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American Family Mutual Insurance Company v. Martin

April 18, 2000


Appeal from the Circuit Court of Winnebago County. No. 98--MR--99 Honorable J. Todd Kennedy, Judge, Presiding.

The opinion of the court was delivered by: Justice Inglis


Plaintiff, American Family Mutual Insurance Company, appeals the trial court's order granting summary judgment to defendant, Betty J. Martin as special administrator of the estate of Timothy E. Martin. The court declared that defendant may recover underinsured motorist benefits under each of two policies issued by plaintiff. Plaintiff argues that the court erred by failing to apply unambiguous clauses in both policies that prohibit the stacking of underinsured motorist benefits.

Timothy Martin was killed by a car driven by Jason Theisman. Defendant was appointed the special administrator of her son's estate. With plaintiff's approval, she settled with Theisman's insurer for $25,000, the limit of liability under Theisman's policy.

Plaintiff issued two insurance policies to defendant, one covering a Dodge Spirit and one covering a Chrysler LeBaron. Each policy provided $100,000 per person of underinsured motorist coverage. Both policies contain the following provision:

"3. Two or More Cars Insured. The total limit of our liability under all policies issued to you by us shall not exceed the highest limit of liability under any one policy."

The policies also provide that the limit of liability for each person is "the maximum for all damages sustained by all persons as the result of bodily injury to one person in any one accident." Accordingly, plaintiff would not pay "more than these maximums no matter how many vehicles are described in the declarations, insured persons, claims, claimants or policies or vehicles are involved in the accident." The policies also contain a clause entitled "Other Insurance" that provides as follows:

"If there is other similar insurance on a loss covered by this endorsement, we will pay our share according to this policy's proportion of the total limits of all similar insurance."

After deducting the $25,000 defendant received from Theisman's insurer, plaintiff paid defendant $75,000 pursuant to the underinsured motorist provisions of the Spirit policy. Plaintiff also paid $20,000 for medical expenses. The latter amount represents the combined medical-expense limits of both policies.

Defendant demanded an additional $100,000 of underinsured motorist coverage from the LeBaron policy, claiming that she was entitled to stack the coverage limits of the two policies. Plaintiff denied this claim and subsequently filed the present action. Plaintiff sought a declaration that defendant could not stack the policies' coverages and that its payment of $75,000 satisfied its obligations under both policies.

The trial court granted summary judgment to defendant, finding that the "two or more cars insured" clause conflicted with the "other insurance" clause to create an ambiguity. The court held that $75,000 (allowing an additional setoff for the $25,000 received from Theisman's insurer) under the LeBaron policy was subject to arbitration. The court denied both parties' motions to reconsider, and plaintiff perfected this appeal.

On appeal, plaintiff argues that its antistacking provision is clear and unambiguous and does not violate public policy. Therefore, the court erred by not enforcing it.

Summary judgment is proper when the pleadings, depositions, and admissions on file, together with the affidavits, if any, reveal that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. 735 ILCS 5/2--1005(c) (West 1998); American Family Mutual Insurance Co. v. Hinde, 302 Ill. App. 3d 227, 231 (1999). We review de novo an order granting summary judgment. Harris Bank v. City of Geneva, 278 Ill. App. 3d 738, 741 (1996).

The construction of an insurance policy is a question of law that this court reviews de novo with the purpose of ascertaining the parties' intent. Smagala v. Owen, 307 Ill. App. 3d 213, 217 (1999); Kopier v. Harlow, 291 Ill. App. 3d 139, 141 (1997). When determining whether an ambiguity exists, a court must read a provision in its factual context. Pahn v. State Farm Mutual Automobile Insurance Co., 291 Ill. App. 3d 343, 345 (1997). If policy language is unambiguous, we must discern the parties' intent directly from ...

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