State Farm Mutual Automobile Insurance Co. v. Elmore
2020 IL 125441
Ill.2020Background:
- Kent Elmore was injured (amputation) when his foot contacted a rotating grain auger while unloading a grain truck owned by his father, Ardith Sheldon Elmore.
- The truck was insured under a State Farm automobile policy that included a Commercial Vehicle endorsement containing a "mechanical device" exclusion: no coverage for "the movement of property by means of a mechanical device, other than a hand truck, that is not attached to the [insured] vehicle."
- Kent settled with the truck owner and other insurers but reserved rights to recover under the State Farm auto policy; State Farm then sued for a declaratory judgment denying coverage based on the exclusion.
- The trial court granted State Farm summary judgment, finding the auger was a mechanical device and the exclusion unambiguous; Kent appealed.
- The Illinois Appellate Court reversed, holding the exclusion ambiguous as applied to a tractor-powered auger and construing ambiguity against the insurer; the Illinois Supreme Court granted leave and reversed the appellate court, affirming summary judgment for State Farm.
Issues:
| Issue | Plaintiff's Argument (State Farm) | Defendant's Argument (Kent) | Held |
|---|---|---|---|
| Whether the policy's "mechanical device" exclusion is ambiguous as to an auger injury | Exclusion is plain: an auger is a "mechanical device," not a hand truck, not attached to the vehicle, so exclusion unambiguously bars coverage | Exclusion is vague/overbroad when applied to a non–self-powered farm auger; ambiguous language must be construed for coverage | Court: exclusion unambiguous; auger falls within ordinary meaning of "mechanical device;" exclusion applies |
| Whether the exclusion should be read to apply only to loading onto the insured vehicle (interpretation of "vehicle described in (a) above") | The three subsections are independent; (c) refers to the insured vehicle generically and applies regardless of loading vs unloading | Reasonable reading: (c) references (a)'s context (vehicle receiving property), so (c) should not cover unloading from the insured truck | Court: subsections are separate exclusions; (c) is not limited to loading and covers movement of property by unattached mechanical devices |
| Whether the exclusion violates public policy/Illinois mandatory omnibus coverage by denying coverage to permissive users | Exclusion does not distinguish between named insured and permissive users and is therefore permitted under Illinois law (Progressive) | Exclusion effectively denies protection to permissive users and conflicts with statutory public policy | Court: exclusion does not discriminate between insureds and permissive users; Progressive permits such exclusions; public policy challenge rejected |
Key Cases Cited
- Progressive Universal Ins. Co. of Illinois v. Liberty Mut. Fire Ins. Co., 215 Ill. 2d 121 (Ill. 2005) (upheld exclusions that do not discriminate between named insureds and permissive users)
- Founders Ins. Co. v. Munoz, 237 Ill. 2d 424 (Ill. 2010) (insurance contract interpretation follows general contract rules; enforce clear terms)
- Western Cas. & Surety Co. v. Brochu, 105 Ill. 2d 486 (Ill. 1985) (apply words in their plain, ordinary, popular meaning)
- Lentin v. Continental Assurance Co., 412 Ill. 158 (Ill. 1952) (courts must enforce the parties' agreed terms and not inject different ones)
- Continental Ins. Co. v. American Motorist Ins. Co., 542 S.E.2d 607 (Ga. Ct. App. 2000) (applied a mechanical-device exclusion to a pallet jack)
- Dauthier v. Pointe Coupee Wood Treating, Inc., 560 So. 2d 556 (La. Ct. App. 1990) (defined "mechanical device" by reference to machinery/contrivance)
- Elk Run Coal Co. v. Canopius U.S. Ins., Inc., 775 S.E.2d 65 (W. Va. 2015) (held a front-end loader was a mechanical device)