Schuster v. Occidental Fire & Casualty Co.

Illinois Official Reports
Appellate Court
Schuster v. Occidental Fire & Casualty Co. of North America,
2015 IL App (1st) 140718Appellate Court IRINA SCHUSTER, as Special Administrator of the Estate of Oleh
Caption Baranovsky, Deceased, Plaintiff-Appellant, v. OCCIDENTAL FIRE
AND CASUALTY COMPANY OF NORTH AMERICA,
Defendant-Appellee.
District & No. First District, Fifth Division
Docket No. 1-14-0718
Filed March 27, 2015
Decision Under Appeal from the Circuit Court of Cook County, No. 11-L-14105; the
Review Hon. Raymond W. Mitchell, Judge, presiding.
Judgment Affirmed.
Counsel on Michael W. Rathsack, Alexander Gruzmark, and Andrew J. Long, all
Appeal of Chicago, for appellant.
Wendy N. Enerson, of Cozen O’Connor, of Chicago, for appellee.
Panel JUSTICE McBRIDE delivered the judgment of the court, with
opinion.
Presiding Justice Palmer and Justice Reyes concurred in the judgment
and opinion.
OPINION
¶1 The plaintiff, Irina Schuster, as special administrator of the estate of Oleh Baranovsky,
deceased, appeals from the entry of summary judgment for the defendant insurer, Occidental
Fire & Casualty Company (Occidental),1 in this insurance coverage action. The main dispute
is whether the insurance policy covers both owned and leased vehicles. The trial court granted
summary judgment to the insurer after finding that its commercial automobile liability policy
covered owned vehicles, not the leased truck that was involved in Baranovsky’s fatal accident,
and that leasing the truck did not trigger an “automatic insurance provision” for newly
acquired vehicles. The court also rejected the plaintiff’s contention that the insurer was
estopped from raising policy defenses. On appeal, the plaintiff contends the findings were
contrary to precedent and the facts. For the reasons below, we disagree with the estate and we
affirm the court’s ruling.
¶2 Baranovsky’s accident occurred on September 8, 2005, at 12:50 p.m. when the 23-year-old
Chicagoan was driving a 1997 Isuzu freight truck in Tennessee. He was southbound on
Interstate 65, near mile marker 100 and the exit ramp for the community of Millersville. There,
the highway curves to the east, but the freight truck crossed west over the highway median,
overturned onto the driver’s side, and slid into the northbound traffic lanes, where it struck a
Toyota Corolla and caused the car to roll several times. The 31-year-old oil refinery worker
who was driving the Toyota was only bruised and was released from the emergency room that
same day. Baranovsky’s injuries were more severe. He was flown from the accident scene and
died in the hospital a week later.
¶3 In 2007, Baranovsky’s estate brought an action for damages against two interstate trucking
companies based in Illinois, Diamond Transportation, Inc. (Diamond), and DA Fast Express,
Inc. (DA Fast); and the president of DA Fast, Dariusz Benesiewicz. The negligence allegations
against Diamond are pertinent here. The estate alternatively alleged that Diamond failed to
provide worker’s compensation coverage to its employee driver or to properly maintain its
truck. More specifically, at the time of the accident, Baranovsky was alleged to be “an
employee and/or agent of, and driver for Defendant [Diamond]” who was “acting within the
scope of said employment and/or agency [with Diamond]” and “operating a [1997 Isuzu]
vehicle owned and/or leased by Defendant [Diamond].” Diamond was alleged to owe “the
duty to exercise due care at all times to avoid placing its employees and/or agents in danger,”
but in breach of that duty it had required its employee and/or agent to “drive unreasonably
extended hours in excess of his ordinary physical limitations” or it failed to inspect, maintain,
1
It is unclear why the insurer has been referred to alternatively as Occidental Fire & Casualty
Company, Occidental Fire & Casualty Company of North America, and Occidental Fire & Casualty
Company of North Carolina. We use the version that appears on the printed policy.
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or repair its vehicle. The estate has abandoned the allegations regarding worker’s
compensation insurance and focuses its appeal on the allegations of common law negligence.
¶4 When Diamond received the negligence complaint, it requested claim coverage from
Occidental under the “Truckers Coverage” commercial automobile policy that Diamond had
purchased from Occidental for the one-year period beginning September 23, 2004. Diamond’s
policy provided up to $1 million liability coverage and obligated Occidental to “pay all sums
an ‘insured’ legally must pay as damages because of ‘bodily injury’ or ‘property damage’ to
which this insurance applies, caused by an ‘accident’ and resulting from the ownership,
maintenance or use of a covered auto.”
¶5 The policy’s section I, “Item Three–Schedule of Covered Autos You Own,” contains a list
of 14 insured trucks and cars, identified by their unique vehicle identification numbers, and
their model year, trade name, and body type (e.g., “straight truck” or “van”). The Isuzu truck
that Baranovsky was driving does not appear on this original policy schedule. However, a
commercial policy change request form in the record on appeal shows that Diamond asked for
the Isuzu truck to be added to its Occidental policy after the accident occurred based on a lease
that was dated one day before the accident occurred. Diamond’s insurance agent faxed the
request to Occidental’s agent on September 8, 2005, at 4:28 p.m. and the written lease dated
September 7, 2005, indicated DA Fast was leasing the Isuzu to Diamond for a year. We
emphasize that it is undisputed that DA Fast owned the Isuzu truck when the accident occurred
and that Diamond has never owned that vehicle.
¶6 Diamond’s “ ‘covered autos’ ” were defined by symbol 46 in a chart of coverage numbers
that was included in section I of the policy. Coverage symbol 46 is labeled, “Specifically
Described ‘Autos,’ ” and defined as “Only those ‘autos’ described in Item Three of the
Declarations for which a premium charge is shown.” Diamond contracted only for coverage
symbol 46 and did not contract for other coverage symbols. For instance, Diamond did not
contract for coverage symbol 41, which is labeled “Any ‘Autos’ ”; or for coverage symbol 47,
which is labeled, “Hired ‘Autos’ Only,” and defined as “Only those ‘autos’ you lease, hire, rent
or borrow.”
¶7 Section I of the policy also contains what the parties refer to as the “automatic insurance
provision.” It states:
“B. Owned Autos You Acquire After the Policy Begins
1. If Symbols 41, 42, 43, 44 or 45 are entered next to the coverage in Item Two
of the Declarations, then you have coverage for ‘autos’ that you acquire of the type
described for the remainder of the policy period.
2. But, if Symbol 46 is entered next to a coverage in Item Two of the
Declarations, an ‘auto’ you acquire will be a covered ‘auto’ for that coverage only
if:
a. We already cover all ‘autos’ that you own for that coverage or it replaces
an ‘auto’ you previously owned that had that coverage; and
b. You tell us within 30 days after you acquire it that you want us to cover it
for that coverage.”
¶8 Section II of the policy contains exclusions for employee injuries:
“B. Exclusions
This insurance does not apply to any of the following:
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***
3. Workers’ Compensation
Any obligation for which the ‘insured’ or the ‘insured’s’ insurer may be
held liable under any workers compensation, disability benefits or
unemployment compensation, disability benefits or unemployment
compensation law or any similar law.
4. [Bodily injury to an employee of the insured arising out of and in the
course of employment. This exclusion applies whether the insured may be
liable as an employer or in any other capacity.]”
¶9 When Diamond requested claim coverage under this policy, Occidental responded that
based on the facts alleged in the estate’s complaint, there was no coverage. Occidental quoted
the policy’s express exclusions for workers’ compensation liability and bodily injuries to
employees and then generally stated, “By naming the specific grounds for this disclaimer of
coverage, we do not waive any of our rights or any of the other provisions or conditions of the
policy of insurance and specifically reserve all of our rights and remedies under this policy and
under the statutes and common law.”
¶ 10 Diamond then answered the complaint but did not otherwise defend against the estate’s
allegations. A default judgment was entered against Diamond and the estate proved up
damages totaling $4.4 million. Shortly after that, Diamond and the estate agreed that the estate
would settle for an assignment of Diamond’s insurance rights and the estate, as assignee,
commenced this declaratory judgment action against Occidental.
¶ 11 Discovery ensued in the coverage case and indicated that DA Fast, an Illinois company,
contracted to haul freight exclusively for Diamond, that Diamond was DA Fast’s sole source of
income, and that the relationship began in 1998 and continued for about a year after
Baranovsky’s accident. Benesiewicz (the president of DA Fast) testified that he bought the
1997 Isuzu truck at issue in April 2005. DA Fast’s drivers’ manifest logs showed that
Benesiewicz drove the 1997 Isuzu as early as August 4, 2005. Another log sheet showed that
Baranovsky drove the truck as early as August 5, 2005, which is when he first began driving
for DA Fast, ostensibly as an independent contractor. The logs showed that the only truck
Baranovsky drove for DA Fast during his six weeks with DA Fast was the 1997 Isuzu.
Benesiewicz testified that he insured the Isuzu through Great West Casualty Company and that
the policy was in effect when the accident occurred.
¶ 12 On cross-motions for summary judgment, the trial court found there was a question of fact
as to whether Baranovsky was Diamond’s employee, but that regardless of his employment
status, Occidental was entitled to summary judgment. As we summarized earlier, the court
found that summary judgment was warranted because the Occidental policy covered only
vehicles that were owned by Diamond, the policy did not cover the leased truck that
Baranovsky was driving, and the lease of the truck from DA Fast to Diamond did not trigger an
“automatic insurance provision” for newly acquired vehicles. The court rejected the estate’s
contention that Diamond’s insurer was estopped from raising defenses to coverage.
¶ 13 The estate now argues the summary judgment ruling should be reversed because Diamond
timely fulfilled the requirements for automatic coverage of the newly acquired Isuzu when it
submitted the change request form on September 8, within 30 days of Diamond’s lease of the
vehicle from DA Fast on September 7. The estate contends this sort of automatic insurance
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clause is commonly used to prevent a gap in coverage between the time an insured acquires a
vehicle and is able to complete the paperwork necessary to expressly add the vehicle to its
policy. The estate cites Smith for the proposition that the Occidental clause provided interim
coverage even though Diamond notified the insurer after the vehicle was involved in an
accident. American Freedom Insurance Co. v. Smith, 347 Ill. App. 3d 1, 6-7, 806 N.E.2d 1136,
1140 (2004). Continuing, the estate argues that the court’s conclusion that the clause applied
only to owned vehicles is contrary to Emiljanowicz, which involved a freight truck that was
leased to a trucking company and an insurance clause that was similar, if not identical, to the
clause at issue here. Progressive Premier Insurance Co. of Illinois v. Emiljanowicz, 2013 IL
App (1st) 113664, 991 N.E.2d 352.
¶ 14 Occidental responds that the trial court’s ruling was well reasoned and should be affirmed.
Occidental contends that adding the Isuzu to the policy after the accident was ineffective and
that according to Mank, unless the vehicle appeared on the policy’s “Schedule of Covered
Autos” on the day of the accident, it was not covered on the day of the accident. Mank v. West
American Insurance Co., 249 Ill. App. 3d 827, 620 N.E.2d 6 (1993). Occidental also contends
that the reason there was coverage for a leased truck in Emiljanowicz was because the insured
purchased coverage for all of its leased (and owned) vehicles, unlike Diamond, which
purchased coverage only for its owned vehicles.
¶ 15 On appeal we consider the allegations of the underlying complaint and construe the
Occidental insurance contract in order to determine whether summary judgment was proper.
The interpretation of an insurance contract and the entry of summary judgment present
questions of law that are reviewed de novo without any deference to the trial court’s
determinations. Continental Casualty Co. v. McDowell & Colantoni, Ltd., 282 Ill. App. 3d
236, 241, 668 N.E.2d 59, 62 (1996).
¶ 16 The entry of summary judgment is a drastic but expeditious means of disposing of a lawsuit
in which the right of the moving party is free from doubt and clear. Outboard Marine, 154 Ill.
2d at 102, 607 N.E.2d at 1209. Summary judgment is to be granted “without delay if 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.” 735 ILCS 5/2-1005 (West 2010); Outboard Marine, 154 Ill. 2d
at 102, 607 N.E.2d at 1209. In other words, at the summary judgment stage, the court does not
decide disputed issues of fact, but does decide whether they exist and that the matter should
instead proceed to trial. A court is cautious in awarding summary judgment in order to avoid
preempting a litigant’s right to a trial in which the litigant may fully present the factual basis of
his or her case. Lamkin v. Towner, 246 Ill. App. 3d 201, 204, 615 N.E.2d 1208, 1210 (1993);
Outboard Marine, 154 Ill. 2d at 102, 607 N.E.2d at 1209 (summary judgment is to be denied
where there are undisputed facts from which reasonable persons could draw divergent
inferences). A genuine issue of material fact is said to exist when the evidence is sufficient to
cause a reasonable jury to return a verdict for the party opposing the entry of summary
judgment. McDonald v. Northeast Illinois Regional, 249 F. Supp. 2d 1051, 1053 (N.D. Ill.
2003).
¶ 17 A plain and unambiguous insurance policy is applied as written. Crum & Forster
Managers Corp. v. Resolution Trust Corp., 156 Ill. 2d 384, 620 N.E.2d 1073 (1993). A court
will not search for ambiguity where none exists. Crum & Forster, 156 Ill. 2d at 391, 620
N.E.2d at 1078. However, a policy that is susceptible to more than one reasonable
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interpretation is ambiguous and subject to rules of interpretation, such as the rule that
ambiguities are construed against the drafter of the policy and in favor of coverage. Outboard
Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill. 2d 90, 119, 607 N.E.2d 1204, 1217
(1992). Accordingly, a court must initially look to the language of the policy alone. Gallagher
v. Lenart, 226 Ill. 2d 208, 233, 874 N.E.2d 43, 58 (2007). A single, isolated clause or provision
in a contract is not indicative of the parties’ intent at the time of contracting. Gallagher, 226 Ill.
2d at 233, 874 N.E.2d at 58. “[B]ecause words derive their meaning from the context in which
they are used, a contract must be construed as a whole, viewing each part in light of the others.”
Gallagher, 226 Ill. 2d at 233, 874 N.E.2d at 58.
¶ 18 We consider the fact that the Isuzu was leased and not owned by Diamond to be dispositive
of this appeal. When the contract is read as a whole, it is clear that the only vehicles that were
covered by this liability policy were vehicles that Diamond owned. According to the contract,
the only type of coverage that Diamond purchased was symbol 46 coverage, symbol 46
coverage is for “Specifically Described Autos” which are “described on Item Three of the
Declarations,” and “Item Three of the Declarations” is entitled “Schedule of Covered Autos
You Own.”
¶ 19 The estate is unable to point to any language in this plain and unambiguous contract which
arguably extends policy coverage to leased vehicles. Instead of contract language or other
competent facts, the estate cites “circumstantial evidence” that this policy encompassed leased
trucks. The estate contends:
“[T]he policy on first glance might appear to cover only owned trucks because the
insured trucks are listed under Item Three[, which is entitled] Schedule of Covered
Autos You Own. However, a witness testified that Diamond leased its trucks rather than
owning them. [This testimony was corroborated by] the fact that Item Three has a line
for the original cost of the truck but not one of those lines is filled in. There was
presumably no cost listed because Diamond never bought them.” (Emphasis in
original.)
¶ 20 The witness testimony that the estate is relying upon is a statement that the president of DA
Fast made during his deposition to the effect that Diamond did not own trucks but rather leased
trucks to haul its freight. Benesiewicz’s opinion or misstatement about the details of someone
else’s company is not competent evidence. His unsupported assumption or misstatement about
Diamond’s business operations or assets is not a statement of fact that could be considered at
the summary judgment stage. Witness testimony properly considered by a court in a summary
judgment proceeding is testimony that meets the same standard as an affidavit and consists of a
statement or statements of fact, not mere conclusions, opinions, or belief not based on personal
knowledge of facts. Patterson v. Stern, 88 Ill. App. 2d 399, 404, 232 N.E.2d 7, 9 (1967); Davis
v. Times Mirror Magazines, Inc., 297 Ill. App. 3d 488, 495-96, 697 N.E.2d 380, 386 (1998)
(rejecting appeal from summary judgment ruling in part because the plaintiff’s “purported
evidence of retaliatory discharge was based on unsupported assertions, opinions, and
conclusory statements that he made in his deposition testimony” and statements of this nature
“are not admissible evidence upon review of a summary judgment motion” (internal quotation
marks omitted)); Seefeldt v. Millikin National Bank of Decatur, 154 Ill. App. 3d 715, 718, 506
N.E.2d 1052, 1055 (1987) (indicating that when determining whether a genuine issue of
material fact exists in a summary judgment proceeding, “a court should ignore personal
conclusions, opinions, and self-serving statements and consider only facts admissible in
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evidence under the rules of evidence”); Harris Bank Hinsdale, N.A. v. Caliendo, 235 Ill. App.
3d 1013, 1025, 601 N.E.2d 1330, 1138 (1992) (evidence that would be inadmissible at trial is
not to be considered in a summary judgment proceeding). Put another way, if this case went to
trial, the president of DA Fast would not be permitted to opine from the witness stand about
Diamond’s assets or business operations and so the estate’s citation to the deposition transcript
does not raise a question of material fact to defeat Occidental’s motion for summary judgment.
Moreover, although we granted the estate’s motion to cite additional authority in support of its
appeal, the case the estate relies upon, Hajicek, does not persuade us to give serious
consideration to Benesiewicz’s deposition testimony that Diamond leased rather than owned
vehicles. Hajicek v. Nauvoo Restoration, Inc., 2014 IL App (3d) 121013, ¶ 13, 7 N.E.3d 911.
The case is properly cited for the well-established proposition that an appellee may not
effectively raise an evidentiary objection for the first time on appeal. The case does not
indicate that speculation, opinion, unfounded conclusion or mere assumption should be treated
as competent evidence to defeat a motion for summary judgment.
¶ 21 Furthermore, the estate’s proposed presumption as to why the purchase price of the
covered vehicles was left blank on the Occidental policy page is not a reasonable inference. It
is speculation which is not grounded in any fact. Even in combination, the assumption and the
speculation are not enough to refute the definite indications in the contract that coverage was
limited to vehicles which Diamond owned.
¶ 22 Nevertheless, presuming, for the purposes of argument, that Occidental or Diamond
intentionally put leased vehicles on the policy’s “Schedule of Covered Autos You Own,” we
would still conclude there is no coverage for the leased Isuzu. This is because the automatic
insurance provision which the estate is relying upon provides coverage only to “Owned Autos
You Acquire After the Policy Begins” and specifies that coverage is extended to after-acquired
vehicles “only if” Occidental “already cover[s] all ‘autos’ that [Diamond] own[s] for that
coverage or it [the newly acquired vehicle] replaces an ‘auto’ you previously owned that had
that coverage.” (Emphases added.) We cannot reasonably construe this clear policy language
about vehicles which are owned to encompass vehicles which are leased.
¶ 23 The record on appeal establishes that Diamond leased the Isuzu from DA Fast instead of
purchasing it from DA Fast. Thus, the policy did not cover the vehicle that Baranovsky was
driving when he had his unfortunate accident.
¶ 24 We are not dissuaded from this conclusion by the estate’s citation to Emiljanowicz, which
was an insurance coverage action concerning a leased freight truck that was involved in an
accident before the driver hauled his first load for the trucking company. Emiljanowicz, 2013
IL App (1st) 113664, ¶ 8, 991 N.E.2d 352. That case is not on point. Specifically there, the
trucking company paid Occidental to insure all of its vehicles, whether they were leased or
owned. Emiljanowicz, 2013 IL App (1st) 113664, ¶ 11, 991 N.E.2d 352. The policy included
the same automatic insurance coverage that is at issue here and the court found that under the
facts presented, the Occidental policy was ambiguous as to whether there was automatic
coverage for the leased freight truck. Emiljanowicz, 2013 IL App (1st) 113664, ¶ 26, 991
N.E.2d 352. The court then applied the principle that ambiguities are construed against the
insurer and found that the newly leased freight truck was covered under the Occidental policy.
Emiljanowicz, 2013 IL App (1st) 113664, ¶ 26, 991 N.E.2d 352. However, in the current case,
there is no competent evidence that Diamond contracted with Occidental to cover any leased
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vehicles and, thus, no ambiguity as to whether there was coverage of the leased Isuzu.
Accordingly, Emiljanowicz’s reasoning is not relevant here.
¶ 25 Based on this analysis, we conclude that the clear and unambiguous contract did not
provide coverage for the leased Isuzu.
¶ 26 Given our conclusion that coverage was limited to owned vehicles, we do not need to
resolve the parties’ dispute as to whether adding the leased Isuzu to the policy after the
accident provided coverage on the day of the accident.
¶ 27 It is also unnecessary for us to reach Occidental’s alternative argument that insurance
coverage is provided only for risks and that because Diamond already knew or had reason to
know of the Isuzu accident and the likelihood of claims when it sought to add the Isuzu to the
Occidental policy, then the known-loss doctrine bars coverage for the Isuzu accident. See
Viking Construction Management, Inc. v. Liberty Mutual Insurance Co., 358 Ill. App. 3d 34,
42, 831 N.E.2d 1, 7 (2005) (indicating that implicit in every liability contract is the requirement
that the loss be a fortuitous loss); Outboard Marine, 154 Ill. 2d at 103, 607 N.E.2d at 1210(indicating that insurance is for a risk not a certainty and that the known-loss doctrine relieves
an insurer of the duty to defend or indemnify).
¶ 28 This brings us to the estate’s second main contention on appeal: estoppel. The estate
contends that the insurer had no right to unilaterally declare there was no coverage (on grounds
that the policy expressly excludes coverage for employee injuries) and that the insurer was
obligated to either defend Diamond under a reservation of rights or to file a declaratory
judgment so that a court could determine the insurer’s responsibilities. The estate is relying on
the equitable principle that “an insurer’s duty to defend under a liability insurance policy is so
fundamental an obligation that a breach of that duty constitutes a repudiation of the contract.”
Employers Insurance of Wausau v. Ehlco Liquidating Trust, 186 Ill. 2d 127, 151, 708 N.E.2d
1122, 1135 (1999); Clemmons v. Travelers Insurance Co., 88 Ill. 2d 469, 479, 430 N.E.2d
1104, 1109 (1981) (indicating the estoppel doctrine is a rule of equity).
¶ 29 If the insurer owes and breaches a duty to defend, the estoppel doctrine bars the insurer
from later enforcing another clause of the contract that contains a defense to coverage, even if
that defense would have been successful. Ehlco, 186 Ill. 2d at 151-52, 708 N.E.2d at 1135;
Clemmons, 88 Ill. 2d at 479, 430 N.E.2d at 1109. Thus, in appropriate circumstances, the
equitable principle of estoppel will be used to preclude an insurer from relying on a condition
in which the insured has forfeited coverage, such as by filing a false statement, vacating a
building after the issuance of a fire policy, and failing to obtain the insurer’s consent before
settling a case. Richardson v. Guardian Life Insurance Co. of America, 984 P.2d 917, 924 (Or.
Ct. App. 1999). In other words, the insured may use estoppel as a defense in order to preserve
contractual rights to coverage. Nationwide Mutual Insurance Co. v. Filos, 285 Ill. App. 3d 528,
533, 673 N.E.2d 1099, 1103 (1996). Estoppel, however, generally cannot be used to create
coverage where none otherwise exists. Filos, 285 Ill. App. 3d at 534, 673 N.E.2d at 1103(“Illinois courts have followed the general rule that the doctrine of estoppel cannot be used to
create primary liability or to increase coverage provided under an insurance policy.”);
ABCD…VISION, Inc. v. Fireman’s Fund Insurance Cos., 744 P.2d 998, 1000 (Or. 1987)
(estoppel cannot expand coverage beyond the limits of the original policy); Schaffer v. Mill
Owners Mutual Insurance Co., 407 P.2d 614, 617 (Or. 1965) (estoppel or waiver is not a basis
for creating a contract for coverage where no such contract previously existed); Alan Corp. v.
International Surplus Lines Insurance Co., 22 F.3d 339, 343 (1st Cir. 1994) (“As a general
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matter, estoppel, like waiver, does not extend, broaden or enlarge coverage so as to include
risks not covered within the terms of the policy.”). Estoppel is not used to create coverage for a
risk the insurer did not agree to cover and the insurer should not be made to pay for a loss for
which it did not collect a premium. Filos, 285 Ill. App. 3d at 534, 673 N.E.2d at 1103.
¶ 30 A court will not enforce the insurer’s protections under the policy where the insurer failed
to act equitably toward its insured, that is, the insurer did not take one of two options: (1) to
defend the suit under a reservation of rights or (2) to seek a declaratory judgment that there is
no coverage under the policy. Clemmons, 88 Ill. 2d at 479, 430 N.E.2d at 1109; Ehlco, 186 Ill.
2d at 150-51, 708 N.E.2d at 1134-35. If the insurer fails to take either step and is later found to
have wrongfully denied coverage, then the estoppel doctrine may be applied. Ehlco, 186 Ill. 2d
at 150-51, 708 N.E.2d at 1135.
¶ 31 The estoppel doctrine was not triggered in this case. The trial court concluded there was no
coverage under the Occidental policy and we agree with that conclusion. The policy clearly
covered only owned automobiles and it was undisputed that the Isuzu was leased and not
owned by Diamond. Therefore, Occidental’s denial was proper and is not grounds for invoking
the estoppel doctrine.
¶ 32 Finally, the estate argues that Occidental is estopped from denying coverage because its
claim denial letter did not refer to the known loss doctrine which Occidental has argued in the
trial and appellate courts. Occidental responds that this argument is incorrect, but in any event,
we should not address it because the estate is presenting it for the first time on appeal and
issues not raised in the circuit court cannot be argued for the first time on appeal. Robidoux v.
Oliphant, 201 Ill. 2d 324, 344, 775 N.E.2d 987, 998-99 (2002). The estate contends that it
made this estoppel argument in one sentence in its 12-page cross-motion for summary
judgment. Having read the motion, however, we disagree with the estate. We find that the
argument is being made for the first time on appeal and has been waived. Waiver aside, it is
irrelevant whether the claim denial letter cited the known-loss doctrine, because this doctrine
did not enter into the trial judge’s ruling or this court’s analysis and the claim was properly
rejected on other grounds. In any event, this policy did not cover leased vehicles and estoppel
is not a basis for creating coverage for which Diamond neither contracted nor paid a premium.
¶ 33 We conclude that the trial court’s findings were correct and that summary judgment was
properly entered. Therefore, we affirm the judgment order from which the estate appealed.
¶ 34 Affirmed.
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