Pekin Ins. Co. v. Campbell

Decision Date07 July 2015
Docket NumberNo. 4–14–0955.,4–14–0955.
Citation44 N.E.3d 1103
PartiesPEKIN INSURANCE COMPANY, Plaintiff–Appellee, v. Tyree CAMPBELL, d/b/a Campbell Construction & Improvement, Defendant–Appellant.
CourtUnited States Appellate Court of Illinois

Mike McElvain (argued), of Law Office of Mike McElvain, of Bloomington, for appellant.

Robert Marc Chemers and Philip G. Brandt (argued), both of Pretzel & Stouffer, Chtrd., of Chicago, for appellee.

OPINION

Presiding Justice POPE

delivered the judgment of the court, with opinion.

¶ 1 Plaintiff, Pekin Insurance Company (Pekin), filed a complaint to rescind a workers' compensation policy it issued to defendant, Tyree Campbell, d/b/a Campbell Construction & Improvement (Campbell), citing misrepresentations Campbell made regarding the number of individuals he employed. Despite being served with the complaint, Campbell failed to respond or appear at the subsequent hearing. In August 2012, the trial court entered a default judgment against him.

¶ 2 In April 2014, Campbell filed a petition to vacate the default judgment. According to Campbell's argument, the default judgment was void because the trial court lacked subject matter jurisdiction to address Pekin's complaint. Specifically, Campbell contended the complaint asked the court to make factual determinations exclusively reserved for the Illinois Workers' Compensation Commission (Commission).

¶ 3 Thereafter, Pekin filed a motion to dismiss Campbell's petition, arguing the default judgment was not void because Pekin's complaint involved the rescission of an insurance policy, which was well within the trial court's subject matter jurisdiction. The court granted Pekin's motion. Campbell then filed a motion to reconsider, which the court denied. Campbell appeals that denial and we affirm.

¶ 4 I. BACKGROUND

¶ 5 On May 2, 2012, Pekin filed a complaint against Campbell seeking to rescind a workers' compensation insurance policy it had issued him. According to the complaint, Pekin and Campbell had a history of doing business together and had renewed Campbell's policy in the past. After each prior policy expired, Pekin conducted an audit to calculate the final premium amount. Pekin explained the audit is necessary because Campbell pays an estimated premium over the first nine months of the policy period. The final premium is based on, inter alia, the insured's representation of the number of employees employed during the previous policy period.

¶ 6 To its complaint, Campbell attached a certified copy of the workers' compensation policy as well as copies of its audit reports. According to Pekin, its premium is based on the risk assessed from the audits. Campbell expressly indicated he had no employees during each previous audit period. Pekin alleged although Campbell employed an individual named Joshua Poor during the audit period, Campbell still claimed he had no employees. According to Pekin, “Campbell's representations that he had ‘no employees' during both the 2010 and 2011 audits were false and known by him to be false at the time he made the representations.” As a result, Campbell misrepresented the risk presented to Pekin, which affected whether Pekin would have extended coverage as well as the premium amount charged for accepting that risk. Pekin alleged had it known of Poor's employment, it would not have issued the policy as written.

¶ 7 On May 12, 2012, the McLean County sheriff served Campbell with a summons and copy of Pekin's complaint. Campbell failed to file an answer or other responsive pleading.

¶ 8 On July 26, 2012, Pekin filed a motion for default judgment against Campbell pursuant to section 2–1301(d) of the Code of Civil Procedure

(Procedure Code), which authorizes the trial court to enter a default judgment “for want of an appearance, or for failure to plead.” 735 ILCS 5/2–1301(d) (West 2012). Notice of the motion and subsequent hearing was provided to Campbell by certified mail. Campbell did not respond to the motion.

¶ 9 On August 27, 2012, the trial court held a hearing on Pekin's motion for default judgment. Campbell failed to appear at the hearing. The court found Campbell had been served but failed to answer or appear. The court entered a default judgment against Campbell and found Pekin was entitled to rescind the policy.

¶ 10 On April 21, 2014, some twenty months later, Campbell filed a petition for relief from judgment pursuant to section 2–1401 of the Procedure Code (735 ILCS 5/2–1401 (West 2012)

). In his petition, Campbell acknowledged service of Pekin's pleadings but argued the trial court's default judgment was void for lack of subject matter jurisdiction. Campbell contended Pekin's complaint improperly asked the trial court to determine whether Poor was an employee. Campbell characterized Poor as an independent contractor. According to Campbell, the question of Poor's employment status could not be resolved by the court because the Commission had “exclusive jurisdiction for the factual determination of employment relationships.” Campbell requested the court declare its prior order void and allow him to plead to the original complaint. (According to Campbell's petition, he received a settlement demand letter requesting $72,000 to settle a workers' compensation suit filed against him by Poor. The record does not reflect when Poor's claim was filed.)

¶ 11 On May 29, 2014, Pekin filed a motion to dismiss Campbell's petition pursuant to section 2–615 of the Procedure Code (735 ILCS 5/2–615 (West 2012)

). Pekin argued, inter alia, Campbell's voidness argument was without merit. According to Pekin, the fact the complaint involved a workers' compensation policy did not mean the trial court's resolution of Pekin's complaint for rescission was beyond the court's jurisdiction. Pekin contended the trial court has jurisdiction over all justiciable matters, including an action for rescission of an insurance policy under the Illinois Insurance Code (Insurance Code). See 215 ILCS 5/154 (West 2012).

¶ 12 Pekin further argued the question of whether Poor was an employee was not at issue because that allegation was deemed admitted as fact by virtue of the default judgment. Thus, Pekin concluded there were no factual issues for the Commission to resolve regarding Poor's employment relationship.

¶ 13 Pekin also noted, even if a workers' compensation issue was implicated, the supreme court in Employers Mutual Cos. v. Skilling, 163 Ill.2d 284, 206 Ill.Dec. 110, 644 N.E.2d 1163 (1994)

, had already found trial courts possess concurrent jurisdiction with the Commission and, in situations like the one presented in this case, the court's jurisdiction is paramount under the doctrine of primary jurisdiction.

¶ 14 Campbell responded, arguing “Pekin's argument there is no factual issue because the default by Campbell admitted the employment, is wrong and does not give the court subject matter jurisdiction.”

¶ 15 On August 6, 2014, the trial court held oral argument on Pekin's motion to dismiss. According to the court's written order, Campbell appeared by counsel and argued against the motion. However, Campbell failed to include a report of the proceedings for this hearing in the record on appeal.

¶ 16 In its August 14, 2014, written order, the trial court found Campbell failed to state a claim for voidness in his section 2–1401

petition. Citing Skilling, it found the subject matter of Pekin's complaint for rescission “was within the purview of the determination of the trial court.” As between it and the Commission, the court concluded “primary jurisdiction lies with the circuit court, as this matter involves * * * rescission, a matter of law, as opposed to a question of fact.” The court concluded its order by stating [t]o the extent Defendant Campbell can, in good faith, plead [the necessary elements of a section 2–1401 petition not based on voidness grounds], the motion [to dismiss] is allowed without prejudice * * * and with leave to re-plead within twenty eight (28) days.”

¶ 17 Campbell did not replead and instead on September 3, 2014, filed a motion to reconsider, arguing the trial court erred in finding the rescission action could be decided as a matter of law. Campbell contended the issue of whether he made a material misrepresentation regarding Poor's status was a factual question, which had to be determined by the Commission.

¶ 18 Following an October 2, 2014, hearing, the trial court denied Campbell's motion to reconsider and dismissed the cause with prejudice as Campbell elected to stand on his pleading rather than file an amended section 2–1401

petition. We note Campbell did not include a report of the proceedings for the hearing on the motion to reconsider.

¶ 19 On October 29, 2014, Campbell filed a notice of appeal. Thereafter, Pekin filed a motion to dismiss Campbell's appeal for lack of appellate jurisdiction pursuant to Illinois Supreme Court Rule 303(b)(2)

(eff. May 30, 2008), which provides the notice of appeal “shall specify the judgment or part thereof or other orders appealed from.” According to Pekin, Campbell failed to indicate which trial court order he was appealing and what relief he sought.

¶ 20 On December 23, 2014, Campbell filed an amended notice of appeal indicating he was appealing from the trial court's (1) August 14, 2014, order denying his petition to vacate the default judgment and (2) October 2, 2014, order denying his motion to reconsider the August 14, 2014, order.

¶ 21 On December 18, 2014, this court entered an order allowing Campbell's motion to accept the amended notice of appeal “as to the circuit court's order of 10/2/14 only” where Campbell's “original and amended notices of appeal are untimely as to the 8/14/14 trial court order.”

¶ 22 This appeal followed.

¶ 23 II. ANALYSIS

¶ 24 On appeal, Campbell argues the trial court erred in dismissing his motion to reconsider his section 2–1401

petition. Specifically, Campbell contends the court lacked subject matter jurisdiction over Campbell's underlying complaint. We disagree.

¶ 25 A....

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