*1 аl., Garnishors-Appellees, OTIS B. CHANDLER et Plaintiffs VERNA (American Casualty Company, Garnishee DOHERTY, L. Defendant Respondent-Appellant). and Citation 4 — 98 — 0078 Fourth District No. August 19, Opinion 1998.
Argued filed November *2 (argued), Robert Marc Daniel & Chemers and G. Wills both of Pretzel Stouffer, Chartered, Chicago, appellant. of for Cornyn (argued), Thomas, Haughey, Michael of R. Mamer & of Cham- paign, Lanto, Jr., Rantoul, appellees. C. Reino of
JUSTICE KNECHT of opinion delivered the court: (American Fire) Casualty American Fire & Company refused Doherty Doherty defend Otis when sued in circuit of court County Champaign by injuries Verna and Jаmes Chandler for received in an automobile accident. Verna was car Chandlers’ when the car an Doherty. Doherty it collided with driven had auto insur- A judgment ance with American Fire. default was entered against Doherty. The Chandlers then sued American Fire to collect the judgment. summary trial granted judgment court the Chan- dlers, holding Doherty American Fire breached its contract with failing raising facts complaint, alleged defend Chandlers’ which The trial court ruled extrinsic facts are duty American Fire did not file allowed to defеat the to defend where declaratory judgment action. parties Fire all involved knew the appeals, contending being by Doherty policy, car driven was not covered under its thus Further, absolving it from a to defend. American Fire contends defend, if even it did have a the trial court’s award of interest judgment judg- on the obtained the Chandlers from the date that ment rendered is error. affirm. We
I. BACKGROUND 1984, Doherty Celebrity In purchased new Chevrolet agency the Facer in Ran- obtained insurance with American toul. liability policy American Fire issued an automobile for the Chev- rolet as named an policy period with insured with effective single liability March to March limits of $300,000 for each accident. The included an exclusion from coverage, which stated: provide Liability Coverage
“B. do not ownership, We maintenance use or of:
* * * vehicle, Any your auto, other than covered which is: by you; a. owned your
b. regular furnished or available for use.” Doherty received a Volkswagen gift. automobile as a *3 He replaced Volkswagen’s body replica fiberglass body the with the Bugatti, Doherty a 1927 referred to all “the parties replicar.” as replicar only purposes parades drove the for recreational such as in for display.
Doherty agency prior May went to the Facer 1987 to see about adding replicar policy the to his with American Fire. He was told American Fire would not insure the car because it was modified. Doherty coverage replicar did not obtain elsewhere. He in ultimately obtaining succeeded insurance with American Fire for three months the accident replicar Chandlers. after 17, 1987, May Doherty replicar, On while he was was Doherty involved a collision with a car driven Verna Chandler. reported shortly the accident Facer the rep- afterward and was told policy licar was not on his with American Fire. 15, 1988, seeking dam-
-On November the Chandlers filed an action ages Doherty injuries they allegedly for personal sustained alleged Doherty negligently accident. In their complaint, Chandlers vehicle,” operated thereby causing “his motor the collision. Notice оf 20, 1988, in letter from given the action was to Facer on December a Doherty, a defense from American Fire. In requested counsel for who letter, counsel stated if he did not receive a to the tender response days being he would assume declined and he within declaratory Fire. against would file a action On December 23 Facer forwarded the letter to American Fire. 3, 1989, responded by advising Doherty American Fire on March his Volkswagen policy indicated the 1962 was not added to the until August 7, 1989, several months аfter the date of loss and “unfortu- nately provide you any coverage we will be unable to for this accident.” Doherty’s counsel was also advised there no the rep- Doherty declaratory judgment licar. Neither nor American Fire filed a regarding action American Fire’s
Doherty did A appear defend Chandlers’ lawsuit. judgment default liability only on was entered him on Doherty November default upon 1990. Notice of was served on April April Doherty 1991. On sent letter to American Fire with of default and a copy notice letter he received from the attorney advising appeared Chandlers’ him it American Fire was wrongfully refusing responded to defend him. American Fire never Doherty’s request for representation. August jury
On damages awarded Chandlers $1,618,678 judgment against Doherty amount of was entered that amount. Doherty
On December counsel for demanded American Fire pay judgment. responded American Fire on March advising payment stating replicar there would be no was not an insured vehicle.
In later proceedings, assigned any rights citation he had under the American Fire to the Chandlers on October 1994. August 21, 1995, On the Chandlers filed their amended garnishment against citation and affidavit for order of American Fire. initially February answered the amended 14, 1996. Both American Fire and the Chandlers filed motions for summary judgment and American Fire filed a motion for leave to withdraw its answer and a motion to dismiss. exchange respective
After an of memoranda their sum- supporting mary judgment motions, counsel for the Chandlers and for American argued their motions before the trial cоurt on October granted partial summary In a the trial court opinion, memorandum 1, 1997, finding judgment for the Chandlers on December “American *4 failing the com- Doherty by breached its contract with to defend when raising coverage.” for The trial court plaint alleged potential facts respect to summary judgment denied the Chandlers’ motion for
801 their court denied American cause of action bad faith. The also summary judgment Fire’s motion and its motion to dismiss. The court 17, 1998, entered a judgment January order in favor of the Chandlers $300,000 in the amount plus statutory of the limit interest at $1,618,678 19, 1993, August 9% the sum of judg- the date the against Doherty. ment was entered
The trial delay court found no reason to enforcement appeal 304(a) (155 304(a)). pursuant Supreme order Court Rule Ill. 2d R. Timely 27, appeal January notice of was filed on argues
American Fire duty it had no to defend as a mat- ter of law because the car he was in the accident with the Chandlers was not an insured under the policy vehicle and there was a policy Further, exclusion specifically addressing that circumstance. Doherty, Fire, contends as as well American knew this Thus, was the case at all relevant times. it was error for the trial court grant summary judgment to the Chandlers.
II. ANALYSIS A trial grant court’s of summary judgment subject is to a de novo upon appeal. review Corp. Outboard Marine Liberty v. Mutual In Co., 90, 102, surance 154 Ill. 2d 1204, 607 (1992); N.E.2d 1209 Sand Silva, (1994). strom v. De 932, 935, 345, 645 N.E.2d 347 Under Illinois law an insured contracts for and right has a to expect (1) separate two and distinct duties from an insurer: duty to defend (2) him if a claim against him; is made duty indemnify him if he is found legally liable for the occurrencе of a covered risk. Con way v. Country Casualty Co., Insurance 92 Ill. 2d 442 N.E.2d 245, 247 Empire Fire & Marine Insurance Co. v. Clarendon In (1994). surance The duty to defend an insured is much broader than the indemnify. Crum & Managers Forster Corp. Corp., Resolution Trust (1993). 384, 393-94, 156 Ill. 2d Illinois, an may insurer be required to defend its insured even when there will ultimately obligation be no to indemnify. Zurich Ray Insurance Co. v. Industries, Inc., mark 118 Ill. 2d law,
Under Illinois
liability
insurer’s
to defend arises
when the insured
tenders defense of a suit
him
alleges
which,
facts
true,
when taken as
raise the
oc
curring during
the effective
period. Empire
Marine,
Fire &
Ill.
3d at
face of the policy
Forster,
Crum &
*5
1079;
Marine,
107-08,
In motor complaint this was “his at vehicle” the time of the accident with Chandlers. American Doherty driving Fire’s covers when he is his 1984 Chevrolet Ce- lebrity. alone, the allegations complaint From there is Doherty claim, parties agree for this which all occurred in Il- during policy period. precedent the effective Under established linois, duty American Fire owed to defend clаims of Chandlers. points squarely out there is no Illinois case presented general with the issue here and contends the rule is
point
not
situation. American Fire contends it should not
applicable
this
its insured
both the insured and the
required
be
to defend
when
In
coverage.
support
position
insurer know there is no
of its
it cites a
federal circuit court case from Florida with an almost identical fact
(5th
1970). Rowell,
In
pattern.
Hodges,
Rowell v.
insured had Cadillac but was a 1955 Ca- insured complaint dillac he in an automobile aсcident. The when was involved alleged the insured was “an automobile” and the insurer retaining independent adjusting an firm the auto determined that it did not The court in involved was the 1955 Cadillac insure. to defend and illogical require Rowell found it to be the insurer established, the already incontrovertibly then it had prove up what in the accident and the fact it was not identity of the vehicle involved hand the defense of the action back to the insured. and then Rowell, F.2d at Illinois, but American Fire precedent
The Rowell decision is nоt use of extrinsic evidence contends Illinois law itself allows for the fall outside of an insured’s actions company an insurance establish First, American Fire contends it is not the law in Illinois face duty complaint that a to defend is owed where the on its does but, rather, such a there is no to defend where a preclude complaint allege stating policy applies. does facts how an insurance support position, Tapp Wrightsman- of this American Fire cites Ill. Agency, Musso Insurance N.E.2d 145 In Tapp, the insurer insured a specific piece property trucking town of Virden and the Tapp, business located on it. 931, 441 complaint alleged injuries 3d at N.E.2d at 147. The oc- piece property Taylorville curred on a plaintiff near while the helping building the insured dismantle and remove a there. located Tapp, 3d at N.E.2d at 146. The did not allege any way property how this action was in related to the Therefore, Virden or the insured’s trucking business. a defense was give denied. The court held the needed to some indication thеre reason to believe the insurance was related to the *6 alleged, facts it Tapp, 933, which did not do. 109 Ill. at 441 App. 3d words, N.E.2d at 149. In other actually the court in set forth the Tapp proposition same stated complaint allege earlier: the sup- must facts porting potential a for coverage policy. under the In the Tapp, com- plaint, face, on its did not set supporting forth facts potential coverage us, while in the case before facts supporting potential covеrage were alleged. by
Other cases cited American Fire in support position of its extrinsic may evidence be by offered an insurance company to coverage determine declaratory arise from judgment proceedings, an option open case, to American Fire in this but one it chose not to pursue. See State Farm Fire Casualty Shelton, & Co. v. App. 176 Ill. 913, 3d (1988); 531 N.E.2d Fidelity 919 & Casualty Co. v. Envirodyne Inc., Engineers, 301, 304-05, 122 Ill. App. 3d (1983). 471, 473-74 Builders,
Another
by
Fire,
case cited
J. Roth
Inc. v.
Co.,
Aetna
& Casualty
572,
(1987),
151 Ill. App. 3d
A final by case cited American Fire in support position of its allow- 804
ing
coverage
the use of extrinsic evidence to determine
is Clemmons v.
(1981).
Co.,
469,
Ill.
Travelers Insurance
88
2d
upon complaint, estopped it was not from assert garnishment ing policy supported by defenses extrinsic evidence However, proceedings. support the cases American Fire cites do its argument. proposition These cases stand for the an insurer can never actively defenses it estopped raising policy be where seeks adjudicate rights by seeking summary judgment and duties in а declaratory judgment action filed the insured or the whether insurer. See J.A. Jones Construction Co. v. Fire Insurance Hartford Sears, Co., 148, 151-52, 269 Ill. 3d Co., Roebuck & Insurance Co. Seneca (1993); Village N.E.2d Melrose Park v. Nautilus Insurance N.E.2d *7 unjustifiably In to defend but Illinois where an insurer has declaratory file a action to determine its refuses to do so and fails to action, is obligations original before trial of the tort the insurer any or defenses in a later estopped asserting policy from exclusions judgment Murphy the insured or a creditor. v. garnishmеnt by action (1981); Thornton, Urso, 1079, 74 88 Ill. 2d 430 N.E.2d 1082 case, American Fire did not 145, Ill. 2d at at 340. this and under the in a declara- adjudicate rights seek to duties either. did not file such an action tory judgment action declaratory judgment action before American Fire could have filed a judicial determination trial of the Chandler lawsuit and obtained 805 declaratory participa- The action would have included the Chandlers, might disputed tion of the who have the lack of cover- well age greater Doherty. motivation than consistently the tоrt
Illinois courts have determined claimant underlying necessary party declaratory judgment an action is a to a action brought coverage to determine insurance for that claim. M.F.A. 809, Cheek, Mutual Insurance Co. v. 66 Ill. 2d N.E.2d 363 (1977); Society Mount Carmel v. National Ben Franklin Insur Co., 655, 661, 1280, ance 268 Ill. 3d N.E.2d Inc., Partnership Marketing Flashner Medical Management, 177, Courts have based the de underlying termination the claimant in the action a necessary party is on the idea right viability such claimants have a “substantial (Cheek, the policy” 811), 66 Ill. 2d at they 363 N.E.2d at аre “a real party liability rights interest to the insurance contract” whose “vest at the time of the giving injuries.” Reagor occurrence rise to his v. Travelers Ill. App. Insurance
(1980). Courts
noted a
noncoverage
have
declaration of
would elimi
nate a source of funds
injured party.
to the
Flashner Medical Partner
ship,
3d at
Illinois law is clear on this We decline American Fire’s invitation change complaint alleged Doherty law. Chandlers’ driving his negligent automobile when his actions caused them to injured. be The insurance policy issued an covers automobile by Doherty owned liability personal injuries his others while it. There was potential coverage and American prevail cannot First, here arguing everyone knew there was no cover age. recognize legal we do not efficacy argument sug of an gesting everyone something, very knew purpose when of some liti gation is to dispute resolve a over who knew whаt and whether what they thought they is actually Certainly Doherty knew true. and his at torney thought might there they be because asked American Fire to defend the lawsuit pay judgment. Further, and later to Doherty’s knowledge or belief as to is not determinative on the issue of whether American Fire had a to defend. American Fire unjustifiably refused Doherty. to defend
When an company unjustifiably insurance refuses to defend its (1) damages the measure of judgment the amount of the against its up insured guilty limits Unless insurer was of negligence, fraud or faith in liability bad which сase there is (2) judgment; full expenses incurred in defending insured (3) suit; any damages additional to its to defend. traceable refusal Conway, 396-98, 442 N.E.2d at 248-49. *8 case, $300,000 judgment
In this the trial court entered for amount judgment. If it plus limits interest on the full not the mea Doherty, owed defense to American does contest damages sure of it contends it was error to assess interest from except judgment argues date the the interest run was entered and should only summary judgment against from the date the entered it. interest policy specifically provided postjudgment American Fire’s for as follows: ‘‘Supplementary Payments liability, pay addition to our limit of we will on behalf of person:
covered
* * * accruing judgment any after is entered in Interest suit we pay pay part defend. Our to interest ends offer to of when we judgment liability does not exceed our limit of which coverage.” argues, policy,
American Fire under its actual defense of the underlying precedent is a condition for postjudg- lawsuit lawsuit, ment it did not in participate underlying interest. Because any postjudgment American Fire contends there is no Doherty. interest assessed here, however, American Fire
We need not deal with that issue as in An presented did not raise it the trial court. issue not trial Mohr, nonjury Marriage court is in civil cases. In re 260 Ill. waived of 98, 101, (1994); In App. Marriage Harper, 3d re of (1989). 3d 575-76 not N.E.2d Issues raised in the trial court are not to be considered for the first time on in Ill. appeal summary judgment Ashley, even cases. Smith v. “Safeway” Anderson Guard R. Corp. Asphalt Champaign
414, 418-19 right judgment inter- specifically The Chandlers asserted their against Doherty in their underlying judgment est from the datе of the garnishment, their motion for sum- complaint for citation and order of summary judgment, mary judgment, support their memorandum in of in on the motion. American Fire never addressed arguments oral judg- summary in motion for response the issue its to the Chandlers’ ment, summary judgment, its memorandum its cross-motion cross-motion, arguments to the of response or even support of its Instead, the motions. arguments counsel at the oral Chandlers’ applicability arguing Fire confined itself to about faith, allegations of bad due the Chandlers’ interest garnishment action. properly part argued were American Fire addressed the issue of should have whether interest judgment against Doherty been assessed from the date entered only appellate briefs. The issue been has waived. foregoing reasons,
For the judgment of the trial court is af- firmed.
Affirmed.
STEIGMANN, J., concurs. McCULLOUGH, dissenting: JUSTICE I respectfully dissent. enforce,
Where there is no there duty is no to defend. allegations The complaint carefully describing of Chandlers’ in avoid collision, detail the nature of the in by vehicles involved the whether make, model, descriptiоn, or serial number. There in nothing is the complaint from Doherty which vehicle in the involved by Casualty collision American Fire & Company can be inferred. Doherty had one by Casualty, vehicle insured American Fire & but the vehicle that was in the policy. involved collision was not on the A partial summary Doherty’s testimony He helpful. purchased is new Chevrolet Celebrity 1984 and obtained insurance on the Celeb- rity from Facer. The Volkswagen given was to him a year about before the accident. He given Bugatti body. was also He wоrked the car year, finishing for about a init about December 1986. In re- sponse to any whether he went to Facer or other agency get insur- ance, answered, he “I asked them about it Doherty one time.” does not remember he when talked to Facer. As to going his reason for Facer, he had the other car might insured at Facer and “I keep as well policies both insurance with the same company.” hap- As to what pened: They
“A. didn’t want to insure it. She said it awas modified car they and something didn’t have don’t remember. It was some —I kind of excuse. Q. words, they In other somebody didn’t have to write off to and get you say they back to wouldn’t cover it?
A. No.
Q. They you day? told that that
A. Yes.” As to accident, the vehicle involved in the Doherty testified he *** “got damages nine hundred and some I [and] dollars worth of
got an repairs estimate of and I sent the estimate to the insurance company,her company, they gave insurance me a check for the amount, investigation. after
Q. your own any didn’t make claim for reimbursement You company? insurance
A. No.”
analysis
go bеyond
should not
the com-
majority
The
states
that
majority
support
The cases cited
do not
conclusion.
plaint.
that,
determining
“It
well-established law
whether an
is now
duty
insurer has a
to defend its
the court must look to
allega-
underlying complaint
compare
in the
these
policy.”
coverage provisions
tions to the relevant
of the insurance
Managers Corp.,
Crum & Forster
620 N.E.2d at
subject
underlying
If
compared
suit,
merely alleges
clearly
duty
there is
no
to defend. The
may
A
own
Doherty
operating
person
was
“his motor vehicle.”
vehicles,
companies. Doherty
all
different
several motor
insured
owns, apparently
he
received
also made reference to another vehicle
Query, if insurance
had on this vehicle with
parents.
from his
to defend?
company,
company
different
would that
also have
give
operating
one of his vehicles does not
The fact that
failure in
Casualty.
to a
to defend American Fire &
rise
the motor
complaint,
specifically identifying
operated
vehicle
collision, gives
application
time of the
rise to the
by Doherty at the
Thornton,
general rule,
to the
as announced
exception
Thornton,
court discussed
supreme
at
I
with the statement
“Although
case law does state that the lack of
must be
absolutely
comparing
clear when
with the
an insurer to refuse to defend
impunity,
we believe this broad
statement
presumes
complaint gives
of law
that the
some indica-
tion there is a
reason to
the insurance
bеlieve
is relevant to
alleged
Tapp,
facts.”
3d at
“[T]he rule does not take into account the possibility that divergence may alleged exist between the facts as in the Petition they and the actual insurer, facts as are known to and that the general where, here, rule does apply as the uncontrovertible facts, indisputable and ascertained company long insurance before the action is commencedand confirmed its own demonstrate any that there never was insurance casualty alleged place, that, therefore, in the first the refusal to but, defend does not constitute a breach of contract on the con- trary, justified is a refusal. sense, say
In a here that the gauge obliga- Garnishee must strictly by pleading tion Complaint, called a put blinders on, speak, so to actually definitely what it knows has ascertained, archaic, considering somewhat the nature of our present system Rowell, pleading.” of notice 434 F.2dat 929-30. reasoning Rowell is plaintiffs sound. The were not entitled to summary judgment.