Progressive N. Ins. Co. v. Ayala
| Decision Date | 17 February 2021 |
| Docket Number | 1-20-0384 |
| Citation | 2021 IL App (1st) 200384,198 N.E.3d 612,459 Ill.Dec. 585 |
| Parties | PROGRESSIVE NORTHERN INSURANCE COMPANY, as Subrogee of Yolanda Rebolledo-Colon, Plaintiff-Appellant, v. Israel AYALA, Defendant-Appellee. |
| Court | United States Appellate Court of Illinois |
Jeffrey S. Deutschman, of Deutschman & Skafish, P.C., of Chicago, for appellant.
Donald Patrick Eckler and Scott L. Howie, of Pretzel & Stouffer Chtrd., of Chicago, for appellee.
¶ 1 Yolanda Rebolledo-Colon and Israel Ayala were involved in a car accident. Rebolledo-Colon had insurance through Progressive Northern Insurance Company (Progressive), and Ayala had insurance through American Alliance Casualty Company (American). After Progressive paid out for the damages to Rebolledo-Colon's vehicle, it sought reimbursement from American, as her subrogee, in a demand letter. American, in turn, sent Progressive a check for 25% of the claimed subrogation balance, along with a letter stating that the check was American's offer of resolution and a claim release document covering it and Ayala. Progressive deposited that check and then sued Ayala for the remaining 75% of its claimed subrogation balance. On Ayala's motion, the circuit court dismissed Progressive's lawsuit, finding that, when Progressive deposited American's check, the parties had reached an accord and satisfaction that barred Progressive's subsequent lawsuit against Ayala. Progressive now appeals that dismissal, contending the court erred in finding that the parties had reached an accord and satisfaction. For the reasons that follow, we reverse the circuit court's dismissal.
¶ 3 On August 21, 2018, Israel Ayala and Yolanda Rebolledo-Colon's vehicles collided. Rebolledo-Colon's insurance company, Progressive Northern Insurance Company, reimbursed her for the damage to her vehicle. Progressive investigated the accident and determined that it was Ayala's negligence that caused the collision. As a result, in October 2018, Progressive faxed Ayala's insurance company, American Alliance Casualty Company, a demand letter that referenced a claim number, a date of loss, and Ayala as the named insured of American.
¶ 4 In the letter, Progressive asserted that it had completed its investigation and determined that Ayala was the proximate cause of the accident. Progressive sought a total subrogation balance of $9881.69, which included Rebolledo-Colon's deductible payment, from American and specifically noted that it was "seeking reimbursement at 100[%]." Progressive also stated that it had sent photographs to an e-mail address associated with American. Progressive directed American to make a check payable to "Progressive Northern Insurance Company as Subrogee of REBOLLEDO-COLON, YOLANDA" and to send the check to its "Subrogation Payment Processing Center" at a specified address. Additionally, Progressive provided a fax number for American to send any requests for additional documentation or information that it may have. Progressive concluded the letter by requesting that American include the claim number on all correspondences.
¶ 5 Three months later, American responded in a letter addressed to the "Progressive Subrogation Payment Processing Center" at the address specified in Progressive's demand letter. American's letter contained the subject line "Claim Status Update—Offer of Resolution" and referenced the claim number provided in Progressive's demand letter. American's letter stated that it had reviewed the claim and made the following proposal:
"Offer of Resolution—At this time we are prepared to offer the sum of $2,477.51 [b]ased on our estimate and [f]ollowing too closely."
In addition to its offer of resolution, American included a "release of property damage claim" that referenced Ayala, the date of the accident, the amount of American's offer, and the claim number. The release document noted that the offer was intended as consideration for Progressive's release of its claim against American and Ayala based on the accident between him and Rebolledo-Colon. The document stated that the undersigned "had the opportunity to review" the release and "consult with legal counsel as appropriate." It continued on and stated that it was "understood and agreed that this settlement is the compromise of a doubtful and disputed claim." The release further indicated that American denied liability in the matter and "intend[ed] by this settlement merely to avoid future litigation and to buy their peace." At the bottom of the document was a space for a signature.
¶ 6 American enclosed a check for $2477.51, payable to "Subrogation Payment Processing Center A/S/O Yolanda Colon," which referenced the claim number. The reverse side of the check contained the following language in the area reserved for the indorsement of the instrument: "The undersigned payee releases the claims against the insured and/or American Alliance Casualty Company as described and enumerated on the reverse side of this check (other than for payments made to an insured for collision, comprehensive, towing and rental coverage)." Progressive deposited the check into its bank account five days later, but it never signed and sent the "release of property damage claim" back to American.
¶ 7 In May 2019, Progressive filed a complaint, as subrogee of Rebolledo-Colon, against Ayala, alleging that he was liable for $7404.18 in damages to Rebolledo-Colon's vehicle based on his negligence. Thereafter, Ayala filed a motion to dismiss pursuant to section 2-619(a)(6) of the Code of Civil Procedure ( 735 ILCS 5/2-619(a)(6) (West 2018)), arguing that, when Progressive deposited American's check, the parties reached an accord and satisfaction that barred Progressive's lawsuit against him. Ayala attached to his motion an affidavit from Andrew Zell, the litigation supervisor of American, who averred that American sent its offer letter, release document, and check in the same envelope after evaluating Progressive's demand and concluding that it disagreed with the demand. Zell further averred that its offer letter, release document, and check were created in the regular course of its business and that it regularly sent such correspondences to Progressive's subrogation payment processing center to pursue settlements with Progressive.
¶ 8 Progressive responded to Ayala's motion and contended that the elements of accord and satisfaction had not been met and that American's offer of a fraction of the subrogation balance was not made in good faith but rather amounted to "bad faith insurance practice." Additionally, Progressive argued that American knew or should have known that its payment center "lacked authority to settle or release insurance claims." Progressive attached to its response an affidavit from Kellie Blood, a subrogation representative for the company, who averred that Progressive paid out $9881.69 to Rebolledo-Colon as a result of her accident with Ayala, which reimbursed her for repairs and the cost of a rental vehicle. After stating that Progressive had sent a demand letter to American, Blood asserted that American did not make a good faith offer to Progressive, did not engage in any good faith settlement discussions with Progressive, and did not communicate in any good faith capacity with Progressive regarding the claim. Blood acknowledged that American sent Progressive a check for $2477.51 but remarked that, "[d]ue to the high volume of checks Progressive receives daily, it is part of Progressive's ordinary course of business, and in accordance with industry practice, for Progressive to deposit into its bank account all the checks it receives." Blood stated that, when Progressive deposited American's check, it never intended its act to be construed as full satisfaction of its claim.
¶ 9 Ultimately, the circuit court granted Ayala's motion and dismissed Progressive's lawsuit. The court's written order contained no explanation for the dismissal, and there is no transcript of the hearing on Ayala's motion.
¶ 10 Progressive subsequently appealed.
¶ 12 Progressive contends that the circuit court erred by dismissing its lawsuit against Ayala where it and American never reached an accord and satisfaction to settle its subrogation claim.
¶ 13 A motion to dismiss under section 2-619 of the Code of Civil Procedure (id. § 2-619 ) admits the legal sufficiency of a complaint but asserts that certain defects, defenses, or other affirmative matters appearing outside of the pleadings act to defeat the complaint's claims. Sandholm v. Kuecker , 2012 IL 111443, ¶ 55, 356 Ill.Dec. 733, 962 N.E.2d 418. One such defense is that the claim set forth in the plaintiff's lawsuit has been released or satisfied. 735 ILCS 5/2-619(a)(6) (West 2018). In analyzing a section 2-619 motion to dismiss, the circuit court is required to accept all well-pled facts in the complaint as true, as well as any reasonable inferences from those facts. Sandholm , 2012 IL 111443, ¶ 55, 356 Ill.Dec. 733, 962 N.E.2d 418. All pleadings and supporting documents must be construed in the light most favorable to the nonmoving party. Id. The critical inquiry is "whether the existence of a genuine issue of material fact should have precluded the dismissal or, absent such an issue of fact, whether dismissal is proper as a matter of law." Kedzie & 103rd Currency Exchange, Inc. v. Hodge , 156 Ill. 2d 112, 116-17, 189 Ill.Dec. 31, 619 N.E.2d 732 (1993). Accord and satisfaction is an affirmative defense, and as such, the proponent of the defense, here Ayala, has the burden to prove all of its elements. In re Estate of Castro , 289 Ill. App. 3d 1071, 1077, 225 Ill.Dec. 592, 683 N.E.2d 1255 (1997). We review a motion to dismiss de novo. Sandholm , 2012 IL 111443, ¶ 55, 356 Ill.Dec. 733, 962 N.E.2d 418.
¶ 14 "An accord and satisfaction is a contractual method of discharging a debt or claim." Saichek v. Lupa , ...
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