Smith v. Allstate Insurance Co.

686 N.E.2d 74, 292 Ill. App. 3d 432

• Court: Appellate Court of Illinois
• Decided: October 20, 1997
• Docket: 1-95-1475
• Status: Published

Opinions

PRESIDING JUSTICE CAMPBELL

delivered the opinion of the court:

Plaintiff Larry Smith appeals an order of the circuit court of Cook County granting judgment on the pleadings to defendant Allstate Insurance Company (Allstate) in a declaratory judgment action.

The record on appeal indicates that on July 8, 1994, plaintiff filed a complaint for declaratory judgment against defendant. The complaint alleged that on January 21, 1993, plaintiff was driving a car east on Golf Road, near the intersection with Narragansett Street, in Morton Grove. Michael Garrity was driving west on Golf Road; Brian Barry and Brendan Mahoney were passengers in the car Garrity was driving. According to the complaint, Garrity negligently caused a collision between the car he was driving and Smith’s car. Plaintiff’s complaint further alleges that the collision caused him to suffer severe and permanent injuries, including spinal injuries, incomplete paraplegia, prosthetic hypertrophy and sexual dysfunction.

Plaintiff, plaintiff’s wife, Mahoney, the estate of Barry and three Barrys individually (the Barrys), all filed suit against Michael Garrity and John Garrity, the owner of the car operated by Michael Garrity. On January 21, 1993, Michael Garrity was an insured driver under a policy issued by State Farm Insurance Company (State Farm) to John Garrity, the owner of the car operated by Michael Garrity. The single-limit liability coverage under the State Farm policy was $100,000 per person / $300,000 per occurrence. Michael Garrity also had $2 million in umbrella coverage from State Farm at the time of the collision. Thus, the maximum coverage available to satisfy the aforementioned claims was $2,300,000.

During the pretrial proceedings in this related matter, State Farm agreed to tender the policy limits on behalf of the Garritys, provided that the matter was settled as to all four claimants. On March 16, 1994, the trial court entered an order granting the Garritys’ motion for a good-faith settlement order. The order dismissed the claims against the Garritys with prejudice and without costs, with the following amounts being paid in settlement: (1) Larry Smith— $600,000; (2) Phyllis Smith — $350,000; (3) the Barrys — $950,000; and (4) Mahoney — $400,000. A claim filed by the Barrys against Larry Smith was also dismissed with prejudice, without costs or any amount being paid in settlement.

Plaintiff’s complaint for declaratory judgment alleged that on January 21, 1993, plaintiff’s car was insured by defendant Allstate. Plaintiff had $1 million of underinsured motorist (UIM) coverage under the Allstate policy. Plaintiff demanded that Allstate tender a $400,000 draft, representing the difference between the limit of the Allstate policy and the amount plaintiff received in settlement of his claim against the Garritys. Allstate refused on the ground that the limits of the Garritys’ policies exceeded the Allstate UIM coverage.

On October 17, 1994, defendant Allstate filed a motion for judgment on the pleadings, pursuant to section 2 — 615(e) of the Illinois Code of Civil Procedure (735 ILCS 5/2 — 615(e) (West 1994)). On March 31, 1995, following a hearing on the matter, the trial court granted defendant’s motion. Plaintiff filed a timely notice of appeal to this court on April 25, 1995.

I

On appeal, plaintiff contends that the trial court erred in granting judgment on the pleadings. A motion for judgment on the pleadings tests the sufficiency of the pleadings by determining whether the plaintiff is entitled to the relief sought by the complaint or, alternatively, whether the defendant by his or her answer has set up a defense that would entitle him or her to a hearing on the merits. TDC Development Corp. v. First Federal Savings & Loan Ass’n, 204 Ill. App. 3d 170, 173, 561 N.E.2d 1142, 1144 (1990). In deciding the motion, the trial court must examine all pleadings on file to determine whether a material factual dispute exists or whether the controversy can be resolved strictly as a matter of law. TDC Development Corp., 204 Ill. App. 3d at 173, 561 N.E.2d at 1144. Judgment on the pleadings is proper if only questions of law and not of fact exist after the pleadings have been filed. Walker v. State Board of Elections, 65 Ill. 2d 543, 359 N.E.2d 113 (1976).

Although a motion for judgment on the pleadings is similar to a motion for summary judgment insofar as both suggest that no material issue of fact exists, a judgment on the pleadings must rely on the allegations of the complaint to establish the absence of material fact, whereas summary judgment may rely on affidavits and other documents. Waterfront Estates Development, Inc. v. City of Palos Hills, 232 Ill. App. 3d 367, 371-72, 597 N.E.2d 641, 645 (1992). In addition, the well-pleaded allegations of the nonmoving party and inferences therefrom are taken as true. See Mitchell v. Waddell, 189 Ill. App. 3d 179, 182, 544 N.E.2d 1261, 1262-63 (1989). Given the procedural posture of the case and that the issues concern the interpretation of a statute, the standard of review is de novo.

II

The sole issue on appeal is the interpretation of section 143a— 2(4) of the Illinois Insurance Code (215 ILCS 5/143a — 2(4) (West 1992)). In recent years, this court has been called upon to rule on the issue of whether an insured may recover under his or her underinsured motorist coverage where the person responsible for the occurrence has coverage limits higher than the insured’s underinsured motorist coverage limit, but multiple claimants have exhausted the coverage. On March 31, 1995, the date the trial court granted judgment on the pleadings, every district of this court to consider the issue had ruled in favor of the insurer. Golladay v. Allied American Insurance Co., 271 Ill. App. 3d 465, 648 N.E.2d 157 (1st Dist. 1995); Illinois Farmers Insurance Co. v. Tabor, 267 Ill. App. 3d 245, 642 N.E.2d 159 (2d Dist. 1994); Purlee v. Liberty Mutual Fire Insurance Co., 260 Ill. App. 3d 11, 631 N.E.2d 433 (5th Dist. 1994); Moriconi v. Sentry Insurance of Illinois, Inc., 193 Ill. App. 3d 904, 550 N.E.2d 637 (4th Dist. 1990). The fifth district, however, has recently reversed its position on this issue. Hathaway v. Standard Mutual Insurance Co., 285 Ill. App. 3d 67 (1996); Cummins v. Country Mutual Insurance Co., 281 Ill. App. 3d 5, 666 N.E.2d 909 (1996), appeal allowed, 168 Ill. 2d 586 (1996).¹ The first district, sixth division, has followed Hathaway in a case outside the multiple-claimant context. Koperski v. Amicus Mutual Insurance Co., 287 Ill. App. 3d 494, 678 N.E.2d 734 (1997).

The fundamental principle of statutory construction is to ascertain and give effect to the intention of the legislature. Varelis v. Northwestern Memorial Hospital, 167 Ill. 2d 449, 454, 657 N.E.2d 997, 999 (1995). Our supreme court has stated that, in enacting section 143a — 2(4), "the legislature intended 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 the policyholder.” Sulser v. Country Mutual Insurance Co., 147 Ill. 2d 548, 558, 591 N.E.2d 427, 430 (1992). The Sulser court also stated that the purpose of section 143a — 2(4) was "to place the insured in the same position he would have occupied if the tortfeasor had carried adequate insurance.” Sulser, 147 Ill. 2d at 555, 591 N.E.2d at 429. The Sulser court added that section 143a — 2(4) was intended to avoid "the absurdity of a situation where a policyholder would receive fewer benefits in the fortuitous event of being injured by an underinsured rather than by an uninsured motorist.” Sulser, 147 Ill. 2d at 557, 591 N.E.2d at 430; cf. Hoglund v. State Farm Mutual Automobile Insurance Co., 148 Ill. 2d 272, 280, 592 N.E.2d 1031, 1035 (1992) (rejecting insurer’s interpretation of insurance policy that would violate public policy behind uninsured motorist statute and deny policyholder substantial economic value for premiums paid).

In this case, the interpretation of section 143a — 2(4) offered by Allstate would lead to the sort of result condemned in Sulser. If the sum of the applicable limits of the tortfeasor’s coverage exceeds the plaintiff’s underinsured motorist limits, the plaintiff would be placed in a worse position than he would have occupied if injured by a motorist who carried liability insurance in the same amount as the policyholder. In order to place the insured in the same position he would have occupied if the tortfeasor had carried adequate insurance, it is necessary to consider that what may be adequate insurance in a single-claimant situation may not always be adequate coverage in a multiple-claimant situation. Otherwise, the insured could be left in the situation of receiving no benefits under a policy for which he has paid a premium due to the fortuitous event of being injured along with others. In addition, cases such as Golladay did not address the argument based on Sulser or Hoglund, as it apparently was not raised there.

Accordingly, we conclude that Garrity’s motor vehicle may be considered an underinsured motor vehicle within the scope of section 143a — 2(4). This construction conforms to the legislative intent announced by the supreme court. "We do not decide any issue regarding other subsections of section 143a — 2 or the language of the policy at this time, as section 143a — 2(4) was the sole issue before the trial court.

For all of the aforementioned reasons, the judgment of the circuit court of Cook County is vacated and the case is remanded for further proceedings consistent with this opinion.

Vacated and remanded.

1 The Illinois Supreme Court issued an opinion affirming the appellate court in Cummins on October 2,1997. Cummins v. Country Mutual Insurance Co., 178 Ill. 2d 474 (1997). We note, however, that the opinion may be withdrawn, changed or corrected pending the filing of a petition for rehearing or the disposition of such a petition. See 155 Ill. 2d Rs. 367, 368. Moreover, as this court is denying the petition for rehearing, the date of judgment remains July 21, 1997. PSL Realty Co. v. Granite Investment Co., 86 Ill. 2d 291, 427 N.E.2d 523 (1981).