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Lagrange Memorial Hospital v. St. Paul Insurance Company

November 09, 2000


The opinion of the court was delivered by: Justice Gallagher

Appeal from the Circuit Court of Cook County Honorable SIDNEY A. JONES Judge Presiding.

This is an insurance coverage dispute between LaGrange Memorial Hospital (LaGrange) and St. Paul Insurance Company (St. Paul) arising out of a workers' compensation claim brought by Hilke Mundy (Mundy) for injuries she sustained while working as a physical therapist at LaGrange. LaGrange filed a declaratory judgment action against St. Paul, contending that St. Paul had a duty to defend and indemnify LaGrange against Mundy's claim under an umbrella excess insurance policy issued by St. Paul to Rehabilitation Services of Mid-America (RSMA), now known as MedRehab, Inc.(the St. Paul policy). The circuit court granted summary judgment to LaGrange. For St. Paul's vexatious and unreasonable conduct, the court awarded statutory penalties, pursuant to section 155 of the Illinois Insurance Code (215 ILCS 5/155(1) (West 1996)), and prejudgment interest under section 2 of the Illinois Interest Act (815 ILCS 205/2 (West1996)). St. Paul now appeals. We affirm with sanctions.

Numerous motions have been filed by the parties in this appeal which will also be considered here. We first consider whether we have jurisdiction over this appeal. St. Paul had until August 27, 1999, to file its notice of appeal, but did not do so until August 30, 1999. The notice of appeal was filed late, by one business day, due to an inadvertent miscalculation on the part of St. Paul's docketing department. Upon learning of its error, St. Paul timely filed a motion for an extension of time to file its notice of appeal pursuant to Illinois Supreme Court Rule 303(d) (155 Ill. 2d R. 303(d)), to which LaGrange filed a response, requesting that we deny St. Paul's motion. We granted the motion. LaGrange subsequently filed a motion to cite additional authority, namely, Berg v. Allied Security, Nos. 85967, 85974 cons. (July 1, 1999), in support of its argument that this appeal should be dismissed due to St. Paul's late notice of filing, as this court was without jurisdiction.

The instant case is similar to Bank of Herrin v. Peoples Bank, 105 Ill. 2d 305, 473 N.E.2d 1298 (1985). In Bank of Herrin, the Illinois Supreme Court held that a docketing error of three days was a "reasonable excuse" for the late filing of a notice of appeal, where the error was an honest mistake and on the day the error was discovered, the appealing attorney mailed a motion for an extension to opposing counsel and filed the motion with the court on the next business day, one business day after the 30 days had elapsed. We conclude that Berg is inapposite as it did not involve either Supreme Court Rule 303(d) or a docketing error on the part of counsel, similar to that in Herrin and the instant case. Thus, we have jurisdiction to consider this appeal.

LaGrange also filed a motion for sanctions, pursuant to Rule 375(b), contending that St. Paul's appeal is not taken in good faith and is frivolous. St. Paul filed a response; LaGrange filed a reply. LaGrange also filed a motion to strike, as untimely, St. Paul's response to the motion for sanctions, which we now deny. LaGrange's motion for sanctions is directed to the merits of the appeal, which we shall address before we consider the motion.

La Grange also filed a motion to strike St. Paul's reply brief. Although LaGrange's arguments are not entirely without merit, we deny the motion.

On or about March 1, 1983, RSMA entered into a written contract with LaGrange, formerly known as Community Memorial Hospital. Under the terms of the contract, RSMA, a provider of physical therapy services, was to be responsible for the operation of the physical therapy department at LaGrange, which included the exclusive rendering of all services and the performance of all the duties customarily conducted by physical therapists in similar hospitals, including the general and overall administration, supervision and operation of the physical therapy department.

The written contract entered into by RSMA provided in part as follows:

"RSMA agrees to indemnify, hold harmless, save and protect from any and all claims, demands, costs, or judgments including reasonable attorney's fees which arise out of *** Workman's Compensation Liability or other liability imposed upon the Hospital as a result of this Contractual Agreement. RSMA shall maintain liability coverage in the amount of $700,000.00 to $600,000.00 on each employee. RSMA also maintains a $1,000,000.00 umbrella policy for negligence. [LaGrange] shall receive, at least annually, an update on the certificate or [sic] insurance for RSMA. RSMA shall maintain in force for the duration of this Contract, Workman's Compensation coverage insured in any company or association authorized under the laws of this State (Illinois) to insure the liability to pay compensation under the Act."

In compliance with this provision, RSMA maintained several insurance policies, including the St. Paul policy at issue here. This St. Paul policy covered not only RSMA but certain other entities. The relevant language states as follows *fn1 :

"What This Agreement Covers

We'll pay amounts you and others protected under this agreement are legally required to pay as damages for covered bodily injury, property damage, personal injury, and advertising injury claims. Claims for bodily injury or property damage are only covered if the injury or damage results from an accidental event."

In addition, the policy provided as follows:

"Who is Protected ***

Besides you, certain other persons are protected under this agreement. Some are protected because of the way your business is owned: by an individual, partnership or joint venture, ...

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