American Family Mutual Insurance Co v. Page

Nos. 2--05--0770 & 2--05--0799 cons. filed:
7/11/06
_____________
_________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
SECOND DISTRICT
_________________________________________________________________________
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AMERICAN FAMILY MUTUAL ) Appeal from the Circuit Court
INSURANCE COMPANY, ) of Du Page County.
)
Plaintiff-Appellee, )
)
v. ) No. 03--MR--1607
)
MYLYNDA PAGE, )
)
Defendant and Counterdefendant- )
Appellant )
)
(Robert Chicoine, Marguerite Chicoine, and )
Nicole Chicoine, Defendants and )
Counterdefendants; American Insurance ) Honorable
Company, Defendant and Counterplaintiff- ) Edward R. Duncan, Jr.,
Appellee). ) Judge, Presiding.
_________________________________________________________________________
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AMERICAN FAMILY MUTUAL ) Appeal from the Circuit Court
INSURANCE COMPANY, ) of Du Page County.
)
Plaintiff-Appellee, )
)
v. ) No. 03--MR--1607
)
MYLYNDA PAGE, )
)
Defendant and Counterdefendant )
)
(Robert Chicoine, Marguerite Chicoine, and)
Nicole Chicoine, Defendants and )
Counterdefendants-Appellants; American ) Honorable
Insurance Company, Defendant and ) Edward R. Duncan, Jr.,
Counterplaintiff-Appellee). ) Judge, Presiding.
_________________________________________________________________________
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JUSTICE O'MALLEY delivered the opinion of the court:
Defendants Mylynda Page, Robert Chicoine, Marguerite Chicoine, and Nicole
Chicoine timely appeal the ruling of the circuit court of Du Page County granting summary
judgment to plaintiff, American Family Mutual Insurance Company (American Family), and
to defendant American Insurance Company (AIC) on plaintiff's complaint seeking a
declaration that an injury occurring on the Chicoines' property was not covered by an
American Family homeowners' insurance policy. Page and the Chicoines argue that the
trial court erred in (1) ruling that the land on which the injury took place was not "vacant
land" under the terms of the Chicoines' homeowners' insurance policies with American
Family and AIC; and (2) ruling that the land was used as "farm land" under the terms of the
policies. For the reasons that follow, we affirm.
The parties do not dispute the relevant facts. The Chicoines own three parcels of
real estate relevant to this appeal: their primary residence in St. Charles, Illinois; a second
home, located in Galena, Illinois; and a 97-acre property in Hanover Township, Illinois. The
Chicoines obtained a homeowners' insurance policy for the St. Charles property and for
the Galena property from American Family and AIC, respectively. Neither of the two
policies explicitly refers to the Hanover property. However, the policies have similar
provisions that extend coverage to "vacant land" owned by the Chicoines. The American
Family policy defines the property insured as follows, in relevant part:
"For Personal Liability and Medical Expense Coverages, insured premises
also include:
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Nos. 2--05--0770 & 2--05--0799 cons.
(3) vacant land (other than farm land) owned by or rented to an
insured. This
includes land on which a one or two family dwelling is being built for the
personal use
of an insured."
Likewise, the AIC policy states as follows, in relevant part:
" 'Insured location' means:
***
e. Vacant land, other than farm land, owned by or rented to an
'insured.' "
On July 20, 2002, while both of the above insurance policies were in effect, Page
was injured while riding in an all-terrain vehicle driven by Nicole Chicoine on the Hanover
property. Page later contacted American Family and AIC to make claims for her injury. On
December 10, 2003, American Family filed a complaint for a declaration that its policy with
the Chicoines did not cover the injury at the Hanover property. AIC filed a counterclaim
against Page and the Chicoines for a declaration that its policy with the Chicoines did not
cover the Hanover property injury.
American Family filed a motion for summary judgment, AIC joined and adopted the
motion, and the Chicoines filed a countermotion for summary judgment. American Family
attached to its motion for summary judgment a deposition from Robert Chicoine. In the
deposition, Robert stated that he purchased the Hanover property in 1998 or 1999. The
property was zoned as farmland, and the property tax assessment for the property
indicated that the land was assessed as farmland. When Robert purchased the property,
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there were two structures located on it: "[a]n old lean-to building and an old decrepitated
[sic] barn." After he purchased the property, Robert had the barn torn down and had a
"metal pole barn" built. The new barn measured "60 by 45" and was a permanent
structure. Robert later had a concrete floor poured for the structure, which cost
approximately $18,000 to complete. He used the barn to house "ATV's, a car, and a ***
tractor/mower." The Chicoines visited the property 8 to 10 times per year, either to walk the
property or to ride in the all-terrain vehicles. Robert had never spent a night at the Hanover
property.
Sometime before July 2002, Robert learned from a neighbor that wild alfalfa was
growing on his land, and he agreed to allow the neighbor to cut and take the alfalfa. The
alfalfa grew naturally, and Robert never made any effort to grow or harvest it himself. He
received no income from the neighbor in exchange for allowing him to harvest the alfalfa.
Though he had never worked on a farm or as a farmer, Robert's federal tax returns from
2000 to 2002 included farm profit and loss forms that indicated that he materially
participated in business on the property, and he claimed tax deductions for "farm loss" in
the amount of his mortgage payments. The returns also indicated income from payments
the government made to him on the condition that he refrain from growing certain crops.
On July 20, 2005, the trial court granted summary judgment in favor of the insurers.
The trial court concluded that the Hanover property was not "vacant land" under the policies
and, even if it was, it was "farm land" and thus excluded from coverage. Page and the
Chicoines appealed, and we consolidated their appeals.
Page and the Chicoines first argue that the trial court erred in granting summary
judgment on the basis that the Hanover property did not constitute "vacant land" under the
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insurance policies and was thus excluded from coverage. Summary judgment is
appropriate where the pleadings, depositions, admissions, and affidavits on file, when taken
together in the light most favorable to the nonmovant, show that there is no genuine issue
of material fact and that the movant is entitled to judgment as a matter of law. State Farm
Insurance Co. v. American Service Insurance Co., 332 Ill. App. 3d 31, 36 (2002). The
function of a reviewing court on appeal from a grant of summary judgment is limited to
determining whether the trial court correctly concluded that no genuine issue of material
fact was raised and, if none was raised, whether judgment as a matter of law was correctly
entered. American Service Insurance Co., 332 Ill. App. 3d at 36. When construing an
insurance contract, the court's primary objective is to give effect to the intent of the parties
at the time of contracting. Crum & Forster Managers Corp. v. Resolution Trust Corp., 156
Ill. 2d 384, 391 (1993). To ascertain the intent of the parties and the meaning of their
insurance policy, the court construes the contract as a whole, with due regard to the risk
undertaken, the subject matter that is insured, and the purposes of the entire contract.
Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill. 2d 90, 108 (1992). If the
words used in the policy are unambiguous, they must be given their plain, ordinary, and
popular meaning. Outboard Marine, 154 Ill. 2d at 108. The interpretation of an insurance
contract and the entry of summary judgment are questions of law that are reviewed de
novo, without any deference to the trial court's ruling. Crum & Forster Managers Corp., 156
Ill. 2d at 390-91.
The relevant insurance policy language here extends coverage to "vacant" land
owned by the Chicoines. The term "vacant" is not defined in the insurance policies.
Therefore, we must determine whether the meaning of "vacant" includes the Hanover
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property. As noted, where terms of an insurance contract are unambiguous, we must
accord them their plain, ordinary, and popular meaning. We therefore turn to the dictionary,
which states that the word "vacant" means, inter alia, "being without content or occupant" or
"not occupied or put to use <~land>." Webster's Third New International Dictionary 2527
(1993). The term is synonymous with the word "empty." Webster's Third New International
Dictionary 2527 (1993).
We also consult several cases, both from Illinois and from foreign jurisdictions, that
address the meaning of the term "vacant." Though the parties cite no Illinois cases dealing
with precisely the issue we face here, AIC cites several Illinois cases discussing the
meaning of the term "vacant" in the context of fire insurance policies and defining it as "
'generally empty or deprived of contents' " (Lundquist v. Allstate Insurance Co., 314 Ill. App.
3d 240, 245 (2000), quoting Thompson v. Green Garden Mutual Insurance Co., 261 Ill.
App. 3d 286, 291 (1994)), or " 'empty of everything but air' " (Gash v. Home Insurance Co.
of New York, 153 Ill. App. 31, 33 (1910)). See also Myers v. Merrimack Mutual Fire
Insurance Co., 788 F.2d 468, 471 (7th Cir. 1986) (citing Illinois cases for the definition of
"vacant"); 44 Am. Jur. 2d Insurance '1219, at 454 ("vacant" means "entirely empty, that is,
lacking animate or inanimate objects"), citing Myers, 788 F.2d 468. The definitions from
these cases are instructive, but they are not dispositive, because, as Page points out, they
each define "vacant" as it relates to a building, not a piece of land. See Cotton States
Mutual Insurance Co. v. Smelcer, 212 Ga. App. 376, 378, 441 S.E.2d 788, 789 (1994) ("the
word 'vacant' modifies the word 'land,' not 'structure.' The policy covers land which is
vacant" (emphasis in original)).
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The parties also cite several analogous cases from foreign jurisdictions. See K.
Reynaga, What Constitutes "Vacant Land" Within Meaning of Liability or Property
Insurance Policy Provisions, 47 A.L.R. 5th 535 (1997) (discussing cases dealing with
definition of "vacant" land). For example, in Dawson v. Dawson, 841 P.2d 749 (Utah App.
1992), the court was charged with determining whether land on which an all-terrain-vehicle-
related injury occurred was "vacant" so as to fall under a homeowners' insurance policy
with a provision similar to those quoted above. The court adopted the dictionary definitions
of the word "vacant," which indicated that the word meant " 'containing nothing; empty' " or
"land 'in the natural state.' " Dawson, 841 P.2d at 751, quoting American Heritage
Dictionary 1334 (2d College Ed. 1985). Because the land in Dawson contained several
buildings regularly used by the owners, including two trailers, an outhouse, and a storage
shed, the land was not empty, and thus the policy did not apply. Dawson, 841 P.2d at 749-
50.
Travelers Indemnity Co. v. Holman, 330 F.2d 142 (5th Cir. 1964), involved an area
of open land surrounding three duplex lots all owned by the same insured. All of those
duplexes "were on well defined traditional city lots which either were then, or were shortly to
be, formally platted on approved subdivision plans." Holman, 330 F.2d at 149. With very
little analysis, the court held that the tract of land between the duplexes was "vacant"
because it was "unoccupied [and] open." Holman, 330 F.2d at 149.
In DeLisa v. Amica Mutual Insurance Co., 59 A.D.2d 380, 399 N.Y.S.2d 909 (1977),
the court considered whether land was "vacant" under an insurance policy where the land
contained a cave with an iron gate at its mouth and a platform and steel ladder inside.
DeLisa, 59 A.D.2d at 381, 399 N.Y.S.2d at 910. The owners of the property were not
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aware of the structures, which had been installed by a group of cave explorers whom the
owners allowed to use the cave, free of charge. DeLisa, 59 A.D.2d at 381, 399 N.Y.S.2d at
910. The court held that the term "vacant land," given its ordinary import, meant "lands that
are both unoccupied and unused." DeLisa, 59 A.D.2d at 382, 399 N.Y.S.2d at 910. The
court reasoned that "[u]se of land implies the employment of the same in a manner that will
materially benefit the owner." DeLisa, 59 A.D.2d at 382, 399 N.Y.S.2d at 910. It concluded
that the land was unoccupied and, because the land was not used in any way beneficial to
the owners, the land was vacant.
We do not agree with the holding in DeLisa, for several reasons. First, we do not
agree that whether a property is used is relevant to the issue of whether it is vacant. The
important inquiry focuses on the nature of the land and the objects upon it, not the way in
which the land is used. Second, even if nonuse of the land were a component of vacancy,
we would not see any reason to consider only use that is "materially benef[icial] to the
owner." The identity of the person using the land has no bearing on whether the land is
used, because the word "used" would describe the land, and thus the question of use
would center on whether the land was used, not whether the owner was using it.
Therefore, if the court in DeLisa truly relied on a definition of vacancy that required nonuse,
it would not have found the land to be vacant, because it was used by the cave explorers.
Third, even if use by the owner were relevant to whether land is vacant, we would
not believe that the use would have to be "materially beneficial" to the owner in order for
the land to be considered nonvacant. The motive for building structures on a piece of land
has no effect on whether those structures render the land nonvacant. Indeed, a property
owner may place several buildings on a piece of land without any intention of deriving
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economic benefit from them. The land in such a case could hardly be considered vacant
simply because it did not generate profit. Likewise, a property owner may accept money in
exchange for refusing to build on a completely undeveloped forest property, or, as in this
case, he could use his ownership of a property for favorable tax treatment. The land in
either circumstance, if otherwise empty, could hardly be considered nonvacant simply
because it produced profit for the landowner. The relevant inquiry centers not on the
economic effect of any structures on the property, but rather on the existence of any
structures on the property. Accord Smelcer, 212 Ga. App. 376, 441 S.E.2d 788 (land
containing an abandoned house was not "vacant" under an insurance policy). Therefore,
we do not take use or "business or economic" motive into account in determining if the
Hanover property is vacant.
We note that the Chicoines at least partially rely on the holding in DeLisa as support
for their argument. However, even if use were a factor to be considered in determining
whether land is vacant, the land in this case was used. The Chicoines used the land
regularly for recreational purposes, including all-terrain-vehicle riding, and, indeed, they
were using the property in exactly that fashion at the time the injury giving rise to this
litigation occurred. The Chicoines note that they derived no economic benefit from their
use of the land, but, as noted above, the economic benefit of a piece of land is irrelevant to
the issue of whether the land is vacant.
In Smelcer, 212 Ga. App. 376, 441 S.E.2d at 788, an insurance company argued
that land containing an abandoned old house did not meet the definition of "vacant land" so
as to fall under coverage of a homeowners' insurance policy. Smelcer, 212 Ga. App. at
376, 441 S.E.2d at 788. The court looked to the dictionary, defining "vacant" as " 'to be
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empty, be free,' " and to previous state case law, defining the word as " 'empty or deprived
of contents or without inanimate objects.' " Smelcer, 212 Ga. App. at 377, 441 S.E.2d at
789, quoting Webster's Third New International Dictionary ___ (___). It also cited a treatise
that stated that " 'clearly *** coverage [of "vacant land"] does not extend to land containing
buildings[,] as "vacant land" refers to land unoccupied, unused and in the natural state.' "
Smelcer, 212 Ga. App. at 377, 441 S.E.2d at 789, quoting G. Couch, Couch on Insurance
2d '44:307, 477-78 (1982). Thus, the court concluded that the land in question was not
vacant. Smelcer, 212 Ga. App. at 377, 441 S.E.2d at 789. We agree with the holding in
Smelcer on the basis that the land was nonvacant because it contained a building.
In American Motorist Insurance Co. v. Steffens, 429 So. 2d 335 (Fla. App. 1983), an
insurance company argued that property on which a canal had been built was not vacant
property that would be covered under a homeowners' insurance policy with language
similar to that in this case. The insured had "excavated a portion of the property to create
an interior lake, and then had a canal dug to connect the lake to the Intracoastal
Waterway." Steffens, 429 So. 2d at 336. On appeal, the insurer contended that the canal
land was nonvacant because it contained tidal waters, watercraft, and marine life. Steffens,
429 So. 2d at 337. It also contended that the canal was built to accommodate watercraft
traffic and was specifically constructed to provide access to the interior lake, and it
analogized the case to one in which a court determined that land with a clay road could not
be considered vacant. Steffens, 429 So. 2d at 337. The court held that the land was, "in
the ordinary usage of the word, vacant land," even though it contained water and marine
life and even though "boats [were] operated" upon it. Steffens, 429 So. 2d at 337. The
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court construed the term "vacant land" as meaning "land which is unoccupied by any
permanently affixed structure or inanimate object." Steffens, 429 So. 2d at 337.
We disagree with the holding in Steffens, and we find persuasive the insurer's
argument in that case. The land in question had been altered with the addition of a canal
that served as a transportation conduit for boats, much in the same manner that a sidewalk
would serve as a transportation conduit for pedestrians. The court in Steffens reasoned
that "[o]ne would hardly consider a parcel of land as anything other than vacant merely
because it contained a drainage ditch filled with water, anymore than one would consider a
parcel of land on which there were only native trees and underbrush as anything other than
being vacant." Steffens, 429 So. 2d at 337. That reasoning misstates the facts of the case.
The canal was more than a simple "drainage ditch filled with water"; it was a transportation
conduit for watercraft. 1 Nor is the analogy to "native trees and underbrush" apt; the canal
in Steffens was not native but, rather, was built by the landowner.
In Fort Worth Lloyds v. Garza, 527 S.W.2d 195 (Tex. App. 1975), an insurer argued
that land that contained an irrigation pump was not "vacant land" covered under an
insurance policy. The court held that, "[a]lthough there may be some question as to
1
As noted above, we do not consider whether land or the structures thereon were
used in determining whether land was vacant. We refer to the use of the canal here for the
limited purpose of describing the canal.
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whether [the land was vacant], such doubt must be resolved in the insured's favor." Garza,
527 S.W.2d at 199. It reasoned that the term "vacant" meant "unoccupied" and that an
"isolated irrigation pump *** does not make the land occupied." Garza, 527 S.W.2d at 199.
Thus, it concluded that the land in question was vacant.
Finally, in Bianchi v. Westfield Insurance Co., 191 Cal. App. 3d 287, 236 Cal. Rptr.
343 (1987), the court considered whether land containing a man-made dam, a storage
shed, and a dirt road leading to the dam could be considered "vacant" so as to be covered
by an insurance policy. The court surveyed several of the cases already mentioned here
and gleaned a rule that "the beneficial use or improvement of untenanted property renders
it nonvacant, particularly if the use has accompanied the introduction of artificial structures."
Bianchi, 191 Cal. App. 3d at 293, 236 Cal. Rptr. at 346. The Bianchi court concluded that
the insured's property was not vacant, because it contained an artificial structure built for
business or economic gain. Bianchi, 191 Cal. App. 3d at 291, 236 Cal. Rptr. at 345. We
agree with the holding in Bianchi that the land was not vacant, but, as explained above, our
conclusion does not rest on the question of whether the land was put to use or whether it
was used for economic gain. Rather, we agree that the landowner's construction of a dam,
a shed, and a dirt road on the property rendered it nonvacant.
In the present case, we hold that the Hanover property was not vacant. We base
our conclusion on the fact that the land contained a pole building. To the extent that any of
the above cases would dictate a different result, we find them unpersuasive. See Skipper
Marine Electronics, Inc. v. United Parcel Service, Inc., 210 Ill. App. 3d 231, 239 (1991)
("Decisions of the reviewing courts of foreign jurisdictions are not are not binding on Illinois
courts").
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Page and the Chicoines offer several arguments militating against our conclusion.
First, the Chicoines argue that the term "vacant" as used in the insurance contracts must
be considered ambiguous. The Chicoines note that the policies refer to vacant land "other
than farm land" and thus that "farm land" is meant to be a subset of "vacant land." The
Chicoines then reason that "reasonable people are familiar" with the fact that farmland must
include buildings such as barns, silos, and out-buildings, and, therefore, the policies' terms
are ambiguous, because "vacant" cannot be meant in its ordinary sense. We disagree with
the Chicoines' premise. Reasonable people can agree that farmers use buildings such as
those the Chicoines mention, but it does not necessarily follow that farmers place at least
one of those buildings on each piece of property that they farm. Therefore, we reject the
Chicoines' argument that the insurance policies' terms are ambiguous.
Second, Page and the Chicoines urge that the above cases indicate that "vacant"
should be defined, not in terms of whether the land is empty, but, rather, in terms of
whether it is "habitable." They thus argue that the Hanover land was not habitable, even
though it contained buildings, and must be considered vacant. We disagree with this
approach. The word "vacant" is used here to modify the word "land," not the word
"building" or "structure." Smelcer, 212 Ga. App. at 378, 441 S.E.2d at 789 ("the word
'vacant' modifies the word 'land,' not 'structure.' The policy covers land which is vacant"
(emphasis in original)). While a building may be considered either habitable or unhabitable,
that terminology is not typically used to describe land. The definition we adopt considers
the meaning of the word "vacant" as it relates to land. To the extent that the cases Page
and the Chicoines cite espouse a definition of "vacant" that hinges on habitability, we
decline to follow them.
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Third, the Chicoines argue that the Hanover property was not used in a manner that
materially benefitted them. However, as noted above, regardless of whether or how the
Chicoines used the property, it contained a building and thus cannot be considered vacant.
In any event, contrary to their assertions, even if they did not profit monetarily from their
use of the land, the Chicoines nevertheless used the Hanover property 8 to 10 times per
year, and they used the pole barn to store the all-terrain vehicles they sometimes used
while at the property. Therefore, the building on the land was connected with their use of
the land for recreational purposes.
Fourth, Page argues that the accident in this case occurred away from any buildings
on the Hanover property and thus that the parties' purpose in excluding nonvacant land
from coverage would not be served by denying coverage here. Page offers that the
clauses excluding nonvacant land from coverage sought to avoid coverage of the risks
associated with use of buildings or structures. We disagree. The purpose of the provisions
is to define the scope of the Chicoines' insurance coverage, and we must enforce the terms
of the contracts according to their plain and unambiguous language, as detailed above. We
must also presume that the plain meaning of the contracts' terms reflects the parties'
understandings of the allocation of risks in their contracts.
Fifth, the Chicoines point out that the American Family policy defines "insured
premises" to include "vacant land (other than farm land) owned by or rented to an insured.
This includes land on which a one or two family dwelling is being built for the personal use
of an insured." Therefore, the Chicoines argue, the term "vacant land" must be meant to
include land on which a dwelling is under construction, and thus the term "clearly
contemplates that land may be vacant even when there is a structure on it." We disagree.
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In our view, the language referring to a dwelling under construction is meant to create an
exception to the ordinarily understood meaning of "vacant land" so that land with dwellings
under construction may be included in the policy. The second sentence quoted from the
policy is meant not to explain the meaning of the term "vacant land," but rather to expand
the coverage under the contract to land that would not otherwise be considered vacant.
The sentence does not contemplate that land may be vacant even with a structure upon it
in any context other than when a dwelling is under construction; instead, it indicates that
land with a dwelling under construction may be covered as if it were vacant land, even
though it otherwise would not be.
Because we agree with the trial court's conclusion that the land in question here was
not vacant, we do not reach the issue of whether it was farmland.
For the foregoing reasons, the judgment of the circuit court of Du Page County is
affirmed.
Affirmed.
KAPALA and GILLERAN JOHNSON, JJ., concur.
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