State Sec. Ins. Co. v. Burgos
| Decision Date | 21 November 1991 |
| Docket Number | No. 71253,71253 |
| Citation | 583 N.E.2d 547,164 Ill.Dec. 631,145 Ill.2d 423 |
| Parties | , 164 Ill.Dec. 631 STATE SECURITY INSURANCE COMPANY, Appellant, v. Ramon Soto BURGOS, Indiv. and d/b/a Casablanca Liquor and Grocery Store, et al., Appellees. |
| Court | Illinois Supreme Court |
Brody, Gore, Fineberg & Wikoff, Ltd., Chicago (Larry R. Wikoff, Marcus J. Nunes, of counsel), for appellant.
Leonard M. Ring & Associates, P.C., Chicago (Leonard M. Ring and William J. Jovan, of counsel), for appellee Milagros C. Segarra.
Plaintiff, State Security Insurance Company, instituted this declaratory judgment action against defendants, Ramon Soto Burgos and Felicita Soto Burgos, individually and d/b/a Casablanca Liquor and Grocery Store, Rolando Soto, and Milagros C. Segarra, administrator of the estate of Manuel A. Segarra. Plaintiff sought a declaration that it owed no duty to defend or indemnify its insureds, Ramon Soto Burgos and Felicita Soto Burgos, d/b/a Casablanca Liquor and Grocery Store, in a wrongful death action brought by Milagros C. Segarra on behalf of her deceased husband's estate. Plaintiff alleged that the Burgoses had failed to comply with a provision in their insurance policy which required the insured to give notice of an occurrence to plaintiff "as soon as practicable." Plaintiff and defendant Segarra both filed motions for summary judgment. The trial court denied plaintiff's motion and granted Segarra's motion. The appellate court affirmed. 205 Ill.App.3d 739, 151 Ill.Dec. 183, 564 N.E.2d 160. Plaintiff brings its appeal to this court on a certificate of importance issued by the appellate court pursuant to Supreme Court Rule 316 (134 Ill.2d R. 316). Defendant Segarra was the only appellee to file a brief in this court.
On or about July 30, 1981, plaintiff issued an owner's, landlord's and tenant's liability policy (the policy) to Ramon Soto Burgos and Felicita Soto Burgos providing liability insurance for the operation of the Burgoses' grocery store. The policy provided coverage for the period beginning July 30, 1981, and ending July 30, 1982. On November 5, 1981, Manuel A. Segarra, a close friend and customer of the Burgoses, was shot and killed outside of the Burgoses' store by Rolando Soto, Ramon's son and a store employee. Immediately after the shooting, Ramon called Robert Patis, the insurance broker who had procured the policy for the Burgoses, and informed him of the shooting. Burgos called Patis again the following morning. Patis visited Burgos, at his store, later that day to discuss the incident. Patis told Burgos not to worry and that he would take care of the situation. Patis also informed Burgos that he believed that Burgos was not liable for the shooting and that the policy issued by plaintiff would not apply because the shooting took place outside of the store and thus off the insured premises. Patis did not notify plaintiff of the shooting until he forwarded the complaint and summons Burgos received two years later.
On November 4, 1983, a lawsuit was filed by Milagros C. Segarra, as administrator of the estate of Manuel A. Segarra, against the Burgoses, individually and d/b/a Casablanca Liquor and Grocery Store, and Rolando Soto. When the Burgoses received the summons and complaint, they gave the documents to Patis, who mailed them to plaintiff. Plaintiff received the suit papers on November 28, 1983. It is undisputed that this was the first actual notice of the shooting that plaintiff received. Plaintiff sent the Burgoses a letter informing them that it would defend them under a reservation of rights. Plaintiff thereafter filed this declaratory judgment action to determine its obligations under the policy.
The policy in question was procured for the Burgoses by Patis, the Burgoses' insurance broker. Patis had been handling all of the Burgoses' insurance needs for over 20 years prior to this occurrence. The policy was issued by the plaintiff insurance company through its agent, Guild Insurance Agency (Guild). Guild transmitted the policy to Patis, who delivered the policy to the Burgoses. The Burgoses paid all premiums on the policy to Patis, who forwarded them to Guild. All notices regarding cancellation, premium changes and renewals were sent by Guild to Patis, who forwarded them to the Burgoses. All communication between plaintiff or Guild and the Burgoses was conducted through Patis. Patis received a commission from Guild for placing the Burgoses' insurance with plaintiff.
The declarations page of the policy contained the following printed provision regarding the representative of the insurance company:
When Patis received the policy from Guild, Guild's name and address had been typed in next to "Agent or Broker--." When Patis forwarded the policy to the Burgoses, he affixed a sticker containing the name and address of the "Robert Patis General Insurance Agency" over the name and address of Guild Insurance Agency. Patis also included a cover letter to the Burgoses with the policy which instructed the Burgoses to notify his office in the event of a loss.
Plaintiff and Segarra both filed motions for summary judgment in the declaratory judgment action. The trial court granted summary judgment in favor of Segarra. It concluded that the Burgoses' notification to Patis constituted compliance with the policy's notice provision because plaintiff had, through its course of dealing with the Burgoses, clothed Patis with apparent authority to act as its agent for the purpose of receiving notice. Plaintiff appealed and the appellate court affirmed on different grounds. The appellate court disagreed with the trial court's finding of apparent authority based upon course of dealings, but determined that plaintiff's and Patis' adherence to an industry custom of using brokers as intermediaries for notice purposes estopped plaintiff from denying Patis' authority to accept notice.
Plaintiff argues before this court that its motion for summary judgment should have been granted, and Segarra's motion denied, because as a matter of law, notice to Patis did not satisfy the policy's notice requirement. Plaintiff contends that Patis was not the apparent agent of plaintiff for notice purposes and that no industry custom was established which converted Patis into plaintiff's agent by estoppel.
Initially, we must address plaintiff's motions to strike certain portions of defendant Segarra's brief. Plaintiff first moves to strike from Segarra's brief any references to evidence that plaintiff had issued insurance policies to the Burgoses prior to the policy in question. Plaintiff argues that there is no such evidence in the record. We agree. Our review of the record indicates that the only evidence regarding other policies issued to the Burgoses by plaintiff pertains to policies issued after the policy in question. Plaintiff's motion to strike any references in Segarra's brief to such prior policies is granted.
Plaintiff next asks this court to strike those portions of Segarra's brief which refer to (1) the details of the shooting incident, (2) the underlying lawsuit, and (3) the underlying procedural aspects of the case. Plaintiff proffers no grounds for striking these portions other than a general allegation of irrelevancy. We find Segarra's recitation of the facts pertaining to each of these areas to be brief passages which merely provide a background for the instant declaratory judgment action. Plaintiff's motion to strike those portions of Segarra's brief is denied.
We now turn to the resolution of the dispositive portion of this declaratory judgment action. The issue presented is whether, under the facts of this case, the broker who sold the policy to the insured is also the authorized agent of the insurance company for the limited purpose of accepting notice of an occurrence from the insured.
The notice of occurrence provision of the insurance policy stated that "in the event of an occurrence" notice "shall be given by or for the insured to the company or any of its authorized agents as soon as practicable * * *." (Emphasis added.) The policy also provided that compliance with the notice of occurrence provision is a condition precedent to plaintiff's obligation to provide coverage under the policy.
Notice of occurrence provisions in insurance liability policies are valid prerequisites to coverage. (Barrington Consolidated High School v. American Insurance Co. (1974), 58 Ill.2d 278, 281, 319 N.E.2d 25.) A provision calling for notice "as soon as practicable" requires notification to the insurer within a reasonable time. Whether notice was given within a reasonable time is dependent upon all the facts and circumstances of the particular case. (Barrington, 58 Ill.2d at 281, 319 N.E.2d 25; Sowinski v. Ramey (1976), 36 Ill.App.3d 690, 694, 344 N.E.2d 635.) Thus, the critical inquiry in the case sub judice is whether the Burgoses gave notice of the occurrence to plaintiff or its authorized agent within a reasonable time.
It is undisputed that the Burgoses informed the broker immediately following the occurrence. The policy requires that notice be given to plaintiff or any of its "authorized agents." It is generally recognized that an insurance broker acts as an agent of the insured, rather than as an agent of the insurer. (Mitchell Buick & Oldsmobile Sales, Inc. v. National Dealer Services, Inc. (1985), 138 Ill.App.3d 574, 582, 93 Ill.Dec. 71, 485 N.E.2d 1281.) However, a broker can act as the agent of the insurer, or as the agent of both the insurer and the insured. (Empire Fire & Marine Insurance Co. v. Faith Truck Lines, Inc. (1988), 178 Ill.App.3d 356, 359, 127 Ill.Dec. 569, 533 N.E.2d 441.) Further, a broker may have apparent authority to act as the insurer's agent. (Empire, 178 Ill.App.3d at 359, 127 Ill.Dec. 569, 533 N.E.2d 441.) It is a well-established precept of agency law...
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