Ill. Ins. Guar. Fund v. Liberty Mut. Ins. Co.

• Decision Date: 12 November 2013
• Docket Number: Docket No. 1–12–3345.
• Citation: 377 Ill.Dec. 69,2013 IL App (1st) 123345,1 N.E.3d 956
• Parties: ILLINOIS INSURANCE GUARANTY FUND, Plaintiff–Appellant, v. LIBERTY MUTUAL INSURANCE COMPANY, Defendant, and Zurich American Insurance Company, and Interlake Material Handling, Defendants–Appellees.
• Court: United States Appellate Court of Illinois

2013 IL App (1st) 123345

1 N.E.3d 956

377 Ill.Dec. 69

ILLINOIS INSURANCE GUARANTY FUND, Plaintiff–Appellant,

v. LIBERTY MUTUAL INSURANCE COMPANY, Defendant,andZurich American Insurance Company, and Interlake Material Handling, Defendants–Appellees.

Docket No. 1–12–3345.

Appellate Court of Illinois,

First District, Second Division.

Nov. 12, 2013.

LockeLord, LLP (Rowe W. Snider and Margaret M. Schuchardt, of counsel), and Stone & Johnson, Chtrd. (J. Murray Pinkston III, of counsel), both of Chicago, for appellant.

Cremer, Spina, Shaughnessy, Jansen & Siegert, LLC, of Chicago (Brian A. O'Gallagher and Brandt W. Allen, of counsel), for appellees.

Presiding Justice QUINN delivered the judgment of the court, with opinion.

¶ 1 I. INTRODUCTION

OPINION

¶ 2 The circuit court correctly ruled in favor of the borrowing employer's insurance company on its motion to dismiss for failure to state a claim in an action brought by the Illinois Insurance Guaranty Fund (IIGF) seeking reimbursement from the borrowing insurance company for workers' compensation benefits IIGF paid to an injured worker after the insurance company for the lending employer that was obligated to make payments was liquidated. The additional defense of the expiration of the statute of limitations as well as other defenses raised by the borrowing employer's insurance company were also valid bases for dismissal.

¶ 3 II. BACKGROUND

¶ 4 Plaintiff, IIGF, was statutorily created in 1971 to provide protection for certain claims of policyholders under certain insurance policies issued by IIGF member companies that become insolvent. 215 ILCS 5/532 et seq. (West 2010). Skokie Castings, Inc. v. Illinois Insurance Guaranty Fund, 2013 IL 113873, ¶ 1, 375 Ill.Dec. 777, 998 N.E.2d 69. This action concerns IIGF's efforts to attempt to be reimbursed for workers' compensation payments from a company that borrowed an employee after the insurance company for the employee's lending employer became insolvent.

¶ 5 IIGF's second amended complaint alleges John Earley (Earley) was hired by TGI Group on December 2, 2000. It further alleges that on December 19, 2000, Earley was performing work as a borrowed employee for Interlake Material Handling (Interlake) pursuant to a written contract between TGI Group and Interlake, although IIGF did not have any contract in its possession between TGI Group and Interlake. On that day, Earley was involved in a workplace accident which resulted in a workers' compensation claim. Earley's employer, TGI Group, had a workers' compensation policy issued by Legion Insurance Company (Legion). Legion made certain workers' compensation payments to Earley on behalf of Earley's employer, TGI Group, until Legion's date of liquidation on July 28, 2003. IIGF stepped in and began paying Earley his workers' compensation benefits and continues to pay Earley to the present time.

¶ 6 On July 17, 2008, almost five years after it took over Earley's payments, IIGF filed its original complaint, which was amended on February 9, 2009. Almost three years after that, on January 19, 2012, IIGF filed a second amended complaint, which is the subject of this appeal. No allegations were made against the named defendant, Liberty Mutual Insurance Company, in the second amended complaint although IIGF named it in the caption. The second amended complaint sought reimbursement from defendants Zurich American Insurance Company (Zurich) and Interlake under a workers' compensation policy Zurich issued to Interlake, Earley's alleged borrowing employer on the date of the accident. Specifically, IIGF sought reimbursement for all workers' compensation payments IIGF had made to Earley, reimbursement for IIGF's defense in Earley's workers' compensation claim, and a judgment that Zurich is responsible for all workers' compensation benefits payable to Earley in connection with the injuries Earley sustained on December 19, 2000.

¶ 7 IIGF further alleged in the second amended complaint that both Earley's presumed lending employer, TGI Group, and his borrowing employer, Interlake, are jointly and severally liable for Earley's workers' compensation benefits. It further alleged that the Zurich policy issued to Interlake is “other insurance” as that term is defined under the Illinois Insurance Code (215 ILCS 5/546(a) (West 2010)) and is, therefore, primary coverage that must be exhausted before IIGF becomes responsible to Earley for any payments.

¶ 8 Zurich filed a combined motion to dismiss under sections 2–615 and 2–619 of the Code of Civil Procedure. 735 ILCS 5/2–615, 2–619 (West 2012). Zurich's motion to dismiss pursuant to section 2–615 asserted that IIGF's second amended complaint was replete with conclusory statements rather than allegations of fact. Specifically, Zurich cites to (1) IIGF's failure to adequately allege the identity of Earley's employer, (2) IIGF's failure to adequately allege a borrowing employer relationship, (3) IIGF's failure to cite any statutory basis for the relief it seeks, and (4) IIGF's failure to even mention the word “subrogation” or any subrogation rights it might have or its basis to maintain such a claim. The basis for Zurich's section 2–619 motion to dismiss was that IIGF's second amended complaint was untimely as against Zurich because Zurich was not added as a defendant until the filing of IIGF's first amended complaint of February 9, 2009, more than six years after any claim accrued.

¶ 9 On June 1, 2012, the circuit court ruled that IIGF did not plead a subrogation claim in its second amended complaint. The circuit court further noted that IIGF's brief in opposition to dismissal made clear that IIGF's request for reimbursement is a claim for subrogation and the second amended complaint failed to plead facts to support the elements of such a claim. The court further noted that IIGF did not argue in its response to Zurich's motion to dismiss that it could assert facts to support a subrogation claim if it was given leave to amend its complaint yet a third time. Therefore, it dismissed the second amended complaint with prejudice. The circuit court ruled that other arguments made by Zurich in its motion to dismiss were moot because the second amended complaint was dismissed for failure to state a claim. On July 2, 2012, IIGF filed a motion for reconsideration.

¶ 10 On October 11, 2012, the circuit court ruled on IIGF's timely filed and fully briefed motion for reconsideration. It stated that IIGF violated the purpose of a motion for reconsideration, which is to apprise the court of newly discovered evidence or a change in the law or errors in the court's earlier application of the law. Because IIGF's motion for reconsideration accomplished none of these purposes, the circuit court denied IIGF's motion.

¶ 11 IIGF filed a timely notice of appeal from the circuit court's adverse decision on November 9, 2012. Ill. S.Ct. R. 303(a) (eff. June 4, 2008).

¶ 12 III. STANDARD OF REVIEW

¶ 13 The appellant, IIGF, did not submit a standard of review in its appellate brief as is required by the rules. Rule 341(h)(3) states that “[t]he appellant must include a concise statement of the applicable standard of review for each issue, with citation to authority.” (Emphasis added.) Ill. S.Ct. R. 341(h)(3) (eff. Feb. 6, 2013). The defendant-appellee, Zurich, submits that this case should be reviewed de novo, but failed to cite any cases in support of its submission.

¶ 14 We note that the question presented by a section 2–615 motion to dismiss is whether the allegations of the complaint, when viewed in the light most favorable to the plaintiff, are sufficient to state a cause of action upon which relief can be granted. Hough v. Kalousek, 279 Ill.App.3d 855, 862, 216 Ill.Dec. 373, 665 N.E.2d 433 (1996). Illinois is a fact-pleading jurisdiction that requires a plaintiff to file both a legally and factually sufficient complaint. Id. at 863, 216 Ill.Dec. 373, 665 N.E.2d 433. When ruling on a section 2–615 motion to dismiss, the circuit court must admit all well-pleaded facts as true and disregard any legal and factual conclusions that are unsupported by allegations of fact. Lake County Grading Co. of Libertyville, Inc. v. Advance Mechanical Contractors, Inc., 275 Ill.App.3d 452, 456–57, 211 Ill.Dec. 299, 654 N.E.2d 1109 (1995). The standard of review on a section 2–615 dismissal is de novo. T & S Signs, Inc. v. Village of Wadsworth, 261 Ill.App.3d 1080, 1083–84, 199 Ill.Dec. 467, 634 N.E.2d 306 (1994).

¶ 15 Additionally, Zurich's motion to dismiss was brought pursuant to section 2–619. 735 ILCS 5/2–619 (West 2012). All well-pleaded facts and reasonable inferences are accepted as true by the circuit court when ruling a section 2–619 motion to dismiss. In re Marriage of Sullivan, 342 Ill.App.3d 560, 562, 277 Ill.Dec. 25, 795 N.E.2d 392 (2003). Conclusions of law are not accepted as true. Id. at 563, 277 Ill.Dec. 25, 795 N.E.2d 392. “A reviewing court should conduct an independent review of the propriety of dismissing the complaint and is not required to defer to the trial court's reasoning.” Id. The standard of review for a dismissal based on section 2–619 motion is also de novo. In re Marriage of Morreale, 351 Ill.App.3d 238, 240, 286 Ill.Dec. 256, 813 N.E.2d 313 (2004). Therefore, this court will look at this entire case de novo.

¶ 16 We also note that this court can affirm the circuit court's dismissal on any grounds supplied by the record and applicable case law, regardless of the circuit court's reasons. Gatreaux v. DKW Enterprises, LLC, 2011 IL App (1st) 103482, ¶ 10, 354 Ill.Dec. 892, 958 N.E.2d 1088.

¶ 17 IV. ANALYSIS

¶ 18 “Subrogation has been defined as the substitution of another * * * in the place of a claimant whose rights [it] succeeds to in relation to the debt or claim asserted, which [it] has paid involuntarily.” Wausau Insurance Co. v. All Chicagoland Moving & Storage Co., 333 Ill.App.3d 1116, 1121, 268 Ill.Dec. 139, 777 N.E.2d 1062 (2002). The purpose of a...