Lewis v. Royal Globe Ins. Co.

• Decision Date: 26 May 1988
• Docket Number: No. 2-87-0636,2-87-0636
• Citation: 121 Ill.Dec. 78,524 N.E.2d 1126,170 Ill.App.3d 516
• Parties: , 121 Ill.Dec. 78 Lucille LEWIS, Plaintiff-Appellant, v. ROYAL GLOBE INSURANCE COMPANY et al., Defendants-Appellees.
• Court: United States Appellate Court of Illinois

Page 1126

524 N.E.2d 1126

170 Ill.App.3d 516, 121 Ill.Dec. 78

Lucille LEWIS, Plaintiff-Appellant, v. ROYAL GLOBE INSURANCE COMPANY et al., Defendants-Appellees.

No. 2-87-0636.

Appellate Court of Illinois,

Second District.

May 26, 1988.

Rehearing Denied July 11, 1988.

Sullivan, Smith, Hauser & Noonan, Ltd., Richard J. Smith (argued), Waukegan, for Lucille Lewis.

Ridge & Lawler, Waukegan, James S. Tukesbrey (argued), Donald Ridge (argued), Law Offices of Donald Ridge, for Royal Globe Ins. Co.

Justice NASH delivered the opinion of the court:

Plaintiff, Lucille Lewis, appeals from a summary judgment entered in favor of defendant, Royal Globe Insurance Company, contending that (1) count I of her complaint for fraud against this defendant was not a direct action against an insurance company prohibited by public policy, (2) the trial court abused its discretion by denying plaintiff's motion to file an amended complaint, and (3) that defendant's motion for summary judgment should have been stricken as it was in the nature of a motion to dismiss combining sections 2-615 and 2-1005 of the Code of Civil Procedure (Ill.Rev.Stat.1985, ch. 110, pars. 2-615, 2-1005), a practice which is disapproved by the reviewing courts.

In January 1977, plaintiff fell and sustained personal injuries in a store building owned and operated by defendant, the Salvation Army, whose insurer of the premises was defendant Royal Globe Insurance Company. In July 1984, plaintiff filed a complaint in which count I was directed against the insurer and count II against the store owner. In count I plaintiff alleged that Royal Globe was the insurer of the premises owned by the Salvation Army at the time plaintiff was injured therein. It further alleged that after her fall, plaintiff was directed to a doctor named by the Salvation Army for treatment and was advised that her medical expenses would be paid by the Salvation Army; that in May 1978, a representative agent and employee of defendant Royal Globe came to plaintiff and offered to settle her claim against the Salvation Army, stating that she should continue receiving treatments from the doctor to whom plaintiff had been referred, and that the insurance company would settle the case with her when it was completed; and that in September 1978, the insurance company representative told plaintiff there was no time limitation for her claim and it would be settled upon completion of the medical treatment of her injury. The complaint further alleged that despite further assurance on other occasions by the Salvation Army that plaintiff's medical bills would be paid by it and the insurance company, the bills were not paid, and that a hospital commenced an action against plaintiff for over $3,000 in medical debts to it and obtained a judgment against plaintiff. Count I also alleged that defendant Royal Globe subsequently refused to pay the medical bills, as the time for bringing plaintiff's claim had expired, and that as a proximate result of the failure of Royal Globe and the Salvation Army to pay the medical bills incurred, as represented by them, a judgment was assessed against plaintiff and she suffered severe emotional pain and suffering and expended sums of money in connection with that litigation. Plaintiff prayed for judgment against defendant Royal Globe Insurance Company for "actual and punitive damages in an amount in excess of $15,000 and costs of suit."

In count II of her complaint directed against the defendant, Salvation Army, plaintiff sought judgment "for a sum in excess of $15,000 plus costs of suit" for personal injuries sustained as a proximate result of this defendant's alleged negligent conduct in maintaining its store premises.

Defendant Royal Globe thereafter moved for summary judgment pursuant to section 2-1005 of the Code of Civil Procedure as to count I of the complaint directed against it, alleging that under Richardson v. Economy Fire & Casualty Co. (1985), 109 Ill.2d 41, 92 Ill.Dec. 516, 485 N.E.2d 327, a direct action may not be maintained against an insurer for the recovery of damages for personal injury, and that under Scroggins v. Allstate Insurance Co. (1979), 74 Ill.App.3d 1027, 30 Ill.Dec. 682, 393 N.E.2d 718, an insurer has no duty to negotiate in good faith with third parties, such as plaintiff, and cannot be held liable to plaintiff for its failure to do so. Royal Globe sought summary judgment as a matter of law under count I of the complaint on the grounds that no duty was owed to plaintiff by this defendant and no recovery was possible. Plaintiff moved to strike Royal Globe's motion, asserting that it essentially attacked the pleading of count I and should therefore be brought pursuant to section 2-615 of the Code of Civil Procedure (Ill.Rev.Stat.1985, ch. 110, par. 2-615).

On January 16, 1987, the trial court granted a motion of defendant Salvation Army to sever for trial count II of the complaint directed against it. The court subsequently ordered that the trial of count II would be bifurcated with separate jurors to consider the statute of limitations affirmative defense interposed by that defendant and the merits of the negligence action, if thereafter reached.

On January 27, 1987, as to count I, the trial court denied plaintiff's motion to strike and granted Royal Globe's motion for summary judgment. The court also denied plaintiff's motion to file an amended count I against Royal Globe instanter, but directed that the tendered amendment be placed in the file of the case. Summary judgment was entered in favor of Royal Globe on count I of the complaint, and the court made findings that there was no just reason to delay enforcement or appeal, pursuant to Supreme Court Rule 304(a) (107 Ill.2d R. 304(a)).

On February 25, 1987, plaintiff moved for reconsideration and to vacate the summary judgment entered on January 27, and on May 26, 1987, it was denied by the trial court. Plaintiff filed her notice of appeal from that judgment on June 22, 1987.

During oral argument in this court we were advised by counsel that while this appeal was pending the severed trial of count II between plaintiff and defendant Salvation Army was conducted in the trial court. In its answer to count II, that defendant had asserted the affirmative defense of the statute of limitations, to which plaintiff had pleaded estoppel premised upon the representations of that defendant's insurer, Royal Globe, that there were no time limitations within which plaintiff must commence an action to recover damages for her injuries. (See, e.g., Dickirson v. Pacific Mutual Life Insurance Co. (1925), 319 Ill. 311, 318, 150 N.E. 256; Zaayer v. Axel (1981), 102 Ill.App.3d 208, 210, 57 Ill.Dec. 709, 429 N.E.2d 607; Arthur L. Larsen Co. v. Shefner (1975), 27 Ill.App.3d 562, 563, 327 N.E.2d 257.) That issue was resolved in favor of plaintiff, and the Salvation Army then settled plaintiff's personal injury damage claim against it.

We consider first Royal Globe's assertion that this court lacks jurisdiction to review the judgment from which the appeal is taken as plaintiff's notice of appeal was filed more than 30 days after the trial court made findings pursuant to Supreme Court Rule 304(a) that there was no just reason to delay enforcement or appeal. Royal Globe relies on Elg v. Wittington (1987), 119 Ill.2d 344, 116 Ill.Dec. 252, 518 N.E.2d 1232, in which the court held that the time within which a notice of appeal must be filed commences on the date of a Rule 304(a) finding, and is not tolled by the filing of a post-trial motion. However, on February 11, 1988, the supreme court modified its opinion in Elg, making it applicable only to cases in which the notice of appeal was filed, or due to be filed, on or after November 16, 1987, the date of its original opinion. Since this appeal was commenced prior to that date, and Elg is not to be retroactively applied, plaintiff's notice of appeal was timely in this case.

The primary issue presented by this appeal is whether under count I of her complaint, or under an appropriate amended complaint, plaintiff may recover damages proximately caused by the alleged fraudulent misrepresentations of defendant insurance company. Plaintiff contends that, in a properly pleaded and proved case, recovery may be had against an insurance company for fraud by its agents, citing McCarter v. State Farm Mutual Automobile Insurance Co. (1985), 130 Ill.App.3d 97, 85 Ill.Dec. 416, 473 N.E.2d 1015, Koehler v. Wolverine Insurance Co. (1977) 49 Ill.App.3d 1061, 7 Ill.Dec. 706, 364 N.E.2d 997, Sommer v. United Savings Life Insurance Co. (1984), 128 Ill.App.3d 808, 84 Ill.Dec. 77, 471 N.E.2d 606, Reagor v. Travelers Insurance Co. (1980), 92 Ill.App.3d 99, 47 Ill.Dec. 507, 415 N.E.2d 512, Mel H. Binning, Inc. v. Safeco Insurance Co. (1977), 74 Cal.App.3d 615, 141 Cal.Rptr. 547, Muraoka v. Budget Rent A Car, Inc. (1984), 160 Cal.App.3d 107, 206 Cal.Rptr. 476, and Thompson v. Safeco Insurance Co. (Fla.App.1967), 199 So.2d 113. Royal Globe responds in its brief, as it also urged the trial court in support of its motion for summary judgment, that it was entitled to judgment as a matter of law under the allegations of count I, citing Richardson v. Economy Fire & Casualty Co. (1985), 109 Ill.2d 41, 92 Ill.Dec. 516, 485 N.E.2d 327, and Scroggins v. Allstate Insurance Co. (1979), 74 Ill.App.3d 1027, 30 Ill.Dec. 682, 393 N.E.2d 718.

The consideration underlying these proceedings is the well-established public policy in Illinois that "prohibits an injured party from recovering personal injury damages against an insurance carrier on account of the negligence of its insured prior to obtaining a judgment against the insured." (Richardson v. Economy Fire & Casualty Co. (1985), 109 Ill.2d 41, 47, 92 Ill.Dec. 516, 518, 485 N.E.2d 327, 329; see also Marchlik v. Coronet Insurance Co. (1968), 40 Ill.2d 327, 332-34, 239 N.E.2d 799.) In Richardson, the plaintiffs and Economy negotiated a...