Employers Mut. Companies v. Skilling

• Decision Date: 04 February 1994
• Docket Number: 2-93-0138,Nos. 2-93-0088,s. 2-93-0088
• Citation: 196 Ill.Dec. 301,629 N.E.2d 1145,256 Ill.App.3d 567
• Court: United States Appellate Court of Illinois
• Parties: , 196 Ill.Dec. 301 EMPLOYERS MUTUAL COMPANIES, Plaintiff-Appellant, v. George SKILLING, Defendant-Appellee (Kirkpatrick Trucking Company, Defendant).

Page 1145

629 N.E.2d 1145

256 Ill.App.3d 567, 196 Ill.Dec. 301

EMPLOYERS MUTUAL COMPANIES, Plaintiff-Appellant, v. George SKILLING, Defendant-Appellee (Kirkpatrick Trucking

Company, Defendant).

Nos. 2-93-0088, 2-93-0138.

Appellate Court of Illinois,

Second District.

Feb. 4, 1994.

Justice BOWMAN delivered the opinion of the court:

Plaintiff, Employers Mutual Companies (Employers Mutual), appeals from an order dismissing its complaint for declaratory judgment against defendant, George Skilling. Skilling had filed two claims for workers' compensation with the Illinois Industrial Commission (Commission) before Employers Mutual filed its complaint in the circuit court. The trial court dismissed the complaint on the ground that plaintiff had failed to exhaust its administrative remedies before the Commission. On appeal Employers Mutual contends that the trial court erred because the Commission did not have jurisdiction to rule on the issue presented in the complaint.

Skilling's workers' compensation claims, filed on July 24, 1991, and September 12, 1991, alleged two separate accidents, both occurring in Illinois, while he was employed by defendant, Kirkpatrick Trucking Company, Inc. (Kirkpatrick). At the time of the accidents Kirkpatrick had workers' compensation insurance provided by Employers Mutual. While we cannot discern a date from the record, at oral argument counsel indicated that in the spring of 1992 Employers Mutual filed a motion with the Commission requesting leave to be added as a party respondent to Skilling's claims. The insurer also asserted essentially that the policy provided coverage only for injuries occurring in work places located in Wisconsin. Since Skilling was injured in Illinois, Employers Mutual requested a determination that it had no obligation to defend or indemnify Kirkpatrick or to pay workers' compensation benefits to Skilling as a result of his claims filed with the Commission. In its subsequent complaint for declaratory judgment, filed on June 5, 1992, Employers Mutual made the same allegations it had made in its motion to the Commission and asked for a ruling from the court that it had no obligation toward Kirkpatrick or Skilling. Employers Mutual ultimately received a default judgment against Kirkpatrick in the court action.

In a motion to dismiss the complaint Skilling urged that, by bringing the matter before the Commission arbitrator, Employers Mutual had acknowledged that the appropriate forum for the determination of insurance coverage was in the Commission. Skilling sought dismissal of the complaint on the ground that there was another action pending between the same parties for the same cause. Employers Mutual acknowledged that it had attempted to have the Commission determine the insurance coverage issue but asserted that the arbitrator would not entertain its motion. Employers Mutual then argued that the Commission did not have jurisdiction over coverage issues. The motion to dismiss was denied. We note that during oral argument counsel for Employers Mutual explained that, when the arbitrator learned this case had been initiated in the circuit court, he declined to rule on the company's motion.

Skilling again moved to dismiss, pursuant to section 2-619 of the Illinois Code of Civil Procedure (735 ILCS 5/2-619 (West 1992)), on the basis that Employers Mutual had failed to exhaust its administrative remedies before the Commission regarding the issue of insurance coverage. The trial court granted the motion, and this appeal followed.

When proceeding under section 2-619, a movant concedes all well-pleaded facts set forth in the complaint, but does not admit conclusions of law. (Falk v. Martel (1991), 210 Ill.App.3d 557, 560-61, 155 Ill.Dec. 248, 569 N.E.2d 248; Miranda v. Jewel Cos. (1989), 192 Ill.App.3d 586, 588, 139 Ill.Dec. 634, 548 N.E.2d 1348.) A section 2-619 motion to dismiss should be granted only when it raises affirmative matter which negates the plaintiff's cause of action completely or refutes critical conclusions of law or conclusions of material, but unsupported, fact. (Daiwa Bank, Ltd. v. LaSalle National Trust, N.A. (1992), 229 Ill.App.3d 366, 384, 170 Ill.Dec. 563, 593 N.E.2d 105; Miranda, 192 Ill.App.3d at 588, 139 Ill.Dec. 634, 548 N.E.2d 1348; Egidi v. Town of Libertyville (1989), 181 Ill.App.3d 542, 546, 130 Ill.Dec. 302, 537 N.E.2d 369.) While appellate review of the dismissal of a complaint pursuant to a section 2-619 motion is limited to a consideration of the legal questions presented by the pleadings, such review is independent and need not defer to the trial court's reasoning. (Miranda, 192 Ill.App.3d at 588, 139 Ill.Dec. 634, 548 N.E.2d 1348; Ronning Engineering Co. v. Adams Pride Alfalfa Corp. (1989), 181 Ill.App.3d 753, 758, 130 Ill.Dec. 703, 537 N.E.2d 1032.) These principles guide our inquiry.

Although Employers Mutual acknowledges the general rule that, where administrative remedies are available, they must be exhausted before judicial review in the circuit court is appropriate (see People v. N L Industries (1992), 152 Ill.2d 82, 95, 178 Ill.Dec. 93, 604 N.E.2d 349; Illinois Bell Telephone Co. v. Allphin (1975), 60 Ill.2d 350, 357-58, 326 N.E.2d 737), it maintains that the rule does not apply here because (1) it contests the authority or jurisdiction of the Commission to hear the case, and (2) pursuit of such remedies would be futile since the Commission lacks jurisdiction and, therefore, cannot provide adequate relief. Skilling responds only that the Commission has broad authority over the interpretation and enforcement of workers' compensation insurance contracts and Employers Mutual, therefore, is required to exhaust its administrative remedies. Skilling's argument overlooks the threshold issue that Employers Mutual has raised.

Employers Mutual does not contest that the Commission enjoys wide authority in the overall area of workers' compensation. Rather, it focuses only on the exhaustion rule and its exceptions. Those exceptions were set forth in Castaneda v. Illinois Human Rights Comm'n (1989), 132 Ill.2d 304, 308-09, 138 Ill.Dec. 270, 547 N.E.2d 437, and include circumstances, as invoked by Employers Mutual, "where the agency's jurisdiction is attacked because it is not authorized by statute," and situations "where the agency cannot provide an adequate remedy or where it is patently futile to seek relief before the agency." (Castaneda, 132 Ill.2d at 309, 138 Ill.Dec. 270, 547 N.E.2d 437). Obviously, the effectiveness of the second exception urged by Employers Mutual, since it relies on a lack of jurisdiction, depends on establishing such a lack under the first exception.

In County of Kane v. Carlson (1987), 116 Ill.2d 186, 107 Ill.Dec. 569, 507 N.E.2d 482, a case cited by Employers Mutual, the plaintiffs challenged the jurisdiction of the Illinois State Labor Relations Board (Labor Board) to act on a pending petition concerning union representation of the deputy circuit clerks. The county sought from the court a declaratory judgment that the deputy clerks were not employees within the scope of the relevant statute and that the Labor Board, therefore, had no jurisdiction over the representation petition. The plaintiffs also attacked the constitutionality of the statute on its face. The County of Kane court stated that the exhaustion rule does not apply where a party challenges the constitutionality of a statute on its face or contests the authority or jurisdiction of the administrative agency. The court then noted that those issues were raised by the county in its complaint and added that the questions presented were entirely legal and did not require fact finding by the agency or the application of the agency's particular expertise. The court concluded that the parties were not required to exhaust their administrative remedies before bringing their respective actions.

In Landfill, Inc. v. Pollution Control Board (1978), 74 Ill.2d 541, 25 Ill.Dec. 602, 387 N.E.2d 258, a case cited in County of Kane, the plaintiff sought to prohibit the Pollution Control Board from acting under one of its own procedural rules, on the basis that the rule was not authorized by statute. The court did not require exhaustion, relying on an exception for situations where a rule under which an administrative body purports to act is challenged as unauthorized by the enabling legislation. The court explained that the purposes underlying the exhaustion doctrine are not served by imposing the rule under such circumstances. The Landfill court noted, as the rationale for the exhaustion doctrine, that it facilitates full development of the facts before the agency; it gives the agency an opportunity to utilize its expertise; and it allows the aggrieved party to succeed ultimately before the agency, making judicial review unnecessary. (See also Castaneda, 132 Ill.2d at 308, 138 Ill.Dec. 270, 547 N.E.2d 437 (where the court added as reasons for the doctrine that it helps protect agency processes from impairment by avoidable interruptions, allows the agency to correct its own errors, and conserves valuable judicial time by avoiding piecemeal appeals).) The court then clarified why these purposes would not be served under the circumstances of the case before it:

"Where an agency's statutory authority to promulgate a rule and exercise jurisdiction is in issue, no questions of fact are involved. The agency's particular expertise is not implicated in statutory construction. Furthermore, there is virtually no chance the aggrieved party will succeed before an agency where the issue is the agency's own assertion of authority." (Landfill, 74 Ill.2d at 550-51, 25 Ill.Dec. 602, 387 N.E.2d 258.)

After concluding that exhaustion was not required where an administrative body's rule was attacked on the ground that it was not authorized by statute, the Landfill court added:

"Under these circumstances the judicial determination involves a question of law...