American Home Assurance Company v. Taylor ( 2010 )

Fourth Division
June 10, 2010
No. 1-08-3169
AMERICAN HOME ASSURANCE COMPANY, ) Appeal from the
) Circuit Court of
Plaintiff, ) Cook County.
)
v. )
)
NORMAN L. TAYLOR, SEAMUS E. KEENAN, )
KATHLEEN KEENAN, PRO MED PARAMEDIC )
SERVICES, LLC, MIDWEST MEDICAL, INC., d/b/a )
ADVANCED AMBULANCE, f/k/a PRO MED )
PARAMEDIC SERVICES, NATIONAL LIABILITY )
AND FIRE INSURANCE COMPANY, and ACUITY )
INSURANCE COMPANY, )
)
Defendants )
)
(Acuity Insurance Company, ) 06 CH 21355
)
Cross-Plaintiff-Appellant; )
)
National Liability and Fire Insurance Company, )
)
Cross-Defendant-Appellee; )
)
American Home Assurance Company, PRO MED )
PARAMEDIC SERVICES, LLC, Midwest Medical, Inc., )
d/b/a Advanced Ambulance, f/k/a Pro Med Paramedic, )
Services Norman L. Taylor, Seamus E. Keenan, and )
Kathleen Keenan, ) Honorable
) William O. Maki,
Defendants). ) Judge Presiding.
JUSTICE NEVILLE delivered the opinion of the court:
This declaratory judgment action involves a dispute between insurance companies insuring
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different parties in a collision involving a car and a medical transport van. National Liability and
Fire Insurance Company (National), which issued the policy covering the van, claimed that the
policy had been cancelled before the accident. Acuity Insurance Company (Acuity), which issued
the policy covering the car, a policy that included an uninsured motorist provision, sought a
judgment declaring that National’s insurance remained in force because National failed to comply
with the notice provisions in the Insurance Code (215 ILCS 5/I et seq. (West 2006)) for cancelling
insurance on medical transport vehicles. The trial court granted National’s motion for summary
judgment. We reverse because we find that the notice provisions in the Insurance Code required
National to send the Illinois Secretary of State notice of cancellation of the insured’s policy.
BACKGROUND
National issued a general liability policy to Pro Med Paramedic Services (Pro Med) in 2005.
The policy included coverage for Pro Med’s vehicles. To purchase the policy, Pro Med obtained a
premium financing loan from First Insurance Funding Corporation (First Insurance). Pro Med
agreed to give First Insurance a power of attorney authorizing First Insurance to cancel the policy
if Pro Med failed to make timely payments on the loan. When Pro Med failed to make the payment
due in March 2006, First Insurance sent Pro Med notice that First Insurance would cancel the policy
unless First Insurance received a payment within 10 days. Pro Med failed to make the payment.
First Insurance sent notice to National cancelling the policy as of April 4, 2006. Despite the
cancellation, Pro Med continued to operate its vehicles on Illinois's roads.
On June 6, 2006, about two months after the date shown on First Insurance’s notice of
cancellation, a Pro Med van, driven by Norman Taylor, collided with a car driven by Seamus
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Keenan. Keenan and his wife, Kathleen, had automobile insurance issued by Acuity. Keenan sued
Taylor and Pro Med to recover for Keenan’s injuries. American Home Assurance Company
(American Home), which insured Taylor’s personal car, initiated this lawsuit by filing an action for
a judgment declaring that it had no duty to defend Taylor against Keenan’s lawsuit. American Home
named both Acuity and National as defendants. The trial court entered a judgment in favor of
American Home on its complaint. American Home's judgment is not at issue in this appeal.
Acuity filed a cross-claim for a judgment declaring that it owed Keenan no coverage under
the uninsured motorist provision of its policy. National responded that it owed Pro Med no coverage
because First Insurance cancelled the policy National issued to Pro Med. Without National’s
insurance, no insurance covered the van, so Acuity, according to National, owed Keenan coverage
under the uninsured motorist provision of its policy.
National admitted, in its answers to discovery, that it did not notify the Illinois Secretary of
State of the cancellation of its policy. Acuity moved for summary judgment on its cross-claim,
arguing that the lack of notice to the Secretary of State rendered the purported cancellation
ineffective. National also moved for summary judgment, contending that it had no duty to notify the
Secretary of State of the cancellation. The trial court granted National’s motion for summary
judgment and denied Acuity’s motion for summary judgment. Acuity now appeals.
ANALYSIS
“Summary judgment is proper where the pleadings, depositions, affidavits and admissions
on file show that there is no genuine issue as to any material fact and that the moving party is entitled
to judgment as a matter of law.” Pajic v. Old Republic Insurance Co., 394 Ill. App. 3d 1040, 1043
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(2009). This appeal presents a question of statutory construction. “Questions of statutory
construction and the satisfaction of statutory requirements are questions of law properly decided on
a motion for summary judgment. [Citation.] We review de novo an order granting summary
judgment, without any deference to the judgment of the circuit court.” Pajic, 394 Ill. App. 3d at 1043.
In construing statutes, we strive to give effect to the intent of the legislature. American
Country Insurance Co. v. Wilcoxon, 127 Ill. 2d 230, 238 (1989). “Courts should first look to the
statutory language as the best indication of the intent of the drafters.” Wilcoxon, 127 Ill. 2d at 238.
However, “[i]t is a basic axiom of statutory construction that in determining the intent of the
legislature, a court may properly consider not only the language of the statute, but also ‘the reason
and necessity for the law, the evils sought to be remedied, and the purpose to be achieved.' "
Wilcoxon, 127 Ill. 2d at 239, quoting Stewart v. Industrial Comm’n, 115 Ill. 2d 337, 341 (1987), and
citing City of Springfield v. Board of Election Commissioners, 105 Ill. 2d 336, 341 (1985).
Acuity claims that the Insurance Code requires notice to a governmental agency, the Illinois
Secretary of State, when a premium finance company cancels insurance for medical transport
vehicles. See 215 ILCS 5/513a11(d) (West 2006). Acuity relies on the Illinois Vehicle Code (625
ILCS 5/1-100 et seq.), which requires special proof of insurance for medical transport vehicles. 625
ILCS 5/8-101.1, 8-102 (West 2006). Acuity points out that insurance policies covering medical
transport vehicles “shall *** contain a provision that the same cannot be cancelled by the company
issuing it without giving ten days notice in writing of such cancellation to the owner and the
Secretary of State.” 625 ILCS 5/8-110 (West 2006). According to Acuity, that restriction “shall
apply” where the premium finance company attempts to cancel an insurance policy. 215 ILCS
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5/513a11(d) (West 2006).
National relies on subsections (1) and (2) of section 8-110 of the Vehicle Code, which
provide as follows:
"Cancellation of insurance policy--Notice. 1. In the event said policy
of insurance be cancelled by the issuing company, or the authority of said
issuing company to do business in the State of Illinois be revoked, the
Secretary of State shall require the owner who filed the same either to furnish
a bond or to replace said policy with another policy according to the provisions
of this Act.
2. Said policy of insurance shall also contain a provision that the same
cannot be cancelled by the company issuing it without giving ten days notice
in writing of such cancellation to the owner and the Secretary of State." 625
ILCS 5/8-110 (1), (2) (West 2006).
National argues that the Vehicle Code does not apply in this case because the Vehicle Code applies
only when the policy is cancelled by the insurer issuing the policy, and here the premium finance
company cancelled the policy. According to National, the Vehicle Code requires the insurer to notify
the Secretary of State when the insurer cancels the policy, but neither the insurer nor the premium
finance company needs to notify the Secretary of State when the premium finance company cancels
the policy.
While the Insurance Code contains two sections that specifically require that notice of
cancellation be provided to government agencies when a premium finance company cancels the
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policy (215 ILCS 5/143.14(d); 513a11 (West 2006)), we rely on section 513a11. Subsections (a) and
(d) of section 513a11 of the Insurance Code provide:
“(a) When a premium finance agreement contains a power of attorney
enabling the premium finance company to cancel any insurance contract or
contracts listed in the premium finance agreement, the insurance contract or
contracts shall not be cancelled by the premium finance company unless the
request for cancellation is effectuated under this Section.
***
(d) All statutory *** restrictions providing that the insurance contract
may not be cancelled unless notice is given to a governmental agency *** shall
apply where cancellation is effected under provisions of this Section. The
insurer shall give the notice to any governmental agency *** on or before the
fifth business day after it receives the notice of cancellation from the premium
finance company.” 215 ILCS 5/513a11 (West 2006).
We note that subsection (2) of section 8-110 of the Vehicle Code provides that a policy of insurance
shall contain a provision that the policy cannot be cancelled by the company issuing it without giving
10 days notice to the Secretary of State. 625 ILCS 5/8-110(2) (West 2006). Thus, when we construe
subsection (2) of the Vehicle Code with section 513a11 of the Insurance Code, it is clear that the
cancellation of an insurance policy by a premium finance company does not take effect if the insurer
fails to give notice to the Secretary of State. 625 ILCS 5/8-110(2); 215 ILCS 5/513a11(a)(d) (West
2006); see also Pitts v. Travelers Insurance Co., 59 Misc. 2d 142, 144, 298 N.Y.S.2d 209, 211
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(1969).
This court “presumes that the legislature intended that two or more statutes which relate to
the same subject are to be read harmoniously so that no provisions are rendered inoperative.” Knolls
Condominium Ass'n v. Harms, 202 Ill. 2d 450, 458-59 (2002), citing Henrich v. Libertyville High
School, 186 Ill. 2d 381, 391-92 (1988). In addition, "statutes relating to the same subject must be
compared and construed with reference to each other so that effect may be given to all the provisions
of each if possible." Harms, 202 Ill. 2d at 459, citing Henrich, 186 Ill. 2d at 392. We find that the
Vehicle Code and the Insurance Code have provisions which explain how to cancel an insurance
policy. Section 8-110 of the Vehicle Code prescribes the procedure for cancellation of insurance
policies when the issuing insurance company cancels the policy of insurance. 625 ILCS 5/8-110
(West 2006). Section 513a11 of the Insurance Code prescribes the procedure for cancellation of
insurance policies when a premium finance company with a power of attorney cancels the policy of
insurance. 215 ILCS 5/143.14, 513a11 (West 2006).
The Insurance Code provides that all statutory, regulatory and contractual restrictions
providing that the insurance contract may not be cancelled unless notice is given to the governmental
agency shall apply where cancellation is effected under a power of attorney under a premium finance
agreement. 215 ILCS 5/513a11(d) (West 2006). Here, we find that, because a medical transport
vehicle is involved (625 ILCS 5/8-101.1, 8-110(2) (West 2006)), and because the premium finance
company cancelled the policy pursuant to the power of attorney in the premium finance agreement,
notice must be given to a governmental agency, the Secretary of State, before cancelling the policy.
215 ILCS 5/513a11(d) (West 2006). Finally, because a premium finance company with a power of
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attorney cancelled the insurance policy in this case, we hold that the cancellation provisions in the
Insurance Code should be followed. 215 ILCS 5/513a11(d) (West 2006).
In addition, when we consider the reason and necessity of notice provisions in statutes, and
the evils to be remedied and the purpose to be achieved, we find that statutory notice provisions must
be enforced to ensure public safety. We note that the Secretary of State does not permit medical
transport vehicles to use state roads until the owners can prove financial responsibility. See 625
ILCS 5/8-113 (West 2006). We also note that the Secretary of State needs notice of the cancellation
of insurance policies for medical transport vehicles so that it can suspend registration certificates,
plates and stickers for uninsured medical transport vehicles. See 625 ILCS 5/8-113 (West 2006).
The purpose of the statutory scheme is to protect members of the public by ensuring that they will
receive compensation if they are injured due to the negligence of a medical transport vehicle driver.
See Wilcoxon, 127 Ill. 2d at 239; see also State Farm Mutual Automobile Insurance Co. v. Smith,
197 Ill. 2d 369, 376 (2001). We find that sections 143.14(d) and 513a11(d) of the Insurance Code
show a legislative intent to preserve all notification requirements when a premium finance company
becomes involved in the cancellation of an insurance policy. 215 ILCS 5/143.14(d), 513a11(d) (West
2006). National’s interpretation of the cancellation provisions in the Vehicle Code and Insurance
Code (1) would prevent the Secretary of State from receiving notice when a premium finance
company cancels a policy, and (2) would defeat the legislature's policy of ensuring the financial
responsibility of medical transport companies. Therefore, we reject National’s interpretation of the
applicable statutes.
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CONCLUSION
In conclusion, when a premium finance company cancels an insurance policy, the Insurance
Code expressly provides that “[t]he insurer shall give the notice” to any necessary governmental
agencies. 215 ILCS 5/143.14, 513a11(d) (West 2006). National admits it gave no such notice to the
Secretary of State. Because the request for cancellation was not effectuated pursuant to section
513a11 of the Insurance Code, we find the cancellation of National's policy did not take effect. See
215 ILCS 5/513a11(d) (West 2006). Therefore, we hold that National's insurance policy was in
effect on the date of the accident. Accordingly, we vacate the order entering summary judgment in
favor of National and remand for entry of a judgment in favor of Acuity on its complaint for a
declaratory judgment.
Reversed and remanded with directions.
O'BRIEN, J., and GALLAGHER, J., concur.
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