Harrington v. American Family Mut. Ins. Co.

• Decision Date: 28 June 2002
• Docket Number: No. 1-01-2810.,1-01-2810.
• Citation: 773 N.E.2d 98,332 Ill. App.3d 385,265 Ill.Dec. 736
• Parties: Michael HARRINGTON, Plaintiff-Appellee, v. AMERICAN FAMILY MUTUAL INSURANCE COMPANY, an Illinois Corporation, and Anthony Stajszczak, Defendants-Appellants.
• Court: United States Appellate Court of Illinois

773 N.E.2d 98

332 Ill. App.3d 385

265 Ill.Dec. 736

Michael HARRINGTON, Plaintiff-Appellee, v. AMERICAN FAMILY MUTUAL INSURANCE COMPANY, an Illinois Corporation, and Anthony Stajszczak, Defendants-Appellants.

No. 1-01-2810.

Appellate Court of Illinois, First District, Fifth Division.

June 28, 2002.

Norton, Mancini, Argentati, Weiler & DeAno, Wheaton (Thomas J. Long, of counsel), for Defendant-Appellant American Family Mutual.

Law Offices of Meyer and Blumenshine, Chicago (Scott A. Blumenshine, Mitchell B. Friedman, of counsel), for Plaintiff-Appellee.

Justice GREIMAN delivered the opinion of the court:

Plaintiff, doing business as Green Acres Landscaping, purchased an insurance policy from American Family Mutual Insurance Company (American) that consisted of commercial general liability coverage and commercial inland marine coverage in the amount of $1 million. The commercial general liability policy included an endorsement that provided coverage for hired auto and nonowned auto liability. In addition to the commercial general liability policy, plaintiff purchased a separate group automobile liability policy in order to provide coverage for the vehicles being operated in connection with his business. Pursuant to the terms of this policy, bodily injury liability was limited in the amount of $100,00 per person and $300,000 per occurrence; accordingly, plaintiff contracted for uninsured motorist coverage in the amounts of $100,000 per person and $300,000 per occurrence.

Plaintiff alleges that on June 17, 1994, he was struck by an automobile while riding a bicycle. Ultimately, plaintiff settled with the driver's insurer, Farmer's Insurance Company, for the full available policy limits of $100,000. Plaintiff then submitted a claim to American for uninsured motorist coverage based on a belief that his damages exceeded $100,000. American denied plaintiffs claim on the basis that the amount paid by Farmer's Insurance Company equaled the uninsured motorist coverage available to plaintiff under the separate group automobile liability policy.

On September 29, 1997, plaintiff filed a complaint for declaratory judgment against American wherein he alleged that the commercial general liability policy was subject to section 143a-2 of the Illinois Insurance Code and that, by operation of law, he was entitled to uninsured motorist coverage in the amount of that policy. 215 ILCS 5/143a-2 (West 1992). Based on that allegation, plaintiff requested that defendant be ordered to arbitrate the matter as if uninsured motorist coverage in the amount of $1 million was included in the commercial general liability policy and that the court find that defendant had engaged in improper claims practices.

American filed an answer to plaintiffs complaint in which all of plaintiffs relevant allegations were denied. Shortly thereafter, plaintiff filed a motion for judgment on the pleadings asserting that American was required by section 143a-2 to offer him uninsured motorist coverage in connection with his purchase of the commercial general liability policy because that policy included an endorsement for hired auto and nonowned auto liability. Plaintiffs motion for judgment on the pleadings was stricken because plaintiff had not complied with defendant's outstanding discovery requests.

On June 29, 1999, plaintiff filed a first amended complaint for declaratory judgment. In counts I and II of that pleading, plaintiff realleged the same relevant facts contained in the original complaint and requested that the trial court reform the commercial general liability policy so that it included uninsured motorist coverage in the amount of $1 million and order American to arbitrate the matter. Furthermore, in count III, plaintiff asserted that American, through its agent Anthony Stajszczak, breached a duty of care it owed to him by negligently advising him with respect to his insurance needs and by failing to provide him with adequate insurance. In count IV, plaintiff argued that defendant's conduct with respect to the sale of the commercial general liability policy was in violation of the Consumer Fraud and Deceptive Business Practices Act. (815 ILCS 505/1, et seq. (West 1992)).

American answered counts I and II of the first amended complaint for declaratory judgment and filed a motion to dismiss counts III and IV. The trial court granted the motion to dismiss as to count IV, but denied the motion as to count III.

On September 27, 1999, plaintiff filed a second amended complaint for declaratory judgment which included an amended count IV. Additionally, in the second amended complaint, plaintiff joined Anthony Stajszczak as a defendant with respect to counts III and IV. Defendants filed a motion to dismiss count IV and answered the remaining counts. The trial court denied the motion to dismiss count IV and, shortly thereafter, defendants filed, an answer to it.

On May 26, 2000, plaintiff filed a motion for judgment on the pleadings as to counts I and II of the second amended complaint. Specifically, plaintiff reiterated his argument that the inclusion of the endorsement in the general liability policy brought the policy within the scope of section 143a-2 and required that an offer of uninsured motorist coverage be made at the time plaintiff purchased the policy.

On September 6, 2000, American filed its response and cross-motion for judgment on the pleadings as to counts I and II. American asserted that it was entitled to entry of the judgment in its favor on plaintiffs request to reform the policy to include uninsured motorist coverage insomuch as the subject commercial general liability policy provided coverage only for the liability of the plaintiff for injuries sustained by third parties in connection with his business and not for injuries sustained by plaintiff himself. In simpler terms, American argued that a "liability only" policy cannot be held subject to the requirements of section 143a-2.

On October 12, 2000, the trial court ruled that the commercial liability policy was a "liability" policy as opposed to a "vehicle" policy and that the endorsement was also limited solely to liability. Accordingly, the trial court entered an order granting American's cross-motion for judgment on the pleadings, denying plaintiffs motion for judgment on the pleadings, and entering judgment in favor of American and against the plaintiff on counts I and II.

Plaintiff filed a motion to reconsider, which was granted by the trial court. The trial court entered an order granting plaintiffs motion to reconsider, vacating the order of October 12, 2000, and granting judgment in favor of plaintiff on counts I and II of the second amended complaint for declaratory judgment.

Next, American filed a motion to reconsider the trial court's order of March 6, 2001, which was subsequently denied by the trial court. American now appeals the trial court's ruling on counts I and II of the second amended complaint.

The issue before us is whether the trial court correctly determined that the commercial general liability policy issued to plaintiff was subject to section 143a-2 of the Illinois Insurance Code. We affirm the trial court's decision to enter judgment in favor of the plaintiff on counts I and II of the second amended complaint.

On appeal, American asserts that the commercial general liability policy issued to plaintiff does not fall within the ambit of section 143a-2, and, therefore, it was never required to offer plaintiff uninsured motorist coverage. Plaintiff, on the other hand, argues that section 143a-2 mandates reformation of the commercial general liability policy to provide uninsured motorist coverage, and, therefore, the trial court's decision should be affirmed. Since the case at bar stems from the trial court's judgment on the pleadings, the standard of review is de novo. Board of Trustees of the University of Illinois v. City of Chicago, 317 Ill.App.3d 569, 571, 251 Ill.Dec. 434, 740 N.E.2d 515 (2000). First, we consider the nature of the insurance coverage purchased by plaintiff. In the case at bar, plaintiff purchased a commercial general liability policy for the period from November 2, 1993, to November 2, 1994, naming as the insured Michael Harrington, doing business as Green Acres Landscaping, operated as a sole proprietorship. Attached to the policy is an endorsement titled "Hired Auto and Non-Owned Auto Liability." "When a court interprets an insurance policy, there are only two sources upon which it may base its analysis: the plain language of the policy and the plain language of the Insurance Code of 1937 as it existed at the time the policy was written." Cincinnati Insurance Company v. Miller, 190 Ill.App.3d 240, 244, 137 Ill.Dec. 755, 546 N.E.2d 700 (1989), citing Bailey v. State Farm Fire & Casualty Co., 156 Ill.App.3d 979, 984, 109 Ill.Dec. 225, 509 N.E.2d 1064 (1987). Only where an ambiguity exists should the court look to other materials. Cincinnati, 190 Ill.App.3d at 244,137 Ill.Dec. 755,546 N.E.2d 700, citing Price v. State Farm Mutual Automobile Insurance Co., 116 Ill. App.3d 463, 470, 72 Ill.Dec. 117, 452 N.E.2d 49 (1983).

Mindful of the aforementioned rules of law, we will examine the plain language of the policy, as amended with the endorsement, and section 143a-2 of the Insurance Code in an effort to determine whether American had a duty to offer uninsured motorist coverage to plaintiff in connection with his purchase of the commercial general liability policy. Moreover, case law tells us that in order to determine whether the commercial general liability policy at hand falls within the scope of section 143a-2, we must first determine whether the direct benefit, albeit the financial benefit of the policy at hand, is received by the insured, the plaintiff in the case at bar, or by the individual who is physically injured himself.

In Cincinnati, 190 Ill.App.3d at 245, 137 Ill.Dec. 755, 546 N.E.2d 700, this court relied on...