Am. Family Mut. Ins. Co. v. Northern Heritage Builders, L.L.C.
| Decision Date | 12 October 2010 |
| Docket Number | No. 1-10-0216.,1-10-0216. |
| Citation | 937 N.E.2d 323,344 Ill.Dec. 617,404 Ill.App.3d 584 |
| Parties | AMERICAN FAMILY MUTUAL INSURANCE COMPANY, as Subrogee of Michael P. McGrath, Jr., Plaintiff-Appellant, v. NORTHERN HERITAGE BUILDERS, L.L.C., and Patrick Plunkett Architectural Design, Ltd., Defendants-Appellees. and Rapciak Construction, Inc., Defendant. |
| Court | United States Appellate Court of Illinois |
Sneckenberg, Thompson & Brody, LLP, Chicago (William Sneckenberg, Steven Thompson, Emilie Kaplan, of counsel), for Appellant.
Senak Smith & Michaud, Ltd., Chicago (Thomas A. Smith, Kelly A. Fox, of counsel), Scott & Krauss, LLC, Chicago (Gregory Bird, Sonia Kinra, Blair Lazarus, of counsel), for Appellees.
[344 Ill.Dec. 618, 404 Ill.App.3d 585]
American Family Insurance Company (American Family) appeals from an order of the Circuit Court of Cook County which dismissed its action against Northern Heritage Builders, L.L.C. (Northern Heritage), and Patrick Plunkett Architectural Design, Ltd. (Patrick Plunkett). American Family brought the instant action against Northern Heritage and Patrick Plunkett as the subrogee of its insured, Michael P. McGrath, Jr. (McGrath), asserting claims based upon a theory of equitable subrogation by reason of its having made payments
[344 Ill.Dec. 619, 937 N.E.2d 325]
to McGrath under a policy of insurance for water damage to his residence. The trial court found that, since its policy of insurance with McGrath provides for subrogation, American Family had not, and could not, assert claims based upon the doctrine of equitable subrogation. For the reasons which follow, we agree and affirm the judgment of the circuit court.
The facts of this case are not in dispute. McGrath is the owner of a three-story single-family residence located at 1848 N. Orchard, Chicago, Illinois. The residence was designed by Patrick Plunkett and built by Northern Heritage pursuant to contracts entered into with McGrath.
McGrath purchased a homeowner's policy from American Family insuring the residence (the Policy). On August 23, 2006, while the Policy was in force, McGrath made a claim under the Policy for damage to the residence by reason of rain and moisture penetrating the exterior due to alleged faulty construction. American Family denied the claim, and McGrath filed suit against American Family in the United States District Court for the Northern District of Illinois (hereinafter referred to as the Federal Action).
On August 6, 2007, while the Federal Action was pending and undetermined, McGrath filed suit in the Circuit Court of Cook County against Northern Heritage and Rapciak Construction, Inc. (hereinafter referred to as case 07 L 8252), seeking damages for the construction defects which resulted in the same damage to his residence that gave rise to the claim that was the subject of the Federal Action against American Family. Following the filing of case 07 L 8252, an order was entered in the Federal Action granting a summary judgment in favor of McGrath on the issue of coverage under the Policy for the water damage to his residence. Thereafter, the Federal Action was tried, resulting in a jury verdict in favor of McGrath. Subsequent to the verdict, on May 16, 2008, McGrath and American Family settled the Federal Action, and American Family paid McGrath under the Policy for the damage to his residence. The terms of the settlement are contained in a written agreement which does not contain an assignment to American Family of McGrath's rights of recovery against any party by reason of the damage to his residence.
On May 20, 2008, American Family filed the instant action as the subrogee of McGrath, which was docketed in the Circuit Court of Cook County as case 08 L 5548. American Family asserted the same allegations as McGrath made in case 07 L 8252. On July 22, 2008, an order was entered consolidating McGrath's action, case 07 L 8252, and the American Family action, case 08 L 5548, for purposes of discovery.
On March 13, 2009, American Family filed its third amended complaint in the instant action, case 08 L 5548, asserting claims based upon a theory of equitable subrogation against Northern Heritage and Patrick Plunkett by reason of the payment it made to McGrath for construction defects which resulted in damage to his residence. In addition to a recitation of the foregoing historical facts, American Family attached to, and incorporated into, its third amended complaint a certified copy of the Policy which, as it relates to subrogation, provides as follows:
On May 13, 2009, Patrick Plunkett filed a combined motion pursuant to section 2-619.1 of the Code of Civil Procedure (Code) (735 ILCS 5/2-619.1 (West 2008)), seeking dismissal of American Family's third amended complaint. Northern Heritage joined in the motion on the following day. Pursuant to section 2-615 (735 ILCS 5/2-615 (West 2008)), the motion argued that the third amended complaint was insufficient at law for the following reasons: 1) American Family failed to plead how and when it became the subrogee of McGrath's rights of action in violation of section 2-403 of the Code (735 ILCS 5/2-403 (West 2008)); 2) the third amended complaint was not verified; and 3) it fails to state a claim based upon a theory of equitable subrogation by reason of the existence of a contractual subrogation provision in the Policy. In support of its prayer for involuntary dismissal pursuant to section 2-619 (735 ILCS 5/2-619 (West 2008)), the motion asserted that, as McGrath had never assigned his rights to recover pursuant to the terms of the Policy, American Family could not maintain a claim as his subrogee. The argument was supported by McGrath's answer to a request to admit facts wherein he denied ever having assigned his rights to American Family.
On July 13, 2009, American Family moved for leave to file an amendment to its third amended complaint, supplying the verification which had been omitted when the third amended complaint was originally filed.
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