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

Decision Date03 December 2020
Docket NumberDocket No. 125441
Citation181 N.E.3d 865,2020 IL 125441,450 Ill.Dec. 513
Parties STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellant, v. Kent ELMORE et al., Appellees.
CourtIllinois Supreme Court

Michael J. Bedesky and Martin K. Morrissey, of Heyl, Royster, Voelker & Allen, of Edwardsville, for appellant.

Christopher A. Koester and Kara J. Wade, of Taylor Law Offices, P.C., of Effingham, for appellee.

OPINION

JUSTICE MICHAEL J. BURKE delivered the judgment of the court, with opinion.

¶ 1 At issue is the enforceability of a "mechanical device" exclusion in an automobile policy issued by plaintiff, State Farm Mutual Automobile Insurance Company (State Farm). The appellate court held that the exclusion was ambiguous and therefore construed it against State Farm and in favor of coverage. 2019 IL App (5th) 180038, ¶ 28, 438 Ill.Dec. 835, 147 N.E.3d 104. For the reasons that follow, we reverse.

¶ 2 BACKGROUND

¶ 3 Defendant, Kent Elmore, was injured while unloading grain from a truck owned by his father, defendant Ardith Sheldon Elmore (Sheldon). Sheldon possessed or leased farm property in Effingham County. On October 16, 2013, Kent was assisting Sheldon in his grain farming operation. Kent backed up a grain truck to an auger that was being used to move grain from the grain truck to a transport truck. A tractor powered the auger by means of a power take-off (PTO) shaft. The auger had a hopper that received grain from the grain truck. The hopper was located beneath the grain truck's dumping chute. As the auger turned, it moved grain up and dumped it into the transport truck. Kent was attempting to open the grain truck's gate to let grain into the auger. He wanted to get extra leverage, so he stepped onto the auger. Because the auger's protective shield had been removed, Kent's foot was exposed to the turning shaft. In the accident, Kent lost his right leg below the knee. Surgery was later required to amputate the leg just above the knee.

¶ 4 Kent filed a negligence action against Sheldon. He eventually settled the lawsuit. In exchange for releasing all claims against Sheldon, Kent received $1.9 million from Bishop Mutual Insurance Company, Grinnell Mutual, and State Farm Fire and Casualty. Kent reserved his right to pursue additional coverage under the auto policy that covered the grain truck.

¶ 5 The truck, a 2002 Ford International 4900, was covered by an auto policy in which Sheldon was a named insured. State Farm filed a complaint for declaratory judgment asking the court to determine and adjudicate the parties' rights and liabilities under the policy. In its original complaint, State Farm argued that no coverage was provided because the injury was caused by an auger and because an auger is neither a "car" nor a "trailer," as those terms are defined in the policy. State Farm later filed an amended complaint arguing that the auger was a mechanical device and therefore coverage was precluded under the policy's "mechanical device" exclusion.

¶ 6 State Farm attached a copy of the policy to the complaint. The policy's declarations page lists the insured vehicle as a 2002 International Model 4900 truck. The policy provided bodily injury liability limits of $250,000 per person and $500,000 per accident. The policy sets forth its liability coverage as follows:

"LIABILITY COVERAGE
* * *
Additional Definition
Insured means:
1. you and resident relatives for:
a. the ownership, maintenance, or use of:
(1) your car ;
* * *
3. any other person for his or her use of:
a. your car :
* * *
Such vehicle must be used within the scope of your consent;
* * *
Insuring Agreement
1. We will pay:
a. damages an insured becomes legally liable to pay because of:
(1) bodily injury to others; and
(2) damage to property
caused by an accident that involves a vehicle for which that insured is provided Liability Coverage by this policy[.]" (Emphases in original.)

¶ 7 The policy contains a Commercial Vehicle endorsement. The "mechanical device" exclusion is contained in this endorsement. This exclusion provides as follows:

"LIABILITY COVERAGE
* * *
b. Exclusions
* * *
(4) THERE IS NO COVERAGE FOR AN INSURED FOR DAMAGES RESULTING FROM:
* * *
(c) THE MOVEMENT OF PROPERTY BY MEANS OF A MECHANICAL DEVICE, OTHER THAN A HAND TRUCK, THAT IS NOT ATTACHED TO THE VEHICLE DESCRIBED IN (a) ABOVE." (Emphasis in original.)

¶ 8 State Farm moved for summary judgment. In the motion, State Farm argued that the grain auger was a "mechanical device" as that term is used in the policy and that therefore the policy provided no liability coverage to Sheldon for Kent's claims. In a memorandum attached to the motion, State Farm argued that the "mechanical device" exclusion precluded coverage because Kent was injured when he stepped into the turning auger. State Farm contended that the exclusion clearly applied because the auger was a mechanical device other than a hand truck, it was not attached to the vehicle, and it was being used to move grain. State Farm noted that, although no Illinois case had construed the exclusion, courts in other states had found the exclusion valid and enforceable.

¶ 9 Kent later filed his own motion for summary judgment. Kent cited section 7-317(b)(2) of the Illinois Vehicle Code, which provides that an owner's policy of liability insurance "[s]hall insure the person named therein and any other person using or responsible for the use of such motor vehicle or vehicles with the express or implied permission of the insured." 625 ILCS 5/7-317(b)(2) (West 2012). Kent argued that Sheldon both used and was responsible for the use of the insured vehicle at the time of the accident because "use" includes the loading, unloading, and transferring of corn from the field to the grain elevator. Kent noted that Illinois courts have adopted the "completed operations doctrine," which provides that coverage extends to the insured for all acts that occur before the loading and unloading process has been completed. In a memorandum of law attached to the motion, Kent argued that several other states had held the "mechanical device" exclusion void as against public policy when it conflicted with a mandatory omnibus coverage statute.

¶ 10 Following a hearing, the circuit court granted State Farm's motion for summary judgment and denied Kent's motion. In a written order, the circuit court explained that it agreed with Kent that the vehicle was being used at the time of the accident, that the use bore a causal connection to the injury, and that the unloading of grain was completing a task. The court agreed with State Farm, however, that the auger was a mechanical device and that it was not a hand truck. The court found the exclusion unambiguous and applicable to Kent's injury. The court considered the out-of-state cases cited by Kent that had held the exclusion void as against public policy. However, the court found these cases inapplicable because the rule in Illinois is that insurers may have reasonable exclusions in a policy if the exclusions do not differentiate between the named insured and permissive users. See Progressive Universal Insurance Co. of Illinois v. Liberty Mutual Fire Insurance Co. , 215 Ill. 2d 121, 293 Ill.Dec. 677, 828 N.E.2d 1175 (2005). The court found that the "mechanical device" exclusion did not differentiate between the insured and permissive users and therefore did not run afoul of Progressive . Finding the exclusion unambiguous and not against public policy, the court denied Kent's motion for summary judgment and entered summary judgment for State Farm.

¶ 11 Kent appealed, and the Appellate Court, Fifth District, reversed. 2019 IL App (5th) 180038, 438 Ill.Dec. 835, 147 N.E.3d 104. Kent raised two issues on appeal. Kent argued that the "mechanical device" exclusion was (1) ambiguous and therefore had to be construed in favor of coverage and (2) contrary to the public policy underlying this state's mandatory insurance laws. Id. ¶ 16. The appellate court agreed with his first point and accordingly did not address the public policy argument.

¶ 12 The appellate court acknowledged that other states had construed the "mechanical device" exclusion and found it unambiguous and enforceable. Id. ¶ 22 (citing Continental Insurance Co. v. American Motorist Insurance Co. , 247 Ga.App. 331, 542 S.E.2d 607 (2000) (applying exclusion when injury was caused by a pallet jack with a hydraulic pumping mechanism), Elk Run Coal Co. v. Canopius U.S. Insurance, Inc. , 235 W.Va. 513, 775 S.E.2d 65 (2015) (front end loader was a "mechanical device"), and Dauthier v. Pointe Coupee Wood Treating, Inc. , 560 So. 2d 556 (La. Ct. App. 1990) (forklift was a "mechanical device")). The three courts reached their conclusions in different ways. In Continental , the court noted that the exclusion applies to the movement of property by a mechanical device other than a hand truck. Continental , 542 S.E.2d at 609-10. The court focused its analysis on whether a pallet jack was a hand truck. The court concluded that it was not, and therefore the exclusion applied. Id. at 611. In Elk Run , the court determined that a front-end loader was a mechanical device by looking to other cases that had described front-end loaders that way. See Elk Run , 775 S.E.2d at 74. In Dauthier , the court determined that a forklift was a mechanical device by looking at the dictionary definitions of "mechanical" and "device." Dauthier , 560 So. 2d at 558. Dauthier determined that a mechanical device is "an invention or contrivance having to do with machinery or tools." Id. State Farm asked the appellate court to adopt Dauthier 's definition of "mechanical device." 2019 IL App (5th) 180038, ¶ 22, 438 Ill.Dec. 835, 147 N.E.3d 104.

¶ 13 The appellate court distinguished the cases State Farm relied upon by noting that they involved "self-powered or motorized machines used in commercial settings." Id. ¶ 24. By contrast, the auger was neither motorized nor self-powered but was simply "a large cylindrical structure with metal...

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