Broadnax v. Morrow

Decision Date14 January 2002
Docket NumberNo. 4-00-0176.,4-00-0176.
Citation326 Ill. App.3d 1074,261 Ill.Dec. 225,762 N.E.2d 1152
PartiesWillie G. BROADNAX, Plaintiff-Appellant, v. David G. MORROW, as Agent for Morrow & Wells, Ltd., an Illinois Corporation; Morrow & Wells, Ltd., an Illionois Corporation, as Principal, for David G. Morrow; and Roush Insurance Services, Inc., an Indiana Corporation, as Principal, Defendants-Appellees.
CourtUnited States Appellate Court of Illinois

Bradford A. Rau, Mark S. Morthland, Morthland, Morthland & Rau, P.C., Decatur, for Willie G. Broadnax.

Robert C. Bollinger, Evan H. Johnson, Erickson Davis Murphy Johnson Griffith & Walsh Ltd., Decatur, for David G. Morrow.

Jerrold H. Stocks, Winters, Featherstun, Gaumer, Kenney, Postlewait, Decatur, for Roush Insurance Services, Inc.

Justice KNECHT delivered the opinion of the court:

After his insurance company refused to pay a fire claim, plaintiff, Willie Broadnax, brought a negligence cause of action against insurance agent David Morrow, insurance agency Morrow & Wells, Ltd., and Roush Insurance Services, Inc. (Roush). The trial court granted defendants' motions to dismiss because Broadnax failed to file the negligence claim within the two-year statute of limitations period. The trial court denied Broadnax's motion to reconsider, and this appeal followed. We affirm.

I. BACKGROUND

In April 1995, plaintiff, Willie Broadnax, applied for an insurance policy from Morrow & Wells, Ltd., to cover a building located in downtown Decatur. During Broadnax's initial conversations with his insurance agent, David Morrow, he told Morrow he was in the process of purchasing the building and he had plans to renovate it and open a package liquor business on the premises. Morrow contacted Roush, an Indiana corporation, which in turn contacted Acceptance Indemnity Insurance Company (Acceptance), which ultimately issued the policy to Broadnax on April, 14, 1995. The policy had a $70,000 limit of liability.

On October 5, 1995, a fire occurred at the building, causing damage in excess of $70,000. Broadnax notified Morrow of the fire, and on October 23, 1995, Morrow helped Broadnax file a proof of loss claim with Acceptance. Sometime before May 10, 1996, Acceptance denied Broadnax's claim. On May 10, Acceptance filed a declaratory judgment action, seeking a declaration of no coverage due to Broadnax's failure to comply with a vacancy provision of the policy.

Broadnax filed a breach of contract action against Acceptance on August 5, 1996, for failure to provide coverage under the policy. On November 26, 1996, Acceptance filed its answer, asserting as an affirmative defense the policy provision regarding vacancy. Acceptance filed a motion for summary judgment on July 17, 1997, and the trial court granted the motion on October 27, 1997. The trial court cited Broadnax's failure to comply with the vacancy provision of the insurance policy. This court affirmed the trial court's judgment in Broadnax v. Acceptance Indemnity Insurance Co., No. 5-97-0957, 298 Ill.App.3d 1187, 250 Ill.Dec. 279, 738 N.E.2d 243 (September 29, 1998) (unpublished order under Supreme Court Rule 23).

On September 1, 1999, Broadnax filed a negligence action against David Morrow, Morrow & Wells, Ltd., and Roush. The negligence claim asserted defendants were negligent for obtaining an insurance policy containing an exclusionary endorsement which did not allow for vacancy or for the premises to be unoccupied, when the defendants allegedly knew or should have known the property would be vacant and unoccupied for a period in excess of 30 days because Broadnax was in the process of renovating and remodeling.

Defendants filed motions to dismiss because Broadnax failed to file his negligence claim within the two-year statute of limitations period. 735 ILCS 5/13-214.4 (West 1998). Broadnax did not file a response to defendants' motions to dismiss; and on October 25, 1999, the trial court dismissed Broadnax's claim with prejudice, finding the two-year statute of limitations period had expired. On November 23, 1999, Broadnax filed a motion to reconsider the dismissal of his claim. The trial court denied the motion and stated:

"Plaintiff did not respond to [d]efendants' [m]otion to [d]ismiss[,] which was filed on September 28, 1999, and ruled on October 25, 1999[,] pursuant to the [c]ourt's docketing order. That [p]laintiff has failed to show why the matter set forth in his [m]otion to [r]econsider could not have been presented to the [c]ourt or that such matters are new and previously unknown to the [p]laintiff or could not have been timely discovered."

Broadnax appeals, contending (1) the trial court erred when it granted defendants' motions to dismiss based on the running of the statute of limitations; and (2) the trial court abused its discretion when it denied his motion to reconsider.

II. ANALYSIS
A. Statute of Limitations

Whether to grant a motion to dismiss is within the sound discretion of the trial court, and we will not disturb its decision absent an abuse of discretion. Dick v. Peoples Mid-Illinois Corp., 242 Ill.App.3d 297, 303, 182 Ill.Dec. 463, 609 N.E.2d 997, 1002, (1993). The trial court's granting of defendants' motions to dismiss on the grounds the claim is barred by other affirmative matter avoiding the legal effect or defeating the claim as provided by section 2-619(a)(5) of the Code of Civil Procedure (Code) (735 ILCS 5/2-619(a)(5) (West 1998)) resembles the granting of a summary judgment motion. For this reason, we will conduct a de novo review and consider whether "`the existence of a genuine issue of material fact should have precluded the dismissal or, absent such an issue of fact, whether dismissal is proper as a matter of law.'" Epstein v. Chicago Board of Education, 178 Ill.2d 370, 383, 227 Ill.Dec. 560, 687 N.E.2d 1042, 1049 (1997), quoting Kedzie & 103rd Currency Exchange, Inc. v. Hodge, 156 Ill.2d 112, 116-17, 189 Ill.Dec. 31, 619 N.E.2d 732, 735 (1993); see 4 R. Michael, Illinois Practice § 41.9 (1989).

Defendants moved to dismiss Broadnax's complaint because the two-year statute of limitations period governing claims against insurance producers had run. Section 13-214.4 of the Code states:

"All causes of action brought by any person or entity under any statute or any legal or equitable theory against an insurance producer, registered firm, or limited insurance representative concerning the sale, placement, procurement, renewal, cancellation of, or failure to procure any policy of insurance shall be brought within 2 years of the date the cause of action accrues." 735 ILCS 5/13-214.4 (West 1998).

Broadnax contends the trial court abused its discretion in granting defendants' motions to dismiss because his negligence cause of action did not accrue until the trial court granted Acceptance's motion for summary judgment in the breach of contract case on October 27, 1997. Therefore, his negligence action filed on September 1, 1999, was within the two-year statute of limitations period. Defendants contend the latest possible date Broadnax's cause of action accrued was August 15, 1996, when Broadnax filed his complaint for breach of contract against Acceptance. Thus, according to defendants, Broadnax's negligence action was filed at least one year after the running of the two-year statute of limitations period.

Indiana Insurance Co. v. Machon & Machon, Inc., 324 Ill.App.3d 300, 257 Ill. Dec. 247, 753 N.E.2d 442, (2001), addresses the issue of when a cause of action accrues under section 13-214.4 of the Code. There, the plaintiff insurance company, Indiana, brought a cause of action against Machon, one of its agents, seeking reimbursement for a claim it was required to pay in excess of the insured's policy limit as a result of Machon's negligent transmittal of a letter to the insured. The letter informed the insured his policy provided "replacement cost" benefits for his building, while the policy actually provided a lesser benefit of "actual cash value." When the insured's building was destroyed by fire, Indiana asserted it became liable to the insured for the "replacement cost" of the building as a result of Machon's negligence. Thus, Indiana's claim sought from Machon the difference between the "replacement cost" and the "actual cash value." Indiana Insurance, 324 Ill.App.3d at 301, 257 Ill.Dec. 247, 753 N.E.2d at 444.

Indiana's complaint contained three theories of recovery: negligence, breach of implied warranty, and breach of contract. On appeal, the First District determined the nature of Indiana's cause of action against Machon was a tort arising out of a contractual relationship. Indiana Insurance, 324 Ill.App.3d at 303-04,257 Ill.Dec. 247,753 N.E.2d at 445-46. Therefore, the limitations period accrued at the time of the breach of contract, not when the party first sustained damages or injury, as in a negligence cause of action. Del Bianco v. American Motorists Insurance Co., 73 Ill. App.3d 743, 748-49, 29 Ill.Dec. 563, 392 N.E.2d 120, 124 (1979) (tort arising from breach of contract); West American Insurance Co. v. Sal E. Lobianco & Son Co., 69 Ill.2d 126, 132, 12 Ill.Dec. 893, 370 N.E.2d 804, 806 (1977) (negligence). The court found the cause of action accrued when Machon breached the contract by sending the letter to the insured obligating Indiana to pay an amount in excess of the amount provided in the policy, even though Indiana could not have known of Machon's error at that time. The court, applying the discovery rule, stated Indiana had the burden of proving the date of the discovery of its loss (Hermitage Corp. v. Contractors Adjustment Co., 166 Ill.2d 72, 84-85, 209 Ill.Dec. 684, 651 N.E.2d 1132, 1138-39 (1995)), and it failed to meet that burden because it did not specify the date when it first became aware of its loss. Indiana Insurance, 324 Ill.App.3d at 304,257 Ill.Dec. 247,753 N.E.2d at 446.

Defendants cite Indiana Insurance as supplemental authority, stating it "supports the...

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