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Herrera v. Benefit Trust Life Insur. Co.

OPINION FILED JUNE 29, 1984.

SANTIAGO HERRERA, PLAINTIFF-APPELLEE AND CROSS-APPELLANT,

v.

BENEFIT TRUST LIFE INSURANCE COMPANY, DEFENDANT-APPELLANT AND CROSS-APPELLEE.



Appeal from the Circuit Court of Cook County; the Hon. William R. Quinlan, Judge, presiding.

PRESIDING JUSTICE MEJDA DELIVERED THE OPINION OF THE COURT:

Plaintiff filed suit seeking total disability benefits pursuant to a Group Insurance Policy (the Policy) issued by defendant to plaintiff's employer together with a claim for attorney fees, costs and punitive damages pursuant to section 155 of the Illinois Insurance Code (the Code) (Ill. Rev. Stat. 1983, ch. 73, par. 767). The trial court found that the determinative provision of the Policy was ambiguous and, accordingly, granted plaintiff's motion for summary judgment as to defendant's liability and denied defendant's cross-motion for summary judgment. Following subsequent arguments on the section 155 allegations, the trial court denied plaintiff's request for attorney fees and punitive damages.

On appeal, defendant contends that the determinative provision of the Policy which treats periods of disability separated by less than six months of uninterrupted active employment as "continuous" unless such periods arise from "different and unrelated causes" is not ambiguous and should be construed as denying plaintiff additional benefits for an aggravation of a pre-existing condition for which plaintiff had already received maximum benefits. In his cross-appeal, plaintiff contends that the trial court abused its discretion in failing to award attorney fees and punitive damages based upon defendant's unreasonable and vexatious behavior. For the following reasons, we affirm the judgment of the trial court.

The undisputed facts disclose that on or about October 24, 1977, plaintiff, a machinist for the Chicago and Northwestern Railway, sustained injuries to his spine and legs while throwing brake shoes across a pit during the course of his employment. In late January, 1978, plaintiff consulted his personal physician, Dr. Kanter, regarding these injuries and was diagnosed as having a "herniated lumbar disc, L5-S1, left" and was advised not to return to work until he had fully recovered. As a result, plaintiff filed a claim with defendant under the monthly accident benefit provision of the Policy which provides benefits of $150 per month for the first six months of disability, $250 for the second six months, and $150 for the remainder of the disability or until age 65. Subsequently, plaintiff was advised by defendant that because his disability had not arisen within 20 days of the accident, he was limited to those accident disability benefits provided under the delayed total disability provision of the Policy which pays benefits of one-half the monthly accident benefit for a maximum of three months, totaling $225. However, plaintiff did have the option to submit his claim under the monthly sickness benefit provision, which would enable him to receive monthly benefits of $150 for the first six months and $250 for the second six months, totaling $2,400. Plaintiff elected to file his claim under the latter provision and received full payment of the sickness benefits.

In May 1978, Dr. Kanter determined that plaintiff was sufficiently recovered to return to work as a diesel mechanic on a light-duty basis, provided that he did not lift anything weighing in excess of 40 pounds until July 9, 1978, at which time he would be reexamined. Because restricted work was not available, plaintiff did not actually return to work until July 11, 1978, when all lifting restrictions had been removed.

After returning to work, plaintiff, on July 21, 1978, sustained injuries to his spine and legs while lifting a sledge hammer during the course of employment. The accident rendered him totally disabled. Within 20 days of this second accident, plaintiff filed a claim with defendant under the monthly accident benefit provision of the Policy, seeking benefits of $1800 per year for 20 years, totaling $36,000. *fn1

Relying on the "Exceptions and Reductions" provision (Exceptions Provision) of the Policy, defendant refused to pay plaintiff additional benefits for what defendant claimed was a period of total disability arising from the same cause as the first such period; i.e., injuries to the back and legs. The Exceptions Provision provides, in pertinent part:

"[I]ntermittent periods of total disability separated by less than six months of continuous active employment shall be considered as one continuous period of disability unless they arise from different and unrelated causes."

As a result, plaintiff filed suit seeking $36,000 in liquidated damages plus costs and attorney fees, claiming that defendant's refusal to pay was vexatious and without reasonable cause. In its answer, defendant reasserted its contention that the injury sustained by plaintiff on July 21, 1978, was an aggravation of a pre-existing condition for which plaintiff had already received maximum benefits and cited the Exceptions Provision as the basis for its affirmative defense.

Plaintiff then moved for summary judgment as to defendant's liability under the Policy and attached a copy of the executed insurance policy, his own affidavit attesting to his total disability and a sworn letter from Dr. Kanter also attesting to plaintiff's total disability. In response, defendant filed its reply followed by a cross-motion for summary judgment which was predicated upon defendant's contention that plaintiff's second period of disability did not arise from a cause different and unrelated to that which precipitated the first period for which benefits had been paid. In support of its motion, defendant attached, inter alia: (1) an affidavit from Dr. Kanter stating that plaintiff's second period of disability was caused by a recurrence of the injury that rendered him disabled from January 25, 1978, through July 1978; and (2) an affidavit from William E. Blohm, Jr., an employee of defendant, attesting to the fact that plaintiff had been paid the full amount in benefits for his original injury.

Following extensive arguments on the summary judgment motions, the trial court denied defendant's motion for summary judgment and granted plaintiff's motion for summary judgment solely on the issue of liability, stating:

"[T]here is at the very least ambiguity in the contract as to what is meant by causes, different and unrelated causes which means, in other words, that the factors bringing about the disability not be the same as the factor that brought about the first disability, * * *.

I'm going to grant the summary judgment in favor of the Plaintiff on the basis that there is ambiguity in this agreement, and if there is ambiguity, the word "cause" should be deemed to relate to causes involving the external factors precipitating the disability regardless of any similarity in the pathology with the pre-existing pathology, so the motion of the Plaintiff will be granted."

In a later order, entered January 27, 1983, the trial court denied plaintiff's motions for judgment in the amount of $35,020 and for accelerated payment, and entered judgment in favor of plaintiff for $7,835.28, the amount due and owing under the Policy for plaintiff's total disability (including interest), plus $150 per month until plaintiff attains the age of 65. The court's decision as to attorney fees and costs was deferred until May 4, 1983, at which time the court denied plaintiff's motion for fees and punitive damages on the ground that there was no evidence that ...


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