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Floral Consul., Ltd. v. Hanover Ins. Co.

OPINION FILED OCTOBER 15, 1984.

FLORAL CONSULTANTS, LTD., PLAINTIFF-APPELLANT,

v.

THE HANOVER INSURANCE COMPANY ET AL., DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Cook County; the Hon. Richard L. Curry, Judge, presiding.

JUSTICE O'CONNOR DELIVERED THE OPINION OF THE COURT:

Plaintiff, Floral Consultants, Ltd., filed a class action suit against defendants, the Hanover Insurance Company (Hanover), Calfa Pacchini Insurance, Inc. (Calfa), and George J. Pistoresi (Pistoresi), seeking to enjoin defendants from the continued use of an alleged misleading sales brochure in the selling of Han-O-Flora insurance policies and to recover damages suffered by it and other members of its class as a result of their reliance on the brochure's alleged fraudulent misrepresentations. The trial court granted defendants' motion to dismiss for failure to state a claim upon which relief can be granted and allowed plaintiff 21 days within which to file an amended complaint. Subsequently, the trial court granted Hanover's motion to strike certain counts of plaintiff's verified amended complaint and dismissed Hanover as a defendant in the suit. Shortly thereafter, on a similar motion filed by Calfa and Pistoresi, the trial court struck the remaining counts of the amended complaint and dismissed the lawsuit. On appeal, plaintiff contends that the trial court erred in holding that: (1) as a matter of law, plaintiff's possession of the actual insurance policy precluded his right to rely on the sales brochure and to predicate an action for fraud or negligence on the brochure; (2) defendant's sales brochure and insurance application were not misleading; and (3) Pistoresi was not acting as Hanover's agent at the time he sold the insurance policy to plaintiff. A determination as to class certification was not made by the trial court and is not at issue on this appeal. For the reasons that follow, we affirm the trial court.

The facts giving rise to this action are undisputed. On March 16, 1981, Pistoresi, an insurance agent, met with Pizzo, president of plaintiff corporation, and presented Pizzo with a sales brochure and application for Han-O-Flora insurance, sold by Calfa and underwritten by Hanover. The brochure consisted of a two-page typewritten document which contained the following introductory language:

"COMPARE * * * FOR IT'S YOUR ASSETS YOUR [sic] SEEKING TO PROTECT. WHEN YOU COMPARE INSURANCE COVERAGE, CONSIDER THE FOLLOWING:

1. The TERMS and CONDITIONS for Coverage being provided.

2. The Quality of the Insurance Carrier underwriting Coverage, and its ability to perform in your behalf.

3. The Professional Expertise and Attitude of the Agent with whom you shall be dealing with [sic], considering whom the Agent represents.

4. Cost and Convenience of Payment.

THE FOLLOWING REPRESENTS A COMPARISON OF DIFFERENCES WORTH NOTING, THAT CAN AFFECT YOU, IN COMPARING THE INSURANCE PACKAGE PROGRAMS DESIGNED BY TWO INSURANCE CARRIERS FOR THE FLORA-CULTURE INDUSTRY."

The brochure then presented a comparison between certain provisions of the Han-O-Flora policy and the Flor-a-Matic policy. The insurance application presented seven coverage categories, under each of which were subcategories with a corresponding space to indicate the dollar amount of coverage desired for each. Other than Pistoresi's assurances to Pizzo that the sales brochure and application accurately depicted and described the Han-O-Flora coverage, Pistoresi made no additional verbal representations regarding the coverage. In reliance upon the brochure and application, Pizzo purchased the Han-O-Flora insurance coverage, effective for one year, commencing March 16, 1981. Approximately three months later, Pizzo received the actual insurance policy, which consisted of a 27-page "Special Businessowners Policy" and a one-page "Han-O-Flora Endorsement" which served to tailor the general coverage provisions to the more specialized needs of the floral industry. On pages four and five of the policy, a section entitled "PERILS AND EXCLUSIONS," the headline for which was printed in large bold-face capital letters, set forth an indented, itemized outline of 16 exclusions, printed in capital letters. The exclusion pertinent to the facts at bar states:

"THE COMPANY SHALL NOT BE LIABLE FOR LOSS:

2. CAUSED BY OR RESULTING FROM POWER, HEATING OR COOLING FAILURE OR DUE TO CHANGE IN TEMPERATURE OR HUMIDITY UNLESS THE CHANGE RESULTS FROM PHYSICAL DAMAGE TO THE BUILDING OR TO EQUIPMENT CONTAINED THEREIN CAUSED BY A PERIL NOT OTHERWISE EXCLUDED; * * *."

On or about January 9, 1982, due to extreme cold weather conditions, plaintiff's heating system malfunctioned, resulting in the destruction of plaintiff's entire inventory of growing plants. Plaintiff's timely claim for damages in the amount of $3,661.60 was denied by Hanover on the grounds that it fell within exclusion No. 2 of the policy. In filing its claim for injunctive and other relief, plaintiff argued that because the brochure did not contain the above exclusion, and the actual policy was not available at the time the application was executed, plaintiff was fraudulently induced to purchase a policy which it believed covered all perils to growing crops. In response, defendants argue that the brochure was never meant to be a synopsis of the policy, it was merely an invitation to compare specific differences between two competitors; that plaintiff never requested a copy of the actual policy prior to making its decision; and that, upon receiving the policy in June, plaintiff had ample time to review it and to seek additional coverage if necessary.

We first address plaintiff's contention that the trial court erred in holding that, because it was in possession of the insurance policy for several months prior to the cold weather damage, it was bound, as a matter of law, to know the contents of the policy and could not now complain that the policy did not contain the type of coverage it assumed it to contain. Plaintiff argues that this "rigid rule" is not the law in Illinois and that such a law would be unwise and contrary to public policy. Further, plaintiff contends that the insurance policy was a complex 27-page document which was not only unavailable at the time the contract was executed, but which defendants knew ...


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