Clear-Vu Packaging, Inc. v. National Union Fire Ins. Co. of Pittsburgh, Pa.

• Decision Date: 25 March 1982
• Docket Number: CLEAR-VU,No. 81-480,81-480
• Court: United States Appellate Court of Illinois
• Parties: , 61 Ill.Dec. 212 PACKAGING, INC., a corporation, and Plastofilm Industries, Inc., a corporation, Plaintiffs-Appellants, v. NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA., a corporation, Defendant, The Alper Agency, Inc., a corporation, Defendant-Appellee.

Page 365

434 N.E.2d 365

105 Ill.App.3d 671, 61 Ill.Dec. 212

CLEAR-VU PACKAGING, INC., a corporation, and Plastofilm Industries, Inc., a corporation, Plaintiffs-Appellants, v. NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA., a corporation, Defendant The Alper Agency, Inc., a corporation, Defendant-Appellee.

No. 81-480.

Appellate Court of Illinois, Second District.

March 25, 1982.

Rehearing Denied May 11, 1982.

Rabens, Formusa & Glassman, Ltd., Marvin Glassman, Nicholas J. Lynn, Chicago, for plaintiffs-appellants.

McKenna, Storer, Rowe, White & Farrug, Robert S. Soderstrom and Shaun McParland, Chicago, for defendant-appellee.

REINHARD, Justice:

This appeal arises from a dismissal of plaintiffs' amended complaint pursuant to section 48(1)(f) of the Illinois Civil Practice Act. (Ill.Rev.Stat.1979, ch. 110, par. 48(1)(f).) The sole issue presented for our review is whether plaintiffs' release of a defendant insurance company for liability under the terms of an insurance policy operated as a release of the defendant insurance broker for liability for its alleged failure to procure a policy in conformance with the plaintiffs' request.

On June 20, 1978, plaintiffs, Clear-Vu Packaging, Inc. (Clear-Vu), and Plastofilm Industries, Inc. (Plastofilm), filed a two-count complaint against defendants, National Union Fire Insurance Co. (National Union) and the Alper Agency, Inc. (Alper), seeking to recover $2,024,400 in damages which they sustained as a result of a fire on their insured premises. Plastofilm is the sole owner of all outstanding shares of stock in Clear-Vu. Count I of the complaint, directed against Alper, sought a declaration of the rights and liabilities of the parties under the provisions of an insurance binder letter dated April 25, 1977, and subsequent letters and agreements between Alper, Clear-Vu and Plastofilm. This count further requested judgment against Alper in an amount equal to plaintiffs' total loss suffered less any sum paid by National Union. Count II sought judgment against National Union under the terms of the insurance policy issued to plaintiffs.

On January 19, 1979, plaintiffs filed an amended complaint seeking, in addition to the relief sought in the original complaint damages against Alper for its improper preparation of plaintiffs' business interruption claim, and punitive damages against National Union for its refusal to pay plaintiffs' claim. The punitive damages claim was subsequently dismissed by the trial court. Also, a countercomplaint was filed by Alper against National Union which is not pertinent to this appeal. On December 28, 1979, plaintiffs' remaining claim against National Union was then dismissed pursuant to a stipulation of the parties that the claim would be litigated in an action between the parties pending in the State of New York. Thereafter, plaintiffs and National Union executed a document, in consideration of $1,250,000 paid by National Union, releasing National Union from all causes of action plaintiffs had against National Union arising out of the insurance policy.

On May 19, 1980, plaintiffs filed an amended Count I against Alper. The facts as alleged in that amended count are essentially as follows. Prior to February 17, 1977, plaintiffs requested Alper to obtain insurance coverage for property and business interruption loss for the property and business operations for Clear-Vu which was located at 112 Bruckner Blvd., Bronx, New York, New York. On April 25, 1977, plaintiffs received a letter from Alper asserting that arrangements had been made with National Union "to accept on an All Risk Basis an amount of $2,650,000 blanket contents, property of others, and business interruption." Accompanying the letter was an insurance premium invoice in the amount of $5,762 which plaintiffs promptly paid. The insurance policy issued by National Union, however, did not conform to the agreement between plaintiffs and Alper, and Alper failed to attend to correction of the policy or to advise plaintiffs that a policy could not be obtained in accordance with their agreement. On or about August 6, 1977, a fire occurred at Clear-Vu's plant and offices in New York, resulting in loss and damage in the total amount of $2,024,400. This amount consisted of a contents loss of $1,311,059 and a business interruption loss of $713,341. Subsequently, plaintiffs were advised by National Union that the policy in force on the date of the fire did not provide blanket coverage but was limited to $1,150,000 for loss of contents and $1,500,000 for business interruption. As a result of the failure of the policy to sufficiently cover plaintiffs' contents loss, plaintiffs suffered an uninsured loss of $161,059. Plaintiffs prayed for judgment against Alper in an amount equal to the total loss suffered less any sums paid by National Union.

On August 11, 1980, Alper filed a motion to dismiss claiming that plaintiffs' release of National Union operated to release plaintiffs' claim against it. The trial court granted Alper's motion, and plaintiff now appeals.

We note initially that in reviewing a trial court's order granting a defendant's motion to dismiss a complaint, we must regard all well-pleaded facts and their reasonable inferences as true. (Wilczynski v. Goodman (1979), 73 Ill.App.3d 51, 54, 29 Ill.Dec. 216, 391 N.E.2d 479.) In addressing the issue raised for our review, we must first determine if the release executed between plaintiffs and National Union, on its face, purported to release Alper. The document in question provided that Clear-Vu and Plastofilm in consideration of the sum of $1,250,000 received from National Union "do hereby release and discharge National its successors and assigns, from all actions, causes of actions, * * * whatsoever, in law, admiralty or equity, which against National either Plastofilm or Clear-Vu or both, or their successors or assigns, ever had, now have or hereafter can, shall, or may have, arising out of the occurrence of a fire on August 7, 1977, which damaged Clear-Vu's premises at 112 Bruckner Boulevard, Bronx, New York, or under, by virtue of, or in connection with, a certain contract of insurance between National and Clear-Vu, bearing policy no. 4509158 * * *." Manifestly, the document does not purport to release anyone other than "National, its successors and assigns." The intention of the parties controls the scope and effect of the release and such intent is determined from the language of the instrument when read in light of the circumstances surrounding the transaction. (Gladinus v. Laughlin (1977), 51 Ill.App.3d 694, 696, 9 Ill.Dec. 173, 366 N.E.2d 430.) Since the document in question does not mention the Alper Agency nor does it state it is in full satisfaction of all of plaintiffs' claims against all potential parties, we believe it is clear that the parties intended to release only National Union from any liability it might have on the insurance policy. We cannot interpret the language of the release so broadly as to defeat a valid claim not then in the minds of the parties. 51 Ill.App.3d 694, 696, 9 Ill.Dec. 173, 366 N.E.2d 430.

Having decided that the document on its face does not release Alper, we must now determine whether Alper was released by operation of law. It is well-settled in Illinois that the release of one joint-tortfeasor releases all. (Pate v. City of Sesser (1979), 75 Ill.App.3d 233, 237, 30 Ill.Dec. 799, 393 N.E.2d 1146; Smith v. Lehn & Fink Products Corp. (1977), 46 Ill.App.3d 1002, 1009, 5 Ill.Dec. 338, 361 N.E.2d 661.) This same rule applies to those concurrently liable for a single indivisible injury, not merely those who are technically joint-tortfeasors. (Alberstett v. Country Mutual Insurance Co. (1979), 79 Ill.App.3d 407, 410, 34 Ill.Dec. 788, 398 N.E.2d 611; Artoe v. Navajo...