Am. Serv. Ins. v. Miller

• Citation: 20 N.E.3d 476
• Decision Date: 17 October 2014
• Docket Number: No. 5–13–0582.,5–13–0582.
• Parties: AMERICAN SERVICE INSURANCE, Plaintiff–Appellee and Cross–Appellant, v. David MILLER, Defendant–Appellant and Cross–Appellee(Patricia Lynch, Defendant).
• Court: United States Appellate Court of Illinois

20 N.E.3d 476

AMERICAN SERVICE INSURANCE, Plaintiff–Appellee and Cross–Appellant

v.David MILLER, Defendant–Appellant and Cross–Appellee(Patricia Lynch, Defendant).

No. 5–13–0582.

Appellate Court of Illinois, Fifth District.

Oct. 17, 2014.

Corrected Oct. 20, 2014.

Rhonda D. Fiss, Michael A. Aguirre, The Law Office of Rhonda D. Fiss, P.C., Belleville, IL, for Appellant.

William J. Knapp, Heather Mueller–Jones, Knapp, Ohl & Green, Edwardsville, IL, for Appellee.

OPINION

Justice SPOMER

delivered the judgment of the court, with opinion.

¶ 1 Defendant David Miller appeals the orders of the circuit court of St. Clair County that awarded Miller sanctions. The plaintiff, American Service Insurance, cross-appeals. For the following reasons, we affirm.

¶ 2 FACTS

¶ 3 The facts necessary to our disposition of this appeal are as follows. On August 15, 2006, the plaintiff filed a complaint for declaratory judgment against defendants Patricia Lynch and David Miller. Therein, the plaintiff alleged that Lynch was a former insured of the plaintiff, and that she was a named defendant in a lawsuit filed by Miller arising from damages Miller allegedly sustained when Lynch, then insured by the plaintiff, struck the bicycle he was riding with her automobile on February 12, 2003. The plaintiff further alleged that, in contravention of the requirements of the notice and cooperation clauses of her automobile insurance policy with the plaintiff, Lynch did not provide the plaintiff with notice of the accident in which she struck Miller and did not provide the plaintiff with notice of the lawsuit filed by Miller against her. The plaintiff asked the circuit court to, inter alia, find and declare that the plaintiff therefore had no obligation to defend or indemnify Lynch in the action brought by Miller. Paragraph 4 of the complaint stated that “[a] copy of the policy is attached hereto and incorporated herein as Exhibit A.” Attached to the plaintiff's complaint was, inter alia, Exhibit A. The first page of Exhibit A included the signed certification of Veronica Maldonado, an underwriter for the plaintiff, that Exhibit A was “a true and correct copy” of the insurance policy issued by the plaintiff to Lynch and in effect at the time of Lynch's collision with Miller. Discovery and motion traffic not relevant to this appeal followed for the next several years.

¶ 4 The case finally came to trial on March 19, 2013. On that date, during the direct examination of witness Scott St. John, a claims adjuster employed by the plaintiff, counsel for the plaintiff adduced testimony from St. John that on May 19, 2004, St. John requested a “certified copy” of Lynch's policy from the plaintiff's underwriting department, and that on May 24, 2004, St. John sent the policy he received from underwriting to counsel for Miller. St. John testified about discrepancies between the policy he initially sent to counsel for Miller and the policy attached to the complaint as Exhibit A, and to explain these discrepancies, described the standard process by which the plaintiff created certified copies of policies, which, according to St. John, was to take “the declarations page that was initially issued and [send] that along with the body of the policy that was current at the time of the request” for a certified copy. Counsel for the plaintiff then attempted to introduce into evidence, as Plaintiff's Exhibit 14, a copy of Exhibit A, which St. John described as “a certified copy of Patricia Lynch's policy.” Counsel for Miller objected, stating “this is not the policy that was in effect at the time of this incident,” because, as St. John's testimony about the plaintiff's standard process demonstrated, the only document that “existed” at the time of the incident was the declarations page: the policy itself was “a copy of a policy that was in effect at the time we requested a certified copy, rather than the policy that was in effect at the time of this incident.” Counsel pointed out that the purported certified copy could not have been in existence at the time of the incident, because it contained an address in Elk Grove Village not occupied by the plaintiff until several months after the incident, which also could not have been the address to which Lynch was required to give notice of any accidents during the pendency of the policy.

¶ 5 The court noted that the policy that had been produced “require[d] cooperation and notification by an insured * * * by telephone” to a telephone number that did not exist at the time of the incident, located at an office that did not exist at the time of the incident. Counsel for the plaintiff responded that Miller had admitted, via a request to admit, “that this was the policy in effect at that time.” Miller objected, positing that the request to admit sent to Miller by the plaintiff must have been fraudulent as well. Although counsel for the plaintiff opined that the process used by the plaintiff to certify the policy “is the practice by which certified copies are generated in the insurance industry,” no expert testimony was offered as to this alleged standard practice, and the court declined, in the absence of additional foundation, to consider St. John's testimony as such expert testimony. The court also noted that it had “an issue with sending someone what purports to be a certified copy and not clearly telling them this is a representative policy, it's not the policy in question.” When counsel for the plaintiff eventually stated that the only difference “between this policy and the prior policy is the address information,” the court responded: “How would we know that? We'd have to take your word for it. We'd have to take the witness's word without his ability to say how he knows that unless he memorized verbatim the prior policy.”

¶ 6 Subsequently, counsel for Miller moved to have the plaintiff's pleadings “stricken for discovery fraud and for abuse of this entire process,” and requested “leave to submit a request for sanctions at the end of this hearing.” The court took the motions under advisement, and eventually the questioning of St. John resumed. On cross-examination, St. John conceded that the copy of the policy that was attached to the complaint for declaratory judgment was “not the policy that Ms. Lynch had in her possession at the time of [the] accident.” At the conclusion of the hearing, counsel for Miller moved for a directed verdict, pointing out that because the plaintiff had been unable to produce the policy in question, the plaintiff could not establish what the terms of that policy were and therefore could never prove that Lynch had failed to comply with the purported notice and cooperation provisions. In response, the court noted that the evidence at the hearing demonstrated that correspondence sent by the plaintiff to Lynch after the incident made reference to paragraphs, purportedly relating to the notice and cooperation provisions of the policy, that did not match up with the policy subsequently produced by the plaintiff for trial. The court took the matter under advisement and noted that by agreement of the parties, the question of possible sanctions would be raised by written motion.

¶ 7 On April 5, 2013, counsel for Miller filed her motion for sanctions pursuant to Illinois Supreme Court Rules 137

(eff. Jan. 4, 2013) and 219(c) (eff. July 1, 2002). On April 22, 2013, the plaintiff filed a response to the motion for sanctions, as well as a motion for leave to amend the complaint and substitute an exhibit, and a proposed first amended complaint for declaratory judgment, attached to which was Exhibit A1. The first page of Exhibit A1 included the signed certification of Helen Piton, an underwriter for the plaintiff, dated April 2, 2013, that Exhibit A1 was “a true and correct copy” of the insurance policy issued by the plaintiff to Lynch and in effect at the time of Lynch's collision with Miller.

¶ 8 On May 8, 2013, a hearing was held on the motions. Following the hearing, counsel for Miller was granted leave to file a supplemental motion for sanctions, and the plaintiff was granted leave to respond thereto. Counsel for Miller filed her supplemental motion on May 22, 2013. On June 12, 2013, the plaintiff filed a corrected motion for leave to amend the complaint and substitute an exhibit, a response to Miller's supplemental motion for sanctions, the affidavit of the plaintiff's litigation manager, Robert McKenna, and a document styled as “Exhibit A2.” The first page of Exhibit A2 included the signed certification of underwriter Piton, dated June 11, 2013, that Exhibit A2 was “a true and correct copy” of the insurance policy issued by the plaintiff to Lynch and in effect at the time of Lynch's collision with Miller. In his affidavit, McKenna purported to explain why the plaintiff had encountered so many difficulties when attempting to produce a certified copy of Lynch's insurance policy, and averred that: (1) the relevant policy provisions in all the policies produced by the plaintiff were the same; (2) Exhibit A2 was the correct policy; and (3) “the errors associated with the creation of the certified copies of the subject policy were wholly inadvertent and were not intentional, fraudulent, deceptive or done with an intention to deceive or conceal.” On June 20, 2013, Miller filed a response to the plaintiff's documents.

¶ 9 On July 29, 2013, the circuit court entered its order on the appropriateness of sanctions. The first section of the order, which was styled “Sanctions per Supreme Court Rule 137

,” found that despite multiple attempts to do so, the plaintiff still had not produced “the right policy,” because even Exhibit A2 did not “comport” with correspondence the plaintiff had sent to Lynch regarding the policy issued to her, and therefore could not be a true and correct copy of her policy. The order found Rule 137 sanctions to be appropriate against the plaintiff, but not against the plaintiff's counsel. The second section of...