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08/24/88 Thomas Lee, D/B/A Lee's v. Richard Calfa Et Al.

August 24, 1988





528 N.E.2d 336, 174 Ill. App. 3d 101, 123 Ill. Dec. 791 1988.IL.1296

Appeal from the Circuit Court of Lake County; the Hon. Alvin Ira Singer, Judge, presiding.


JUSTICE UNVERZAGT delivered the opinion of the court. DUNN and NASH, JJ., concur.


Plaintiff, Thomas Lee, d/b/a Lee's Kitchen Distributors, filed suit in the circuit court of Lake County against defendants, Richard Calfa, individually, and Calfa-Pacchini Insurance, Inc., an Illinois corporation, alleging contract breach and negligence by defendant insurance agents in securing proper insurance coverage of plaintiff's business premises and the personal property contained therein. Plaintiff complained that the total recovery due him under the terms of the insurance policy procured for plaintiff by defendants failed to provide plaintiff with the actual full replacement value of his premises and personal property which were totally destroyed by fire. Plaintiff sought relief in the amount of his actual damages.

A jury rendered a verdict in favor of defendants, and the trial court entered judgment thereon. Subsequently, plaintiff filed a post-trial motion seeking judgment notwithstanding the verdict or, in the alternative, a new trial. The trial court denied the motion, and plaintiff appeals. On appeal, plaintiff contends: (1) that the jury verdict was against the manifest weight of the evidence; (2) that the trial court committed reversible error in giving defendants' instruction relating to the testimony of expert witnesses; and (3) that the conduct of defendants' counsel was grossly inflammatory and prejudicial, depriving plaintiff of a fair hearing on the merits of his complaint.

Testimony at trial showed that defendant Calfa had been plaintiff's insurance agent since at least 1978. During that time, Calfa had procured insurance for plaintiff covering his business premises, including replacement coverage of the property in the event of loss due to a fire. On November 19, 1984, plaintiff's business premises, consisting of a barn and a metal addition thereto, and its contents were completely destroyed by fire. According to plaintiff's testimony, the value of his property at the time of the loss was somewhere between $276,000 to $334,000 for the building and $190,000 to $242,000 for the contents. Plaintiff stated that he recovered only $201,000 on the building and $100,000 on the contents.

Plaintiff testified that he had told Calfa that he wanted his business property fully covered and that he relied on Calfa to obtain such coverage. According to plaintiff, Calfa had told plaintiff that with replacement cost insurance and certain policy endorsements, plaintiff was well covered. Plaintiff stated that every time he inquired of Calfa whether plaintiff had sufficient insurance on his building and the contents, Calfa informed him that plaintiff had plenty of coverage. In particular, plaintiff recalled that he phoned Calfa when the value of his increased stock of premade kitchen cabinets went from about $30,000 to $75,000 in value to find out if his insurance was sufficient to cover this additional stock. Defendant told plaintiff he definitely had enough coverage.

Plaintiff also testified that when he remortgaged his building, the bank had it appraised at between $275,000 and $300,000. It was plaintiff's testimony that he subsequently asked Calfa if his insurance was sufficient to cover a $300,000 building and that Calfa replied that with replacement cost insurance and the applicable inflation clauses, plaintiff had plenty of coverage.

On cross-examination plaintiff was asked if he continuously complained to Calfa about the rising cost of insurance. Plaintiff responded that he was "concerned about the price" but that he would not characterize his comments as complaints.

Plaintiff stated that prior to the fire, Calfa never explained the limits of the insurance policy on plaintiff's business premises. Defense counsel then introduced plaintiff's deposition wherein plaintiff had admitted that the concept of limits had been explained to him "in a very vague way." Plaintiff stated that Calfa told him to keep Calfa informed about what plaintiff was doing so Calfa could make sure plaintiff was covered.

Defendant, Richard Calfa, testified that plaintiff "got upset" every time his insurance premium increased, that plaintiff was "extremely concerned about costs," and that plaintiff "didn't like buying insurance." Calfa also related that he relied upon plaintiff for determining the value of his property and that plaintiff told Calfa that the metal addition on the original barn structure cost $60,000 to construct. A guidebook used in the insurance trade indicated that the cost of the building was $80,000 or $90,000.

Calfa stated that plaintiff tried to convince Calfa that $120,000 would cover the reconstruction of the barn and its addition. Calfa stated that he explained to plaintiff that his coverage had to equal his mortgage as well as satisfy the coinsurance clause of the insurance policy. To assure plaintiff the $120,000 he indicated would meet the rebuilding costs of the building, Calfa convinced plaintiff he needed to acquire coverage in the amount of $175,000. According to Calfa, plaintiff referred to this amount as a "rip off." Calfa said he was not able to convince plaintiff to obtain more than $175,000 in coverage. Calfa testified that plaintiff never expressed any skepticism to Calfa regarding the possibility of rebuilding his building for $175,000 if a total loss occurred. Calfa pointed out that any skepticism of this nature would have provided him with the opportunity to sell plaintiff more insurance, and the more insurance plaintiff bought the more money Calfa would make.

Also, Calfa stated that plaintiff had never shown him or talked to him about a bank appraisal of plaintiff's property. Calfa related that had plaintiff informed him of an appraisal, Calfa would have relied upon that appraisal to tell plaintiff he needed more insurance.

John Ingram, a professor at John Marshall Law School and a former insurance broker from 1950 to 1970, testified on plaintiff's behalf. Plaintiff's counsel proposed a hypothetical question regarding whether an insurance agent owed any duty to a client requesting insurance coverage for full replacement of his business premises and contents, without depreciation of the property, in the event of fire loss. The witness responded that he thought the agent would owe the client the duty of attempting to aid the client in determining the proper amount of coverage. According to Ingram, there was no single customary or appropriate manner for determining such coverage, but rather several methods could be used, such as having an appraisal made, using the original construction costs, if referring to a building, or calculating, by the use of valuation tables, the square-footage basis for the type of construction involved. The value of the business contents could be determined by both the cost of manufacturing the products involved and the probable retail sale value.

On cross-examination, Ingram stated that whether Calfa did a disservice to plaintiff depended, in large part, on whether Calfa was acting as an insurance consultant or as an insurance agent. Ingram said that his opinion of Calfa's duty was based on the witness' belief that Calfa was in an advisory position to plaintiff. Ingram agreed that the insured has the "last say" in determining the limits and amounts of insurance he is going to carry. The witness also agreed that if a replacement cost insurance policy provided for the replacement of a building of comparable utility, the insured would receive the coverage for which he had paid.

Also testifying on plaintiff's behalf was Dan Daniel, a public adjuster hired by the plaintiff to determine the cost of replacing the building lost in the fire. Daniel's replacement figure amounted to $334,600.81, which the witness admitted was based on union labor. Daniel stated that he did not know whether the building being replaced would be built by union ...

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