The opinion of the court was delivered by: Justice McBRIDE
Appeal from the Circuit Court of Cook County Honorable John K. Madden, Judge Presiding.
Plaintiff Valor Insurance Company (Valor) brought suit against defendant Annie Wallace (Wallace), administratrix of the estate of Beatrice Ann Williams, a/k/a Marie Williams, seeking a declaration that it had no obligation under an automobile insurance policy to indemnify or defend Walter Hornik in an underlying cause. Following a hearing on cross-motions for summary judgment, the trial court denied Wallace's motion and granted summary judgment for Valor. Wallace now appeals, contending that because there was a material issue of fact, the trial court erred in granting Valor's motion for summary judgment. Wallace also contends that the court erred in denying her motion for summary judgment where Valor had failed to maintain proof of cancellation of Hornik's insurance policy and had failed to make a reservation of rights.
The record on appeal consists entirely of pleadings. There is no transcript of the hearing on the cross-motions for summary judgment or of any other proceeding.
Walter Hornik at one time had an automobile insurance policy (policy) with Valor (then known as Hallberg Direct Insurance Company). The record includes a copy of a November 4, 1994, letter from Valor informing Hornik that his policy was being cancelled as of December 9, 1994, due to his accident record. Copied onto the lower right-hand corner of the letter is the corner of an envelope showing a U.S. Postage meter mark and cancellation stamp from the Park Ridge, Illinois, U.S. postal facility. Both the meter mark and cancellation stamp are dated November 4, 1994.
On January 2, 1995, Walter Hornik was in an automobile accident that killed his passenger, Beatrice Ann Williams. Defendant Wallace, the administratrix of Williams' estate, filed a wrongful death and negligent entrustment action against Hornik and his wife, Danuta, the owner of the vehicle, in March 1996. On May 28, 1996, Valor sent a letter to Walter Hornik informing him that coverage for the accident was denied because his policy had been cancelled effective December 9, 1995. However, Valor admits that it appointed attorneys in August 1996, to undertake defense of the Horniks in the underlying cause. In October 1996, Valor filed a declaratory judgment action seeking a finding that it was not obligated to defend the Horniks under a certain policy issued to Danuta Hornik. That policy is not the policy at issue before this court on appeal. In July 1997, Valor filed an amended complaint for declaratory judgment adding a claim that it was not obligated to defend the Horniks under a policy issued to Walter Hornik (the policy at issue on appeal), because the policy had been cancelled prior to the accident due to Walter's unsafe driving record.
Wallace, in turn, filed a motion for summary judgment alleging that Valor had not effectively cancelled Walter Hornik's policy because it had failed to maintain proof of mailing as required by law, and was estopped from denying coverage because it had not filed a reservation of rights or given Hornik the opportunity to obtain his own counsel.
On July 17, 1998, the trial court entered an order denying Wallace's motion for summary judgment and granting Valor's motion, finding that Valor had no duty to indemnify Hornik because Hornik's automobile insurance policy had been properly cancelled prior to the accident.
Defendant Wallace contends that the trial court erred in granting summary judgment for Valor and in denying her own motion for summary judgment. Summary judgment is appropriate if "the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." 735 ILCS 5/2-1005(c) (West 1996). Where reasonable persons could draw divergent inferences from undisputed material facts or a dispute as to a material fact exists, summary judgment should be denied. Allstate Insurance Co. v. Smiley, 276 Ill. App. 3d 971, 977, 659 N.E.2d 1345 (1995). The standard of review on appeal from a grant of summary judgment is de novo. Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill. 2d 90, 102, 607 N.E.2d 1204 (1992).
The parties agree that the only proof of cancellation before the trial court was the letter of cancellation, with a corner of an envelope showing a U.S. Post Office meter stamp and cancellation stamp copied onto the lower right-hand corner. Both stamps are from the Park Ridge, Illinois, U.S. postal facility and are dated November 4, 1994.
The parties disagree as to whether the cancellation notice sent by Valor complies with Section 143.14(a) of the Illinois Insurance Code. 215 ILCS 5/143.14(a) (West 1996). Section 143.14(a) states:
"No notice of cancellation of any policy of insurance, to which Section 143.11 applies, shall be effective unless mailed by the company to the named insured and the mortgage or lien holder, at the last mailing address known by the company. The company shall maintain proof of mailing of such notice on a recognized U.S. Post Office form or a form acceptable to the U.S. Post Office or other commercial mail delivery service." 215 ILCS 5/143.14(a) (West 1996).
The Illinois Supreme Court's decision in Ragan v. Columbia Mutual Insurance Co., 183 Ill. 2d 342, 701 N.E.2d 493 (1998), controls the outcome of this appeal. However, because Ragan was decided subsequent to the trial court's grant of summary judgment in the instant cause, we will briefly discuss the conflicting lines of authority that led up to the Ragan decision.
In the First District case Kolias v. State Farm Mutual Automobile Insurance Co., 148 Ill. App. 3d 1086, 500 N.E.2d 502 (1986), the plaintiffs argued that defendant State Farm had not effectively cancelled an automobile insurance policy where it failed to produce proof of mailing upon the form required in section 143.14(a). The trial court, relying in part on State Farm's inability to produce the post office form, entered judgment against State Farm. Kolias, 148 Ill. App. 3d at 1089. On appeal, the Kolias court held that although no such form had been introduced, "the statute fails to indicate that proof of mailing cannot be shown by other methods." Kolias, 148 Ill. App. 3d at 1090. The court thus concluded that the trial court's "restrictive" interpretation of section 143.14 as requiring State Farm to produce the post office form was incorrect. Kolias, 148 Ill. App. 3d at 1092. Instead, proof of State Farm's customary mailing practices, in conjunction with other evidence, was sufficient to establish State Farm's compliance with section 143.14. Kolias, 148 Ill. App. 3d at 1090-92.
The Fourth District reached a similar result in Bates v. Merrimack Mutual Fire Insurance Co., 238 Ill. App. 3d 1050, 605 N.E.2d 626 (1992). In Bates, there were defects in the post office's preparation of its form regarding mailing of the cancellation notice at issue. The Bates court, in finding that compliance with section 143.14 had been adequately established, relied on Kolias for the proposition that evidence of mailing ...