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State Farm Mutual Automobile Insurance v. Fisher

August 25, 2000

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, PLAINTIFF-APPELLEE,
v.
JEREMY FISHER AND HARRAH'S CASINO ILLINOIS, AN ILLINOIS CORPORATION, DEFENDANTS-APPELLANTS, AND RUBY SMITH, DEFENDANT. *FN1



The opinion of the court was delivered by: Justice Hartman

Appeal from the Circuit Court of Cook County. Honorable Michael B. Getty, Judge Presiding.

Ruby Smith (Smith) allegedly sustained injuries while entering Maurice Barnes' (Barnes) vehicle following its return from the valet parking service at Harrah's Casino Illinois (Harrah's). Smith filed suit against Barnes, Jeremy Fisher (Fisher), the valet driver employed by Harrah's, and Harrah's. Fisher and Harrah's tendered their defense to Barnes' automobile insurance carrier, State Farm Mutual Automobile Insurance Company (State Farm).

State Farm later sought a declaratory judgment that it had no duty to defend or indemnify Fisher or Harrah's because there was no coverage under the "automobile business" exclusion clause (sometimes "exclusion clause") in Barnes' insurance policy. The circuit court granted State Farm's motion for summary judgment, finding that the policy exclusion clause applied. Fisher and Harrah's allege State Farm's exclusion clause violates public policy, was ambiguous, and does not apply by its own terms because Fisher was acting as Barnes' agent. They seek reversal of the court's judgment, entry of summary judgment in their favor, and sanctions against State Farm.

On September 21, 1995, Barnes and Smith visited Harrah's in Joliet, Illinois. Upon arrival, Barnes, driving his 1985 Mercury Cougar, gave his vehicle to an employee of Harrah's valet service. When finished with their visit, Fisher retrieved Barnes' vehicle and returned it to the front of the casino. As Smith entered the passenger side, the vehicle rolled backward, causing her to be knocked to the ground. At the time of the accident, Barnes' vehicle was insured through State Farm.

In August 1997, Smith filed suit against Fisher, Harrah's, and Barnes, alleging that defendants negligently managed and operated the vehicle, failed to keep the vehicle under proper control, failed to apply the emergency brake upon returning the vehicle, and negligently left the motor running on an inclined driveway. Subsequently, Fisher and Harrah's tendered their defense to State Farm, which State Farm denied, alleging that it had no duty to defend Fisher and Harrah's under Barnes' insurance policy, based upon the exclusion clause in Barnes' policy that provided, in pertinent part:

"THERE IS NO COVERAGE:

1. WHILE ANY VEHICLE INSURED UNDER THIS SECTION IS:

***

b. BEING REPAIRED, SERVICED OR USED BY ANY PERSON EMPLOYED OR ENGAGED IN ANY WAY IN A CAR BUSINESS. This does not apply to:

(1) you or your spouse

(4) any agent, employee or partner of you, your spouse, any relative or such resident." (Emphasis in original.) The policy defined a "car business" as "a business or job where the purpose is to sell, lease, repair, service, transport, store or park land motor vehicles or trailers."

In July 1998, State Farm sought a declaratory judgment that it had no duty to defend Fisher and Harrah's because of the excluded coverage. In September 1998, Fisher and Harrah's filed an answer and affirmative defense to State Farm's declaratory judgment complaint, arguing that the exception did not apply because Fisher and Harrah's were acting as Barnes' agent when the injury occurred. In March 1999, State Farm moved for summary judgment. In April 1999, Fisher and Harrah's responded to State Farm's motion for summary judgment and filed a cross-motion for summary judgment, asserting that they were Barnes' agents and therefore were exempt from the exclusion clause; the clause language was ambiguous; and the exclusion violated public policy.

In May 1999, the circuit court granted State Farm's summary judgment motion and denied Fisher and Harrah's cross-motion, finding that "Fisher, while working as a valet for Harrah's was in the 'car business' [because] his job was to 'store or park land motor vehicles.'" In addition, Fisher and Harrah's were not exempt from the exclusion clause because Fisher was a bailee, not Barnes' agent, when he parked Barnes' vehicle. Last, the exclusion clause was not ambiguous and State Farm appropriately relied upon the provision when it denied the claim.

In August 1999, Fisher and Harrah's moved to reconsider the grant of summary judgment, arguing that Fisher could be both Barnes' bailee and agent and asked the circuit court to follow a factually similar case from New Jersey, Scott v. Salerno, 688 A.2d 614, 297 N.J. Super. 437 (1997). The circuit court denied the motion, finding that Fisher was acting as a bailee, not Barnes' ...


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