State Farm Fire & Cas. Co. v. Hatherley, 1-91-3280

• Court: United States Appellate Court of Illinois
• Writing for the Court: JOHNSON
• Citation: 190 Ill.Dec. 170,621 N.E.2d 39,250 Ill.App.3d 333
• Parties: , 190 Ill.Dec. 170 STATE FARM FIRE & CASUALTY COMPANY, a corporation, Plaintiff-Appellee, v. Anthony J. HATHERLEY, Defendant-Appellant (Hidden Lakes Estate Condominium Association and Heritage Standard Bank & Trust Co., Defendants).
• Docket Number: No. 1-91-3280,1-91-3280
• Decision Date: 10 June 1993

Page 39

621 N.E.2d 39 250 Ill.App.3d 333, 190 Ill.Dec. 170 STATE FARM FIRE & CASUALTY COMPANY, a corporation, Plaintiff-Appellee,
v.
Anthony J. HATHERLEY, Defendant-Appellant (Hidden Lakes
Estate Condominium Association and Heritage
Standard Bank & Trust Co., Defendants). No. 1-91-3280. Appellate Court of Illinois,
First District, Fourth Division. June 10, 1993.

Page 40

[250 Ill.App.3d 334] [190 Ill.Dec. 171] Richard C. Jones, Jr., Michael D. Richman, Dardick & Denlow, Chicago, for defendant-appellant.

Michael Resis, Querrey & Harrow, Ltd., Chicago, for plaintiff-appellee.

Justice JOHNSON delivered the opinion of the court:

Plaintiff, State Farm Fire & Casualty Company, filed a complaint for declaratory judgment in the circuit court of Cook County. Plaintiff sought a determination that it had no duty to defend or indemnify its insured, defendant, Anthony J. Hatherley, in a separate case brought by Heritage Standard Bank and Trust against defendant. Following a hearing, the trial court granted plaintiff's summary judgment motion. [250 Ill.App.3d 335] Defendant brought this appeal contending that (1) plaintiff's declaratory judgment action was premature, and (2) the trial court improperly granted summary judgment thereby holding that plaintiff had

Page 41

[190 Ill.Dec. 172] no duty to defend or indemnify in an underlying suit.

We affirm.

The underlying suit is based on a dispute between Heritage Standard Bank and Trust (the Bank) and defendant. The dispute concerns property damage to a condominium unit (the unit) purchased by defendant with a mortgage issued by the Bank. In its four-count complaint against defendant, the Bank alleged that it foreclosed on the unit on November 16, 1984, and later bought the unit at a court-ordered sheriff's sale. The Bank became entitled to possession of the unit on February 21, 1985. On February 27, 1985, the bank took possession of the unit. Prior to that time, however, defendant was in exclusive possession of the unit and had removed certain improvements including lighting fixtures, kitchen cabinets and countertops, electrical fixtures, bathroom fixtures, and carpeting. The Bank claimed the unit was damaged by defendant's removal of the improvements. The Bank later filed a second amended complaint based on negligence, conversion, and intentional trespass.

Pursuant to his homeowners insurance policy, defendant requested plaintiff to defend and indemnify him against any liability arising from the underlying suit. Plaintiff initially agreed to defend under a reservation of rights, but later filed a motion for summary judgment. Prior to the hearing, plaintiff filed a request to admit facts alleging that defendant removed kitchen cabinets and countertops, a whirlpool bathtub, and carpeting from the unit. Defendant filed no response. After the hearing, the trial court granted plaintiff's motion for summary judgment finding that several policy exclusions applied which exempted defendant from liability coverage. Defendant later filed a motion pursuant to Supreme Court Rule 304(a) which the trial court denied. Defendant filed the instant appeal.

We will first consider defendant's argument that plaintiff's declaratory action was premature.

The general rule is that when an insurer is in doubt as to whether it has a duty to defend its insured, it may seek a declaratory judgment to determine its obligations and rights or defend under a reservation of rights. (Fidelity & Casualty Co. v. Envirodyne Engineers, Inc. (1983), 122 Ill.App.3d 301, 304, 77 Ill.Dec. 848, 461 N.E.2d 471.) In response to defendant's request for defense and indemnification, plaintiff initially defended under a reservations of rights, but later filed this declaratory judgment [250 Ill.App.3d 336] action. Defendant argues that the issue of whether the improvements removed from the unit were "fixtures" should have been adjudicated by the trial court in the underlying suit before a declaratory judgment action could properly proceed. We hold that defendant's...