Purlee v. Liberty Mut. Fire Ins. Co.

• Citation: 631 N.E.2d 433,197 Ill.Dec. 430,260 Ill.App.3d 11
• Decision Date: 29 March 1994
• Docket Number: No. 5-92-0065,5-92-0065
• Parties: , 197 Ill.Dec. 430 Barbara A. PURLEE, Plaintiff-Appellant, v. LIBERTY MUTUAL FIRE INSURANCE COMPANY, Defendant-Appellee. Kathleen L. ALLEN, Plaintiff-Appellant, v. LIBERTY MUTUAL FIRE INSURANCE COMPANY, Defendant-Appellee.
• Court: United States Appellate Court of Illinois

Page 433

631 N.E.2d 433

260 Ill.App.3d 11, 197 Ill.Dec. 430

Barbara A. PURLEE, Plaintiff-Appellant, v. LIBERTY MUTUAL FIRE INSURANCE COMPANY, Defendant-Appellee.

Kathleen L. ALLEN, Plaintiff-Appellant, v. LIBERTY MUTUAL FIRE INSURANCE COMPANY, Defendant-Appellee.

No. 5-92-0065.

Appellate Court of Illinois,

Fifth District.

March 29, 1994.

Coulson & Grimm, Collinsville, Wesley J. Coulson, of counsel, for plaintiff-appellant.

Evans & Dixon, Alexander M. Wilson, Edwardsville, for defendant-appellee.

Justice WELCH delivered the opinion of the court:

The matter before us on appeal is a consolidation of two cases filed on December 28, 1990, in the circuit court of Madison County: Barbara A. Purlee v. Liberty Mutual Fire Insurance Co., case no. 90-L-1712, and Kathleen Allen v. Liberty Mutual Fire Insurance Co., case no. 90-L-1713. Plaintiff Purlee appeals from the October 13, 1991, order of the circuit court granting defendant's motion for summary judgment and the December 23, 1991, order of the circuit court denying plaintiff's motion to reconsider. Plaintiff Allen appeals from the December 6, 1991, order of the circuit court granting defendant's motion for summary judgment and the January 24, 1992, order of the circuit court denying plaintiff's motion to reconsider. Plaintiffs present the following issues for our consideration on appeal:

(1) whether the availability of underinsured motorist coverage to a claimant, when the at-fault motorist's liability insurance is exhausted by payments to other claimants injured in the same occurrence, should be determined by comparing the amount of the claimant's underinsured motorist coverage to the stated amount of the at-fault motorist's liability coverage or to the amount the claimant actually recovers from the at-fault motorist's coverage;

(2) whether, if the underinsured motorist coverage statute is interpreted to deny coverage to Purlee and Allen upon the facts they allege, the statute involves an improper legislative classification which denies them equal protection of the laws and due process of law, in violation of the United States and Illinois Constitutions;

(3) whether, in comparing the amount of the claimant's underinsured motorist coverage with the liability coverage of an at-fault motorist who carries combined single-limit coverage, to determine the availability of the underinsured motorist coverage to an occurrence, the amount of the at-fault motorist's liability coverage should be reduced by the amount of property damage coverage required by the Illinois Safety Responsibility Law (Ill.Rev.Stat.1989, ch. 95 1/2, par. 7-100 et seq.) (applies to Purlee case only);

(4) whether an insurance company, by its conduct in failing to furnish its insured with a copy of her policy despite repeated requests, in failing to timely advise its insured that it denies coverage of her claim, and in failing to offer its insured a reasonable and accurate explanation on the basis of her insurance policy or applicable law why her claim should be denied, is estopped from claiming, in the insured's subsequent suit to recover insurance benefits she claims are due, that coverage does not apply; and

(5) whether the viability of an insured's statutory and common law causes of action against her insurance company alleging that it violated various provisions of the Illinois Insurance Code (Insurance Code) (Ill.Rev.Stat.1989, ch. 73, par. 613 et seq.) and failed to act in good faith and deal fairly with her in handling her insurance claim depends on whether her underlying insurance claim is resolved in her favor.

Plaintiffs alleged in their respective complaints that they were injured on January 31, 1989, when a motor vehicle driven by Bobby Loew collided with a building in which they were located. The record indicates that plaintiffs and five other individuals were attending a craft class on that date in the building into which Loew's pickup truck crashed and that Loew was charged with driving under the influence of alcohol. Plaintiffs alleged that as a result of that collision, they sustained damages, including severe and permanent injuries, pain and suffering disability, disfigurement, past and future medical expenses, and past and future lost wages. Plaintiff Allen alleged that her damages exceeded $20,000; plaintiff Purlee alleged that her damages exceeded $100,000.

Plaintiffs alleged that along with the five other persons who were also injured in this accident, they were made party-defendants to an interpleader action filed by Loew's insurance carrier and that the purpose of the action was to divide Loew's $100,000 insurance limit among the seven injured claimants, because Loew's insurance was insufficient to pay such claims in full. In the settlement reached among the seven claimants in the interpleader action, plaintiff Allen received $3,822.39 and plaintiff Purlee received $27,658.14. Plaintiffs Allen and Purlee each alleged in her complaint that the proceeds of the settlement were less than the total amount of her damages.

Plaintiff Allen holds a policy of automobile insurance with defendant including a provision for underinsured motorist coverage in the amount of $50,000 per person. Plaintiff Purlee holds a policy of automobile insurance with defendant including a provision for underinsured motorist coverage in the amount of $20,000 per person, the minimum coverage which is automatically provided in all insurance policies, unless the insured requests a higher limit.

Plaintiffs alleged in their complaints that prior to settlement of the interpleader action, they notified defendant of their intention to enter into the settlement and offered defendant the opportunity to match the proceeds to be paid under the settlement, but defendant elected not to do so. Plaintiffs alleged that after receiving their settlements, they each made a claim with defendant upon the underinsured motorist coverage provision of their respective insurance policies for the remaining unpaid balance of their claims. The record indicates that the value of plaintiff Allen's case is $22,128.17 and that the value of plaintiff Purlee's case is $134,294.20.

Plaintiffs alleged in their complaints that in breach of defendant's duty under its contracts of insurance with plaintiffs, it refuses to make or offer any payment upon plaintiffs' underinsured motorist coverage claims. Plaintiffs sought damages from defendant for breach of contract. Plaintiffs also included counts in their respective complaints alleging that in its handling of their claims defendant engaged in unreasonable and vexatious conduct entitling them to damages in excess of $15,000 and to reasonable attorney fees, costs, and penalties pursuant to section 155 of the Insurance Code (Ill.Rev.Stat.1989, ch. 73, par. 767). In addition, plaintiffs included counts in their complaints alleging that defendant breached its implied duty to act in good faith and deal fairly with plaintiffs in all matters arising out of and relating to their relationship as insurer and insured and sought compensatory and punitive damages for such breach in excess of $50,000.

Defendant filed a motion to dismiss in each case, alleging that its policy of insurance included a provision requiring the resolution of the action by arbitration and that plaintiff Allen and plaintiff Purlee had not complied with the requirement of demanding arbitration prior to filing suit against defendant. The circuit court ruled, however, that defendant was estopped from raising the argument of plaintiffs' failure to pursue policy arbitration as a defense in this case. We have not been provided with the reports of proceeding for the hearings on defendant's motions to dismiss, but plaintiffs alleged in their complaints that demand had been made with defendant on numerous occasions to provide them with a copy of their insurance policies, that the insurance policies are in the control of defendant, but that defendant has refused to provide a copy of the policies to plaintiffs.

In its answer filed to plaintiff Allen's complaint defendant raised, as an affirmative defense, that Allen's action for coverage under the underinsured motorist coverage provided by her policy with defendant is barred by the terms of that coverage, which applies only when the insurance covering the motor vehicle causing the plaintiff's alleged injuries was less than the underinsured coverage in plaintiff's policy with defendant. Defendant further stated that because plaintiff Allen's underinsured motorist coverage was $50,000 per person and the coverage for the motor vehicle involved in the accident allegedly causing Allen's injuries was $100,000, the terms of the policy bar any underinsured motorist claim by plaintiff Allen. Defendant attached to its answer as Exhibit A a copy of plaintiff Allen's insurance policy with defendant. Plaintiff Allen filed a motion for leave to amend her complaint on September 17, 1991, proposing to add a count for a declaratory judgment to determine the coverage issue raised by defendant in its affirmative defense to her complaint, and the record indicates that such motion was allowed.

Defendant filed a motion for summary judgment in case no. 90-L-1713 against plaintiff Purlee on August 14, 1991, and a motion for summary judgment in case no. 90-L-1712 against plaintiff Allen on September 20, 1991. In its motion directed against plaintiff Allen's complaint, defendant stated that each of the four counts of plaintiff Allen's complaint are premised on a theory that defendant wrongfully or vexatiously refused to pay plaintiff's claim for underinsured motorist coverage. Defendant noted that schedule C of plaintiff Allen's policy defines "underinsured motor vehicle" as a land motor vehicle or trailer of any type to which a bodily injury liability bond or policy applies at the time of the accident but its limit for bodily injury liability is less than the limit of liability for this...