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

• Decision Date: 05 September 2006
• Docket Number: No. 1-05-1891.,1-05-1891.
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Plaintiff-Appellee, v. Steven E. COE, Defendant-Appellant.
• Court: United States Appellate Court of Illinois

855 N.E.2d 173

305 Ill.Dec. 282

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Plaintiff-Appellee, v. Steven E. COE, Defendant-Appellant.

No. 1-05-1891.

Appellate Court of Illinois, First District, Second Division.

September 5, 2006.

Rehearing Denied October 16, 2006.

As Modified Upon Denial of Rehearing October 17, 2006.

David M. Hundley, Joseph R. Curio, Ltd., Chicago, for Appellant.

John R. Adams, Taylor, Miller, Sprowl, Hoffnagle & Merletti, Chicago, for Appellee.

Modified Opinion Upon Denial of Rehearing

Justice HALL delivered the opinion of the court:

The plaintiff, State Farm Mutual Automobile Insurance Company (State Farm) filed a complaint for declaratory judgment seeking a determination that the defendant, Steven E. Coe, was not entitled to underinsured motorist benefits under his automobile liability policy with State Farm. Both parties filed motions for summary judgment. Mr. Coe appeals the order of the circuit court of Cook County granting summary judgment to State Farm and denying Mr. Coe's motion for summary judgment.

The sole issue on appeal is the correctness of the circuit court's order. The pertinent facts are summarized below.

On November 20, 2001, Mr. Coe, a police officer for the Village of Park Forest, was directing traffic when he was struck by a car driven by Nicole Moorehouse. Ms. Moorehouse was insured for automobile liability, with limits of $50,000. Mr. Coe received over $100,000 in workers' compensation benefits, but claimed special damages in the amount of $150,000.¹

At the time of the accident, Mr. Coe was insured by State Farm for automobile liability. The policy provided underinsured motorist coverage with a $100,000 limit. Under the underinsured motorist coverage, State Farm agreed to "pay damages for bodily injury an insured is legally entitled to collect from the owner or driver of an underinsured motor vehicle." State Farm's agreement to pay damages pursuant to the underinsured motorist provision was subject to the following policy limitations:

"1. The amount of coverage is shown on the declarations page under `Limits of Liability — W — Each Person, Each Accident.' Under `Each Person' is the amount of coverage for all damages due to bodily injury to one person. `Bodily injury to one person' includes all injury and damages to others resulting from this bodily injury and all emotional distress resulting from this bodily injury sustained by other persons who do not sustain bodily injury. * * *

2. Any amount paid or payable to or for the insured under any workers' compensation, disability benefits, or similar law shall reduce the amount payable under this coverage. The reduction may be taken only once and shall first be applied to the amount payable by any policy providing coverage on a primary basis. * * *

* * *

5. a. The most we will pay any one insured is the lesser of:

(1) the amount by which the `each person' limit of this coverage exceeds the sum of the `each person' limits of liability of all bodily injury liability insurance coverages that apply to the accident; or

(2) the amount by which the insured's damages for bodily injury exceed the sum of the `each person' limits of liability of all bodily injury liability insurance coverages that apply to the accident."²

Pursuant to the policy terms, Mr. Coe sought arbitration of his underinsured coverage claim. State Farm responded by filing the instant complaint for declaratory judgment. The complaint alleged that Ms. Moorehouse's insurance company had agreed to pay the $50,000 limit of liability under her policy to Mr. Coe and that Mr. Coe was entitled to in excess of $100,000 in workers' compensation benefits. Based on those amounts, State Farm sought a declaration that Mr. Coe was not entitled to any benefit under the underinsured motorist provision of his State Farm policy. In response to a request to admit facts, Mr. Coe admitted he settled his workers' compensation claim with the Village of Park Forest for an amount not less than $100,000. Both parties filed motions for summary judgment.

In its motion, State Farm argued that, under the underinsured motorist limitations provisions, it was entitled to set off Mr. Coe's workers' compensation settlement against the underinsured coverage amount. The settlement amount of $100,000 reduced the underinsured benefits of $100,000 to -0-. Therefore, Mr. Coe was not entitled to any recovery under the underinsured motorist provisions of the policy.

In his motion, Mr. Coe maintained that his special damages were well in excess of $150,000. He further maintained, "[T]o the extent that the Illinois Insurance Code permits any set-off for benefits received though [sic] Workers' Compensation, the Code, the plain language of the insurance policy, and public policy define the `amounts payable' to which such a set-off may be applied as the total damages of the insured Defendant, not the limits of [underinsured motorist] coverage." (Emphasis in original.)

The circuit court granted summary judgment to State Farm and denied Mr. Coe's summary judgment motion. In its ruling, the circuit court relied on the supreme court's decisions in Sulser v. Country Mutual Insurance Co., 147 Ill.2d 548, 169 Ill.Dec. 254, 591 N.E.2d 427 (1992), and Ullman v. Wolverine Insurance Co., 48 Ill.2d 1, 269 N.E.2d 295 (1970). This timely appeal followed.

ANALYSIS

I. Standard of Review

The court reviews motions for summary judgment de novo. Chubb Insurance Co. v. DeChambre, 349 Ill.App.3d 56, 59, 283 Ill.Dec. 487, 808 N.E.2d 37 (2004). Summary judgment is proper if, and only if, the pleadings, depositions, admissions, affidavits and other relevant matters on file show that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law. DeChambre, 349 Ill.App.3d at 59, 283 Ill.Dec. 487, 808 N.E.2d 37.

By filing cross-motions for summary judgment, the parties invite the court to determine the issues as a matter of law and enter judgment in favor of one of the parties. Wolfram Partnership, Ltd. v. LaSalle National Bank, 328 Ill.App.3d 207, 262 Ill.Dec. 404, 765 N.E.2d 1012 (2001). Yet the mere filing of cross-motions does not preclude a determination that triable questions of fact exist. Wolfram, 328 Ill.App.3d at 215, 262 Ill.Dec. 404, 765 N.E.2d 1012. Summary judgment should only be allowed when the right of the moving party is free from doubt. Elliott v. Williams, 347 Ill.App.3d 109, 112, 282 Ill.Dec. 882, 807 N.E.2d 506 (2004).

II. Principles Applicable to the Construction of Insurance Policies

"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). The court's "primary objective when construing an insurance policy is to ascertain and give effect to the intention of the parties, as expressed in the policy language." Gillen v. State Farm Mutual Automobile Insurance Co., 215 Ill.2d 381, 393, 294 Ill.Dec. 163, 830 N.E.2d 575 (2005). "If the 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." Hobbs, 214 Ill.2d at 17, 291 Ill.Dec. 269, 823 N.E.2d 561. "If the policy language is susceptible to more than one reasonable meaning, it is considered ambiguous and will be construed against the insurer." Gillen, 215 Ill.2d at 393, 294 Ill.Dec. 163, 830 N.E.2d 575.

"Importantly, a policy provision that purports to exclude or limit coverage will be read narrowly and will be applied only where its terms are clear, definite, and specific." Gillen, 215 Ill.2d at 393, 294 Ill.Dec. 163, 830 N.E.2d 575. However, this rule of construction only comes into play if the policy is ambiguous. Hobbs, 214 Ill.2d at 17, 291 Ill.Dec. 269, 823 N.E.2d 561.

III. Discussion

Section 143a-2(4) of the Illinois Insurance Code (215 ILCS 5/143a-2(4) (West 2000)) (the Insurance Code) provides in pertinent part as follows:

"For the purpose of this Code the term `underinsured motor vehicle' means a motor vehicle whose ownership, maintenance or use has resulted in bodily injury or death of the insured, as defined in the policy, and for which the sum of the limits of liability under all bodily injury liability insurance policies or under bonds other security required to be maintained under Illinois law applicable to the driver or to the person or organization legally responsible for such vehicle and applicable to the vehicle, is less than the limits for underinsured coverage provided the insured as defined in the policy at the time of the accident. The limits of liability for an insurer providing underinsured motorist coverage shall be the limits of such coverage, less those amounts actually recovered under the applicable bodily injury insurance policies, bonds or other security maintained on the underinsured motor vehicle. However, the maximum amount payable by the underinsured motorist coverage carrier shall not exceed the amount by which the limits of the underinsured motorist coverage exceeds the limits of the bodily injury liability insurance of the owner or operator of the underinsured motor vehicle." 215 ILCS 5/143a-2(4) (West 2000).

The underlying purpose of underinsured motorist coverage is 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. 254, 591 N.E.2d 427; see Martin v. Illinois Farmers Insurance, 318 Ill.App.3d 751, 758, 252 Ill.Dec. 310, 742 N.E.2d 848 (2000) (the purpose of underinsured coverage is to furnish protection for the difference between the insured's claim and the amounts available from the underinsured driver)....