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04/11/88 Lee T. Blake, v. State Farm Mutual

April 11, 1988




Before the policy was renewed for the first time, Blake was involved in a collision with an underinsured motorist, one whose liability insurance was insufficient to cover the injuries suffered by the other motorist, in this case, Blake. Blake claimed that he carried no underinsured motorist coverage because State Farm failed adequately to offer the increased coverage. State Farm responded that it had complied with section 143a-2 of the Illinois Insurance Code (Ill. Rev. Stat. 1985, ch. 73, par. 755a-2), which requires insurers to offer the increased uninsured and underinsured coverage when offering other automobile insurance.


523 N.E.2d 85, 168 Ill. App. 3d 918, 119 Ill. Dec. 617 1988.IL.507

Appeal from the Circuit Court of Cook County; the Hon. Thomas J. O'Brien, Judge, presiding.


JUSTICE O'CONNOR delivered the opinion of the court. BUCKLEY and QUINLAN, JJ., concur.


This is an appeal from a bench trial to determine the limits of appellant Lee Blake's underinsured motorist insurance coverage under a policy, issued by appellee State Farm Mutual Automobile Insurance Company (State Farm), which did not by its terms include underinsured motorist coverage. Blake also appeals the dismissal of class action allegations and a claim alleging violation of Illinois consumer fraud statutes. For the reasons stated below, judgment is affirmed.

Three issues are presented on appeal. The first issue is whether State Farm's failure adequately to offer increased underinsured motorist coverage to Blake and other "new business" policyholders, through the acknowledgement/rejection form combined with an agent's verbal explanations, constitutes similarity of facts or law sufficient to sustain a class action. The second is whether the amount of underinsured coverage implied by law for Blake after the accident was properly limited to the amount of Blake's bodily injury liability under the policy. The third issue is whether State Farm's failure adequately to offer increased underinsured motorist coverage to Blake as a "new business" policyholder violated the Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act) (Ill. Rev. Stat. 1985, ch. 121 1/2, par. 261 et seq.) and the Uniform Deceptive Trade Practices Act (Ill. Rev. Stat. 1983, ch. 121 1/2, par. 311 et seq.).

On September 5, 1980, State Farm issued an automobile insurance policy to Lee T. Blake. The policy provided 50/100 bodily injury liability coverage ($50,000 per person or $100,000 per occurrence), 15/30 uninsured motorist coverage, and no underinsured motorist coverage. After face-to-face negotiations with State Farm agent Diane Trennert, Blake signed an application for insurance, and an "acknowledgement/rejection" form rejecting increased limits on the uninsured and underinsured motorist coverages.

Blake brought suit against State Farm individually and on behalf of the class of all "new business" policyholders, alleging violations of the Insurance Code, Consumer Fraud Act, and Uniform Deceptive Trade Practices Act. Before trial, the court dismissed Blake's class action allegations on a motion by State Farm. The individual claims proceeded to a bench trial, where the court found that the face-to-face negotiations and the acknowledgement/rejection form were insufficient to constitute an adequate offer. The trial court implied underinsured coverage to the limits of Blake's bodily injury liability coverage and found in favor of State Farm on the consumer fraud allegations. After trial, Blake filed timely notice of appeal, and State Farm cross-appealed.

We initially address whether the trial court correctly dismissed the class action allegations made by Blake. Blake contends that State Farm's use of the inadequate "acknowledgement/rejection" form for "new business" provided a sufficient basis for the similarity of law or fact required for class actions by the Illinois Code of Civil Procedure (Ill. Rev. Stat. 1985, ch. 110, par. 2-801(2)). Receipt of the form and its failure to comply with statutory requirements, Blake contends, comprise the common predominant question of law upon which the class action allegations are based. It is well settled that where a predominant question of law or fact exists, requirement of individual proofs, or multiple claims requiring separate adjudication, do not bar class actions. Barliant v. Follett Corp. (1978), 74 Ill. 2d 226, 384 N.E.2d 316; Hoover v. May Department Stores Co. (1978), 60 Ill. App. 3d 106, 378 N.E.2d 762, rev'd on other grounds (1979), 77 Ill. 2d 93, 395 N.E.2d 541.

Case law suggests, however, that to establish a plaintiff class, the action of the defendant must cause some injury to everyone, absent some intervening factor. In Goetz v. Village of Hoffman Estates (1978), 62 Ill. App. 3d 233, 378 N.E.2d 1276, for example, the court ruled that each plaintiff was separate and distinct, requiring individual proofs of causation. In so holding, the court cited cases where the plaintiff class had been injured economically by the defendant's action and did not require, as in the instant case, an intervening action to establish the injury (see Brooks v. Midas-International Corp. (1977), 47 Ill. App. 3d 266, 361 N.E.2d 815, appeal denied (1977), 66 Ill. 2d 629; DePhillips v. Mortgage Associates, Inc. (1972), 8 Ill. App. 3d 759, 291 N.E.2d 329; see also Barton Chemical Corp. v. Hertz Corp. (1977), 52 Ill. App. 3d 214, 367 N.E.2d 398, appeal denied (1977), 66 Ill. 2d 638 (harm to named plaintiff did not necessarily imply harm to other members of proposed class)).

Blake inaccurately characterizes the instant case as one that turns on a pervasive question of law common to all class members. In the cases cited by Blake, the common question of law or fact was the basis for the law suit. The defendants' actions harmed all class members, although the harm to the individual class members may have varied somewhat by degree or circumstances in which it arose. In contrast, no commonality among members of the proposed class arose from the transaction of September 5, 1980, between Mr. and Mrs. Blake and State Farm's agent Ms. Trennert, and proof of Blake's claim would not give other proposed class members a right to recover. The instant case arose from an auto accident between Blake and an unnamed third party, and the allegations of improper offer stem from individual negotiations with State Farm's agent. The circumstances of the case show predominant individual issues despite an incidental question of law that may extend to other insureds.

Further, an intervening factor, the automobile accident, made Blake's injury apparent. Without intervening factors such as auto accidents, or other incidents that give rise to an insurance claim, the possible harm to other class members stemming from the inadequate acknowledgement/rejection form is at best speculative. Therefore, because the instant case arose from negotiations between Blake and State Farm, and Blake's damage was more directly the result of the accident ...

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