Ill. State Bar Ass'n Mut. Ins. Co. v. Canulli
| Decision Date | 13 March 2020 |
| Docket Number | No. 1-19-0142,1-19-0142 |
| Citation | 150 N.E.3d 140,440 Ill.Dec. 80,2020 IL App (1st) 190142 |
| Parties | ILLINOIS STATE BAR ASSOCIATION MUTUAL INSURANCE COMPANY, Plaintiff-Appellee, v. Michael D. CANULLI, Defendant-Appellants. |
| Court | United States Appellate Court of Illinois |
Michael D. Canulli, of Naperville, appellant pro se.
Robert Marc Chemers and Scott L. Howie, of Pretzel & Stouffer, Chtrd., of Chicago, for appellee.
¶ 1 Defendant-appellant Michael D. Canulli challenges the circuit court of Cook County's entry of summary judgment in favor of plaintiff-appellee Illinois State Bar Association Mutual Insurance Company (ISBA Mutual) in its declaratory judgment action. Finding that ISBA Mutual owed Canulli a duty to defend, we reverse the entry of summary judgment in its favor and remand for further proceedings.
¶ 3 ISBA Mutual issued a policy of professional liability insurance to Canulli, an attorney, beginning in June 2009. At some point thereafter, Canulli began representing Maria Freda in her divorce from her husband, Michael Maude. During the course of that litigation, Canulli, on Freda's behalf, filed a third-party complaint against a number of individuals and entities referred to collectively as "Prairie State."
¶ 4 On May 12, 2010, Prairie State moved for sanctions against Canulli and Freda (the sanctions motion), alleging that the suit against it was not well grounded in fact or law and was instead intended solely to harass Prairie State. Canulli requested ISBA Mutual to defend him against the sanctions motion, but ISBA Mutual rejected his tender. In February 2011, ISBA Mutual filed a complaint (case number 11 CH 5420), seeking a declaratory judgment that it did not owe Canulli a duty to defend.
¶ 5 Three months later, in May 2011, Freda sued Canulli for malpractice, alleging that Canulli acted negligently in seeking injunctive and other relief against Prairie State in connection with her divorce. She further alleged that, as a result of Canulli's acts and omissions, she was "damaged in an amount in excess of the minimal jurisdictional limits of the [court]." This time, ISBA Mutual accepted the tender of defense and retained counsel to defend Canulli.
¶ 6 Less than one year later, on February 16, 2012, Freda amended her complaint, alleging again that Canulli was negligent in suing Prairie State but clarifying that she was damaged in an amount in excess of $100,000 "in that she has incurred attorney's fees and costs for useless and unnecessary legal proceedings initiated by [Canulli]." Her amended complaint also added a count alleging breach of contract, stating that Canulli breached his agreement to provide legal services to Freda by "inflating bills" and "performing actions which were neither necessary nor reasonable to the prosecution and ultimate resolution of the * * * divorce." Again, Freda repeated that her damages were in excess of $100,000 "in attorney's fees and costs."
¶ 7 One month later, on March 15, 2012, Gummerson Rausch, the firm ISBA Mutual had retained to represent Canulli, moved to dismiss Freda's amended complaint on the grounds that there had already been a judicial determination that Canulli's fees for representing Freda were reasonably and necessarily incurred.
¶ 8 Notwithstanding this motion, on April 9, 2012, ISBA Mutual filed a declaratory judgment action seeking a finding that it was not obligated to defend Canulli against Freda's amended complaint. One month later, on May 18, 2012, Gummerson moved to withdraw as Canulli's attorney.
¶ 9 Canulli, now representing himself, moved to consolidate the two declaratory judgment actions. Over ISBA Mutual's objection, the motion was granted.
¶ 10 Canulli filed an amended answer and countercomplaint to ISBA Mutual's declaratory judgment complaint in the Freda malpractice action in March 2013. His countercomplaint contained four counts: (1) declaratory judgment, seeking a finding that Freda's amended malpractice complaint presented a covered claim; (2) breach of contract to provide insurance based on ISBA Mutual's failure to defend him in the malpractice action; (3) "breach of special fiduciary relationship," alleging that ISBA Mutual had a conflict of interest when it withdrew its defense of him in response to Freda's amended malpractice complaint; and (4) violation of section 155 of the Illinois Insurance Code ( 215 ILCS 5/155 (West 2012) ) for unreasonable and vexatious conduct.
¶ 11 ISBA Mutual moved to dismiss Canulli's countercomplaint. On October 11, 2013, the circuit court denied the motion with prejudice but stayed the charges "unrelated to the basic coverage issue" until it had ruled on ISBA Mutual's duty to defend.
¶ 12 In April 2014, the circuit court ruled on the parties' cross motions for summary judgment in both declaratory judgment actions. With respect to the action regarding the amended malpractice complaint, the court found that ISBA Mutual had no duty to defend Canulli against the complaint but declined to enter summary judgment in ISBA Mutual's favor in order to allow additional briefing on the issue of whether ISBA Mutual had waived, or was estopped from, denying its duty to defend.
¶ 13 Four years later, on April 24, 2018, the circuit court, having been fully briefed, concluded that ISBA Mutual had neither waived nor was estopped from denying its duty to defend. The court nevertheless declined to enter summary judgment in favor of ISBA Mutual because the malpractice action was still ongoing and it was possible Freda would again amend her complaint to put it back in the ambit of ISBA Mutual's duty to defend.1
¶ 14 Freda and Canulli ultimately settled the malpractice complaint in an agreed order dated July 26, 2018. Under the terms of the settlement, Freda paid Canulli $67,500 for his fees and dismissed with prejudice both counts of her amended complaint. On December 17, 2018, the circuit court of Cook County entered summary judgment in favor of ISBA Mutual regarding its duty to defend the amended malpractice complaint. Canulli appealed on January 16, 2019.
¶ 16 Before turning to the merits of the parties' arguments, we initially address the question of this court's jurisdiction. Whether we have jurisdiction is a question of law that we review de novo . Stasko v. City of Chicago , 2013 IL App (1st) 120265, ¶ 27, 375 Ill.Dec. 664, 997 N.E.2d 975. Following briefing in this case, we asked the parties to submit a report on the status of Canulli's counterclaims in the circuit court and were informed that the counterclaims are still pending. Canulli argues that the pendency of his counterclaims deprives us of jurisdiction over this matter. We disagree.
¶ 17 Pursuant to Illinois Supreme Court Rule 304(a) (eff. Mar. 8, 2016), "[i]f multiple parties or multiple claims for relief are involved in an action, an appeal may be taken from a final judgment as to one or more but fewer than all of the parties or claims only if the trial court has made an express written finding that there is no just reason for delaying either enforcement or appeal or both." Illinois appellate court decisions are split on whether " Rule 304(a) language" is required in order to appeal from a final judgment that resolves a complaint but leaves a counterclaim pending. Compare Stasko , 2013 IL App (1st) 120265, ¶ 28, 375 Ill.Dec. 664, 997 N.E.2d 975, and Rohr Burg Motors, Inc. v. Kulbarsh , 2014 IL App (1st) 131664, ¶ 35, 384 Ill.Dec. 840, 17 N.E.3d 822 ; with American Country Insurance Co. v. Chicago Carriage Cab Corp. , 2012 IL App (1st) 110761, ¶¶ 21-22, 364 Ill.Dec. 295, 976 N.E.2d 573, and 1350 Lake Shore Associates v. Casalino , 352 Ill. App. 3d 1027, 1034, 287 Ill.Dec. 708, 816 N.E.2d 675 (2004).
¶ 18 We believe the instant case is more closely analogous to American Country Insurance and Lake Shore Associates . In Lake Shore Associates , we held that, where a circuit court's order granting a motion for summary judgment "necessarily entailed the disposition" of issues raised in a counterclaim, a Rule 304(a) finding was not necessary to make the summary judgment order appealable. Lake Shore Associates , 352 Ill. App. 3d at 1034-35, 287 Ill.Dec. 708, 816 N.E.2d 675 (citing Lynch Imports, Ltd. v. Frey , 200 Ill. App. 3d 781, 146 Ill.Dec. 521, 558 N.E.2d 484 (1990) ); see also American Country Insurance , 2012 IL App (1st) 110761, ¶ 22, 364 Ill.Dec. 295, 976 N.E.2d 573 ; contra Stasko , 2013 IL App (1st) 120265, ¶ 28, 375 Ill.Dec. 664, 997 N.E.2d 975 ()).
¶ 19 Here, just as in Lake Shore Associates , the court's entry of summary judgment in favor of ISBA Mutual was premised on its finding that ISBA Mutual did not owe Canulli a duty to defend. This necessarily disposed of the counts in Canulli's counterclaim, as they all arose from the proposition that ISBA Mutual did owe Canulli a duty to defend. Specifically, the countercomplaint sought a finding that Freda's amended malpractice complaint presented a covered claim and went on to allege breach of contract, breach of special fiduciary duty, and unreasonable and vexatious conduct. All of these allegations are premised on the conclusion that ISBA Mutual had a duty to defend Canulli. When the circuit court found that ISBA mutual had no such duty, it rendered the claims in Canulli's countercomplaint moot. Accordingly, we conclude that the order entering summary judgment in favor of ISBA Mutual was final notwithstanding the pendency of the countercomplaint and we have jurisdiction to decide this appeal. A contrary finding would serve only to elevate form over substance.
¶ 20 Turning to the merits of the dispute, on appeal, Canulli challenges the entry of summary judgment in favor of ISBA Mutual, arguing that it had a duty to defend him...
To continue reading
Request your trial
-
Donahue v. Republic Nat'l Distrib. Co.
...285 (explaining Wisconsin law governing insurance policy interpretation and the duty to defend); see Illinois State Bar Ass'n Mut. Ins. Co. v. Canulli , 2020 IL App (1st) 190142, ¶ 21, 440 Ill.Dec. 80, 150 N.E.3d 140, 145, reh'g denied (May 13, 2020) (explaining Illinois law governing insur......