Office Furnishings, Ltd. v. A.F. Crissie & Company, Ltd.

Illinois Official Reports Digitally signed by Reporter
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Appellate Court Date: 2016.01.27 10:27:52
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Office Furnishings, Ltd. v. A.F. Crissie & Co., 2015 IL App (1st) 141724
Appellate Court OFFICE FURNISHINGS, LTD., Plaintiff-Appellant, v. A.F.
Caption CRISSIE AND COMPANY, LTD., and JAMES T. WERNER,
Defendants-Appellees.
District & No. First District, First Division
Docket No. 1-14-1724
Filed November 9, 2015
Rehearing denied December 16, 2015
Decision Under Appeal from the Circuit Court of Cook County, No. 2008-L-12796;
Review the Hon. Donald J. Suriano, Judge, presiding.
Judgment Affirmed.
Counsel on Law Offices of John F. Hedrich, of Chicago (Robert B. Patterson, of
Appeal counsel), for appellant.
HeplerBroom LLC, of Chicago (Anthony J. Tunney and Robert E.
Elworth, of counsel), for appellees.
Panel JUSTICE HARRIS delivered the judgment of the court, with opinion.
Presiding Justice Liu and Justice Connors concurred in the judgment
and opinion.
OPINION
¶1 Plaintiff Office Furnishings, Ltd., appeals the judgment of the circuit court granting
defendants A.F. Crissie & Company, Ltd. (Crissie), and James T. Werner’s motion for a
judgment notwithstanding the verdict (judgment n.o.v.) on plaintiff’s professional negligence
claim.1 On appeal, plaintiff contends that the trial court erred in entering the judgment n.o.v.
because the evidence presented supports the finding that defendants owed a duty to procure
replacement insurance for plaintiff, defendants breached that duty, and the breach proximately
caused plaintiff’s loss. For the following reasons, we affirm.
¶2 JURISDICTION
¶3 The trial court granted defendants’ motion for judgment n.o.v. on May 9, 2014. Plaintiff
filed its notice of appeal on June 5, 2014. Accordingly, this court has jurisdiction pursuant to
Illinois Supreme Court Rules 301 and 303 governing appeals from final judgments entered
below. Ill. S. Ct. R. 301 (eff. Feb. 1, 1994); R. 303 (eff. May 30, 2008).
¶4 BACKGROUND
¶5 In 1993, plaintiff leased warehouse and office space in a building located at 725 South 25th
Avenue in Bellwood, Illinois. Brathan Property, LLC (Brathan), purchased the property in
2000, and plaintiff continued to lease space from the building. Ray Meyers holds controlling
ownership in both Brathan and plaintiff Office Furnishings, Ltd.
¶6 The building had two types of roofing. One section of roof was made of PVC membrane
and the other was made of tar and gravel. The PVC roof had not been replaced since plaintiff
leased the property in 1993. Meyers testified that after Brathan purchased the property, people
would go on the roof regularly to see “what needed to be maintained.” They would
occasionally patch the PVC roof when checkups revealed water penetration. However, he
stated that as far as he knew, the warehouse was dry up to 2003 and he could not “remember
any time when someone came and told me the roof was leaking before the incident of 2003 on
the PVC portion of the roof.” His company did file an insurance claim in 2001 for a leaking
problem with the tar and gravel roof.
¶7 When Brathan purchased the property, the building’s roofing was inspected by a roofing
contractor. Meyers stated that he did not call the roofing contractor nor did he recall whether he
read any report prepared by the contractor. When presented with the documents, Meyers
acknowledged that a contractor did inspect the roof. The report stated that the PVC membrane
had shrunk and that “a substantial amount of water is trapped between the two layers of
roofing.” It recommended that the roof be replaced within one or two years. Defendants
presented two more reports by other roofing contractors who inspected the PVC roof in
February 2001 and June 2001. Both reports indicated that the contractors repaired leaks and the
roof was in poor condition and needed to be replaced. Meyers denied that he had this
information previously or was aware of the recommendations.
¶8 Jim Werner was the insurance producer for plaintiff, and he conducted his business
through his agency, Crissie. Up to December 2002, plaintiff and Brathan were insured by a
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Brathan Property, LLC, also a plaintiff in the negligence claim, is not a party to this appeal.
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policy from Meridian Insurance Company. Werner testified that he knew plaintiff made a
property damage claim in 2001 for loss resulting from water damage. In August 2002,
Meridian informed Werner that it would not be renewing coverage for plaintiff. Meridian did
not renew plaintiff’s policy because it had paid out more in claims than it received in
premiums. Werner testified that he did not know the age of the building’s roof.
¶9 As plaintiff’s insurance producer, Werner sought replacement coverage from other
insurance companies through the ACORD application. Werner testified that Meyers did not
need to request replacement insurance, but it was “assumed” Werner would find replacement
coverage as the insurance agent of plaintiff. To aid the application process, Werner asked
plaintiff to provide updated information if applicable. He testified that sometimes the client
returned the form with updates, and sometimes it did not. If no update was provided, Werner
used the same information given on the prior application. He could not recall whether plaintiff
returned the form with updated information.
¶ 10 Werner sent the ACORD application to eight insurance companies in October 2002. He
stated that it was not the practice for clients to review the ACORD application before it was
sent, and neither Meyers nor Meyers’ assistant, Judith Johnson, reviewed the application.
Werner also listed on the application that Brathan should be added as an additional insured in
the policy. The application was silent on the age and condition of the roof. After reviewing the
application, the companies declined to offer insurance to plaintiff due to past loss experience.
Werner then contacted Joe Kobel, who was an agent for American Family Insurance
(American Family) and with whom he had done some business in the past year. In November
2002, Kobel informed Werner that American Family would offer a policy to plaintiff. Werner
met with Meyers and Johnson and presented them with American Family’s proposal, which he
recommended they accept. Meyers accepted based on Werner’s recommendation.
¶ 11 Werner scheduled another meeting in December 2002 with Meyers, Johnson, and Kobel.
He explained to Meyers that a subsequent meeting was needed because Kobel, as an authorized
American Family agent, had “his own application that needed to be–that he would ask
questions and that had to be signed.” Werner was present at that meeting because “they did not
know Joe Kobel. So it would have been–because I have done prior business with him, it was
just customary that I would take him there, introduced him to Office Furnishings, explain that
he was going to have to complete his application and that he’s going to answer questions, and
then Joe Kobel from that point on was in charge from there.”
¶ 12 At the meeting, Kobel used the ACORD application to obtain some information he needed,
and he asked more questions of Meyers and Johnson to complete the application. The
American Family insurance application stated that the building’s roof was five years old. This
information was not listed on the ACORD application. The application listed no problems with
the roof. Kobel testified that he was told by either Meyers or Johnson that the roof was five
years old. However, Meyers and Johnson testified that they were not asked to provide
information about the age or condition of the roof, and they did not provide such information to
Kobel. Meyers acknowledged that he never communicated to Werner the age of the roof
because he did not have that information. Kobel did not inform Meyers or Johnson of the
importance of accurately listing the age of the roof on the application. Werner testified that
although he was present during the meeting, he did not review any of the documents that were
signed and he did not ask questions.
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¶ 13 Meyers testified that he was not present for the entire meeting and was called in to sign two
sections. When asked whether he recalled answering any questions about the application,
Meyers responded, “we were never asked any questions about [the] American Family
application process.” He stated that Johnson would have handled any appointments and
discussions related to the application process. Meyers acknowledged that Kobel was in charge
of the meeting and stated that Werner did not ask any questions during the meeting. The
application omitted Brathan as an additional insured. Werner, however, discovered the
omission and told Meyers that he was working on the issue with Kobel. The policy provided
insurance coverage to plaintiff from December 1, 2002, to December 1, 2003.
¶ 14 Meyers testified that on January 31, 2003, he was in his office when his purchasing agent
informed him that an employee from the warehouse reported a leak in the roof. Meyers stated
that he did not think “anything of it because we’ve had no problems with leaking in the
warehouse. So I thought it was real minor.” Around noon, the purchasing agent approached
Meyers again and told him that “guys in the warehouse say the roof is really leaking.” He went
to look at the roof and saw that it “was in total chaos.” When Meyers went to the warehouse he
saw that “[i]t was raining like a rain forest” inside. He and his employees protected as much of
the merchandise as they could, but the company sustained more than $1 million in damages.
¶ 15 Plaintiff submitted a claim to American Family. In investigating the claim, American
Family discovered that plaintiff misrepresented the age and condition of the roof on their
application. American Family denied the claim because “the alleged occurrence was not a
fortuitous event.” It also pointed out other misrepresentations, including that plaintiff never
made a claim for damages caused by wind to the roof, and that no contractors had ever
examined the roof’s condition. Plaintiff and Brathan filed this professional negligence claim
against defendants, alleging damages of $1,349,872 for damage to the building, $759,259 for
damage to business personal property, and $88,074 for expenses related to installing a
temporary roof.
¶ 16 During the trial, plaintiff’s expert Stephen Nechtow testified that the standard practice for
an insurance producer required Werner to review the American Family application “to be sure
that the information that was put into the American Family application was true and accurate”
and “all the facts were there.” Defendants’ expert, Todd Davis, testified it was not standard
practice for Werner to review or explain the application to plaintiff or the consequences of
providing incorrect answers on the application. Werner properly discharged his duty to
plaintiff by obtaining replacement insurance for plaintiff through Kobel and American Family.
¶ 17 Three issues of negligence were presented to the jury: (1) Werner failed to ensure that
plaintiff understood the questions on the American Family application; (2) Werner failed to
ensure that plaintiff understood that coverage could be denied if the answers on the application
are not correct; and (3) Werner failed to ensure that the information on the application filled
out accurately reflected the information provided. The jury found in favor of Office
Furnishings for $467,721.50, but found against Brathan.
¶ 18 Defendants filed a motion for a judgment n.o.v. or, in the alternative, for a new trial,
arguing that the verdict reflected an improper imposition of a duty upon Werner, and the
manifest weight of the evidence warranted a new trial. The trial court granted the judgment
n.o.v., finding that Werner had no duty “to verify the information on the application” or to
review the application with Meyers. Werner “could do nothing with that application” because
Kobel was the exclusive agent for American Family. Werner’s duty was only to procure the
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insurance request of plaintiff, and since “[h]e did provide the coverage and everything that he
was looking for,” Werner fulfilled his duty. Plaintiff filed this timely appeal.
¶ 19 ANALYSIS
¶ 20 Plaintiff contends that the trial court erred in granting judgment n.o.v. in favor of
defendants. The trial court properly enters a judgment n.o.v. in limited cases where all of the
evidence, viewed in the light most favorable to the nonmoving party, so overwhelmingly
favors the movant that no contrary verdict based on the evidence could ever stand. Maple v.
Gustafson, 151 Ill. 2d 445, 453 (1992). A judgment n.o.v. is not appropriate if any evidence,
together with reasonable inferences drawn therefrom, demonstrate a substantial factual
dispute, “or where the assessment of credibility of the witnesses or the determination regarding
conflicting evidence is decisive to the outcome.” Id. at 454. We review the trial court’s ruling
on a motion for a judgment n.o.v. under the de novo standard. York v. Rush-Presbyterian-St.
Luke’s Medical Center, 222 Ill. 2d 147, 178 (2006).
¶ 21 Generally, to state a cause of action for negligence, plaintiff must show that defendant
owed plaintiff a duty, defendant breached that duty, and defendant’s breach was the proximate
cause of plaintiff’s injury. Hills v. Bridgeview Little League Ass’n, 195 Ill. 2d 210, 228 (2001).
“In the context of an insurance broker procuring insurance on behalf of the plaintiff, ‘the
primary function of an insurance broker as it relates to an insured is to faithfully negotiate and
procure an insurance policy according to the wishes and requirements of his client.’ ”
Industrial Enclosure Corp. v. Glenview Insurance Agency, Inc., 379 Ill. App. 3d 434, 439-40
(2008) (quoting Pittway Corp. v. American Motorists Insurance Co., 56 Ill. App. 3d 338,
346-47 (1977)).
¶ 22 This common law duty of a broker is codified in section 2-2201(a) of the Code of Civil
Procedure (Code) (735 ILCS 5/2-2201(a) (West 2010)), which requires an insurance producer
to “exercise ordinary care and skill in renewing, procuring, binding, or placing the coverage
requested by the insured or proposed insured.” Under this section, the duty to exercise ordinary
care arises only after coverage is “ ‘requested by the insured or proposed insured.’ ” Skaperdas
v. Country Casualty Insurance Co., 2015 IL 117021, ¶ 37 (quoting 735 ILCS 5/2-2201(a)
(West 2010)). Once such coverage is requested, insurance producers “exercise ordinary care
and skill in responding to the request, ‘either by providing the desirable coverage or by
notifying the applicant of the rejection of the risk.’ ” Id. (quoting Talbot v. Country Life
Insurance Co., 8 Ill. App. 3d 1062, 1065 (1973)).
¶ 23 Our supreme court in Skaperdas agreed with this court’s determination in Melrose Park
Sundries, Inc. v. Carlini, 399 Ill. App. 3d 915 (2010), that such a duty “may not be imposed
*** based on a vague request to make sure the insured is covered.” Skaperdas, 2015 IL
117021, ¶ 42. In Melrose Park Sundries, Inc. v. Carlini, 399 Ill. App. 3d 915 (2010), the
plaintiff did not specifically request workers’ compensation insurance and the policy procured
by the defendant insurance producer provided business liability coverage but not coverage for
workers’ compensation claims. After one of the plaintiff’s employees was injured on the job,
plaintiff filed a negligence claim against defendant alleging that defendant failed to obtain or
offer to obtain workers’ compensation insurance and failed to advise plaintiff that such
insurance was required by law. Id. at 918. This court affirmed the trial court’s grant of
summary judgment in favor of defendant, holding that an insurance producer had no duty to
obtain workers’ compensation insurance not requested, nor was he obligated to advise the
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insured regarding the need for such insurance. Id. at 920. “To hold [the insurance producer]
responsible for insurance coverage beyond that requested by [the insured] would extend the
duty of ordinary care beyond that expressly defined by the legislature.” Id.
¶ 24 Here, plaintiff contends that in finding that Werner had no duty to verify the information on
the American Family insurance application, or to review the application with plaintiff, and
granting the motion for judgment n.o.v., the trial court confused duty with evidence of conduct
proving breach of a duty. Plaintiff argues that Werner’s conduct in undertaking to find
defendants a replacement policy, obtaining American Family as the carrier, arranging the
application meeting, being present at the meeting, and offering to correct errors in the issued
policy, subjected Werner to liability if the requested insurance becomes void due to his
negligence. Plaintiff contends that whether such conduct indicates a breach of duty is a
question of fact for the jury and, given the conflicting expert opinions given in the case,
judgment n.o.v. was not appropriate.
¶ 25 Plaintiff, however, is essentially arguing that by engaging in the aforementioned conduct,
Werner created a duty, beyond the exercise of ordinary care outlined in Skaperdas, to verify
the accuracy of the information on the insurance application and to review the application with
defendants. Our supreme court made clear in Skaperdas that section 2-2201(a) of the Code
imposes on an insurance producer only a duty to exercise ordinary care in renewing, procuring,
binding, or placing the coverage specifically requested by the insured. Skaperdas, 2015 IL
117021, ¶ 37. In order to find a duty to provide specific coverage, the insured must make a
request for that specific coverage; a general request to make sure the insured is covered is
insufficient to create such a duty. Id. Insurance producers exercise ordinary care and skill in
responding to a request for coverage, either by providing the desirable coverage or by notifying
the applicant of the rejection of the risk. Id.
¶ 26 The evidence shows that Meyers did not make a specific request for coverage, only that it
was assumed Werner would find replacement insurance for plaintiff. Werner, as the insurance
producer, found an insurer, American Family, to provide a replacement policy as requested.
Through Kobel, American Family’s agent, plaintiff was issued a replacement policy. This
evidence is undisputed. According to Skaperdas, defendants fulfilled their duty owed to
plaintiff. To require Werner to review the American Family application with Meyers and
Johnson for accuracy, and advise them on the necessity of providing accurate information,
would extend the section 2-2201 duty “beyond that expressly defined by the legislature.”
Carlini, 399 Ill. App. 3d at 920. Furthermore, imposing such a duty on Werner makes no sense
here, where the evidence showed that Werner did not know the age of the roof and could not
have known whether Meyers or Johnson answered that question accurately. “Where no duty is
owed, there is no negligence, and the plaintiff is precluded from recovery as a matter of law.”
Id. at 919. Since the evidence, viewed in the light most favorable to the nonmoving party, so
overwhelmingly favors defendants that no contrary verdict based on the evidence could ever
stand, judgment n.o.v. was proper. Maple, 151 Ill. 2d at 453.
¶ 27 In light of our disposition of the case, we need not address defendants’ alternate request for
a new trial.
¶ 28 For the foregoing reasons, the judgment of the circuit court is affirmed.
¶ 29 Affirmed.
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