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06/18/96 JERRY DUIGNAN v. LINCOLN TOWERS INSURANCE

June 18, 1996

JERRY DUIGNAN, PLAINTIFF-APPELLEE,
v.
LINCOLN TOWERS INSURANCE AGENCY, INC., DEFENDANT-APPELLANT.



Appeal from the Circuit Court of Cook County. The Honorable Sidney A. Jones III, Judge Presiding.

The Honorable Justice DiVITO delivered the opinion of the court: Hartman, P.j., and Burke, J., concur.

The opinion of the court was delivered by: Divito

JUSTICE DiVITO delivered the opinion of the court:

Plaintiff Jerry Duignan filed an amended complaint against Lincoln Towers Insurance Agency, Inc. (Lincoln Towers), alleging a breach of fiduciary duty and a violation of the Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act)(815 ILCS 505/1 et seq. (West 1992)). The circuit court granted Duignan partial summary judgment and awarded him $23,379.50 in attorney fees and $150,000 in punitive damages. Lincoln Towers appeals. For the following reasons, the grant of summary judgment is affirmed, but the award of attorney fees and the award of punitive damages are vacated, and the cause is remanded.

On November 2, 1989, Duignan purchased a 1985 Chevy Blazer from O'Connor Chevrolet and requested automobile insurance from Lincoln Towers, which was located in the O'Connor Chevrolet dealership building. Lincoln Towers procured an insurance policy for Duignan from Safeway Insurance Agency (Safeway) effective November 3, 1989, to November 3, 1990. Lincoln Towers also arranged for Duignan to finance the insurance premium of $886 through Illinois Vehicle Premium Finance Company (Illinois Vehicle), also located in O'Connor Chevrolet's building. Duignan made monthly cash payments to Lincoln Towers, which forwarded them to Illinois Vehicle.

On December 12, 1989, following Duignan's failure to make his monthly payment, Lincoln Towers requested that Safeway cancel his insurance policy. On January 3, 1990, after receiving payment, Lincoln Towers requested that Safeway reinstate the policy. Safeway did so. On August 12, 1990, Lincoln Towers again requested that Safeway cancel the policy. On August 16, 1990, Safeway sent Duignan notification that his insurance policy would be cancelled on August 27, 1990. On September 24, 1990, Lincoln Towers requested that Safeway reinstate the policy.

On September 11, 1990, Duignan's vehicle was destroyed in a fire. On October 18, 1990, in response to a request for payment from Duignan, Lincoln Towers explained that it cancelled his policy for nonpayment effective August 27, 1990, and did not seek a reinstatement until September 24, 1990, the date on which it received a check from Duignan's mother, made payable to Lincoln Towers and dated August 21, 1990.

On December 5, 1990, Duignan filed an action in the law division of the circuit court against Safeway. After Lincoln Towers was added as a defendant, an arbitration panel found in favor of the defendants. Duignan rejected the panel's decision. On October 22, 1991, he filed the instant action for declaratory judgment against Safeway and Lincoln Towers in the chancery division. On March 26, 1992, Duignan voluntarily dismissed the law division action.

In the chancery action, Safeway maintained that it cancelled Duignan's policy at Lincoln Towers' request because it considered Lincoln Towers to be the agent of Duignan. Lincoln Towers offered into evidence a premium financing agreement that authorized Illinois Vehicle to cancel Duignan's policy for default. The agreement was not signed by Duignan, but rather by N. Tidwell, as agent for Duignan. Also, the agreement was dated November 16, 1990, after the loss, the cancellation, and the request for reinstatement of the insurance.

On August 25, 1993, the chancery court found that the cancellation of Duignan's insurance policy was invalid because it was effected by Lincoln Towers without authority. As a result, Duignan had full coverage under the policy, and summary judgment was granted in his favor. The case was transferred to the law division for a hearing on damages, fees, and costs. Safeway then settled with Duignan for $7,500, and the claim against Safeway was dismissed.

On January, 14, 1994, Duignan filed an amended complaint against Lincoln Towers for breach of fiduciary duty and violation of the Consumer Fraud Act. Both parties filed motions for partial summary judgment. The circuit court granted summary judgment in Duignan's favor, ruling that Lincoln Towers was Duignan's agent and should not have cancelled his policy.

A trial was held on damages. Duignan testified that at the time he purchased the car he also purchased insurance through "Marie" at Lincoln Towers. Each month he came into Lincoln Towers and gave Marie a cash payment. The one time he paid by check, the one dated August 21, 1990, it was made payable to Lincoln Towers. He did not receive notice of the cancellation of his policy until he called Marie to inform her about the fire. He agreed to pay his attorneys at a rate of $90 per hour, and the itemization of attorney fees which was entered into evidence reflected the legal work done on his behalf.

Kathleen Johnson, an attorney in the office of Kralovec, Marquard, Doyle & Gibbons, testified for Duignan as an expert witness to the reasonableness and documentation of his requested attorney fees. Johnson's expertise was based on her experience as an attorney and as a claim specialist who reviewed billings of attorney fees and costs for an insurance company. Johnson testified that the instant bills and costs were reasonable.

Sam Shelist, an expert regarding attorney fees, testified for Lincoln Towers that although the billed hourly rate of $90 was reasonable, some of the billings were deficient for failing to indicate which attorney performed the described services, the relationship between the requested fees and Duignan's net recovery was not reasonable, ...


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