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Wood v. National Liability and Fire Insurance Co.

September 13, 2001


Appeal from the Circuit Court of Kane County. No. 98--MR--0342 Honorable Patrick J. Dixon, Judge, Presiding.

The opinion of the court was delivered by: Justice Byrne.


This is an appeal from an order granting summary judgment to plaintiff, Bradley D. Wood, with respect to the limit of liability insurance extended to him by defendant, National Liability & Fire Insurance Company (National), and from an order dismissing the third-party complaint against Larry Laux, the independent insurance agent who procured the policy. We affirm.

The following facts are undisputed. Plaintiff applied for automobile liability insurance on December 30, 1996, through Laux. Wood's application did not contain an election form to reject the limits of uninsured/underinsured motorist (UM/UIM) coverage. Laux completed the application on Wood's behalf and submitted it to defendant National. National issued Wood a policy of insurance on December 31, 1996, for the period from December 31, 1996, to December 31, 1997, insuring Wood against loss resulting from liability. The bodily injury liability policy limit was $350,000.

National forwarded Wood's application to Transcom, its general agent. Transcom notified Laux that the application was incomplete because it did not include an election form allowing Wood to reject UM/UIM limits higher than those statutorily required. According to Transcom, Wood's UM/UIM limits would automatically be increased to match the liability limits if the form was not submitted by January 21, 1997. Laux submitted the form on Wood's behalf the following day.

Wood was involved in an automobile accident several months later and made a UM/UIM claim upon his National policy for the policy amount of $350,000. National asserted that, because Wood rejected the higher amount, his UM/UIM policy coverage was reduced to the statutory minimums of $20,000/$40,000. Upon the denial of his claim, Wood filed this action seeking the reformation of the insurance contract to reflect the intended limit of $350,000. National filed a third-party complaint against Laux, alleging that, if it was required to pay Wood the higher limit, then Laux was liable for inappropriately handling the election form.

Wood filed a motion for summary judgment. He claimed that the application process was complete when National accepted his application and issued him a policy. Wood also alleged that, even if the application process was not completed, the election form that rejected the higher limits did not contain an express rejection of those limits and therefore was statutorily ineffective. Pursuant to section 2--615 of the Code of Civil Procedure (735 ILCS 5/2--615 (West 1998)), Laux filed a motion to dismiss the third-party complaint, alleging that the duty to obtain an appropriate rejection of the higher limits was exclusive to the insurer and that Laux, as an independent agent, had no such duty.

The trial court agreed with Wood's argument and entered summary judgment on the complaint for reformation. Because the judgment also absolved Laux of any responsibility for the higher limit, the court granted Laux's motion to dismiss the third-party complaint. National timely appeals.

We begin our analysis by addressing the issue of whether the trial court properly granted the motion for summary judgment and the motion to dismiss. 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 1998). 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).

As with a motion to dismiss, the standard of review of a summary judgment ruling is de novo. Crum & Forster Managers Corp. v. Resolution Trust Corp., 156 Ill. 2d 384, 390 (1993); Rodgers v. Peoples Gas, Light & Coke Co., 315 Ill. App. 3d 340, 347 (2000); Holloway v. Meyer, 311 Ill. App. 3d 818, 822 (2000).

National contends that the trial court erred in granting summary judgment because the UM/UIM election form was part of the application process and therefore fulfills the statutory requirement that the applicant be provided a place on the application to reject UM/UIM limits above the statutory minimum. National maintains that the application in this case consists of the four-page document and the UM/UIM election form.

National ignores that the linchpin of this case turns on the salient fact that Wood never rejected the limits before the policy of insurance was issued in the manner required by statute. Section 143a--2(1) of the Illinois Insurance Code (Code) (215 ILCS 5/143a--2(1) (West 1998)) requires that the amount of uninsured motorist coverage be included in an insurance policy "in an amount equal to the insured's bodily injury liability limits unless specifically rejected by the insured." The statute further provides:

"(1) *** Each insurance company providing the coverage must provide applicants with a brief description of the coverage and advise them of their right to reject the coverage in excess of the [statutory minimum]. ***

(2) *** [E]very application for motor vehicle coverage must contain a space for indicating the rejection of additional uninsured motorist coverage. No rejection of that coverage may be effective unless the applicant signs or initials the indication of ...

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