937 N.E.2d 1186 (Ill.App. 1 Dist. 2010), 1-09-1130, Founders Ins. Co. v. Shaikh

Docket Nº:1-09-1130.
Citation:937 N.E.2d 1186, 344 Ill.Dec. 845
Opinion Judge:McBRIDE, Justice
Party Name:FOUNDERS INSURANCE COMPANY, Plaintiff-Appellee, v. Siraj A. SHAIKH, Defendant (Muhammad M. Khan, Defendant-Appellant).
Attorney:Stephanie L. Erickson, Law Office of Shari Shelmadine, for Plaintiff-Appellee. Constantine N. Dranias, Dranias, Harrington & Wilson, Chicago, for Defendant-Appellant.
Judge Panel:CAHILL and R. GORDON, JJ., concur.
Case Date:October 22, 2010
Court:Court of Appeals of Illinois

Page 1186

937 N.E.2d 1186 (Ill.App. 1 Dist. 2010)

344 Ill.Dec. 845

FOUNDERS INSURANCE COMPANY, Plaintiff-Appellee,

v.

Siraj A. SHAIKH, Defendant (Muhammad M. Khan, Defendant-Appellant).

No. 1-09-1130.

Court of Appeal of Illinois, First District, Sixth Division.

October 22, 2010

Page 1187

[Copyrighted Material Omitted]

Page 1188

Stephanie L. Erickson, Law Office of Shari Shelmadine, for Plaintiff-Appellee.

Constantine N. Dranias, Dranias, Harrington & Wilson, Chicago, for Defendant-Appellant.

OPINION

McBRIDE, Justice

The circuit court granted summary judgment to Founders Insurance Company on its claim that its insured driver Siraj A. Shaikh, who was involved in a two-car collision, breached the assistance and cooperation clause of his automobile policy. The court's finding relieved the insurer of any duty to defend or indemnify Shaikh from litigation and an $11,000 judgment entered for the other driver, Muhammad M. Khan. Because Shaikh's whereabouts are unknown, Khan cannot collect the judgment. Khan argues for reversal on grounds that the insurer had control of negotiations with Khan but delayed settling the case in breach of its duty of good faith toward its insured and failed to show the substantial prejudice necessary to justify invocation of the contract clause.

Summary judgment can aid in the expeditious disposition of a lawsuit, but it is considered a drastic remedy which should be granted only when the pleadings, depositions, affidavits, admissions, and exhibits on file show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Kleinwort Benson North America, Inc. v. Quantum Financial Services, Inc., 285 Ill.App.3d 201, 208-09, 220 Ill.Dec. 457, 673 N.E.2d 369, 374-75 (1996). The court should construe all of the foregoing documents strictly against the moving party and in favor of the responding party, and where reasonable persons could draw different conclusions, deny summary judgment. Kleinwort Benson, 285 Ill.App.3d at 209, 220 Ill.Dec. 457, 673 N.E.2d at 375. A circuit court's entry of summary judgment is addressed de novo on appeal. Kleinwort Benson, 285 Ill.App.3d at 209, 220 Ill.Dec. 457, 673 N.E.2d at 375. Under this standard, the facts and law are considered anew, without any deference to the judgment of the court. Kleinwort Benson, 285 Ill.App.3d at 209, 220 Ill.Dec. 457, 673 N.E.2d at 375.

Shaikh, who was born in 1949, applied for insurance coverage from Founders Insurance Company (Founders) on or about March 12, 2003. The home address he provided was 489 James Court, # C, Glendale Heights, Illinois, 60139. The following day, Founders issued a one-year policy. About a month later, Shaikh was driving the insured vehicle on Chicago's northwest side at 1:05 a.m. on Monday, April 14, 2003, when the collision at issue occurred in the intersection of Talman and Devon Avenues. The police report indicates Shaikh was ticketed for failure to stop and both vehicles were towed from the scene. Defendant Khan, who was born in 1975, complained of knee, neck, and back pain, and was transported to a hospital. Shaikh told the investigating officer his address was 6150 North Lincoln Avenue, Chicago, Illinois. On June 5, 2003, Khan's attorney told Founders his claims would include bodily injury and lost wages. On December 2, 2003, Khan's insurer accepted $5,757 to settle his property damage claim. On January 30, 2004, counsel told Founders that Khan's losses included $6,590 for medical care and $651

Page 1189

for lost wages, and on February 28, 2005, counsel demanded the limits of Shaikh's coverage, which was $20,000. However, on March 9, 2005, Founders countered with a settlement offer of $2,000 and indicated it would not raise this amount despite Khan's threat to file suit.

About three years after the collision, Shaikh telephoned Founders on May 12, 2006, and notified senior claim analyst Cort Fornero that he had been served with the summons and complaint for Khan v. Shaikh, 05-M1-301121. According to an affidavit prepared by Founders' employee Erin Goggin, a senior claim analyst, the documents and notes in Founders' underwriting, claim, and litigation files indicated Fornero then asked Shaikh to fax a copy of the litigation documents, and informed Shaikh that a lawyer would file an appearance on his behalf and Shaikh did not need to appear in court on the return date specified in the summons. During that telephone conversation, Shaikh told Fornero his current address was 1721 North Mannheim Road, Unit 16, Stone Park, Illinois, and he provided his current home telephone number. That same day, Shaikh faxed a copy of the Khan lawsuit to Founders and indicated on the fax cover page that his address was " 1721 N. Mannheim Rd, # 16, Stone Park, IL 60165." Later that day, Fornero transmitted Shaikh's cover page to Engelberg & Hillison, the Chicago law firm Founders hired to provide Shaikh's legal defense. On May 17, 2006, which was the return date on the summons, Shaikh telephoned Fornero and was again advised that a lawyer would file an appearance and answer on his behalf and also told that the lawyer would contact Shaikh during the discovery phase of the case to obtain answers to written or oral questions about the collision.

Later that same year, on December 21, 2006, attorney Allen Engelberg told Fornero that correspondence sent to Shaikh had been returned to the law firm as undeliverable. Fornero dialed Shaikh's telephone number and learned the service was disconnected.

Fornero turned the matter over to Founders' special investigation unit, where Carolyn Berna generated a database search on LexisNexis which showed Shaikh's two most recent addresses were the ones on Lincoln Avenue and Mannheim Road. On January 4, 2007, Berna went to the Mannheim Road property in person. A man occupying the apartment unit told Berna that he had recently moved in, that Shaikh did not reside there, and that he did not know Shaikh or have any information about him. On January 8, 2007, Berna went to the Lincoln Avenue address, which turned out to be a commercial property occupied by a law firm, and a woman in the office said she did not know Shaikh or know why he would use the address as his own. On January 18, 2007, Founders retained the professional investigation firm of Stern Process & Investigation L.L.C. (Stern Process) to locate Shaikh and hand deliver a letter to him about the Khan lawsuit. Research conducted by Stern Process indicated that a different Mannheim Road address was Shaikh's most recent. Instead of 1721 Mannheim Road, the most current address was 1837 Mannheim Road. On January 20, 2007, Stern Process investigator George F. Kelleher went to the new Mannheim address and discovered it was an automobile muffler shop. The shop's manager did not know Shaikh and the current owners of the business had owned it for six years and were unacquainted with Shaikh. Next, Stern Process investigator Todd Martinson located Shaikh's son, Kaiser Shaikh, who was living at 46 Stonefield Drive, Glendale Heights, Illinois, but when Martinson telephoned Kaiser on January

Page 1190

25, 2007, Kaiser said he had not been in contact with his father in " years."

Meanwhile, the Khan lawsuit was progressing. On February 5, 2007, the circuit court entered a written order indicating Shaikh must answer written discovery by February 26, 2007, or be barred from testifying or presenting any evidence at trial or mandatory arbitration proceedings.

On February 16, 2007, investigator Martinson went to the James Court address stated in Shaikh's application for insurance and confirmed that Shaikh was no longer residing there. On March 28, 2007, claim analyst Goggin sent letters to Shaikh at the James Court address (the application address), the Lincoln Avenue address (the commercial property occupied by a law firm), and the first of the two Mannheim Road addresses (the residential unit with a new occupant who denied knowing Shaikh). All three letters were returned as undeliverable, but the postal service indicated on the envelope returned from James Court that Shaikh's expired forwarding address was the Stonefield Drive property where his son Kaiser was residing. Claims analyst Goggin pursued this lead on April 3, 2007, by sending a letter to Shaikh by regular and certified mail delivery to the Stonefield Drive address and on April 4, 2007, by having investigator Berna go to the Stonefield Drive property herself, and after receiving no answer, leave a copy of the letter on the residence door. The copy sent by certified mail was returned as " Unclaimed." The correspondence announced Founders' intention to file a declaratory judgment action regarding the assistance and cooperation clause of the insurance contract. That clause states:

" CONDITIONS

* * *

5. Assistance and Cooperation of the Insured-Parts I [Liability], III [Physical Damage] and IV [Uninsured...

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