General Cas. Co. v. CARROLL TILING SERV.
Decision Date | 03 September 2003 |
Docket Number | No. 2-01-1460.,2-01-1460. |
Citation | 796 N.E.2d 702,277 Ill.Dec. 616,342 Ill. App.3d 883 |
Parties | GENERAL CASUALTY COMPANY OF ILLINOIS, Plaintiff-Appellee, v. CARROLL TILING SERVICE, INC., and Todd M. Carroll, Defendants-Appellants (Todd M. Carroll, Third-Party Plaintiff-Appellant, v. Clark Carroll and Law Insurance Agencies, Inc., Third-Party Defendants-Appellees). |
Court | United States Appellate Court of Illinois |
Timothy B. Zollinger, Ward, Murray, Pace & Johnson, P.C., Sterling, for Todd M. Carroll, Carroll Tiling Service Inc.
David J. Cahill, Matthew D. Jacobson, Swanson, Martin & Bell, Wheaton, for General Casualty Company of Illinois.
John D. Dalton, Donald E. Elder, Merlo, Kanofsky & Brinkmeier, Ltd., Chicago, for Clark Carroll, Law Insurance Agencies, Inc.
Defendant and third-party plaintiff, Todd M. Carroll (Todd), appeals from the order of the circuit court of Carroll County denying his motion for summary judgment and granting plaintiff General Casualty Company's (General Casualty) cross-motion for summary judgment. Todd also appeals the trial court's order dismissing as time-barred his third-party complaint against third-party defendants Clark Carroll (Clark) and Law Insurance Agencies (Law). We affirm in part, reverse in part, and remand the cause.
General Casualty filed a declaratory judgment action against Carroll Tiling Service, Inc. (Carroll Tiling), and Todd, seeking a determination that it was not required to provide workers' compensation coverage to Todd for the policy period of April 1, 1999, to April 1, 2000. After the parties completed discovery, General Casualty and Todd filed cross-motions for summary judgment.
The undisputed facts in the record show that Todd was an employee of Carroll Tiling. On May 14, 1999, he was injured while performing his duties for Carroll Tiling. Todd filed a workers' compensation claim against Carroll Tiling. General Casualty denied coverage and initiated this declaratory judgment action.
General Casualty was Carroll Tiling's workers' compensation insurance carrier. Carroll Tiling obtained its workers' compensation policies through Clark. Clark worked for Law, and Law, in turn, was General Casualty's agent. In 1993, Carroll Tiling first obtained workers' compensation insurance from General Casualty. At that time, J. Craig Carroll (Craig), Todd's father and president of Carroll Tiling, was excluded from coverage under the workers' compensation policy. (We note that the efficacy of this withdrawal, either from the operation of the Workers' Compensation Act (Act) (820 ILCS 305/1 et seq. (West 2000)) or from insurance coverage, is not raised by any party and we express no position on it.)
In 1997, Carroll Tiling sought to reduce its premium costs for workers' compensation insurance. On September 15, 1997, Todd, who was Carroll Tiling's vice president, and his mother, Vianne Carroll (Vianne), Carroll Tiling's secretary, both executed a written form requesting to be excluded from coverage under General Casualty's workers' compensation policy. The form was entitled "Illinois Workers Compensation Benefits Rejection Form" and provided:
In October 1997, General Casualty issued an endorsement, effective for the April 1, 1997, to April 1, 1998, policy period, listing Todd and Vianne as individuals excluded from coverage under the workers' compensation policy. Instead of providing a single endorsement sheet showing that Todd, Vianne, and Craig were excluded from the workers' compensation insurance policy, General Casualty created a second endorsement sheet listing only Todd and Vianne. Craig was listed as excluded on another typewritten endorsement. As a result of excluding Todd and Vianne from the coverage of its workers' compensation insurance policy, Carroll Tiling's premiums were reduced by $1,236.
At the same time that Todd and Vianne were excluded from workers' compensation coverage, Clark advised Carroll Tiling to obtain major medical insurance. A policy providing major medical insurance covering Todd was subsequently purchased.
The record demonstrates that, following the exclusion of Todd from workers' compensation insurance coverage, Carroll Tiling did not pay any premium associated with Todd's salary. In fact, Vianne specifically noted on an April 28, 1998, audit form that Todd was excluded from coverage.
When the workers' compensation policy was renewed for the period April 1, 1999 to April 1, 2000, General Casualty sent to Carroll Tiling a copy of the policy, which did not indicate that Todd was excluded from coverage; the exclusion endorsement listed only Craig as being excluded from coverage. General Casualty explained that the omission occurred when the physical policy was assembled for renewal and the person assembling the endorsements looked only for a single exclusion endorsement. Through happenstance, that person came upon the typewritten exclusion of Craig first. As a result, the renewal policy was assembled with only Craig being listed on the exclusion endorsement. General Casualty maintains that Craig, Vianne, and Todd were shown as excluded from coverage on its computerized records. General Casualty maintains that the exclusion of Todd (and Vianne) was consistent with its billing practices after September 1997, to charge no premium for Todd's salary, as well as consistent with the audits of Carroll Tiling's salaries performed after September 1997.
The record demonstrates that at no time after September 1997 did anyone from Carroll Tiling ever request, either orally or in writing, to reinstate coverage for Todd under Carroll Tiling's workers' compensation policy. Likewise, no one from Carroll Tiling ever requested, either orally or in writing, specifically to exclude Todd from coverage at any time after September 1997.
When Todd was injured, he filed a workers' compensation claim, prompting General Casualty's denial of coverage and the institution of this declaratory judgment action. Thereafter, Todd filed a third-party complaint against Clark and Law. This complaint was filed both individually and as assignee of Carroll Tiling. Todd alleged that Clark and Law breached their fiduciary duties to him and Carroll Tiling by failing to inform Todd that his election to be excluded from coverage in 1997 would be renewed each year and by failing to make sure that Todd was covered by workers' compensation insurance.
Todd and General Casualty filed cross-motions for summary judgment. The trial court denied Todd's motion and granted General Casualty's motion, finding that, by the terms of the contract at issue, unless a party took action to cancel the contract, it automatically renewed for the following year with the same terms in place as were used in the previous year. Because there were no further negotiations to change or modify the terms of coverage between Carroll Tiling and General Casualty, the court found that Todd was excluded from coverage by virtue of the September 1997 exclusion election. The trial court held that General Casualty had clearly and convincingly proved that the failure to include Todd on the physical copy of the exclusion endorsement was a clerical error.
In addition, Clark and Law filed a motion to dismiss, alleging that the two-year statute of limitations had run and that Todd's claim was time-barred. The court agreed, finding that the cause of action accrued no later than the first renewal following Carroll Tiling's election to exclude Todd from workers' compensation coverage. Todd timely appeals.
As an initial matter, we note that Todd's initial argument appears to be based on a faulty premise. Todd repeatedly argues that the trial court determined "reformation [of the insurance contract] to be inappropriate" and that "it was not considering parol evidence." Todd then constructs his argument as if this court is bound to...
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