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NESS v. FORD MOTOR CO.

October 26, 1993

FRANK ROBERT NESS, Plaintiff,
v.
FORD MOTOR COMPANY, a corporation; THE CHUBB CORPORATION; and VIGILANT INSURANCE COMPANY, Defendants.



The opinion of the court was delivered by: CHARLES RONALD NORGLE, SR.

 CHARLES R. NORGLE, SR., District Judge:

 Before the court are cross-motions for summary judgment filed by plaintiff Frank Robert Ness ("Ness") and defendants The Chubb Corporation ("Chubb") and Vigilant Insurance Company ("Vigilant"). For the following reasons, Ness' motion for summary judgment is granted and Chubb and Vigilant's joint motion for summary judgment is denied. *fn1"

 BACKGROUND

 On January 7, 1987, Ness was injured in an automobile accident. *fn2" The injuries Ness sustained during the accident rendered him a quadriplegic. At the time of the accident, Ness was riding as a passenger in an underinsured automobile owned and operated by Donald Moseley ("Moseley"). There were no other vehicles involved in the accident.

 Prior to the January 7, 1987 accident, Chubb and Vigilant had issued an insurance policy to the parents of Ness, which included an underinsured motorist provision that provided underinsurance coverage to Ness. *fn3" On July 14, 1988, Chubb and Vigilant paid Ness the sum of $ 750,000, the full limit of the underinsured motorist coverage under the policy. The underinsurance proceeds of $ 750,000 were paid to Ness in "full settlement and final discharge of all claims under the . . . policy for injuries to [Ness] arising out of the ownership or operation of an underinsured automobile by [Moseley] . . . ." Pltf.'s Mot. for Summary Judgment, Exhibit C at 1.

 On January 26, 1989, Ness filed a two-count complaint against defendant Ford Motor Company ("Ford"). The complaint does not name or join Moseley as a party defendant. Ness asserts two product liability claims against Ford for the enhanced injuries caused by the lack of crashworthiness of the Ford manufactured vehicle (the "Ford Litigation"). The Ford Litigation involves matters that are separate and distinct from the ownership and operation of an underinsured motor vehicle operated by Moseley. *fn4"

 On May 19, 1993, over four years into the Ford Litigation, Chubb and Vigilant notified Ness of a lien and an assertion of a subrogation right in Ness' action against Ford. In response to Chubb and Vigilant's assertion of their subrogation right in the Ford Litigation, Ness filed a second amended complaint on June 1, 1993 adding a count against Chubb and Vigilant for a declaratory judgment. Subsequently, the parties filed the instant cross-motions for summary judgment.

 DISCUSSION

 To grant summary judgment "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, [must] show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). The nonmoving party must elucidate specific facts demonstrating that there is a genuine issue for trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986). A scintilla of evidence will not be adequate to oppose a motion for summary judgment. Brownell v. Figel, 950 F.2d 1285, 1289 (7th Cir. 1991). A dispute about a material fact is "genuine" only if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986).

 In the instant case, the material facts are not in dispute. The parties are in agreement as to the relevant facts. The only disputed matter is whether Chubb and Vigilant's right to subrogation pursuant to the terms of the insurance policy at issue may be asserted in the Ford Litigation. "The construction of the terms of an insurance policy and the effect of the [related] statutory requirements are questions of law appropriate for summary judgment disposition." Banes v. Western States Ins. Co., 247 Ill. App. 3d 480, 616 N.E.2d 1021, 1023, 186 Ill. Dec. 579 (Ill. Ct. App. 1993). *fn5"

 The difficulty in the enforcement of the subrogation clause in the Ness' policy arises because the accident which caused his injuries was allegedly caused by two tortfeasors with varying abilities to compensate Ness for his injuries: Moseley is underinsured and Ford is sufficiently insured. Chubb and Vigilant argue that the sum paid to Ness under the underinsurance provision of the policy may be recouped from any settlement or judgment amount recovered from Ford. Ness responds that Chubb and Vigilant do possess the right of subrogation to the extent of the amount paid to Ness, but such right of subrogation does not extend to settlement proceeds recovered from Ford whose liability is unrelated to the liability of Moseley.

 The rules of contract construction apply when terms of an insurance policy are at issue. Monsalud v. State Farm Mut. Auto. Ins. Co., 210 Ill. App. 3d 102, 568 N.E.2d 969, 971, 154 Ill. Dec. 748 (Ill. Ct. App. 1991). The relevant terms and corresponding provisions, however, are not to be construed in a vacuum; rather, the terms must be read in conjunction with the policyholder's reasonable expectations, the public policy behind the relevant provision, and the intended coverage of the provision. Hoglund v. State Farm Mut. Auto. Ins. Co., 148 Ill. 2d 272, 592 N.E.2d 1031, 1034, 170 Ill. Dec. 351 (Ill. 1992). *fn6" When the relevant policy terms are viewed in this way and a latent ambiguity in the policy emerges, such ambiguity must be construed in favor of the insured. Gibbs v. Madison Mut. Ins. Co., 242 Ill. App. 3d 147, 610 N.E.2d 143, 148, 182 Ill. Dec. 719 (Ill. Ct. App. 1993).

 The public policy behind underinsurance coverage is to bridge the gap between the underinsured driver's liability policy limit and the injured party's underinsurance coverage limit. Banes, 616 N.E.2d at 1023. Section 143a-2(4) of the Insurance Code of Illinois provides that "the limits of liability for an insurer providing underinsurance . . . coverage shall be the limits of such coverage, less those amounts actually recovered under the applicable bodily injury insurance policies . . . maintained on the underinsured motor vehicle." 215 ILCS 5/143a-2(4) (1993) (emphasis added). Thus, the primary function of the underinsurance coverage is to place the injured party in the same position as if the ...


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