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Doll v. Farmers Automobile Ins. Ass'n





APPEAL from the Circuit Court of La Salle County; the Hon. THOMAS R. FLOOD, Judge, presiding.


Plaintiffs Anthony J. Doll and Fay Doll appeal from an order of the Circuit Court of La Salle County granting summary judgment in favor of defendant in an action to recover on a fire insurance policy where suit was filed after the expiration of the 12-month period from the date of the fire.

Complaint was filed by plaintiffs in this action on July 23, 1974, and sought recovery under an insurance contract issued by defendant Farmers Automobile Insurance Association for damages sustained by the destruction of plaintiffs' house by fire on February 26, 1973. Defendant moved for summary judgment on the ground that the action was barred by a 12-month limitation period contained in the insurance policy, which motion was granted by the court in favor of defendant and in bar of plaintiffs' action. On appeal in this court, plaintiffs contend that the trial court erred by entering summary judgment for the reason that the case as developed did present genuine issues of material fact regarding (1) whether defendant's conduct constituted a waiver of the 12-month limitation term in the policy, (2) whether or not a letter denying liability sent by defendant was in fact received by plaintiffs, and (3) whether the letter denying liability, if it had been received by plaintiffs, would have permitted sufficient time to plaintiffs to make arrangements for an attorney to file suit prior to the expiration of the limitation period.

The record discloses that on February 26, 1973, plaintiffs' 2-story house located in Dana, Illinois, was destroyed by fire. At the time of the destruction by fire, the premises were insured as against such hazard by a policy issued by defendant insurance company and contained provisions for coverage in the sum of $37,000 as to the structure, $18,500 on unscheduled personal property, and $3,700 on appurtenant structures. The policy also contained the following standard limitation provision:

"No suit or action on this policy for the recovery of any claim shall be sustainable in any court * * * unless commenced within twleve months after inception of the loss."

On February 27, 1973, the day after the fire, plaintiffs notified an agent of defendant of the fire. Plaintiffs subsequently provided the proofs of loss to defendant as required by the policy. Plaintiffs and defendant, through defendant's employee Mr. William Wall, then entered into a series of negotiations conducted by Anthony Doll and Mr. Wall, by telephone, with respect to the amount of money required to satisfy plaintiffs' claim under the policy. Plaintiffs initially demanded $38,000 for settlement of their loss and then decreased their demand to $27,000, and finally to $22,000. Defendant had offered $14,000 initially, then increased its offer to $17,000, and finally to $19,750. At that time, the difference between the offer and the request for settlement by plaintiffs was only $2,250. On September 28, 1973, in the last of the telephone conversations between plaintiff Doll and Mr. Wall, when Mr. Wall offered $19,750 in settlement, Mr. Doll refused that offer. On or about September 29, 1973, plaintiff Anthony Doll sent defendant a handwritten letter stating that he attempted to get in touch with his attorney but the attorney was not in, but that the attorney would contact Mr. Wall with respect to disposition of the matter. On February 11, 1974, defendant contends that it sent plaintiffs a letter by certified mail, in which it denied liability to plaintiffs, for the claim resulting from the fire loss. Nothing was said therein as to the one-year limitation period for filing action. Plaintiffs deny that any such letter was received by them at any time.

On July 23, 1974, plaintiffs filed their complaint in the instant case to recover under the insurance policy for their fire loss. In the deposition taken on March 24, 1976, Anthony Doll stated that, after the telephone call of September 28, 1973, he believed that his personal negotiations with defendant had not produced the desired results and that he did not expect Mr. Wall to contact him again, after he had said that he turned the case over to his attorney. He stated expressly that he did not receive a letter from defendant denying liability for the claim, which defendant contends was sent in February of 1974.

As we have noted previously, defendant, on August 6, 1976, filed motion for summary judgment on the basis of the 12-month limitation provision of the policy. The trial court, after conducting a hearing on the motion, entered summary judgment in favor of defendant and as against plaintiffs.

• 1-3 Plaintiffs argue on appeal in this court that the trial court erred in granting summary judgment since there existed genuine issues of fact in the case. The Illinois Supreme Court has stated the test for determining the propriety of summary judgment in Farmers Automobile Insurance Association v. Hamilton (1976), 64 Ill.2d 138, 141-42, 355 N.E.2d 1:

"In Econo Lease, Inc. v. Noffsinger, 63 Ill.2d 390, 393, we said: `A motion for summary judgment will be granted if the pleadings, depositions, admissions and affidavits on file reveal that there is no genuine issue as to any material fact and that the movant is entitled to a judgment or decree as a matter of law. (Ill. Rev. Stat. 1975, ch. 110, par. 57(3); Carruthers v. B.C. Christopher & Co., 57 Ill.2d 376.) A reviewing court must reverse an order granting summary judgment if it is determined that a material question of fact does exist.'" Plaintiffs argue that there was presented a genuine issue of material fact in determining whether defendant's conduct constituted a waiver of the 12-month limitation period through the circumstance that it did not deny liability, but continued to negotiate for a settlement based solely on the amount of money which should be paid by reason of destruction by fire. Plaintiffs contend that it is inequitable and unjust to bar their claim under the facts and circumstances as presented in the case. As stated in O'Brien v. Country Mutual Insurance Co. (1st Dist. 1969), 105 Ill. App.2d 21, 23-24, 245 N.E.2d 30:

"The law is clear that subject to statutory regulations a party to an insurance policy may contract to limit the time within which action on the policy may be brought. [Citation.] It is also clear however that rights under a contractual provision limiting the time within which an action may be brought may be lost by waiver on the part of the insurer. [Citations.] Such provisions, working a forfeiture when upheld, produce harsh results. The courts> therefore do not require strong proof of a waiver. [Citations.] * * *

"When an insurance company, by holding out reasonable hope of adjustment, deters an insured from bringing suit within the time limits of the policy, such limitation is thereby waived. * * * Once the insurer waives the policy limitation provision, the limitation cannot be revived and the case will be barred only by the regular statutory limitation. [Citations.]"

• 4, 5 We are also aware of the observations made in Flagler v. Wessman (2d Dist. 1970), 130 Ill. App.2d 491, 494, 262 N.E.2d 630, that the fact that an insurer negotiates with a claimant is not conduct amounting to waiver by estoppel unless the negotiations contain statements or conduct which are calculated to lull the claimant into a reasonable belief that his claim will be settled without suit. That case also noted that if there is evidence of such conduct which exceeds mere investigation and negotiation, an issue is made for determination by the trier of facts. As stated in D'Urso v. Wildheim (1st Dist. 1976), 37 Ill. App.3d 835, 838-39, 347 N.E.2d 463:

"The rule of waiver by estoppel applicable to situations similar to that which is presented in the instant case was set forth in Kinsey v. Thompson, 44 ...

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