letters are attached to my affidavit. Under my understanding of Illinois law, one or both defending carriers may be able to recoup monies paid or incurred in the defense of National Decorating.

14. To date, our firm has submitted monthly bills to our client National Decorating and its insurance carriers Liberty and Iowa. The bills have shown time entries showing the attorney performing the service, the time spent on each task, a description of the task provided, and the rates of the respective attorneys. Those bills are not attached here because I believe that they are within the attorney-client privilege. Overall, I have set the strategy of the defense using my experience as a construction trial attorney. I have been assisted by one or more other lawyers at my law firm. They have included Dana B. Mehlman, an associate attorney who is also a licensed professional engineer. Among other tasks, she has attended court hearings, reviewed voluminous documents produced, conferred with our consultant, and attended inspections of the building. Based on my knowledge and experience, I know our hourly rates are in keeping with prevailing rates charged by attorneys of similar experience practicing in similar matters in Chicago.

15. As of January 4, 2016 my accounting department advises me of these facts:

a. As of December 2015, we have billed a total of $84,687.51 in fees and disbursements over the life of this matter with fees being $79,906.90 and disbursements (e.g., court reporter bills) being $4,780.61.

b. Of the $84,687.51 billed, we have been paid $58,989.53 by a combination of National Decorating, Liberty Mutual and by Iowa Mutual.

16. By way of forecast, as of January 5, 2016 there are several more depositions planned as to parties and at least one independent architect expert. These depositions are set to go ahead of the mediation presently set for February 24, 2016. If the case is not successfully resolved then, the parties through counsel (including this Affiant) are discussing the need for some 40 more depositions of lay witnesses with perhaps another dozen of experts. In short, a great many more depositions are on the horizon.

Dear Mr. Hart:

The undersigned has been assigned to this claim which has been tendered to Iowa American Insurance Company ("IAIC").

IAIC issued two general liability policies to National Decorating Service, Inc ("National"), which are detailed herein. Coverage under the IAIC policies is subject to each policy's respective terms, conditions, exclusions and limitations. The Plaintiffs do not cite a specific date for their claimed `property damage' and we request you report this loss to your General Liability Carrier(s) who preceded your coverage with IAIC. The Plaintiffs are also non-specific regarding their demand and the Plaintiffs' claim could fall within a prior policy period.

You have tendered the above cited Complaint that was filed against National to IAIC for defense and indemnity. For the reasons, and on the terms, set forth herein, IAIC agrees to provide a defense to National in the suit, subject to a complete reservation of IAIC's rights under the IAIC policies.

Please note, so that IAIC's position is clear, we will set forth the bases herein. In taking its position IAIC in no way states or implies that the claims made against National are well-founded in fact or law.

CLAIMED ALLEGATIONS

The Complaint contains the following Counts:

The Plaintiffs' claim that National was a subcontractor for James McHugh Construction Co. ("General Contractor") and National was contracted to perform all the painting work on this project. The Plaintiff is claiming they have experienced construction defects consisting of; a) significant cracking of the exterior concrete walls, interior walls and ceilings and; b) significant leakage through the exterior concrete walls, balconies and windows. The construction defects include the common elements of the Condominium.

In COUNT I — Breach of Implied Warranty of Habitability, paragraph 29 states in part, "National Decorating Service, Inc. entered into a subcontractor agreement with James McHugh Construction Co. to complete all painting work in accordance with contract documents. The painting work of National Decorating on the subject project was defective in that its exterior coating was too thin, in violation of the contract documents and industry custom and practices."

Paragraph 33 also states, "The construction defects rendered the property not reasonably fit for use as a residence as the structure cracked and leaked. The construction defects caused property damage to the interior ceilings and floors of the units."

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COVERAGE REVIEW

Your Commercial General Liability Policy A033828GL, with effective dates of 11/1/2011 to 11/1/2012 and 11/1/2012 to 11/1/2013, contains the policy form CG 00 01 (12-04) that provides liability coverage to you for `property damage' which you may become legally obligated to pay as damages, to which this insurance applies, arising out of an occurrence during the policy period. Such coverage is provided unless the loss is specifically excluded or limited in the policy. The limit of liability for each policy term is $2,000,000 for each occurrence and under the Products-Completed Operations the Aggregate Limit of $2,000,000.

In addition to the General Liability policies A033828GL, IAIC also provided two Commercial Umbrella policies with policy terms of 11/1/2011 to 11/1/2012 and 11/1/2012 to 11/1/2013. The limits of insurance for each of these two policies was and is $8,000,000, Policy Aggregate Limit.

Your policies do not provide coverage for any claim or resulting damage that involves `your product' or `your work'. However, coverage will be afforded for any damage to other property as a result of `your product' or `your work'.

* * * * *

At this time I would like to direct your attention to page 1 of 14, of the Commercial General Liability Coverage Form, CG 00 01 (Ed. 12-04), this endorsement was included in both policy terms, the following reads in part:

* * * * *

Starting on page 1 thru 4 of 14, the following Exclusions should be noted and they read in part:

2. Exclusions

This insurance does not apply to:

j. Damage To Property

k. Damage To Your Product

"Property damage" to "your product" arising out of it or any part of it.

On page 9 of 14, the Limits of Insurance is discussed, which reads in part:

* * * * *

Starting on page 9 and ending on page 10 of 14, coverage Conditions are discussed and read is part:

2. Duties In The Event Of Occurrence, Offense, Claim Or Suit

* * * * *

RECOVERY FROM OTHER INSURERS

IAIC reserves It right to seek contribution, subrogation and/or allocation, and/or recovery of defense expenses, with regard to defense cost and/or indemnity, if any, paid by IAIC, against any and all other insurers who may owe coverage to National and further reserves all other actions, remedies and rights, at law or in equity, with respect to such other insurers.

On page 10 of 14, the policy discusses provisions for Other Insurance and it reads in part:

* * * * *

Policy Definitions that can be found on page 11 through 14 of 14 reads in part:

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Your policy also contains a Property Damage Liability deductible of $500. This deductible is detailed in endorsement Deductible Liability Insurance CG0300 (Ed. 01-96). If this company makes a property damage payment, you will be required to reimburse this company your $500.00 deductible.

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Both the CGL and Umbrella policies are endorsed with the "Illinois Changes-Defense Costs" endorsement which provides IAIC with the right to recover its cost of defense from an insured when IAIC defends an insured pursuant to a reservation of rights and "it is later determined that the claims against the insured are not covered by the insurance." The right to reimbursement applies to defense cost incurred after IMIC notifies the insured in writing: "that there may not be coverage and (IAIC) is reserving (its) rights to terminate the defense and seek reimbursement for defense costs."

Pursuant to the "Illinois Changes-Defense Costs" endorsement, IAIC hereby notifies National that there may be no coverage under the CGL and/or Umbrella for the claims against National, as cited in the tendered complaint. National is hereby advised that IAIC reserves it rights to terminate funding of defense costs, including but not limited to attorneys' fees, which IAIC incurs with respect to National's defense in the Board of Managers 200 North Jefferson suit, pursuant to the terms of the "Illinois Changes-Defense Costs" endorsement.

* * * * *

The following can be found in endorsement IL 01 62 04-06 ILLINOIS CHANGES — DEFENSE COSTS:

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Since the Plaintiff's have failed to declare their demand(s) specifically, we are unable to determine if there is an exposure greater than your CGL limits and/or if your coverage under the Commercial Umbrella Liability Insurance Policy 2779A (Ed. 06-06) would be exposed, and/or if your company would have a financial exposure.

I have enclosed a copy of your Umbrella policy, based on the facts as known today, the following sections should be reviewed and they read in part from page 1 of 19:

* * * * *

On page 6 of 19 please note the following Exclusions, which read in part:

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On page 10 of 19, the policy outlines Who is An Insured and in part it reads:

SECTION III — WHO IS AN INSURED

1. If you are designated in the Declarations as:

* * * * *

Finally, the Umbrella policy under Section VI — Definitions starting on page 15 of 19 have the following definitions in part:

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APPOINTMENT OF DEFENSE COUNSEL

We have contacted attorney Andrew Seiber of Smith Amundsen, 150 North Michigan Avenue, Chicago, IL. Their phone number is 312-894-3279. Mr. Seiber and his associates have been asked if they can defend National against the allegations being presented by the Plaintiffs in this suit. Mr. Seiber and his firm have indicated they have no conflicts and they have the professional experience to defend National.

However, if you wish Mr. Kevin R. Sido of Hinshaw and Culbertson to defend you due to the potential coverage issues as cited within, please provide this writer with written notification of your intentions.

If you choose to have Mr. Sido and his firm defend you, it is our hope that he will work with this office to discuss and agree to a reasonable fee schedule for normal and customary defense work for this type of litigation. As well as agreeing to whom at Hinshaw and Culbertson will be involved in the defense of National. Naturally, we will need appropriate reporting from Mr. Sido on the defense of National.

If you chose to be defended by Mr. Seiber, please understand that Mr. Seiber and his firm have an ongoing business relationship with IAIC. By copy of this letter to Mr. Seiber, we are making him aware of IAIC's reservation of rights. IAIC asks Mr. Seiber, as we do with all defense counsel, to provide their best efforts in defense of National, without regard to the interest of IAIC. IAIC asks that they refrain from any comment on coverage issues in his reports to IAIC regarding the defense of this suit.

Unfortunately, at the current time we are at a disadvantage in fully understanding what Plaintiffs exact damages are and what they are seeking for a resolution of their alleged claims.

Based on my review of the complaint and our telephone conversation of Monday, November 26, I see no evidence indicating National should be a target Defendant. Even if Mr. Sido is successful in having National dismissed from this complaint, there is the possibility that the Plaintiffs could re-file in an attempt to bring National back into the litigation. Therefore, it will be important for this office to continue with our investigation to better understand National's involvement in this project and to properly evaluate the Plaintiffs' claims.

REQUESTED DOCUMENTATION

In order to properly investigate and evaluate the claimed allegations, we request you provide this office with the following information/documents:

During our investigation and discovery, additional information may be needed from you so we can properly evaluate the Plaintiff's claim and to defend National.

CONCLUSION

If you have any other available insurance to protect you for this loss, including umbrella coverage, please notify the carrier(s) so they may have an opportunity to investigate on your behalf and then notify us of the carrier(s) providing such coverage.

We ask you to give us your full cooperation in the investigation of this claim. We may request assistance from outside parties to investigate on our behalf. These individuals will have no authority to determine coverage or liability under the policy and will be assigned to gather information and will be reporting directly to this writer.

IAIC agrees to provide a defense to National in the Board of Managers 200 North Jefferson suit, subject to a complete reservation of IAIC rights. In addition to the matters set forth above, IAIC's reservation also includes, but is not limited to, the right to cease defending National upon reasonable notice and the right to seek a judicial declaration of IAIC's rights and duties under the IAIC policy.

IAIC's investigation of this matter is ongoing. Nothing herein shall serve as a waiver or admission by IAIC, or to limit, prejudice or estop IAIC in any way. IAIC reserves all of its rights to full extent permitted by law, including the right to raise additional defenses to coverage and the right to expand upon those defenses raised herein.

Please call or write with any questions or comments you have regarding IAIC's position and/or reservation of rights as set forth herein. If there is any additional information that you wish to bring to our attention, please feel free to do so.

You may contact me at 800-333-8692 ext. 31241, 563-659-1241 or email at: bruce.gower@lowamutual.com.

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Part 919 of the Rules of the Illinois Department of Insurance requires that our company advise you that if you wish to take this matter up with the Illinois Department of Insurance, it maintains a Consumer Division in Chicago at 100 W. Randolph Street, Suite 15-100, Chicago, Illinois 60601 and in Springfield at 320 West Washington Street, Springfield, Illinois 62767.

Liberty Mutual Insurance 100 Liberty Way Dover, NH 03820 603 749-2600 March 4, 2014 Mr. Sam Hart, President National Decorating Service, Inc. 2210 Camden Ct. Oak Brook, IL 60523

Re: Board of Manager of 200 N. Jefferson Tower Condominium Assoc. vs. Jefferson, LLC Our Insured: National Decorating Service, Inc. Claim Number: P961-067515-01

Dear Mr. Hart:

We continue to investigate the coverage, liability and damages associated with the above matter, which now also involves a Third-Party Complaint filed against National Decorating Service, Inc. by defendant James McHugh Construction Co. alleging Breach of Contract and Express Contractual Defense & Indemnity.

The matter concerns a 24-story and 198-unit residential condominium development the common elements of which allegedly experienced construction defects consisting generally of: a) significant cracking of the exterior concrete walls, interior walls and ceilings and; b) significant leakage through the exterior concrete walls, balconies and windows. These defects are alleged to be latent in nature and were discovered on March 18, 2011.

The allegations of the Third-Party Complaint filed by James McHugh Construction Co. include that the alleged damage arises out of or is otherwise connected to the performance of your work under the subcontract, which was defective because the exterior coating was applied too thin in violation of the contract and industry standards, and seeks recovery in the event that McHugh is found liable for damages in connection with the underlying complaint.

We have reviewed the pleadings filed in the above-referenced litigation together with the terms of our Commercial General Liability policies and we have determined that the claims asserted create a potential for coverage under the policy. Accordingly, we will provide defense of this matter under a reservation of rights as detailed below, subject to all policy terms, provisions, conditions and exclusions. Because we are providing you with a defense subject to a position on coverage under the policies as set forth herein, you have the right to designate counsel of your choice at our expense. We agree to provide a defense of the matter through your selected counsel, Kevin R. Sido of Hinshaw & Culbertson, LLP. If you wish to further address the selection of your defense counsel, please contact me.

Liberty Insurance Corporation issued Commercial General Liability policy numbers TB7-141-091930-077, with effective dates of 2/28/07 through 2/28/08, and TB7-141-091930-076, with effective dates 2/28/06 through 2/28/07. Additionally, Liberty Mutual Fire Insurance Company issued Umbrella Excess Liability policies TH2-641-091930-117 and TH2-641-091930-116 for the same respective effective periods.

Exclusion k. excludes "property damage" to "your product," which is defined as including any goods or products, other than real property, manufactured, sold, handled, distributed or disposed of by the insured.

Exclusion l. excludes "property damage" to "your work," which is defined as work or operations performed by the insured or on its behalf, including materials, parts or equipment furnished in connection with such work or operations. The "property damage" must be included in the "products-completed operations hazard." Per the policy, the "products-completed operations hazard" is defined as follows:

This exclusion does not apply if the damaged work or the work out of which the damage arises was performed by a subcontractor. There is no indication that a subcontractor was involved.

Exclusion m. excludes "property damage" to "impaired property" or property that has not been physically injured, arising out of a defect, deficiency, inadequacy or dangerous condition in "your product" or "your work", or a delay or failure by the insured or anyone acting on the insured's behalf to perform a contract or agreement in accordance with its terms. "Impaired property" is defined as tangible property other than "your product" or "your work" that cannot be used or is less useful because it incorporates "your product" or "your work" that is known or thought to be defective, deficient, inadequate or dangerous, or because the insured has failed to fulfill the terms of a contract or agreement. It must be possible for the property to be restored to use by the repair, replacement, adjustment or removal of "your product" or "your work" or by the insured fulfilling the terms of the contract or agreement.

Our policy also contains the below exclusion, which potentially applies:

Our policies would not cover the cost of repairing or replacing our insured's products or work, nor is there coverage for diminution in the value of other property because it incorporates our insured's defective products or work. Our policies would cover only physical injury to other property or bodily injury caused by our insured's products or work, and only if such damage occurred during our period of coverage, provided that no specific exclusions apply.

While we have attempted to address all of the coverage considerations related to this claim, Liberty Insurance Corporation and Liberty Mutual Fire Insurance Company reserve all rights under applicable law and the policies. This letter should in no way be construed as a waiver or estoppel of any of the possible coverage defenses afforded by the policies or the law.

Please continue to forward to us any additional information you receive relating to this matter, as well as any other information you believe may affect our position.

Sincerely, Liberty Insurance Corporation Liberty Mutual Fire Insurance Company Brian Dickey Sr. Technical Claims Specialist Direct line: 603 970-4324 Cc: Kevin R. Sido Hinshaw & Culbertson