Sears, Roebuck and Co. v. Seneca Ins. Co.

• Decision Date: 28 September 1993
• Docket Number: No. 1-92-1492,1-92-1492
• Parties: , 194 Ill.Dec. 57 SEARS, ROEBUCK AND COMPANY, Plaintiff-Appellant, v. SENECA INSURANCE COMPANY, Defendant-Appellee.
• Court: United States Appellate Court of Illinois

Page 173

627 N.E.2d 173

254 Ill.App.3d 686, 194 Ill.Dec. 57

SEARS, ROEBUCK AND COMPANY, Plaintiff-Appellant, v. SENECA INSURANCE COMPANY, Defendant-Appellee.

No. 1-92-1492.

Appellate Court of Illinois,

First District, Second Division.

Sept. 28, 1993.

Arnstein & Lehr, Chicago (Arthur L. Klein, Hal R. Morris and James M. Rooney, of counsel), for plaintiff-appellant.

Brinton & Fedota, Chicago (John D. Kuhn and Stephen C. Prout, of counsel), for defendant-appellee.

Justice SCARIANO delivered the opinion of the court:

The present appeal is the second time we have had this case before us. In the first appeal, we reversed the trial court's grant of summary judgment in favor of defendant Seneca Insurance Company. On remand, the trial court again granted summary judgment in defendant's favor, and plaintiff Sears, Roebuck and Company appeals from that order.

Tamara Morgan notified plaintiff in 1982 that she had been injured in 1970 when a defective nightgown which she was wearing caught fire. It was not until June of 1986, however, that she informed plaintiff that the garment, which bore the serial number 29K3111F, had been purchased through plaintiff's 1968 catalogue. Morgan eventually filed a products liability action against plaintiff in October of 1986.

Plaintiff was unable to locate the manufacturer of the nightgown, Guild Lingerie of California, until June of 1987, when it was identified by a retired employee. Soon thereafter, on June 12, 1987, plaintiff requested that Guild, defendant's principal insured, defend the Morgan action. On September 9, 1987, Guild demanded that defendant undertake the defense of the action, but when defendant did not respond to Guild's request, plaintiff demanded directly of defendant that it take up the defense of the Morgan action. Defendant ultimately denied coverage because plaintiff could not establish the existence of the policy, and because plaintiff did not provide it with timely notice of Morgan's injury. It is undisputed that neither party could locate either the original policy or a copy thereof.

Plaintiff filed suit against defendant on April 13, 1988, seeking a declaratory judgment that defendant had a duty to defend it against Morgan's complaint. While that action remained pending, plaintiff prevailed in the case Morgan brought against it; consequently, plaintiff changed the relief sought against defendant to that of seeking damages in the amount of the cost of its successful defense. Defendant reiterated in its answer that it had no duty to defend plaintiff because it could not satisfy its burden of establishing that a policy covering it existed, and even if it could do so, plaintiff did not comply with the policy's provision requiring timely notice of Morgan's injury.

Both parties filed motions for summary judgment. In support of its motion, plaintiff produced a certificate of insurance and a vendor's endorsement issued by Eagle Star Insurance Company (Eagle Star), through Eagle Star's agent, Craven, Dargan & Company (Craven), defendant's predecessor. Defendant supported its motion by including a statement of policy language which it alleged to be standard in all policies, and which stated that a claimant must inform its insurer of accidents "as soon as practical" after they occur. Circuit Court Judge Robert L. Sklodowski ruled that the certificate and endorsement were sufficient evidence that plaintiff was covered under a policy issued by defendant to Guild, but that plaintiff was not entitled to recovery "on the basis of late notice" of the accident to defendant. Accordingly, the trial court entered summary judgment in favor of defendant.

We reversed in an unpublished order. (Sears Roebuck & Co. v. Seneca Insurance Co. (1990), 207 Ill.App.3d 1111, 178 Ill.Dec. 327, 604 N.E.2d 583 (unpublished order under Supreme Court Rule 23).) We noted that the only evidence in the record of a late notice provision in the policy was a statement in defendant's answer that " 'the late notice provision is a standard clause in the policies issued by [defendant],' " as well as a statement contained in an Illinois Continuing Legal Education handbook to the effect that most insurance policies contain late notice provisions which require an insured to notify its insurer of a covered accident as soon as practical. We held that such evidence was insufficient to justify the entry of summary judgment, stating that "defendant must produce some admissible evidence, not just the pleadings, to demonstrate the existence of a notice clause in the insurance contract." Accordingly, we remanded the cause to the circuit court for further proceedings not inconsistent with the views expressed in our order.

On remand, both parties again moved for summary judgment. In support of its motion, defendant offered the affidavit of Robert Towney, who was the managing underwriter in the Los Angeles Office of Craven, ¹ defendant's predecessor and the company which underwrote all general comprehensive liability (GCL) policies for Eagle Star, the insurer which issued the policy in question to Guild. Attached to Towney's affidavit was a specimen GCL policy, which he stated was the only standard GCL policy used by Craven between 1962 and 1973. Towney confirmed that the specimen GCL policy contained a late notice provision. ²

Plaintiff included the deposition testimony of Towney in support of its motion for summary judgment. Towney testified that since he had no recollection whatsoever of the policy in question being issued, he could not say for certain that it included the late notice provision set forth in the specimen policy. He also stated that while it was likely that the policy was issued out of the Los Angeles office, since that is where Guild's home office was located, he could not rule out the possibility that one of Craven's several other offices on the west coast actually wrote the policy. He further stated that while it would have been unusual for Craven to issue a GCL policy other than its standard form, he could not say for certain that the policy issued to Guild was a handwritten, or "manuscript," policy. Towney also related that he located a standard form amendment, or "endorsement," to the policy issued to Guild which contained the notation "END.# 13," which Towney explained meant that there were at least 12 other endorsements to the policy. He further stated that while he did not remember ever using an endorsement to delete a late notice provision in a policy, such was theoretically possible, since any term in a policy could have been changed or deleted by an endorsement.

After hearing argument, circuit court Judge Monica Reynolds issued a memorandum of opinion granting defendant's motion for summary judgment, finding as a matter of law that the specimen policy and deposition testimony of Towney established that the policy issued to Guild contained the late notice provision found in the specimen; which implies, of course, that not only was there a policy but that it contained the late notice provision and that plaintiff's notice to defendant was in fact late. Plaintiff filed a timely notice of appeal from that judgment. I.

Plaintiff first argues that on remand, the trial court misinterpreted our mandate when it granted summary judgment in defendant's favor because defendant still failed to introduce competent evidence which conclusively demonstrated the existence of a late notice clause in the policy. Defendant disagrees, arguing that the combination of the specimen policy and Towney's deposition is sufficient evidence that the policy issued to Guild contained a late notice provision.

The scope of this court's review of a grant of summary judgment is by this time well settled. The purpose of summary judgment is to determine whether there exist any genuine issues of triable fact. (Purtill v. Hess (1986), 111 Ill.2d 229, 240, 95 Ill.Dec. 305, 309, 489 N.E.2d 867, 871.) Although our supreme court has encouraged the use of the summary judgment procedure as an aid in the expeditious disposition of a lawsuit (Purtill, 111 Ill.2d at 240, 95 Ill.Dec. at 309, 489 N.E.2d at 871), it has also emphasized that the device is a drastic means of disposing of litigation and should be used only when the right of the moving party is clear and free from doubt. Loyola Academy v. S & S Roof Maintenance, Inc. (1992), 146 Ill.2d 263, 271, 166 Ill.Dec. 882, 886, 586 N.E.2d 1211, 1215.

Because it is such a severe measure, a motion for summary judgment should be granted only when the pleadings, depositions, admissions and affidavits on file reveal that there is no genuine issue of material fact and that accordingly, the moving party is entitled to judgment as a matter of law. (Ill.Rev.Stat.1991, ch. 110, par. 2-1005(c); Balla v. Gambro, Inc. (1991), 145 Ill.2d 492, 508, 164 Ill.Dec. 892, 900, 584 N.E.2d 104, 112.) A genuine issue of material fact exists not only when the facts are in dispute, but also where reasonable persons could draw different inferences from undisputed facts (Loyola Academy, 146 Ill.2d at 272, 166 Ill.Dec. at 886, 586 N.E.2d at 1215); therefore, summary judgment is proper only where undisputed facts admit but one reasonable inference. Meyer v. Cohen (1st Dist. May 18, 1993), --- Ill.App.3d ---, ---, --- Ill.Dec. ----, ----, --- N.E.2d ----, ----, No. 1-91-2572, slip op. at 11; In re Estate of Jessman (1990), 197 Ill.App.3d 414, 419, 143 Ill.Dec. 783, 785, 554 N.E.2d 718, 720.

The burden of establishing that no genuine issue of material fact exists is on the moving party (Becovic v. Harris Trust & Savings Bank (1984), 128 Ill.App.3d 107, 119, 83 Ill.Dec. 233, 241, 469 N.E.2d 1379, 1387); and in determining whether the moving party has met that burden, the trial court must construe all of the pleadings, depositions, admissions and affidavits strictly against the movant and liberally in favor of the opponent. (Loyola Academy, 146 Ill.2d at 271, 166 Ill.Dec. at 886, 586 N.E.2d at...