Progressive Direct Insurance v. Jungkans

2012 IL App (2d) 110939, 972 N.E.2d 807
CourtAppellate Court of Illinois
DecidedJune 27, 2012
Docket2-11-0939
StatusPublished
Cited by7 cases

This text of 2012 IL App (2d) 110939 (Progressive Direct Insurance v. Jungkans) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Progressive Direct Insurance v. Jungkans, 2012 IL App (2d) 110939, 972 N.E.2d 807 (Ill. Ct. App. 2012).

Opinion

ILLINOIS OFFICIAL REPORTS Appellate Court

Progressive Direct Insurance Co. v. Jungkans, 2012 IL App (2d) 110939

Appellate Court PROGRESSIVE DIRECT INSURANCE COMPANY, Plaintiff- Caption Appellee, v. KYLE JUNGKANS, Defendant-Appellant.

District & No. Second District Docket No. 2-11-0939

Filed June 27, 2012

Held An insurance company was not entitled to a declaration that its insured (Note: This syllabus violated their policy’s cooperation clause when the insured settled with constitutes no part of the driver of the vehicle that injured him, for the limits of the driver’s the opinion of the court policy, without notice to the insurer, where the driver was judgment proof but has been prepared and the insurer was not prejudiced by the settlement. by the Reporter of Decisions for the convenience of the reader.)

Decision Under Appeal from the Circuit Court of Kendall County, No. 10-MR-7; the Review Hon. Timothy J. McCann, Judge, presiding.

Judgment Judgment for plaintiff reversed; judgment for defendant entered. Counsel on Michael W. Rathsack, of Law Offices of Michael W. Rathsack, of Appeal Chicago, and Kathleen T. Zellner and Douglas H. Johnson, both of Kathleen T. Zellner & Associates, P.C., of Downers Grove, for appellant.

Bill Porter and Reagan F. Goins, both of Chilton, Yambert & Porter, LLP, of Geneva, for appellee.

Panel JUSTICE McLAREN delivered the judgment of the court, with opinion. Justices Zenoff and Birkett concurred in the judgment and opinion.

OPINION

¶1 Defendant, Kyle Jungkans, was injured while he was riding in a car driven by Billy Watts. He settled with Watts and Watts’ insurer, State Farm Insurance Companies (State Farm), for State Farm’s policy limit, then sought underinsured motorist (UIM) coverage under his policy with plaintiff, Progressive Direct Insurance Company. Plaintiff denied coverage, on the basis that defendant’s failure to notify it in advance of the settlement violated the policy’s cooperation clause. Plaintiff filed an action for a declaratory judgment (735 ILCS 5/2-701 (West 2010)). The trial court granted plaintiff summary judgment (735 ILCS 5/2-1005(c) (West 2010)). Defendant appeals. We reverse the judgment and enter judgment for defendant. ¶2 Defendant’s policy with plaintiff included UIM coverage, with limits of $250,000 per person and $500,000 per occurrence. On September 24, 1999, defendant was seriously injured while riding in a car driven by Watts. Jennifer Walker owned the car, and her policy with State Farm had limits of $100,000 per person and $300,000 per occurrence. Defendant sued Watts for negligence. On November 6, 2009, he settled with Watts for the policy limit of $100,000. Defendant and Watts signed a release discharging Watts and Walker from future liability for the accident. Defendant did not notify plaintiff of the release until November 30, 2009. ¶3 Defendant then sought UIM coverage from plaintiff. Plaintiff denied the coverage, asserting that, by releasing Watts, defendant had violated the policy’s cooperation clause and had cut off plaintiff’s right of subrogation against Watts and State Farm. Plaintiff filed a complaint for a declaratory judgment to this effect, attaching a copy of the policy. The two pertinent policy provisions follow. The first is the cooperation clause: “NOTICE AND CONSENT REQUIREMENTS An insured person must notify us in writing at least 30 days before entering into any settlement with the owner or operator of an uninsured motor vehicle or an

-2- underinsured motor vehicle, or any liability insurer. In order to preserve our right of subrogation, we may elect to pay any sum offered in settlement by, or on behalf of, the owner or operator of an uninsured motor vehicle or an underinsured motor vehicle. If we do this, the insured person agrees to assign to us all their rights against the owner or operator of the uninsured motor vehicle or underinsured motor vehicle, to the extent of our payment. Any judgment or settlement for damages against an owner or operator of an uninsured motor vehicle or an underinsured motor vehicle that arises out of a lawsuit brought without our written consent is not binding on us.” (Emphases in original.) The second pertinent provision reads: “OUR RIGHTS TO RECOVER PAYMENT We are entitled to the rights of recovery that the insured person to whom payment was made has against another, to the extent of our payment. That insured person may be required to sign documents related to the recovery and must do whatever else we require to help us exercise those recovery rights, and do nothing after an accident or loss to prejudice those rights. However, we may not assert rights of recovery against the owner or operator of an uninsured motor vehicle or an underinsured motor vehicle, if the person seeking coverage under Part III–Uninsured/Underinsured Motorist Coverage provides us with written notice at least 30 days prior to entering into a settlement that an offer of settlement has been made by, or on behalf of, the owner or operator of an uninsured motor vehicle or an underinsured motor vehicle, and if we do not elect to pay to, or on behalf of, that person an amount equal to the amount offered in full settlement by, or on behalf of, the owner or operator of the uninsured motor vehicle or underinsured motor vehicle. When an insured person has been paid by us and also recovers from another, the amount recovered will be held by the insured person in trust for us and reimbursed to us to the extent of our payment. If we are not reimbursed, we may pursue recovery of that amount directly against that insured person. If an insured person recovers from another without our written consent, the insured person’s right to payment under any affected coverage will no longer exist. *** These provisions will be applied in accordance with state law.” (Emphases in original.) ¶4 Plaintiff’s complaint contended that, by releasing Watts without first timely notifying plaintiff, defendant violated the cooperation clause and destroyed plaintiff’s right of subrogation, and that, as a result, defendant had forfeited any UIM payments. ¶5 Defendant moved to dismiss the complaint (see 735 ILCS 5/2-619(a)(9) (West 2010)). As pertinent here, he argued that, even if he had violated the cooperation clause, plaintiff still could not recover. That was because, since the time of the accident, Watts had no significant assets, so that plaintiff had suffered no substantial prejudice from losing its subrogation right. ¶6 Defendant’s motion attached several documents. The first, a letter dated January 22,

-3- 2010, from Edward R. Kirby & Associates, Inc. (Kirby), a private investigator, to defendant’s attorney, Kathleen T. Zellner & Associates, P.C. (Zellner), stated that Kirby’s “limited investigation” had shown that Watts’ only “readily identifiable” assets were three 1995 motor vehicles. Moreover, there was an unsatisfied 2005 judgment against him for $5,249; two paternity suits had been filed against him; and, on January 8, 2010, he had been sentenced to four years in prison for aggravated driving under the influence of alcohol, apparently based on the accident that had injured defendant. The letter concluded, “Given that [Watts] is currently incarcerated and we find no immediate assets, we are discontinuing any further investigation at this time.” ¶7 Defendant’s motion attached another letter from Kirby to Zellner, dated February 18, 2010, stating that a “limited investigation” had revealed that Walker had no “assets of note” other than two vehicles, including the car involved in the accident.

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2012 IL App (2d) 110939, 972 N.E.2d 807, Counsel Stack Legal Research, https://law.counselstack.com/opinion/progressive-direct-insurance-v-jungkans-illappct-2012.