Goldstein v. Grinnell Select Ins. Co.

• Decision Date: 30 June 2016
• Docket Number: No. 1–14–0317.,1–14–0317.
• Citation: 405 Ill.Dec. 518,58 N.E.3d 779
• Parties: Dawn Renee GOLDSTEIN, Independent Executor of the Estate of Gilbert Gail Gerth, Deceased, Plaintiff and Counterdefendant–Appellant, v. GRINNELL SELECT INSURANCE COMPANY, an Iowa Stock Fire and Casualty Company, Defendant and Counterplaintiff–Appellee.
• Court: United States Appellate Court of Illinois

58 N.E.3d 779

405 Ill.Dec. 518

Dawn Renee GOLDSTEIN, Independent Executor of the Estate of Gilbert Gail Gerth, Deceased, Plaintiff and Counterdefendant–Appellant,

v.GRINNELL SELECT INSURANCE COMPANY, an Iowa Stock Fire and Casualty Company, Defendant and Counterplaintiff–Appellee.

No. 1–14–0317.

Appellate Court of Illinois, First District, Sixth Division.

June 30, 2016.

James J. Morici, Jr., and Michael G. Miller, both of Morici, Figlioli & Associates, of Chicago, for appellant.

Michael T. Reagan, of Ottawa, for appellee.

OPINION

Justice HALL delivered the judgment of the court, with opinion.

¶ 1 The plaintiff, Dawn Renee Goldstein, executor of the estate of Gilbert Gail Gerth, deceased, appeals from an order of the circuit court of Cook County denying her motion for summary judgment and granting summary judgment to the defendant, Grinnell Insurance Company, on her complaint for declaratory judgment. On appeal, the plaintiff contends that: (1) an automobile liability policy excluding underinsured-motorist coverage for an owned vehicle is unenforceable under Illinois law; and (2) the policy exclusion does not apply because a riding lawnmower is not a motor vehicle. The plaintiff's contentions present issues of first impression in Illinois.

¶ 2 BACKGROUND

¶ 3 The facts are not in dispute. Mr. Gerth was riding his Snapper lawnmower on 2300th Street in Effingham County, Illinois, when the riding lawnmower was rear-ended by a pickup truck operated by Gary Sachau, killing Mr. Gerth. At the time of the accident, Mr. Sachau was insured under an automobile insurance policy with liability limits of $30,000. Mr. Gerth was insured under an automobile insurance policy with The Hartford Insurance Company containing underinsured-motorist liability limits of $100,000 per person. He was also insured under an automobile insurance policy with the defendant containing single underinsured-motorist liability limits of $1 million per accident.

¶ 4 The plaintiff settled her claim against Mr. Sachau for $30,000 and her underinsurance claim with The Hartford for its policy limit of $100,000 minus a $30,000 credit for her settlement with Mr. Sachau. The defendant denied coverage under the following provision of the automobile liability policy it issued to Mr. Gerth:

“EXCLUSIONS

A. We do not provide Underinsured Motorists Coverage for ‘bodily injury’ sustained:

1. By an ‘insured’ while ‘occupying’, or when struck by, any motor vehicle owned by that ‘insured’ which is not insured for this coverage under this policy. This includes a trailer of any type used with that vehicle.”

¶ 5 On October 23, 2012, the plaintiff filed a complaint for declaratory judgment against the defendant. The plaintiff alleged that the policy exclusion for an owned vehicle was unenforceable in the context of underinsured-motorist coverage in Illinois and that a riding lawnmower was not a “motor vehicle” under the defendant's policy, the underinsured motorist provisions of Illinois law and Illinois case law. The defendant filed an answer to the complaint and a counterclaim for declaratory judgment.¹

¶ 6 The parties filed motions for summary judgment on their respective complaints. Following a hearing on the motions, the circuit court denied the plaintiff's motion for summary judgment on her complaint for declaratory judgment and granted summary judgment to the defendant on its counter-complaint for declaratory judgment. The court found that a riding lawnmower was a “motor vehicle” under the Illinois Vehicle Code (625 ILCS 5/1–100 et seq. (West 2010)), which had been incorporated into the Illinois Insurance Code (215 ILCS 5/1 et seq. (West 2010)). See Roberts v. Country Mutual Insurance Co., 231 Ill.App.3d 713, 716–17, 172 Ill.Dec. 906, 596 N.E.2d 185 (1992). The court further found that the 1995 amendment of the Insurance Code permitting the owned-vehicle exclusion in uninsured-motorist coverage applied to underinsured-motorist coverage as well.

¶ 7 The plaintiff filed a notice of appeal from the circuit court's order denying her motion for summary judgment and granting summary judgment to the defendant on its counter-complaint.

¶ 8 ANALYSIS

¶ 9 I. Standards of Review

¶ 10 The grant of summary judgment, the construction of an insurance policy and the construction of a statute are reviewed de novo. Majid v. Retirement Board of the Policemen's Annuity & Benefit Fund, 2015 IL App (1st) 132182, ¶ 13, 393 Ill.Dec. 83, 33 N.E.3d 827 ; Mt. Hawley Insurance Co. v. Robinette Demolition, Inc., 2013 IL App (1st) 112847, ¶ 12, 374 Ill.Dec. 36, 994 N.E.2d 973.

¶ 11 II. Applicable Principles

¶ 12 “ ‘Summary judgment is proper if, and only if, the pleadings, depositions, admissions, affidavits and other relevant matters on file show that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law.’ ” Mt. Hawley Insurance Co., 2013 IL App (1st) 112847, ¶ 14, 374 Ill.Dec. 36, 994 N.E.2d 973 (quoting Illinois Farmers Insurance Co. v. Hall, 363 Ill.App.3d 989, 993, 300 Ill.Dec. 530, 844 N.E.2d 973 (2006) ). Where, as in this case, the parties have filed cross-motions for summary judgment, the parties invite the court to determine the issues as a matter of law and enter judgment in favor of one of the parties. Mt. Hawley Insurance Co., 2013 IL App (1st) 112847, ¶ 14, 374 Ill.Dec. 36, 994 N.E.2d 973.

¶ 13 The rules of construction applicable to contracts are also applicable to insurance policies. Mt. Hawley Insurance Co., 2013 IL App (1st) 112847, ¶ 15, 374 Ill.Dec. 36, 994 N.E.2d 973. Our primary objective is to ascertain and give effect to the parties' intentions as expressed in the policy's language. Mt. Hawley Insurance Co., 2013 IL App (1st) 112847, ¶ 15, 374 Ill.Dec. 36, 994 N.E.2d 973. We construe the policy as a whole giving effect to every provision; unambiguous words in the policy are to be given their plain, ordinary and popular meaning. Mt. Hawley Insurance Co., 2013 IL App (1st) 112847, ¶ 15, 374 Ill.Dec. 36, 994 N.E.2d 973.

¶ 14 “The cardinal rule of statutory construction is to determine and give effect to the legislature's intent.” Sulser v. Country Mutual Insurance Co., 147 Ill.2d 548, 555, 169 Ill.Dec. 254, 591 N.E.2d 427 (1992). “[S]ections of the same statute should be considered to be in pari materia, and that each section should be construed with every other part or section so as to produce a harmonious whole.” Sulser, 147 Ill.2d at 555, 169 Ill.Dec. 254, 591 N.E.2d 427.

¶ 15 III. Discussion

¶ 16 “ ‘Parties to a contract may agree to any terms they choose unless their agreement is contrary to public policy.’ ” Allstate Property & Casualty Insurance Co. v. Trujillo, 2014 IL App (1st) 123419, ¶ 18, 379 Ill.Dec. 684, 7 N.E.3d 110 (quoting Sulser, 147 Ill.2d at 559, 169 Ill.Dec. 254, 591 N.E.2d 427 ). Our supreme court has a long tradition of upholding the rights of parties to freely contract, and, therefore, a court must use the power to declare a private contract invalid on public policy grounds sparingly. Phoenix Insurance Co. v. Rosen, 242 Ill.2d 48, 55, 350 Ill.Dec. 847, 949 N.E.2d 639 (2011). “An agreement will not be invalidated unless it is clearly contrary to what the constitution, the statutes, or the decisions of the courts have declared to be the public policy of Illinois or unless the agreement is ‘manifestly injurious to the public welfare.’ ” Phoenix Insurance Co., 242 Ill.2d at 55, 350 Ill.Dec. 847, 949 N.E.2d 639 (quoting Progressive Universal Insurance Co. of Illinois v. Liberty Mutual Fire Insurance Co., 215 Ill.2d 121, 129–30, 293 Ill.Dec. 677, 828 N.E.2d 1175 (2005) ). The party seeking to invalidate an agreement as against public policy carries a “ ‘heavy burden’ of demonstrating a violation of public policy.' ” Phoenix Insurance Co., 242 Ill.2d at 55, 350 Ill.Dec. 847, 949 N.E.2d 639 (quoting Mohanty v. St. John Heart Clinic, S.C., 225 Ill.2d 52, 65, 310 Ill.Dec. 274, 866 N.E.2d 85 (2006) ). Our legislature occupies a superior position in determining public policy. Phoenix Insurance Co., 242 Ill.2d at 55–56, 350 Ill.Dec. 847, 949 N.E.2d 639.

¶ 17 A. Owned Vehicle Exclusion

¶ 18 The plaintiff contends that the owned-vehicle exclusion in underinsured-motorist coverage is unenforceable under section 143a–2 of the Insurance Code (215 ILCS 5/143a–2 (West 2010) ). Prior to 1995, our courts held that the owned-vehicle exclusion in an automobile liability policy was unenforceable as to both uninsured- and underinsured-motorist coverage. See Squire v. Economy Fire & Casualty Co., 69 Ill.2d 167, 13 Ill.Dec. 17, 370 N.E.2d 1044 (1977) (uninsured-motorist coverage); Hettenhausen v. Economy Fire & Casualty Co., 154 Ill.App.3d 488, 107 Ill.Dec. 457, 507 N.E.2d 121 (1987) (underinsured-motorist coverage).

¶ 19 In 1995, the legislature amended section 143a of the Insurance Code, as follows:

“Uninsured motor vehicle coverage does not apply to bodily injury, sickness, disease, or death resulting therefrom, of an insured while occupying a motor vehicle owned by, or furnished or available for the regular use of the insured, a resident spouse or resident relative, if that motor vehicle is not described in the policy under which a claim is made or is not a newly acquired or replacement motor vehicle covered under the terms of the policy.” Pub. Act 89–206 (eff. July 21, 1995) (amending 215 ILCS 5/143a (West 1996) ).

¶ 20 The plaintiff maintains that the owned-vehicle exclusion remains unenforceable in the context of underinsured-motorist coverage. The plaintiff argues that the legislature did not amend section 143a–2, as it did section 143a, to permit the owned-vehicle exclusion in the context of underinsured-motorist coverage. She further argues that the purpose of the underinsured-motorist statute differs from that of the uninsured-motorist statute and the application of the amendment would defeat the purpose of the underinsured-motorist coverage.

¶ 21 “The ‘principle purpose’ of the mandatory liability insurance requirement is ‘to...