Yacko v. Curtis

JUSTICE KNECHT

delivered the opinion of the court:

Third-party plaintiff, Bradley R Curtis, appeals the entry of summary judgment by the circuit court of McLean County on his claims against third-party defendant, Anthem Casualty Insurance Company (Anthem). We affirm.

I. BACKGROUND

On December 6, 1996, Affirmative Insurance Company (Affirmative), a subsidiary of Anthem, issued Curtis an automobile policy for one year. Premiums were due each month, and Curtis often paid premiums in cash at the office of Terry Woith and Associates, his independent agent. During the policy period, Curtis received three cancellation notices that were followed by reinstatement notices. For example, on February 14, 1997, a cancellation notice was sent to Curtis, while on February 20, a reinstatement of coverage was issued.

In addition, on June 2, 1997, Anthem sent Curtis another cancellation notice, stating Anthem would cancel the policy if payment was not received by June 20, 1997. In mid-July, Anthem received a check for $155 from Curtis. Curtis’s credit union dishonored the check for insufficient funds. Later, Curtis sent a payment of $68.82 to Anthem by check dated August 3, 1997. Anthem cashed the check in mid-August. The policy was reinstated by notice dated August 15, 1997, effective August 27, 1997.

On August 18, 1997, Anthem sent a cancellation notice not followed by a reinstatement notice. This notice indicated if the premium due on or before August 31, 1997, was not timely received, the policy would be canceled:

“As you know, you have a premium due 08/31/97. ***

If this payment is not received by us before 08/31/97, then this notice will serve as a notice of cancellation for non[ ]payment of premium effective 08/31/97, at 12:01 a.m. standard time.”

Also sent to Curtis on that date was a statement indicating a payment of $229.09 was due on or before August 31, 1997. Anthem did not receive this payment or any payment after the August 3, 1997, check for $68.82 sent by Curtis.

Anthem established by affidavit that it sent Curtis on September 19, 1997, a collection notice for $106.81, the premium due for the period of early August 1997 through August 31, 1997. The September 19, 1997, notice states as follows: “Recently, your policy with our company was canceled. Prior to that cancellation, there was a balance due for insurance protection you have already received. The premium due is $106.81.” In his deposition, Curtis admitted receiving this notice.

On October 17, 1997, Curtis was in an automobile accident that allegedly resulted in damages to Ronald J. Yacko. When Curtis inquired about coverage under the policy, Anthem responded the policy was canceled and Curtis was not covered on October 17, 1997.

On June 22, 1999, Yacko filed suit, alleging a claim of negligence against Curtis. Later, on December 1, 2000, Curtis filed an amended third-party complaint against Anthem. Curtis claimed Anthem improperly denied his claim and failed to provide coverage and representation.

By motion dated July 23, 2001, Anthem moved for summary judgment on Curtis’s claim. Anthem maintained the policy by Curtis had been canceled due to nonpayment of premium and thus Curtis was not covered on the date of the collision with Yacko. Curtis claimed he was covered by the policy. Curtis presented testimony from Terry Woith, the insurance agent who worked with Curtis. Woith, who worked in the insurance industry since 1988, testified she believed the policy was in effect on October 17, 1997, and the August 18, 1997, cancellation notice could be discarded because the August 15, 1997, reinstatement stated the reinstatement was effective August 27, 1997. Woith testified she received no other notices regarding Curtis’s policy after August 27, 1997.

The circuit court agreed with Anthem and granted Anthem’s motion after finding “Anthem has established the requisite cancellation notices were mailed according to law.”

Curtis appeals.

II. ANALYSIS

We review the grant of summary judgment de novo. Crum & Forster Managers Corp. v. Resolution Trust Corp., 156 Ill. 2d 384, 390, 620 N.E.2d 1073, 1077 (1993). On summary judgment, we view all evidence in the light most favorable to the nonmovant. Boldini v. Owens Corning, 318 Ill. App. 3d 1167, 1170, 744 N.E.2d 370, 372 (2001). Summary judgment is inappropriate if a material question of fact exists. It is proper, however, “when the pleadings, depositions, admissions, and affidavits demonstrate no genuine issue of material fact exists and the movant is entitled to judgment as a matter of law.” Boldini, 318 Ill. App. 3d at 1169-70, 744 N.E.2d at 372, citing 735 ILCS 5/2—1005(c) (West 1998).

Curtis does not dispute the facts or contend a material issue of fact exists. Instead, Curtis argues two theories on appeal. First, Curtis contends the policy was in effect and in full force when the collision with Yacko occurred. Curtis contends “[biased on the history between the parties it would be very reasonable to interpret the actions of [Anthem] between August 15 and August 18, 1997[,] as having reinstated the policy and thereby voiding the effect of the August 18, 1997[,] notice of cancellation.” Curtis maintains the reinstatement as of August 27, 1997, “superceded the cancellation date of August 18, 1997,” and it was reasonable to believe the cancellation notice and his check crossed in the mail. Curtis then contends while viewing all evidence in the light most favorable to him, the policy was in effect on October 17, 1997.

In response, Anthem maintains the policy was properly canceled for nonpayment of premium. Anthem maintains despite both the August 18, 1997, and September 19, 1997, cancellation notices, Curtis made no payment after the $68.82 check on August 3, 1997. Anthem states Curtis’s contention the reinstatement following receipt of the $68.82 check rendered the August 18 cancellation notice irrelevant is incredible given the August 18, 1997, notice states an amount three times greater than the $68.32 paid.

While we must view evidence in the light most favorable to a nonmovant, we cannot simply ignore evidence unfavorable to the nonmovant. The August 18 cancellation notice and statement indicated Curtis must pay $229.09 before August 31, 1997. Curtis paid $68.82. Even if Curtis believed the $68.82 went toward the August 31, 1997, payment, it is still far short of the amount required by the cancellation notice. Curtis was clearly told “if [$229.09] is not received by us before 08/31/ 97, then this notice will serve as a notice of cancellation for nonpayment of premium effective 08/31/97, at 12:01 a.m. standard time.”

Kujbida v. Horizon Insurance Agency, Inc., 260 Ill. App. 3d 1001, 1008-09, 632 N.E.2d 151, 156 (1994), relied upon by Curtis, does not hold otherwise. Kujbida states before a cancellation under Illinois law is valid, notice must provide unambiguously sufficient information to determine whether the reason is valid, so the insured may either contest the cancellation or correct the defect. See Kujbida, 260 Ill. App. 3d at 1008-09, 632 N.E.2d at 156. Here, because the notice was clear and unambiguous, Kujbida does not help Curtis.

Curtis next argues Anthem’s conduct in providing three notices of cancellation and then reinstatement “constitute^] at the very minimum a waiver of strict compliance with the policy.” Curtis cites two cases in support: Western Casualty & Surety Co. v. Brochu, 105 Ill. 2d 486, 475 N.E.2d 872 (1985), and Insurance Co. of Illinois v. Brown, 315 Ill. App. 3d 1168, 734 N.E.2d 964 (2000).

Anthem, on the other hand, contends it acted within the law. Anthem points to section 143.15 of the Illinois Insurance Code, which permits an insurer to cancel a policy for nonpayment, so long as notice of cancellation is mailed 10 days before cancellation is effective. 215 ILCS 5/143.15 (West 1996). Anthem also contends both Brochu and Brown are factually inapposite.

We agree with Anthem; neither Brochu nor Brown supports Curtis’s contentions. In Brochu, the Supreme Court of Illinois found no waiver, when the insurer expressly reserved its right to deny coverage if necessary at a later date. Brochu, 105 Ill. 2d at 499, 475 N.E.2d at 878-79. In Brown, the First District found the insurer waived its right to enforce a cancellation provision when the insurer accepted a premium but did not refund the amount applicable to the relevant date. Brown, 315 Ill. App. 3d at 1175, 734 N.E.2d at 969. At best, these cases can be said to show waiver may arise if an insurer intentionally relinquishes a known right. Here, the facts, taken in the light most favorable to Curtis, reveal Anthem did not intentionally relinquish its rights, but instead intentionally invoked its statutory right to cancel the policy when the premium was not paid. Curtis has provided no authority to prove otherwise.

The dissent raises points not argued by either party. The dissent contends the cancellation notice was insufficient because it (1) was sent before the insured failed to pay his premium and (2) was conciliatory in tone.

Neither of these points may be resolved simply by looking at the face of section 143.15, the rest of the statute, or earlier holdings. Arguments based on these points raise legal and policy questions best not decided without the benefit of party debate. The first issue, whether prospective notice is barred, has been addressed by a handful of non-Illinois courts. The decisions, however, were not unanimous. Compare Mackey v. Bristol West Insurance Services of California, Inc., 105 Cal. App. 4th 1247, 130 Cal. Rptr. 2d 536 (2003), and Pennsylvania National Mutual Casualty Insurance Co. v. Person, 164 Ga. App. 488, 297 S.E.2d 80 (1982), with Munoz v. New Jersey Automobile Full Insurance Underwriting Ass’n, 145 N.J. 377, 678 A.2d 1051 (1996). (We note Mackey states two Illinois courts have found prospective notice barred. See Mackey, 105 Cal. App. 4th at 1259 n.8, 130 Cal. Rptr. 2d at 544 n.8. These cases, however, did not address this specific issue. See Fisher for use of Kiniry v. Associated Underwriters, Inc., 294 Ill. App. 315, 13 N.E.2d 809 (1938); Mitchell v. Burnett, 1 Ill. App. 3d 24, 272 N.E.2d 393 (1971). Instead, Fisher and Mitchell addressed the second issue raised by the dissent.)

In addition to the points argued in the above decisions, we note others may exist, including how prospective notice may benefit an insured by giving him or her more time to pay for requisite insurance. In addition, there is no discussion of the consequences of a notice of cancellation that follows a missed premium. By not allowing prospective notice, we might be placing the insured at a disadvantage by giving the insurer sole discretion to reinstate coverage at the end of the 10-day notice period.

We doubt an interpretation of section 143.15 that allows prospective notice would permit insurers to give a cancellation notice in the policy itself. The dissent’s approach ignores the case law requirement that a cancellation notice must provide sufficient information for the insured to determine whether the reason is valid and to allow him or her to contest the cancellation or correct the defect. See Kujbida, 260 Ill. App. 3d at 1008-09, 632 N.E.2d at 156. A general cancellation notice in the policy would likely fail the requirements in Kujbida.

The second issue raises questions not debated in some time. A few appellate court decisions have resolved the issue as the dissent suggests, finding similar notices conciliatory and equivocal. See, e.g., Mitchell, 1 Ill. App. 3d at 27-28, 272 N.E.2d at 396; Burnett v. Illinois Agricultural Mutual Insurance Co., 318 Ill. App. 629, 631-34, 48 N.E.2d 559, 560-61 (1943). These cases can be traced or linked to Fisher, 294 Ill. App. 3d 315, 13 N.E.2d 809, and the conclusion Fisher found a similar notice conciliatory and thus insufficient. See Mitchell, 1 Ill. App. 3d at 27, 272 N.E.2d at 396; Burnett, 318 Ill. App. at 632-33, 48 N.E.2d at 560.

In Roon v. Van Schouwen, 406 Ill. 617, 621-22, 94 N.E.2d 880, 882 (1950) (Roon I), however, the Supreme Court of Illinois refused to apply Fisher in the same way. The Roon I court adopted the appellate court dissent’s interpretation of Fisher (see Roon I, 406 Ill. at 622, 94 N.E.2d at 882; see also Roon v. Van Schouwen, 339 Ill. App. 173, 176-79, 89 N.E.2d 427, 429-30 (1949) (Niemeyer, J., dissenting) (Roon II)) and found the following notice sufficient:

“ ‘We acknowledge receipt of the estimated advance premium due to renew the above policy. You did not file a labor record as required in the policy and this policy cannot be continued unless you do furnish us with the information on the amount of labor you employed during the past six months.

This policy will be canceled on Mar. 16, 1945[,] unless you furnish us a report of the amount of labor employed by you during the past six months period.’ ” Roon I, 406 Ill. at 623, 94 N.E.2d at 883 (Thompson, J., dissenting).

Roon I thus appears to permit cancellation notices that turn on action or inaction of the insured. Roon I may, however, be distinguishable. Roon I predates the current version of section 143.15. Roon I also does not involve cancellation for nonpayment of premium.

Other questions arise, including the effect of the September 19 letter that gave Curtis actual notice of the cancellation almost one month before the accident. That letter may itself be a cancellation notice. That letter may be viewed as changing the allegedly conciliatory tone of the cancellation notice. Perhaps the letter cures the issue of prospective notice. These interesting assertions were not raised by anyone.

This court would have benefitted from a full, or even partial, debate of these issues. We decline the dissent’s invitation to resolve issues not raised.

For the forgoing reasons, we affirm.

Affirmed.

MYERSCOUGH, P.J., concurs.