Livingston v. Trustgard Ins.

• Decision Date: 25 October 2013
• Docket Number: Case No. 13 C 2166
• Citation: 988 F.Supp.2d 873
• Parties: Bruce Livingston, Plaintiff, v. Trustgard Insurance, Defendant,
• Court: U.S. District Court — Northern District of Illinois

988 F.Supp.2d 873

Bruce Livingston, Plaintiff,

v.Trustgard Insurance, Defendant,

Case No. 13 C 2166

United States District Court, N.D. Illinois, Eastern Division.

Filed October 25, 2013

Bruce Livingston, Skokie, IL, pro se.

Rodger L. Eckelberry, Elizabeth Ann Braverman, Baker Hostetler LLP, Columbus, OH, Katharine Elizabeth Heitman, William Kevin Kane, Baker & Hostetler LLP, Chicago, IL, for Defendant.

MEMORANDUM OPINION & ORDER

JOAN B. GOTTSCHALL, United States District Judge

Plaintiff Bruce Livingston has an underinsured motorist insurance policy with defendant Trustgard Insurance Company. The policy includes an exhaustion clause, which provides that Trustgard will pay Mr. Livingston only after he exhausts “any” other applicable insurance policies. Mr. Livingston has filed this action against Trustgard, contending that the exhaustion clause has been satisfied because he has exhausted one of the two applicable insurance policies. Trustgard has moved for judgment on the pleadings, contending that Mr. Livingston must exhaust both applicable polices before it is required to pay Mr. Livingston. For the following reasons, Trustgard's motion is granted.

I. Facts

According to the complaint, Mr. Livingston was involved in a car accident on January 19, 2009, suffering injuries to his cervical spine and shoulder. The driver of the other car, Brian Shafar, had a personal automobile liability insurance policy with Hartford Insurance. Mr. Livingston is prosecuting a personal injury action against Mr. Shafar in state court. The vehicle that Mr. Shafar was driving was separately insured by Encompass Insurance Company. Encompass has already settled with and paid Mr. Livingston. Mr. Livingston and Trustgard agree that he has thus exhausted the Encompass policy, but has not yet exhausted the Hartford policy.

Mr. Livingston himself carries underinsured motorist insurance with Trustgard. Plaintiff has demanded coverage from Trustgard, but Trustgard has refused to pay Mr. Livingston, because he has not exhausted all applicable insurance policies. The Trustgard insurance policy states:

We will pay under this coverage only after the limits of liability under any applicable bodily injury liability bonds or policies have been exhausted by payment of judgment or settlements.

(Compl. Ex. B at C–4, Dkt. No. 1–2.) Trustgard contends that Mr. Livingston has not satisfied this requirement because he has exhausted one, but not both, of the applicable policies.

Mr. Livingston filed a complaint alleging three counts: (i) a count seeking a declaratoryjudgment that Trustgard wrongfully denied Mr. Livingston coverage; (ii) breach of contract; and (iii) consumer fraud. The complaint also includes class action allegations on behalf of similarly situated individuals.

Trustgard has moved for judgment on the pleadings, arguing that, in the context of the exhaustion clause, “any” unambiguously means “every” or “all.”

II. Standard of Review

In evaluating a motion for judgment on the pleadings under Federal Rule of Civil Procedure 12(c), the court employs the “same standard that applies when reviewing a motion to dismiss for failure to state a claim under Rule 12(b)(6).” Buchanan—Moore v. Cnty. of Milwaukee, 570 F.3d 824, 827 (7th Cir.2009). Thus, the court must view the facts alleged in the complaint “in the light most favorable to the nonmoving party and will grant the motion only if it appears beyond doubt that the plaintiff cannot prove any facts that would support her claim for relief.” Id. (internal citation and quotation omitted). The court should not ignore facts in the complaint that “undermine the plaintiff's claim” nor “give weight to unsupported conclusions of law.” Id. Moreover, although the complaint need only contain “a short and plain statement of the claim showing that the pleader is entitled to relief,” Fed.R.Civ.P. 8(a)(2), the complaint's factual allegations “must be enough to raise a right to relief above the speculative level.” Pisciotta v. Old Nat'l Bancorp, 499 F.3d 629, 633 (7th Cir.2007) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (quotation marks omitted)).

III. Analysis

A. Count I (Declaratory Judgment) and Count II (Breach of Contract)

Mr. Livingston's declaratory judgment and breach of contract claims both turn on the interpretation of the word “any” in the exhaustion clause of the insurance policy. Under Illinois law, interpretation of an insurance policy is a question of law. Patrick Schaumburg Autos., Inc. v. Hanover Ins. Co., 452 F.Supp.2d 857, 869 (N.D.Ill.2006) (citing Outboard Marine Corp. v. Liberty Mut. Ins. Co., 154 Ill.2d 90, 180 Ill.Dec. 691, 607 N.E.2d 1204, 1212 (1992)). The policy is construed as a whole, with due regard to the risk undertaken, the subject matter that is insured, and the purposes of the entire contract. Outboard Marine, 180 Ill.Dec. 691, 607 N.E.2d at 1212. The purpose of underinsured motorist coverage is “to place the insured in the same position he would have occupied if the tortfeasor had carried adequate insurance.” Phoenix Ins. Co. v. Rosen, 242 Ill.2d 48, 350 Ill.Dec. 847, 949 N.E.2d 639, 653 (2011) (internal quotation omitted). The coverage “cover[s] the shortfall between the amount of insurance contracted for and the amount received from the liable driver.” Cummins v. Country Mut. Ins. Co., 178 Ill.2d 474, 227 Ill.Dec. 539, 687 N.E.2d 1021, 1023 (1997).

If the words of a policy are clear and unambiguous, they must be given their plain, ordinary, and popular meaning. Outboard Marine, 180 Ill.Dec. 691, 607 N.E.2d at 1212. If, however, the words are susceptible to more than one reasonable interpretation, they are ambiguous and will be construed in favor of the insured and against the insurer who drafted the policy. Id. This rule of construction in favor of coverage comes into play only when the term at issue is ambiguous. Hobbs v. Hartford Ins. Co. of the Midwest, 214 Ill.2d 11, 291 Ill.Dec. 269, 823 N.E.2d 561, 564 (2005) (citing Menke v. Country Mut. Ins. Co., 78 Ill.2d 420, 36 Ill.Dec. 698, 401 N.E.2d 539, 541 (1980)). A contract is not ambiguous merely because the parties disagree on its meaning. Cent. Ill. Light Co. v. Home Ins. Co., 213 Ill.2d 141, 290 Ill.Dec. 155, 821 N.E.2d 206, 214 (2004) (citing Johnstowne Centre P'ship v. Chin, 99 Ill.2d 284, 76 Ill.Dec. 80, 458 N.E.2d 480, 481 (Ill.1983)). However, a contract is not necessarily unambiguous when each party insists that the language unambiguously supports its position. Id. Rather, whether a contract is ambiguous is a question of law. Id. (citing Quake Constr., Inc. v. Am. Airlines, Inc., 141 Ill.2d 281, 152 Ill.Dec. 308, 565 N.E.2d 990, 994 (1990)).

Trustgard contends that, in the context of the exhaustion clause, “any” unambiguously means “every” or “all,” for several reasons. First, the Supreme Court of Illinois has held that an exhaustion clause identical to Trustgard's was “virtually identical” to language contained in the Illinois statute expressly authorizing clauses in underinsured motorist insurance policies. SeeGen. Cas. Ins. Co. v. Lacey, 199 Ill.2d 281, 263 Ill.Dec. 816, 769 N.E.2d 18, 21 (2002). That statute provides that such policies may include clauses which deny payment until “all” applicable policies have been exhausted. 215 Ill. Comp. Stat. 5/143a–2(7). Therefore, Trustgard contends, in the context of an exhaustion clause, the word “any” is synonymous with “all.” Trustgard cites authorities from other jurisdictions that it claims support its interpretation as well. SeeAugustine v. Simonson, 283 Mont. 259, 940 P.2d 116, 119 (1997); Bergen v. Motorists Mut. Ins. Co., No. CA2000–06–112, 2001 WL 567841, at *5 (Ohio Ct.App. May 29, 2001).

Trustgard also points to various dictionaries and grammar usage authorities that it claims support its view. Specifically, Trustgard argues that “any” must mean “all” because (i) “any” modifies the plural nouns “liability bonds or policies,” as opposed to the singular form of those nouns; (ii) the quantity of applicable policies is unknown, so the use of the word “any” should not be construed as limiting; and (iii) the clause is an affirmative sentence, and in such sentences, “any” means “all.”

Mr. Livingston contends that the more common use of the word “any” is to mean “one.” He points to Black's Law Dictionary, which defines “any” as “some out of many, an indefinite number ... may be employed to indicate ‘all’ or ‘every’ as well as ‘some’ or ‘one’ ....” Black's Law Dictionary 94 (6th Ed.1990). He argues that, at most, the exhaustion clause is ambiguous and that any ambiguity should be resolved in his favor. He also claims that the fact that Trustgard's policy uses the word “any,” while the Illinois authorizing statute uses the word “all,” reveals an intent on Trustgard's part to “bait-and-switch” consumers into believing that they were signing up for a more attractive policy than they actually received. He claims that further discovery is necessary to determine Trustgard's intent.

Although the word “any” is indeed sometimes used to mean “one,” the court finds that, in this context, that construction is strained. Like many states, Illinois requires automobile insurers to include underinsured motorist coverage in policies they issue. See215 Ill. Comp. Stat. 5/143a–2(4). The statute limits the amount of liability for an insurer providing underinsured motorist coverage to the amount of underinsured coverage provided in the insurance policy “less those amounts actually recovered under the applicable bodily injury insurance policies, bonds or other security maintained on the underinsured vehicle.” Id. The statute goes on to expressly authorize exhaustion clauses:

A policy which provides underinsured motor vehicle coverage may include a clause which denies payment until the limits of liability or portion thereof under all bodily injury liability insurance policies applicable to the underinsured motor vehicle and its...