University of Illinois v. Continental Cas. Co.

• Decision Date: 03 September 1992
• Docket Number: No. 4-92-0121,4-92-0121
• Citation: 599 N.E.2d 1338,234 Ill.App.3d 340,175 Ill.Dec. 324
• Parties: , 175 Ill.Dec. 324, 77 Ed. Law Rep. 865 The UNIVERSITY OF ILLINOIS, Plaintiff-Appellee, v. CONTINENTAL CASUALTY COMPANY, Defendant-Appellant.
• Court: United States Appellate Court of Illinois

Page 1338

599 N.E.2d 1338 234 Ill.App.3d 340, 175 Ill.Dec. 324,
77 Ed. Law Rep. 865 The UNIVERSITY OF ILLINOIS, Plaintiff-Appellee,
v.
CONTINENTAL CASUALTY COMPANY, Defendant-Appellant. No. 4-92-0121. Appellate Court of Illinois,
Fourth District. Sept. 3, 1992.

Page 1340

[234 Ill.App.3d 342] [175 Ill.Dec. 326] Michael P. Tone, T. David Ackerman, Peterson & Ross, Chicago, Mark S. Lipton, Meyer, Capel, Hirschfeld, Muncy, Jahn & Aldeen P.C., Champaign, for defendant-appellant.

Ronald S. Betman, Katten, Muchin & Zavis, Chicago, William J. Brinkmann, Thomas, Mamer & Haughey, Champaign, for plaintiff-appellee.

Page 1341

[175 Ill.Dec. 327] Justice McCULLOUGH delivered the opinion of the court:

Defendant Continental Casualty Company appeals from a partial summary judgment entered in the circuit court of Champaign County in favor of plaintiff University of Illinois (University) on counts I, III, V, VIII, IX, X, and XIII of plaintiff's complaint for breach of contract based on a board of education liability (BEL) insurance policy. The trial court found there was no just reason to delay enforcement or appeal, thereby providing this court the jurisdiction to consider the appeal pursuant to Supreme Court Rule 304(a). 134 Ill.2d R. 304(a).

The issues presented for review are as follows: (1) whether the summary judgment in favor of plaintiff and against defendant is precluded because there are genuine issues of material fact regarding defendant's coverage under the BEL insurance policy for settlement of or judgment on claims or for the defense costs incurred relating to claims arising out of (a) employment, (b) intentional misconduct, (c) discrimination, and (d) emotional distress and loss of reputation, or for claims of which the plaintiff provided late notice of the claim to defendant; and (2) whether summary judgment was improper because defendant is entitled to allocate costs of defense between covered and noncovered claims as a matter of law, or whether a genuine issue of [234 Ill.App.3d 343] material fact exists with regard to that question. We affirm in part, reverse in part, and remand with directions.

I. GENERAL PRINCIPLES REGARDING SUMMARY JUDGMENT

Pursuant to section 2-1005 of the Code of Civil Procedure (Ill.Rev.Stat.1991, ch. 110, par. 2-1005), a party may move for summary judgment and may file supporting affidavits. The opposing party may file counteraffidavits. In addition to the affidavits, the trial court may consider the pleadings, depositions and admissions to determine whether any genuine issue of material fact exists and whether the moving party is entitled to summary judgment as a matter of law. This procedure allows the trial court to determine if a genuine issue of material fact exists, but not to try the issue. While summary judgment facilitates the prompt disposition of lawsuits, it is a drastic remedy allowed only when the moving party's right to it is clear and free from doubt. In determining the propriety of granting summary judgment, the trial court should construe pleadings, depositions, admissions, exhibits, and affidavits strictly against the movant and liberally in favor of the respondent. Although inferences may be drawn from undisputed facts, an issue should be decided by the trier of fact and summary judgment denied where reasonable persons could draw divergent inferences from the undisputed facts. (Pyne v. Witmer (1989), 129 Ill.2d 351, 357-59, 135 Ill.Dec. 557, 560-61, 543 N.E.2d 1304, 1307-08.) In reviewing the granting of summary judgment, the role of the reviewing court is to determine if the trial court correctly ruled that no genuine issue of material fact exists, and if none exists, whether judgment was correctly entered for the moving party as a matter of law. (O'Hara v. Holy Cross Hospital (1989), 185 Ill.App.3d 694, 699, 134 Ill.Dec. 11, 14, 542 N.E.2d 11, 14, aff'd (1990), 137 Ill.2d 332, 148 Ill.Dec. 712, 561 N.E.2d 18.)

"The entry of summary judgment is not a matter within the discretion of the trial court. In reviewing a trial court's ruling on a motion for summary judgment, the appellate court should consider anew the facts and law related to the case and determine whether the trial court was correct." (Shull v. Harristown Township (1992), 223 Ill.App.3d 819, 824, 166 Ill.Dec. 142, 145, 585 N.E.2d 1164, 1167.)

Where the matter or issue may be decided as a question of law, such as where the only issue concerns the construction of an insurance policy, including its exclusionary provisions, summary judgment is a proper remedy. Johnson v. American Family Mutual Insurance Co. (1990), 193 Ill.App.3d 794, 799, 140 Ill.Dec. 783, 787, 550 N.E.2d 668, 672; [234 Ill.App.3d 344] Rockford Mutual Insurance Co. v. Schuppner (1989), 182 Ill.App.3d 898, 902, 131 Ill.Dec. 357, 360, 538 N.E.2d 732, 735.

Page 1342

[175 Ill.Dec. 328] II. FACTS

Plaintiff alleged in its multicount first-amended complaint breaches of contract on the part of defendant in failing to pay defense costs and settlements and judgments in several cases against it. Those allegations pertinent to the appeal will be summarized.

A. Count I

In September 1979, Warren Craft and Louise A. DeSalle, two black medical students, failed "senior certifying examinations" and filed suit for racial discrimination in the United States District Court for the Northern District of Illinois (case No. 79-C-3521). Following a jury trial, a verdict was returned in favor of the University. The judgment entered therein was later affirmed by the Seventh Circuit. (Craft v. Board of Trustees of University of Illinois (7th Cir.1986), 793 F.2d 140.) However, in defending the suit, the University incurred fees and expenses of $190,469.53 plus interest, of which plaintiff claimed $185,469.53 was due and owing from defendant.

B. Count III

On May 17, 1980, Mariangela Segre filed a complaint with the Equal Employment Opportunity Commission (EEOC) based on allegations of sex discrimination leading to her dismissal as a professor at the veterinary school of medicine. On July 2, 1982, Segre filed a complaint alleging counts of sex discrimination and breach of contract in the United States District Court for the Central District of Illinois (case No. 82-2219). Notice of the suit was provided to defendant. On February 11, 1986, the lawsuit was settled for $130,000 and the EEOC complaint was settled for $5,000. Although defendant issued a letter on August 20, 1985, denying coverage, it did provide settlement authority prior to the settlement. Plaintiff University incurred $57,438.72 in defense fees and expenses and demanded reimbursement from defendant of $187,438.72 plus interest.

C. Count V

On April 21, 1982, Leonard Robbins, a former assistant professor in the school of urban sciences, filed a complaint in the Cook County circuit court (case No. 82-CH-3226) seeking reinstatement with full tenure. On November 24, 1983, the suit was dismissed. [234 Ill.App.3d 345] Defense fees and expenses totalled $13,659.79, and plaintiff University alleged that reimbursement due and owing from defendant amounted to $8,659.79 plus interest.

D. Count VIII

On November 2, 1983, Joyce A. Phares, a former medical records technician, filed suit in the United States District Court for the Central District of Illinois (case No. 83-2456), alleging violation of her first and fourteenth amendment rights and emotional distress. On April 16, 1987, a directed verdict was entered in favor of the University, which incurred $72,008.76 defense fees and expenses. According to the University, the amount due and owing from defendant was $67,008.76 plus interest.

E. Count IX

On August 23, 1984, three University police officers filed suit in the United States District Court for the Northern District of Illinois (case No. 84-C-7301), alleging violation of their constitutional rights under the fifth and fourteenth amendments because they were not hired to work a function at the University of Illinois, Chicago Pavilion. This case is identified as the "Jania suit." On May 3, 1985, this suit was dismissed. The University incurred defense fees and expenses of $12,668.74, of which $7,668.74 plus interest was alleged to be due and owing from defendant.

F. Count X

On July 10, 1980, Clarice E. Mills, a former University Hospital employee, filed a sex discrimination claim before the Illinois Human Rights Department (case No. 1980-CF-0234), alleging civil rights violations and seeking reinstatement, damages, and attorney fees. On September 1, 1981, the dispute was settled for $8,041.04, and the University incurred $8,943.76 in defense fees and expenses. Plaintiff University claimed $11,984.80 plus interest was due and owing from defendant.

G. Count XIII

On December 21, 1983, John W. Jones, a former medical student who failed his senior

Page 1343

[175 Ill.Dec. 329] comprehensive examination four times, brought suit alleging discrimination predicated on violations of civil and constitutional rights in the United States District Court for the Northern District of Illinois (case No. 83-C-9344). In February 1988, the cause was dismissed. The University incurred $172,863.13 [234 Ill.App.3d 346] in defense fees and expenses, and alleged $167,863.13 plus interest was due and owing from defendant.

H. The Policy

The subject policy went into effect on November 5, 1975, and its operation was renewed twice so that it remained in effect through December 1, 1984. The maximum annual aggregate limit of liability was $2 million, with $5,000 retention (deductible) per loss.

No duty to defend was created by this policy. Instead, the defendant agreed to pay all losses arising from any claim or claims for any wrongful act occurring during the policy period which was made against the assureds for which they became legally obligated to pay or for which the University, as the designated school district, may be required or permitted to reimburse such assureds, or for all losses which the University became legally...