Trogub v. Robinson

First Division
July 17, 2006
1-05-3284
ARCADY TROGUB and ROZALYA TROGUB, )
)
Plaintiffs-Appellants, )
) Appeal from
v. ) the Circuit Court
) of Cook County
MATTHEW K. ROBINSON, )
) 04 M 300760
Defendant )
) Honorable
(Government Employees Insurance ) Michael T. Healy,
Company, ) Judge Presiding
)
Respondent-Appellee). )
JUSTICE McBRIDE delivered the opinion of the court:
Plaintiffs Arcady and Rozalya Trogub accepted $10,000 to
settle a lawsuit they filed against defendant Matthew K. Robinson
after a minor two-car collision on August 28, 1999, near the
intersection of Milwaukee Avenue and Lake Cook Road in Wheeling,
Illinois. Robinson rear-ended the Trogubs' southbound vehicle.
The Trogubs' automobile insurance carrier, respondent Government
Employees Insurance Company or GEICO, paid $7,650 for the
Trogubs' resulting medical care and sought a portion of the
Robinson settlement proceeds based on a subrogation clause in
GEICO's written insurance policy. The circuit court determined
GEICO was entitled to subrogate $7,650, less 40% to reflect the
attorney fees the Trogubs had agreed to pay on the amount
recovered in the action and less $336 the Trogubs incurred in
litigation expenses, for a net recovery to GEICO of $4,254. The
Trogubs appeal, contending GEICO is not entitled to any part of
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the Robinson settlement proceeds or alternatively, that the
circuit court should not have disallowed an additional $297 in
litigation expenses. Robinson takes no part in this appeal.
Unless otherwise stated, the following facts are disclosed
by the record on appeal. According to the Trogubs, they
originally filed suit against Robinson on November 15, 2000, but
voluntarily dismissed the action on June 27, 2003, because their
treating physician was not available when the matter was called
for trial. The record on appeal includes a copy of the complaint
the Trogubs filed against Robinson on February 24, 2004.
According to the Trogubs, they reached a settlement agreement
with Robinson on April 4, 2005. The record also discloses that
on April 5, 2005, the Trogubs filed a "motion to strike [GEICO's]
alleged subrogation lien," in which they indicated GEICO "now
seeks to attach" the Robinson settlement and that GEICO's conduct
was improper because it had not appeared or petitioned to
intervene in the Trogubs' suit against Robinson or filed "any
other action to recover [its] medical payment." The Trogubs did
not indicate how or when they notified GEICO of their suit,
Trogub v. Robinson, No. 04--M1--300760 (Cir. Ct. Cook Co.)
(hereinafter Trogub v. Robinson) or how or when the Trogubs were
notified of GEICO's intention to pursue its subrogation interest.
On May 3, 2005, GEICO filed an appearance in Trogub v.
Robinson, a written response to the Trogubs' motion to strike the
lien, and a cross-motion to sanction the Trogubs' attorney
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pursuant to Supreme Court Rule 137 for filing a motion that was
not well grounded in fact or law in order to harass or delay
GEICO's ability to enforce its subrogation rights. 155 Ill. 2d
R. 137. GEICO's written response included a copy of its
insurance contract with the Trogubs, which stated in relevant
part:
"CONDITIONS
The following conditions apply to this
Coverage:
* * *
5. SUBROGATION
When we make a payment under this
coverage, we will be subrogated (to the
extent of payment made by us) to the rights
of recovery the injured person or anyone
receiving the payments may have against any
person or organization. Such person will do
whatever is necessary to secure our rights
and will do nothing to prejudice them.
This means we will have the right to sue
for or otherwise recover the loss from anyone
else who may be held responsible."
GEICO also attached copies of its business records indicating the
insurance company made payments on the Trogubs' behalf to Spevak
Medical in Wheeling, Illinois.
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In the reply brief the Trogubs filed in support of their
motion to strike GEICO's lien, the Trogubs indicated that when
they agreed to settle with Robinson for $10,000, they were
operating under the "reasonabl[e] belie[f]" that GEICO had
already enforced its subrogation rights against Robinson's
insurer, State Farm Insurance. The Trogubs did not provide any
facts or otherwise explain why this belief was "reasonable" or
disclose whether they had been represented by counsel at the
time. They further indicated, however, that by the time their
lawyer took his litigation expenses and 40% contingency fee and
GEICO took its share, the Trogubs would have little cash to show
for their personal injury action, and they argued these
circumstances would have "a chilling effect" on all subsequent
small personal injury actions.
On June 7, 2005, the circuit court denied the cross-motions.
After the circuit court indicated GEICO was entitled to
subrogate and declined to strike the lien, the Trogubs filed a
motion and an amended motion to adjudicate the amount of the
lien. In the amended motion, the Trogubs indicated they still
objected to GEICO's position, but were willing to address the
amount GEICO might be entitled to, because the question was
delaying payment from Robinson. They reiterated that their
attorney was entitled to 40% of the lawsuit's proceeds and
further stated:
"3. Plaintiffs have incurred the
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following litigation expenses:
a. Clerk - 11/15/00 - Initial $220.00
Filing
b. Sheriff - 11/15/00 - Service 33.00
Attempt
c. Clerk - 1/26/00 - Alias Summons 5.00
d. Special Process Server - 75.00
12/30/00
e. Clerk-2/24/04-Refiling [after 271.00
voluntary nonsuit]
f. Sheriff - 2/2/04 - Service 33.00
Attempt
g. Clerk - 4/27/04 - Alias 6.00
h. Sheriff-4/27/04-Service 34.20
i. McMorke [sic] Court Reporters - 90.00
3/5/05
j. Postage, copying, phone, etc. 54.00
k. Police Report 5.00
TOTAL $826.20"
In a written response, GEICO pointed out that no attorney-
client fee agreement or expense receipts or citation to case law
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had been provided in support of the claimed expenses and fees,
particularly where counsel was seeking more than the usual 33.33%
contingency fee and the expenses of a different lawsuit. GEICO
suggested that counsel receive the standard one-third or $2,550
of the $7,650, and that the expense claim be reduced to $263.
GEICO also asked the court to order the reimbursement of its
appearance fee, since GEICO had appeared (as "Leinholder
Respondent") only to defend the Trogubs' motions regarding its
lien.
In reply, the Trogubs and their attorney tendered affidavits
attesting to the 40% contingency agreement. The Trogubs further
swore they had not been aware that GEICO paid their medical bills
or that GEICO had subrogation rights. Counsel also tendered a
$90 expense receipt from McCorkle Court Reporter, Inc.
As indicated above, on September 13, 2005, the circuit court
ruled that GEICO was entitled to $7,650, less $3,060 (40%) for
the Trogubs' attorney fees, and $336 in litigation expenses, for
a net recovery of $4,254 from the $10,000 settlement. The
circuit court disallowed all the litigation expenses purportedly
incurred in 2000 in the Trogubs' first action against Robinson
(designated as items a through j in the Trogubs' motion), and
disallowed the unexplained entry for "Postage, copying, phone,
etc." in the present action (designated as item j in the Trogubs'
motion). The circuit court determined the allowable expenses
totaled $439 and that GEICO's proportionate share of the allowed
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expenses was 76.50%, or $336. The circuit court also ordered the
clerk of the circuit court to reimburse GEICO's $143 appearance
fee.
The following principles are generally relevant to this
appeal. "Subrogation simply means substitution of one person for
another; that is, one person is allowed to stand in the shoes of
another and assert that person's rights against the defendant."
D. Dobbs, Law of Remedies _ 4.3(4), at 604 (2d ed. 1993).
"Factually, the case arises because, for some justifiable reason,
[a party] has paid a debt owed by the defendant." D. Dobbs, Law
of Remedies _ 4.3(4), at 604 (2d ed. 1993). "Having paid the
defendant's creditor, the [party] stands in the creditor's shoes
*** and 'is entitled to exercise all the remedies which the
creditor possessed against the defendant." D. Dobbs, Law of
Remedies _ 4.3(4), at 604 (2d ed. 1993), quoting American Surety
Co. of New York v. Bethlehem National Bank of Bethlehem, 314 U.S.
314, 317, 86 L. Ed. 241, 244, 62 S. Ct. 226, 228 (1941). "Thus,
a subrogee merely succeeds to the legal rights or claims of a
subrogor." 73 Am. Jur. 2d Subrogation _ 1, at 542 (2001).
Subrogation rights originated in common law to prevent unjust or
unearned enrichment of one party at the expense of another, but
may also be created by statute or contract. Aames Capital Corp.
v. Interstate Bank of Oak Forest, 315 Ill. App. 3d 700, 706-07,
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734 N.E.2d 493 (2000). In the case of an insurance contract,
subrogation rights arise where (1) a third party has caused a
loss and is primarily liable to the insured for the loss, (2) the
insurer is secondarily liable to the insured due to an insurance
policy, and (3) the insurer pays the insured under that policy,
thereby extinguishing the debt owed by the third party. State
Farm General Insurance Co. v. Stewart, 288 Ill. App. 3d 678, 686,
681 N.E.2d 625 (1997). When an insurance contract gives the
insurer the right to subrogate to the extent of its payment, the
contract will be enforced as written and the insurer will receive
full subrogation, even if the insured's losses exceed the amount
it recovers from the tortfeasor and the insurer. Capitol
Indemnity Corp. v. Strike Zone, S.S.B.&B. Corp., 269 Ill. App. 3d
594, 596-97, 646 N.E.2d 310 (1995) (rejecting claim that insured
should be made whole first); Eddy v. Sybert, 335 Ill. App. 3d
1136, 1139, 783 N.E.2d 106 (2003) (insurer's right to subrogation
did not depend on whether insured was made whole by settlement
with tortfeasor).
The Trogubs raise five main arguments on appeal. The
Trogubs' first contention is that GEICO failed to produce "any
authenticated evidence" that it paid for their medical care after
they collided with Robinson. We find, however, that the Trogubs
have waived this contention by failing to cite any portion of the
record on appeal indicating that they objected to the circuit
court's reliance on GEICO's exhibits. The record on appeal does
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not include a transcript of the proceedings conducted on
September 13, 2005, or a bystander's report, and thus, there is
no way of knowing whether the Trogubs made an objection and
preserved this issue for the purposes of appeal. In order to
preserve a question for appellate review, a party must make
appropriate objections in the trial court. Bohannon v. Schertz,
21 Ill. App. 3d 149, 151, 315 N.E.2d 316 (1974). In addition,
appellants, which in this instance are the Trogubs, bear the
burden of providing a sufficiently complete record to support
their claim or claims of error, and any doubt arising from the
incompleteness of the record will be resolved against the
appellants. Linn v. Damilano, 303 Ill. App. 3d 600, 603, 708
N.E.2d 533 (1999), citing Foutch v. O'Bryant, 99 Ill. 2d 389,
392, 459 N.E.2d 958 (1984). Because the record does not
substantiate that the Trogubs objected to the circuit court's
reliance on GEICO's exhibits, we decline to address whether the
exhibits were sufficiently "authenticated."
The Trogubs' second main contention is that the parties'
insurance contract required GEICO to file a separate action in
order to pursue its subrogation interest. More specifically,
they argue the contract's subrogation clause, quoted in full
above, "uses non-standard language concerning subrogation," "is
ambiguous," and should have been construed more favorably to the
Trogubs. The Trogubs fail to explain what a "standard"
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subrogation clause might state or why they consider this
particular clause unclear, but Aames Capital suggests that even
without the contract language, GEICO's involuntary payment of
medical expenses that were caused by Robinson's tortious contact
with the Trogubs' car would have created an equitable right to
recoup those funds. Aames Capital, 315 Ill. App. 3d at 706-07(indicating subrogation rights may arise in equity or contract).
In addition, we are not persuaded by the Trogubs' unsupported
contention that because the contract language provides GEICO
"will have the right to sue or otherwise recover the loss from
anyone else who may be held responsible," then the "only
inference which can be drawn is that [GEICO must file] a separate
subrogation action or a petition to intervene [to recoup its
loss]." "The law is well settled that if an insurance contract
is so drawn as to be equivocal, uncertain or ambiguous, as to
require interpretation because [it is] fairly susceptible to two
or more different, but sensible and reasonable constructions, the
one will be adopted which *** is most favorable to the insured."
(Emphasis added.) Boal v. John Hancock Mutual Life Insurance
Co., 305 Ill. App. 563, 567. 27 N.E.2d 555 (1940). See also
Bulley & Andrews, Inc. v. Symons Corp., 25 Ill. App. 3d 696, 323
N.E.2d 806 (1975) (indicating contract language is ambiguous when
it is reasonably susceptible to different constructions).
However, we do not consider the GEICO policy to be equivocal,
uncertain, or ambiguous; nor do we consider the Trogubs'
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"inference" to be a reasonable interpretation of the clearly
worded policy. "'A policy term is not ambiguous because the term
is not defined within the policy or because the parties can
suggest creative possibilities for its meaning.'" Chatham Corp.
v. Dann Insurance, 351 Ill. App. 3d 353, 358, 812 N.E.2d 483(2004), quoting Lampham-Hickey Steel Corp. v. Protection Mutual
Insurance Co., 166 Ill. 2d 520, 529, 655 N.E.2d 842 (1995). "In
addition, a court may not read an ambiguity into a policy just to
find in favor of the insured." Chatham Corp., 351 Ill. App. 3d
at 358. To the contrary, we find no problem of construction or
interpretation and we read "to sue for or otherwise recover" to
mean that GEICO may use litigation or other less cumbersome, less
expensive means, such as correspondence or telephone calls, to
pursue its loss. Accordingly, we turn to the Trogubs' other
arguments.
The Trogubs' third main contention on appeal is that GEICO's
failure to comply with various Illinois statutes prevents it from
legitimately claiming any of the Robinson settlement proceeds.
For instance, the Trogubs argue section 2-403(c) of the
Code of Civil Procedure (735 ILCS 5/2-403 (West 2002)) required
GEICO to bring a subrogation action in its own name in order to
enforce its subrogation interest and they cite Nitrin, Inc. v.
Bethlehem Steel Corp., 35 Ill. App. 3d 577, 342 N.E.2d 65 (1976),
as an instance in which this requirement was enforced against an
insurer. We are not persuaded that the statute required GEICO to
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initiate an action, because the statute is entitled "Who may be
plaintiff -- Assignments -- Subrogation" instead of "Who shall be
plaintiff -- Assignments -- Subrogation" and the body of the
statute plainly indicates that in the event a subrogation action
is brought, which did not occur here, the subrogation action
"shall be brought either in the name or for the use of the
subrogee":
"Who may be plaintiff -- Assignments --
Subrogation ***
***
(c) Any action hereafter brought by
virtue of the subrogation provision of any
contract or by virtue of subrogation by
operation of law shall be brought either in
the name or for the use of the subrogee; and
the subrogee shall in his or her pleading on
oath, or by his or her affidavit if pleading
is not required, allege that he or she is the
actual bona fide subrogee and set forth how
and when he or she became subrogee." 735
ILCS 5/2-403(c) (West 2002).
Since subrogee GEICO did not bring an action but only responded
to various motions about subrogation which the Trogubs filed in
Trogub v. Robinson, section 2-403(c) has no relevance here and is
not a basis for concluding that the circuit court's order denying
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the "motion to strike alleged subrogation lien" should be
reversed. Moreover, the Trogubs fail to cite and we were unable
to find any language in Nitrin indicating section 2-403(c)
requires a subrogee to enforce its rights by filing a separate
action. 735 ILCS 5/2-403(c); Nitrin, 35 Ill. App. 3d 577, 342
N.E.2d 65.
The Trogubs similarly contend the intervention section of
the Code of Civil Procedure (735 ILCS 5/2-408 (West 2002)) and
Herriford v. Boyles, 193 Ill. App. 3d 947, 550 N.E.2d 654 (1990),
obligated GEICO to bring an intervening petition in Trogub v.
Robinson to enforce its subrogation interest. Generally, the
intervention statute provides that upon timely application, the
court may, in its discretion, allow anyone to intervene in an
action. 735 ILCS 5/2-408 (West 2002). The Trogubs conclude that
since GEICO did not adhere to the cited authority, the circuit
court's adverse orders should now be reversed. We were unable to
find any relevant language in the cited authority. In addition,
we reiterate that GEICO was only responding to various motions
which the Trogubs filed regarding GEICO's right to subrogate. We
are not persuaded by the Trogubs' bald contention that unless a
subrogee such as GEICO motions and obtains leave of court to
intervene in an action, the subrogee cannot be permitted to
respond to a pending motion that seeks judicial determination of
the subrogee's rights.
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The Trogubs also contend that "in essence" GEICO and the
Trogubs have respectively become a judgment creditor and debtors,
and, therefore, section 12-1001(h)(4) of the Code of Civil
Procedure (735 ILCS 5/12-1001(h)(4) (West 2002)) renders the
$10,000 settlement payment from Robinson "untouchable" by GEICO.
They cite People ex rel. Director of Corrections v. Booth, 215
Ill. 2d 416, 423, 830 N.E.2d 569 (2005), for the proposition that
section 12-1001 "supersede[s] a contractual lien [such as
GEICO's] which is not recognized by statute." We find this
statutory argument no more persuasive that the Trogubs' two other
statutory arguments. Article 12 of the Code of Civil Procedure
is entitled "Judgments -- Enforcement," and section 12-1001 in
particular renders certain "personal property, owned by the
debtor *** exempt from judgment, attachment, or distress for
rent." 735 ILCS 5/12-1001 (West 2002). The subparagraphs of the
statute specify the exempted property, including, as examples,
payments that are traceable to a crime victim's reparation law, a
life insurance contract, and, notably, "a payment, not to exceed
$7,500 in value, on account of personal bodily injury of the
1
debtor." The Trobugs' reliance on this statute is misplaced
since the only "debtor" in this case is Robinson. It is
1
The statute was recently amended to exempt a payment of
up to $15,000 "on account of personal bodily injury of the
debtor." Pub. Act 94-293, _ 5, eff. January 1, 2006.
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undisputed that Robinson, by virtue of his tortious contact with
the Trogubs' vehicle in 1999, became liable for their resulting
compensable loss, and GEICO, by virtue of its insurance contract
with the Trogubs' was secondarily liable for their loss. The
subrogation authority cited generally at the outset of this
opinion deems Robinson to be a debtor. It also deems the Trogubs
to be his creditor as well as GEICO's subrogor, and GEICO to be
the subrogee that has "paid the insured under [the] policy,
thereby extinguishing the debt of [Robinson,] the third party."
State Farm General Insurance, 288 Ill. App. 3d 2d at 686-87, 681
N.E. 2d 625. Furthermore, the case the Trogubs rely upon, Booth,
215 Ill. 2d at 425, 830 N.E.2d 569, indicates that section 12-
1001(h)(4) is triggered when a civil action affects the proceeds
of an earlier, separate action or claim, which did not occur
here. In Booth, a prisoner received a payment in excess of
$40,000 in settlement of a personal injury action he brought
against a bus company prior to his incarceration. Booth, 215
Ill. 2d at 418, 830 N.E.2d 569. After the State became aware
that the prisoner obtained this settlement, it brought a separate
civil action against him based on a statute that makes
incarcerated persons responsible for the expenses of their
incarceration. Booth, 215 Ill. 2d at 418-19, 830 N.E.2d 569.
The State obtained a judgment against the prisoner for more than
$40,000 and an order attaching the proceeds of his earlier
personal injury lawsuit. Booth, 215 Ill. 2d at 420, 830 N.E.2d
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569. The court later determined, however, that section 12-
1001(h)(4) was applicable and shielded the first $7,500 of the
$40,000 personal injury settlement from the State's statutory
judgment against the prisoner. Booth, 215 Ill. 2d at 421, 830
N.E.2d 569. The case does not indicate in any way that section
12-1001(h)(4) is triggered when there is only one civil action
instead of two civil actions, or that section 12-1001(h)(4) is a
legitimate means of defeating a contractual right to subrogate.
In short, we are not persuaded that the subrogation clause
in the GEICO contract or any section of the Code of Civil
Procedure should be construed to obligate GEICO to litigate in
order to enforce its subrogation rights.
Our conclusion that GEICO was not required to litigate to
recoup its loss also dispenses with the Trogubs' other main
contention on appeal that, "Since GEICO did not file a separate
subrogation action or file a petition to intervene, GEICO failed
to place [the Trogubs] on notice of its intention to assert a
lien on the [Trogubs'] recovery in their third party action."
GEICO was not required by contract or statute to file a
subrogation action or a petition to intervene, or otherwise give
the Trogubs notice of its intent to pursue its subrogation
rights.
The Trogubs' last contention is that the circuit court
incorrectly disallowed reimbursement of $297 to their attorney,
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consisting of 76.50% of the $333 in filing fees and service of
process expenses incurred in the Trobugs' first action against
Robinson, and 76.50% of $54 in expenses purportedly incurred in
the present action for "Postage, copying, phone, etc." The
Trogubs ask us to remand this cause to the circuit court so that
the additional funds can be awarded to their counsel. The
Trogubs rely on Lemmer v. Karp, 56 Ill. App. 3d 190, 195, 371
N.E.2d 655 (1977), which does not indicate an insurer's
subrogation lien should be reduced for expenses incurred in some
other action or for undocumented expenses. The Trogubs fail to
provide reasoned analysis indicating that we should expand
Lemmer's holding and fail to cite any other authority. They
contend there is "no precedent" supporting the circuit court's
determination -- apparently forgetting that they brought the
motion which included their request for fees and costs, and that
a moving party always bears the burden of proving its entitlement
to fees and costs (Kaiser v. MEPC American Properties, Inc., 164
Ill. App. 3d 978, 983, 518 N.E.2d 424 (1987)), and that the
moving party must provide detailed records substantiating the
reasonableness of the requested amounts. Prior Plumbing &
Heating Co. v. Hagins, 258 Ill. App. 3d 683, 688, 630 N.E.2d 1208(994) (a party seeking attorney fees bears the burden of
presenting sufficient evidence from which the trial court can
render a decision as to their reasonableness). A fee award
cannot be based upon the court's conjecture or on the opinion or
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conclusion of the moving attorney. Kaiser, 164 Ill. App. 3d at
984.
Finally, GEICO asks this court to impose sanctions against
the Trogubs' attorney pursuant to Supreme Court Rule 375(b) for
bringing a frivolous appeal solely to harass and needlessly
increase GEICO's litigation expenses. 155 Ill. 2d R. 375; see
e.g., Sterling Homes, Ltd. v. Rasberry, 325 Ill. App. 3d 703, 759
N.E.2d 163 (2001) (sua sponte raising question of whether
sanctions should be imposed on appellant where appeal was an
attempt to delay the proceedings and harass the opponent). While
we have found all of counsel's arguments to be wholly
unpersuasive, the circumstances do not suggest the appeal was not
taken in good faith and was intended to be abusive. Accordingly,
we decline to order the imposition of sanctions.
Affirmed.
CAHILL, P.J., and BURKE, J., concur.
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