Country Mutual Insurance v. Peoples Bank , 286 Ill. App. 3d 356 ( 1997 )

JUSTICE GREEN

delivered the opinion of the court:

This case concerns the meaning of an exclusionary provision of a homeowner’s insurance policy issued by plaintiff Country Mutual Insurance Company (Country Mutual) to defendants Matthew and Sarah Augsburger. That provision stated:

"Liability, Coverage A, does not apply to:

* * *

5. bodily injury to you and, if residents of your household, your relatives, and individuals under 21 in the care of the preceding persons[.]” (Emphasis in original.)

The principal question presented is whether a very young foster child placed in the home of the Augsburgers was a "resident of [their] household” within the meaning of that exclusionary provision. If so, Country Mutual had no responsibility under that policy to defend or indemnify the Augsburgers in a suit brought against them by defendant Peoples Bank (Bank) as special administrator for the estate of that child charging the Augsburgers with negligence in the supervision and monitoring of the child and seeking damages for injuries to and the death of that child. We hold that the child was a resident of the Augsburgers’ household and Country Mutual had no obligation of coverage concerning the suit.

On February 8, 1995, Country Mutual filed a complaint in the circuit court of McLean County seeking a declaratory judgment that it had no duty of coverage under the foregoing policy in regard to the suit filed on behalf of the deceased child’s estate. In addition to the Augsburgers and the Bank, Youth Services of Mid-Illinois, a corporation (Youth Services), was named a defendant. Youth Services had placed the child with the Augsburgers pursuant to a written foster parent agreement and the child died while in their home and under their care. Both sides requested summary judgment. On December 11, 1995, the circuit court entered summary judgment granting Country Mutual the declaration it sought. The Augsburgers have appealed. We affirm.

Under section 2—1005(c) of the Code of Civil Procedure (Code) (735 ILCS 5/2—1005(c) (West 1994)), summary judgments should be granted when "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 judgment as a matter of law.” The ruling of the circuit court granting the summary judgment was a determination of law concerning the interpretation of an insurance policy. We must review that determination de novo, giving no deference to the ruling of the circuit court. See Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill. 2d 90, 102, 607 N.E.2d 1204, 1209 (1992).

An insurance policy is a contract, subject to the standard rules of construction. Western States Insurance Co. v. Bobo, 268 Ill. App. 3d 513, 515, 644 N.E.2d 486, 488 (1994). As the Augsburgers point out, if any exclusionary provision of such a contract is ambiguous, rules of construction may be applied and the provision should be strictly construed against the insurer. Western Casualty & Surety Co. v. Brochu, 105 Ill. 2d 486, 495, 475 N.E.2d 872, 876 (1985). The Augsburgers maintain in particular that the decision of the second district in Country Mutual Insurance Co. v. Watson, 1 Ill. App. 3d 667, 274 N.E.2d 136 (1971), requires that we interpret the instant exclusionary clause in such a way that the decedent child be determined not to have been a resident of their household.

In Watson, the appellate court affirmed a decision of the circuit court finding that a foster child placed by the Illinois Department of Children and Family Services (DCFS) with a farm family was not a resident of that household under a policy that did "not cover injuries incurred by the insured, his spouse, or 'residents of his household.’” Watson, 1 Ill. App. 3d at 669, 274 N.E.2d at 138. In concluding that, under the facts there, the child’s presence was too temporary to constitute residence, the court stated:

"In the instant case, testimony given by a social worker for the Department indicates it was never intended that any child placed in the defendant’s home would remain there permanently. The home was merely a 'temporary care facility’ used until permanent placement of a child could be made. It was stressed to the children that they would be moved from the home. Further testimony was given by the regional director of the Department who characterized the foster home operated by the defendant as a 'diagnostic center’ where the children were placed for a[n] indeterminate period of time up to five months under the custodial agreement.

The testimony clearly indicates that the stay of the boy would be of a temporary nature and the critical element of intention to make the home his permanent abode was lacking. Therefore, it cannot be said that he became a 'resident of the household.’ ” Watson, 1 Ill. App. 3d at 670, 274 N.E.2d at 138.

Here, the minor child was placed by Youth Services with the Augsburgers in June 1992 for one year under a written agreement, and that agreement was renewed for another year shortly before the child’s death. Either party could terminate the agreement on 30 days’ written notice or immediately for default by the other party. Neither had done so. Nothing in the record indicated that the Augsburgers’ home was to be a "diagnostic center,” nor was any evidence introduced that anybody had been notified that the child was likely to be moved.

The Watson court did not describe the word "residence” as being ambiguous. Rather, it described it as having "no fixed, exact meaning in the law, but [varying] with context and subject matter” and cited Hughes v. Illinois Public Aid Comm’n, 2 Ill. 2d 374, 380, 118 N.E.2d 14, 17 (1954). Watson, 1 Ill. App. 3d at 669, 274 N.E.2d at 138. In Coriasco v. Hutchcraft, 245 Ill. App. 3d 969, 971, 615 N.E.2d 64, 65 (1993), in holding that a minor child who made weekly overnight visits to the home of her noncustodial father was a resident of his home within the meaning of an uninsured motorist policy, the fifth district stated that the phrase "resident of the household” was not ambiguous and that the reasonable interpretation of it "requires an analysis of intent, physical presence, and permanency of abode in each case.”

In A.G. v. Travelers Insurance Co., 112 Wis. 2d 18, 331 N.W.2d 643 (1983), a court ward was placed in a foster home for a period of one year. That court held, as a matter of law, that the child was a resident of the foster family household and thus the homeowner’s policy excluded liability coverage of an injury inflicted upon the foster child by a natural child of the foster parents. The court noted that (1) the foster parents are to give the child the love given their natural children; (2) the primary reason behind an exclusionary clause for residents is the possible lack of cooperation on the part of the insureds when they have affection for the person seeking damages for a tort against an insured; and (3) public policy would not be served by treating the foster child as a nonresident and therefore not covered by a policy that would defend and indemnify him from suit by a third party. A.G., 112 Wis. 2d at 26, 331 N.W.2d at 647.

The A.G. court also explained that "[although the intended duration of the relationship [between foster parents and child] is a necessary element in deciding whether a person is a resident of a household, a showing of permanency is not required” but that the stay of the person must be more than "a mere temporary sojourn.” A.G., 112 Wis. 2d at 21, 331 N.W.2d at 645. The placement there was made by a court for a term of one year but could be changed by agreement of the parties with court approval. Thus, permanency of the placement of the ward there was very similar to that here.

The reasoning of Hughes, Coriasco, and A.G. tends to explain why a leading treatise on insurance has stated that the term "resident” is broadly construed in insurance policies. 11 Couch on Insurance § 44:254, at 399 (2d rev. ed. 1982). We recognize the policy of construing insurance policies against insurers in general and against exclusionary clauses in particular. However, those rules are ordinarily prefaced by the condition that an ambiguity exists in the words to be interpreted. Brochu, 105 Ill. 2d at 495, 475 N.E.2d at 876; State Farm Fire & Casualty Co. v. Guccione, 171 Ill. App. 3d 404, 406, 525 N.E.2d 595, 596 (1988). Here, the foregoing cases seem to hold that the words "resident” and "residence” are not ambiguous but are to be interpreted according to the factors listed in those cases.

In holding that foster parents do not have standing to object to adoption of their foster children, this court has recognized that the relationship between a foster child and his or her foster parent is not permanent. See Johnson v. Burnett, 182 Ill. App. 3d 574, 582, 538 N.E.2d 892, 897 (1989). Nothing in that holding prevents a foster child from becoming a resident of the household of a foster parent if the length of the placement is sufficient and the other factors in the cited cases are met. The length of the child’s intended stay with the Augsburgers was much longer than that in Watson, somewhat longer than in A.G., and much more steady than that in Coriasco.

In considering the intent of the Augsburgers’ policy, significance must be given to the definition of who are insureds, which states as follows:

"Insured means you and the following residents of your household:

1. your relatives; and

2. persons under 21 in the care of those named above.”

Thus, if the deceased child was a "resident” within the meaning of the policy, she would have been entitled to various benefits. The parties have not suggested that the child could be a "resident” of the household in order to be considered an insured but not a resident as to the exclusionary clause. The A.G. court reasoned that a similar provision, in defining who was insured, indicated an intention that the minor foster child be considered as a resident both in regard to being an insured and being subject to the liability exclusion provision.

A stronger factor in deeming that the intent of the policy was to consider a foster child in the situation of the decedent here as a "resident of the household” is the fact that few unrelated children, who are not subject to possible removal, stay with foster parents over extended periods. Thus, if only long-term foster children were intended to be described in the definition provision and the exclusionary provision, the designations would have little meaning.

Our decision here is consistent with legislation enacted fairly recently in regard to insurance coverage for foster children. Public Act 86—1482, effective January 14, 1991, has two provisions that are relevant here. See Pub. Act 86—1482, eff. January 14, 1991 (1990 Ill. Laws 4064). One provision, which appears in section 155.30 of the Illinois Insurance Code (Insurance Code) (215 ILCS 5/155.30 (West 1994)), states that (1) for purposes of determining insurance rates in regard to a child placed in a household by DCFS or a private child welfare agency, a foster child shall not be treated "differently from a natural or adopted child of the policy owner” and "acceptance of the placement of a foster child in [an insured] household” shall not be considered "as a use of the family dwelling for a business purpose.” See Pub. Act 86—1482, § 4, eff. January 14, 1991 (1990 Ill. Laws 4064, 4078). The other provision is in section 5(s) of the Children and Family Services Act (Act) (20 ILCS 505/5(s) (West 1994)). It states that DCFS may provide a program to reimburse foster parents, under placement agreements such as that here, for "damages sustained by [them] as a result of the malicious or negligent acts of foster children” as well as providing third-party coverage for such foster parents with regard to actions of foster children to other individuals. 20 ILCS 505/5(s) (West 1994); see also Pub. Act 86—1482, § 1, eff. January 14, 1991 (1990 Ill. Laws 4064, 4071).

Notably, section 155.30 of the Insurance Code prevents insurers from charging a higher premium because the covered children are foster children than if the children were natural or adopted children. 215 ILCS 5/155.30 (West 1994). The exposure of foster parents to suits by foster children in regard to the supervision and care given to the foster children would appear to be greater than the exposure to suits brought by natural or adopted children, because in the latter case natural and adoptive parents are still protected by parent-child immunity. See Cates v. Cates, 156 Ill. 2d 76, 619 N.E.2d 715 (1993). If foster parents have such immunity, the Bank has no case here. In any event, the General Assembly did not prohibit an insurer from excluding coverage of parents for liability to either natural, adopted, or foster children.

In Watson, the court not only held that the exclusionary provision there did not defeat coverage for an insured for a suit by the foster child, the court also held that although the foster parents were receiving pay for caring for the child, this did not constitute operation of a business in the home. Another exclusionary provision would have prevented coverage if that were so. The General Assembly codified that portion of the Watson holding but did not codify or otherwise deal with the exclusionary provision in regard to coverage for liability of the foster parent to foster children. Our decision treats the foster children the same as natural or adopted children.

The Augsburgers also make some contention that the exclusionary provision does not apply to injuries to the deceased minor because the reference in the exclusionary clause to "individuals under 21 in the care of the preceding persons” refers only to relatives residing with the policyholder as "preceding persons” and not to the policyholder, i.e., the person designated as "you.” Such an interpretation does not make sense. An insurer would be unlikely to exclude liability coverage for suits by a foster child of a relative of the policyholder residing in the household but not exclude liability coverage for suits brought by a foster child of the policyholder. Such an interpretation would also be at odds with the format of the definition of who are "insureds” where the language makes clear that "persons under 21” who are residents of the household are "insureds” regardless of whether they are under the care of the policyholder or a relative of the policyholder.

The Augsburgers originally maintained that the "last antecedent clause rule” set forth in Illini Federal Savings & Loan Ass’n v. Elsah Hills Corp., 112 Ill. App. 3d 356, 359, 445 N.E.2d 1193, 1196 (1983), required an interpretation of the exclusionary provision that "individuals under 21 in the care of the preceding persons” applies only to those in care of relatives of the person referred to as "you.” That rule speaks of confining a qualifying phrase to its last antecedent. No operation of that rule can limit reference to "individuals under 21 in the care of the preceding persons” to those in the care of relatives. The Augsburgers conceded this at oral argument.

As we have indicated, we affirm.

Affirmed.

KNECHT, J., concurs.