State Farm Mutual Automobile Insurance Co. v. Villicana , 286 Ill. App. 3d 1013 ( 1997 )

                             No. 2--96--0405

_________________________________________________________________

                                 IN THE

                       APPELLATE COURT OF ILLINOIS

                             SECOND DISTRICT

_________________________________________________________________

STATE FARM MUTUAL AUTOMOBILE         )  Appeal from the Circuit Court

INSURANCE COMPANY,                   )  of McHenry County.

                                    )

    Plaintiff-Appellee,             )

                                    )

v.                                   )  No. 96--MR--5

                                    )

JENNIFER VILLICANA,                  )  Honorable

                                    )  James C. Franz,

    Defendant-Appellant.            )  Judge, Presiding.

_________________________________________________________________

    JUSTICE RATHJE delivered the opinion of the court:

    Defendant, Jennifer Villicana (Jennifer), appeals from an

order of the circuit court of McHenry County granting summary

judgment to the plaintiff, State Farm Mutual Automobile Insurance

Company (State Farm).  

    On appeal, Jennifer raises the following issues:  (1) whether

the exclusion contained in the State Farm insurance policy at issue

violates public policy; (2) whether an ambiguity in that policy

exists; and (3) whether the case authority relied on by State Farm

in support of its motion for summary judgment is distinguishable or

is, in fact, supportive of the invalidity of the exclusion

contained in the policy.  

    The facts of this case are not in dispute.  Jennifer was a

passenger in a 1990 Ford Mustang being driven by Jay Rebscher when

the Mustang went off the road and crashed into a tree.  As a result

of the accident Jennifer sustained personal injuries.  

    The Mustang was owned by Bernard J. Villicana, Jr., Jennifer's

father.  Mr. Villicana had insured the Mustang with State Farm

under an automobile policy which provided bodily injury "liability"

and "underinsured" limits of $100,000 per person/$300,000 per

occurrence.  Under a separate policy with State Farm, Mr. Villicana

insured his 1990 Buick LeSabre.  That policy provided "liability"

and "underinsured motorist coverage" limits in the sum of $250,000

per person/$500,000 per occurrence.  Mr. Rebscher had insurance

coverage on his own vehicle (not involved in the accident) through

Coronet Insurance Group (Coronet) with bodily injury "liability"

limits in the sum of $20,000 per person/$40,000 per occurrence.

    State Farm paid Jennifer the $100,000 limit of liability

coverage on the Mustang.  Jennifer also received the $20,000 limit

of liability coverage from Coronet, Mr. Rebscher's insurer.

However, due to the amount of the damages she incurred, Jennifer

filed a claim with State Farm under Mr. Villicana's Buick's

"underinsured" coverage.  State Farm denied her claim and filed the

instant declaratory judgment action maintaining that its

"Underinsured Motor Vehicle--Coverage W" did not provide coverage

to Jennifer.  That portion of the policy on the Buick provided as

follows:

    "UNDERINSURED MOTOR VEHICLE--COVERAGE W

         You have this coverage if "W" appears in the "Coverages"

    space on the declarations page.

         We will pay damages for bodily injury an insured is

    legally entitled to collect from the owner or driver of an

    underinsured motor vehicle.  The bodily injury must be caused

    by accident or use of an underinsured motor vehicle.

                                  * * *

         Underinsured Motor Vehicle--means a land vehicle:

              1.   the ownership, maintenance or use of which:

                   a.   is insured or bonded for bodily injury at

              the time of the accident; and

                   b.   has resulted in bodily injury of an

                   insured; but

              2.   the limits of liability for bodily injury

         liability:

                   a.   are less than the limits you carry for

              underinsured motor vehicle coverage under this

              policy; or

                   b.   have been reduced by payments to persons

              other than an insured to less than the limits you

              carry for underinsured motor vehicle coverage under

              this policy.

              An underinsured motor vehicle does not include a

         land motor vehicle:

              1.   insured under the liability coverage of this

         policy;

              2.   furnished for the regular use of you, your

         spouse or any relative;

              3.   owned by any government or any of its political

         subdivisions or agencies;

              4.   while located for use as premises; or

              5.   designed for use mainly off public roads, and

         not able to be licensed for public road use.  This does

         not apply while the vehicle is on public roads."

    The policy also provides the following definitions:

              "Relative - means a person related to you or your

         spouse by blood, marriage or adoption who lives with you.

         It includes your unmarried and unemancipated child away

         at school.

              Spouse - means your husband or wife while living

         with you.

              You or Your - means the named insured or insured

         shown on the declarations page."

    In its declaratory judgment action, State Farm contended that

because the Mustang involved in the accident was "furnished for the

regular use of" Mr. Villicana and Jennifer, there was no

underinsured coverage applicable to Jennifer's claim under the

Buick policy.  Jennifer answered the complaint, alleging that the

above exclusion violated the public policy underlying underinsured

coverage, as mandated by section 143a--2(4) of the Illinois

Insurance Code (215 ILCS 5/143a--2(4) (West 1994)).

    Both State Farm and Jennifer filed motions for summary

judgment.  The trial court granted State Farm's motion for summary

judgment.  This appeal followed.

    Summary judgment is proper when the pleadings, affidavits, and

other documents on file, construed in favor of the nonmovant, show

that there is no genuine issue of material fact and that the movant

is entitled to judgment as a matter of law.  Espinoza v. Elgin,

Joliet & Eastern Ry. Co., 165 Ill. 2d 107, 113 (1995).  We review

the entry of summary judgment de novo.  In re Estate of Hoover, 155

Ill. 2d 402, 411 (1993).

    There are no facts in dispute in this case.  We note that the

parties are in agreement that the above-recited policy exclusion,

if valid, would deny Jennifer the underinsured coverage benefit

under the Buick policy.  However, Jennifer contends, as she did in

the trial court, that the language of the exclusion violates

Illinois public policy.  Furthermore, both parties submit that this

policy provision has never been construed by an Illinois court.

Therefore, both parties rely heavily on cases from other

jurisdictions.

    We begin by examining the pertinent provisions of the Illinois

Insurance Code (Code) (215 ILCS 5/1 et seq. (West 1994)).  Section

143a--2(4) of the Code provides that automobile insurance policies

must provide underinsured-motorist coverage in an amount equal to

the total amount of uninsured-motorist coverage.  215 ILCS

5/143a--2(4) (West 1994).  The Code defines an "underinsured motor

vehicle" as

         "a motor vehicle whose ownership, maintenance or use has

    resulted in bodily injury or death of the insured, as defined

    in the policy, and for which the sum of the limits of

    liability under all bodily injury liability insurance policies

    or ***, is less than the limits for underinsured coverage

    provided the insured as defined in the policy at the time of

    the accident.  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."  215 ILCS

    5/143a--2(4) (West 1994).

    The purpose of section 143a--2(4) is to place the insured in

the same position he would have occupied if the tortfeasor had

carried adequate insurance.  Sulser v. Country Mutual Insurance

Co., 147 Ill. 2d 548, 555 (1992).  Section 7--203 of the Illinois

Vehicle Code (625 ILCS 5/7--203 (West 1994)) requires insurance

coverage for bodily injury/death in the minimum amount of $20,000

for one person and $40,000 for two people in any one motor vehicle

accident plus minimum coverage of $15,000 for injury or destruction

of property of others in any one motor vehicle accident.  In the

case of underinsured coverage, under section 143a--2(4), the

coverage must be equal to the total amount of uninsured-motorist

coverage provided in the polity, where the uninsured coverage

exceeds the limits set forth in section 7--203.

    Given that this is a case of first impression and while both

parties have submitted an extensive list of cases from other

jurisdictions, we, nevertheless, believe that we can resolve this

issue utilizing authority from this jurisdiction.  Both parties

have cited with favor Luechtefeld v. Allstate Insurance Co., 167

Ill. 2d 148 (1995).  Although this case deals with uninsured-

motorist coverage, we believe the reasoning of that case applies

equally to similar issues involving underinsured coverage since the

underlying consideration for both the uninsured and the

underinsured statutory provisions is to place the insured in the

same position he would have occupied if the tortfeasor had carried

adequate insurance.  See Sulser, 147 Ill. 2d at 555.

    In Luechtefeld, while the plaintiff was operating his

motorcycle, he was injured when he was struck by an uninsured

driver.  The motorcycle was insured under a policy with Pekin

Insurance Company, which provided uninsured-motorist coverage with

limits of $20,000 per person and $40,000 per accident.  The

plaintiff also was the named insured on a policy with Allstate that

insured three vehicles owned by the plaintiff.  The Allstate policy

provided uninsured-motorist coverage of $100,000 per

person/$300,000 per accident.  The plaintiff received policy limits

of $20,000 under the Pekin policy.  However, since his injuries

exceeded the $20,000 amount, he filed a claim with Allstate to

collect under the uninsured-motorist provisions of that policy.  

    Allstate denied the claim on the basis of language in its

policy that excluded coverage when the insured was in a vehicle

insured for uninsured-motorist coverage under another policy.  The

plaintiff filed an action for declaratory judgment, alleging inter

alia, that the above exclusion violated public policy.  The trial

court granted summary judgment to Allstate.  However, the appellate

court reversed, finding that the exclusion did violate public

policy.  

    The supreme court granted leave to appeal and reversed the

decision of the appellate court, concluding that the exclusion did

not violate public policy.  The court first noted that the

legislative purpose was to place the policyholder in substantially

the same position he would have occupied had he been killed or

injured if the wrongful driver had had the minimum liability

insurance required by the Illinois Vehicle Code.  It then

determined that the enforcement of the exclusionary provision in

the Allstate policy would not violate the legislative purpose

because, despite the exclusion, the plaintiff received the $20,000

in uninsured-motorist coverage which he would have received if the

driver of the uninsured vehicle had obtained the minimum liability

insurance required by law.  

    The supreme court then turned to the plaintiff's argument that

under its decision in Squire v. Economy Fire & Casualty Co. 69 Ill.

2d 167 (1977), when an insured purchases an insurance policy that

includes uninsured-motorist coverage, that policy provides

uninsured-motorist protection for any vehicle the insured owns or

is injured in, even if the vehicle is insured under another policy.

The plaintiff further argued that, under Squire, the payment of the

premium to Allstate for uninsured-motorist coverage for one of his

automobiles entitled him to coverage for any injury caused by an

uninsured motorist, regardless of whether the injury occurred in a

vehicle listed in the Allstate policy; otherwise, the premium he

paid to Pekin was redundant and unnecessary.  

    The supreme court rejected the plaintiff's reading of Squire.

The court pointed out that the policy at issue in Squire excluded

uninsured-motorist coverage whenever the insured was injured in a

vehicle not listed in the policy regardless of whether there was

uninsured-motorist coverage on that second vehicle.  Thus, the

enforcement of the exclusion could have left the insured without

any protection against injuries caused by uninsured motorists in

some circumstances.  The court noted as follows:

         "The Allstate exclusionary clause does not deprive the

    plaintiff of uninsured-motorist coverage solely because the

    vehicle in which he was riding at the time of the accident was

    not listed in the Allstate policy.  On the contrary, the

    exclusionary clause takes effect only if the insured is

    injured in a vehicle that has uninsured-motorist coverage

    under another policy."  Luechtefeld, 167 Ill. 2d at 155.

    What we glean from Luechtefeld is that an exclusion will not

be deemed violative of public policy if it does not prevent the

insured from being placed in the same position he would occupy, in

the event of an accident, had the tortfeasor had the coverage

required by law.  The decision in Luechtefeld also makes clear that

the payment of multiple premiums does not allow an insured to

"stack" coverage where the exclusionary language only limits, but

does not totally bar, recovery.  Nor is public policy violated

simply because the plaintiff pays multiple premiums for uninsured-

(underinsured) motorist coverage but is limited under the policy to

a single recovery.  Luechtefeld, 167 Ill. 2d at 157-58.

    Applying the reasoning of Luechtefeld to the cause before us,

we conclude that the exclusion contained in the Buick policy

violates public policy.  The Buick policy excluded from

underinsured motorist coverage any vehicle "furnished for the

regular use of you, your spouse or any relative."  In this cause,

there is no dispute that the Mustang was a vehicle "furnished for

the regular use of" Jennifer, who was a relative of the insured, as

defined by the policy terms.  Thus, had the Mustang not been

covered by insurance or was underinsured, Jennifer could not have

recovered under the Buick policy.  Unlike the exclusion in

Luechtefeld, the exclusion in the Buick policy here would operate

regardless of whether or not there was underinsured-motorist

coverage available under the Mustang policy.  See Luechtefeld, 167

Ill. 2d at 155.

    The difficulty in this cause is that the underinsured-

motorist coverage available under the Mustang policy has placed

Jennifer in the same position she would have occupied had Mr.

Rebscher carried the same amount of insurance on his vehicle as was

carried on the Mustang.  Thus, the purpose of section 143a--2(4)

has been satisfied under the particular facts in this cause.

Nevertheless, since the exclusion in the Buick policy is not

limited to those situations in which underinsurance coverage is

available under another applicable policy, under our reading of

Luechtefeld, the exclusion in the Buick policy is in violation of

the public policy expressed in section 143a--2(4) of the Code

because it could operate "in some circumstances" to leave the

insured without any protection against an underinsured motorist.

See Luechtefeld, 167 Ill. 2d at 155.  

    We reverse the order of the circuit court granting summary

judgment to plaintiff, and this cause is remanded for the entry of

an order granting Jennifer's motion for summary judgment.

    The judgment of the circuit court of McHenry County is

reversed, and the cause is remanded.

    Reversed and remanded with directions

    BOWMAN and DOYLE, JJ., concur.