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American Standard Insurance Co. v. Basbagill

August 21, 2002

AMERICAN STANDARD INSURANCE COMPANY, A MEMBER OF AMERICAN FAMILY INSURANCE GROUP, PLAINTIFF-APPELLANT,
v.
PAUL BASBAGILL AND PETER BENCAK, AS INDEPENDENT CO-ADM'RS OF THE ESTATE OF PETER G. SAWCZUK, DECEASED; PAUL BASBAGILL AND PETER BENCAK, AS INDEPENDENT CO-ADM'RS OF THE ESTATE OF SHARON A. SAWCZUK, DECEASED; PAUL BASBAGILL AND PETER BENCAK, AS SPECIAL CO-ADM'RS OF THE ESTATE OF ELIZABETH M. SAWCZUK, DECEASED; PAUL BASBAGILL AND PETER BENCAK, AS SPECIAL CO-ADM'RS OF OF THE ESTATE OF KATHARINE A. SAWCZUK, DECEASED; RANDY E. BRESNAHAN; AND ANTHONY P. PEASE, INDIV. AND AS AGENT OF RANDY E. BRESNAHAN, DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Lake County. No. 99-MR-381 Honorable Stephen E. Walter, Judge, Presiding.

The opinion of the court was delivered by: Justice Kapala

Released for publication August 29, 2002.

AMERICAN STANDARD INSURANCE COMPANY, A MEMBER OF AMERICAN FAMILY INSURANCE GROUP, PLAINTIFF-APPELLANT,
v.
PAUL BASBAGILL AND PETER BENCAK, AS INDEPENDENT CO-ADM'RS OF THE ESTATE OF PETER G. SAWCZUK, DECEASED; PAUL BASBAGILL AND PETER BENCAK, AS INDEPENDENT CO-ADM'RS OF THE ESTATE OF SHARON A. SAWCZUK, DECEASED; PAUL BASBAGILL AND PETER BENCAK, AS SPECIAL CO-ADM'RS OF THE ESTATE OF ELIZABETH M. SAWCZUK, DECEASED; PAUL BASBAGILL AND PETER BENCAK, AS SPECIAL CO-ADM'RS OF OF THE ESTATE OF KATHARINE A. SAWCZUK, DECEASED; RANDY E. BRESNAHAN; AND ANTHONY P. PEASE, INDIV. AND AS AGENT OF RANDY E. BRESNAHAN, DEFENDANTS-APPELLEES.

Appeal from the Circuit Court of Lake County. No. 99-MR-381 Honorable Stephen E. Walter, Judge, Presiding.

The opinion of the court was delivered by: Justice Kapala

PUBLISH

Plaintiff, American Standard Insurance Company, appeals from an order entered pursuant to a complaint for a declaratory judgment. The order determined that plaintiff had a duty to defend a tort suit (the Sawczuk suit) brought by Paul Basbagill and Peter Bencak, as administrators of the estates of Peter Sawczuk and his family, against plaintiff's insureds, Randy E. Bresnahan and Anthony P. Pease. Bresnahan and Pease were named also as defendants in plaintiff's complaint for declaratory judgment. Plaintiff asserts that, by offering to settle for the policy limit and by tendering that amount to the court via interpleader (see 735 ILCS 5/2--409 (West 2000)), it has discharged its contractual duty to defend even though the Sawczuk suit was still pending. We disagree and affirm.

Plaintiff issued an automobile liability insurance policy to Bresnahan, covering his 1990 Ford Bronco for up to $40,000 per incident. On April 19, 1997, with the policy in force, the Bronco collided with Peter Sawczuk's car, killing Sawczuk, his wife, and their two daughters. On January 27, 1999, Basbagill and Bencak, the administrators of the Sawczuk estates, sued Bresnahan and Pease in the circuit court of Lake County, alleging that, although the identity or the driver was in question, either Bresnahan or Pease was driving the Bronco and was at fault when the Bronco collided with the Sawczuk car.

On March 30, 1999, American Standard filed the two-count complaint in the case now before this court. Count I, for interpleader, states that, although plaintiff does not admit any liability in the Sawczuk suit, the total claims there could equal or exceed the Bresnahan policy's $40,000 limit. In count I plaintiff asks for leave to deposit $40,000 with the clerk of the circuit court so that, when the Sawczuk suit is resolved, the money can be distributed according to an appropriate court order. Count II seeks a declaration that granting plaintiff judgment on count I relieves it of any further duty to defend Bresnahan or Pease in the Sawczuk suit. Plaintiff relies on the following language in part I of the policy:

"We will pay compensatory damages an insured person is legally liable for because of bodily injury and property damage ***. We will defend any suit or settle any claim for damages payable under this policy as we think proper.

If a suit involves both compensatory and punitive or exemplary damages, we will defend the compensatory damages. We will not defend the punitive or exemplary damage portion of the suit. HOWEVER, WE WILL NOT DEFEND ANY SUIT AFTER OUR LIMIT OF LIABILITY HAS BEEN OFFERED OR PAID." (Emphasis in original.)

The policy does not define "offered" or "paid."

Pease filed an answer to the complaint. Bresnahan did not file an answer. Plaintiff moved for summary judgment on both counts of the complaint. In seeking summary judgment on count II, plaintiff argued that, under Zurich Insurance Co. v. Raymark Industries, Inc., 118 Ill. 2d 23 (1987), and Novak v. American Family Insurance Co., 183 Wis. 2d 133, 515 N.W.2d 504 (1994), part I of the policy implies that its duty to defend the Sawczuk suit would end when it tendered the $40,000 policy limit to the court via interpleader. Pease did not oppose summary judgment for plaintiff on count I, but he argued that plaintiff could not discharge its contractual duty merely by tendering its policy limit to the court before the Sawczuk suit had been resolved.

The trial court initially granted plaintiff summary judgment on both counts of its complaint. Pease moved to reconsider the judgment on count II, arguing that, under Douglas v. Allied American Insurance, 312 Ill. App. 3d 535 (2000), plaintiff had not discharged its contractual duty to defend and that to allow plaintiff to withdraw from the ...


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