2020 IL App (1st) 190631
Ill. App. Ct.2020Background
- Insured Gia Wells owned a Crete, IL house; policy covered loss from freezing but excluded losses while dwelling was "vacant" or "unoccupied" unless insured maintained heat or shut off/drained water.
- In May 2016 Gia discovered extensive water in the basement and a failed second-floor bathroom pipe; EFI (hired by State Farm) issued reports identifying possible causes including freezing, corrosion, and vandalism, and later noted municipal water service had been discontinued before the loss.
- State Farm investigated (interviews, property inspections, EFI reports) and, citing the unoccupied-dwelling exclusion and a concealment/fraud condition (due to inconsistent statements about occupancy, water service, and marriage date), denied coverage in July 2017.
- Gia sued for breach of contract and for a §155 claim (vexatious/unreasonable denial). State Farm moved to dismiss the §155 claim, attaching an affidavit and exhibits; Gia failed to file a counter-affidavit.
- The circuit court dismissed the §155 claim, finding a bona fide coverage dispute; Gia voluntarily nonsuited the breach count. The court initially found Gia willfully failed to appear for a deposition, then later vacated that willfulness finding (the court characterized the change as nunc pro tunc).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether State Farm acted vexatiously/unreasonably under 215 ILCS 5/155 by denying the claim | Wells: denial was pretextual; State Farm feigned a coverage dispute and improperly delayed and manipulated expert reports | State Farm: investigation and EFI reports plus inconsistent insured statements created a bona fide dispute; denial based on policy exclusions and concealment | Court: Dismissed §155 claim — bona fide dispute existed, so conduct not vexatious/unreasonable |
| Whether the court improperly used a nunc pro tunc order to vacate its prior finding that Wells willfully failed to appear for deposition | Wells: moved to vacate willfulness finding within time; court had jurisdiction to correct | State Farm: court lacked jurisdiction after nonsuit and could not alter prior order nunc pro tunc | Court: Vacatur was timely (done within 30 days) and permissible; calling it nunc pro tunc was unnecessary but harmless; no reversible error |
Key Cases Cited
- Employers Insurance of Wausau v. Ehlco Liquidating Trust, 186 Ill. 2d 127 (standard of review for §155 rulings/judgment on pleadings)
- Zedella v. Gibson, 165 Ill. 2d 181 (unchallenged affidavits in support of motion deemed admitted)
- Lundquist v. Allstate Insurance Co., 314 Ill. App. 3d 240 (tests for whether a residence is "occupied")
- Thompson v. Green Garden Mutual Insurance Co., 261 Ill. App. 3d 286 (meaning of "unoccupied" in coverage exclusions)
- Scudella v. Illinois Farmers Insurance Co., 174 Ill. App. 3d 245 (insurer may assert legitimate policy defenses; §155 not for denials grounded in policy wording)
- Buais v. Safeway Insurance Co., 275 Ill. App. 3d 587 (failure to investigate can support a §155 claim when no bona fide dispute exists)
- Beck v. Stepp, 144 Ill. 2d 232 (jurisdictional rules and proper use of nunc pro tunc corrections)
- King v. City of Chicago, 324 Ill. App. 3d 856 (use of supporting affidavits under §2-619)