Smith v. Allstate Ins. Co.
| Decision Date | 20 October 1997 |
| Docket Number | No. 1-95-1475,1-95-1475 |
| Citation | 686 N.E.2d 74,226 Ill.Dec. 725,292 Ill.App.3d 432 |
| Parties | , 226 Ill.Dec. 725 Larry S. SMITH, Plaintiff-Appellant, v. ALLSTATE INSURANCE COMPANY, Defendant-Appellee. |
| Court | United States Appellate Court of Illinois |
Anesi, Ozmon & Rodin, Ltd., Chicago (Bruce M. Kohen, Scott H. Rudin and Darius H. Bozorgi, of counsel), for Plaintiff-Appellant.
Ross & Hardies, Chicago (Peter J. Valenta and Thomas D. Titsworth, of counsel), for Defendant-Appellee.
MODIFIED ON DENIAL OF REHEARING
Plaintiff Larry Smith appeals an order of the circuit court of Cook County granting judgment on the pleadings to defendant Allstate Insurance Company (Allstate) in a declaratory judgment action.
The record on appeal indicates that on July 8, 1994, plaintiff filed a complaint for declaratory judgment against defendant. The complaint alleged that on January 21, 1993, plaintiff was driving a car east on Golf Road, near the intersection with Narragansett Street, in Morton Grove. Michael Garrity was driving west on Golf Road; Brian Barry and Brendan Mahoney were passengers in the car Garrity was driving. According to the complaint, Garrity negligently caused a collision between the car he was driving and Smith's car. Plaintiff's complaint further alleges that the collision caused him to suffer severe and permanent injuries, including spinal injuries, incomplete paraplegia, prosthetic hypertrophy and sexual dysfunction.
Plaintiff, plaintiff's wife, Mahoney, the estate of Barry and three Barrys individually (the Barrys), all filed suit against Michael Garrity and John Garrity, the owner of the car operated by Michael Garrity. On January 21, 1993, Michael Garrity was an insured driver under a policy issued by State Farm Insurance Company (State Farm) to John Garrity, the owner of the car operated by Michael Garrity. The single limit liability coverage under the State Farm Policy was $100,000 per person/$300,000 per occurrence. Michael Garrity also had $2,000,000 in umbrella coverage from State Farm at the time of the collision. Thus, the maximum coverage available to satisfy the aforementioned claims was $2,300,000.
During the pretrial proceedings in this related matter, State Farm agreed to tender the policy limits on behalf of the Garritys, provided that the matter was settled as to all four claimants. On March 16, 1994, the trial court entered an order granting the Garritys' motion for a good faith settlement order. The order dismissed the claims against the Garritys with prejudice and without costs, with the following amounts being paid in settlement: (1) Larry Smith--$600,000; (2) Phyllis Smith--$350,000; (3) the Barrys--$950,000; and (4) Mahoney--$400,000. A claim filed by the Barrys against Larry Smith was also dismissed with prejudice, without costs or any amount being paid in settlement.
Plaintiff's complaint for declaratory judgment alleged that on January 21, 1993, plaintiff's car was insured by defendant Allstate. Plaintiff had $1,000,000 of underinsured motorist (UIM) coverage under the Allstate policy. Plaintiff demanded that Allstate tender a $400,000 draft, representing the difference between the limit of the Allstate policy and the amount plaintiff received in settlement of his claim against the Garritys. Allstate refused on the ground that the limits of the Garritys' policies exceeded the Allstate UIM coverage.
On October 17, 1994, defendant Allstate filed a motion for judgment on the pleadings, pursuant to section 2-615(e) of the Illinois Code of Civil Procedure (735 ILCS 5/2-615(e)(West 1994)). On March 31, 1995, following a hearing on the matter, the trial court granted defendant's motion. Plaintiff filed a timely Notice of Appeal to this court on April 25, 1995.
On appeal, plaintiff contends that the trial court erred in granting judgment on the pleadings. A motion for judgment on the pleadings tests the sufficiency of the pleadings by determining whether the plaintiff is entitled to the relief sought by the complaint or, alternatively, whether the defendant by his or her answer has set up a defense that would entitle him or her to a hearing on the merits. TDC Development Corp. v. First Federal Sav. and Loan Ass'n of Ottawa, 204 Ill.App.3d 170, 173, 149 Ill.Dec. 446, 448, 561 N.E.2d 1142, 1144 (1990). In deciding the motion, the trial court must examine all pleadings on file to determine whether a material factual dispute exists or whether the controversy can be resolved strictly as a matter of law. TDC Development Corp., 204 Ill.App.3d at 173, 149 Ill.Dec. at 448, 561 N.E.2d at 1144. Judgment on the pleadings is proper if only questions of law and not of fact exist after the pleadings have been filed. Walker v. State Board of Elections, 65 Ill.2d 543, 3 Ill.Dec. 703, 359 N.E.2d 113 (1976).
Although a motion for judgment on the pleadings is similar to a motion for summary judgment insofar as both suggest that no material issue of fact exists, a judgment on the pleadings must rely on the allegations of the complaint to establish the absence of material fact, whereas summary judgment may rely on affidavits and other documents. Waterfront Estates Development, Inc. v. City of Palos Hills, 232 Ill.App.3d 367, 371-72, 173 Ill.Dec. 667, 671, 597 N.E.2d 641, 645 (1992). In addition, the well-pleaded allegations of the non-moving party and inferences therefrom are taken as true. See Mitchell v. Waddell, 189 Ill.App.3d 179, 182, 136 Ill.Dec. 486, 487-88, 544 N.E.2d 1261, 1262-63 (1989). Given the procedural posture of the case and that the issues concern the interpretation of a statute, the standard of review is de novo.
The sole issue on appeal is the interpretation of section 143a-2(4) of the Illinois Insurance Code (215 ILCS 5/143a-2(4) (West 1994)). In recent years, this court has been called upon to rule on the issue of whether an insured may recover under his or her underinsured motorist coverage where the person responsible for the occurrence has coverage limits higher than the insured's underinsured motorist coverage limit, but multiple claimants have exhausted the coverage. On March 31, 1995, the date the trial court granted judgment on the pleadings, every district of this court to consider the issue had ruled in favor of the insurer. Golladay v. Allied American Ins. Co., 271 Ill.App.3d 465, 207 Ill.Dec. 701, 648 N.E.2d 157 (1995); Illinois Farmers Ins. Co. v. Tabor, 267 Ill.App.3d 245, 204 Ill.Dec. 697, 642 N.E.2d 159 (1994); Purlee v. Liberty Mutual Fire Ins. Co., 260 Ill.App.3d 11, 197 Ill.Dec. 430, 631 N.E.2d 433 (1994); Moriconi v. Sentry Ins. of Illinois, Inc., 193 Ill.App.3d 904, 140 Ill.Dec. 752, 550 N.E.2d 637 (1990). The Fifth District, however, has recently reversed its position on this issue. Hathaway v. Standard Mutual Ins. Co., 285 Ill.App.3d 67, 220 Ill.Dec. 581, 673 N.E.2d 725 (1996); Cummins v. Country Mutual Ins. Co., 281 Ill.App.3d 5, 217 Ill.Dec. 240, 666 N.E.2d 909 (1996), appeal allowed, 168 Ill.2d 586, 219 Ill.Dec. 561, 671 N.E.2d 728. 1 The First District Sixth Division, has followed Hathaway in a case outside the multiple claimant context. Koperski v. Amica Mutual Ins. Co., 287 Ill.App.3d 494, 222 Ill.Dec. 862, 678 N.E.2d 734 (1997).
The fundamental principle of statutory construction is to ascertain and give effect to the intention of the legislature. Varelis v. Northwestern Memorial Hospital, 167 Ill.2d 449, 454, 212 Ill.Dec. 652, 654, 657 N.E.2d 997, 999 (1995). Our supreme court has stated that in enacting section 143a-2(4), "the legislature intended to place the insured in the same position he would have occupied if injured by a motorist who carried liability insurance in the same amount as the policyholder." Sulser v. Country Mutual Ins. Co., 147 Ill.2d 548, 558, 169 Ill.Dec. 254, 257, 591 N.E.2d 427, 430 (1992). The Sulser court also stated that the purpose of section 143a-2(4) was "to place the insured in the same position he would have occupied if the tortfeasor had carried adequate insurance." Sulser, 147 Ill.2d at 555, 169 Ill.Dec. at 256, 591 N.E.2d at 429. The Sulser court added that section 143a-2(4) was intended to avoid "the absurdity of a situation where a policyholder would receive fewer benefits in the fortuitous event of being injured by an underinsured rather than by an uninsured motorist." Sulser, 147 Ill.2d at 557, 169 Ill.Dec. at 257, 591 N.E.2d at 430; cf. Hoglund v. State Farm Mutual Automobile Ins. Co., 148 Ill.2d 272, 280, 170 Ill.Dec. 351, 355, 592 N.E.2d 1031, 1035 (1992)( insurer's interpretation of insurance policy that would violate public policy behind uninsured motorist statute and deny policyholder substantial economic value for premiums paid).
In this case, the interpretation of section 143a-2(4) offered by Allstate would lead to the sort of result condemned in Sulser. If the sum of the applicable limits of the tortfeasor's coverage exceeds the plaintiff's underinsured motorist limits, the plaintiff would be placed in a worse position than he would have occupied if injured by a motorist who carried liability insurance in the same amount as the policyholder. In order to place the insured in the same position he would have occupied if the tortfeasor had carried adequate insurance, it is necessary to consider that what may be adequate insurance in a single claimant situation may not always be adequate coverage in a multiple claimant situation. Otherwise, the insured could be left in the situation of receiving no benefits under a policy for which he has paid a premium due to the fortuitous event of being injured along with others. In addition, cases such as Golladay did not address the argument based on Sulser on Hoglund, as it apparently was not raised there.
Accordingly, we conclude that Garrity's motor vehicle may be considered an underinsured motor vehicle within the scope of section 143a-2(4). This construction conforms to the...
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