Raprager v. Allstate Ins. Co.

• Decision Date: 19 May 1989
• Docket Number: No. 2-88-0949,2-88-0949
• Citation: 132 Ill.Dec. 224,539 N.E.2d 787,183 Ill.App.3d 847
• Parties: , 132 Ill.Dec. 224 Herbert RAPRAGER et al., Plaintiffs-Appellants, v. ALLSTATE INSURANCE COMPANY, Defendant-Appellee.
• Court: United States Appellate Court of Illinois

Page 787

539 N.E.2d 787

183 Ill.App.3d 847, 132 Ill.Dec. 224

Herbert RAPRAGER et al Plaintiffs-Appellants, v. ALLSTATE INSURANCE COMPANY, Defendant-Appellee.

No. 2-88-0949.

Appellate Court of Illinois,

Second District.

May 19, 1989.

Reharing Denied June 30, 1989.

Peter T. Sullivan, III (argued), Sreenan, Cain & Sullivan, P.C., Rockford, for Herbert Raprager, Margo Raprager.

Paul S. Festenstein (argued), Mark E. Condon, Francis J. Leyhane, Condon, Cook & Roche, Chicago, Ill., for Allstate Ins. Co.

Presiding Justice UNVERZAGT delivered the opinion of the court:

The plaintiffs, Herbert and Margo Raprager, appeal from judgments of the circuit court of Winnebago County entered in favor of the defendant, Allstate Insurance Company. The plaintiffs filed a three-count complaint against Allstate after it denied them recovery under their insurance policy after a fire in their home in Machesney Park, Illinois, on March 16, 1985. The plaintiffs' son, Todd Raprager, who was 17 at the time of the fire, entered a negotiated plea of guilty to arson of the house. Todd admitted he removed a plug from a natural gas line in the basement of the house during the very early morning hours of March 16. He then left the house. Sometime later that morning, the house exploded and burned. Plaintiffs and their other son, Justin, who were all sleeping at the time of the explosion, escaped injury. Todd's written statement to the police described problems in his relationship with his mother and father as his motive for the arson.

Count I stated a cause of action for breach of contract, count II a claim for attorney fees pursuant to section 155 of the Illinois Insurance Code (the Code) (Ill.Rev.Stat.1985, ch. 73, par. 767), and count III a cause of action in tort for compensatory and punitive damages caused by Allstate's intentional refusal to deal fairly and act in good faith.

Allstate's motion to dismiss count III for failure to state a cause of action (Ill.Rev.Stat.1985, ch. 110, par. 2-615) was granted. Its answer to counts I and II raised five affirmative defenses, and the plaintiffs' motion to strike these affirmative defenses and subsequent motion to reconsider were denied. The plaintiffs filed general denials to these defenses. Allstate thereafter filed a motion for summary judgment which alleged there was no genuine issue of material fact with respect to any of the allegations of counts I and II and its first affirmative defense. After argument on the summary judgment motion and plaintiffs' second motion to strike the affirmative defenses, plaintiffs' motion to strike was denied, and Allstate's motion for summary judgment was granted.

The plaintiffs raise three issues on appeal: (1) whether the court erred in denying their motion to strike Allstate's affirmative defenses; (2) whether the court erred in granting Allstate summary judgment; and (3) whether the court erred in dismissing count III.

Motion to Strike Affirmative Defenses

Inasmuch as Allstate's motion for summary judgment was grounded on its first affirmative defense, we consider first the plaintiffs' contention the court erred by not striking it.

Plaintiffs' contract with Allstate is comprised of four components: (1) two pages of declarations; (2) a standard one-page 165-line fire policy (standard fire policy); (3) a cover page for the standard fire policy (cover page); and (4) a three-section "Deluxe Homeowners Insurance Policy" (homeowners' policy).

The declarations pages show Herbert A. and Margo A. Raprager listed under "Name of Insured."

The standard fire policy cover page provides in pertinent part:

"This form contains the provisions of the Standard Fire Policy. Whenever the terms and provisions of Section I can be construed to perform a liberalization of the provisions found in the Standard Fire Policy, the terms and provisions of Section I shall apply. (Emphasis added.)

In Consideration of the Provisions and Stipulations Herein or Added Hereto and of the Premium Specified in the Declarations * * * Allstate * * * does insure the Insured named in the Declarations and legal representatives, * * * against all DIRECT LOSS BY FIRE, LIGHTNING AND OTHER PERILS INSURED AGAINST IN THIS POLICY INCLUDING REMOVAL FROM PREMISES ENDANGERED BY THE PERILS INSURED AGAINST IN THIS POLICY, EXCEPT AS HEREINAFTER PROVIDED, to the property described herein while located or contained as described in this policy * * *. [Capitalization in original.]

* * * * * *

This policy is made and accepted subject to the foregoing provisions and stipulations and those hereinafter stated, which are hereby made a part of this policy, together with such other provisions, stipulations and agreements as may be added hereto, as provided in this policy."

The 165-line standard fire policy provides in pertinent part:

"This entire policy shall be void if, whether before or after a loss, the insured has wilfully concealed or misrepresented any material fact or circumstance concerning this insurance or the subject thereof, or the interest of the insured therein, or in case of any fraud or false swearing by the insured relating thereto.

* * * * * *

This Company shall not be liable for loss by fire or other perils insured against in this policy caused, directly or indirectly, by: * * * neglect of the insured to use all reasonable means to save and preserve the property at and after a loss, or when the property is in endangered by fire in neighboring premises.

* * * * * * Unless otherwise provided in writing added hereto this Company shall not be liable for loss occurring (a) while the hazard is increased by any means within the control or knowledge of the insured."

The general section of the homeowners' policy provides definitions of "you" or "your" and "insured person":

" 'You ' or 'your '--means the person named on the declarations page as the insured and that person's resident spouse.

* * * * * *

'Insured person '--means you and, if a resident of your household:

(a) any relative; and

(b) any dependent person in your care.

* * * * * *

The terms of this policy impose joint obligations on the person named on the declarations page as the Insured and that person's resident spouse. These persons are defined as you or your. This means that the responsibilities, acts and failures to act of a person defined as you or your will be binding upon another person defined as you or your.

The terms of this policy imposed joint obligations on persons defined as an insured person. This means that the responsibilities, acts and failures to act of a person defined as an insured person will be binding upon another person defined as an insured person.

* * * * * *

This policy is void if you intentionally conceal or misrepresent any material fact or circumstance, before or after loss. We do not cover any other insured person who has concealed or misrepresented any material fact or circumstance, before or after a loss." (Emphasis in original.)

Section I of the homeowners' policy provides in part:

"Losses We Do Not Cover:

* * * * * *

4. Neglect by an insured person to take all reasonable steps to save and preserve property at and after a loss or when the property is endangered by a loss we cover.

5. Any substantial change or increase in hazard, if changed or increased by any means within the control or knowledge of an insured person.

6. Intentional or criminal acts of an insured person, if the loss that occurs:

(a) may be reasonably expected to result from such acts; or

(b) is in fact the intended result of such acts.

This exclusion does not apply with respect to the interest of mortgagees not participating in these acts." (Emphasis in original.)

Allstate's first affirmative defense was that Todd Raprager was an "insured person" as defined in the general section of the policy and that Todd Raprager started and caused the fire in question; that the loss which occurred was reasonably expected to result from his actions or was in fact the intended result of his actions; and that, inasmuch as the policy imposes joint obligations on persons defined as an "insured person," neither Herbert nor Margo Raprager, named in the policy as insureds and, thus, included in the definition of "insured person," was entitled to sue on the subject policy for the fire of March 16, 1985.

Plaintiffs argue the court erred when it refused to strike this affirmative defense because (1) the policy, viewed in its entirety, cannot be read so as to deny them coverage based upon the actions of their son and (2) that to so interpret the policy would be against public policy. Plaintiffs' argument focuses on the fact the exclusions provided in the standard fire policy refer to the conduct of "the insured," as opposed to the exclusions in section I of the homeowners' policy which refer to the acts of an "insured person." Plaintiffs posit that the definitions and joint obligations language of the general section of the homeowners' policy can only be read as a prelude to the homeowners' policy and not to the standard fire policy since to do so would render the term "the insured" in the standard fire policy meaningless and surplusage. Plaintiffs further argue the section I exclusion for intentional or criminal acts of an insured person cannot be applied to defeat recovery under the standard fire policy since that exclusion cannot be construed as performing a "liberalization" of the standard fire policy provisions.

Plaintiffs rely on cases (one of which, American States Insurance Co. v. White (1950), 341 Ill.App. 422, 94 N.E.2d 95, is an abstract opinion) which stand for the general proposition that meaning and effect should be given to every part of a contract, including all its terms and provisions (Home & Automobile Insurance Co. v. Scharli (1973), 10 Ill.App.3d 133, 293 N.E.2d 914), and that where an ambiguity exists, a contract of insurance will be construed most strongly against the insurer (Webster v. Inland Supply...