Judson Atkinson Candies, Inc. v. Kenray Assocs., Inc., No. 12-1035 (7th Cir. 2013)Annotate this Case
Atkinson filed suits against Kenray. Kenray filed a separate action against Hoosier, seeking insurance coverage for Atkinson’s claims. Atkinson and Kenray settled their suits. Kenray agreed to entry of judgments in favor of Atkinson. Atkinson agreed not to execute the judgments if Kenray pursued the coverage action against Hoosier. Kenray assigned claims against its insurance agent to Atkinson. State courts entered judgment in favor of Hoosier. Meanwhile, Atkinson sued Kenray’s insurance agent asserting errors and omissions claims. The agent obtained summary judgment. Atkinson returned to the district court that presided over the original suits to set aside the settlement covenant. Atkinson claimed fraudulent inducement: that it entered the agreement based upon Kenray’s representations that its agent had confirmed that Kenray had insurance coverage for Atkinson’s claims. The court held that, because the covenant contained an unambiguous integration clause, parol evidence could not be considered, but that if Atkinson could prove fraud in the inducement specific to the integration clause, it might prevail. Atkinson conceded that it could not establish fraudulent inducement as to the integration clause itself. The court declined to set aside the agreement. The Seventh Circuit reversed, holding that Indiana law does not impose the bright-line rule applied by the trial court.