State Farm Mut. Auto. Ins. Co. v. Rodriguez

• Decision Date: 28 March 2013
• Docket Number: 1–12–1390 cons.,Docket Nos. 1–12–1388
• Citation: 987 N.E.2d 896,370 Ill.Dec. 130,2013 IL App (1st) 121388
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Plaintiff–Appellee, v. Heriberto RODRIGUEZ, Defendant–Appellant. State Farm Mutual Automobile Insurance Company, Plaintiff–Appellee, v. Raul Diaz, Ramiro Victoriano, Josefina Alvarez, and Leonel Alvarez, Defendants–Appellants.
• Court: United States Appellate Court of Illinois

2013 IL App (1st) 121388

987 N.E.2d 896

370 Ill.Dec. 130

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Plaintiff–Appellee,

v.Heriberto RODRIGUEZ, Defendant–Appellant.

State Farm Mutual Automobile Insurance Company, Plaintiff–Appellee,

v.Raul Diaz, Ramiro Victoriano, Josefina Alvarez, and Leonel Alvarez, Defendants–Appellants.

Docket Nos. 1–12–1388, 1–12–1390 cons.

Appellate Court of Illinois, First District, Fourth Division.

March 28, 2013.

Joseph A. Bosco and Andrew D. Bell, both of LaRose & Bosco, Ltd., of Chicago, for appellants.

Kristin L. Ward and Frank C. Stevens, both of Taylor Miller, LLC, of Chicago, for appellee.

Justice EPSTEIN delivered the judgment of the court, with opinion.

[370 Ill.Dec. 132]¶ 1 State Farm Mutual Automobile Insurance Company (State Farm) issued automobile insurance policies to the defendants. During the term of the insurance policies, the defendants' automobiles were seized by law enforcement authorities as stolen vehicles. The trial courts in two separate declaratory judgment actions granted summary judgment in favor of State Farm, ruling that its policy provides no comprehensive coverage for the seized vehicles.

¶ 2 In this consolidated appeal, the defendants contend that the trial courts erred in granting summary judgment to State Farm. For the reasons stated herein, we affirm.

¶ 3 BACKGROUND

¶ 4 State Farm issued automobile insurance policies to each of the defendants: Heriberto Rodriguez; Raul Diaz; Ramiro Victoriano; and Leonel and Josefina Alvarez. Although the facts pertinent to each defendant differ slightly, certain facts are common to all of the defendants. First, there is no dispute that the defendants' State Farm policies were in force at the time of the events in question. Second, each defendant purchased an automobile from a private individual. Third, following such purchases, all of the automobiles were seized by law enforcement on the grounds that they previously had been stolen. Fourth, the defendants did not steal the automobiles and were not aware that the vehicles were stolen at the time they were purchased.

¶ 5 Following the seizure of their automobiles, each of the defendants made claims for comprehensive coverage on their State Farm policies. With respect to Diaz only, State Farm provided rental car coverage, which was extended twice, while his claim was being investigated. State Farm ultimately denied Diaz's claim, as well as the claims of the other defendants. After the denials, State Farm filed two declaratory judgment actions in the circuit court of Cook County, seeking declaration that there was no comprehensive coverage available to the defendants.¹

¶ 6 The parties filed cross-motions for summary judgment. Judge Peter Flynn heard the motions concerning defendants Diaz, Victoriano, and Josefina and Leonal Alvarez. The court granted State Farm's summary judgment motion and denied the defendants' summary judgment motion. In its order ruling on the summary judgment motions, the court “declare[d] that the seizure of the insured vehicles by law enforcement authorities on the ground that they were stolen is not a ‘loss' as defined in the comprehensive coverage” of the defendants' policies. Judge Mary Mikva granted State Farm's summary judgment motion and denied defendant Rodriguez's summary judgment motion.

¶ 7 The defendants appealed their respective orders; the appeals are consolidated herein.

¶ 8 ANALYSIS

[370 Ill.Dec. 133]¶ 9 The policy ² provides in pertinent part as follows:

“PHYSICAL DAMAGE COVERAGES

* * *

Insuring Agreements

1. Comprehensive Coverage

We will pay:

a. for loss, except loss caused by collision, to a covered vehicle [.]”(Emphasis in original.)

The policy defines “loss,” in relevant part, as follows:

“Loss means:

1. direct, sudden, and accidental damage to; or

2. total or partial theft of

a covered vehicle.” (Emphasis in original.)

¶ 10 Defendants raise a number of arguments on appeal. The defendants contend that they have an insurable interest in the vehicles, given that they were good-faith purchasers. The defendants then argue that because the term “damage” is undefined in the policy, the court must look to its dictionary definition. The defendants urged the trial courts to use the Black's Law Dictionary definitions of “damage”—“loss or injury to person or property”—and “loss”: “the disappearance or diminution of value, usually in an unexpected or relatively unpredictable way.” Noting that State Farm presented no “counter-definition” at the trial court level, the defendants contend that State Farm's primary argument—that only damage to the vehicle, rather than damage to the defendants, may be considered “damage” under the policy—is, at best, a second “reasonable interpretation[ ]” of the policy language. Given that “all ambiguities in an insurance contract will be construed against the insurance company,” the defendants argue that the trial court erred in finding in State Farm's favor. Finally, the defendants contend that State Farm's extension of rental coverage to one of the defendants is “further evidence that the policy language is ambiguous.”

¶ 11 State Farm and the defendants agree regarding the applicable standard of review. Because the parties filed cross-motions for summary judgment, they conceded the absence of a genuine issue of material fact and invited the court to decide the question presented as a matter of law. Steadfast Insurance Co. v. Caremark Rx, Inc., 359 Ill.App.3d 749, 755, 296 Ill.Dec. 537, 835 N.E.2d 890 (2005). In appeals from summary judgment rulings, we conduct a de novo review. Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill.2d 90, 102, 180 Ill.Dec. 691, 607 N.E.2d 1204 (1992).

¶ 12 Insurable Interest

¶ 13 The defendants contend that, based on the holding in Reznick v. Home Insurance Co., 45 Ill.App.3d 1058, 1060, 4 Ill.Dec. 525, 360 N.E.2d 461 (1977), the good-faith purchaser of an automobile that later was determined to be a stolen vehicle has an insurable interest in the vehicle. The court in Reznick stated that “ ‘[g]enerally speaking, a person has an insurable interest in property whenever he would profit by or gain some advantage by its continued existence and suffer some loss or disadvantage by its destruction.’ ” Reznick, 45 Ill.App.3d at 1061, 4 Ill.Dec. 525, 360 N.E.2d 461 (quoting 3 Ronald A. Anderson, Couch Cyclopedia of Insurance Law § 24:13 (2d ed. 1960)). Because they each were “financially and practically disadvantaged by the loss of the vehicle,” the defendants assert that they satisfy the Reznick definition of insurable interest, as long as they were “good faith purchasers.” See Reznick, 45 Ill.App.3d at 1061, 4 Ill.Dec. 525, 360 N.E.2d 461.

¶ 14 State Farm concedes that the defendants were good-faith purchasers of their vehicles and have insurable interests. However, State Farm argues—and we agree—that this concession is irrelevant to the issue of whether its policy provided coverage for the seizure of the vehicles. The Reznick court held that it first needed to determine whether a good-faith purchaser of a stolen vehicle had an insurable interest in the vehicle because it could decide “whether this type of loss”— i.e., seizure by law enforcement—“was covered by the comprehensive coverage provisions of the insurance agreement.” Id. at 1062, 4 Ill.Dec. 525, 360 N.E.2d 461. Therefore, we turn our focus to the issue of whether defendants sustained a “loss” according to the terms of State Farm's policy.

¶ 15 “Loss” Under the Policy

¶ 16 The policy provides physical damage coverage for “loss * * * to a covered vehicle.” The policy defines “loss” as “direct, sudden, and accidental damage to” or “total or partial theft of” a “covered vehicle.” The parties agree that seizure of the vehicles by law enforcement authorities does not constitute “total or partial theft of” the vehicles. The critical question is whether the seizure constitutes “direct, sudden, and accidental damage to * * * a covered vehicle.”

¶ 17 “An insurance policy is a contract, and the general rules governing the interpretation of other types of contracts also govern the interpretation of insurance policies.” Hobbs v. Hartford Insurance Co. of the Midwest, 214 Ill.2d 11, 17, 291 Ill.Dec. 269, 823 N.E.2d 561 (2005). Our primary objective is to “ascertain and give effect to the intention of the parties as expressed in the agreement.” Nicor, Inc. v. Associated Electric & Gas Insurance Services Ltd., 223 Ill.2d 407, 416, 307 Ill.Dec. 626, 860 N.E.2d 280 (2006).

¶ 18 If the insurance policy language is unambiguous, the policy will be applied as written, unless it contravenes public policy. Hobbs, 214 Ill.2d at 17, 291 Ill.Dec. 269, 823 N.E.2d 561. Whether an ambiguity exists “turns on whether the policy language is subject to more than one reasonable interpretation.” Id. “That a term is not defined by the policy does not render it ambiguous, nor is a policy term considered ambiguous merely because the parties can suggest creative possibilities for its meaning.” Nicor, 223 Ill.2d at 417, 307 Ill.Dec. 626, 860 N.E.2d 280.

¶ 19 Where a term in an insurance policy is not defined, “we afford that term its plain, ordinary and popular meaning, i.e., we look to its dictionary definition.” Founders Insurance Co. v. Munoz, 237 Ill.2d 424, 436, 341 Ill.Dec. 485, 930 N.E.2d 999 (2010). See also Valley Forge Insurance Co. v. Swiderski Electronics, Inc., 223 Ill.2d 352, 366, 307 Ill.Dec. 653, 860 N.E.2d 307 (2006) (noting that courts have looked to their dictionary definitions to afford terms their “plain, ordinary, and popular meanings”); Gillen v. State Farm Mutual Automobile Insurance Co., 215 Ill.2d 381, 393, 294 Ill.Dec. 163, 830 N.E.2d 575 (2005) (stating that undefined terms will be given their “plain, ordinary and popular meaning, i.e., they will be construed with reference to the average, ordinary, normal, reasonable person”); Czapski v. Maher, 2011 IL App (1st) 100948, ¶ 29, 352 Ill.Dec. 377, 954 N.E.2d...