State Farm Fire and Cas. Co. v. Hooks
Decision Date | 19 June 2006 |
Docket Number | No. 1-05-2516.,1-05-2516. |
Citation | 853 N.E.2d 1 |
Parties | STATE FARM FIRE AND CASUALTY COMPANY, Plaintiff-Appellee, v. Sharon Connor HOOKS, Defendant-Appellant (Donya Tyree Hooks, Defendant). |
Court | United States Appellate Court of Illinois |
James M. Harman, Harman, Fedick & O'Connor, Ltd., Chicago, for Appellant.
David E. Neumeister, Jennifer L. Medenwald, Querry & Harrow, Ltd., Chicago, for Appellee.
Plaintiff-appellee, State Farm Fire and Casualty Company (State Farm), filed this action seeking a declaration that it owed no duty to defend or indemnify Donya Tyree Hooks (Donya) in an underlying negligence suit file by her former sister-in-law, Sharon Connor Hooks (Sharon). The trial court granted State Farm's motion for summary judgment, finding that the policy's household exclusion applied to Sharon and that State Farm, therefore, had no duty to defend or indemnify Donya. Sharon appeals the grant of summary judgment in State Farm's favor. For the reasons that follow, we reverse and remand.
In her negligence complaint against Donya, Sharon alleged that on March 4, 2001, she was living in an apartment in a multi-unit residential building on Green Street in Chicago when a fire broke out and caused her to sustain multiple injuries. Sharon alleged that Donya, as owner of the building, was negligent in failing to provide or maintain working smoke and carbon monoxide detectors, in allowing "tenants with connections to drug activity" to go into the basement where the fire started, and in failing to provide an emergency escape light in the common hallways.
Donya tendered her defense of the suit to State Farm pursuant to a homeowner's policy she maintained with her brother and co-owner of the apartment building, Donald Hooks (Donald). Donald was married to and living with Sharon in the insured building at the time of the fire; however, he was not named as a defendant in Sharon's complaint. State Farm initially accepted the defense under a reservation of rights, but it later decided that it owed no duty to defend or indemnify Donya against Sharon's action because Sharon was an "insured" under Donya and Donald's policy. State Farm then withdrew its defense and filed the instant action against Donya and Sharon seeking a declaration that it had no duty to defend or indemnify Donya.
Donya and Donald's homeowner's policy with State Farm stated in pertinent part as follows:
"DEFINITIONS
`You' and `your' mean the `named insured' shown in the Declarations. Your spouse is included if a resident of your household. `We', `us' and `our' mean the Company shown in the Declarations.
* * *
5. `insured' means you and, if residents of your household:
a. relatives
* * *
6. `insured location' means:
a. the residence premises;
* * *
11. `residence premises' means:
a. the one, two, three or four-family dwelling, other structures and grounds; or
b. that part of any other building;
where you reside and which is shown in the Declarations. * * *
If a claim is made or a suit is brought against an insured for damages because of bodily injury or property damage to which this coverage applies, caused by an occurrence, we will:
1. pay up to our limit of liability for the damages for which the insured is legally liable; and
2. provide a defense at our expense by counsel of our choice. We may make any investigation and settle any claim or suit that we decide is appropriate. Our obligation to defend any claim or suit ends when the amount we pay for damages, to effect settlement or satisfy a judgment resulting from the occurrence, equals our limit of liability.
* * *
1. Coverage L and Coverage M do not apply to:
* * *
h. bodily injury to you or any insured within the meaning of part a. or b. of the definition of insured.
This exclusion also applies to any claim made or suit brought against you or any insured to share damages with or repay someone else who may be obligated to pay damages because of the bodily injury sustained by you or any insured within the meaning of part a. or b. of the definition of insured.
* * *
2. Severability of Insurance. This insurance applies separately to each insured. This condition shall not increase our limit of liability for any one occurrence." (Emphasis in original.)
In its complaint for declaratory judgment, State Farm contended that because Sharon was married to Donald, she was a relative of both Donald and Donya and was, therefore, an "insured" under the policy. State Farm further asserted that under the policy it had no duty to defend Donya, as a named insured, against claims of bodily injury from another "insured." Donya, thereafter, brought a counterclaim for vexatious delay and wrongful denial of coverage pursuant to section 155 of the Illinois Insurance Code. 215 ILCS 5/155 (West 2004). Donya's counterclaims are not part of this appeal.
After both Donya and Sharon filed answers to the complaint, State Farm brought a motion for summary judgment reasserting the contentions made in its complaint and further emphasizing the fact that Sharon was living with and married to Donald, a "named insured" under the policy, at the time of her injuries. Donya and Sharon filed separate responses to State Farm's motion for summary judgment. They each contended that Sharon was not an "insured" as to Donya because Donya did not reside at the premises and was not a member of Sharon's household. However, they both conceded that Sharon was, in fact, an "insured" as to Donald because Sharon and Donald were married and lived together at the insured residence. Donya additionally contended that the policy's severability clause ("severability of insurance" as cited above) required that Sharon's status be determined independently for each "named insured" and that, therefore, Sharon's status as an "insured" as to Donald did not release State Farm from its obligations to defend and indemnify Donya because Sharon did not qualify as an "insured" as to her. Finally, both Donya and Sharon contended that the policy was ambiguous and should therefore be construed against State Farm. The court granted State Farm's motion finding that Sharon was an "insured" as defined by the policy and that the severability provision had no bearing on that status. Thereafter, Sharon brought this appeal.
Sharon first contends that under the plain language of the policy, she cannot be considered an "insured" as to Donya because they were not residing together at the insured residence at the time of the fire as required by policy's definition of "insured." Sharon further argues that to the extent that the policy is unclear as to whether she qualifies as an "insured," it must be considered ambiguous and be construed against State Farm as the drafter of the policy. Sharon also contends that the policy's severability clause supports her position that her status as an "insured" must be tested separately for both Donya and Donald because it essentially creates two distinct policies for the two named insureds. Therefore, Sharon contends that her status as an "insured" in relation to Donald has no effect on her status in relation to Donya. State Farm contends that, under the unambiguous requirements of the policy, Sharon was an "insured" for purposes of the entire policy by virtue of the fact that she was married to and living with Donald at the insured residence. State Farm also maintains that the severability clause has no effect on whether someone qualifies as an insured. Accordingly, State Farm maintains that it has no duty to defend or indemnify Donya for the claims brought by Sharon.
As noted, Donya and Donald's homeowner's policy defined "insured" as "you, and if residents of your household: (a) your relatives." The policy further excluded coverage for "[b]odily injury to you and any insured." Based on these provisions, the parties agree that State Farm would have had no duty to defend or indemnify Donald had Sharon decided to sue him for her injuries because Sharon qualified as an "insured" by virtue of her marriage to and cohabitation with Donald. Similarly, the parties also essentially agree that if Donya were the sole named insured on the policy, Sharon would not qualify as an "insured" and State Farm would be required to defend and indemnify Donya because, although the two were related in law, they were not residing together as required by the policy's definition of "insured." Thus, the primary issue in this case is whether Sharon's status as an "insured" should be determined once for the entire policy as urged by State Farm, or whether it must be determined separately for both of the named insureds, as urged by Sharon.
Summary judgment is appropriate only where the pleadings, depositions, admissions and affidavits on file, viewed in light most favorable to the nonmovant, show 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). Our review of a grant of summary judgment is de novo. Illinois Emcasco Insurance Co. v. Northwestern National Casualty Co., 337 Ill. App.3d 356, 359, 271 Ill.Dec. 711, 785 N.E.2d 905, 908 (2003).
To determine whether an insurer has a duty to defend, the court must look to the allegations of the underlying complaint and compare those to the relevant provisions of the insurance policy. Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill.2d 90, 107-08, 180 Ill.Dec. 691, 607 N.E.2d 1204, 1212 (1992); United States Fidelity & Guaranty Co. v. Wilkin Insulation Co., 144 Ill.2d 64, 73, 161 Ill.Dec. 280, 578 N.E.2d 926, 930 (1991). The underlying complaint and the insurance policy must be liberally construed in favor of the insured. Wilkin, 144 Ill.2d at 74, 161 Ill.Dec. 280, 578 N.E.2d at 930. If the...
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