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Weed v. Ohio Farmers Insurance Co.

OPINION FILED OCTOBER 26, 1977.

ROBERT C. WEED, D/B/A NORTHERN ILLINOIS TRANSIT COMPANY, PLAINTIFF-APPELLANT,

v.

OHIO FARMERS INSURANCE COMPANY, DEFENDANT-APPELLEE.



APPEAL from the Circuit Court of Whiteside County; the Hon. ROBERT M. BELL, Judge, presiding.

MR. PRESIDING JUSTICE ALLOY DELIVERED THE OPINION OF THE COURT:

This is an appeal from a judgment of the Circuit Court of Whiteside County granting a motion for a judgment on the pleadings and dismissing plaintiff Robert C. Weed's complaint with prejudice, assessing costs to plaintiff. Plaintiff Robert C. Weed, d/b/a Northern Illinois Transit Company, instituted the action in the circuit court to recover damages occasioned by the alleged breach by Ohio Farmers Insurance Company of an insurance contract between defendant and one Isom Copeland, based on the charge of breach of contract and, alternatively, of negligence and bad faith by defendant for failure to defend its insured, Isom Copeland, and to pay the judgment rendered in the prior action against its insured.

The record discloses that on or about August 11, 1972, Isom Copeland (the insured) purchased from defendant Ohio Farmers Insurance Company a family automobile insurance policy, having liability limits of $5,000. The policy was captioned "AUTOMOBILE POLICY" and the declaration page of the policy was entitled "FAMILY AUTOMOBILE POLICY." The policy designated as covered owned vehicles of the insured, two passenger-type automobiles, a Mercury Monterey and a Pontiac Catalina. The policy, under "Part I — Liability," specified that defendant was to pay damages for bodily injury and property damage:

"* * * arising out of the ownership, maintenance or use of the owned automobile or any non-owned automobile, and the company [defendant] shall defend any suit alleging such bodily injury or property damage and seeking damages which are payable under the terms of this policy, even if any of the allegations of the suit are groundless, false or fraudulent * * *."

On December 19, 1972, while the insurance policy was in force, the insured, while operating a certain GMC flatbed truck owned by Jim I. Copeland, was involved in a motor vehicle collision with plaintiff Robert C. Weed. Plaintiff's vehicle sustained property damage as a result of the collision, and plaintiff filed suit on June 15, 1973, in the Ogle County Circuit Court against the insured Isom Copeland and Jim I. Copeland, seeking to recover damages for property damage sustained by his vehicle in the collision.

Such complaint alleged that defendant Isom R. Copeland was operating a GMC flatbed truck owned by defendant Jim I. Copeland and that at the time Isom R. Copeland was an agent and servant of defendant Jim I. Copeland. It was also shown that on October 15, 1974, and at various times thereafter, the insured's attorney requested that defendant-insurance company undertake the defense of the insured in the action filed by plaintiff but defendant declined to take such action. It appears, also, that the insured and plaintiff entered into settlement negotiations in the prior action but that defendant insurance company refused to participate in any settlement of that action.

The insured, Isom R. Copeland, ultimately proceeded in his own defense at the trial in the prior action, through an attorney he had employed, and without the aid of defendant insurance company. Judgment was rendered in such action in favor of plaintiff Weed as against the insured Isom R. Copeland, in the amount of $15,800 plus court costs. Defendant insurance company did not satisfy the whole or any part of this judgment and did not pay the insured for his costs in defending himself in plaintiff Weed's action.

The insured Isom R. Copeland subsequently assigned all rights and causes of action that he may have against defendant insurance company to plaintiff Weed, and plaintiff Weed then brought the current action against defendant insurance company to recover damages from defendant for its failure to defend the insured, Isom R. Copeland, and to pay the property damage judgment rendered against the insured. Plaintiff's two-count complaint in the instant action alleges, in the first count, breach of contract, and in the second count, negligence and bad faith by defendant. Recovery is sought of the amount of the judgment rendered as against defendant's insured of $15,800 plus costs and $1,500 in attorney's fees incurred by the insured Isom R. Copeland in defending plaintiff's prior action.

Defendant filed a motion for judgment on the pleadings in the trial court in the instant case. By order entered on December 14, 1976, the trial court granted defendant's motion and dismissed plaintiff's suit with prejudice and assessed costs to plaintiff. The trial court found in its order that the insurance policy covering defendant's insured provided coverage for Isom R. Copeland's automobiles but was not intended to provide coverage for a flatbed truck. The court, also, stated that plaintiff's complaint in the prior lawsuit alleged that the insured was driving a GMC flatbed truck at the time of the accident, and that by reason thereof, defendant insurance company had no coverage or duty to defend the insured in plaintiff Weed's prior action. The court also found that the policy covering the insured excluded coverage for the named insured while he was operating a non-owned automobile when "employed or otherwise engaged in * * * any other business or occupation of the insured * * *." The court stated that plaintiff's complaint in the prior action alleged that at the time of the accident the insured was the agent and servant of Jim I. Copeland and that, therefore, defendant had no duty to defend the insured in plaintiff's prior action.

• 1, 2 On appeal in this court, plaintiff argues that the trial court erred in dismissing plaintiff's complaint as substantially insufficient in law. With respect to the duty of an insurer to defend an action brought against an insured, the Illinois Supreme Court stated in Maryland Casualty Co. v. Peppers (1976), 64 Ill.2d 187, 193, 355 N.E.2d 24:

"In determining whether the insurer owes a duty to the insured to defend an action brought against him, it is the general rule that the allegations of the compliant determine the duty. If the complaint alleges facts within the coverage of the policy or potentially within the coverage of the policy the duty to defend has been established."

Additionally, the Illinois Appellate Court, in Sherman v. Home Insurance Co. (1st Dist. 1975), 25 Ill. App.3d 519, 522, 323 N.E.2d 550, stated:

"An insurer must defend a suit brought against its insured when the complaint states facts which fall within the potential coverage of the policy. If the complaint does not state facts bringing it within the policy, the insurance company may decline to defend the suit. [Citations.] An unjustified refusal to defend makes the company liable for the amount recovered from its insured either by way of judgment or settlement, for his costs in defending the suit and for any additional damages caused by its refusal to defend. [Citations.]

An insurance company's obligation to represent its insured depends on the allegations of the compliant and the provisions of the insurance policy. [Citation.] * * * [T]he personal injury complaint must show on its face that there is no ...


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