Nationwide Mut. Ins. Co. v. Filos, 1-96-0594

• Court: United States Appellate Court of Illinois
• Writing for the Court: DiVITO
• Citation: 285 Ill.App.3d 528,673 N.E.2d 1099
• Parties: , 220 Ill.Dec. 678 NATIONWIDE MUTUAL INSURANCE COMPANY, Plaintiff-Appellee, v. Michael FILOS, Defendant-Appellant.
• Docket Number: No. 1-96-0594,1-96-0594
• Decision Date: 26 November 1996

Page 1099

673 N.E.2d 1099 285 Ill.App.3d 528, 220 Ill.Dec. 678 NATIONWIDE MUTUAL INSURANCE COMPANY, Plaintiff-Appellee,
v.
Michael FILOS, Defendant-Appellant. No. 1-96-0594. Appellate Court of Illinois,
First District, Second Division. Nov. 26, 1996.

Page 1100

[220 Ill.Dec. 679] [285 Ill.App.3d 530] James G. Meyer, A. Mark Ialongo, Ialongo & Meyer, Chicago, for Defendant-Appellant.

Stephen E. Sward, James L. Reed, Jr., Rooks, Pitts and Poust, Chicago, for Plaintiff-Appellee.

Page 1101

[220 Ill.Dec. 680] Justice DiVITO delivered the opinion of the court:

Defendant Michael Filos filed a products liability action after he was injured by a dough breaker machine at his place of employment. Without reserving its rights, plaintiff Nationwide Mutual Insurance Company (Nationwide), one of the insurers of the manufacturer of the machine, admitted that it provided coverage for his injury. Twenty-three days before trial was set to begin, Nationwide denied coverage and filed this declaratory judgment action, seeking a determination as to its liability. Finding that Nationwide's insurance policy did not provide coverage for Filos' injury, the circuit court granted its motion for summary judgment. The question of first impression presented in this appeal is whether an exception to the general rule that the doctrine of estoppel will not operate to create primary insurance liability is available in Illinois. For the reasons that follow, we conclude that it is.

Filos' former employer, Noodles of China, ordered a dough breaker machine from its designer and manufacturer, Volpi & Son Machine Corporation Southbrook Division, Inc. (Volpi), on June 29, 1978. Almost 10 years later, on June 16, 1988, Filos severely injured his hand while operating the dough breaker machine.

In December 1988, Filos sued Volpi, contending that the dough breaker was unreasonably dangerous and defectively designed. When Joseph Volpi, the president of Volpi, received a copy of the summons and complaint, he directed that it be sent to the different insurance companies with which Volpi had had coverage in order to determine whether it was covered by any of them. A letter was sent to Nationwide advising it that Volpi's records indicated that its policy, which was in effect from April 2, 1978, to February 2, 1981, provided Volpi with protection from the suit and asking that it respond to the summons. Sometime in early 1989, without reserving its rights, Nationwide informed Volpi that it was covered for the accident.

From early 1989 until August 1993, Nationwide defended Volpi in the underlying litigation. On June 11, 1990, in an answer to Filos' interrogatories, Nationwide stated that its "policy was in effect on the date of occurrence, maximum liability limits--One Million Dollars Aggregate." In November 1991, Nationwide's in-house claims attorney, James Boyd, prepared a request for appraisal in which he [285 Ill.App.3d 531] recommended a settlement offer of $350,000. Although a representative of Nationwide made a settlement offer of $350,000 in a pretrial conference on November 12, 1991, it was not accepted.

In August 1993, Eugene Tierney, one of Nationwide's attorneys, reviewed Filos' file. He noticed that the date of loss was erroneously recorded as the date of the sale of the dough breaker. In his opinion, the date of loss was the date Filos was injured. On August 20, 1993, 23 days before trial was set to begin, he advised Filos' attorney that the settlement offer was withdrawn and that Nationwide had not provided insurance coverage to Volpi on the date of the occurrence. On August 31, 1993, Nationwide filed an amended interrogatory answer, denying that Volpi was covered by its policy on June 16, 1988.

On September 15, 1993, a settlement order dismissing Filos' action against Volpi was entered in the circuit court. The order provided for judgment in favor of Filos in the amount of $400,000. A settlement assignment was signed by Filos, Yvonne Chambers, one of Nationwide's claims attorneys, and Joseph Volpi. That document provided that Nationwide denied liability and that Filos agreed not to execute the judgment against Volpi in exchange for Volpi's assignment of any rights that it might have against Nationwide.

On September 16, 1993, Nationwide filed this action, a complaint for declaratory judgment, seeking a determination that it was not liable for the $400,000 judgment. Filos and Volpi, in turn, filed a complaint at law against Nationwide, alleging constructive fraud and breach of fiduciary duty. In March 1994, that suit and Nationwide's declaratory judgment action were consolidated. On January 26, 1996, finding that Nationwide's policy did not provide coverage for Filos' injury, the

Page 1102

[220 Ill.Dec. 681] circuit court granted summary judgment in favor of Nationwide. Filos appeals. I

Because the order of the circuit court granting summary judgment did not dispose of all claims raised in the consolidated action and did not contain a Supreme Court Rule 304(a) finding, we first address the question of whether we have jurisdiction to entertain this appeal.

Supreme Court Rule 304(a) (134 Ill.2d R. 304(a)) provides in relevant part that "[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 enforcement or appeal." 134 Ill.2d R. [285 Ill.App.3d 532] 304(a). Rule 304(a) does not necessarily apply to all actions involving multiple claims or parties. E.g., Northtown Warehouse & Transportation Co. v. Transamerica Insurance Co., 111 Ill.2d 532, 96 Ill.Dec. 63, 490 N.E.2d 1268 (1986) (Rule 304(a) finding not required where counterclaim is severed from case in chief).

Where a consolidation concerns several actions involving an inquiry into the same event in its general aspects and is limited to a joint trial, with separate docket entries, verdicts and judgments, an order dismissing one of the actions is deemed final and immediately appealable. Heritage Pullman Bank v. American National Bank & Trust Co., 164 Ill.App.3d 680, 683-84, 115 Ill.Dec. 706, 518 N.E.2d 231 (1987); Kassnel v. Village of Rosemont, 135 Ill.App.3d 361, 364, 90 Ill.Dec. 49, 481 N.E.2d 849 (1985). In such a case, Supreme Court Rule 304(a) language is not required before a reviewing court will have jurisdiction. Heritage Pullman, 164 Ill.App.3d at 684, 115 Ill.Dec. 706, 518 N.E.2d 231. Where several actions actually merge into one action, however, thereby losing their identity, they are disposed of as one suit and Supreme Court Rule 304(a) language is necessary before an appeal of dismissal of less than all counts will be heard. Kassnel, 135 Ill.App.3d at 364, 90 Ill.Dec. 49, 481 N.E.2d 849.

Here, the consolidated action took the first form. The motion for consolidation of Nationwide's declaratory judgment action and Filos' law action stated that because both cases involved the same parties and common questions of fact,...