PROGRESSIVE UNIV. INS. v. LIBERTY MUT. FIRE

• Citation: 293 Ill.Dec. 677,828 N.E.2d 1175,215 Ill.2d 121
• Decision Date: 21 April 2005
• Docket Number: No. 98329.,98329.
• Parties: PROGRESSIVE UNIVERSAL INSURANCE COMPANY OF ILLINOIS, Appellant, v. LIBERTY MUTUAL FIRE INSURANCE COMPANY, Appellee.
• Court: Illinois Supreme Court

828 N.E.2d 1175

215 Ill.2d 121

293 Ill.Dec. 677

PROGRESSIVE UNIVERSAL INSURANCE COMPANY OF ILLINOIS, Appellant, v. LIBERTY MUTUAL FIRE INSURANCE COMPANY, Appellee.

No. 98329.

Supreme Court of Illinois.

April 21, 2005.

As Modified on Denial of Rehearing June 9, 2005.

Williams Montgomery & John, Ltd., Chicago (Alyssa M. Campbell, Barry L. Kroll, Richard Hodyl, Lloyd E. Williams, Jr., of counsel), for appellant.

Joseph P. Postel, of Meachum, Spahr, Cozzi, Postel & Zenz, Chicago, for appellee.

Justice KARMEIER delivered the opinion of the court:

Ronald Abbinante delivered pizzas for Casale Pizza, Inc. While using his mother's minivan to make a delivery, Abbinante struck and injured a pedestrian. The issue in this case is whether Progressive Universal Insurance Company of Illinois (Progressive), which issued the motor vehicle liability insurance policy on Abbinante's mother's van, had a duty to defend and indemnify him in a personal injury action subsequently filed by the injured pedestrian and the pedestrian's wife. In a declaratory judgment action filed by Progressive, the circuit court of Du Page County held that because of a provision in the policy excluding coverage for bodily injury or property damage arising out of the use of the vehicle to carry persons or property for compensation or a fee, including food delivery, the company owed no such duty. The appellate court reversed, finding the exclusion to be void and unenforceable under this state's law mandating liability coverage for permissive users of a vehicle. 347 Ill.App.3d 411, 282 Ill.Dec. 636, 806 N.E.2d 1224. We granted Progressive's petition for leave to appeal. 177 Ill.2d R. 315. For the reasons that follow, we now reverse the judgment of the appellate court.

The facts are undisputed. Shirley Abbinante owned a minivan which she insured through Progressive. On August 25, 2000, Mrs. Abbinante allowed her son Ronald to use the van to deliver pizzas for Casale Pizza, Inc. The company gave Ronald money for gas and paid him $1.25 for each pizza he delivered. While driving his mother's van in the course of delivering a pizza for the company, Ronald struck a pedestrian named Mikhail Lavit. Lavit and his wife sued Ronald and Casale Pizza to obtain damages for personal injuries, including brain and spinal cord injuries, sustained as a result of the accident.

Progressive began defending Ronald in the personal injury action under a reservation of rights. While that action was underway, the Lavits sought and obtained a payment of $100,000 from their own insurer, Liberty Mutual Fire Insurance Company (Liberty Mutual). That payment represented the limits of the uninsured-motorist coverage provided by their Liberty Mutual motor vehicle policy.

After paying the policy limits to the Lavits, Liberty Mutual demanded reimbursement of that sum from Progressive. Progressive responded by bringing this action in the circuit court of Du Page County to obtain a declaratory judgment that it had no duty to defend or indemnify Ronald in the Lavits' personal injury action. Liberty Mutual, in turn, asserted a counter-claim against Progressive seeking reimbursement of the sums it had paid to the Lavits under the uninsured-motorist provisions of their policy. Progressive moved for summary judgment pursuant to section 2-1005 of the Code of Civil Procedure (735 ILCS 5/2-1005 (West 2000)) arguing that it owed no duty to defend or indemnify Ronald because his conduct fell within the terms of an exclusion set forth in the policy it issued to Ronald's mother. That exclusion stated that coverage under the policy, including Progressive's duty to defend, did not apply to bodily injury or property damage arising out of

"the ownership, maintenance, or use of a vehicle while being used to carry persons or property for compensation or a fee, including, but not limited to, delivery of * * * food, or any other products."

Liberty Mutual countered with a cross-motion for summary judgment, arguing that Progressive could not avoid its contractual obligations based on this exclusion because the exclusion was not only ambiguous, but contrary to public policy.

Following a hearing, the circuit court granted the motion for summary judgment filed by Progressive and denied the cross-motion for summary judgment filed by Liberty Mutual. In the court's view, the food delivery exclusion in the policy was both unambiguous and valid. Progressive therefore had no duty, as a matter of law, to defend or indemnify Ronald. Absent such a duty, Liberty Mutual had no basis for obtaining reimbursement from Progressive.

The circuit court's summary judgment order contained an express written finding pursuant to Supreme Court Rule 304(a) (155 Ill.2d R. 304(a)) that there was no just reason for delaying enforcement or appeal or both.¹ Liberty Mutual appealed. Ronald, his mother, Casale Pizza, and the Lavits, who were also named as defendants in the case, did not contest the circuit court's judgment and are no longer involved in these proceedings.

In its appeal, Liberty Mutual argued, as it had in the circuit court, that the food delivery exclusion in the policy issued to Ronald's mother was ambiguous and contrary to public policy. The appellate court agreed with the circuit court that the claim of ambiguity was meritless. Viewing the exclusion with reference to the particular facts of this case, the appellate court held that the exclusion was completely unambiguous and that Ronald's conduct fell squarely within its terms. The policy excluded coverage where the vehicle was being used to deliver food for a fee or compensation, and, the appellate court observed, that was precisely what Ronald was doing at the time he hit Mr. Lavit. He was using the van to deliver food, namely, pizza, and was being paid compensation or a fee, $1.25 per delivery plus gas money, to do so. 347 Ill.App.3d at 415, 282 Ill.Dec. 636, 806 N.E.2d 1224.

While the appellate court found no ambiguity in the policy's food delivery exclusion as applied to this case, it agreed with Liberty Mutual's additional claim that the exclusion violated public policy. Relying on this court's recent decision in State Farm Mutual Automobile Insurance Co. v. Smith, 197 Ill.2d 369, 259 Ill.Dec. 18, 757 N.E.2d 881 (2001), the appellate court held that the exclusion was void and unenforceable because it conflicted with section 7-317(b)(2) of the Illinois Safety and Family Financial Responsibility Law (625 ILCS 5/7-317(b)(2) (West 2000)), which provides that a motor vehicle owner's policy of liability insurance

"[s]hall insure the person named therein and any other person using or responsible for the use of such motor vehicle or vehicles with the express or implied permission of the insured[.]"

Because Ronald was using the vehicle with his mother's express permission at the time he struck and injured Lavit, the court held that section 7-317(b)(2) required Progressive to defend and indemnify Ronald in the personal injury action brought against him by the Lavits. In the appellate court's view, giving effect to the food delivery exclusion in the mother's policy would conflict with this statutory requirement and contravene the goal of Illinois' mandatory motor vehicle liability insurance law. Accordingly, the appellate court reversed the circuit court's entry of summary judgment in favor of Progressive and entered summary judgment in favor of Liberty Mutual. 347 Ill.App.3d at 416-18, 282 Ill.Dec. 636, 806 N.E.2d 1224. This appeal by Progressive followed.

In the proceedings before our court, no issue is raised as to the clarity of the food delivery exclusion in the mother's insurance policy. It is conceded to be unambiguous. The sole question presented for our review is whether the appellate court erred in holding that Liberty Mutual was entitled to summary judgment on the grounds that the policy exclusion was void and unenforceable.

The standards applicable to this inquiry are well established. Summary judgment is proper where, when viewed in the light most favorable to the nonmoving party, the pleadings, depositions, admissions, and affidavits on file reveal that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Whether the entry of summary judgment was appropriate is a matter we review de novo. General Casualty Insurance Co. v. Lacey, 199 Ill.2d 281, 284, 263 Ill.Dec. 816, 769 N.E.2d 18 (2002)

. De novo review is also appropriate because resolution of this appeal turns on questions of statutory interpretation. Midstate Siding & Window Co. v. Rogers, 204 Ill.2d 314, 319, 273 Ill.Dec. 816, 789 N.E.2d 1248 (2003).

Section 7-601(a) of the Illinois Safety and Family Financial Responsibility Law (625 ILCS 5/7-601(a) (West 2000)) mandates liability insurance coverage for automobiles and other motor vehicles designed to be used on a public highway. Under the statute, no person is permitted to operate, register or maintain registration of such a motor vehicle unless the vehicle is covered by a liability insurance policy. State Farm Mutual Automobile Insurance Co. v. Smith, 197 Ill.2d at 373, 259 Ill.Dec. 18, 757 N.E.2d 881. Certain types of vehicles are exempt from this requirement. See 625 ILCS 5/7-601(b) (West 2000). None of those exemptions, however, is applicable here.

The liability insurance mandated by section 7-601(a) must meet certain requirements. One of those requirements is set forth in section 7-317(b)(2) of the Illinois Safety and Family Financial Responsibility Law (625 ILCS 5/7-317(b)(2) (West 2000)). As indicated earlier in this opinion, section 7-317(b)(2) provides that a motor vehicle owner's policy of liability insurance

"[s]hall insure the person named therein and any other person using or responsible for the use of such motor vehicle or vehicles with the express or implied permission of the insured[.]" 625 ILCS 5/7-317(b)(2) (West 2000).

Provisions such as this, which extend...