United Auto. Ins. Co. v. Buckley

• Decision Date: 05 January 2012
• Docket Number: No. 1–10–3666.,1–10–3666.
• Parties: UNITED AUTOMOBILE INSURANCE COMPANY, Plaintiff–Appellant, v. Rodney BUCKLEY and Hal Haywood, Defendants–Appellees.
• Court: United States Appellate Court of Illinois

2011 IL App (1st) 103666

356 Ill.Dec. 863

962 N.E.2d 548

UNITED AUTOMOBILE INSURANCE COMPANY, Plaintiff–Appellant,

v.Rodney BUCKLEY and Hal Haywood, Defendants–Appellees.

No. 1–10–3666.

Appellate Court of Illinois, First District, First Division.

Dec. 5, 2011.Rehearing Denied Jan. 5, 2012.

Shelist Law Firm, LLC, Chicago (Assata N. Peterson, Samuel A. Shelist, of counsel), for plaintiff–appellant.

McCreedy Garcia & Leet, P.C., Chicago (Michael P. McCreedy, of counsel), for defendants–appellees.

OPINION

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

[356 Ill.Dec. 867] ¶ 1 United Automobile Insurance Co. (United) insured an automobile that was driven by Rodney Buckley and involved in a collision with an automobile driven by Hal Haywood. Mr. Haywood filed a personal injury suit, and a judgment on an arbitration award was entered in his favor against Mr. Buckley. Mr. Buckley was debarred from rejecting the award based on his failure to appear at the arbitration hearing and noncompliance with a Rule 237 (Ill. S.Ct. R. 237 (eff. July 1, 2005)) notice. Mr. Haywood, in an effort to collect the judgment, brought garnishment proceedings against United. United filed a declaratory judgment action seeking a finding that there was no coverage under its policy issued to Mr. Buckley. The two actions were consolidated. In the garnishment and the declaratory judgment actions, United argued Mr. Buckley breached the assistance and cooperation provision of its policy by failing to appear at the arbitration hearing. The trial court, after a bench trial, found that Mr. Buckley had not breached his contractual duty to cooperate and entered judgment in Mr. Haywood's favor. We affirm.

¶ 2 BACKGROUND

¶ 3 Personal Injury Suit

¶ 4 In his complaint filed on May 4, 2007, Mr. Haywood alleged that, on November 13, 2006, at 2:35 p.m., he was driving northbound and Mr. Buckley was driving southbound on Martin Luther King Drive in Chicago. After crossing into oncoming traffic, Mr. Buckley's automobile struck the vehicle traveling in front of Mr. Haywood and then Mr. Haywood's vehicle. Mr. Haywood charged that Mr. Buckley was negligent for failing to drive at a reasonable speed and to keep his car in the proper lane of traffic.

¶ 5 Mr. Buckley was served with summons on May 22, 2007, and three days after service, on May 25, 2007, filed a pro se appearance. There is nothing in the record showing that Mr. Buckley filed an answer or responsive pleading. On July 27, 2007, the trial court entered an order setting a discovery closure date of December 21, 2007, and assigning the suit to mandatory arbitration pursuant to Supreme Court Rule 89. Ill. S.Ct. R. 89 (eff. Mar. 26, 1996). On September 10, 2007, the law firm of Parillo, Weiss & O'Halloran (Parillo Weiss), which had been hired by United to defend Mr. Buckley as its insured, moved to vacate any defaults and sought leave to file instanter an appearance, jury demand and answer on his behalf. After the motion was granted, Parillo Weiss filed an appearance and jury demand, but the record does not contain a responsive pleading filed by Parillo Weiss. A copy of the clerk's docket, which is in the record, does not include an entry for an answer to Mr. Haywood's complaint.

¶ 6 Mr. Buckley participated in discovery. Mr. Buckley, through Parillo Weiss, produced the reports made by the police officers who investigated the collision and gave the following notice: “all parties listed on the police report[s]” were witnesses. The police reports included the names and addresses of seven persons, including Mr. Haywood and Mr. Buckley.

¶ 7 Pursuant to Supreme Court Rule 237(b) (Ill.S.Ct. R. 237(b) (eff. July 1, 2005)), Mr. Haywood sent notice to Mr. Buckley requesting his presence at trial. See Bachmann v. Kent, 293 Ill.App.3d 1078, 1082, 228 Ill.Dec. 299, 689 N.E.2d 171 (1997) (A Rule 237 notice to appear at trial applied to an arbitration hearing where the case was transferred to mandatory arbitration and a trial was not yet scheduled.); Ill. S.Ct. R. 90(g) (eff. July 1, 2008) (Rule 237 is “equally applicable to arbitration hearings as they are to trials.”). Mr. Haywood sent Mr. Buckley notice of his intention to submit certain medical records and bills at the arbitration hearing pursuant to Supreme Court Rule 90(c). Ill. S.Ct. R. 90(c) (eff. July 1, 2008). These records reflected that, after the collision, Mr. Haywood suffered various injuries, including: acute cervical strain, shoulder sprain, acute thoracic sprain/strain, and skull contusion. The records showed Mr. Haywood received medical treatment from the date of the collision through December 19, 2006. The medical expenses totaled approximately $5,400.

¶ 8 After two continuances requested by Mr. Buckley, the case was set for an arbitration hearing on June 5, 2008. Parillo Weiss sent Mr. Buckley a notice as to the date, time and location of the arbitration hearing. The notice, dated April 7, 2008, stated:

“IF YOU FAIL TO APPEAR AT YOUR HEARING:

(1) A judgment will be entered against you, which may exceed your policy and which you must pay personally.

* * *

(c) You will lose your driver's license.” (Underlined text in the original.)

The notice requested that Mr. Buckley confirm its receipt by calling Parillo Weiss. Additionally, United sent Mr. Buckley a letter dated May 13, 2008, reminding him of the June 5 arbitration hearing and stating: “Your attendance and cooperation at the hearing is required under Condition 6 of you[r] UAIC policy.” Mr. Buckley failed to appear at the arbitration hearing, but Parillo Weiss appeared on his behalf.

¶ 9 The arbitrators entered an award in favor of Mr. Haywood in the amount of $15,000 and court costs. The award included the following statement: “Rodney Buckley did NOT participate in good faith based upon the following findings: Rule 237 served upon Defense Counsel on Feb. 18, 2008 for Defendant Buckley to appear at arbitration & trial. Defendant failed to appear.”

¶ 10 Parillo Weiss timely filed a notice of Mr. Buckley's rejection of the award. Mr. Haywood moved to debar the rejection, citing Supreme Court Rule 90(g) (Ill.S.Ct. R. 90(g) (eff. July 1, 2008)), which provides sanctions that may be entered for a failure to comply with a Rule 237 notice, including an order debarring rejection of the award. Mr. Haywood also stated “the arbitrators had found bad faith.” In opposition to the motion, Parillo Weiss argued the failure to appear was an “inadvertant mistake” and submitted Mr. Buckley's affidavit, which stated he was aware of the date of the arbitration, but he “associated it with the wrong day,” mistakenly thinking the arbitration date was on a Friday. Mr. Buckley apologized for his “mistake.” On September 18, 2008, the trial court debarred Mr. Buckley from rejecting the award and entered judgment on the award. The order does not include a basis for the sanction or findings of fact or law. The record does not contain a transcript of proceedings relating to the motion to debar.

¶ 11 The judgment on award was not attacked or appealed by Mr. Buckley and became final. Shortly after the judgment became final, United sent Mr. Buckley a letter dated October 24, 2008, denying coverage as to the judgment because of his lack of cooperation.

¶ 12 Garnishment Proceedings

¶ 13 Mr. Haywood, in an attempt to collect his judgment against Mr. Buckley, brought a third-party garnishment action against United seeking the proceeds under the policy. United filed an answer and an affirmative defense denying there was coverage under its policy because Mr. Buckley, by failing to appear at the arbitration hearing, had breached the assistance and cooperation provision. That provision states:

“6. Assistance and Cooperation of the Insured. As a condition precedent to the company's duty of indemnity with respect to suits against the insured, the insured shall cooperate with the Company and upon the Company's request, attend hearings, trial and examinations under oath, and assist in making settlements, securing and giving evidence, obtaining the attendance of witnesses and in the conduct of any legal proceedings in connection with the subject matter of this insurance. The insured shall not, except at his own cost, voluntarily make any payment, assume any obligation or incur any expense other than for such immediate medical and surgical relief to others as shall be imperative at the time of the accident.”

¶ 14 United and Mr. Haywood filed cross-motions for summary judgment as to the coverage issue. Mr. Haywood argued Mr. Buckley's failure to appear at the arbitration hearing was due to inadvertence and he had otherwise cooperated and participated in the defense of the suit. In support of his motion, Mr. Haywood submitted two affidavits of Mr. Buckley, including Mr. Buckley's affidavit, which had been submitted in response to the motion to debar rejection of the award. In the second affidavit, Mr. Buckley averred:

“On November 13, 2006, I was involved in a car accident with Hal Haywood. I learned that a lawsuit was filed by his attorney and that I was being represented by the law firm Parillo Weiss & O'Halloran. I received phone calls and letters from Parillo Weiss & O'Halloran regarding the lawsuit. I returned the phone calls and responded to all the letters from Parillo Weiss & O'Halloran. I cooperated with Parillo Weiss & O'Halloran in every aspect of the lawsuit with the exception of attending the arbitration hearing. I spoke with an employee of Parillo Weiss & O'Halloran and explained that I mistakenly had the wrong date for the arbitration hearing. They sent me an affidavit regarding the reason why I did not attend the arbitration hearing. I signed the affidavit and sent it back to them. I subsequently attended court dates on September 23, 2008, in courtroom 1310 and on March 3, 2009, in courtroom 1401 both at the Daley Center regarding this case.”

¶ 15 United contended principles of estoppel...