RVP, LLC v. Advantage Insurance Services, Inc.
82 N.E.3d 619
Ill. App. Ct.2017Background
- RVP and River Valley Recycling (plaintiffs) used agent Tom Roule and broker firms Advantage and CIG to procure insurance for two buildings and business property; Mark Fill handled insurance for plaintiffs.
- Travelers and Universal policies were canceled; Roule placed new Erie policies in 2009–2010. Erie declarations showed $1.545M and $545K for buildings and $75K for business personal property.
- On September 2, 2011 a fire destroyed the properties; Erie paid only policy limits, leaving plaintiffs with large unreimbursed losses.
- Plaintiffs sued (Aug 30, 2013) for negligence and breach of contract against the brokers/agent for failing to procure sufficient coverage. Defendants moved asserting the two-year statute of limitations under 735 ILCS 5/13-214.4.
- Discovery showed plaintiffs received the Erie policies (and renewals) before the renewal dates; the trial court granted summary judgment for defendants, holding the claims accrued upon receipt of the policies and were time-barred.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| When did cause of action accrue under the two-year rule for claims against insurance producers? | Accrual was tolled by the discovery rule; they did not learn of the inadequate limits until after the fire (Sept 2, 2011), so the Aug 30, 2013 suit was timely. | Cause accrued when plaintiffs received the Erie policies/renewals because they knew or should have known the coverage limits then. | Court: Accrual occurred upon receipt of policies/renewals showing limits; claims were time-barred. |
| Effect of insured’s failure to read the policy when suing the broker/agent (Perelman rule)? | Perelman and related cases prevent presuming knowledge simply because the insured received the policy where a fiduciary/broker relationship exists; material fact exists on when they should have known. | Even under a broker relationship, undisputed declaration pages showing explicit limits charge insureds with knowledge for limitations purposes. | Court: Perelman didn’t save plaintiffs here; undisputed declaration pages made the limits obvious, so plaintiffs should have known upon receipt. |
| Whether ambiguity or fiduciary duty preclude summary judgment on accrual | Plaintiffs assert fiduciary duty and possible ambiguity create fact issues on when they should have known. | Defendants point to unambiguous declaration pages and multiple renewals that put plaintiffs on notice as a matter of law. | Court: No ambiguity alleged; fiduciary-duty/merits issues do not prevent finding accrual as a matter of law here. |
| Whether failure-to-read is absolute bar to recovery or only affects merits | Plaintiffs argue failure to read is not an absolute bar against a broker due to fiduciary duty. | Defendants argue failure to read starts limitations running and bar applies to accrual. | Court: Did not decide absolute bar on merits; held for limitations purposes that receipt put plaintiffs on notice and barred the claim. |
Key Cases Cited
- Perelman v. Fisher, 298 Ill. App. 3d 1007 (Ill. App. Ct.) (insured’s failure to read policy procured by broker not an absolute bar where fiduciary duty exists)
- Celotex Corp. v. Knox College, 88 Ill. 2d 407 (Ill. 1981) (discovery rule: limitations begins when plaintiff knows or should know injury was wrongly caused)
- Economy Fire & Casualty Co. v. Bassett, 170 Ill. App. 3d 765 (Ill. App. Ct.) (insured bound to read policy when suing insurer)
- Black v. Illinois Fair Plan Ass’n, 87 Ill. App. 3d 1106 (Ill. App. Ct.) (insured’s duty to read policy binds insured in actions against insurer)
- Foster v. Crum & Forster Insurance Cos., 36 Ill. App. 3d 595 (Ill. App. Ct.) (insured’s duty to review policy terms)
- Furtak v. Moffett, 284 Ill. App. 3d 255 (Ill. App. Ct.) (cases distinguishing insurer versus broker liability)