HARLINGTON WOOD, Jr., Circuit Judge.
On July 27, 1980, patrons gathered at the DuQuoin State Fairgrounds ("Fairgrounds") in DuQuoin, Illinois, for a motorcycle race sponsored by the American Motorcycle Association ("AMA"). The sponsored race was canceled due to inclement weather, but many of the patrons remained to either watch or participate in the unsponsored and unauthorized "racing or stunting" of motorcycles. That activity ended tragically when a motorcycle accident injured Gerald Degerlia and cost Kevin Deerhake his life.
At the time of the accident, the DuQuoin State Fair Association ("Association"), which leased the Fairgrounds to the AMA, maintained four levels of liability coverage with the following limits of liability:
Insurer Limit of Liability National Union Insurance Company $300,000 Lexington Insurance Company $700,000 Integrity Insurance Company $1,000,000 Granite State Insurance Company $3,000,000
The uppermost layer of coverage, an excess umbrella liability policy issued by Granite State, included the following exclusion:
The Association also procured an additional policy from Lincoln Insurance Company to provide coverage for the AMA-sanctioned motorcycle competition scheduled to take place on July 27, 1980.
After the accident, both Degerlia and Linda Deerhake, the special administrator of Kevin Deerhake's estate, filed suit against a number of defendants, including the Association. These actions were consolidated and produced jury verdicts of $770,000 for Degerlia and $1,757,510 for Deerhake. The only remaining obstacle was collecting the sums awarded by the jury, and the Association's liability coverage provided an attractive means by which to accomplish this goal.
Well aware of the possibility that Degerlia and Deerhake might attempt to collect under the Association's policies, Granite State and Lexington invoked our diversity jurisdiction and filed the present declaratory judgment action.
The question presented by this appeal is quite narrow. Both Degerlia and Deerhake do not contest, and thereby concede, that the injuries for which they seek compensation arose out of "motorcycle racing or stunting" that occurred "with respect to the operation of any fair out of doors." Compare Garriguenc v. Love, 67 Wis.2d 130, 226 N.W.2d 414 (1975). They also concede that the exclusion does not violate public policy. The only issue they raise is whether the district court, within the context of a motion for summary judgment, committed reversible error by failing to conclude that the exclusion applied only to "racing or stunting" sponsored by the Association. If their argument is correct, then the exclusion would be inapplicable to these facts — Degerlia's and Deerhake's injuries arose out of unsponsored "racing or stunting."
Under Illinois law, which the parties concede applies to this action, we interpret the language of an insurance policy as a matter of law. Sawyer Fruit & Veg. Co-op. Corp. v. Lumbermens Mut. Cas. Co., 117 Ill.App.3d 407, 408, 453 N.E.2d 826, 827, 73 Ill.Dec. 1, 2 (1st Dist.1983). On one end of a spectrum we place that policy language that is clearly and unambiguously in favor of coverage. At the other end of the spectrum we place that policy language that clearly and unambiguously excludes coverage. If the relevant language in the Granite State policy falls at either end of the spectrum — i.e., if it is subject to only one reasonable interpretation — then we apply the terms of the policy as written. See Severs v. Country Mut. Ins. Co., 89 Ill.2d 515, 521, 434 N.E.2d 290, 292, 61 Ill.Dec. 137, 139 (1982); see also National Fidelity Life Ins. Co. v. Karaganis, 811 F.2d 357, 361 (7th Cir.1987) ("an insurance policy that contains no ambiguity is to be
As the district court held, the language in the Granite State exclusion meets this heavy burden.
An examination of the remainder of the exclusion confirms this conclusion; the Granite State policy is quite specific when it qualifies the scope of its clauses. The first paragraph of the exclusion limits itself to "any contest or exhibition of an athletic or sports nature sponsored by the named insured."
Our analysis does not end, however, with the four corners of the insurance policy. Under Illinois law, "[a]n insurance policy is not to be interpreted in a factual vacuum; it is issued under given factual circumstances. What at first blush might appear unambiguous in the insurance contract might not be such in the factual setting in which the contract was issued." See, e.g., Glidden v. Farmers Auto. Ins. Ass'n, 57 Ill.2d 330, 336, 312 N.E.2d 247, 250 (1974).
Seizing upon this language in Glidden, Degerlia and Deerhake note that the Association purchased outside coverage for the AMA-sanctioned "racing or stunting" but did not purchase outside coverage for unsponsored motorcycle "racing or stunting." They then argue, on the basis of the Association's conduct, that it intended and believed the Granite State exclusion to apply only to activities for which outside coverage had been procured — i.e., sponsored "racing or stunting." If the Association had not intended the Granite State policy to cover unsponsored "racing or stunting," Degerlia and Deerhake argue, the Association would have procured outside coverage for those activities.
While we recognize the apparent willingness of Illinois courts to look beyond the four corners of the insurance policy in determining the meaning of a particular
There being no genuine issues of material fact raised in opposition, and having demonstrated that it is entitled to judgment as a matter of law, Granite State is entitled to summary judgment in its favor. See New Process Baking Co. v. Federal Ins. Co., 923 F.2d 62 (7th Cir.1991) (per curiam). The decision of the district court is
The record is sketchy with regard to the activities of the remaining insurers. Degerlia and Deerhake represent that National Union has made payments under its policy. Integrity has apparently been placed into receivership. And we are unable to discern Lincoln's present status with regard to the events herein.