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

• Decision Date: 31 March 1999
• Docket Number: No. 1-98-1524,1-98-1524
• Citation: 237 Ill.Dec. 677,710 N.E.2d 100,304 Ill.App.3d 831
• Parties: , 237 Ill.Dec. 677 STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Plaintiff-Appellee, v. Steven PFIEL, Roger Pfiel, Gayle Pfiel, and Marsha Norskog, Individually and as Special Administrator of the Estate of Hillary Norskog, deceased, Defendants-Appellants.
• Court: United States Appellate Court of Illinois

Page 100

710 N.E.2d 100

304 Ill.App.3d 831, 237 Ill.Dec. 677

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Plaintiff-Appellee, v. Steven PFIEL, Roger Pfiel, Gayle Pfiel, and Marsha Norskog Individually and as Special Administrator of the Estate of Hillary Norskog, deceased Defendants-Appellants.

No. 1-98-1524.

Appellate Court of Illinois,

First District, Fifth Division.

March 31, 1999.

Ross & Hardies, Chicago (Michael King, Donald Pasulka and Peter Witty, of counsel), for Appellant.

Taylor, Miller, Sprowl, Hoffnagle & Merletti, Chicago (Frank Stevens and John Adams, of counsel), for Appellee.

Justice HARTMAN delivered the opinion of the court:

State Farm Mutual Automobile Insurance Company (State Farm) sought a judicial declaration of its obligation to defend its insured, Gayle Pfiel (Gayle), in a tort action brought by Marsha Norskog (Marsha), individually, and as special administrator of her daughter Hillary Norskog's (Hillary) estate. In that still pending suit, Marsha claims that Steven Pfiel (Steven), Gayle's son, stabbed and killed Hillary while inside Gayle's automobile. The circuit court granted State Farm's motion for summary judgment, finding that Gayle's automobile policy afforded no coverage for the acts alleged in the underlying tort complaint. Marsha contends that the court erred in (1) refusing to stay the declaratory judgment action until the resolution of her tort claim; and (2) finding that State Farm had no duty to defend pursuant to the general automobile policy issued to Gayle.

On July 14, 1993, while seated inside his mother's Chevrolet Cavalier parked in a forest preserve, 17-year-old Steven stabbed to death 13-year-old Hillary with a hunting knife given to him by his parents. He then drove to another area of the forest preserve where he left Hillary's body, which was discovered several days later. Steven subsequently was charged with Hillary's murder.

Marsha filed suit against Steven for wrongful death, assault and infliction of emotional distress. She also sought damages from Gayle and her husband, Roger Pfiel (Roger), for their negligent supervision of Steven and their negligent entrustment of the hunting knife and automobile to him. The underlying complaint alleged that Gayle's automobile, when placed in Steven's unrestricted and unsupervised possession, was a dangerous instrumentality which ultimately was used to facilitate Hillary's murder. The complaint further alleged that Steven used that vehicle to transport drugs and alcohol on the day of Hillary's murder, and that he planned the murder and used the vehicle's interior space as a "trap" to confine Hillary during the attack, to muffle her screams and to transport her body to a hidden location to avoid detection. The underlying complaint alleged that, at the time Gayle and Roger entrusted the vehicle to Steven, it was reasonably foreseeable that Steven would use the vehicle to harm others, given his alleged violent and aggressive behavior. ¹

Gayle and Roger tendered their defense to State Farm, the insurer of Gayle's vehicle. The insurance policy covering the automobile provided, inter alia, that State Farm would

"1. pay damages which an insured becomes legally liable to pay because of:

a. bodily injury to others, and

b. damage to or destruction of property including loss of its use,

caused by accident resulting from the ownership, maintenance or use of your car; and

2. defend any suit against an insured for such damages * * *." (Emphasis in original.)

State Farm thereafter sought judgment declaring that the general automobile policy it had issued to Gayle provided no coverage for the allegations contained in the underlying complaint and, therefore, it did not owe Roger, Gayle or Steven any duty to defend. For support, State Farm argued that the "bodily injury" to Hillary did not arise from "the ownership, maintenance or use" of Gayle's vehicle as anticipated by coverage language in the policy. The circuit court entered summary judgment in favor of State Farm, finding that the policy provided no coverage because the alleged damages did not result from the ownership, maintenance or use of the covered automobile. Marsha appeals.

I

Marsha initially asserts that the circuit court's consideration of State Farm's declaratory judgment action was premature. She contends that the court should have waited until the resolution of her tort case to determine whether coverage applied. State Farm responds that the court decided no issues material to the underlying tort case and, therefore, its review of the declaratory judgment action was appropriate.

An insurer's duty to defend its insured in a lawsuit hinges upon a liberal reading of the complaint; the insurer is, therefore, duty bound to defend its insured whenever conduct alleged is potentially within policy coverage, even where the insurance company discovers that the allegations are groundless, false, or fraudulent. Maryland Casualty Co. v. Peppers, 64 Ill.2d 187, 355 N.E.2d 24 (1976). Only if it is apparent on the face of the allegations contained in the complaint that the claim is beyond the policy's coverage limits can the insurer conclude that it has no duty to defend. State Farm Fire & Casualty Co. v. Shelton, 176 Ill.App.3d 858, 862, 126 Ill.Dec. 286, 531 N.E.2d 913 (1988). When a court is asked to determine whether an insured's conduct is covered under a policy, it must not determine disputed issues of fact which form the basis for the insured's liability in the underlying tort action (Peppers, 64 Ill.2d at 197, 355 N.E.2d 24; State Farm Fire & Casualty Co. v. Leverton, 289 Ill.App.3d 855, 856-57, 225 Ill.Dec. 308, 683 N.E.2d 476 (1997)); declaratory judgments prior to resolution of the underlying tort action might resolve issues crucial to the insured's liability in an ancillary proceeding. Allstate Insurance Co. v. Carioto, 194 Ill.App.3d 767, 774, 141 Ill.Dec. 389, 551 N.E.2d 382 (1990). Accordingly, where bona fide controversies arise over the issue of negligence versus intentional conduct, declaratory judgment actions are premature until resolution of that question in the underlying tort case. Carioto, 194 Ill.App.3d at 774, 141 Ill.Dec. 389, 551 N.E.2d 382.

The construction of the automobile policy's coverage language in the instant case, however, is an issue of law independent of the ultimate issues to be resolved in Marsha's tort case. The declaratory judgment action did not improperly resolve contested issues in the tort litigation; rather, the circuit court determined, as a matter of law, that the facts as alleged in the underlying complaint did not invoke the coverage provisions in Gayle's automobile policy. The question of whether Hillary's death was due to an "accident" caused by Gayle's negligent "ownership" or caused by Steven's "use" of the vehicle is one of policy construction, not crucial to the determination of liability in the underlying tort action. See United States Fidelity & Guaranty Ins. Co. v. Jiffy Cab Co., 265 Ill.App.3d 533, 537, 202 Ill.Dec. 431, 637 N.E.2d 1167 (1994) (Jiffy Cab ) ("The issue to be resolved in the coverage action is wholly separable from any of the issues involved in the underlying action. The sole issue to be resolved in the coverage action is whether the underlying claim resulted from the use, operation, or maintenance of a covered auto.") Accordingly, the court did not consider State Farm's declaratory judgment complaint prematurely.

II

Marsha next identifies error in the circuit court's determination that State Farm had no duty to defend the Pfiels, insisting that the conduct alleged in her complaint is covered by State Farm's policy. State Farm responds that Steven's "use" of the automobile--the transportation of drugs and alcohol, the confinement and stabbing of Hillary while inside the automobile, and the removal of her body from the scene of the stabbing--were not "uses" of the vehicle within the scope of coverage.

The construction of an insurance policy and the determination of the rights and obligations of the parties to that policy are questions of law which are subject to de novo review. Pekin Insurance Co. v. L.J. Shaw & Co., 291 Ill.App.3d 888, 891, 225 Ill.Dec. 862, 684 N.E.2d 853 (1997). Insurance policies will be liberally construed in favor of the insured and all doubts and ambiguities will be resolved in favor of the insured. Jiffy Cab, 265 Ill.App.3d at 538, 202 Ill.Dec. 431, 637 N.E.2d 1167. A duty to defend arises where a complaint alleges a cause of action within or potentially within the coverage of an insured's policy. In construing an insurance policy, a court's primary function is to ascertain and enforce the intentions of the parties as expressed in the agreement. Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill.2d 90, 180 Ill.Dec. 691, 607 N.E.2d 1204 (1992). Whether an insurer's duty to defend exists is determined by analyzing the allegations in the underlying complaint with the policy provisions as frames of reference. Lapham-Hickey Steel Corp. v. Protection Mutual Insurance Co., 166 Ill.2d 520, 532, 211 Ill.Dec. 459, 655 N.E.2d 842 (1995).

In ...