[UPDATED THROUGH December 15, 2013]
American Access Casualty Co. v. Reyes
Supreme Court Case Number: 115601
Appellate Court: Second District
Appellate Court Case Number: 2-12-0296
Issue Presented: Is a clause of an automobile insurance policy excluding all liability coverage for the sole named insured and titleholder on the insured vehicle void as against public policy?
Appellate Court Opinion Summary: Plaintiff issued an automobile insurance policy to the defendant. The policy listed the defendant as the sole named insured, as well as the titleholder on the insured vehicle. However, in the policy section identifying the “operators” of the vehicle, next to the defendant’s name, rather than the defendant’s license number, the policy carries a notation: “EXCLUDED.” In the same section, the policy identifies a second operator by name and an international driver’s license number. The policy also includes an endorsement stating that no claim or suit arising from the named insured’s operation of the vehicle is covered, and an exclusion for any damages caused while in the vehicle is “in control of an excluded operator.” In late 2007, the named insured/defendant struck two pedestrians while driving the car; one was seriously injured, and the other died of his injuries. The victims’ father sued the defendant for negligence. The plaintiff filed this declaratory judgment action, seeking a declaration of no coverage for the accident; a second insurer, which provided uninsured motorist coverage to the victims, intervened and counterclaimed, arguing that the exclusion of the defendant from coverage was contrary to public policy and unenforceable. The Circuit Court granted the plaintiff’s motion for summary judgment, and denied the intervening insurer’s motion for reconsideration.
The Appellate Court reversed. The Court noted that pursuant to Section 7-317(b)(2) of the Safety and Family Financial Responsibility Law, a motor vehicle owner’s liability insurance policy must “insure the person named therein.” Because the exclusion of the defendant, the sole named insured, from any liability coverage under the policy squarely conflicted with that statutory command, the Court held that it was contrary to public policy and therefore unenforceable. The Court noted that other courts had upheld named-driver exclusions, but found that each of those cases had involved a driver who was not the sole named insured on the policy. The Court further acknowledged that the Supreme Court had, in two recent cases (Founders Insurance Co. v. Munoz and Progressive Universal Insurance Co. of Illinois v. Liberty Mutual Fire Insurance Co.), approved clauses which, under certain circumstances, excluded coverage for named insureds. However, the Appellate Court distinguished these holdings, noting that these were limitations on coverage, whereas the named insured in the case at hand had no coverage under any circumstances.
Steadfast Insurance Co. v. Caremark RX, Inc.
Supreme Court Case Number: 104906
Appellate Court: First District, Division 2
Appellate Court Case Number: 1-06-1221
Issues Presented: (1) Where an insurer pays its insured's defense costs solely in order to comply with a trial court order, may the insurer seek reimbursement of those payments when the order finding a duty to defend is reversed? (2) Did the Circuit Court abuse its discretion by permitting the insurer to amend its complaint for declaratory judgment after the order on duty to defend is reversed to state a claim for unjust enrichment?
Appellate Court Opinion Summary: The insurer's insured was sued for allegedly conspiring to obtain undisclosed discounts, rebates and kickbacks for favoring certain drugs. Insurer denied a defense and filed a declaratory judgment action. The Circuit Court granted the insured's motion for summary judgment, ordered insurer to provide a defense, and refused to stay enforcement of its order pending review. The Appellate Court reversed, holding that insurer had no duty to defend. On remand, insurer filed a motion for restitution, seeking to recover defense costs expended between entry of the trial court's order and reversal. The Circuit Court held that the insurer's declaratory judgment action was the "functional equivalent" of a defense on reservation of rights, and the insurer was therefore barred from recovering defense costs under General Agents Ins. Co. of Am. v. Midwest Sporting Goods Co., 215 Ill.2d 146 (2005). The Appellate Court affirmed the Circuit Court's denial of the motion for restitution, finding that although the motion was not governed by General Agents, insurer had not stated any cause of action which could support a remedy of restitution. However, the Appellate Court reversed the Circuit Court's refusal to permit the insurer to amend to state a claim for unjust enrichment.
Citations to Opinion: 373 Ill.App.3d 895, 311 Ill.Dec. 897, 869 N.E.2d 910