Clayton v. Millers First Ins. Companies

• Citation: 892 N.E.2d 613
• Decision Date: 25 July 2008
• Docket Number: No. 5-07-0061.,5-07-0061.
• Parties: Steven CLAYTON, Plaintiff-Appellant, v. MILLERS FIRST INSURANCE COMPANIES, Defendant-Appellee.
• Court: United States Appellate Court of Illinois

892 N.E.2d 613

Steven CLAYTON, Plaintiff-Appellant, v. MILLERS FIRST INSURANCE COMPANIES, Defendant-Appellee.

No. 5-07-0061.

Appellate Court of Illinois, Fifth District.

July 25, 2008.

Patrick R. Foley, Williams, Caponi, Foley & Eckert, PC, Belleville, for Appellant.

Michael J. Bedesky, Reed, Armstrong, Gorman, Mudge & Morrissey, P.C., Edwardsville, for Appellee.

Justice GOLDENHERSH delivered the opinion of the court:

Plaintiff, Steven Clayton, filed a declaratory judgment action against defendant, Millers First Insurance Companies, in the circuit court of Bond County. The court granted a partial summary judgment to defendant. On appeal, plaintiff raises these issues: (1) whether the trial court erred by ruling in a summary judgment that plaintiff was not a family member under the insurance policy and (2) whether defendant acted in bad faith by refusing to pay. We vacate and remand.

FACTS

On August 25, 2002, plaintiff, a minor, was a passenger in a car that was involved in a one-car accident. The driver was also a minor. Plaintiff filed suit against the minor driver and the owner of the vehicle, the minor's father. The driver's father subsequently filed for bankruptcy, and plaintiff filed an amended complaint naming the driver's mother as a defendant. The driver's mother subsequently filed for bankruptcy.

On the date of the accident, plaintiff lived with his mother, Carol Clayton, and her then-fiancé, Nick Gregory. Gregory submitted an affidavit claiming that plaintiff has lived at his residence since 1998 and that he has "nurtured, cared [for], and provided for the support and upbringing of" plaintiff. Gregory stated that his relationship with plaintiff was of a "parental nature" and that it was his understanding that plaintiff was covered by the insurance policy. Gregory had automobile insurance with uninsured-motorist coverage through defendant.

On June 7, 2004, plaintiff notified defendant that he was seeking compensation under the uninsured-motorist coverage of the policy issued to Gregory. Defendant responded that plaintiff was not insured under the Gregory policy.

On July 29, 2005, plaintiff amended his complaint to add defendant. In the amended complaint, plaintiff asked for a declaratory judgment that defendant is obligated to provide uninsured-motorist coverage for plaintiff. Plaintiff also alleged that defendant acted in bad faith in declining coverage. Plaintiff alleged that at the time of the accident he was a minor child residing with Gregory and "was financially dependent upon the insured for care and support." Plaintiff claimed coverage as a family member under the uninsured-motorist provisions of the Gregory policy.

Defendant filed a motion for a summary judgment on the counts for a declaratory judgment (735 ILCS 5/2-1005 (West 2004)). Plaintiff filed a response and a cross-motion for a summary judgment. The trial court granted a summary judgment to defendant. Plaintiff appeals.

ANALYSIS

A summary judgment is appropriate only where "the pleadings, depositions, 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." 735 ILCS 5/2-1005(c) (West 2004). The review of an entry of a summary judgment is de novo. Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill.2d 90, 102, 180 Ill. Dec. 691, 607 N.E.2d 1204, 1209 (1992). Specifically, the construction of an insurance policy is a question of law, which is reviewed de novo. Central Illinois Light Co. v. Home Insurance Co., 213 Ill.2d 141, 153, 290 Ill.Dec. 155, 821 N.E.2d 206, 213 (2004).

The resolution of this matter calls for the application of well-worn principles of contract construction. The insurance policy is a contract and is subject to the same rules that govern the interpretation of contracts. Hobbs v. Hartford Insurance Co. of the Midwest, 214 Ill.2d 11, 17, 291 Ill.Dec. 269, 823 N.E.2d 561, 564 (2005). The primary objective of the court is to determine and give effect to the intent of the parties as expressed in the language of the policy. Hobbs, 214 Ill.2d at 17, 291 Ill.Dec. 269, 823 N.E.2d at 564. On review, the court is to assume that every provision in the contract serves a purpose. Central Illinois Light Co., 213 Ill.2d at 153, 290 Ill.Dec. 155, 821 N.E.2d at 213. The policy is to be construed as a whole taking into account the type of insurance provided, the nature of the risks involved, and the overall purpose served by the contract. American States Insurance Co. v. Koloms, 177 Ill.2d 473, 479, 227 Ill.Dec. 149, 687 N.E.2d 72, 75 (1997).

The pertinent question in the underlying declaratory judgment action is whether plaintiff qualifies as a "family member" under the terms of the Gregory policy. Paragraph F under the "Definitions" portion of the policy provides as follows:

"F. `Family member' means a person related to you by blood, marriage[,] or adoption who is a resident of your household. This includes a ward or foster child."

Plaintiff contends that the definition is ambiguous. In particular, plaintiff contends that the terms "ward" and "foster child" have several different meanings. Words that are clear and unambiguous must be given their plain, ordinary, and popular meaning. Outboard Marine Corp., 154 Ill.2d at 119, 180 Ill.Dec. 691, 607 N.E.2d at 1217. In determining whether a policy term is ambiguous, the standard is not whether parties disagree, but whether the term is reasonably susceptible to more than one interpretation. Valley Forge Insurance Co. v. Swiderski Electronics, Inc., 223 Ill.2d 352, 363, 307 Ill.Dec. 653, 860 N.E.2d 307, 314 (2006). If a word is reasonably susceptible to more than one meaning, it will be considered ambiguous and construed strictly against the drafter of the policy. Central Illinois Light Co., 213 Ill.2d at 153, 290 Ill.Dec. 155, 821 N.E.2d at 213. A court will not search for ambiguity where there is none. Crum & Forster Managers Corp. v. Resolution Trust Corp., 156 Ill.2d 384, 391, 189 Ill.Dec. 756, 620 N.E.2d 1073, 1078 (1993). Although any terms that limit an insurer's liability will be construed in favor of coverage, this rule comes into play only if the policy is ambiguous. Hobbs, 214 Ill.2d at 17, 291 Ill.Dec. 269, 823 N.E.2d at 564.

If an insurance policy does not define a particular term, a court should afford the term its plain and ordinary meaning. Outboard Marine Corp., 154 Ill.2d at 115, 180 Ill.Dec. 691, 607 N.E.2d at 1215. Dictionaries provide several definitions for the term "ward."

"Ward. * * * 6.a. Law. A minor or incompetent person placed under the care or protection of a guardian or court. b. A person under the protection or care of another. 7. The state of being under guard; custody. 8. The act of guarding or protecting; guardianship." The American Heritage Dictionary of the English Language 2013 (3d ed.1992).

"Ward. * * * 2: the state of being under guard; esp: CUSTODY. * * * 6: a person or thing under guard, protection, or surveillance: as a: a minor subject to wardship, b: a person who by reason of incapacity (as minority or lunacy) is under the protection of a court either directly or through a guardian appointed by the court — called also ward of court, c: a person or body of persons under the protection or tutelage of a government." Merriam-Webster's Collegiate Dictionary 1331 (10th ed.1993).

"Ward. 2.a. gen. Guardianship, keeping, control. * * * b. spec. Guardianship of a child, a minor, or other person legally incapable of conducting his affairs. Also, the condition of being subject to a guardian." The Oxford English Dictionary 86-87, vol. VII (1933) (reprinted in 1961, 1970).

See Valley Forge Insurance Co., 223 Ill.2d at 366, 307 Ill.Dec. 653, 860 N.E.2d at 316 (dictionaries provide the plain and ordinary usage of terms for contract interpretation).

Defendant contends that the term "ward" is a term of legal significance. A contract term is unambiguous if it has an established and precise legal meaning. Rich v. Principal Life Insurance Co., 226 Ill.2d 359, 373, 314 Ill.Dec. 795, 875 N.E.2d 1082, 1091 (2007). On the other hand, there may be no requirement to satisfy the elements of a legal term if the policy does not explicitly purport to rely on or define the legal term. See Barth v. State Farm Fire & Casualty Co., 228 Ill.2d 163, 319 Ill.Dec. 852, 886 N.E.2d 976 (2008).

Defendant relies on Rosenberg v. Zurich American Insurance Co., 312 Ill.App.3d 97, 244 Ill.Dec. 433, 726 N.E.2d 29 (2000). In Rosenberg, a nursing home resident was fatally injured when he was struck by an automobile driven by an uninsured motorist. The resident's estate claimed that he was covered by the policy issued to the corporation which operated the nursing home. The court found that the policy did not insure the resident. The policy applied to "family members" only if the policyholder was an "individual." The policy form provided that the policyholder could be either a "partnership," a "corporation," or an "individual." The defendant was a corporation, not an individual, so the "family member" provision did not apply. Rosenberg, 312 Ill.App.3d at 101, 244 Ill. Dec. 433, 726 N.E.2d at 33. Additionally, the court noted that under Illinois law a corporation cannot have family members. Rosenberg, 312 Ill.App.3d at 102, 244 Ill. Dec. 433, 726 N.E.2d at 33.

The plaintiff argued that the defendant should not be considered a regular corporation because of its special role as a long-term care facility and that this created an ambiguity. Rosenberg, 312 Ill.App.3d at 102, 244 Ill.Dec. 433, 726 N.E.2d at 33. The plaintiff pointed out that nursing home residents rely on the facility for the essentials of everyday life, including food and shelter. Nonetheless, the court found that the language of the policy covered "family members" only when the signatory was designated as an individual and not a corporation. Rosenberg, 312...