*1 Illinois Official Reports
Appellate Court
Pekin Insurance Co. v. St. Paul Lutheran Church
,
HOPE FARNEY, as Independent Administrator of the Estate of KITTY MULLINS, Deceased, Defendants-Appellees. Fourth District
District & No.
Docket No. 4-15-0966 Filed October 14, 2016
Modified upon
denial of rehearing January 4, 2017
Decision Under Appeal from the Circuit Court of Ford County, No. 15-MR-4; the Hon. Matthew John Fitton, Judge, presiding. Review Appeal dismissed in part and affirmed in part. Judgment Counsel on Robert Marc Chemers and Richard M. Burgland (argued), of Pretzel & Stouffer Chtrd., of Chicago, for appellant. Appeal
Thomas J. Pliura (argued), of LeRoy, for appellee St. Paul Lutheran Church.
Michael J. Gravlin (argued), Sean Mussey, and Jakub D. Banaszak, of Law Offices of Michael J. Gravlin LLC, of Chicago, for appellee Hope Farney. *2 JUSTICE APPLETON delivered the judgment of the court, with
Panel
opinion.
Justices Holder White and Steigmann concurred in the judgment and opinion.
OPINION This is an action for declaratory judgment. The plaintiff is Pekin Insurance Company (Pekin), and the two defendants are St. Paul Lutheran Church of Roberts, Illinois (church), and Hope Farney, the independent administrator оf the estate of Kitty Mullins, deceased. In a case separate from this one—the underlying tort case—Farney is suing the church for wrongful death, alleging that a church employee, Matthew Geerdes, while using his personally owned car for church business, negligently crashed into Mullins’s car, causing her death. Pekin had issued the church an insurance policy, which covered bodily injury caused by the use of a non-owned auto for church business. In the present case, though, Pekin sought a declaratory judgment that, for two reasons (corresponding to counts I and II of its amended complaint for declaratory judgment), it had no contractual duty to defend its insured, the church, in Farney’s wrongful-death lawsuit. First, at the time of the accident, Geerdes was on his way to his other job, his job with University Lutheran Ministry of Bloomington-Normal, Illinois (University Lutheran); thus, Pekin contends, he was not using his car for church business, and there is no business liability coverage under the Pekin policy. Second, Cоuntry Mutual Insurance Company (Country Mutual) already was defending the church pursuant to the automobile liability policy it had issued to Geerdes, and the policy Pekin had issued to the church stipulated that the business liability coverage was excess coverage when it came to the use of a non-owned auto for church business and that as long as the primary insurer (in this case, Country Mutual) was defending the church, Pekin had no duty to do so. The two defendants in this declaratory judgment action, the church and Farney, moved to
dismiss Pekin’s amended complaint for declaratory judgment on the ground of failure to state a cause action. See 735 ILCS 5/2-615 (West 2014). The trial court granted their motions without prejudice. Afterward, when Pekin moved for permission to file a second amended complaint for declaratory judgment, the court not only denied permission to do so but stated that this time its ruling was “with prejudice.” Pekin appeals the dismissal of its amendеd complaint and, alternatively, the denial of permission to file the proposed second amended complaint. We conclude that count I of the amended complaint for declaratory judgment is premature and that count II is moot. Because Pekin is silent as to count III, it has forfeited any challenge to the dismissal of that count. We find no abuse of discretion in the denial of permission to file the proposed second amended complaint, since it would not have cured the deficiencies in the amended complaint. Therefore, we dismiss this appeal as to count II of the amended complaint for declaratory judgment, and we otherwise affirm the trial court’s judgment.
I. BACKGROUND A. Pekin’s Amended Complaint for Declaratory Judgment In its amended complaint for declaratory judgment, Pekin made the following allegations. 1. The Insurance Policy That Pekin Issued to the Church Pekin issued an insurance policy, No. 00BU11178, to the church. This policy, which had an effective policy period of October 24, 2012, to October 24, 2013, provided business liability coverage for “ ‘bodily injury’ or ‘property damage’ arising out of the use of any ‘non-owned auto’ in [the church’s] business by any person other than [the church].” This business liability coverage was subject to the following condition pertaining to other insurance:
“H. OTHER INSURANCE
(1) If there is other insurance covering the same loss or damage, we will pay only for the amount of covered loss or damage in excess of the amount due from that other insurance, whether you can collect on it or not.
(2) Business Liability Coverage is excess over any other insurance that insures for direct physical loss or damage.
(3) When this insurance is excess, we will have no duty to defend any claim or ‘suit’ that any other insurer has a duty to defend. If no other insurer defends, we will undertake to do so; but we will be entitled to the insured’s rights against all those other insurers.” The Underlying Lawsuit
In Farney v. Geerdes, Ford County Circuit Court сase No. 13-L-14, Farney, as the special administrator of Mullins’s estate, filed a third amended complaint against four defendants: Matthew Geerdes, Larry Thorndyke, University Lutheran, and the church. In her third amended complaint, Farney invoked the Wrongful Death Act (740 ILCS 180/2 (West 2012)) and the Survival Act (755 ILCS 5/27-6 (West 2012)), alleging as follows. On October 9, 2013, at 9:20 a.m., Geerdes was driving a motor vehicle in Peach Orchard, Illinois, when he negligently ran into a motor vehicle driven by Mullins, who suffered fatal injuries. At the time of the accident, Geerdes was talking on the phone with Thorndyke, in violation of section 12-610.2 of the Illinois Vehicle Code (625 ILCS 5/12-610.2 (West 2012)). Thorndyke was the one who had made the phone call to Geerdes, and when telephoning Geerdes, he knew Geerdes was driving. Thus, Thorndyke negligently distracted Geerdes from the task of driving, causing the fatal accident. At the time of the phone call and the accident, Thorndyke was acting within the scope of his employment as an employee оf the church, and Geerdes was acting within the scope of his employment as an employee of both the church and University Lutheran. Farney sought to hold the church and University Lutheran vicariously liable for the alleged negligence of their agents.
3. The Insurance Policy That Country Mutual Issued to Geerdes Country Mutual had issued insurance policy No. A12A3355557 to Geerdes. This policy provided automobile liability coverage on a primary basis and had an effective policy period of July 3, 2013, to January 3, 2014.
¶ 16 The Country Mutual policy covered not only Geerdes but “anyone else” liable for his acts
or omissions in the operation of an insured vehicle. Under the heading of “Persons Insured,” the policy provided:
“Under this Section of the policy, an insured is:
“1. With respect to an insured vehicle :
a. you and any resident of the same household as you ; b. anyone using an insured vehicle with your permission or the permission of an adult relative ;
c. anyone else, but only with respect to liability resulting from acts or omissions of an insured as defined in a. or b. above.” (Emphases in original.) ¶ 17 4. Tendering the Defense
¶ 18 The church tendered the defense to Pekin. Pekin accepted the tender, but with reservations.
Afterward, Pekin tendered the defense to Country Mutuаl, which accepted the tender without reservations.
¶ 19 The Judicial Declarations That Pekin Sought in Its
Amended Complaint for Declaratory Judgment Pekin’s amended complaint for declaratory judgment had three counts. In count I, Pekin alleged that “Geerdes, who was operating his own motor vehicle, was not using his motor vehicle in connection with Church business.” Therefore, as to count I, Pekin requested a declaratory judgment that (1) “for the matters alleged in [case No. 13-L-14],” it was “not liable under its policy of insurance issued to [the church]” and (2) it was “not obligated to defend [the church] in [case No. 13-L-14].” Count II sought a declaration only that Pekin lacked a duty to defend the church. Pekin
alleged that, as an excess insurer, it was “not obligated to defend the Church as there [was] other insurance covering the same loss, namely, Geerdes’[s] personal automobile policy with Country Mutual, and Country Mutual ha[d] accepted the Church’s defense without reservation.” Therefore, as to count II, Pekin requested a declarаtory judgment that because Pekin was an excess insurer rather than a primary insurer, and because Country Mutual, as the primary insurer, was defending the church without reservation, the “Other Insurance” provision of the policy exempted Pekin of any obligation to defend the church. In the final count of the amended complaint for declaratory judgment, count III, Pekin
alleged that the policy it had issued to the church included a provision for the reimbursement of defense costs if Pekin “ ‘initially defend[ed] an insured or [paid] for an insured’s defense but later determine[d] that the claim [was] not covered under this insurance.’ ” Therefore, as to count III, Pekin requested a declaratory judgment that the church had to “reimburse Pekin *** for all of the defense costs and other expenses incurred on *** behalf [of the church] in connection with [case No. 13-L-14].” Also, in all three counts, Pekin alleged, “on information and belief,” that defendants
disagreed with the positions Pekin took in its amended complaint. By Pekin’s understanding, defendants took the position “that the allegations contained in the action filed by Farney [were] covered under Pekin’s policy of insurance,” a position with which Pekin disagreed. Consequently, Pekin alleged, “an actual and justiciable controversy exist[ed] between the *5 parties,” a controversy that “[might] be determined by a judgment or order of [the trial court].” B. Defendants’ Motions to Dismiss
the Amended Complaint for Declaratory Judgment The Church’s Motion for Dismissal Pursuant to section 2-615 of the Code of Civil Procedure (735 ILCS 5/2-615 (West 2014)), the church moved to dismiss, with prejudice, Pekin’s amended complaint for declaratory judgment. The church argued that count I was legally insufficient because “[t]he allegations of the
Farney complaint squarely [brought] the asserted claim under the scope of the coverage
provided by [the church’s] policy, irrespective of any denials by [Pekin] herein or by [the
church] in answer to the underlying complaint.” The church cited
Maxum Indemnity Co. v.
Gillette
,
“15. Firstly, if Country [Mutual] is defending this claim without a reservation of rights, there is no active dispute between Pekin and [the church]. Pekin is only seeking an advisory ruling from this Court to the effect that, ‘should Country [Mutual] not defend [the church] in the Farney claim, Pekin would still not be obligated to defend the claim.’ This Court cannot and should not issue an advisory opinion on an unripe claim. ***
16. Secondly, Country [Mutual] has accepted the tender and is defending [the church] in the underlying action, but the indemnity limit on the Country [Mutual]/Geerdes policy is only $100,000.00. On information and belief, Country [Mutual] has tendered that limit to Farney. Farney has not yet аccepted the tender as doing so without releasing or waiving a cause of action against the remaining defendants would require additional efforts not yet accomplished.
17. It is anticipated, however[,] that once [Country Mutual’s] limit has been
exhausted, it will have no remaining obligation or intention to defend [the church]. At
that time, Pekin’s complaint may again become ripe for consideration by the Court.
But, Pekin’s defense to coverage will be no more tenable than this frivolous claim is
now. Therefore dismissal with prejudice is appropriate.”
(Pekin points out that, actually, Geerdes’s policy says: “ ‘[Country Mutual’s] duty to settle or
defend ends when the limits of liability stated on the declarations page have been exhausted by
payment of any
judgment or settlement
.’ ” (Emphasis in original.) Thus, Pekin explains,
Country Mutual’s voluntary payment of $100,000—the mere exhaustion of the policy
limit—actually would not end Country Mutual’s duty to defend its insureds; the payment
would have to be pursuant to a judgment or settlement. See
Conway v. Country Casualty
Insurance Co.
,
ground that it failed to state a cause of action. See 735 ILCS 5/2-615 (West 2014). In her
motion, Farney pointed out that, under the supreme court’s decision in
United States Fidelity &
Guaranty Co. v. Wilkin Insulation Co.
,
“If the underlying complaints allege facts within or potentially within policy coverage, the insurer is obliged to defend its insured even if the allegations are groundless, false, or fraudulent. [Citation.] An insurer may not justifiably refuse to defend an aсtion against its insured unless it is clear from the face of the underlying complaints that the allegations fail to state facts which bring the case within, or potentially within, the policy’s coverage. [Citation.]” (Emphases in original.) Id. Farney argued that, far from being clear, from the face of the underlying complaint, that her
claim was outside the coverage of the policy Pekin had issued to the church, her claim clearly was within the business liability coverage of that policy, for Geerdes allegedly was driving his car on church business at the time of the accident. The underlying complaint in case No. 13-L-14 (more precisely, the third amended complaint) alleged that Mullins’s death had resulted from the negligent operation of a motor vehicle by Geerdes while he was employed by the church and while he was acting within the scope of that employment. Specifically, the third amended complaint alleged that, at the time of the аccident, Geerdes was substantially within the authorized time and space limits of his employment, he was serving the interests of the church, and the church directly supervised and controlled him. The policy issued by Pekin applied to bodily injury arising from the church’s use (that is to say, its agent’s use) of a non-owned automobile in the church’s business. But what about the “Other Insurance” provision of the church’s insurance policy, the
provision that Pekin invoked in count II of its amended complaint for declaratory judgment? Farney asserted:
“The Pekin Insurance policy provision ‘Other Insurance’ does not remove Hope Farney’s Complaint from inside the borders of the Pekin Insurance policy coverage. Further, the ‘Other Insurance’ provision does not relieve Pekin *** from their obligation to defend [the] [c]hurch as the allegations of the Complaint remain clearly within the insurance policy coverage. Pekin *** fails to demonstrate why cоverage does not apply or their duty to defend is relieved based on this provision. The ‘Other Insurance’ provision has no bearing as to whether the Pekin Insurance policy applies or whether Pekin *** must defend [the] [c]hurch, which are the questions that must be answered by [Y]our Honor. Because the ‘Other Insurance’ provision does not affect the applicability of coverage or the duty to defend, Plaintiff’s Amended Complaint for Declaratory Judgment is substantially insufficient at law and must be dismissed with prejudice.”
¶ 34 Pekin’s Response to the Motions for Dismissal In its response to the motions for dismissal, Pekin conceded that, “ordinarily,” when
deciding whether an insurer had a duty to defend its insured, a court should confine itself to comparing the allegations of the underlying complaint with the provisions of the insurance policy. Pekin noted, however, that, “under certain circumstances,” a court might “look beyond the underlying complaint” when determining an insurer’s duty to defend. In this respect, Pekin quotеd the supreme court:
“ ‘[I]f an insurer opts to file a declaratory proceeding, we believe that it may properly
challenge the existence of such a duty by offering evidence to prove that the insured’s
actions fell within the limitations of one of the policy’s exclusions. [Citations.] The
only time such evidence should not be permitted is when it tends to determine an issue
crucial to the determination of the underlying lawsuit [citations] ***. If a crucial issue
will not be determined, we see no reason why the party seeking a declaration of rights
should not have the prerogative to present evidence that is accorded generally to a party
during a motion for summary judgment in a declaratory proceeding.
To require the
trial court to look solely to the complaint in the underlying action to determine
coverage would make the declaratory proceeding little more than a useless exercise
possessing no attendant benefit and would greatly diminish a declaratory action’s
purpose of settling and fixing the rights of the parties.
’ ” (Emphasis in original.)
Pekin
Insurance Co. v. Wilson
,
would collaterally estop Farney in her tort case, Pekin requested, as an alternative, the declaration it sought in count II: that the “Other Insurance” provision, together with Country Mutual’s unreserved assumption of the defense, negated Pekin’s duty to defend the church. If the trial court “rule[d] in Pekin’s favor as to [c]ount II, Pekin [would] dismiss [c]ount I without prejudice and with leave to replead.” As far as Pekin was concerned, the relief in count II would suffice for the time being. Pekin disagreed with the church that count II was moot, considering that the church had
tendered the defense to Pekin and had communicated to Pekin no formal withdrawal of the tender. Pekin argued: “Since the Church has not withdrawn its tender of defense from Pekin, there is a live controversy whether Pekin has a current duty or obligation to defend the Church in the Farney action.” The other defendant in the declaratory judgment action, Farney, did not regard this
question as moot; she maintained that, despite the “Other Insurance” provision and Country *8 Mutual’s acceptancе, without reservation, of Pekin’s tender of the defense, Pekin still had a duty to defend the church.
¶ 40 4. The Trial Court’s Ruling on the Motions for Dismissal ¶ 41 On May 19, 2015, the trial court granted defendants’ motions to dismiss Pekin’s amended
complaint for declaratory judgment, but the court did so “without prejudice.” ¶ 42 C. Pekin’s Motion for Reconsideration ¶ 43 1. The Arguments Pekin Made Pekin moved for reconsideration of the dismissal of its amended complaint for declaratory
judgment. Pekin argued it had pleaded the three elements of an action for declaratory
judgment—(1) a plaintiff with a tangible legal interest, (2) a defendant with an opposing
interest, and (3) an actual controversy between the parties concerning these interests
(
Beahringer v. Page
,
“To the contrary, the very fact that Country Mutual undertook to defend the Church is exactly what makes the Count ripe for adjudication, that is, another insurer has admitted that it owes a duty to defend the Church, and the Pekin policy provides in that scenario, Pekin has no duty to defend. At the very least, Pekin sufficiently pled facts establishing that an actual controversy exists between Pekin, which claims it has no duty to defend based on the other insurance provisions, and the Defendants, who claim that Pekin owes a duty to defend the Church in the Farney action.” The Church’s Response to Pekin’s Motion for Reconsideration The church filed a memorandum in opposition to Pekin’s motion for reconsideration. In its discussion of count I, the church did not specifically respond to Pekin’s quotation from Wilson ; the church merely continued to insist “the law [was] crystal clear” that, “in determining whether an insurer has a duty to defend its insured in an underlying lawsuit, the court must look to the allegations in the underlying complaint and compare those allegations to the relevant coverage provisions of the insurance policy.” The church also continued to insist that count II was moot. The church said:
“If Country [Mutual] is defending this claim without a reservation of rights, as is alleged, there is no active dispute between Pekin and [the church]. Pekin is only seeking an advisory ruling from this Court to the effect that, ‘should Country [Mutual] not defend [the church] in the Farney claim, Pekin would still not be obligated to defend the claim.’ This Court was correct in ruling that it cannot and should not issue an advisory opinion on an unripe claim.”
3. Farney’s Response to Pekin’s Motion for Reconsideration In her response to Pekin’s motion for reconsideration, Farney disputed that she had sought a ruling on the merits of Pekin’s amended complaint. She argued, rather, it was Pekin that had transgressed the bounds of procedural propriety by offering extrinsic evidence (Geerdes’s deposition) in opposition to her section 2-615 motion. She also pointed out that Beahringer was not new case law and that Pekin could have cited that case earlier instead of waiting until its motion for reconsideration to do so.
4. The Trial Court’s Ruling On August 18, 2015, the trial court denied Pekin’s motion for reconsideration.
D. Pekin’s Motion for Permission To File a Second Amended Complaint for Declaratory Judgment After the denial of its motion for reconsideration, Pekin moved for permission to file a second amended complaint for declaratory judgment “and also [to] immediately stay the declaratory [judgment action], pending resolution of the underlying action.” The proposed second amended complaint would have added the following allegation: “On May 14, 2014, Geerdes testified that he was driving to his other job in Normal, Illinois[,] when the alleged accident оccurred.” A copy of Geerdes’s deposition transcript was attached as an exhibit. Otherwise, the proposed second amended complaint mirrored the (now dismissed) amended complaint.
Defendants opposed Pekin’s motion for permission to file a second amended complaint, and in doing so, they moved for sanctions against Pekin pursuant to Illinois Supreme Court Rule 137 (eff. July 1, 2013).
On November 6, 2015, the trial court denied Pekin’s motion for permission to file a second amended complaint, this time “with prejudice.” At the same time, the court denied defendants’ motions for sanctions.
Pekin appealed 14 days later.
II. ANALYSIS A. The Three Counts of Pekin’s Amended Complaint for Declaratory Judgment, Taken One at a Time Count I To survive a motion for dismissal pursuant to section 2-615, the complaint, when interpreted in the light most favorable to the plaintiff, must set forth facts which, taken as true, legally entitle the plaintiff to the relief requested in the complaint. DeHart v. DeHart , 2013 IL 114137, ¶ 18. The motion points out defects that are apparent on the face of the complaint and that stand in the way of granting the requested relief. Urbaitis v. Commonwealth Edison , 143 Ill. 2d 458, 475 (1991). Defendants argue a defect is apparent on the face of count I of Pekin’s amended complaint
for declaratory judgment: a violation of the eight-corners rule. We decide
de novo
whether they
are correct. See
City of Chicago v. Beretta U.S.A. Corp.
,
whether the insurer has a contractual duty to defend the insured, the court may consider factual
matters external to the underlying complaint and the insurance policy “as long as [these factual
matters] do not bear upon issues in the underlying litigation” (
Millers Mutual Insurance Ass’n
of Illinois v. Ainsworth Seed Co.
, 194 Ill. App. 3d 888, 889 (1989)) or “impact upon the
underlying plaintiff’s ability to pursue a theory of liability” (
Fremont Compensation Insurance
Co. v. Ace-Chicago Great Dane Corp.
, 304 Ill. App. 3d 734, 743 (1999)). Thus, the
eight-corners rule bars extrinsic evidence only if, as a result of the proposed declaratory
judgment, the plaintiff in the underlying lawsuit could be hampered by collateral estoppel.
Maryland Casualty Co. v. Peppers
,
to determine a factual issue crucial to the underlying lawsuit, namely, whether at the time of
the accident, Geerdes was on Church business.” We see the same problem. If Farney wanted to
argue, in her tort case, that the church was vicariously liable because, at the time Geerdes ran
into Mullins, he was driving his car on church business, Farney would find herself collaterally
estopped by the declaratory judgment requested in count I of Pekin’s amended complaint. See
Mabie v. Village of Schaumburg
,
Pekin maintains that count I states a cause of action, “even if it would require a premature factual determination of a crucial issue in the Farney litigation,” and “the proper procedural move here was not to dismiss Pekin’s complaint altogether, but instead, allow Pekin to amend its Complaint and stay Count I pending resolution of the underlying action,” an option that Pekin suggested to the trial court in the hearing on Pekin’s motion to file a second amended complaint for declaratory judgment. TIG is distinguishable, however, because in TIG , the plaintiff in the underlying action
moved for a stay, not the insurer. The plaintiff in the underlying action filed a motion
either
to
dismiss the insurer’s declaratory judgment complaint as premature
or
to stay the declaratory
judgment action.
Id.
at 369. Thus, the plaintiff in the underlying action was willing to live with
*11
the prematurity, and therefore the legal insufficiency (see
Beahringer
,
live with the prematurity (and, therefore, the legal insufficiency) of count I until the underlying action was resolved. They moved for dismissal on the ground of failure to state a cause of action—period. If dismissal was justified on that ground, they were entitled to a dismissal. They were entitled to a correct ruling that was responsive to their motion. Another way TIG is distinguishable is its procedural posture. Just because the appellate
court, in
TIG
, found no abuse of discretion in the granting of the stay, it does not logically
follow that denying the stay would have been an abuse of discretion, either. The standard of
“аbuse of discretion” is the most deferential standard of review recognized by the law; a
decision will be deemed an abuse of discretion only if the decision is “unreasonable and
arbitrary or where no reasonable person would take the view adopted by the circuit court.”
Gulino v. Zurawski
, 2015 IL App (1st) 131587, ¶ 64. There could be two opposing but
reasonable answers to the same question. When presented with a motion for dismissal on the
ground of legal insufficiency, a trial court could reasonably decide it does not want an unripe
declaratory judgment action sitting on its docket. After all, an unripe declaratory judgment
action lacks an essential element of the cause of action, namely, an actual controversy
(
Underground Contractors Ass’n v. City of Chicago
,
no duty to defend the church in case No. 13-L-14 because Pekin is an excess insurer rather than a primary insurer and because the primary insurer, Country Mutual, has accepted without reservation the tender of the defense. The church insists that count II is moot because thе church agrees with Pekin that while Country Mutual defends the church, Pekin has no contractual duty to do so. On appeal, Pekin seems to be asking us to second-guess the church when the church, all but pounding the table, says over and over again it agrees with Pekin in this regard. If the church says it agrees, it agrees, and that is that. As between Pekin and the church,
count II presents no “justiciable [matter],” a constitutional prerequisite of the trial court’s
*12
subject-matter jurisdiction. Ill. Const. 1970, art. VI, § 9; see
Belleville Toyota, Inc. v. Toyota
Motor Sales, U.S.A., Inc.
,
¶ 73 Farney is a little more difficult to read. On the one hand, she says: “The allegations
contained in Farney’s complaint are clearly within the insurance policy coverage[,] and the ‘Other Insurance’ provision does not relieve Pekin from their obligation to defend the Church.” On the other hand, beginning with the next sentence of her brief, she says:
“[S]ince the Church (through Pekin) tendered the defense to Country Mutual, there was no ripe controversy between Pekin and the Church for the court to entertain. *** [B]ecause Country Mutual had undertaken the defense of the Church, any controversy between Pekin and the Church is moot. Pekin’s attempt to tack on this theory to their already legally insufficient first count must fail. ***
*** [B]ecause Country Mutual undertook the Church’s defense, Pekin’s attempt to argue there is not duty to defend because of Country’s tender is premature as there is no actual or ripe controversy between Pekin and the Church, and the circuit court appropriately dismissed Count II of Pekin’s Amended Complаint for Declaratory Judgment.”
Farney seems to be arguing that, given the allegations of her third amended complaint in case No. 13-L-14, Pekin has a contractual duty to defend the church but that because Country Mutual has undertaken the defense of the church, Pekin’s performance of its contractual duty has not yet fallen due (and, possibly, never will fall due). This seems a roundabout way of saying she agrees with Pekin’s position, in count II, that as long as Country Mutual is defending the church, Pekin need not do so. Ultimately, then, it seems that Farney, like the church, regards count II as moot, or as
presenting no “actual controversy.”
Id.
Therefore, as to count II of Pekin’s amended complaint
for declaratory judgment, we dismiss this appeal as moot. See
La Salle National Bank v. City of
Chicago
,
declaratory judgment. Therefore, pursuant to the doctrine of procedural forfeiture, we uphold the dismissal of that count. See Ill. S. Ct. R. 341(h)(7) (eff. Jan. 1, 2016) (“Points not argued are [forfeited] ***.”). B. Denial of Permission to File
the Proposed Second Amended Complaint for Declaratory Judgment A trial court has broad discretion when deciding whether to allow an amendment to a
complaint, and we will defer to its decision unless we find an abuse of discretion (
Charleston v.
*13
Larson
, 297 Ill. App. 3d 540, 555 (1998)) or, in other words, unless we find the court’s
decision to be arbitrary or unreasonable (
Gulino
,
for one additional allegation: Geerdes himself testified he was driving to his other job, in
Normal, Illinois, at the time of the accident. As Pekin admits in its brief, “consideration of
Geerdes’[s] deposition testimony may tend to determine a factual issue crucial to the
underlying lawsuit, namely, whether at the time of the accident, Geerdes was on Church
business.” Thus, all the proposed second amended complaint did was enhance or elaborate the
defect in count I of the amended complaint. See
Fremont Compensation
, 304 Ill. App. 3d at
743;
Millers Mutual
,
declaratory judgment should have been without prejudice instead of with prejudice. Pekin
argues that “[i]f a declaratory judgment is premature because it would decide an ultimate issue
of fact in the underlying litigation, the proper resolution is a stay or dismissal without
prejudice.” In support of that argument, Pekin cites
State Farm Fire & Casualty Co. v. Shelton
,
“Finally, and parenthetically, we note that although the trial court dismissed plaintiff’s complaint as premature, the initial order of dismissal was without prejudice and with leave for plaintiff to move for a stay in the event of an adverse decision, i.e. , debarment, by the Department. We question the propriety of such an order in view of the fact that plaintiff’s complaint did not present a justiciable controversy in the first instance, and that plaintiff would still be required to exhaust its administrative review remedies prior to being entitled to judicial review.” Id.
¶ 83 So, if a declaratory-judgment action by an insurer is premature or unripe in that it would
decide an important issue of fact in the underlying litigation, what is the correct disposition:
dismissal with prejudice (see
id.
) or dismissal without prejudice (see
Shelton
, 176 Ill. App. 3d
at 868;
Batteast
,
prejudice.” A dismissal with prejudice amounts to an adjudication on the merits, and such an
adjudication can be
res judicata
in a subsequent action.
McGann v. Illinois Hospital Ass’n
, 172
Ill. App. 3d 560, 569 (1988).
Res judicata
does not apply, however, to a subsequent action if
the subsequent action is “based on different operative facts” than the previous action.
Regan v.
Ivanelli
,
Rule 375(b) (eff. Feb. 1, 1994), which provides, in its first paragraph:
“If, after consideration of an appeal or other action pursued in a reviewing court, it is determined that the appeal or other action itself is frivolous, or that an appeal or other *15 action was not taken in good faith, for an improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation, or the manner of prosecuting or defending the appeal or other action is for such purpose, an appropriate sanction may be imposed upon any party or the attorney or attorneys of the party or parties. An appeal or other action will be deemed frivolous where it is not reasonably well grounded in fact and not warranted by existing law or a good-faith argument for the еxtension, modification, or reversal of existing law. An appeal or other action will be deemed to have been taken or prosecuted for an improper purpose where the primary purpose of the appeal or other action is to delay, harass, or cause needless expense.” The church argues: “[W]ithout any basis under the facts or law, Pekin has taken the
frivolous position that by denying that Geerdes was actually acting within the scope of his employment at the time of the accident (irrespective of the complaint’s allegations), it is entitled to deny coverage for defense of the claim.” (Emphasis in original.) Is it really impossible, though, for Pekin to find a foothold from which to plausibly argue the exception to the eight-corners rule? Consider the precise wording of this passage from Envirodyne Engineers , which the supreme court quoted with approval in Wilson :
“ ‘[W]e find no support for Envirodyne’s contention that the court may not look beyond the underlying complaint even in a declaratory proceeding where the duty to defend is at issue. ***. *** [I]f an insurer opts to file a declaratory proceeding, we believe that it may properly challenge the existence of such a duty by offering evidence to prove that the insured’s actions fell within the limitations of one of the policy’s exclusions. [Citations.] The only time such evidence should not be permitted is when it tends to determine an issue crucial to the determination of the underlying lawsuit ***.’ ” (Emphasis added.) Wilson ,237 Ill. 2d at 461 (quoting Envirodyne Engineers ,122 Ill. App. 3d at 304-05 ). In formal contexts, “crucial” means “decisive or critical.” The New Oxford American
Dictionary 410 (2001). Whether Geerdes, at the time of the accident, was using his car for
church business is
important
to the determination of the church’s vicarious liability, but
arguably, it is not
decisive
or
critical
to the determination of the church’s vicarious liability.
The argument could be made, and Pekin does argue, that even if Geerdes was not using his car
for church business, the church still could be held vicariously liable if Geerdes—having been
encouraged by the church’s other agent, Thorndyke, to violate section 12-610.2 of the Illinois
Vehicle Code (625 ILCS 5/12-610.2 (West 2012))—used his cell phone for church business
and consequently, to Mullins’s detriment, let his attention wander from the road.
Ultimately, we are unconvinced by that argument. We conclude that the bar to extrinsic
evidence reaches further than indispensable facts. The test is not whether the evidence
determines a crucial issue but whether the evidence “tends” to do so (internal quotation marks
omitted) (
Wilson
, 237 Ill. 2d at 461), and cases from the appellate court bar evidence that
“bear[s] upon issues in the underlying litigation” (
Millers Mutual
,
¶ 93 In Pekin’s defense, the declaratory judgment could be hampering in different degrees: it
could bе hampering when it comes to “ultimate facts” (the term that
Peppers
and
Envirodyne
Engineers
use (
Peppers
,
¶ 94 2. The Alleged Frivolity of Count II The church further argues in its motion for sanctions: “Pekin tacked onto its frivolous
complaint a second theory that on its face failed to present an actual and ripe controversy between the parties. The trial court properly dismissed the complaint with prejudice. On this point, Pekin again offers no existing law that supports its appeal and no good-faith argument for the extension, modification, or reversal of existing law.” The church must be referring to count II of the amended complaint for declaratory
judgment, in which Pekin seeks a declaration that, under the “Other Insurance” provision of the insurance policy it issued to the church, Pekin has no duty to defend the church in Farney’s lawsuit while the primary insurer, Country Mutual, is undertaking the defense. As we have already discussed, we agree that the parties have no actual controversy as to count II. Even so, three things could be said in favor of count II. First, in the proceedings below, Farney took a hard line, insisting that, despite the “Other Insurance” provision and Country Mutual’s assumption of the defense, Pekin had a duty to defend the church (she seems to have moderated her position on appeal). Second, Pekin pointed out to the trial court that the church never sent Pekin a formal withdrawal of the tender of defense. Third, the church, like Farney, is capable of sending mixed signals: in paragraph 9 of its motion for sanctions, the church says: “Pekin had no good faith basis under the law to deny defense of the Farney claim.” How could Pekin lack such a good-faith basis if, as the church maintains, count II presents no actual controversy? We decline to sanction Pekin for count II. Count III It does not appear that, in its motion for sanctions, the church makes any argument
specifically pertaining to count III of the amended complaint for declaratory judgment. Therefore, for the reasons we have discussed in connection with count I and II, we deny the church’s motion for sanctions pursuant to Rule 375(b). *17 III. CONCLUSION We dismiss this appeal as to count II of Pekin’s amended complaint for declaratory
judgment, and we otherwise affirm the trial court’s judgment. Appeal dismissed in part and affirmed in part.