American Standard Insurance Company of Wisconsin v. Slifer

• Court: Appellate Court of Illinois
• Decided: November 6, 2009
• Docket: 4-09-0326 Rel
• Status: Published

Opinion

Filed 11/6/09 NO. 4-09-0326

IN THE APPELLATE COURT

OF ILLINOIS

FOURTH DISTRICT

AMERICAN STANDARD INSURANCE COMPANY ) Appeal from OF WISCONSIN, ) Circuit Court of Plaintiff-Appellee, ) Macon County v. ) No. 08MR74 ROGER L. SLIFER, ) Defendant, ) and ) HELEN M. BROWN, Independent ) Administratrix of the Estate of LEE ) Honorable J. WEST, Deceased, ) Albert G. Webber, Defendant-Appellant. ) Judge Presiding. _________________________________________________________________

JUSTICE STEIGMANN delivered the opinion of the court:

In July 2007, defendant, Helen M. Brown, independent

administratrix of the estate of Lee J. West, deceased, sued

defendant, Roger L. Slifer, under (1) the Wrongful Death Act (740

ILCS 180/0.01 through 2.2 (West 2002)) and (2) section 27-6 of

the Probate Act of 1975 (Probate Act) (755 ILCS 5/27-6 (West

2002)) for the August 2002 hit-and-run death of her son, West.

In May 2008, plaintiff, American Standard Insurance Company of

Wisconsin (American Standard), filed an amended complaint for

declaratory judgment under section 2-701 of the Code of Civil

Procedure (Code) (735 ILCS 5/2-701 (West 2008)), arguing that it

was not obligated to indemnify Slifer against Brown's claims

because Slifer failed to comply with the prompt-notification

provision of his insurance policy. In January 2009, American

Standard and Brown filed cross-motions for summary judgment on

American Standard's amended complaint for declaratory judgment. In March 2009, the trial court denied Brown's motion

for summary judgment and granted summary judgment in favor of

American Standard. Brown appeals.

Because we conclude that (1) the notice provision that

directed Slifer to promptly notify American Standard of any car

accidents or losses was part of the contractual agreement of his

insurance policy and (2) Slifer failed to notify American Stan-

dard of the August 2002 accident in accordance with that notice

provision, we affirm.

I. BACKGROUND

The following facts were taken from the parties'

pleadings and other documents filed with the trial court.

On August 2, 2002, West was walking down a rural road

when he was struck by a hit-and-run driver. West was eventually

discovered and taken to a hospital, where he died the following

day from his injuries.

In June 2007, Slifer confessed to police that he drove

the vehicle that struck and killed West. Slifer later pleaded

guilty to failure to report an accident involving great bodily

harm or death and was sentenced to 14 years in prison.

In July 2007, Brown filed a complaint at law against

Slifer, seeking compensatory damages under (1) the Wrongful Death

Act (740 ILCS 180/0.01 through 2.2 (West 2002)) and (2) section

27-6 of the Probate Act (755 ILCS 5/27-6 (West 2002)) for the

August 2002 death of West.

In May 2008, American Standard filed an amended com-

- 2 - plaint for declaratory judgment under section 2-701 of the Code

(735 ILCS 5/2-701 (West 2008)), arguing that it was not obligated

to provide indemnity, coverage, protection, or any other benefit

relating to Brown's claims because Slifer had failed to comply

with the prompt-notification provisions of the vehicle insurance

policy in effect in August 2002.

In January 2009, American Standard and Brown filed

cross-motions for summary judgment pursuant to section 2-1005 of

the Code (735 ILCS 5/2-1005 (West 2008)). American Standard

argued that because Slifer failed to comply with the notice

provision of his policy by concealing the August 2002 accident

for over five years, he breached his contractual obligation and

was not entitled to the coverage afforded by the policy. Thus,

American Standard contended that it was not obligated to indem-

nify Slifer for any claims arising from Brown's suit. Brown

argued that (1) the notice provision was ambiguous and (2)

because the notice provision appeared before the "Agreement"

section of the policy--in which she claimed the parties' contrac-

tual duties and obligations were set forth--the notice provision

was merely advisory rather than contractually binding.

The location of the notice provision at issue appeared

on the first page of Slifer's insurance policy as follows:

"IF YOU HAVE AN AUTO ACCIDENT OR LOSS

NOTIFY US

Tell us promptly. Give time, place, and

details. Include names and addresses of

- 3 - injured persons and witnesses.

OTHER DUTIES

Each person claiming any coverage of this

policy must also:

1. Assist us in any claims or

suits.

* * *

6. Give us statements and answer

questions under oath when asked by

any person we name as often as we

reasonably ask, and sign copies of

the answers.

Each person claiming Uninsured Motorist cov-

erage must promptly notify the police if a

hit-and-run driver is involved.

Each person claiming Car Damage coverages

must also:

1. Take responsible steps after

loss to protect the vehicle and its

equipment from further loss. ***

4. Answer questions under oath when

asked by any person we name as

often as we reasonably ask, and

sign copies of the answers

AGREEMENT

- 4 - We agree with you, in return for your premium

payment, to insure you subject to all the

terms in this policy. We will insure you for

the coverages and the terms of liability in

the declarations of this policy." (Emphases

in original.)

Following the aforementioned "Agreement" section, a separate

section defined terms used throughout the policy. The remainder

of the policy consisted of six parts that delineated the follow-

ing: (1) liability coverage, (2) medical-expense coverage, (3)

uninsured-motorist coverage, (4) car-damage coverages, (5)

emergency-road-service coverage, and (6) general provisions.

In March 2008, the trial court entered a written order

granting American Standard's summary-judgment motion and denying

Brown's summary-judgment motion.

This appeal followed.

II. THE TRIAL COURT'S GRANT OF SUMMARY JUDGMENT

A. Summary Judgment and the Standard of Review

"Summary judgment is appropriate where the pleadings,

depositions, admissions[,] and affidavits on file, viewed in the

light most favorable to the nonmoving party, reveal that there is

no genuine issue as to any material fact and that the moving

party is entitled to judgment as a matter of law." Kajima

Construction Services, Inc. v. St. Paul Fire & Marine Insurance

Co., 227 Ill. 2d 102, 106, 879 N.E.2d 305, 308 (2007); see 735

ILCS 5/2-1005(c) (West 2008). Summary judgment should be granted

- 5 - only if the movant's right to judgment is clear and free from

doubt. Bluestar Energy Services, Inc. v. Illinois Commerce

Comm'n, 374 Ill. App. 3d 990, 993, 871 N.E.2d 880, 884 (2007).

We review de novo the trial court's grant of summary judgment.

Reppert v. Southern Illinois University, 375 Ill. App. 3d 502,

504, 874 N.E.2d 905, 907 (2007).

B. Brown's Claim That the Trial Court Erred by Granting American Standard's Motion for Summary Judgment

Brown argues that the trial court erred by granting

American Standard's motion for summary judgment. Specifically,

Brown contends that the notice provision was ambiguous because

(1) it appeared before the section of the policy entitled "Agree-

ment" and (2) it was not expressed in mandatory terms. Thus,

Brown asserts that the court should have construed the aforemen-

tioned ambiguities against American Standard and in favor of

coverage. We address Brown's contentions in turn.

1. Brown's Claim That the Notice Provision Was Ambiguous

a. The Location of the Notice Provision

Brown contends that the notice provision was ambiguous

because it appeared before the section of the policy entitled

"Agreement." We disagree.

If the words of an insurance policy are reasonably

susceptible to more than one meaning, they are considered ambigu-

ous and will be construed strictly against the insurer who

drafted the policy. Central Illinois Light Co. v. Home Insurance

Co., 213 Ill. 2d 141, 153, 821 N.E.2d 206, 213 (2004). This is

especially true with regard to provisions that limit or exclude

- 6 - coverage. Outboard Marine Corp. v. Liberty Mutual Insurance Co.,

154 Ill. 2d 90, 119, 607 N.E.2d 1204, 1217 (1992). However, "[a]

contract is not rendered ambiguous merely because the parties

disagree on its meaning." Central Illinois Light Co., 213 Ill.

2d at 153, 821 N.E.2d at 214. "Although policy terms that limit

an insurer's liability will be liberally construed in favor of

coverage, this rule of construction only comes into play when the

policy is ambiguous." Hobbs v. Hartford Insurance Co. of the

Midwest, 214 Ill. 2d 11, 17, 823 N.E.2d 561, 564 (2005).

Although Brown contends that the notice provision was

ambiguous, she does not base this contention on a claim that the

words used to construct the provision were susceptible to differ-

ent interpretations. Rather, Brown claims that the notice

provision was ambiguous solely because it appeared before the

"Agreement" section of the policy. Brown maintains that an

ambiguity exists because the notice provision was merely advisory

rather than contractually binding.

To the extent that Brown argues that the language of

the notice provision created an ambiguity, we reject her claim.

Our review of the plain language of the notice provision shows

that--with regard to the reporting requirement--the provision is

unambiguous in that it plainly directs Slifer to promptly notify

American Standard in the event of an accident or loss. Thus, we

conclude that the language of the notice provision at issue is

not ambiguous.

- 7 - b. The Language of the Notice Provision

Brown also contends that the notice provision was

merely advisory and not contractually binding because it was not

expressed in mandatory terms--that is, the terms of the notice

provision were not sufficiently imperative. We disagree.

Because Brown essentially contests the effect of the

notice provision of Slifer's insurance policy, the task before us

involves interpreting that provision within the context of

Slifer's and American Standard's intent when they entered into

the contractual agreement.

In Rich v. Principal Life Insurance Co., 226 Ill. 2d

359, 371, 875 N.E.2d 1082, 1090 (2007), the supreme court out-

lined the rules that govern the court's interpretation of insur-

ance policy language as follows:

"When construing the language of an

insurance policy, a court's primary objective

is to ascertain and give effect to the inten-

tions of the parties as expressed by the

words of the policy. [Citations.] Because

the court must assume that every provision

was intended to serve a purpose, an insurance

policy is to be construed as a whole, giving

effect to every provision [citation], and

taking into account the type of insurance

provided, the nature of the risks involved,

and the overall purpose of the contract [ci-

- 8 - tations]. 'All the provisions of the insur-

ance contract, rather than an isolated part,

should be read together to interpret it ***.'

[Citation.] If the words used in the policy

are clear and unambiguous, they must be given

their plain, ordinary, and popular meaning

[citation], and the policy will be applied as

written, unless it contravenes public policy

[citation]."

By its very terms, the insurance policy agreement

between Slifer and American Standard stated that American Stan-

dard would provide insurance to protect Slifer's interests if a

car accident occurred in which (1) he suffered a loss due to the

negligence of another motorist or, in the alternative, (2) it was

determined that he was negligent--that is, American Standard

would defend and indemnify Slifer. In exchange for providing

that insurance protection, American Standard would receive

adequate compensation for assuming the risk it was underwriting

on Slifer's behalf.

Inherent to the successful operation of their contrac-

tual agreement is the intention that if Slifer experienced an

accident or loss--regardless of fault--he would report the claim

to American Standard so that it could not only protect Slifer's

interests according to the terms of the policy but also protect

its interests as well. See Barrington Consolidated High School

v. American Insurance Co., 58 Ill. 2d 278, 281, 319 N.E.2d 25, 27

- 9 - (1974) (A notice provision affords an "insurer an opportunity to

make a timely and thorough investigation and to gather and

preserve possible evidence").

Consistent with the aforementioned intent, the first

and only section that includes a notice provision prominently

appears before the "Agreement" section and is couched in manda-

tory terms. Specifically, immediately after the notice

provision--which we note is the first provision of the policy--

the "Other Duties" subsection specifically refers to the notice

provision by mandating that "[e]ach person claiming any coverage

of this policy must also" perform other functions associated with

processing a claim. (Emphasis added.) In addition, each of the

two subsections following that provision contain mandatory

language pertaining to uninsured-motorist claims and car-damage

claims.

Our review of the plain meaning of the notice provision

of Slifer's insurance policy--within the context of the entire

policy--indicates that he had a contractual obligation to

promptly report the August 2002 accident that resulted in West's

death to American Standard. To conclude otherwise, as Brown

urges, would essentially render the notice provision a nullity,

which would (1) violate our mandate to assume that every provi-

sion serves a purpose and (2) thwart the aforementioned intent of

Slifer and American Standard when they entered into the contrac-

tual agreement. Thus, although we agree that American Standard

could have structured its policy to better convey the mandatory

- 10 - nature of the notice provision, we nonetheless reject Brown's

contention that the notice provision was merely advisory rather

than contractually binding because it was not expressed in

mandatory terms. However, our analysis does not end here.

2. Slifer's Compliance With the Notice Provision

In this case, the uncontested facts are that (1) in

August 2002, Slifer drove a vehicle that struck and killed West;

(2) at the time of the accident, Slifer had a valid insurance

policy with American Standard; (3) Slifer failed to report the

August 2002 accident in accordance with the notice provision of

his insurance policy; and (4) American Standard did not learn of

Slifer's accident until August 6, 2007, over five years later.

Thus, given that we have previously concluded that the notice

provision of Slifer's insurance policy with American Standard was

contractually binding, we further conclude that Slifer breached

the terms of his insurance policy when he failed to notify

American Standard of the August 2002 accident in accordance with

that provision. We find support for our conclusion that Slifer

breached the terms of his insurance policy in the Second Dis-

trict's decision in American Country Insurance Co. v. Bruhn, 289

Ill. App. 3d 241, 682 N.E.2d 366 (1997), which did not address

the binding nature of the notice provision but did involve

similar facts and a similarly worded notice provision.

In Bruhn, 289 Ill. App. 3d at 243, 682 N.E.2d at 367,

Todd Raymond Nebel was driving his vehicle when he struck and

killed two pedestrians. Nebel concealed his involvement in the

- 11 - hit-and-run accident until three years and eight months later

when he confessed to police. Bruhn, 289 Ill. App. 3d at 243, 682

N.E.2d at 367. The administratrix of the decedents' estate

subsequently sued Nebel for negligence, wrongful death, and

intentional infliction of emotional distress. Bruhn, 289 Ill.

App. 3d at 243, 682 N.E.2d at 368. American Country Insurance

Company (American) later filed a complaint for declaratory

judgment, claiming that although it had issued the car insurance

policy in effect at the time of accident, it had no duty to

defend Nebel because he failed, in part, to comply with the

notice provisions of his policy. Bruhn, 289 Ill. App. 3d at 243-

44, 682 N.E.2d at 368. At a hearing on American's complaint, the

trial court granted Bruhn's motion for directed finding after the

close of American's case, finding that Nebel's notice to American

was sufficient under the insurance policy's notice provision.

Bruhn, 289 Ill. App. 3d at 246, 682 N.E.2d at 369.

In reversing the trial court determination, the Second

District concluded, in part, that, while not an absolute bar to

coverage in every circumstance, (1) Nebel had breached the

mandatory notice provision of his insurance policy (Bruhn, 289

Ill. App. 3d at 249, 682 N.E.2d at 371) by not reporting the

accident until three years and eight months later and (2) public

policy did not preclude denial of coverage (Bruhn, 289 Ill. App.

3d at 250-51, 682 N.E.2d at 372-73).

Accordingly, we conclude that the trial court did not

err by granting American Standard's motion for summary judgment.

- 12 - III. CONCLUSION

For the reasons stated, we affirm the trial court’s

judgment.

Affirmed.

McCULLOUGH, P.J., and TURNER, J., concur.

- 13 -