Columbia Mutual Insurance Company v. Herrin , 2012 IL App (5th) 100037 ( 2012 )

ILLINOIS OFFICIAL REPORTS
Appellate Court
Columbia Mutual Insurance Co. v. Herrin, 2012 IL App (5th) 100037
Appellate Court COLUMBIA MUTUAL INSURANCE COMPANY, Plaintiff, v.
Caption ROGER HERRIN, Special Administrator of the Estate of Michael Herrin,
Deceased, KATHERINE DUNCAN, ROSS DUNCAN, and JARED
HEAD, ENCOMPASS INSURANCE, HARRISBURG MEDICAL
CENTER, BRIAN W. BRAMLET, and ROBERT BRAMLET,
Defendants (Roger Herrin, Special Administrator of the Estate of Michael
Herrin, Deceased, Counterplaintiff-Appellee, and Martha Head, as
Mother and Next Friend of Jared Head, a Minor, and Martha Head and
Wayne Head, Individually and as Parents of Jared Head, a Minor,
Counterplaintiffs-Appellants, v. Columbia Mutual Insurance Company,
Monroe Guaranty Insurance Company, and Encompass Insurance
Company, Counterdefendants, and Katherine Duncan, Ross Duncan, and
Russell Duncan, Counterdefendants-Appellants, and Roger Herrin,
Special Administrator of the Estate of Michael Herrin, Deceased,
Counterdefendant-Appellee).
District & No. Fifth District
Docket No. 5-10-0037
Filed January 12, 2012
Rehearing denied April 24, 2012
Held In complex litigation arising from an automobile accident that resulted in
(Note: This syllabus a fatality and multiple injuries, the trial court erred in applying a ratio
constitutes no part of method of distributing the underinsured-motorist coverage proceeds
the opinion of the court without considering the amounts available exclusively to certain
but has been prepared occupants before distributing the host vehicle’s underinsured-motorist
by the Reporter of coverage, since James requires that the trial court take into account the
Decisions for the presence of separate underinsured-motorist coverage exclusive to
convenience of the individual passengers and give each passenger credit with the amount of
reader.)
those benefits available exclusively to them, but the valuations of each
occupant’s injuries previously set forth in a bench trial would be
controlling.
Decision Under Appeal from the Circuit Court of Saline County, No. 02-MR-42; the Hon.
Review Ronald R. Eckiss, Judge, presiding.
Judgment Affirmed in part and reversed in part; cause remanded with directions.
Counsel on Douglas N. Dorris, of Howerton, Dorris & Stone, of Marion, for
Appeal appellants Jared Head, Martha Head, and Wayne Head.
Mark D. Prince, of Prince Law Firm, of Marion, for appellants Katherine
Duncan, Ross Duncan, and Russell Duncan.
James B. Bleyer, of Bleyer & Bleyer, of Marion, for appellees Brian W.
Bramlet and Robert Bramlet.
John Womick, of Womick Law Firm, Chtrd., of Herrin, for appellee
Roger Herrin.
Panel JUSTICE GOLDENHERSH delivered the judgment of the court, with
opinion.
Justices Welch and Wexstten concurred in the judgment and opinion.
OPINION
¶1 The instant appeal involves a dispute about the distribution of underinsured-motorist
proceeds following a tragic accident involving a group of teenage boys who were riding
together in a Jeep Cherokee being driven by one of the boys’ mothers, Katherine Duncan.
Defendants-counterplaintiffs, Jared Head, Martha Head and Wayne Head, individually and
as parents of Jared Head, a minor (hereinafter Jared), who has since attained the age of
majority, and Katherine Duncan, Ross Duncan, and Russell Duncan, appeal the order of the
circuit court of Saline County which distributed the underinsured-motorist proceeds. Jared
and the Duncans will collectively be referred to as appellants. Appellee is the other
defendant, Dr. Roger Herrin, special administrator of the estate of Michael Herrin. Michael
Herrin died as a result of the accident, and Dr. Herrin was his father. While appellants and
appellee both recognize that the formula set forth in Janes v. Western States Insurance Co.,
335 Ill. App. 3d 1109, 783 N.E.2d 37 (2001), controls, appellants argue the trial court
incorrectly applied the formula. Appellants contend the misapplication of Janes resulted in
-2-
appellee receiving a disproportionately large share of the host vehicle’s underinsured-
motorist coverage, specifically arguing: (1) the ratio method is not the method of distribution
Janes requires when distributing a common pool of underinsured-motorist coverage available
upon a host vehicle; (2) the trial court erred when it used the value of the amounts actually
received by appellee from separate underinsured-motorist coverage available exclusively to
it instead of the total limits of underinsured-motorist coverage which were available
exclusively to it; and (3) the trial court erred when it used as the valuations for each
occupant’s injuries the amounts set during a prior bench trial which distributed the bodily
injury liability proceeds of $100,000 from the driver of the at-fault vehicle’s insurance policy
instead of requiring that the valuation of injury awards for use in distributing underinsured-
motorist proceeds be set by arbitration. We affirm in part, reverse in part, and remand for
further proceedings.
¶2 BACKGROUND
¶3 On June 14, 2001, Michael Herrin, Jared Head, and Ross Duncan were passengers in a
Jeep Cherokee being driven by Katherine Duncan when they were hit by a truck being driven
by Brian Bramlet, who failed to stop at an intersection. Michael Herrin was killed in the
accident while Katherine Duncan, Ross Duncan, and Jared Head all received injuries. All
occupants of the Jeep Cherokee filed separate personal injury claims against Brian Bramlet,
the at-fault driver. Bramlet’s truck was insured by Columbia Mutual Insurance Company
(Columbia Mutual) with policy limits of $100,000 per occurrence. Columbia Mutual
tendered its $100,000 policy limits.
¶4 An issue arose as to how to divide the $100,000 in liability insurance proceeds provided
by the Columbia Mutual policy. Accordingly, the trial court conducted a consolidated bench
trial in December 2007 in order to establish values for each of the claims. After hearing all
the evidence, the trial court found the following values for the claims of the occupants of
Katherine Duncan’s vehicle:
Estate of Michael Herrin $10,010,953.61
Jared Head $ 633,804.70
Katherine Duncan $ 155,855.11
Ross Duncan $ 125,892.50
Russell Duncan $ 40,000.00
Total $10,966,505.92
¶5 Dr. Herrin owned several nursing homes and purchased business insurance on the nursing
homes and insurance on certain vehicles owned through the nursing homes. Two policies
specifically provided automobile insurance coverage on certain listed vehicles and provided
underinsured-motorist coverage not only on Dr. Herrin but also on relatives who resided with
him, including Michael. The policies were issued by Monroe Guaranty and Cincinnati
Insurance. After litigation, it was determined that Dr. Herrin’s nursing home policies
provided his family with $5 million of underinsured-motorist coverage and specifically
covered the accident in which Michael was killed on June 14, 2001. Dr. Herrin was also
-3-
covered by an automobile policy through Encompass Insurance Company (Encompass),
which provided an additional $500,000 in underinsured-motorist coverage for appellee’s
wrongful-death claim for a total of $5.5 million in underinsured-motorist coverage. This $5.5
million is exclusive to appellee’s claims, and appellants can make no claim against the $5.5
million pool of appellee’s underinsured-motorist coverage.
¶6 After mediation, the Herrin estate settled its wrongful-death claim for $1.65 million out
of the $5.5 million in underinsured-motorist coverage available exclusively to the Herrin
estate. A total of $1.25 million was paid by Monroe Guaranty and $400,000 was paid by
Cincinnati Insurance. The trial court approved the $1.65 million settlement.
¶7 At the time of the accident, Jared’s family carried underinsured-motorist coverage on
their vehicles totaling $100,000; however, because the driver of the at-fault vehicle, Brian
Bramlet, was carrying $100,000 in personal liability insurance through Columbia Mutual,
Bramlet was not an underinsured motorist for purposes of Jared’s family’s automobile
insurance carrier. The Duncan family carried automobile insurance through Encompass on
numerous vehicles. After extended stacking litigation, including an appeal to this court, it
was determined that the Duncans’ underinsured-motorist coverage aggregated to $900,000.
Encompass was given a setoff for the $100,000 in tortfeasor liability insurance on the basis
that those funds will be distributed to the parties injured by the tortfeasor Bramlet, leaving
a total of $800,000 available from the underinsured-motorist coverage provided by
Encompass. See Columbia Mutual Insurance v. Herrin, No. 5-04-0575 (2007) (unpublished
order under Supreme Court Rule 23 (eff. July 1, 1994)).
¶8 On April 21, 2009, Encompass filed a motion for leave to deposit $800,000 of
underinsured-motorist benefits with the court with a request that Encompass be discharged
from liability upon deposit of those funds and a request that the occupants of the Duncan
vehicle be ordered to settle between themselves their rights or claims to the underinsured
benefits available under the Encompass policy. While not objecting to $800,000 being paid
into the court, appellants objected to Encompass’s motion on the basis that the amounts to
be distributed to the occupants of the Duncan vehicle were issues that needed to be arbitrated
and they should not be “ordered to settle” their rights and claims to the common pool of host
vehicle underinsured-motorist coverage when a good-faith disagreement existed on that
issue.
¶9 On December 1, 2009, the trial court conducted a hearing on Encompass’s motion and
appellants’ objections thereto. The trial court found that the arbitration clause of the
Encompass policy would not be followed because the court previously set the amounts of
each claim in a bench trial which determined the value of the claims when considering how
the $100,000 in liability insurance coverage carried by the tortfeasor should be distributed.
The trial court noted that the Herrin estate already received $1.65 million in underinsured-
motorist settlement proceeds from policies which were only available to the Herrin estate and
that it would apply the principles of Janes when distributing the Encompass underinsured-
motorist funds. The trial court used a ratio method and, ultimately, distributed the Encompass
funds as follows:
-4-
Herrin Estate $677,851.06
Jared Head $147,368.96
Katherine Duncan $ 36,228.77
Ross Duncan $ 29,286.12
Russell Duncan $ 9,265.09
Total $900,000.00
Jared Head and the Duncans filed separate motions to reconsider or modify. The trial court
denied the motions. Appellants filed timely notices of appeal.
¶ 10 ANALYSIS
¶ 11 We first address appellee’s argument that this case is moot because the $800,000 of
Encompass funds have already been distributed. According to appellee, the trial court has
already paid out Encompass’s underinsured-motorist funds to the administrator of the Herrin
estate, who has already paid them out from the probate estate, and, thus, no funds remain in
the estate of Michael Herrin. We point out that an issue is only moot if no actual controversy
exists or where events occur which make it impossible for the court to grant effectual relief.
Wheatley v. Board of Education of Township High School District 205, 99 Ill. 2d 481, 484-
85, 459 N.E.2d 1364, 1366 (1984). Here, we agree with appellants that the early distribution
of any of the Encompass insurance proceeds, which was done over the objection of Jared
Head, does not make the issues in this appeal moot. There is nothing in the record to indicate
that the funds distributed to the estate of Michael Herrin through the administrator of the
estate, Dr. Roger Herrin, Michael’s father, have been spent. In any event, even if the funds
have been spent, Dr. Herrin can be required to make restitution. See First National Bank of
Jonesboro v. Road District No. 8, 389 Ill. 156, 162-63, 58 N.E.2d 884, 887 (1945). We turn
now to the issues raised by appellants.
¶ 12 I. METHOD OF DISTRIBUTION
¶ 13 Appellants first contend the trial court erred by employing the ratio method of
distribution. Appellants insist that Janes requires the host vehicle occupants with separate
sources of underinsured-motorist coverage exclusive to them access their own sources of
underinsured-motorist coverage before participating in the host vehicle’s common pool of
underinsured-motorist coverage and that the common pool coverage should be used initially
to satisfy the claims of occupants with no outside source of underinsured-motorist coverage.
We agree.
¶ 14 In Janes, the plaintiff, Linda Janes, and her husband were involved in a car accident in
their van. Her husband was driving and was killed. Linda survived but incurred medical bills
in the amount of $162,226. Four other van passengers, two married couples, Cleo and Jerry
Harris and Connie and Charles Church, were also killed. Alice Phelps was driving a car that
crossed the centerline and caused the collision. Phelps had $50,000 in bodily injury liability
coverage that was tendered by her insurance company.
¶ 15 The plaintiff and her husband had two separate auto insurance policies. One issued by
-5-
Western States Insurance Company (Western States) provided $50,000 in underinsured-
motorist coverage, and the other issued by Transamerica Indemnity Company (Transamerica)
stacked to provide $300,000 in underinsured-motorist coverage for a total of $350,000. That
amount was reduced to $300,000 because of the $50,000 in tortfeasor liability coverage
already paid into the court. Cleo and Jerry Harris received $50,000 each from their own
insurance policy for a total of $100,000 in underinsured-motorist benefits exclusive to them.
Connie and Charles Church each received $100,000 from their own insurance policy for a
total of $200,000 in underinsured-motorist benefits exclusive to them.
¶ 16 One of the issues in Janes was how to divide the $300,000 in underinsured-motorist
benefits provided by the Janes’s two insurance policies among the six passengers of the van.
The trial court ruled that the $300,000 should be divided equally among the six occupants
of the Janes’s van. The trial court awarded each of the six claimants $8,333.33 from the
Western States policy and $41,666.66 from the Transamerica policy. Janes, 335 Ill. App. 3d
at 1114, 783 N.E.2d at 40-41. Plaintiff appealed the trial court’s distribution of the host
vehicle underinsured-motorist coverage in equal amounts. The Janes court found that the
trial court’s distribution of the host vehicle’s underinsured-motorist benefits to the occupants
of the insured vehicle in equal shares failed to fill the gap between the tortfeasor’s policy and
the insured’s policy because the trial court failed to consider payments of underinsured
benefits to the occupants individually and failed to adjust payments of underinsured-motorist
benefits payable on the van to equalize the funds received by each occupant. Janes
specifically stated:
“If a court decides that the passengers are equally entitled to recover damages, the
‘gap’ should be filled first by the policies specific to a policyholder and then by policies
general to all occupants. Assuming plaintiff has correctly assessed the limits of the other
injured parties’ policies, plaintiff would be entitled to the first $100,000 to become equal
to the Harrises, and then the funds of the Janes policy would be equally distributed with
the Harrises until all parties are equal to the Churches. Upon remand, a hearing will be
required to allow plaintiff to prove that the Harrises and the Churches had other
coverage.” Janes, 335 Ill. App. 3d at 1123-24, 783 N.E.2d at 48.
The result of the Janes decision was that all occupants of the vehicle would ultimately
receive $100,000 in underinsured-motorist coverage.
¶ 17 The Janes court rejected the ratio method employed by the trial court because it did not
take into account the separate sources of underinsured-motorist coverage the Churches and
the Harrises had available exclusively to them before dividing the common pool of
underinsured-motorist coverage. Pursuant to the holding in Janes, the Churches were not
entitled to any additional underinsured-motorist funds available through the host vehicle’s
common pool of underinsured-motorist proceeds because the Churches’ own underinsured-
motorist coverage available exclusively to them already provided them with $100,000 each.
The Harrises were entitled to another $50,000 each from the host vehicle policy, which
combined with their own underinsured-motorist coverage of $50,000 each resulted in a total
of $100,000 each. Plaintiff and her deceased husband would take $100,000 for a total of
$200,000.
-6-
¶ 18 Here, as in Janes, the trial court erred in applying a ratio method without considering the
amounts of underinsured-motorist coverage which the occupants of the Duncan vehicle had
available exclusively to them before dividing up the host vehicle’s underinsured-motorist
coverage provided by the Encompass policy. Janes requires a court to take into account the
presence of separate underinsured-motorist coverage exclusive to individual passengers and
give each passenger credit with the amount of underinsured-motorist benefits available
exclusively to them. Therefore, we reverse that portion of the trial court’s order which
apportioned the Encompass policy between the occupants of the host vehicle and remand
with directions that when determining the apportionment of an $800,000 pool of host vehicle
underinsured-motorist coverage available through Encompass, the trial court give credit for
the underinsured-motorist coverage available exclusively to the estate of Michael Herrin.
¶ 19 II. SETTLEMENT VS. COVERAGE AVAILABLE
¶ 20 Appellants next contend that the trial court erred by crediting only the amount of the
settlement received ($1.65 million) rather than the amount of the coverage available to the
estate of Michael Herrin ($5.5 million). After careful consideration, we find that this issue
need not be decided because using either figure, it is clear that the value of the claims of the
occupants in the Duncan host vehicle who did not have outside sources of underinsured-
motorist insurance exceeds the $800,000 available under the Encompass policy.
¶ 21 In the instant case, a bench trial was conducted to determine the value of the claims of
the occupants of the Duncan vehicle when considering how the $100,000 in liability
coverage carried by the tortfeasor should be distributed. All parties participated in the bench
trial, and no party appealed the trial court’s findings. The trial court specifically valued
appellants’ claims as follows:
Katherine Duncan $155,855.11
Ross Duncan $125,892.50
Russell Duncan $ 40,000.00
Jared Head $633,804.70
Total $955,552.31
Thus, the sum of appellants’ claims exceeds the amount of underinsured-motorist coverage
available under the Duncans’ Encompass policy. Because the Herrin estate has already
received $1.65 million in underinsured-motorist benefits available exclusively to the estate,
which far exceeds the $800,000 of underinsured-motorist coverage available on the host
vehicle, it is clear that under either computation ($1.65 million or $5.5 million), the Herrin
estate will not be able to recover any additional funds.
¶ 22 III. ARBITRATION
¶ 23 Finally, appellants contend the trial court erred when it used as valuations for each
occupant’s injuries the amounts set during the prior bench trial which distributed the bodily
injury liability proceeds of $100,000 from the at-fault driver’s insurance policy instead of
requiring the valuation of the injury awards for use in distributing underinsured-motorist
-7-
proceeds under the Duncans’ Encompass policy be set by arbitration as per the language of
the Encompass policy. We disagree.
¶ 24 The instant case presents a tragedy where neither the appellants nor the appellee can
really ever be declared a winner. The best we can hope for is that sooner rather than later this
complex litigation will come to a logical conclusion, and the appellants and the appellee will
receive equitable compensation for their grave losses. While appellants contend that they are
entitled to arbitration on the issue of damage awards, we find that the damage awards decided
by the trial court during the bench trial to determine the distribution of the tortfeasor’s bodily
injury liability should control.
¶ 25 It is well settled that the fixing of damages is a function of the trier of fact and should not
be disturbed upon review unless there is no evidence to support the finding or the award does
not bear a reasonable relation to plaintiffs’ loss. Netzel v. United Parcel Service, Inc., 181
Ill. App. 3d 808, 817, 537 N.E.2d 1348, 1354 (1989). Here, appellants did not object to these
damage awards at the time they were decided by the trial court, nor did they file an appeal
on that issue. Appellants had an opportunity to present their evidence and cross-examine
witnesses.
¶ 26 Appellants argue that because they believed that the evidence during the bench trial was
only being used to set the damage awards affecting the distribution of the $100,000 from the
tortfeasor’s policy, no party had much desire to strike an adversarial position. However,
during this appeal, appellants have failed to show us how the valuations are flawed or
unreasonable. Even though the parties were not initially aware that these valuations would
be used, considering the totality of the circumstances, we find the trial court’s decision to use
the valuations for each occupant’s injuries previously set during the bench trial distributing
the bodily injury liability proceeds from the at-fault driver’s policy not to be an abuse of its
discretion.
¶ 27 CONCLUSION
¶ 28 For the foregoing reasons, the judgment of the circuit court of Saline County is hereby
affirmed in part and reversed in part, and the cause is remanded with directions consistent
with this opinion to distribute to each of the injured occupants of the host vehicle from the
$800,000 of common pool Encompass underinsured-motorist coverage by properly applying
the formula for distribution mandated in Janes. The valuations for each occupant’s injuries
previously set forth in the bench trial are controlling and arbitration is unnecessary.
¶ 29 Affirmed in part and reversed in part; cause remanded with directions.
-8-