DeStefano v. Farmers Automobile Insurance Association ( 2016 )

NOTICE
2016 IL App (5th) 150325
Decision filed 06/14/16. The
text of this decision may be NO. 5-15-0325
changed or corrected prior to
the filing of a Peti ion for
Rehearing or the disposition of IN THE
the same.
APPELLATE COURT OF ILLINOIS
FIFTH DISTRICT
________________________________________________________________________
DEBORAH DeSTEFANO, as Mother and ) Appeal from the
Next Friend of Caroline DeStefano, a ) Circuit Court of
Minor, and DEBORAH DeSTEFANO, ) Madison County.
Individually, )
)
Plaintiff-Appellee, )
)
v. ) No. 11-MR-226
)
FARMERS AUTOMOBILE INSURANCE )
ASSOCIATION, ) Honorable
) John B. Barberis, Jr.,
Defendant-Appellant. ) Judge, presiding.
________________________________________________________________________
JUSTICE GOLDENHERSH delivered the judgment of the court, with opinion.
Presiding Justice Schwarm and Justice Cates concurred in the judgment and
opinion.
OPINION
¶1 This case arises out of a demand for underinsured motorist (UIM) benefits by
plaintiff, Deborah DeStefano, as mother and next friend of Caroline DeStefano, a minor,
against defendant, Farmers Automobile Insurance Association (Farmers), incorrectly
sued as Pekin Insurance Company. Plaintiff filed this declaratory judgment action in the
circuit court of Madison County after her daughter, who was operating a Honda
motorcycle, was struck by a motor vehicle operated by a rural United States postal
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worker, Donald Sprinot, as she crossed the family's driveway on August 28, 2010. The
accident was due to the negligence of Mr. Sprinot, who had a single limit policy of
$25,000, through Progressive Insurance Company (Progressive). Progressive paid its
policy limit of $25,000 to plaintiff. Plaintiff maintained a $100,000 UIM policy with
defendant and made a demand on defendant for the balance of the underinsured limits of
$75,000.
¶2 The parties stipulated to the facts. They agreed, inter alia, that Mr. Sprinot was
negligent when, acting as a rural mail carrier, he drove his 2001 GMC Jimmy pickup
truck off the public road and "traversed onto the driveway of the DeStefano property"
striking Caroline as she rode a motorcycle on the family's driveway. Farmers did not
contest coverage under the underinsured motorist provision issued to Caroline's father,
Patrick, but during the stipulated bench trial asserted it was entitled not only to a $25,000
setoff paid by Progressive, but also a $49,900 setoff paid by the United States in
exchange for a release of plaintiff's claims against the United States and its agents and
employees.
¶3 It is uncontested that the claimed damages exceed all available underinsured
motorist coverage, even if credits are allowed for the payment made by the United States.
Ultimately, the trial court entered judgment in favor of plaintiff and against Farmers in
the amount of $75,000, finding Farmers is not entitled to set off the money paid by the
United States to plaintiff. The only issue raised in this appeal is whether the trial court
erred in entering judgment in favor of plaintiff in the amount of $75,000. We affirm.
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¶4 ANALYSIS
¶5 There is disagreement between the parties as to the standard of review to be
applied. Farmers contends review is de novo while plaintiff asserts the correct standard
of review is abuse of discretion because the trial court drew inferences and made
credibility determinations. We agree with Farmers that review is de novo.
¶6 The construction of an insurance policy presents a question of law which is subject
to de novo review. American States Insurance Co. v. Koloms, 177 Ill. 2d 473, 479-80,
687 N.E.2d 72, 75 (1997). "A court must construe the policy as a whole and take into
account the type of insurance purchased, the nature of the risks involved, and the overall
purpose of the contract." Koloms, 177 Ill. 2d at 479, 687 N.E.2d at 75. Moreover, where,
as here, the question is a legal conclusion to be drawn from a given set of facts, and
witness credibility is not at issue, review is de novo. Independent Trust Corp. v.
Hurwick, 351 Ill. App. 3d 941, 952, 814 N.E.2d 895, 905 (2004).
¶7 In the instant case, the only question is whether Farmers is entitled to a $49,900
setoff. The parties stipulated to the facts, and the trial court made a legal conclusion,
which we review de novo. While we agree with Farmers as to the standard of review to
be applied, we do not agree with Farmers' argument regarding setoff.
¶8 Farmers argues it is entitled to a setoff of not only the $25,000 Progressive paid to
plaintiff, but also the $49,900 the United States paid to plaintiff, making the maximum
amount recoverable by plaintiff under the UIM provision of its policy $25,100.
According to Farmers, both the $25,000 paid by Progressive and the $49,900 paid by the
United States were paid on behalf of the underinsured motorist, Mr. Sprinot, which
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allows Farmers to deduct those amounts from its UIM limit. Plaintiff responds that
Farmers is not entitled to reduce from its UIM limits the $49,900 paid to plaintiff by the
United States because the United States was extinguishing its own, independent liability
from that of Mr. Sprinot through its $49,900 settlement.
¶9 Both parties rely on Farmers Automobile Insurance Ass'n v. Coulson, 402 Ill. App.
3d 779, 931 N.E.2d 1257 (2010), in support of their respective positions; however, we
find Coulson supports plaintiff's position rather than Farmers'. In Coulson, the plaintiff
was severely injured when a vehicle owned and operated by Robert Roy drove through
the window of a Subway restaurant and struck the plaintiff and two other patrons who
were eating there. 402 Ill. App. 3d at 779, 931 N.E.2d at 1258. The plaintiff alleged
damages in excess of $900,000. Roy was insured by State Farm and had bodily injury
liability limits of $50,000. State Farm paid $24,000 to the plaintiff and $26,000 to the
other injured patrons. The property owner and franchisee settled with the plaintiff for
$410,000. At the time of the accident, the plaintiff was a "family member" covered under
her stepfather's automobile insurance policy with Farmers, which contained the exact
same UIM provision at issue here, but provided UIM coverage in the amount of $300,000
per person and $500,000 per occurrence. 402 Ill. App. 3d at 779-80, 931 N.E.2d at 1258.
¶ 10 The plaintiff made a demand for UIM benefits, but Farmers declined to pay
benefits. Farmers alleged the policy contained setoff provisions which entitled Farmers
to set off the $434,000 the plaintiff had already received against the $300,000 in UIM
coverage provided under the Farmers policy, meaning Farmers would pay the plaintiff
nothing. 402 Ill. App. 3d at 780, 931 N.E.2d at 1258. We disagreed with Farmers'
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assertion and found "the only amounts deductible from the UIM coverage are those
amounts paid on behalf of the underinsured motor vehicle" which in that case constituted
"the $24,000 paid by State Farm and not the amounts paid in settlement by the property
owner and the franchisee." 402 Ill. App. 3d at 786, 931 N.E.2d at 1263-64. We
specifically explained:
"[The plaintiff's] stepfather paid premiums to have UIM coverage in the amount of
$300,000 per person. Roy was a UIM, having liability limits of $50,000 but
paying only $24,000 to [the plaintiff]. Thus, [the plaintiff] could recover from
Farmers under her stepfather's UIM policy up to $276,000 (i.e., $300,000 minus
$24,000 equals $276,000). The property owner and the franchisee were not UIMs,
and it is irrelevant to the amount Farmers could deduct from its UIM liability
limit, so long as there is no double recovery by [the plaintiff]. This is consistent
with other Illinois Appellate Court cases that have addressed similar
circumstances." 402 Ill. App. 3d at 784, 931 N.E.2d at 1262.
While Farmers insists that here the $49,900 paid by the United States was paid on behalf
of the UIM, Mr. Sprinot, the stipulations between the parties belie that assertion and
support plaintiff's argument that in paying $49,900, the United States was extinguishing
its own liability independent of Mr. Sprinot's.
¶ 11 First, paragraph 18 of the stipulation of facts specifically states:
"At all times mentioned herein, there were in existence certain rules and
regulations governing rural route carrier's delivery of parcels onto private
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property. Plaintiff contends that the failure to enforce these rules, and the failure
to formulate others, was a proximate cause of the plaintiff's injuries."
Second, the "Stipulation for Compromise Settlement and Release of Federal Tort Claims
Act Pursuant to 28 U.S.C. § 2677" entered into between the United States and plaintiff
specifically states that by paying $49,900, the United States was extinguishing ALL
liability. Paragraph 2 of the stipulation states:
"The United States of America agrees to pay the sum of $49,900.00, which sum
shall be in full settlement and satisfaction of any and all claims, demands, rights
and causes of action of whatsoever kind and nature, arising from, and by reason of
any and all known and unknown, foreseen and unforeseen bodily and personal
injuries, damage to property and the consequences thereof, resulting, and to result,
from the subject matter of this settlement, including any and all claims of any kind
for which plaintiff or plaintiff's guardians, heirs, executors, administrators, or
assigns, and each of them, now have or may hereafter acquire against the United
States of America, its agents, servants, and employees."
Under these circumstances, where by payment of $49,900, the Unites States extinguished
all liability in conjunction with the August 28, 2010, accident, Farmers is not entitled to a
UIM setoff in that amount.
¶ 12 Farmers also asserts the application of the setoff provision in the instant case does
not frustrate the public policy of the UIM statute. We disagree. If we allowed Farmers to
deduct the amount paid by the United States to plaintiff, we would frustrate the public
policy behind UIM coverage, which is to place the insured in substantially the same
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position he would have occupied if the tortfeasor carried adequate insurance. Coulson,
402 Ill. App. 3d at 783-84, 931 N.E.2d at 1262 (citing Sulser v. Country Mutual
Insurance Co., 147 Ill. 2d 548, 555, 591 N.E.2d 427, 429 (1992)).
¶ 13 Here, plaintiff's father paid premiums for $100,000 of UIM coverage. The parties
agree plaintiff's damages exceed $149,900. It is clear plaintiff will never be fully
compensated for her damages; however, if we accept Farmers' argument, plaintiff will be
in a substantially worse financial situation, and Farmers will only be required to pay
$25,100, even though it collected premiums for $100,000 worth of UIM coverage. To
allow Farmers to offset against its UIM limits the amount paid by the United States to
extinguish its own liability would frustrate the public policy of placing plaintiff in the
same position as if Mr. Sprinot was fully insured.
¶ 14 CONCLUSION
¶ 15 Taking into account Progressive paid Mr. Sprinot's policy limits of $25,000, we
find plaintiff is entitled to recover $75,000 of the $100,000 under the UIM coverage
provided by Farmers. Farmers cannot deduct the $49,900 paid by the United States to
extinguish its liability. Accordingly, we find the trial court did not err in entering
judgment in favor of plaintiff and against Farmers in the amount of $75,000.
¶ 16 For the foregoing reasons, we hereby affirm the judgment of the circuit court of
Madison County.
¶ 17 Affirmed.
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2016 IL App (5th) 150325
NO. 5-15-0325
IN THE
APPELLATE COURT OF ILLINOIS
FIFTH DISTRICT
DEBORAH DeSTEFANO, as Mother and ) Appeal from the
Next Friend of Caroline DeStefano, a ) Circuit Court of
Minor, and DEBORAH DeSTEFANO, ) Madison County.
Individually, )
)
Plaintiff-Appellee, )
)
v. ) No. 11-MR-226
)
FARMERS AUTOMOBILE INSURANCE )
ASSOCIATION, ) Honorable
) John B. Barberis, Jr.,
Defendant-Appellant. ) Judge, presiding.
__________________________________________________________________________
Opinion Filed: June 14, 2016
__________________________________________________________________________
Justices: Honorable Richard P. Goldenhersh, J.
Honorable S. Gene Schwarm, P.J., and
Honorable Judy L. Cates, J.,
Concur
__________________________________________________________________________
Attorneys Robert Marc Chemers, Richard M. Burgland, Pretzel & Stouffer,
for Chartered, One South Wacker Drive, Suite 2500, Chicago, IL 60606
Appellant
__________________________________________________________________________
Attorney Lanny Darr, Darr Firm, 307 Henry Street, Suite 406, P.O. Box 940,
for Alton, IL 62002
Appellee
__________________________________________________________________________