Crowley v. Empire Fire and Marine Insurance Co. , 432 Ill. Dec. 104 ( 2019 )

2019 IL App (2d) 180752
No. 2-18-0752
Opinion filed June 18, 2019
______________________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
SECOND DISTRICT
______________________________________________________________________________
BARBARA CROWLEY, Individually ) Appeal from the Circuit Court
and as Special Administrator of the Estate ) of De Kalb County.
of Robert T. Crowley, Deceased, )
)
Plaintiff-Appellee, )
)
v. ) No. 17-MR-305
)
EMPIRE FIRE AND MARINE INSURANCE )
COMPANY; ENTERPRISE LEASING )
COMPANY OF CHICAGO, LLC; )
ENTERPRISE HOLDINGS, INC.; and )
THOMAS BRUEN, )
)
Defendants )
) Honorable
(Empire Fire and Marine Insurance Company, ) William P. Brady,
Defendant-Appellant). ) Judge, Presiding.
______________________________________________________________________________
JUSTICE SCHOSTOK delivered the judgment of the court, with opinion.
Presiding Justice Birkett and Justice Hutchinson concurred in the judgment and opinion.
OPINION
¶1 This case concerns whether an exclusion in a supplemental insurance policy that Empire
Fire and Marine Insurance Company (Empire) issued to John Bruen was unenforceable as a
matter of public policy. The exclusion applied if the insured was under the influence of alcohol
or drugs. The circuit court of De Kalb County determined that the intoxication exclusion was
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unenforceable and therefore entered summary judgment in favor of the plaintiff, Barbara
Crowley. Empire appeals from the trial court’s order. We reverse.
¶2 I. BACKGROUND
¶3 On June 12, 2015, John Bruen rented a 2015 Volkswagen Jetta from Enterprise. He
purchased “full coverage” insurance, which included “Supplemental Liability Protection” (SLP
or excess policy). The insurance was provided by Empire. The insurance policy provided
coverage through a surety bond in the amount of $100,000, with the potential for an additional
$900,000 of excess liability coverage. The SLP policy included an exclusion that the insurance
did not apply to a loss where the insured was under the influence of alcohol or drugs. The rental
agreement listed Thomas Bruen as an additional authorized driver of the rental car.
¶4 On June 13, 2015, Thomas Bruen, while driving the rental car, was involved in a motor
vehicle accident that killed Robert Crowley and injured his wife Barbara Crowley. Thomas
Bruen had marijuana, cocaine, and opiates in his system at the time of the accident, and he was
subsequently convicted of aggravated driving under the influence of drugs (625 ILCS 5/11-
501(d)(1)(C), (F) (West 2014)).
¶5 On May 1, 2017, Barbara Crowley filed a personal-injury complaint against Thomas
Bruen. She alleged that Thomas Bruen’s negligent operation of the rental car caused the
accident and the resulting injuries to her and her late husband.
¶6 On September 29, 2017, Barbara Crowley filed a complaint against Enterprise Leasing
Company of Chicago, LLC, and Enterprise Holdings, Inc. (Enterprise defendants), as well as
Empire, seeking a declaration that the Empire excess policy provided coverage for the claims
that she had asserted against Thomas Bruen in the underlying case.
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¶7 On January 16, 2018, Crowley filed a motion for a judgment on the pleadings against
Empire. She argued that Empire was obligated to provide coverage based on its insurance
contract with John Bruen. She asserted that the intoxication exclusion in the Empire policy was
void because it was contrary to Illinois public policy.
¶8 On February 23, 2018, Empire filed a motion for summary judgment on Crowley’s
action. Empire argued that, based on the language of the insurance contract, Thomas Bruen was
not entitled to coverage, because he was intoxicated at the time of the accident. Empire insisted
that the insurance contract was neither ambiguous nor against public policy.
¶9 On July 18, 2018, the trial court denied Empire’s motion for summary judgment and
indicated that it would treat Crowley’s motion for judgment on the pleadings as a motion for
summary judgment.
¶ 10 On August 15, 2018, the trial court granted Crowley’s motion for summary judgment.
Relying on Hertz Corp. v. Garrott, 238 Ill. App. 3d 231 (1992), the trial court found that the
intoxication exclusion in Empire’s SLP policy was unenforceable as against public policy and
that the Empire policy provided an additional $900,000 of excess coverage. The trial court also
granted Crowley’s motion to nonsuit the Enterprise defendants and found that its order resolved
all matters in controversy between the parties. Empire thereafter filed a timely notice of appeal.
¶ 11 II. ANALYSIS
¶ 12 The issue on appeal is whether the trial court erred in granting summary judgment to
Crowley. Appellate review of a summary judgment ruling is de novo. AUI Construction Group,
LLC v. Vaessen, 2016 IL App (2d) 160009, ¶ 16. Summary judgment is appropriate where “the
pleadings, depositions, and admissions on file, together with the affidavits, if any, show that
there is no genuine issue as to any material fact and that the moving party is entitled to a
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judgment as a matter of law.” 735 ILCS 5/2-1005(c) (West 2016). The interpretation of an
insurance policy and the coverage provided are questions of law that are appropriate for
resolution through summary judgment. Crum & Forster Managers Corp. v. Resolution Trust
Corp., 156 Ill. 2d 384, 391 (1993). The policy should be enforced as written unless the policy
provision in question is ambiguous or contravenes public policy. Safeway Insurance Co. v.
Hadary, 2016 IL App (1st) 132554-B, ¶ 21; Pahn v. State Farm Mutual Automobile Insurance
Co., 291 Ill. App. 3d 343, 345 (1997).
¶ 13 Here, Crowley does not argue that the intoxication exclusion barring coverage to Thomas
Bruen is ambiguous. Rather, she contends that the exclusion is unenforceable because it
contravenes public policy. The Illinois General Assembly declared it to be the public policy of
this state that owners and operators of motor vehicles carry primary liability insurance coverage
when it passed the Illinois Safety and Family Financial Responsibility Law (Financial
Responsibility Law) (625 ILCS 5/7-601(a) (West 2016)), requiring each motorist to have
minimum liability insurance coverage regardless of fault. See Nelson v. Artley, 2015 IL 118058,
¶ 14. When a statute exists for the protection of the public, it cannot be overridden through
private contractual terms. Progressive Universal Insurance Co. of Illinois v. Liberty Mutual Fire
Insurance Co., 215 Ill. 2d 121, 129 (2005). One reason for this rule is that “the members of the
public to be protected are not and, of course, could not be made parties to any such contract.”
American Country Insurance Co. v. Wilcoxon, 127 Ill. 2d 230, 241 (1989). Where liability
coverage is mandated by statute, a contractual provision in an insurance policy that conflicts with
the statute will be deemed void. Progressive, 215 Ill. 2d at 129. When we assess whether a
statutory provision prevails over a contractual provision, however, we must keep in mind that
parties generally have freedom to contract as they desire. Id. Our supreme court has reasoned:
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“The freedom of parties to make their own agreements, on the one hand, and their
obligation to honor statutory requirements, on the other, may sometimes conflict. These
values, however, are not antithetical. Both serve the interests of the public. Just as public
policy demands adherence to statutory requirements, it is in the public’s interest that
persons not be unnecessarily restricted in their freedom to make their own contracts.” Id.
¶ 14 Accordingly, courts use sparingly the power to declare a contractual provision void as
against public policy. Id. A contractual provision will not be invalidated on public policy
grounds unless it is clearly contrary to what the constitution, the statutes, or the decisions of the
courts have declared to be the public policy or unless it is manifestly injurious to the public
welfare. Id. at 129-30. Such a determination depends upon the particular facts and
circumstances of each case. Id. at 130.
¶ 15 Both parties point to two cases in which the Illinois Appellate Court has analyzed the
interplay between public policy and insurance contracts: Garrott and Fogel v. Enterprise
Leasing Co. of Chicago, 353 Ill. App. 3d 165 (2004). Crowley argues that this case is analogous
to Garrott while Empire argues that this case is analogous to Fogel.
¶ 16 In Garrott, Angelique Garrott rented an automobile from Hertz. Garrott, 238 Ill. App. 3d
at 233. The rental agreement indicated that liability protection (which was included in the cost
of renting the vehicle) was $100,000 per person, $300,000 per accident for bodily injury, and
$25,000 for property damage. Id. at 237. Angelique declined to purchase any liability insurance
supplement. Id. at 236. The day after Angelique rented the vehicle, her husband, Rodney, was
involved in an automobile accident. Id. at 233. As a result of the accident, Hertz was sued. Id.
Hertz filed a declaratory action, asking the trial court to find that it owed no liability coverage to
Angelique, because Rodney (1) was not authorized under the contract to drive the vehicle and
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(2) violated the contract by driving while intoxicated. Id. The trial court found that Hertz’s
contractual obligation to provide liability coverage was voided by Rodney’s intoxication. Id. at
234.
¶ 17 The appellate court reversed, finding that the exclusionary clause in the insurance
contract was void as against public policy. Id. at 240. In so holding, the appellate court quoted
with approval a Delaware Supreme Court opinion that invalidated a similar intoxication
exclusion:
“ ‘[T]he fixing of penalties for antisocial conduct is, in the first instance, a governmental
responsibility through legislative response. The Delaware General Assembly has
expressly determined the consequences which result from a conviction of driving under
the influence. These sanctions include the criminal penalties of fine and/or imprisonment
[citation] and license revocation through administrative action [citation]. We do not
believe that the General Assembly, in addition to the imposition of these substantial
penalties, also intended, by implication, to work a forfeiture of insurance protection
purchased in conformity with State law.’ ” Id. at 238-39 (quoting Bass v. Horizon
Assurance Co. 562 A.2d 1194, 1197 (Del. 1989)).
¶ 18 The Garrott court opined that, as in the Delaware case, a car rental company (a private
entity) could not, in the name of public policy, impose a sanction upon private citizens for
driving while intoxicated, “when such sanctions work a hardship upon the general public and, at
the same time, benefit the rental agency and/or its insurer.” Id. at 239. The appellate court
additionally rejected Hertz’s argument that the court should lower the amount of the insurance
that Hertz was obligated to provide to the statutory minimum of $50,000. Id. The appellate
court explained that it would not reform the contract, because if Hertz “wanted to provide
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liability protection at a level that would merely satisfy the minimum requirement under the
statute, it was free to have done so.” Id.
¶ 19 Turning to the second case, in Fogel, the driver was in an accident while driving a vehicle
rented from Enterprise. Fogel, 353 Ill. App. 3d at 168. The driver had purchased supplemental
liability coverage. Id. The 18-year-old driver was able to rent a car because he misrepresented
his age as 22. Id. Enterprise would not rent to anyone younger than 21. Id. After the accident,
Enterprise sought to rescind its contract with the driver and deny him insurance. Id. at 169-70.
The victims of the accident sued Enterprise, arguing that (1) Enterprise could not rescind its
contract and (2) public policy required that the contract, including the supplemental liability
policy, be enforced. Id. at 171-73. On review, the appellate court rejected those arguments. Id.
at 175. In rejecting the public policy argument that Enterprise could not rescind the contract
once the rights of an innocent third party had vested, the appellate court stated:
“[W]e do not find Fogel’s position persuasive. The cases cited by Fogel concern state
laws for mandatory liability insurance. In these cases, courts have held that mandatory
insurance statutes have abrogated the insurance company’s right to rescind the policy
with regard to claims of persons not involved in making the misrepresentation. In other
words, the public policy underlying mandatory insurance statutes requires that insurance
companies cannot rescind the contract and preclude an innocent third party from
coverage benefits. The rationale in these cases is that mandatory insurance statutes were
enacted to protect the public from financial hardship and these laws have transformed
what was a private contract into a quasi-public obligation. The public policy argument is
that where a state mandates liability insurance in order to protect the public, the risk of a
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misrepresentation made by the applicant is borne by the insurer and not an innocent third
party.
In this case, however, Fogel’s public policy argument fails because we are not
addressing mandatory liability coverage. *** Here, the case involves a private contract
entered into between Enterprise and [the driver]. The supplemental liability protection
[(SLP)] was a part of that contract. The SLP was not required under state law with the
purpose of protecting the public from financial hardship. Thus we find Fogel’s public
policy argument unavailing.” (Emphasis omitted.) Id. at 174.
¶ 20 Fogel is more analogous to the instant case because the insurance policy at issue is an
excess policy. We consider this to be an important distinction when considering public policy
relating to insurance. As noted earlier, by passing the Financial Responsibility Law requiring
each motorist to have minimum liability insurance coverage regardless of fault, the Illinois
General Assembly declared it to be the public policy of this state that owners and operators of
motor vehicles carry primary liability insurance coverage. See Nelson, 2015 IL 118058, ¶ 14.
However, the Financial Responsibility Law does not mandate that excess or supplemental
liability insurance coverage be obtained once the mandated minimum level of insurance has been
met. Id. (“The law does not, however, require that the full amount of any loss be covered.
Rather, it mandates only certain minimum levels of coverage.”). Additionally, no Illinois statute
precludes an intoxication exclusion in an excess or supplemental liability policy. See
Progressive, 215 Ill. 2d at 138 (“[T]he *** Financial Responsibility Law clearly contemplates
that exclusions may be included in policies and that those exclusions will be upheld.”). As such,
Empire’s denial of excess or supplemental coverage to Bruen based on his violation of the
insurance contract does not violate public policy.
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¶ 21 In so ruling, we note that the distinction the Fogel court drew between mandatory
insurance and supplemental insurance regarding public policy concerns is consistent with the
way that other courts have analyzed the issue. 1 See T.H.E. Insurance Co. v. Dollar Rent-A-Car
Systems, Inc., 900 So. 2d 694, 696 (Fla. Dist. Ct. App. 2005) (public policy dictates against
mandating excess liability insurance coverage when an exclusion for losses that stem from
intoxication is clearly spelled out); Philadelphia Indemnity Insurance Co. v. Carco Rentals, Inc.,
923 F. Supp. 1143, 1153 (W.D. Ark. 1996) (intoxication exclusion in supplemental liability
policy does not violate Arkansas public policy, because the supplemental liability coverage is
purely voluntary and is not designed to comply with minimum financial responsibility laws).
¶ 22 Crowley argues that Fogel is distinguishable because the underlying contract in that case
was void as it was fraudulently entered into. Because John Bruen entered into a valid contract
with Empire, she insists that Fogel has no relevance here. We do not believe it to be significant
whether a driver’s insurance coverage is negated because of a misrepresentation in the rental
contract (as in Fogel) or limited by operation of a policy exclusion (as in the case here). Rather,
what is relevant is that Fogel involved an excess policy and Garrott did not. 2 The Fogel court
1
We recognize that it is well established that, where the public policy of Illinois may be
found in this state’s constitution, statutes, and judicial decisions, the public policies of other
states are not persuasive. State Farm Mutual Automobile Insurance Co. v. Collins, 258 Ill. App.
3d 1, 4 (1994). Nothing, however, bars this court from adopting sound reasoning. We need not
ignore persuasive reasoning in nonprecedential decisions any more than persuasive reasoning in
a learned treatise or anywhere else. People ex rel. Webb v. Wortham, 2018 IL App (2d) 170445,
¶ 27.
2
Crowley mischaracterizes the policy in Garrott as an excess policy because it provided
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drew this same distinction when it held that the public policy rationale in Garrott did not apply,
because that case did not concern insurance coverage that was not required by state law. Fogel,
353 Ill. App. 3d at 174.
¶ 23 We also reject Crowley’s argument that, based on Garrott, we should find the
intoxication exclusion void as against public policy because enforcing the exclusion would
“work a hardship upon the general public and, at the same time, benefit the rental agency and/or
its insurer.” Garrott, 238 Ill. App. 3d at 239. We decline to extend Garrott to the facts of this
case. Adopting Crowley’s argument would essentially void any insurance exclusion if that
exclusion has the effect of harming an innocent third party. Our supreme court has specifically
rejected that argument, stating:
“We observed [in Progressive] that the legislature could have barred [auto] insurers from
excluding certain risks from coverage, but did not do so, and concluded that the
legislature must have intended that coverage exclusions may be included in liability
policies ***. [Citation.]
*** We recognize that, depending upon the circumstances of a particular case,
*** any exclusion[ ] may result in no insurance coverage from which injured third parties
may be compensated. Such coverage gaps, however, implicate policy concerns that are
greater coverage than was mandated by statute. An excess policy is different from a primary
policy because it does not provide coverage until the coverage provided by the primary policy
has been exhausted. See United States Fidelity & Guaranty Co. v. Continental Casualty Co.,
198 Ill. App. 3d 950, 955 (1990). The fact that a primary policy provides greater coverage than
is mandated by statute does not convert a primary policy into an excess policy. See id.
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properly considered by the legislature, not this court.” Founders Insurance Co. v. Munoz,
237 Ill. 2d 424, 445 (2010).
¶ 24 Further, we are unpersuaded by Crowley’s argument that Empire’s excess insurance
policy is illusory (and therefore unenforceable) because it excludes coverage for all accidents
arising from criminal acts. Crowley insists that, if the exclusion is upheld, Empire would never
have to provide coverage, because all accidents are premised on criminal acts. Our supreme
court has rejected a similar argument, asserting that a court “need not speculate as to the myriad
of other factual scenarios to which the exclusion might apply.” Id. at 440. Based on the specific
facts of this case, Empire’s intoxication exclusion in the excess policy is enforceable.
¶ 25 We also reject Crowley’s argument that the intoxication exclusion should be
unenforceable because it was in small print on the reverse side of the rental agreement and
neither John nor Thomas Bruen was provided with a copy of the Empire policy. As Empire
points out, Crowley forfeited this issue by not raising it before the trial court. In re Estate of
Chaney, 2013 IL App (3d) 120565, ¶ 8 (“It is well-settled law in Illinois that issues, theories, or
arguments not raised in the trial court are forfeited and may not be raised for the first time on
appeal.”). Even overlooking forfeiture, however, whether the exclusion was in small print is
irrelevant to whether the exclusion violates public policy.
¶ 26 Finally, we find Crowley’s reliance on Maryland Casualty Co. v. Iowa National Mutual
Insurance Co., 54 Ill. 2d 333 (1973), to be misplaced. Crowley argues that Maryland Casualty
stands for the proposition that the owner of an automobile may not cause a permissive user to
lose liability coverage by placing restrictions on the use of the vehicle. She therefore insists that
no insurance exclusions applied to Thomas Bruen, because “[o]nce the initial permission has
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been granted, no limitations may be placed upon the driver. Any deviations are immaterial. Any
use is permissible.”
¶ 27 In Maryland Casualty, at issue was whether the insurance company had to provide
coverage for someone who had permission to drive the vehicle but had not received that
permission from the named insured. Id. at 336. The Maryland Casualty court did not address
whether the exclusions that applied to the named insured also applied to anyone whom the
insured gave permission to drive the vehicle. However, the supreme court addressed that issue in
Progressive and held that an exclusion that applied to the named insured also applied to anyone
whom the insured permitted to drive the vehicle. Progressive, 215 Ill. 2d at 134. Thus,
Progressive specifically refutes Crowley’s argument.
¶ 28 III. CONCLUSION
¶ 29 For the reasons stated, the judgment of the circuit court of De Kalb County is reversed.
¶ 30 Reversed.
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