West Bend Mutual Insurance Co. v. TRRS Corp.
216 N.E.3d 332
Ill. App. Ct.2022Background
- TRRS (a tire-retreading company) employed Gary Bernardino as plant manager; in April 2017 Bernardino fell from a forklift platform and reinjured his left shoulder — a recurrence of a prior workplace shoulder injury.
- TRRS’s general manager, Michael Sardinas, visited Bernardino at the hospital and TRRS voluntarily paid or arranged payment of medical bills and promised to cover lost wages, without immediately notifying its insurer, West Bend.
- About 11 months after the injury Bernardino retained counsel and filed a workers’ compensation claim and a personal-injury suit; TRRS then reported the claim to the Illinois Workers’ Compensation Commission and tendered the suit to West Bend.
- West Bend filed a declaratory-judgment action seeking a ruling that it owes no coverage because notice was untimely and that voluntary payments were not reimbursable; the trial court granted summary judgment for West Bend, finding the 11-month delay unreasonable and applying Livorsi to foreclose recovery regardless of prejudice.
- On appeal the court held that material factual disputes (e.g., Sardinas’s stated belief that the claim might be a pre-existing-condition exclusion, the limited evidence of TRRS/Sardinas’s insurance sophistication, and unclear insurer prejudice) made timeliness a question for trial, so summary judgment was improper.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an 11-month delay in giving notice was unreasonable as a matter of law | Delay is per se unreasonable; summary judgment appropriate | Reasonableness is a factual question given context; summary judgment improper | Timeliness is a fact question here; 11-month delay not unreasonable as matter of law — remand for factfinding |
| Whether insurer need show prejudice once notice is found unreasonable (Livorsi rule) | If notice is unreasonable, insured cannot recover regardless of prejudice | Insured argues reasonableness must be considered and prejudice remains a relevant factor | Court reiterated Livorsi but found Livorsi inapplicable where reasonableness is disputed; cannot bypass fact inquiry into prejudice and related factors now |
| Whether TRRS (and Sardinas) are sufficiently sophisticated that delayed notice is unreasonable | Sardinas/TRRS were sophisticated corporate insureds; delay is unreasonable | Sardinas had limited insurance experience; TRRS not shown to have attributes of a sophisticated corporate insured | Record insufficient to treat TRRS as a sophisticated insured; sophistication is a factual issue |
| Whether TRRS’s voluntary payments waive coverage or preclude notice | West Bend contends voluntary payments and delay weigh against coverage | TRRS says payments were permitted by policy language and made while coverage was uncertain; not a blanket waiver | Voluntary payments do not automatically disclaim coverage; insurer prejudice unclear — factual inquiry required |
Key Cases Cited
- Country Mut. Ins. Co. v. Livorsi Marine, Inc., 222 Ill. 2d 303 (2006) (prejudice is a factor in assessing notice reasonableness; insurer need not prove prejudice once notice is held unreasonable)
- West Am. Ins. Co. v. Yorkville Nat’l Bank, 238 Ill. 2d 177 (2010) (timeliness of notice is generally a question of fact; "immediately" means within a reasonable time; lists factors for evaluating notice)
- Berglind v. Paintball Bus. Ass’n, 402 Ill. App. 3d 76 (2010) (delay excused where facts support insured’s reasonable belief of noncoverage)
- Brotherhood Mut. Ins. Co. v. Roseth, 177 Ill. App. 3d 443 (1988) (lengthy delay excused where insured reasonably believed claim not covered)
- Equity Gen. Ins. Co. v. Patis, 119 Ill. App. 3d 232 (1983) (experienced insurance agents can be treated as sophisticated insureds)