ZDEB v. ALLState Ins. Co.

• Court: Appellate Court of Illinois
• Writing for the Court: Justice ROBERT E. GORDON delivered the opinion of the court:
• Citation: Zdeb v. Allstate Ins. Co., 404 Ill.App.3d 113, 935 N.E.2d 706, 343 Ill.Dec. 698 (Ill. App. 2010)
• Decision Date: 17 September 2010
• Docket Number: No. 1-09-2774.,1-09-2774.
• Parties: Elizabeth ZDEB, Plaintiff-Appellant, v. ALLSTATE INSURANCE COMPANY, an Illinois Corporation, Defendant-Appellee.

404 Ill.App.3d 113

935 N.E.2d 706

343 Ill.Dec. 698

Elizabeth ZDEB, Plaintiff-Appellant,

v.ALLSTATE INSURANCE COMPANY, an Illinois Corporation, Defendant-Appellee.

No. 1-09-2774.

Appellate Court of Illinois,First District, Sixth Division.

Sept. 17, 2010.

James E. Ocasek, Cooney and Conway, Chicago, IL, for Appellant.

Peter C. Morse, Daniel J. James, Morse Bolduc & Dinos, Chicago, IL, for Appellee.

Justice ROBERT E. GORDON delivered the opinion of the court:

Plaintiff Elizabeth Zdeb, a policyholder, filed a declaratory judgment action in the circuit court of Cook County seeking a determination that defendant, Allstate Insurance Company (Allstate), was not entitled to a setoff on underinsured motorist coverage with monies paid to her for automobile medical payments coverage. Allstate moved for summary judgment pursuant to section 2-1005 of the Illinois Code of Civil Procedure (735 ILCS 5/2-1005 (West 2008)), claiming that the provisions of her automobile insurance policy permitted the setoff. Plaintiff filed a response to Allstate's motion, and a cross-motion for summary judgment, claiming that a setoff is allowed only when a policyholder obtains double recovery. The trial court found the policy unambiguously permitted the setoff, granted Allstate's motion for summary judgment, and denied plaintiff's cross-motion for summary judgment Plaintiff appeals and we affirm.

BACKGROUND

The underlying facts are not in dispute. On October 19, 2006, plaintiff was a pedestrian on a public sidewalk in Chicago when she was struck by an automobile driven by Kamil A. Scislowicz (Scislowicz). As a result, plaintiff sustained serious injuries, claiming damages in excess of $200,000.

Scislowicz's vehicle was insured by State Farm Insurance Company (State Farm) under an automobile insurance policy that provided liability coverage limits of $50,000 per person for bodily injury. Plaintiff settled with State Farm for the full policy limit of $50,000.

Plaintiff's policy with Allstate provided underinsured motorist (UIM) coverage with a limit of $100,000 for bodily injury and automobile medical payments (MP) coverage with a limit of $50,000. Plaintiff paid separate premium amounts for the UIM and MP coverages, as is normally done in an automobile insurance policy. Part 2 of the policy declaration explains “automobile medical payments coverage” as follows:

“Allstate will pay to * * * an insured person all reasonable expenses actually incurred for necessary medical treatment, medical services or medical products actually provided to the insured person. Hospital, medical, surgical, x-ray, dental, orthopedic and prosthetic devices, pharmaceuticals, eyeglasses, hearing aids, and professional nursing services * * * are covered.

Payments will be made only when bodily injury is caused by an accident involving an auto or when [the insured] * * * is struck as a pedestrian by a motor vehicle * * *.”

Part 6 of the policy declaration contains provisions concerning UIM coverage. That part contained a “Limits of Liability” section that included the following applicable setoff provision:

“Damages payable will be reduced by:

1. all amounts paid by or on behalf of the owner or operator of the uninsured auto or anyone else responsible. This includes all sums paid under the bodily injury or property damage liability coverage of this or any other auto insurance policy.

2. all amounts payable under any workers' compensation law, disability benefits law, or any similar automobile medical payments coverage. (Emphasis added.)

Plaintiff submitted a UIM claim for her injuries to Allstate in the amount of $50,000, which equaled her UIM coverage limit minus the settlement amount she received from State Farm. Allstate had paid plaintiff $38,952.53 in MP coverage.

Allstate calculated plaintiff's UIM claim as follows: $100,000 would be setoff by the $50,000 settlement she received from State Farm and the $38,952.53 that Allstate had paid her in MP coverage, for a total setoff amount of $88,952.53. Allstate tendered the balance of $11,047.47 to plaintiff.

On April 23, 2009, plaintiff filed a declaratory judgment action against Allstate seeking a declaration that she was entitled to $50,000, which represents the full UIM limit for bodily injury less the settlement amount she received from State Farm. On July 1, 2009, Allstate filed a motion for summary judgment claiming that it was entitled to setoff the MP paid to plaintiff in the amount of $38,952.53.

On August 14, plaintiff filed a response to Allstate's motion for summary judgment and a cross-motion for summary judgment. Plaintiff responded that summary judgment in favor of Allstate was improper because the MP coverage is a separate and distinct portion of plaintiff's insurance policy and claimed that a setoff is only allowed to prevent a double recovery.

After hearing arguments from both parties, the trial court issued a written memorandum and order finding that the policy provisions unambiguously allowed Allstate to setoff the UIM coverage by any settlement amount and payments made under the MP coverage.

Furthermore, the trial court found that the purpose of UIM coverage is to place a policyholder in the same position had the underinsured motorist carried liability insurance in the same amount as the policyholder. The trial court concluded that in allowing Allstate to set off the UIM coverage by Scislowicz's settlement amount and the amount paid to plaintiff under her MP coverage placed plaintiff in the same position had she recovered $100,000 liability coverage from Scislowicz. As a result, the trial court entered an order granting summary judgment in favor of Allstate and denied plaintiff's cross-motion for summary judgment.

This appeal followed.

ANALYSIS

On appeal, plaintiff claims that the trial court erred in granting summary judgment in favor of Allstate and denying her cross-motion for summary judgment. Plaintiff argues that Allstate violated public policy when it reduced its underinsured motorist coverage by amounts paid for medical payments although the insurance policy unambiguously allowed for such a reduction.

[1] A trial court is permitted to grant summary judgment only “if the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” 735 ILCS 5/2-1005(c) (West 2006). Construction of the terms of an insurance policy and whether the policy comports with statutory requirements are questions of law properly decided on a motion for summary judgment. See Librizzi v. State Farm Fire & Casualty Co., 236 Ill.App.3d 582, 587, 177 Ill.Dec. 751, 603 N.E.2d 821 (1992). The standard of review from the granting of summary judgment is de novo. Weather-Tite, Inc. v. University of St. Francis, 233 Ill.2d 385, 389, 330 Ill.Dec. 808, 909 N.E.2d 830 (2009) (“We review appeals from summary judgment rulings de novo ”).

When the language of an insurance policy is clear and unambiguous, a reviewing court will give effect to those terms. Grevas v. United States Fidelity & Guaranty Co., 152 Ill.2d 407, 410, 178 Ill.Dec. 419, 604 N.E.2d 942 (1992); Menke v. Country Mutual Insurance Co., 78 Ill.2d 420, 423-24, 36 Ill.Dec. 698, 401 N.E.2d 539 (1980). Here, the underinsured motorist coverage in the insurance policy provided, in pertinent part, that defendant's liability to plaintiff shall be reduced by the amount paid on behalf of the underinsured driver and “any similar medical payments” paid on behalf of defendant. The trial court found this language clear and unambiguous, and, on appeal, the parties do not contend that any ambiguity exists in the language of the insurance policy. “Parties to a contract may agree to any terms they choose unless their agreement is contrary to public policy.” Sulser v. Country Mutual Insurance Co., 147 Ill.2d 548, 559, 169 Ill.Dec. 254, 591 N.E.2d 427 (1992).

Underinsured motorist coverage is a statutory creation. Section 143a-2(4) of the Illinois Insurance Code (Code) requires automobile insurers to include underinsured-motorist coverage in policies that they issue. 215 ILCS 5/143a-2(4) (West 2004). Section 143a-2(4) of the Code defines an “underinsured motor vehicle” as one which has resulted in bodily injury or death to the insured, and “for which the sum of the limits of liability under all bodily injury liability insurance policies or under bonds or other security” be maintained by the person responsible for the vehicle is less than the limits of underinsured coverage provided the insured under his policy at the time of the accident. 215 ILCS 5/143a-2(4) (West 2004). Section 143a-2(4) further provides for the insurer's limits of liability as follows:

“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.” 215 ILCS 5/143a-2(4) (West 2004).

In Sulser v. Country Mutual Insurance Co., 147 Ill.2d 548, 169 Ill.Dec. 254, 591 N.E.2d 427 (1992), our supreme court examined the public policy behind the underinsured motorist statute. In Sulser, plaintiff's husband was killed in a motor vehicle accident involving an underinsured motorist. Sulser, 147 Ill.2d at 551, 169 Ill.Dec. 254, 591 N.E.2d 427. Defendant insurance company sought to reduce the plaintiff's UIM coverage by workers' compensations benefits plaintiff received on behalf of the husband. Sulser, 147 Ill.2d at 553, 169 Ill.Dec. 254, 591 N.E.2d 427. The supreme court construed the legislative intent for providing underinsured motorist coverage was “to place the insured in the same position he would have occupied if injured by a motorist who carried liability insurance in the same amount as his [underinsured motorists...