Lyons v. State Farm Fire and Cas. Co.

• Decision Date: 27 May 2004
• Docket Number: No. 5-02-0597.,5-02-0597.
• Citation: 349 Ill.App.3d 404,811 N.E.2d 718,285 Ill.Dec. 231
• Parties: Ronnie L. LYONS, Plaintiff-Appellee, v. STATE FARM FIRE AND CASUALTY COMPANY, Defendant-Appellant.
• Court: United States Appellate Court of Illinois

811 N.E.2d 718

349 Ill.App.3d 404

285 Ill.Dec. 231

Ronnie L. LYONS, Plaintiff-Appellee, v. STATE FARM FIRE AND CASUALTY COMPANY, Defendant-Appellant.

No. 5-02-0597.

Appellate Court of Illinois, Fifth District.

May 27, 2004.

Rehearing Denied June 25, 2004.

Stephen W. Thomson, Thomson Law Offices, P.C., Edwardsville, for Appellant.

Brad K. Bleyer, Marion, for Appellee. Presiding Justice CHAPMAN delivered the opinion of the court:

The plaintiff, Ronnie L. Lyons, filed a complaint for a declaratory judgment in the circuit court of Williamson County. He sought a determination of whether the defendant, State Farm Fire and Casualty Company (State Farm), had a duty to defend and indemnify him under a homeowner's policy against a neighbor's lawsuit claiming trespass, permanent injunction, and replevin. The trial court found in Lyons' favor, ordering State Farm to provide a defense in the underlying claim. State Farm appeals. We affirm in part and reverse in part.

I. BACKGROUND

On May 9, 2001, Tony and Deena Rendleman, who owned property that adjoined property owned by Lyons, filed a lawsuit against Lyons in the circuit court of Perry County, cause No. 01-CH-11. The Rendlemans made the following allegations in their complaint: (1) trespass — that Lyons had built levees that protruded onto their property, (2) permanent injunction — that when Lyons would harvest fish from the pond that he had constructed for a commercial fish operation, he would drain the pond by diverting water onto the Rendlemans' property, in violation of article II of the Illinois Drainage Code (70 ILCS 605/2-1 et seq. (West 2000)), and (3) replevin — that Lyons had wrongfully detained the Rendlemans' personal property (i.e., a brushcutter).

Lyons tendered his defense to his insurer State Farm under his homeowner's policy. State Farm refused to defend Lyons, raising policy defenses. In response, Lyons filed a complaint for a declaratory judgment in Williamson County and sought coverage and indemnification under the policy. State Farm and Lyons each filed a motion for a judgment on the pleadings. The trial court granted Lyons' motion, entering a judgment on the pleadings. State Farm appeals this final judgment, following the trial court's denial of its motion to reconsider.

II. ANALYSIS

A motion for a judgment on the pleadings is akin to a motion for a summary judgment, but it is limited to the pleadings. Employers Insurance of Wausau v. Ehlco Liquidating Trust, 186 Ill.2d 127, 138, 237 Ill.Dec. 82, 708 N.E.2d 1122, 1129 (1999). We review a judgment on the pleadings on a de novo basis. State Farm Fire & Casualty Co. v. Tillerson, 334 Ill.App.3d 404, 407, 268 Ill.Dec. 63, 777 N.E.2d 986, 989 (2002).

The issues before us are whether State Farm has a duty to defend and indemnify Lyons under its homeowner's policy against the complaint filed by the Rendlemans.

First, we review the well-settled law regarding the construction of insurance policies as it relates to the rights and obligations of the parties. It is the general rule that the duty of the insurer is determined by the allegations of the underlying complaint. Maryland Casualty Co. v. Peppers, 64 Ill.2d 187, 193, 355 N.E.2d 24, 28 (1976). A duty to defend arises if the complaint's allegations fall within or potentially within the coverage provisions of the policy. Chandler v. Doherty, 299 Ill.App.3d 797, 801, 234 Ill.Dec. 294, 702 N.E.2d 634, 637 (1998); Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill.2d 90, 108, 180 Ill.Dec. 691, 607 N.E.2d 1204, 1212 (1992). This is true even if the allegations are groundless, false, or fraudulent or if only one of several theories advanced is potentially within policy coverage. United States Fidelity & Guaranty Co. v. Wilkin Insulation Co., 144 Ill.2d 64, 73, 161 Ill.Dec. 280, 578 N.E.2d 926, 930 (1991); Peppers, 64 Ill.2d at 194,355 N.E.2d at 28. The threshold requirements for the complaint's allegations are low. Management Support Associates v. Union Indemnity Insurance Co. of New York, 129 Ill.App.3d 1089, 1096, 85 Ill.Dec. 37, 473 N.E.2d 405, 411 (1984). In a court's determination of the duty to defend, the underlying complaint is to be liberally construed in favor of the insured, and doubts and ambiguities are to be construed in favor of the insured. Wilkin Insulation Co.,144 Ill.2d at 74,161 Ill.Dec. 280,578 N.E.2d at 930. A determination regarding an exclusionary clause is subject to the same liberal standard. Wilkin Insulation Co.,144 Ill.2d at 78,161 Ill.Dec. 280,578 N.E.2d at 933. The factual allegations of the complaint, rather than the legal theories, determine a duty to defend. Management Support Associates, 129 Ill.App.3d at 1097, 85 Ill.Dec. 37, 473 N.E.2d at 411. "An insurer may not justifiably refuse to defend an action against its insured unless it is clear from the face of the underlying complaints that the allegations fail to state facts which bring the case within, or potentially within, the policy's coverage." (Emphasis in original.) Wilkin Insulation Co.,144 Ill.2d at 73,161 Ill.Dec. 280,578 N.E.2d at 930.

Keeping these principles in mind, we turn now to compare the allegations of the underlying complaint with the relevant portions of the insurance policy.

The underlying complaint was brought in three counts: count I — trespass, count II — permanent injunction, and count III — replevin. While State Farm argues against coverage on all three counts, Lyons does not argue for coverage on count II or count III, conceding at oral argument that coverage does not apply for those counts. Because the duty to defend a lawsuit arises even if only one of several theories of recovery is within the potential coverage of the policy, we therefore proceed to consider the potential for coverage on count I without the necessity of considering State Farm's arguments regarding counts II and III. See Wilkin Insulation Co., 144 Ill.2d at 73-74, 161 Ill.Dec. 280, 578 N.E.2d at 930.

Count I includes the following allegations: "Defendant has trespassed on Plaintiffs' Property in that Defendant has constructed levees that protrude onto Plaintiffs' Property," and "Defendant's actions constitute a wrongful interference with Plaintiffs' actual possessory rights in Plaintiffs' Property."

Lyons' liability policy provides coverage for "damages because of bodily injury or property damage to which this coverage applies, caused by an occurrence." It excludes coverage for property damage that "is either expected or intended by the insured." The policy defines "occurrence" as "an accident, including exposure to conditions, which results in: a. bodily injury; or b. property damage." The policy also states as follows: "`[P]roperty damage' means physical damage to or destruction of tangible property, including loss of use of this property. Theft or conversion of property by any insured is not property damage."

Occurrence

State Farm argues that the act of constructing levees was intentional and therefore was not an "occurrence" within the meaning of the policy, which defines "occurrence" as "an accident." It further argues that the levees are the "natural and ordinary consequences" of the act of construction and therefore do not constitute "an accident." In support of these arguments, State Farm cites to several cases that define an accident as "`"an unforeseen occurrence, usually of an untoward or disastrous character or an undesigned sudden or unexpected event of an inflictive or unfortunate character."'" Tillerson, 334 Ill.App.3d at 409, 268 Ill.Dec. 63, 777 N.E.2d at 990 (quoting State Farm Fire & Casualty Co. v. Watters, 268 Ill.App.3d 501, 506, 205 Ill.Dec. 936, 644 N.E.2d 492, 495-96 (1994) (quoting Aetna Casualty & Surety Co. v. Freyer, 89 Ill.App.3d 617, 619, 44 Ill.Dec. 791, 411 N.E.2d 1157, 1159 (1980))).

In determining what constitutes an accident, Illinois adheres to the rule of law promulgated by the United States Supreme Court more than a century ago in United States Mutual Accident Ass'n v. Barry, 131 U.S. 100, 9 S.Ct. 755, 33 L.Ed. 60 (1889). In the Barry case three men jumped to the ground from a platform several feet high. The three men were physicians who had just finished visiting a patient and were attempting to take a shortcut to their next destination. Two of the men landed safely; however, Dr. Barry landed awkwardly. He immediately became ill and died a few days later from a twisted duodenum caused by his bad landing. His insurer raised a policy defense contending that Dr. Barry's death was not accidental within the meaning of the policy. At the trial a jury found that the event had occurred accidentally. The United States Supreme Court upheld the verdict, approving the following instructions with regard to finding an accident under the policy:

"The court properly instructed [the jurors] that the jumping off the platform was the means by which the injury, if any was sustained, was caused; that the question was whether there was anything accidental, unforseen, involuntary, unexpected, in the act of jumping, from the time the deceased left the platform until he alighted on the ground; that the term `accidental' was used in the policy in its ordinary, popular sense, as meaning `happening by chance, unexpectedly taking place, not according to the usual course of things, or not as expected'; that if a result is such as follows from ordinary means, voluntarily employed, in a not unusual or unexpected way, it cannot be called a result effected by accidental means; but that if, in the act which precedes the injury, something unforeseen, unexpected, unusual, occurs which produces the injury, then the injury has resulted through accidental means." Barry, 131 U.S. at 121, 9 S.Ct. at 762, 33 L.Ed. 60.

The court reasoned that while Dr. Barry intended to jump, he believed and intended that he would land safely from the jump; the fact that he did not land safely as expected constituted the accident. Barry, 131 U.S. at 121, 9 S.Ct....