Illinois Farmers Ins. Co. v. Preston

Decision Date19 March 1987
Docket NumberNo. 2-86-0445,2-86-0445
Citation106 Ill.Dec. 552,153 Ill.App.3d 644,505 N.E.2d 1343
Parties, 106 Ill.Dec. 552, 38 Ed. Law Rep. 1230 ILLINOIS FARMERS INSURANCE COMPANY, a corporation, Plaintiff-Appellee and Counterdefendant-Appellee, v. Beatrice PRESTON and Steve Preston, Defendants-Appellants Robert L. Kufalk, Donald W. Hart, Fred W. Kraiss, Richard F. Kunnert, Patricia A. McGrail, Randall J. Manus, Steven L. Nordquist, Anne M. Brannon, Michael C. Sabo, and Barbara Olson School of Hope, Defendants-Appellees; Beatrice Preston, Counterplaintiff-Appellant. v.
CourtUnited States Appellate Court of Illinois

Clark, McGreevy & Johnson, Edward M. Maher, Rockford, for defendants-appellants.

Tuite Shaw Gesmer Finnegan & Tuite, Robert J. Shaw, Rockford, for plaintiff-appellee.

Justice WOODWARD delivered the opinion of the court:

Defendant, Beatrice Preston, was named defendant in Kufalk v. Hart (N.D.Ill.1985), 610 F.Supp. 1178, in the Federal district court for the Northern District of Illinois; that Federal action was pending at the time the present suit was filed.

The defendant, Preston, tendered her defense in the Federal court action to her insurer, the plaintiff herein, Illinois Farmers Insurance Company (hereinafter IFIC). IFIC contended that the defendant was not covered under her homeowner's policy, refused to defend, and filed this action for declaratory judgment. The circuit court of Winnebago County granted summary judgment for IFIC.

The plaintiff in the Federal suit, Robert Kufalk, filed a four-count complaint against the defendant, Preston, and others. The counts were set forth as follows:





The incident giving rise to these claims was the alleged wrongful dismissal of Mr. Kufalk as administrator of the Barbara Olson School of Hope (hereinafter BOSH), an organization serving developmentally disabled adult clients with mental disabilities. In his complaint, Kufalk names Beatrice Preston as a defendant in her capacity as a member of the education committee of BOSH. He alleged in part that the defendant Preston entered into a conspiracy with other school and State officials to "injure plaintiff in his employment" and to deprive Mr. Kufalk of "rights secured to him under the First, Fourth, and Fourteenth Amendments to the Constitution of the United States * * *." The defendant is alleged to have made certain "false, misleading and pretextual statements" that lead to Kufalk's dismissal. Also, in his deposition, Kufalk testified to having suffered severe emotional distress and high blood pressure, in addition to three personal injuries allegedly attributable to the circumstances of his wrongful discharge.

The defendant, in turn, submitted her defense to the plaintiff herein, IFIC, pursuant to her homeowner's policy of insurance. The defendant contended that she was entitled to a defense by the insurance company under her liability coverage for personal injury. The plaintiff insurer points out that there is a specific exclusion in the policy regarding the intentional acts of the insured. Further, plaintiff notes that only bodily injury arising from an accident is covered and asserts that defendant's conduct in the Kufalk case cannot be construed to be an accident. The trial court found for the plaintiff, holding that Kufalk's firing was not covered because it fell within the "intentional acts" exclusionary clause of the defendant's homeowner's policy and granted summary judgment for the plaintiff insurer.

On appeal, the defendant raises two issues: (1) whether the court erred in its construction of the insurance policy; and (2) whether it was improper for the court to adjudicate the rights of the parties to the insurance contract before the Federal suit against the defendant brought by Kufalk had been resolved.

The allegations set forth in a complaint determine the duty to defend. (Maryland Casualty Co. v. Peppers (1976), 64 Ill.2d 187, 355 N.E.2d 24; Grinnell Mutual Reinsurance Co. v. Frierdich (1979), 79 Ill.App.3d 1146, 35 Ill.Dec. 418, 399 N.E.2d 252.) An insurer's duty to defend under a liability policy arises only if facts are set forth in the complaint that are within the coverage provided. (Conway v. Country Casualty Insurance Co. (1982), 92 Ill.2d 388, 65 Ill.Dec. 934, 442 N.E.2d 245; Hawkeye Security Insurance Co. v. Hodorowicz (1980), 84 Ill.App.3d 948, 40 Ill.Dec. 445, 406 N.E.2d 146.) Since an insurer need not defend a claim that falls outside of the policy coverage or is excluded (Van Vleck v. Barbee (1983), 115 Ill.App.3d 936, 71 Ill.Dec. 537, 451 N.E.2d 25; Dorre v. Country Mutual Insurance Co. (1977), 48 Ill.App.3d 880, 6 Ill.Dec. 782, 363 N.E.2d 464), we must look at whether the allegations of Kufalk's complaint fall within the policy's coverage or an exclusion from coverage.

The defendant, Preston, allegedly in concert with other school officials, made statements at a meeting of the board of directors indicating plaintiff had misused State funds. In addition, defendant supposedly claimed to have heard a State official with the Illinois Department of Mental Health and Developmental Disabilities call Kufalk a "bad administrator." Kufalk contends that the defendant, Preston, knew or should have known upon reasonable inquiry that these statements were false, misleading, and pretextual.

The homeowner's policy herein at issue provides liability coverage for accidental bodily injury. IFIC argues that the allegations in Kufalk's complaint concerning the defendant Preston's actions do not constitute an accident within the terms of this policy. Under the policy, accident is defined as:

"a sudden event; including continuous or repeated exposure to the same conditions, resulting in bodily injury neither expected nor intended by the insured."

The term "accident" as used in insurance policies has been defined as an unforeseen, unexpected occurrence without design or intent. (Wahls v. Aetna Life Insurance Co. (1983), 122 Ill.App.3d 309, 77 Ill.Dec. 843, 461 N.E.2d 466; Aetna Casualty & Surety Co. v. Freyer (1980), 89 Ill.App.3d 617, 44 Ill.Dec. 791, 411 N.E.2d 1157.) The concept of accidental bodily injury presupposes that the injury naturally and probably followed from the acts of the insured. Russell v. Metropolitan Life Insurance Co. (1982), 108 Ill.App.3d 417, 64 Ill.Dec. 160, 439 N.E.2d 89; Macklin v. Commonwealth Life & Accident Co. (1970), 121 Ill.App.2d 119, 257 N.E.2d 256.

In the present case, the trial court granted summary judgment for the insurer, finding that no issues of fact existed and ruling that the defendant, Preston, was not entitled to a defense under the policy. The function of this court on review of the trial court's entry of summary judgment is to correctly determine whether the trial court ruled that no genuine issue of material fact had been raised for trial. (Bauer v. City of Chicago (1985), 137 Ill.App.3d 228, 91 Ill.Dec. 863, 484 N.E.2d 422; Rambert v. Advance Construction Co. (1985), 134 Ill.App.3d 155, 89 Ill.Dec. 1, 479 N.E.2d 1007.) Even if the facts are undisputed, if fair-minded persons could draw different inferences from the facts, summary judgment is inappropriate. (Comastro v. Village of Rosemont (1984), 122 Ill.App.3d 405, 78 Ill.Dec. 32, 461 N.E.2d 616; Federal Deposit Insurance Corp. v. Maris (1984), 121 Ill.App.3d 894, 77 Ill.Dec. 311, 460 N.E.2d 367.) In its assessment of whether or not summary judgment is appropriate, the trial court should look to all pleadings, depositions, admissions, and affidavits on file. (Miller v. Verson Allsteel Press Co. (1984), 126 Ill.App.3d 935, 81 Ill.Dec. 861, 467 N.E.2d 983; Lower v. Lanark Mutual Fire Insurance Co. (1983), 114 Ill.App.3d 462, 70 Ill.Dec. 62, 448 N.E.2d 940.) In determining whether an insured's injury was an accident, i.e. whether it was unintended and unforeseen, the courts have looked to whether the injury was the natural and probable result of the insured's conduct. (Yates v. Banker's Life & Casualty Co. (1953), 415 Ill. 16, 111 N.E.2d 516; Marsh v. Metropolitan Life Insurance Co. (1979), 70 Ill.App.3d 790, 27 Ill.Dec. 158, 388 N.E.2d 1121). Whether the consequences of an insured's conduct are foreseeable is essentially a factual determination to be made by the trier of fact based upon the evidence in each individual case. McCall v. National Life & Accident Insurance Co. (1981), 95 Ill.App.3d 737, 51 Ill.Dec. 271, 420 N.E.2d 685; Macklin v. Commonwealth Life & Accident Co. (1970), 121 Ill.App.2d 119, 257 N.E.2d 256; Wylie v. Union Casualty & Life Insurance Co. (1957), 15 Ill.App.2d 448, 257 N.E.2d 256.

Kufalk's complaint alleged damage from statements of the defendant, Preston, acting in her capacity as a member of the education committee of BOSH, because she knew or should have known upon reasonable inquiry that such statements would cause him injury. Further, Kufalk's deposition testimony consisted in part of injuries he supposedly suffered, in particular severe emotional distress and high blood pressure, linked to his discharge by his physician. Based upon this evidence and consistent with the liberal interpretation to be accorded the term "accident" in construing insurance coverage (see, e.g., Marsh v. Metropolitan Life Insurance Co. (1979), 70 Ill.App.3d 790, 27 Ill.Dec. 158, 388 N.E.2d 1121; Associated Indemnity Co. v. Insurance Co. of North America (1979), 68 Ill.App.3d 807, 25 Ill.Dec. 258, 386 N.E.2d 529), we believe it would have been possible for a fair-minded person to infer that Kufalk's alleged injuries were not the natural and probable result of the insured Preston's conduct.

IFIC also argues that even if the result of the insured's conduct could be found to be accidental, the insured's conduct clearly is excluded by the policy provision that specifically excludes coverage for bodily injury "[a]rising as a...

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