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10/02/97 CRAIG CUMMINS v. COUNTRY MUTUAL INSURANCE

October 2, 1997

CRAIG CUMMINS, APPELLEE
v.
COUNTRY MUTUAL INSURANCE COMPANY, APPELLANT.



The Honorable Justice Harrison delivered the judgment of the court. Chief Justice Freeman, specially concurring. Justice McMORROW joins in this special concurrence. Justice Heiple, dissenting. Justice Miller joins in this dissent.

The opinion of the court was delivered by: Harrison

The Honorable Justice HARRISON delivered the judgment of the court:

Plaintiff, Craig Cummins, filed suit in the circuit court of St. Clair County to recover underinsured-motorist benefits from defendant, Country Mutual Insurance Company (Country Mutual). Country Mutual filed a motion to dismiss plaintiff's complaint contending that the liable driver's vehicle was not underinsured, as defined in the Illinois Insurance Code, because the driver carried liability limits which were equal to the limits of plaintiff's underinsured-motorist coverage. The trial court granted defendant's motion to dismiss, and plaintiff appealed. The appellate court reversed and remanded the cause for further proceedings, with one justice specially concurring. 281 Ill. App. 3d 5, 666 N.E.2d 909, 217 Ill. Dec. 240. The appellate court held that plaintiff could state a claim for the underinsured-motorist coverage provided by Country Mutual. We granted defendant's petition for leave to appeal. 155 Ill. 2d R. 315.

The sole issue before this court is whether plaintiff could state a claim to recover the shortfall between his underinsured-motorist policy limits and the amount he actually recovered from the liable driver's insurance, when the liable driver's policy has limits identical to plaintiff's underinsured-motorist coverage, but the coverage was exhausted by payments to other injured claimants. For the reasons which follow, we affirm the judgment of the appellate court.

On February 20, 1992, Cummins suffered injuries in a two-car accident and sustained over $50,000 in damages. Cummins was the passenger in a car insured by Country Mutual. At the time of the accident, Cummins was covered by the Country Mutual insurance policy, which provided both uninsured- and underinsured-motorist benefits in the amount of $50,000 per person and $100,000 per accident. The other motorist, who collided with the Country Mutual vehicle, was determined to be at-fault and had insurance with identical liability limits of $50,000 per person and $100,000 per accident. Cummins received a court-approved, good-faith settlement of $35,000 from the at-fault driver, with the balance of the liability proceeds going to injured passengers in the at-fault driver's vehicle.

Cummins filed suit against Country Mutual seeking the $15,000 difference between the $35,000 which he received as a settlement from the at-fault driver's liability insurance and the $50,000 limit of Country Mutual's underinsured-motorist coverage. Cummins is the sole claimant to Country Mutual's underinsured-motorist coverage. Country Mutual filed a motion to dismiss plaintiff's complaint for failure to state a cause of action (735 ILCS 5/2-615 (West 1992)), claiming that the at-fault driver's vehicle was not "underinsured" as defined in the policy and section 143-2(4) of the Illinois Insurance Code (215 ILCS 5/143a-2(4) (West 1992)). Defendant argued that even though plaintiff was not indemnified up to the $50,000 amount guaranteed by defendant's underinsured-motorist coverage, the at-fault driver's vehicle did not meet the definition of underinsured because the limits of liability coverage were identical to the limits of plaintiff's underinsured-motorist coverage. According to defendant, Cummins could not recover any underinsured-motorist benefits.

Initially, the trial court denied defendant's motion to dismiss. However, the trial court reconsidered its original ruling in light of Purlee v. Liberty Mutual Fire Insurance Co., 260 Ill. App. 3d 11, 197 Ill. Dec. 430, 631 N.E.2d 433 (1994). The trial court felt compelled to follow the decision in Purlee, which held that where the at-fault driver's liability insurance limits "equal or exceed the underinsured motorist coverage limits, underinsured motorist coverage is not applicable." See Purlee, 260 Ill. App. 3d at 27. Here, the at-fault motorist's insurance policy limits equalled plaintiff's underinsured-motorist policy limits. Based on the reasoning in Purlee, the trial court found that the at-fault motorist was not underinsured, and granted defendant's motion to dismiss.

The appellate court reversed and remanded with one justice specially concurring. 281 Ill. App. 3d 5, 666 N.E.2d 909, 217 Ill. Dec. 240. The court found that the Country Mutual's insurance policy was ambiguous and subject to a reasonable interpretation other than the one urged by defendant. 281 Ill. App. 3d at 13. The court looked to the language of section 143a-2(4) and the intent of the statute to determine whether the availability of underinsured-motorist coverage should be measured by comparing the limit of the plaintiff's underinsured-motorist coverage to the stated limits of the at-fault motorist's liability coverage or to the amount the plaintiff actually recovers from the at-fault motorist.

The court held that the relevant factor to be considered is the amount actually recovered from the at-fault driver, not the limits of liability coverage. 281 Ill. App. 3d at 13. In the present case, there was a gap between the $35,000 actually recovered from the at-fault motorist's insurance and plaintiff's $50,000 underinsured-motorist limits. The appellate court concluded that the at-fault motorist was underinsured and, therefore, plaintiff could state a claim for $15,000 in underinsured-motorist benefits. 281 Ill. App. 3d at 14.

As stated, at issue is whether Cummins can state a claim to recover the difference between his underinsured-motorist coverage limits and the amount he actually received from the at-fault motorist's liability policy. We must determine whether the at-fault vehicle in this case was considered an "underinsured motor vehicle," enabling plaintiff to state a claim against Country Mutual for underinsured-motorist benefits. Section 143a-2(4), the underinsured-motorist provision of the Illinois Insurance Code, provides:

"For the purpose of this Code the term 'underinsured motor vehicle' means a motor vehicle whose ownership, maintenance or use has resulted in bodily injury or death of the insured, as defined in the policy, and for which the sum of the limits of liability under all bodily injury liability insurance policies or under bonds or other security required to be maintained under Illinois law applicable to the driver or to the person or organization legally responsible for such vehicle and applicable to the vehicle, is less than the limits for underinsured coverage provided the insured as defined in the policy at the time of the accident. The limits of liability for an insurer providing underinsured motorist coverage shall be the limits of such coverage, less those amounts actually recovered under the applicable bodily injury insurance policies, bonds or other security maintained on the underinsured motor vehicle." 215 ILCS 5/143a-2(4) (West 1992).

Country Mutual's insurance policy defined an underinsured motor vehicle as follows:

"2. Underinsured motor vehicle means any type of motor vehicle or trailer for which the sum of all liability bonds or policies at the time of an accident are less than the limit of this insurance." (Emphasis in original.)

The issue before us is one of statutory construction, requiring the court to first look at the language of the underinsured-motorist statute to ascertain and give effect to the legislature's intent. State Farm Fire & Casualty Co. v. Yapejian, 152 Ill. 2d 533, 540-41, 178 Ill. Dec. 745, 605 N.E.2d 539 (1992). In determining legislative intent, a court may also consider the reason and necessity for the law, the evils to be remedied, and the objectives to be attained. Yapejian, 152 Ill. 2d at 541. In construing statutory language, a court will assume that the legislature did not intend to produce an absurd or unjust result. Yapejian, 152 Ill. 2d at 541.

Country Mutual contends that under the clear language of section 143a-2(4) and the policy provision, underinsured-motorist coverage is triggered only when the claimant carries a higher amount of underinsured-motorist coverage than the amount of liability coverage maintained by the at-fault driver. See Purlee, 260 Ill. App. 3d at 26. Defendant notes that the first sentence of section 143a-2(4) expressly defines an "underinsured motor vehicle" by reference to the limits of liability coverage compared to the limits of underinsured-motorist coverage. Therefore, according to Country Mutual, the amount of insurance proceeds actually recovered from the at-fault driver is irrelevant when determining whether a motorist is underinsured. Since there were identical limits of coverage in this case, Country Mutual claims that the unambiguous language contained in both section 143a-2(4) and the policy provision compels a finding that the at-fault motorist was not underinsured.

Plaintiff disagrees with this interpretation of section 143a-2(4) and the policy at issue and argues that the language defining an underinsured motorist is ambiguous. Specifically, plaintiff claims that the statute simply does not say whether the definition of underinsured motorist is meant to refer to the recoverable limits of an at-fault motorist's liability coverage or to the stated limits of that coverage, regardless of the amount actually available. Similarly, plaintiff contends that the definition contained in Country Mutual's policy does not specifically refer to the stated limits of the at-fault driver's liability insurance as opposed to the recoverable limits.

The underinsured-motorist statute defines an "underinsured motor vehicle" as one "for which the sum of the limits of liability under all bodily injury liability insurance policies *** is less than the limits for underinsured coverage." 215 ILCS 5/143a-2(4) (West 1992). We agree with plaintiff that it is unclear from the definition whether underinsured-motorist status should be determined by comparing the limits of plaintiff's underinsured-motorist coverage to the stated limits of liability coverage or to the recoverable limits. The definition, contained in both the statute and Country Mutual's policy, does not expressly refer to the stated policy limits as opposed to the amount of liability insurance actually recovered. However, the second sentence of section 143a-2(4) does specifically refer to the amount of insurance proceeds actually recovered and provides that "the limits of liability for an insurer providing underinsured motorist 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) (West 1992).

Under this second sentence, the limits of an insurer's liability are calculated by taking the limits of underinsured-motorist coverage, less the amount actually recovered from the at-fault driver's liability insurance. The statute recognizes that the recoverability of proceeds must be considered when calculating the liability of an insurer who provides underinsured-motorist coverage. Therefore, the amount actually recovered may be the appropriate figure to be used in determining whether a vehicle is underinsured.

Country Mutual disputes this interpretation and urges us to follow the appellate court cases which hold that the second clause of the statute only needs to be examined after there has been an initial determination that the at-fault driver's vehicle is underinsured. See Purlee, 260 Ill. App. 3d at 26-27; Moriconi v. Sentry Insurance of Illinois, Inc., 193 Ill. App. 3d 904, 908, 140 Ill. Dec. 752, 550 N.E.2d 637 (1990). Country Mutual contends that under Purlee and Moriconi, for a liable vehicle to be considered underinsured, an injured party must carry higher amounts of underinsured-motorist coverage than the at-fault driver's liability coverage. Purlee, 260 Ill. App. 3d at 26; Moriconi, 193 Ill. App. 3d at 908. Country Mutual argues that first this determination of ...


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