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July 17, 1997


Appeal from Circuit Court of Greene County. No. 95MR59. Honorable James W. Day, Judge Presiding.

Honorable Robert W. Cook, J., Honorable John T. McCullough, J. - Concur, Honorable James A. Knecht, J. - Concur. Justice Cook delivered the opinion of the court. McCULLOUGH and Knecht, JJ., concur.

The opinion of the court was delivered by: Cook

The Honorable Justice COOK delivered the opinion of the court:

An insured filed a declaratory judgment action seeking to hold his insurer liable under the terms of an underinsured motorist (UDIM) provision in his insurance policy. The trial court granted the insurer's motion to dismiss, and the insured appeals, claiming: (1) the insurance policy's provision requiring actions for UDIM coverage to be brought within two years of the accident violates public policy; and (2) provisions of the policy are conflicting and ambiguous, requiring the application of the 10-year statute of limitations for contract actions in this case. We affirm.


This case involves the interaction of three insurance policies. On January 24, 1990, plaintiff Gary Flatt was injured when his truck was struck by a truck driven by Russell Juhl and owned by Russell's sons, Thomas and Robert. At the time of the accident, Flatt carried an insurance policy with Country Mutual Insurance Company (Country Mutual) (the Country Mutual policy) that included a UDIM provision with limits of $250,000. The truck Russell was driving was covered by an owner's insurance policy (the primary policy) with liability coverage of $100,000. Finally, Russell had insured his own vehicles through General Casualty Company of Illinois (General Casualty). This policy (the General Casualty policy) had a $250,000 limit for bodily injury. It appears that Flatt provided his insurance company, Country Mutual with prompt notice of the accident.

Flatt and his wife filed suit against Russell and Thomas on January 6, 1992. At that time, Flatt was unaware of the General Casualty policy. In July 1992, Flatt answered an interrogatory indicating he was seeking damages amounting to $400,000.

In January 1993, Flatt sent his first set of interrogatories to Russell. Russell's answers to the interrogatories, filed March 4, 1993 (more than three years after the accident), indicated that the truck Russell was driving at the time of the accident was covered by the primary policy. The answers to the interrogatories also revealed that Russell was covered by the General Casualty policy but that Russell had not notified General Casualty of the accident "because he was not aware that his coverage [the General Casualty policy] *** might be excess or involved in any way." Flatt first became aware of the General Casualty policy through the answers to the interrogatories.

In November 1994, General Casualty sought a declaratory judgment that its policy with Russell did not cover Russell's liability to Flatt. General Casualty argued that Russell had violated the terms of the policy by failing to provide it with adequate notice of the accident.

On November 20, 1995, Flatt filed this declaratory judgment action against Country Mutual. Flatt sought enforcement of the UDIM clause in Country Mutual policy. Country Mutual filed a motion to dismiss Flatt's action (735 ILCS 5/2-619 (West 1992)) because Flatt had not brought suit against it within two years of the accident, as required by the policy.

In December 1995, the trial court ruled against Russell's insurance company, General Casualty, requiring the company to provide Russell with excess insurance coverage for any liability arising from the accident that was not covered by the primary policy. General Casualty appealed. In August 1996, this court reversed and remanded, holding that the 7 1/2-month delay, from the time Flatt indicated the case was worth $400,000 to the time Russell actually notified General Casualty, was an unreasonable delay nullifying the coverage of Russell's policy with General Casualty. General Casualty Co. v. Juhl, 283 Ill. App. 3d 376, 381, 669 N.E.2d 1211, 1214, 218 Ill. Dec. 685 (1996).

Finally, in November 1996, the trial court granted Country Mutual's motion to dismiss and entered an order finding that Country Mutual was not obligated to provide UDIM coverage to Flatt due to his failure to initiate an action for such coverage within two years of the date of the accident, as he was required to do under the terms of the policy. Flatt appeals. The relevant facts and dates are summarized as follows:

January 1990: Accident.

January 1992: Flatt sues Russell and his son Thomas.

July 1992: Flatt answers interrogatories indicating he is seeking ...

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