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06/04/97 P & A FLOOR COMPANY v. JAMES BURCH

June 4, 1997

P & A FLOOR COMPANY, INC., AN ILLINOIS CORPORATION, PLAINTIFF-APPELLEE,
v.
JAMES BURCH, INDIVIDUALLY AND D/B/A JAMES BURCH & ASSOCIATES, DEFENDANTS-APPELLEES, AND STATEWIDE INSURANCE COMPANY, DEFENDANT/APPELLANT.



Appeal from the Circuit Court of Cook County. Honorable Mary Jane Theis, Dorothy Kirie Kinnaird, Judges Presiding.

Released for Publication July 21, 1997.

The Honorable Justice Gordon delivered the opinion of the court. Cousins, Jr., P.j. and Leavitt, J., concur.

The opinion of the court was delivered by: Gordon

JUSTICE GORDON delivered the opinion of the court:

On August 17, 1990, while plaintiff P & A Floor Company, Inc. (P & A) was performing a floor-sanding operation at a property owned by the underlying plaintiffs Adrian and Linda Winick, *fn1 a fire broke out. After the fire, the Winicks filed the underlying lawsuit against P & A in the circuit court of Cook County, seeking to hold P & A responsible for damages which resulted from the fire. Thereafter, P & A contacted its insurance carrier, defendant Statewide Insurance Company (Statewide), to inform it of the fire, at which time Statewide advised P & A that the Statewide policy at issue had been cancelled prior to the fire due to the non-payment of premiums.

P & A then filed the instant two-count action against its insurer, Statewide, and its insurance broker, James Burch (individually and doing business as James Burch & Associates) (hereinafter referred to as Burch). Count one sought a declaratory judgment against Statewide and Burch. In count one, P & A alleged that in April 1990, it purchased a general commercial liability insurance policy from Statewide through defendant Burch. P & A further alleged that at that time it paid Burch the first premium installment of $140.00 and agreed to pay the balance owing on the premium in monthly installments through a certain premium financing company (H & M). Burch then sent P & A a certificate of insurance acknowledging its coverage. P & A also alleged that it received no invoice for premiums in May or June 1990 from H & M, Burch or Statewide, and that H & M sent P & A a late premium payment notice in July 1990 which P & A never received because it was sent to the wrong address. According to the complaint, shortly thereafter, Statewide sent P & A an insurance coverage cancellation notice which P & A never received because it was sent to the wrong address. Count one sought the following relief: (A) that the trial court declare the Statewide policy in issue to have been "in full force and effect" at the time of the fire; (B) that defendants Statewide and Burch be required to defend P & A in the underlying lawsuit and in any future claims against P & A relating to the fire; (C) that defendants be required to reimburse P & A for all expenses, costs, and fees incurred in the underlying action and in the declaratory judgment action; (D) that defendants be required "to provide legal defense, as well as insurance coverage, up to the amount as stated in the aforesaid POLICY;" and (E) that defendants be required to pay for costs and fees "incurred to date in this matter."

Count two was filed against Burch only from whom it sought damages under a negligence theory. It alleged that Burch failed to properly notify Statewide and H & M of P & A's correct address; failed to notify P & A that its premiums were past due; failed to advise P & A that its Statewide policy was going to be cancelled; and failed to advise P & A that the policy had in fact been cancelled. Defendant Burch filed a cross-motion for contribution against Statewide and a third-party complaint for contribution against E. A. Meindl Insurance Agency (Meindl), who was alleged to have been partially responsible for the financing of P & A's premium payments.

On November 1, 1993, at the conclusion of a bench trial before Judge Theis, the trial court ruled upon the relief requested in count one of P & A's complaint. In its written order, the trial court held that the subject Statewide policy "was in full force and effect" at the time of the fire; that Statewide "has the duty to defend" P & A in the underlying action; that judgment was entered in favor of defendant Burch on count one; and that "no ruling is made on any other count or cross-claim at this time." In the November 1, 1993 colloquy preceding its entry of that order, the trial court explained its ruling as follows:

"The Parties are before me for ruling after trial. The underlying complaint filed by P & A Floor contains two counts. Count one is [sic] declaratory judgment against [the defendants]. *** The only issue before me now at this point is count one. The essential question here in this case is whether [the] Statewide policy *** was in full force and effect on [the date of the fire]. Defendants argue that it was not, as the above-named policy was cancelled *** for nonpayment of premium.

Statewide lacked authority to cancel the policy and [it] was in full force and effect on [the date of the fire]. *** Thus Statewide *** has had the duty to defend the claims arising out of the fire ***. *** Accordingly it is ordered that James Burch is not required to defend or indemnify P & A Floor for loss incurred."

After the entry of the November 1, 1993 order, defendant Burch filed a motion to dismiss count two of P & A's complaint against him and a motion to voluntarily dismiss his action for contribution against Statewide. Defendant Meindl also filed a motion to dismiss Burch's action for contribution against it. All three motions were granted by Judge Dunne on January 7, 1994, at which time the case was administratively coded as being final and was removed it in its entirety from the court's calendar.

No further activity took place in this case until nearly one year later, at which time the judge assigned to this case was apparently Judge Dunne. Then on December 29, 1994, Statewide filed a motion requesting a Supreme Court Rule 304(a) (155 Ill. 2d R. 304(a)) finding that the trial court's November 1, 1993 order was final and appealable. Apparently, no further action was taken with respect to that motion. Seven months later, on July 21, 1995, Statewide filed a new motion, this time before Judge Kinnaird, seeking the same relief and in the alternative seeking permission under Supreme Court Rule 308(a) (155 Ill. 2d R. 308(a)) to file an immediate interlocutory appeal from the November 1, 1993 order. In support of its July 21, 1995 motion, Statewide urged that P & A's complaint raised a duty to indemnify issue which was not resolved by the Judge Theis in her November 1, 1993 order, and that therefore, the duty to defend issue resolved in that order could not be appealed without a Rule 304(a) finding or in the alternative a Rule 308(a) certification.

On October 16, 1995, a hearing was commenced before Judge Kinnaird on Statewide's motion for a Rule 304(a) finding or a Rule 308(a) certification. Initially, Judge Kinnaird orally agreed with Statewide that the issue of indemnification had been raised in P & A's complaint and had not been resolved in the November 1, 1993 order. The court noted that the prayer for relief in count one of P & A's complaint did not contain an express request for indemnification. However, the judge further noted that paragraph (D) of the prayer requested that defendants be required to provide legal defense "as well as insurance coverage, up to the amount as stated in the aforesaid policy." According to the trial court in its October 16, 1995 hearing, "technically, that is the duty to indemnify." The court then ordered the parties to draft a written order reflecting its oral findings for its signature. Such an order was apparently prepared and submitted to Judge Kinnaird on October 16, 1995 which the judge then took under advisement.

At a follow-up hearing on January 8, 1996, Judge Kinnaird rejected the written order submitted by the parties, retracted her oral statements of October 16, 1995 regarding the pendency of an indemnification issue in the pleadings, and entered a written order denying Statewide's motions for Rule 308 certification and for the addition of Rule 304(a) language to the November 1, 1993 order. In that order, the trial court expressly noted that the November 1, 1993 order had disposed of count one of P & A's complaint in its entirety and that the January 7, 1994 order had disposed of count two and of the cross and third-party claims in their ...


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