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Sabatino v. First American Title Insurance Co.

November 17, 1999


Appeal from the Circuit Court of Lake County. No. 98--CH--725 Honorable Emilio B. Santi, Judge, Presiding.

The opinion of the court was delivered by: Justice Inglis

Defendant, First American Title Insurance Company, appeals the order of the trial court of Lake County granting summary judgment to plaintiffs, Thomas J. Sabatino, Jr., and Joan Turnbull Sabatino. We reverse.

Plaintiffs brought a declaratory judgment action (count I) and a breach of contract action (count II) seeking a judicial determination that defendant was obligated to defend and indemnify them in a civil suit filed by Robert G. Hershenhorn against plaintiffs (No. 98--CH-- 327).

In the underlying suit, Hershenhorn alleged the following. The properties on which plaintiffs and Hershenhorn now reside were a single property from 1873 until 1945, when it was divided. Prior to the division of the property, a sanitary sewer line ran from Hershenhorn's property in a straight northerly direction across plaintiffs' property and discharged into the sewer line on Westminster Street in the City of Lake Forest. In 1996, plaintiffs applied for a variance from Lake Forest in order to construct an addition to their home. On October 17, 1996, Hershenhorn filed a letter of objection to the variance, raising the issue of the existence of an unrecorded easement for the sanitary sewer line upon plaintiffs' property. Lake Forest denied the variance and plaintiffs resubmitted modified plans without Hershenhorn's knowledge. Hershenhorn alleged that plaintiffs intentionally did not show the location of Hershenhorn's sanitary sewer line on the modified plans because otherwise plaintiffs would have had to obtain a variance from Lake Forest, permission from Hershenhorn, or both to modify or alter his easement.

Hershenhorn further alleged that plaintiffs never asked permission to alter his easement and that he told plaintiffs on numerous occasions prior to and during the construction of their home addition that plaintiffs had no right to use, alter, or modify his sewer line or to violate his easement rights. According to Hershenhorn, when plaintiffs began construction, they ruptured and broke the sanitary sewer pipe used by Hershenhorn. Without Hershenhorn's permission, plaintiffs allegedly installed a permanent modification to the sanitary sewer line by diverting and rerouting it around the new foundation which plaintiffs constructed as part of their home addition. Plaintiffs allegedly connected their new sanitary sewer line and an ejector pump system to the existing sanitary sewer line, removed a manhole, and rerouted the existing sanitary sewer line to a different manhole. Hershenhorn alleged that, as a consequence of plaintiffs' actions, debris accumulated in the sanitary sewer line, and sewage and effluent flowed onto Hershenhorn's property.

Hershenhorn filed a two-count complaint against plaintiffs seeking an award of punitive damages and preliminary and permanent injunctions to direct the restoration of the original easement; to prevent any further interference, modification, or alteration of Hershenhorn's easement rights; to provide for an inspection and evaluation of the sanitary sewer system installed by plaintiffs; and to provide for the construction of a new sanitary sewer line onto Deerpath Road.

Thereafter, plaintiffs notified defendant of the underlying litigation, requesting that it defend and indemnify them. In response, defendant denied that it had any duty under the terms of the title insurance policy to defend plaintiffs for the actions that they had taken in interfering with Hershenhorn's easement as alleged in the underlying litigation.

Plaintiffs then filed a two-count complaint against defendant seeking a declaration that defendant had a duty to defend them in the underlying litigation (count I) and that defendant breached the title insurance policy by refusing to defend (count II). Plaintiffs' motion for summary judgment was granted as to both counts. As to count I, the court found that there were no material issues of fact, that the complaint in the underlying litigation alleged claims that were covered by the title insurance policy issued by defendant to plaintiffs and, based upon the allegations of the underlying complaint, defendant had a duty to defend plaintiffs under the policy. As to count II, the court granted plaintiffs' claim for reimbursement from defendant for defense costs incurred by them in the underlying litigation and continued the matter for further hearing concerning the amount of those costs. Subject to this appeal, count II remains pending before the trial court. Defendant timely appeals.

We initially note that plaintiffs assert that defendant failed to file a response to their "Statement of Material Facts in Support of Plaintiffs' Motion for Summary Judgment" and that the failure to do so amounts to an admission of all material facts under local court rule. Plaintiffs conclude that defendant therefore admits that the complaint in the underlying litigation alleges facts covered under the policy. However, the record shows that defendant did timely respond to plaintiffs' statement of material facts denying that the complaint in the underlying actions alleged facts covered under the policy. Accordingly, we admonish plaintiffs to thoroughly search the record before making unsupported assertions in their argument.

We begin our analysis by addressing the issue of whether the trial court properly granted summary judgment. A court should enter summary judgment when the pleadings, depositions, admissions, and affidavits show there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. 735 ILCS 5/2-1005(c) (West 1996). Summary judgment is a drastic remedy that should be granted only when the right of the moving party to relief is free from doubt. Loyola Academy v. S&S Roof Maintenance, Inc., 146 Ill. 2d 263, 271 (1992). The court must construe the evidence strictly against the movant and liberally in favor of the opponent. Gatlin v. Ruder, 137 Ill. 2d 284, 293 (1990). Even if the facts are undisputed, if rational persons could draw different inferences from those facts, summary judgment is inappropriate. Stephen v. Swiatkowski, 263 Ill. App. 3d 694, 697 (1994). We review a grant of summary judgment de novo. Crum & Forster Managers Corp. v. Resolution Trust Corp., 156 Ill. 2d 384, 390 (1993).

Defendant contends that the trial court erred in determining that the underlying complaint alleges facts within or potentially within coverage of the title insurance policy. In determining whether an insurer has a duty to defend its insured, a court must look to the allegations in the underlying complaint and compare these allegations to the relevant coverage provisions of the insurance policy. Crum & Forster Managers Corp., 156 Ill. 2d at 393. Where the underlying complaint alleges facts that if true would exempt the insured from coverage under the policy, the insurer has no duty to defend. State Farm Fire & Casualty Co. v. Hatherley, 250 Ill. App. 3d 333, 336 (1993). Where the language of an insurance policy is clear and unambiguous, it must be given its plain and ordinary meaning. State Farm Fire & Casualty Co., 250 Ill. App. 3d at 337.

Defendant argues that the underlying complaint seeks injunctive relief due to plaintiffs' "deliberate, wrongful and intentional actions" in interfering with the unrecorded easement. Defendant argues that all of plaintiffs' actions alleged in the underlying complaint occurred after the policy was issued by defendant and fall outside the terms of the insurance policy. We agree.

The title insurance policy excludes loss or damage, costs, attorney fees, or expenses that arise by reason of:

"3. Defects, liens, encumbrances, adverse claims or other matters: (a) created, suffered, assumed or agreed to by the insured claimant; or *** (d) attaching or created subsequent to Date of Policy."It is clear that because the adverse claims in the underlying litigation were created by plaintiffs' actions, which occurred after the date of ...

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