Schultz v. Illinois Farmers Ins. Co.
| Decision Date | 08 January 2009 |
| Docket Number | No. 1-08-0458.,No. 1-08-0583.,1-08-0458.,1-08-0583. |
| Citation | 901 N.E.2d 957,387 Ill. App. 3d 622 |
| Parties | Kenneth W. SCHULTZ, Executor of the Estate of Patricia Smetana, Deceased, Plaintiff-Appellant, v. ILLINOIS FARMERS INSURANCE COMPANY, Defendant-Appellee (Kathleen O'Conner, Plaintiff). Illinois Farmers Insurance Company, Plaintiff-Appellant, v. Barbara Weglarz, Krzysztof Majchrowicz and Jolanta Majchrowicz, Defendants-Appellants. |
| Court | United States Appellate Court of Illinois |
This consolidated appeal involves the definition of an "insured" for purposes of both uninsured (UM) and underinsured (UIM) motorist coverage in automobile insurance policies issued by Illinois Farmers Insurance Company (Farmers). Kenneth W. Schultz, executor of the estate of Patricia Smetana, appeals the trial court's grant of summary judgment in favor of Farmers, upholding Farmers' use of different definitions of an insured under the UM and UIM sections of its policy. In an unrelated case, Farmers appeals the trial court's grant of summary judgment in favor of Barbara Weglarz, finding an ambiguity in the policy language relating to the definition of an insured in the UIM section of Farmers' policy. For the reasons that follow, we reverse the trial court's grant of summary judgment in No. 1-08-0458, the Schultz action, and affirm the trial court's grant of summary judgment in No. 1-08-0583, the Weglarz action.
Patricia Smetana was a passenger in an automobile that was being driven by Kathleen O'Conner. The automobile was owned by Herbert and Alvina Hummelberg. The vehicle was struck by another vehicle being driven by Alexandria Fotopoulos. Smetana later died of her injuries. Schultz was appointed independent administrator of Smetana's estate by the circuit court of Cook County.
Both vehicles were insured by Farmers. The Fotopoulos policy had liability limits of $100,000 per person and $300,000 per accident. Farmers settled with both the O'Conner and Smetana estates for $100,000 each. The Hummelberg policy had bodily injury liability, UM, and UIM limits of $250,000 per person and $500,000 per accident. Farmers recognized the claim submitted by O'Conner's estate for UIM coverage, but denied the claim submitted by Smetana's estate on the grounds that Smetana did not fit the definition of an insured for purposes of UIM coverage.
Farmers' policy defined "insured person" to include an occupant of the vehicle for purposes of UM coverage, but restricted the definition in the UIM endorsement to the policyholder or a family member. The Smetana estate filed a declaratory judgment suit and Farmers filed a counterclaim for declaratory judgment. Both parties moved for summary judgment. The trial court held that the more restrictive definition for UIM coverage in the policy did not violate public policy or the Illinois Insurance Code (215 ILCS 5/143a (West 2004)) and awarded summary judgment to Farmers.
Barbara Weglarz was a passenger in an automobile that was owned by her son, Krzysztof Majchrowicz, and was being driven by Jolanta Majchrowicz. The vehicle was struck by an underinsured motorist, Galyna Kovalyz, and Weglarz was injured. The Kovalyz vehicle was insured by Allstate Insurance Company and provided UIM coverage in the amount of $25,000. The Majchrowicz vehicle was insured by Farmers and provided $50,000/$100,000 in UM/UIM coverage.
Weglarz filed a claim for UIM coverage with Farmers. The claim was denied on the grounds that Weglarz was not an insured as defined by the UIM endorsement to the policy. As in the Hummelberg policy discussed above, the definition of an insured included occupants for purposes of UM coverage but restricted UIM coverage to the policyholder or a family member. Although Weglarz is the mother of Krzysztof Majchrowicz, the policy further defined "family member" as a resident of the household. Since Weglarz did not reside with Majchrowicz, she did not qualify as a family member under the policy.
Farmers filed a declaratory complaint asking the court to find that it had no duty to provide UIM coverage to Weglarz. The parties filed cross-motions for summary judgment. Weglarz argued that the language in the policy was ambiguous. In the UIM endorsement, the first paragraph states that all of the terms and conditions of UM coverage apply to UIM coverage. However, the final paragraph states that the UIM endorsement supersedes and controls anything to the contrary in the policy. Weglarz argued that it was not clear from this language whether the definition of an insured from the UM section was controlling or was superseded by the definition in the UIM endorsement. Weglarz also argued that the UIM endorsement violated public policy. The trial court found that the language in the policy was ambiguous and, resolving the ambiguity in favor of the insured, found that the UM definition of an insured was controlling. Weglarz' motion for summary judgment was granted and Farmers' cross-motion for summary judgment was denied.
Summary judgment is proper when the pleadings, depositions, and affidavits demonstrate that no genuine issue of material fact exists and that the moving party is entitled to judgment as a matter of law. 735 ILCS 5/2-1005(c) (West 2004); State Farm Mutual Automobile Insurance Co. v. Coe, 367 Ill.App.3d 604, 607, 305 Ill.Dec. 282, 855 N.E.2d 173, 176 (2006). "Construction of the terms of an insurance policy and satisfaction of statutory requirements are questions of law properly decided on a motion for summary judgment." Librizzi v. State Farm Fire & Casualty Co., 236 Ill.App.3d 582, 587, 177 Ill.Dec. 751, 603 N.E.2d 821, 824 (1992). We review de novo an order granting summary judgment. Jones v. Country Mutual Insurance Co., 371 Ill. App.3d 1096, 1098, 309 Ill.Dec. 552, 864 N.E.2d 793, 795 (2007). We also review de novo the question of the proper interpretation of statutory provisions. Lee v. John Deere Insurance Co., 208 Ill.2d 38, 43, 280 Ill.Dec. 523, 802 N.E.2d 774, 777 (2003).
Section 143a of the Illinois Insurance Code (215 ILCS 5/143a (West 2004)) mandates uninsured motorist coverage in an amount equal to the $20,000/$40,000 liability limits for bodily injury or death required by section 7-203 of the Illinois Vehicle Code (625 ILCS 5/7-203 (West 2004)). Subsection (4) of section 143a-2 defines underinsured motorist coverage and provides that no policy of insurance may be issued unless underinsured insurance is included in an amount equal to the uninsured motorist coverage where the latter exceeds the minimum limits required by section 7-203 of the Illinois Vehicle Code. 215 ILCS 5/143a-2(4) (West 2004).
The Illinois Supreme Court has construed subsection (4) of section 143a-2 to provide that UIM coverage is mandatorily set at the amount of UM coverage that is selected and has acknowledged that the two coverages are inextricably linked in the statute. Lee, 208 Ill.2d at 44-45, 280 Ill.Dec. 523, 802 N.E.2d at 778. Farmers argues that the statutory provision applies only to insurance limits and not to the definition of who qualifies as an insured for coverage, relying on this court's decision in Cohs v. Western States Insurance Co., 329 Ill.App.3d 930, 264 Ill.Dec. 201, 769 N.E.2d 1038 (2002). We find this reliance to be misplaced.
In Cohs, this court held that the use of the term "occupying" in defining who qualifies as an insured for purposes of UIM coverage was not unduly restrictive even though the definition of an insured for purposes of liability coverage was broader. Cohs, 329 Ill.App.3d at 936-37, 264 Ill.Dec. 201, 769 N.E.2d at 1044-45. The UIM section defined an "insured" as "`anyone else "occupying" a covered "auto" or a temporary substitute for a covered "auto."'" Cohs, 329 Ill.App.3d at 932, 264 Ill.Dec. 201, 769 N.E.2d at 1041. The plaintiff in Cohs contended that because section 143a-2(1) requires liability and UIM coverage amounts to be equal, the definition of an insured for purposes of UIM coverage should not be more restrictive than the definition for liability coverage, and argued that coverage should be extended to anyone "using" the covered auto. Cohs, 329 Ill.App.3d at 936-37, 264 Ill.Dec. 201, 769 N.E.2d at 1044-45.
In support of its holding in Cohs that the word "occupying" was not unduly restrictive, this court relied on Heritage Insurance Co. of America v. Phelan, 59 Ill.2d 389, 321 N.E.2d 257 (1974). In Phelan, the supreme court stated that the UM statute did not restrict "the right of the parties to an insurance contract to agree on which persons are to be the `insureds' under an automobile insurance policy." Phelan, 59 Ill.2d at 395, 321 N.E.2d at 260. Citing only this portion of the Phelan decision, this court reasoned in Cohs that it could not, therefore, find the word "occupying" to be unduly restrictive for purposes of UM coverage.
However, in the sentence immediately preceding the language cited in Cohs, the supreme court said that the legislative intent behind the UM statute "was to provide extensive uninsured-motorist protection for those who are `insureds' under an automobile liability policy." Phelan, 59 Ill.2d at 395, 321 N.E.2d at 260. The supreme court went on to say that "it is only after the parties designate the `insureds' that the statute and case law become applicable and prohibit an insurance company from either directly or indirectly denying uninsured-motorist coverage to an `insured.'" Phelan, 59 Ill.2d at 395, 321 N.E.2d at 260. We read Phelan as holding that ...
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