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Fuoss v. Auto Ownersins. Co.

OPINION FILED SEPTEMBER 30, 1986.

EDWARD K. FUOSS, PLAINTIFF-APPELLANT,

v.

AUTO OWNERS (MUTUAL) INSURANCE COMPANY ET AL., DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Madison County; the Hon. George J. Moran, Judge, presiding.

JUSTICE JONES DELIVERED THE OPINION OF THE COURT:

Rehearing denied November 7, 1986.

Plaintiff appeals two summary judgments entered in favor of defendant Auto Owners (Mutual) Insurance Company (Auto Owners), and defendant Van's Insurance Agency, Inc. (Van's). These judgments concluded plaintiff's action for damages for personal injuries he had suffered as a result of an automobile collision with Toni Kerr in rural Champaign County. Plaintiff's complaint was in two counts but was later amended to add a third count. Count I was against Toni Kerr. That count was subsequently settled for $100,000, the maximum amount of bodily injury insurance coverage that was afforded by the policy pertaining to the car driven by Kerr. Count II of plaintiff's complaint was a declaratory judgment action directed at Auto Owners. It charged that plaintiff was damaged by reason of not having underinsurance coverage under a policy of automobile liability insurance issued to him by Auto Owners and that this omission stemmed from the failure by Auto Owners to comply with a statutory requirement to notify plaintiff of the availability of underinsured-motorist coverage. More specifically, in count II plaintiff alleged he was injured in the collision with Kerr, Kerr had auto liability policy limits of $100,000, and plaintiff's damages would far exceed $100,000. It further alleged that a statute in force (Ill. Rev. Stat. 1981, ch. 73, par. 755a-2), provided:

"(1) Required offer of additional uninsured motor vehicle coverage. No policy insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any person arising out of the ownership, maintenance or use of a motor vehicle shall be renewed or delivered or issued for delivery in State with respect to any motor vehicle registered or principally garaged in this State unless uninsured motorist coverage as required in Section 143a of this Act is offered in an amount up to the insured's bodily injury liability limits.

* * *

(3) Required offer of underinsured motorist coverage. Any offer made under subsection (1) of this Section shall also include an offer of underinsured motorist coverage. For the purpose of this Act the term `underinsured motor vehicle' means a motor vehicle whose ownership, maintenance or use has resulted in bodily injury or death of the insured, as defined in the policy, and for which the sum of the limits of liability under all bodily injury liability insurance policies or under bonds or other security required to be maintained under Illinois law applicable to the driver or to the person or organization legally responsible for such vehicle and applicable to the vehicle, is less than the limits for underinsured coverage provided the insured as defined in the policy at the time of the accident."

Count II then asserted that no offer of underinsured coverage had ever been made to plaintiff and that as a direct result of the failure of Auto Owners to make such offer the plaintiff would be limited to his recovery of damages for his injuries to the $100,000 from the Kerr policy although his damages will far exceed $100,000. Count II then charged that the conduct of Auto Owners was wilful, and it concluded with a prayer, first, for a judgment declaring that Auto Owners violated the cited statute in that no offer of underinsured-motorist coverage had been made and that plaintiff was entitled to an offer of underinsured-motorist coverage on his insurance policy to include limits in an amount sufficient to cover his damages and, second, for a judgment for punitive damages for the wilful failure or refusal to offer the underinsured-motorist coverage as required by the statute.

As a response to plaintiff's complaint against it, Auto Owners filed a motion for summary judgment in which it asserted that the Illinois Insurance Code (Ill. Rev. Stat. 1981, ch. 73, par. 613 et seq.), prohibited it from selling plaintiff underinsured-motorist coverage in excess of $15,000 for each person and $30,000 for each occurrence. The basis for this assertion by Auto Owners was sections 143a-2(3) and (4) of the Illinois Insurance Code (Ill. Rev. Stat. 1981, ch. 73, pars. 755a-2(3), (4)). In subsection (3) it is provided in part:

"The limits of liability for an insurer providing underinsured motorist coverage shall be the limits of such coverage, less those amounts actually recovered under the applicable bodily injury insurance policies, bonds or other security maintained on the underinsured motor vehicle."

In subsection (4) it is provided in part that "[t]he named insured may elect to purchase limits of underinsured motorist coverage in an amount up to the uninsured motorist coverage on the insured vehicle or may reject the offer of underinsured motorist coverage." It was also pointed out by Auto Owners that plaintiff's policy had been issued with bodily injury liability coverage limits of $25,000 for each person and $50,000 for each occurrence and uninsured-motorist coverage in the amount of $15,000 for each person and $30,000 for each occurrence. Auto Owners then reasoned that, since plaintiff had uninsured-motorist coverage of $15,000/$30,000 and had already received $100,000 from Kerr's insurer, if it had offered plaintiff underinsured motorist coverage it would have been limited in amount to $15,000/$30,000 by subsection (4). Since that amount is far below that already received by plaintiff from Kerr, the offset provision of subsection (3) would render ineffective plaintiff's claim under the underinsured-motorist provision of the statute. Auto Owners' motion was supported by an affidavit.

Plaintiff filed an answer to Auto Owners' motion for summary judgment and contemporaneously filed his own motion for summary judgment supported by his affidavit. He asserted that he had never been told of or offered underinsured-motorist coverage as mandated by the statute and stated:

"If I had been aware of the existence and the availability of underinsured motorist coverage, I would have purchased and [sic] amount of underinsured motorist coverage that would have been sufficient to cover my loss herein."

Plaintiff was granted leave to add a count III to his complaint (designated as count II in the record) by adding as a defendant Van's Insurance Agency, Inc. This count sounded in negligence and reiterated the coverage shortcomings and damages-in-excess-of-coverage allegations contained in count II directed at Auto Owners. It further alleged that Van's was an agent for Auto Owners and had sold plaintiff the policy in question without any underinsured-motorist coverage and, despite the statutory directive, had not offered underinsured-motorist coverage to him. Count III asserted that Van's was under a duty to advise plaintiff and to offer and make him aware of underinsured-motorist coverage and that it was negligent in not so advising him. As a result of Van's alleged negligence, plaintiff prayed for judgment in excess of $15,000.

Auto Owners subsequently moved the court to reconsider its order denying its motion for summary judgment. As the reason for its motion for reconsideration, Auto Owners stated that, after the order denying its motion for summary judgment had been entered, the case of Tucker v. Country Mutual Insurance Co. (1984), 125 Ill. App.3d 329, 465 N.E.2d 956, had been decided. The Tucker case held that, because of a deficient notice of the availability of underinsurance coverage, there had been no compliance with section 143a-2 (Ill. Rev. Stat. 1983, ch. 73, par. 755a-2). As a consequence of the failure to comply properly, the court in Tucker implied underinsured-motorist coverage in the amount of the policyholder's uninsured-motorist coverage. Auto Owners then contended that since the ...


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