American Standard Insurance Company of Wisconsin v. Slifer

Filed 11/6/09 NO. 4-09-0326
IN THE APPELLATE COURT
OF ILLINOIS
FOURTH DISTRICT
AMERICAN STANDARD INSURANCE COMPANY ) Appeal from
OF WISCONSIN, ) Circuit Court of
Plaintiff-Appellee, ) Macon County
v. ) No. 08MR74
ROGER L. SLIFER, )
Defendant, )
and )
HELEN M. BROWN, Independent )
Administratrix of the Estate of LEE ) Honorable
J. WEST, Deceased, ) Albert G. Webber,
Defendant-Appellant. ) Judge Presiding.
_________________________________________________________________
JUSTICE STEIGMANN delivered the opinion of the court:
In July 2007, defendant, Helen M. Brown, independent
administratrix of the estate of Lee J. West, deceased, sued
defendant, Roger L. Slifer, under (1) the Wrongful Death Act (740
ILCS 180/0.01 through 2.2 (West 2002)) and (2) section 27-6 of
the Probate Act of 1975 (Probate Act) (755 ILCS 5/27-6 (West
2002)) for the August 2002 hit-and-run death of her son, West.
In May 2008, plaintiff, American Standard Insurance Company of
Wisconsin (American Standard), filed an amended complaint for
declaratory judgment under section 2-701 of the Code of Civil
Procedure (Code) (735 ILCS 5/2-701 (West 2008)), arguing that it
was not obligated to indemnify Slifer against Brown's claims
because Slifer failed to comply with the prompt-notification
provision of his insurance policy. In January 2009, American
Standard and Brown filed cross-motions for summary judgment on
American Standard's amended complaint for declaratory judgment.
In March 2009, the trial court denied Brown's motion
for summary judgment and granted summary judgment in favor of
American Standard. Brown appeals.
Because we conclude that (1) the notice provision that
directed Slifer to promptly notify American Standard of any car
accidents or losses was part of the contractual agreement of his
insurance policy and (2) Slifer failed to notify American Stan-
dard of the August 2002 accident in accordance with that notice
provision, we affirm.
I. BACKGROUND
The following facts were taken from the parties'
pleadings and other documents filed with the trial court.
On August 2, 2002, West was walking down a rural road
when he was struck by a hit-and-run driver. West was eventually
discovered and taken to a hospital, where he died the following
day from his injuries.
In June 2007, Slifer confessed to police that he drove
the vehicle that struck and killed West. Slifer later pleaded
guilty to failure to report an accident involving great bodily
harm or death and was sentenced to 14 years in prison.
In July 2007, Brown filed a complaint at law against
Slifer, seeking compensatory damages under (1) the Wrongful Death
Act (740 ILCS 180/0.01 through 2.2 (West 2002)) and (2) section
27-6 of the Probate Act (755 ILCS 5/27-6 (West 2002)) for the
August 2002 death of West.
In May 2008, American Standard filed an amended com-
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plaint for declaratory judgment under section 2-701 of the Code
(735 ILCS 5/2-701 (West 2008)), arguing that it was not obligated
to provide indemnity, coverage, protection, or any other benefit
relating to Brown's claims because Slifer had failed to comply
with the prompt-notification provisions of the vehicle insurance
policy in effect in August 2002.
In January 2009, American Standard and Brown filed
cross-motions for summary judgment pursuant to section 2-1005 of
the Code (735 ILCS 5/2-1005 (West 2008)). American Standard
argued that because Slifer failed to comply with the notice
provision of his policy by concealing the August 2002 accident
for over five years, he breached his contractual obligation and
was not entitled to the coverage afforded by the policy. Thus,
American Standard contended that it was not obligated to indem-
nify Slifer for any claims arising from Brown's suit. Brown
argued that (1) the notice provision was ambiguous and (2)
because the notice provision appeared before the "Agreement"
section of the policy--in which she claimed the parties' contrac-
tual duties and obligations were set forth--the notice provision
was merely advisory rather than contractually binding.
The location of the notice provision at issue appeared
on the first page of Slifer's insurance policy as follows:
"IF YOU HAVE AN AUTO ACCIDENT OR LOSS
NOTIFY US
Tell us promptly. Give time, place, and
details. Include names and addresses of
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injured persons and witnesses.
OTHER DUTIES
Each person claiming any coverage of this
policy must also:
1. Assist us in any claims or
suits.
* * *
6. Give us statements and answer
questions under oath when asked by
any person we name as often as we
reasonably ask, and sign copies of
the answers.
Each person claiming Uninsured Motorist cov-
erage must promptly notify the police if a
hit-and-run driver is involved.
Each person claiming Car Damage coverages
must also:
1. Take responsible steps after
loss to protect the vehicle and its
equipment from further loss. ***
* * *
4. Answer questions under oath when
asked by any person we name as
often as we reasonably ask, and
sign copies of the answers
AGREEMENT
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We agree with you, in return for your premium
payment, to insure you subject to all the
terms in this policy. We will insure you for
the coverages and the terms of liability in
the declarations of this policy." (Emphases
in original.)
Following the aforementioned "Agreement" section, a separate
section defined terms used throughout the policy. The remainder
of the policy consisted of six parts that delineated the follow-
ing: (1) liability coverage, (2) medical-expense coverage, (3)
uninsured-motorist coverage, (4) car-damage coverages, (5)
emergency-road-service coverage, and (6) general provisions.
In March 2008, the trial court entered a written order
granting American Standard's summary-judgment motion and denying
Brown's summary-judgment motion.
This appeal followed.
II. THE TRIAL COURT'S GRANT OF SUMMARY JUDGMENT
A. Summary Judgment and the Standard of Review
"Summary judgment is appropriate where the pleadings,
depositions, admissions[,] and affidavits on file, viewed in the
light most favorable to the nonmoving party, reveal that there is
no genuine issue as to any material fact and that the moving
party is entitled to judgment as a matter of law." Kajima
Construction Services, Inc. v. St. Paul Fire & Marine Insurance
Co., 227 Ill. 2d 102, 106, 879 N.E.2d 305, 308 (2007); see 735
ILCS 5/2-1005(c) (West 2008). Summary judgment should be granted
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only if the movant's right to judgment is clear and free from
doubt. Bluestar Energy Services, Inc. v. Illinois Commerce
Comm'n, 374 Ill. App. 3d 990, 993, 871 N.E.2d 880, 884 (2007).
We review de novo the trial court's grant of summary judgment.
Reppert v. Southern Illinois University, 375 Ill. App. 3d 502,
504, 874 N.E.2d 905, 907 (2007).
B. Brown's Claim That the Trial Court Erred by Granting
American Standard's Motion for Summary Judgment
Brown argues that the trial court erred by granting
American Standard's motion for summary judgment. Specifically,
Brown contends that the notice provision was ambiguous because
(1) it appeared before the section of the policy entitled "Agree-
ment" and (2) it was not expressed in mandatory terms. Thus,
Brown asserts that the court should have construed the aforemen-
tioned ambiguities against American Standard and in favor of
coverage. We address Brown's contentions in turn.
1. Brown's Claim That the Notice Provision Was Ambiguous
a. The Location of the Notice Provision
Brown contends that the notice provision was ambiguous
because it appeared before the section of the policy entitled
"Agreement." We disagree.
If the words of an insurance policy are reasonably
susceptible to more than one meaning, they are considered ambigu-
ous and will be construed strictly against the insurer who
drafted the policy. Central Illinois Light Co. v. Home Insurance
Co., 213 Ill. 2d 141, 153, 821 N.E.2d 206, 213 (2004). This is
especially true with regard to provisions that limit or exclude
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coverage. Outboard Marine Corp. v. Liberty Mutual Insurance Co.,
154 Ill. 2d 90, 119, 607 N.E.2d 1204, 1217 (1992). However, "[a]
contract is not rendered ambiguous merely because the parties
disagree on its meaning." Central Illinois Light Co., 213 Ill.
2d at 153, 821 N.E.2d at 214. "Although policy terms that limit
an insurer's liability will be liberally construed in favor of
coverage, this rule of construction only comes into play when the
policy is ambiguous." Hobbs v. Hartford Insurance Co. of the
Midwest, 214 Ill. 2d 11, 17, 823 N.E.2d 561, 564 (2005).
Although Brown contends that the notice provision was
ambiguous, she does not base this contention on a claim that the
words used to construct the provision were susceptible to differ-
ent interpretations. Rather, Brown claims that the notice
provision was ambiguous solely because it appeared before the
"Agreement" section of the policy. Brown maintains that an
ambiguity exists because the notice provision was merely advisory
rather than contractually binding.
To the extent that Brown argues that the language of
the notice provision created an ambiguity, we reject her claim.
Our review of the plain language of the notice provision shows
that--with regard to the reporting requirement--the provision is
unambiguous in that it plainly directs Slifer to promptly notify
American Standard in the event of an accident or loss. Thus, we
conclude that the language of the notice provision at issue is
not ambiguous.
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b. The Language of the Notice Provision
Brown also contends that the notice provision was
merely advisory and not contractually binding because it was not
expressed in mandatory terms--that is, the terms of the notice
provision were not sufficiently imperative. We disagree.
Because Brown essentially contests the effect of the
notice provision of Slifer's insurance policy, the task before us
involves interpreting that provision within the context of
Slifer's and American Standard's intent when they entered into
the contractual agreement.
In Rich v. Principal Life Insurance Co., 226 Ill. 2d
359, 371, 875 N.E.2d 1082, 1090 (2007), the supreme court out-
lined the rules that govern the court's interpretation of insur-
ance policy language as follows:
"When construing the language of an
insurance policy, a court's primary objective
is to ascertain and give effect to the inten-
tions of the parties as expressed by the
words of the policy. [Citations.] Because
the court must assume that every provision
was intended to serve a purpose, an insurance
policy is to be construed as a whole, giving
effect to every provision [citation], and
taking into account the type of insurance
provided, the nature of the risks involved,
and the overall purpose of the contract [ci-
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tations]. 'All the provisions of the insur-
ance contract, rather than an isolated part,
should be read together to interpret it ***.'
[Citation.] If the words used in the policy
are clear and unambiguous, they must be given
their plain, ordinary, and popular meaning
[citation], and the policy will be applied as
written, unless it contravenes public policy
[citation]."
By its very terms, the insurance policy agreement
between Slifer and American Standard stated that American Stan-
dard would provide insurance to protect Slifer's interests if a
car accident occurred in which (1) he suffered a loss due to the
negligence of another motorist or, in the alternative, (2) it was
determined that he was negligent--that is, American Standard
would defend and indemnify Slifer. In exchange for providing
that insurance protection, American Standard would receive
adequate compensation for assuming the risk it was underwriting
on Slifer's behalf.
Inherent to the successful operation of their contrac-
tual agreement is the intention that if Slifer experienced an
accident or loss--regardless of fault--he would report the claim
to American Standard so that it could not only protect Slifer's
interests according to the terms of the policy but also protect
its interests as well. See Barrington Consolidated High School
v. American Insurance Co., 58 Ill. 2d 278, 281, 319 N.E.2d 25, 27
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(1974) (A notice provision affords an "insurer an opportunity to
make a timely and thorough investigation and to gather and
preserve possible evidence").
Consistent with the aforementioned intent, the first
and only section that includes a notice provision prominently
appears before the "Agreement" section and is couched in manda-
tory terms. Specifically, immediately after the notice
provision--which we note is the first provision of the policy--
the "Other Duties" subsection specifically refers to the notice
provision by mandating that "[e]ach person claiming any coverage
of this policy must also" perform other functions associated with
processing a claim. (Emphasis added.) In addition, each of the
two subsections following that provision contain mandatory
language pertaining to uninsured-motorist claims and car-damage
claims.
Our review of the plain meaning of the notice provision
of Slifer's insurance policy--within the context of the entire
policy--indicates that he had a contractual obligation to
promptly report the August 2002 accident that resulted in West's
death to American Standard. To conclude otherwise, as Brown
urges, would essentially render the notice provision a nullity,
which would (1) violate our mandate to assume that every provi-
sion serves a purpose and (2) thwart the aforementioned intent of
Slifer and American Standard when they entered into the contrac-
tual agreement. Thus, although we agree that American Standard
could have structured its policy to better convey the mandatory
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nature of the notice provision, we nonetheless reject Brown's
contention that the notice provision was merely advisory rather
than contractually binding because it was not expressed in
mandatory terms. However, our analysis does not end here.
2. Slifer's Compliance With the Notice Provision
In this case, the uncontested facts are that (1) in
August 2002, Slifer drove a vehicle that struck and killed West;
(2) at the time of the accident, Slifer had a valid insurance
policy with American Standard; (3) Slifer failed to report the
August 2002 accident in accordance with the notice provision of
his insurance policy; and (4) American Standard did not learn of
Slifer's accident until August 6, 2007, over five years later.
Thus, given that we have previously concluded that the notice
provision of Slifer's insurance policy with American Standard was
contractually binding, we further conclude that Slifer breached
the terms of his insurance policy when he failed to notify
American Standard of the August 2002 accident in accordance with
that provision. We find support for our conclusion that Slifer
breached the terms of his insurance policy in the Second Dis-
trict's decision in American Country Insurance Co. v. Bruhn, 289
Ill. App. 3d 241, 682 N.E.2d 366 (1997), which did not address
the binding nature of the notice provision but did involve
similar facts and a similarly worded notice provision.
In Bruhn, 289 Ill. App. 3d at 243, 682 N.E.2d at 367,
Todd Raymond Nebel was driving his vehicle when he struck and
killed two pedestrians. Nebel concealed his involvement in the
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hit-and-run accident until three years and eight months later
when he confessed to police. Bruhn, 289 Ill. App. 3d at 243, 682
N.E.2d at 367. The administratrix of the decedents' estate
subsequently sued Nebel for negligence, wrongful death, and
intentional infliction of emotional distress. Bruhn, 289 Ill.
App. 3d at 243, 682 N.E.2d at 368. American Country Insurance
Company (American) later filed a complaint for declaratory
judgment, claiming that although it had issued the car insurance
policy in effect at the time of accident, it had no duty to
defend Nebel because he failed, in part, to comply with the
notice provisions of his policy. Bruhn, 289 Ill. App. 3d at 243-
44, 682 N.E.2d at 368. At a hearing on American's complaint, the
trial court granted Bruhn's motion for directed finding after the
close of American's case, finding that Nebel's notice to American
was sufficient under the insurance policy's notice provision.
Bruhn, 289 Ill. App. 3d at 246, 682 N.E.2d at 369.
In reversing the trial court determination, the Second
District concluded, in part, that, while not an absolute bar to
coverage in every circumstance, (1) Nebel had breached the
mandatory notice provision of his insurance policy (Bruhn, 289
Ill. App. 3d at 249, 682 N.E.2d at 371) by not reporting the
accident until three years and eight months later and (2) public
policy did not preclude denial of coverage (Bruhn, 289 Ill. App.
3d at 250-51, 682 N.E.2d at 372-73).
Accordingly, we conclude that the trial court did not
err by granting American Standard's motion for summary judgment.
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III. CONCLUSION
For the reasons stated, we affirm the trial court’s
judgment.
Affirmed.
McCULLOUGH, P.J., and TURNER, J., concur.
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