NO. 5-95-0570
IN THE
APPELLATE COURT OF ILLINOIS
FIFTH DISTRICT
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STEPHEN MICHAEL STEFAN, ) Appeal from the
) Circuit Court of
Plaintiff-Appellant, ) Williamson County.
)
v. ) No. 91-MR-17
STATE FARM MUTUAL AUTOMOBILE INSURANCE)
COMPANY and ROBERT BAHR, JR., d/b/a )
Bahr Insurance Agency, ) Honorable
) C. David Nelson,
Defendants-Appellees. ) Judge, presiding.
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JUSTICE GOLDENHERSH delivered the opinion of the court:
Plaintiff, Stephen Michael Stefan, appeals from the judgment
of the circuit court of Williamson County granting a motion to
dismiss in favor of defendants, State Farm Mutual Automobile
Insurance Company (hereinafter State Farm) and Robert Bahr, Jr.,
d/b/a Bahr Insurance Agency (hereinafter Bahr, Jr.).
On appeal, plaintiff raises the following questions for our
consideration: (1) whether the trial court erred in ruling that
State Farm made a proper offer of uninsured motorist coverage
pursuant to the Illinois Insurance Code (the Code) (Ill. Rev. Stat.
1991, ch. 73, par. 613 et seq. (now 215 ILCS 5/1 et seq. (West
1994))), and (2) whether there is a cause of action for breach of
a voluntary undertaking where an insurance producer assumes the
duty of reviewing annually the insured's insurance coverage. We
reverse and remand.
I
On October 12, 1990, plaintiff was involved in an automobile
accident with William Sanson, who struck plaintiff while he was
riding a bicycle. Plaintiff sustained serious injuries as a result
of the accident. Sanson was insured with West American Car
Insurance Company with bodily injury limits of $20,000 per person.
Sanson's insurer settled with plaintiff, paying $20,000, the limits
of its coverage. At the time of the occurrence, plaintiff had
automobile insurance coverage from State Farm, with limits of
$50,000 per person for bodily injury and $100,000 per occurrence,
and uninsured motorist coverage of $20,000 per person and $40,000
per occurrence. Plaintiff did not have underinsured motorist
coverage.
Plaintiff first obtained automobile insurance from State Farm
through Robert Bahr, Sr., prior owner of Bahr Insurance Agency, in
July 1975. Robert Bahr, Sr., procured and maintained insurance
exclusively through State Farm. Subsequent to January 1, 1988,
Bahr, Jr., as successor to Robert Bahr, Sr., offered services to
procure and maintain insurance for plaintiff. Bahr, Jr., continued
to place plaintiff's automobile insurance with State Farm.
Plaintiff filed a two-count complaint, count I against State
Farm and count II against Bahr, Jr. In his fourth amended com-
plaint, filed on December 30, 1994, plaintiff alleges that from
January 1, 1988, through October 23, 1990, plaintiff had, on
occasion, requested that Bahr, Jr., update his policies of insur-
ance, including the automobile insurance. Plaintiff recalled
asking Bahr, Jr., if plaintiff had everything he needed with
respect to his automobile insurance coverage. Bahr, Jr., initiated
State Farm's "Family Insurance Check-Up Program," whose purpose is
"to review the adequacy of the insured's coverage in light of their
specific circumstances and needs and to recommend the appropriate
changes that better serve the insured." Plaintiff alleges that
when plaintiff's automobile insurance was renewed on December 24,
1989, Bahr, Jr., failed to inform plaintiff of the availability and
benefits of underinsured motorist coverage and failed to recommend
that plaintiff procure underinsured motorist coverage. Plaintiff
further alleges that State Farm breached its statutory duty to make
a proper offer of uninsured motorist coverage equal to the bodily
injury liability coverage, thereby denying plaintiff the opportuni-
ty to purchase underinsured motorist protection.
On January 23, 1994, defendants filed a motion to dismiss
plaintiff's fourth amended complaint. To support its motion to
dismiss, defendants submitted the discovery deposition of Kathy
Malone, a service supervisor at State Farm Mutual Insurance
Company's headquarters in Bloomington. In her deposition, Malone
testified that, as service supervisor, she is responsible for
making sure the computer system is programmed to send out statutory
notices concerning uninsured and underinsured motorist coverage, as
well as billing notices. Malone explained that when the new
uninsured and underinsured motorist law became effective, State
Farm began sending out notices offering uninsured and underinsured
motorist coverage beginning on July 1, 1983. State Farm sent to
its policyholders a notice and insert, explaining uninsured and
underinsured coverage, with billings for semiannual and annual
payment plans and with every renewal until June 30, 1984. The
insert and notice informed the insured of the additional coverage
and instructed the insured to return the lower portion of the
notice with his next payment if the insured elected the higher
limits. If the insured failed to return the lower portion with the
next payment, it was assumed that the insured rejected the offer of
additional coverage.
Upon reviewing the tape dump of the computer record and the
company procedures process guide for the uninsured motorist offer,
Malone opined that plaintiff did receive an offer in December 1983
to increase his uninsured motorist limits to match his bodily
injury limits. Malone testified that the tape dump began with a
certain date and ended with a certain date. This indicated that
the mailing of the notices for the uninsured motorist offer and the
insert were sent out in accordance with the program. However, the
tape dump did not contain notations that the uninsured motorist
insert was sent out to a particular insured. Malone based her
conclusions that plaintiff received notice of the uninsured
motorist coverage offer on the fact that plaintiff received
billings in December 1983 and in June 1984. As part of the billing
process during that period of time, the computer would generate
rate data for increased uninsured and underinsured motorist
coverage, which included the information contained in the insert.
On July 25, 1995, the trial court granted defendants' motion
to dismiss, finding that State Farm complied with its obligations
to offer uninsured motorist coverage to plaintiff; that Bahr, Jr.,
was the exclusive agent of State Farm and as such had no indepen-
dent duty to offer plaintiff additional uninsured motorist
coverage; and that Bahr, Jr., did not have a duty by virtue of his
relationship with plaintiff or by virtue of the "Family Insurance
Check-Up" to provide plaintiff with the "highest degree of
protection," since that term is too indefinite and uncertain to be
enforceable. Plaintiff now appeals.
II
Plaintiff contends that the trial court erred in finding that
State Farm complied with its statutory obligation to offer
plaintiff additional uninsured and underinsured motorist coverage
pursuant to then sections 755a-2(1) and (5) of the Code (Ill. Rev.
Stat. 1983, ch. 73, pars. 755a-2(1), (5) (now 215 ILCS 5/143a-2(1),
(4) (West 1994))). Plaintiff asserts that the trial court
improperly dismissed his complaint because the pleadings raised a
material and genuine question of fact regarding plaintiff's alleged
receipt of the notice and insert offering uninsured and underin-
sured motorist coverage, which State Farm claims it sent to plain-
tiff. Plaintiff further argues that because plaintiff made a
timely jury demand, his complaint was improperly dismissed. We
agree.
A complaint should be dismissed only where it "clearly appears
that no set of facts can be proved which would entitle plaintiff to
recover." People ex rel. Hartigan v. Knecht Services, Inc., 216
Ill. App. 3d 843, 860, 575 N.E.2d 1378, 1389 (1991). A reviewing
court can consider anew the pleadings and documents in support of
and in opposition to a motion to dismiss. Gilbert Bros., Inc. v.
Gilbert, 258 Ill. App. 3d 395, 398, 630 N.E.2d 189, 192 (1994).
Where a material and genuine question of fact exists and the
plaintiff has made a timely jury demand, a motion for involuntary
dismissal should be denied. Andrews v. Mid-America Bank & Trust
Co., 152 Ill. App. 3d 139, 143, 503 N.E.2d 1120, 1123 (1987).
A letter properly sent through the mails is presumed to have
reached its destination. Mulholland v. State Farm Mutual Auto
Insurance Co., 171 Ill. App. 3d 600, 607, 527 N.E.2d 29, 33 (1988).
Where the addressee denies receipt of the letter, the receipt
thereof becomes an issue of fact. City of Chicago v. Supreme
Savings & Loan Ass'n, 27 Ill. App. 3d 589, 327 N.E.2d 5, 7 (1975).
In his deposition, plaintiff testified that he did not recall
receiving any notices regarding changes in uninsured and underin-
sured motorist coverage offered by State Farm. Further, plaintiff
testified that no notices ever appeared on the bottom of his
monthly premium billings regarding premium changes related to the
offer of increased uninsured and underinsured motorist coverage.
Moreover, plaintiff stated that initially he mailed in his monthly
premium payments; however, he later changed his method of payment
to automatic withdrawals of premium payments from plaintiff's
checking account. Plaintiff did not remember when this method of
payment began. The record does not indicate when plaintiff
switched his method of payment or whether, with automatic withdraw-
als, plaintiff continued to receive monthly billings by mail or
whether he only received a receipt or some other indication of
payment from State Farm. Malone's deposition testimony does not
address State Farm's practice regarding its notification of
policyholders who made premium payments through checking account
withdrawals. It is not clear when plaintiff began making payments
through automatic withdrawals or how State Farm notified policy-
holders making such payments of the uninsured and underinsured
motorist offer.
The record indicates material and genuine questions of fact
concerning whether plaintiff was given a meaningful offer of
additional uninsured and underinsured coverage by State Farm.
Plaintiff alleges facts that sufficiently state a cause of action.
Accordingly, the trial court erred in granting defendants' motion
to dismiss count I of plaintiff's complaint against State Farm.
III
Plaintiff next argues that this court should recognize a cause
of action for breach of a voluntary undertaking by an insurance
producer. Plaintiff argues that Bahr, Jr., is an insurance
producer pursuant to section 491.1(b) of the Code (215 ILCS
5/491.1(b) (West 1994)). Plaintiff asserts that as an insurance
producer, Bahr, Jr., had a duty to inform plaintiff of available
coverage. Further, plaintiff contends that Bahr, Jr., voluntarily
assumed the duty to review plaintiff's insurance coverage by
initiating an annual "Family Insurance Check-Up." Plaintiff argues
that Bahr, Jr., having assumed this duty, was required to use
ordinary care in discharging his duty to review coverage and Bahr,
Jr., failed to exercise due care in reviewing plaintiff's automo-
bile policy by not advising plaintiff to secure underinsured
motorist coverage.
On the other hand, defendants contend that in paragraph 3 of
count II of plaintiff's fourth amended complaint, plaintiff alleges
that Bahr, Jr., "procures and maintains insurance exclusively
through State Farm" and, consequently, Bahr, Jr., is State Farm's
agent, not plaintiff's agent. Defendants further assert that
because Bahr, Jr., is State Farm's agent, he was not obligated to
procure underinsured motorist coverage for plaintiff, inform
plaintiff of the benefits of underinsured motorist coverage, review
the adequacy of plaintiff's underinsured motorist coverage, or
recommend underinsured motorist coverage. Additionally, defendants
argue that Bahr, Jr.'s use of State Farm's Family Insurance Check-
Up Program does not give rise to a duty to procure underinsured
motorist protection. We agree with plaintiff for the reasons set
out below.
"Whether a person is an insurance agent or an insurance broker
is determined by his acts [citations] and is dependent upon who
called him into action, who controls his movement, who pays him and
whose interests he presents." Browder v. Hanley Dawson Cadillac,
62 Ill. App. 3d 623, 629, 379 N.E.2d 1206, 1210-11 (1978). The
question of whether a broker is an agent for the insured, the
insurer, or both is a factual matter. Browder, 62 Ill. App. 2d at
629, 379 N.E.2d at 1211. "[T]he court must closely examine the
facts in each case to determine whether a seller of insurance is an
agent or broker and to whom he may owe a duty." Browder, 62 Ill.
App. 2d at 629, 379 N.E.2d at 1211. The question of agency is not
a question of law to be decided from the pleadings. Browder, 62
Ill. App. 2d at 629, 379 N.E.2d at 1211. Because the question of
Bahr, Jr.'s agency is a factual matter sufficiently alleged, we
hold that the trial court improperly dismissed count II of
plaintiff's fourth amended complaint.
We next consider plaintiff's contention that Bahr, Jr.,
assumed a duty to annually review the adequacy of plaintiff's
automobile insurance coverage by instituting State Farm's Family
Insurance Check-Up Program.
It is well established that one who assumes to act, even
though voluntarily or gratuitously, must perform the duty undertak-
en with "due care" or "such competence and skill as [one] possess-
es." Frye v. Medicare-Glaser Corp., 153 Ill. 2d 26, 32, 605 N.E.2d
557, 560 (1992). Liability can attach from the negligent perfor-
mance of a voluntary undertaking. Nelson v. Union Wire Rope Corp.,
31 Ill. 2d 69, 74, 199 N.E.2d 769, 773-74 (1964). The duty of care
imposed is limited to the extent of the undertaking. Frye, 153
Ill. at 32, 605 N.E.2d at 560.
Here, defendant Bahr, Jr., voluntarily instituted the State
Farm Family Insurance Check-Up Program. The informational flier
for the Family Insurance Check-Up Program states that the purpose
of the program is to review policyholders' insurance coverage,
assess the policyholders' risk needs, and determine how those needs
can best be met. This indicates that the agents or brokers will
regularly review the policyholder's individual circumstances and
assess the adequacy of the policyholder's coverages. Bahr, Jr.,
did conduct the Family Insurance Check-Up with plaintiff, who has
several insurance policies with defendant. In his complaint,
plaintiff alleges that he relied upon Bahr, Jr.'s expertise and
knowledge concerning his insurance needs. In his evidence
deposition, plaintiff testified that he inquired about the adequacy
of his automobile insurance coverage during a visit to Bahr, Jr.'s
office prior to October 12, 1990. We believe that plaintiff
sufficiently pled facts establishing a cause of action under a
theory of voluntary undertaking. We note that at this stage
plaintiff is not required to prove his case; rather, he must allege
facts sufficient to support liability based on a theory of
voluntary undertaking. Accordingly, we reverse the trial court's
dismissal of count II of plaintiff's complaint.
For the foregoing reasons, the judgment of the circuit court
of Williamson County granting defendants' motion to dismiss
plaintiff's fourth amended complaint is reversed, and the cause
remanded for further proceedings.
Reversed and remanded.
HOPKINS, P.J., and MAAG, J., concur.
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Opinion Filed: November 21, 1996
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Justices: Honorable Richard P. Goldenhersh, J.
Honorable Terrence J. Hopkins, P.J., and
Honorable Gordon E. Maag, J.,
Concur
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Attorneys Thomas F. Crosby, Rick W. Aeilts, Winters, Brewster, Crosby
for & Patchett, 111 West Main, P.O. Box 700, Marion, IL 62959
Appellant
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Attorney Stephen W. Stone, Brandon & Schmidt, P.O. Box 3898,
for Carbondale, IL 62902-3898
Appellee
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