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Board of Managers of the Townhomes of Woodland Hills Condominium v. State Farm Fire and Casualty Co.

May 03, 2002

BOARD OF MANAGERS OF THE TOWNHOMES OF WOODLAND HILLS CONDOMINIUM ASSOCIATION, AS ASSIGNEE OF JAMES REGAS AND GEORGIA REGAS, PLAINTIFF-APPELLANT,
v.
STATE FARM FIRE AND CASUALTY COMPANY AND STATE FARM INSURANCE COMPANIES, INDIV. AND D/B/A STATE FARM INSURANCE, DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Du Page County. No. 00-L-483 Honorable Robert K. Kilander, Judge, Presiding.

The opinion of the court was delivered by: Justice McLAREN

Released for publication May 7, 2002.

BOARD OF MANAGERS OF THE TOWNHOMES OF WOODLAND HILLS CONDOMINIUM ASSOCIATION, AS ASSIGNEE OF JAMES REGAS AND GEORGIA REGAS, PLAINTIFF-APPELLANT,
v.
STATE FARM FIRE AND CASUALTY COMPANY AND STATE FARM INSURANCE COMPANIES, INDIV. AND D/B/A STATE FARM INSURANCE, DEFENDANTS-APPELLEES.

Appeal from the Circuit Court of Du Page County. No. 00-L-483 Honorable Robert K. Kilander, Judge, Presiding.

The opinion of the court was delivered by: Justice McLAREN

PUBLISHED

 Plaintiff, board of managers of the Townhomes of Woodland Hills Condominium Association (Association), appeals the trial court's granting of the motion for judgment on the pleadings made by defendants, State Farm Fire & Casualty Company and State Farm Insurance Companies (collectively, State Farm), in this insurance coverage case. We affirm.

Plaintiff is a condominium association created by a condominium declaration recorded with the recorder of deeds of Lake County on October 30, 1985. James and Georgia Regas (Regases) owned and developed plaintiff's condominiums and served as the Association's directors and officers. The declaration names Woodland Hills Development Company as the developer. Georgia Regas and Gus Leakakos were the directors of the development company. A trust held title to the parcel of land to be developed and all condominium units until the units were sold. James Regas was the beneficiary of the trust prior to January 1982 and was replaced as beneficiary by Georgia Regas in January 1982.

In 1995, the Association filed a complaint against, inter alia, James and Georgia Regas, in Lake County. The third amended complaint against the Regases sought damages in excess of $1 million against the Regases in their capacities as developers and owners of the condominium buildings and as directors of the condominium association. The complaint alleged that the Regases were liable for, inter alia, faulty construction, the failure to collect assessments and pay the assessments and reserves, the failure to properly act as directors of the Association, and fraud. Prior to May 16, 1995, State Farm issued the Regases a homeowners insurance policy and a personal liability umbrella policy (collectively, the policies). These policies were in effect at the time the Association filed its complaint against the Regases and at the time the acts alleged in the Association's complaint occurred. The Regases, thus, tendered the Association's suit to State Farm for defense and indemnification under the policies. Initially, State Farm informed the Regases that it would pay the attorney fees and costs of defending the Regases, pursuant to a reservation of rights. However, on or about May 29, 1996, State Farm informed the Regases that it denied coverage. Yet, State Farm did not file suit seeking a declaratory judgment that it had no duty to defend the Regases.

In 1998, the Regases and the Association agreed to settle their suit for $3,850,000. Pursuant to the settlement agreement, the Regases paid the Association $65,000 and assigned to the Association any and all claims the Regases had against State Farm for its wrongful failure to defend the Regases. The Lake County circuit court approved the settlement and entered a good-faith finding.

In May 2000, the Association brought this instant action against State Farm, asserting, as assignee, that State Farm breached its duty to defend the Regases and was liable for damages as set forth in the settlement agreement between the Association and the Regases. In January 2001, State Farm filed a motion for judgment on the pleadings, asserting that the policies provided no coverage to the Regases and State Farm had no duty to the Regases in the underlying action. On March 2, 2001, the trial court granted State Farm's motion. The Association filed this timely appeal.

The Association argues that the trial court erred by holding that State Farm had no duty to defend and that there was no coverage under the policies.

Judgment on the pleadings is proper only if the pleadings, depositions, admissions, and affidavits show that there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Jones v. Chicago HMO Ltd. of Illinois, 191 Ill. 2d 278, 291 (2000). In ruling on a motion for judgment on the pleadings, only those facts apparent from the face of the pleadings, matters subject to judicial notice, and judicial admissions in the record may be considered. All well-pleaded facts and all reasonable inferences from those facts are taken as true. Our review is de novo. Jones, 191 Ill. 2d at 291.

In Illinois, an insurer has a duty to defend if the allegations in the underlying complaint fall within or potentially fall within the coverage of the policy. Guillen v. Potomac Insurance ...


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