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Wausau Insurance Co. v. All Chicagoland Moving and Storage Co.

September 27, 2002

WAUSAU INSURANCE COMPANY, AS SUBROGEE OF THE MCCRONE GROUP, INC., PLAINTIFF-APPELLEE,
v.
ALL CHICAGOLAND MOVING AND STORAGE COMPANY, DEFENDANT-APPELLANT.



Appeal from the Circuit Court of Du Page County. No. 98-L-764 Honorable Kenneth L. Popejoy and Stephen J. Culliton, Judges, Presiding.

The opinion of the court was delivered by: Justice Byrne

Plaintiff, Wausau Insurance Company (Wausau), initiated a subrogation action against All Chicagoland Moving & Storage Company (Chicagoland), alleging that Chicagoland dropped and damaged an electron microscope owned by the McCrone Group, Inc. (McCrone), and insured by Wausau. Wausau's amended complaint alleged that Chicagoland acted negligently and breached a bailment agreement with McCrone. The trial court granted Wausau summary judgment and awarded $90,500 in damages, and Chicagoland appeals. We affirm the portion of the court's order granting Wausau summary judgment, but we reverse the award of $90,500 and remand the cause for a new determination of Wausau's damages.

FACTS

In June 1997, McCrone, a business which provides chemical analysis services, decided to replace a JEM200CX electron microscope (the microscope) with a more advanced microscope. McCrone had originally purchased the old microscope from JEOL, the microscope's manufacturer, and intended to place the microscope with JEOL for resale. JEOL contacted McDonald Moving & Storage (McDonald) to transport the microscope. On June 26, 1997, McDonald retained Chicagoland to retrieve the microscope from McCrone's Westmont facility, deliver it to Chicagoland's Elmhurst warehouse, and await further instruction from McDonald.

Larry Illingworth, Jr., a Chicagoland employee, prepared a bill of lading and directed Mike Holt, an independent contractor, to retrieve the microscope and transport it to Chicagoland's Elmhurst warehouse. The bill of lading identified Chicagoland's warehouse as the microscope's final destination. On June 30, 1997, Holt transported the microscope without incident. However, Kevin Illingworth, Chicagoland's warehouse manager, dropped and damaged the microscope while he and an assistant were repackaging it within Chicagoland's warehouse.

On appeal, Chicagoland contends that the damage occurred on the day Chicagoland accepted the microscope. However Chicagoland's answer to the complaint states that the accident occurred two days later, "on or about July 2, 1997." Chicagoland concedes that its agents dropped the microscope but insists that they were not negligent in doing so.

Before the accident, McCrone had purchased from Wausau an insurance policy that purportedly covered the microscope. McCrone submitted a claim for the damaged microscope, and Wausau paid McCrone $90,250 after accounting for the $250 deductible. Wausau's original and amended complaints each sought $90,500, which allegedly represented the aggregate loss of the insurer and the insured. After Wausau amended its complaint, the trial court permitted additional discovery but barred eight interrogatories and a deposition request submitted by Chicagoland that addressed Wausau's damages. The trial court subsequently granted Wausau summary judgment on its subrogation claim against Chicagoland, and Chicagoland timely appeals.

ANALYSIS

In all appeals from the entry of summary judgment, we conduct a de novo review of the evidence in the record. Espinoza v. Elgin, Joliet & Eastern Ry. Co., 165 Ill. 2d 107, 113 (1995). Summary judgment is appropriate where the pleadings, affidavits, depositions, and admissions on file, when viewed in the light most favorable to the nonmoving party, show that there is no genuine issue of material fact and that the moving party is entitled to a judgment as a matter of law. 735 ILCS 5/2--1005(c) (West 1998); Bier v. Leanna Lakeside Property Ass'n, 305 Ill. App. 3d 45, 50 (1999). "Summary judgment is a drastic means of resolving litigation and should be allowed only when the right of the moving party is clear and free from doubt." Bier, 305 Ill. App. 3d at 50. "Therefore, where reasonable persons could draw divergent inferences from the undisputed material facts or where there is a dispute as to a material fact, summary judgment should be denied and the issue decided by the trier of fact." Espinoza, 165 Ill. 2d at 114.

If a party moving for summary judgment introduces facts that, if not contradicted, would entitle him to a judgment as a matter of law, the opposing party may not rely on his pleadings alone to raise issues of material fact. Hermes v. Fischer, 226 Ill. App. 3d 820, 824 (1992).

In this case, Wausau and Chicagoland filed opposing motions for summary judgment to dispose of Wausau's subrogation claim, and the trial court ruled for Wausau. Chicagoland asserts that questions of fact exist but nevertheless argues that it is entitled to summary judgment. Chicagoland contends that (1) Wausau did not establish a prima facie case of bailment; (2) Chicagoland exercised due care in handling the microscope; (3) Wausau's subrogation claim is barred because McCrone's insurance policy did not require Wausau to pay for the loss; (4) the damage award of $90,500 is not supported by competent evidence; (5) the bill of lading limited Chicagoland's liability to "$2 times the weight of the subject microscope in pounds"; and (6) the trial court abused its discretion in barring Chicagoland's discovery requests regarding Wausau's damages.

Subrogation has been defined as the substitution of another person in the place of a claimant whose rights he succeeds to in relation to the debt or claim asserted, which he has paid involuntarily. North American Insurance Co. v. Kemper National Insurance Co., 325 Ill. App. 3d 477, 481 (2001). The right of subrogation may be grounded in equity or based on an express or implied agreement. To establish its status as a subrogor, an insurer must prove that (1) a third party is primarily liable to the insured for the loss; (2) the insurer is secondarily liable to the insured for the loss pursuant to an insurance policy; and (3) the insurer paid the insured under the policy, thereby extinguishing the debt of the third party. North American, 325 Ill. App. 3d at 481. Chicagoland disputes whether Wausau established the first two elements of subrogation.

1. Chicagoland's Liability to Wausau

We initially consider whether Chicagoland is primarily liable to McCrone for the damage to the microscope. The trial court decided that Wausau proved Chicagoland's liability by establishing a prima facie case of bailment. " 'A bailment is the delivery of property for some purpose upon a contract, express or implied, that after the purpose has been fulfilled, the property shall be redelivered to the bailor, or otherwise dealt with according to his directions, or kept until he reclaims it.' " American Ambassador Casualty Co. v. Jackson, 295 Ill. App. 3d 485, 490 (1998), quoting American Ambassador Casualty Co. v. City of Chicago, 205 Ill. App. 3d 879, 881 (1990). To recover under a bailment theory, a plaintiff must establish (1) an express or implied agreement to create a bailment; (2) a delivery of the property in good condition; (3) the bailee's acceptance of the property; and (4) the bailee's failure to return the property or the bailee's redelivery of the property in a damaged condition. Jackson, 295 Ill. App. 3d at 490.

A prima facie case of bailment creates a rebuttable presumption that the defendant acted negligently. Jackson, 295 Ill. App. 3d at 490. A bailee for hire must exercise reasonable care under the circumstances, but he is not an insurer of the bailed property. Ortiz v. Warren Chevrolet, Inc., 24 Ill. App. 3d 199, 202 (1974). Whether a bailee has met the burden of showing that damage to the bailed property occurred without the bailee's fault is ordinarily a question of fact for the trier of fact. Ortiz, 24 Ill. App. 3d at 202. However, even though the question is ordinarily a question of fact, a question of law that may be dispensed with by summary judgment is presented if only one conclusion may be drawn from the undisputed facts. Reynolds v. Decatur Memorial Hospital, 277 Ill. App. 3d 80, 84 (1996).

Chicagoland concedes that it accepted the microscope at McCrone's Westmont facility pursuant to the bill of lading and that it returned the microscope in damaged condition. Therefore, the existence of the first, third, and fourth elements of bailment is undisputed. However, Chicagoland argues that a question of fact exists as to whether McCrone tendered the property in good condition. We agree with Wausau that the second and fourth elements of bailment can be established by evidence that the bailee returned the property in worse condition than when the bailor tendered it.

Wausau's amended complaint alleges that "[a]t the time CHICAGOLAND picked up McCrone's microscope, the microscope was not damaged, was operable, and was otherwise in good condition." In its answer to this particular allegation, Chicagoland stated that "on or about June 30, 1997, the subject microscope was in apparent good order and condition at the time [Chicagoland] picked it up from a location in Westmont." Moreover, Donald Brooks, McCrone's owner and president, stated in an affidavit that the microscope was "in good operating condition immediately prior to the microscope being dropped."

On appeal, Chicagoland ignores its admission and instead relies upon its document entitled "Electronic Descriptive Inventory," which Holt prepared when he accepted the disassembled microscope from McCrone. In the form, Holt noted that McCrone had packaged the microscope and that the "contents and condition [were] unknown." Chicagoland also argues that Brooks was unqualified to comment on the microscope's condition because he did not operate it and because other McCrone employees were more familiar with it. Chicagoland presumes that the microscope was not in good condition because McCrone believed it was "old technology" and intended to sell it.

A judicial admission is a deliberate, clear, unequivocal statement of a party, about a concrete fact, within the party's peculiar knowledge. It is well settled that the party making the admission is bound by that admission and cannot contradict it. A judicial admission will support a grant of summary judgment. Eidson v. Audrey's CTL, Inc., 251 Ill. App. 3d 193, 195-96 (1993).

In its answer, Chicagoland stated that the microscope was in "apparent good *** condition" when it was accepted. Brooks stated that, although he was not an expert in electron microscopy, he knew that the microscope operated before Chicagoland dropped it. Holt's "Electronic Descriptive Inventory" merely asserts that the microscope's external casing was scratched and that the condition of the microscope was otherwise "unknown." The inventory form does not refute Brooks's affidavit, and no one disputes that McCrone intended to sell the microscope because it was obsolete, not because it was broken. Most importantly, Chicagoland concedes on appeal that the microscope was in worse condition after it "came in contact with the floor" of Chicagoland's warehouse. Chicagoland may not rely upon a novel appellate argument to contradict its prior admission, Wausau's pleadings, and Brooks's affidavit. Therefore, we conclude that Wausau established a prima facie case of bailment and created a rebuttable presumption that Chicagoland acted negligently when it dropped the microscope.

We next address Chicagoland's contention that it exercised due care in handling the microscope. Chicagoland relies exclusively upon a supplemental affidavit in which Kevin Illingworth described in detail the equipment and procedures he used when moving the microscope. Illingworth opined that he and his assistant were "in compliance with the custom and practice in the shipping industry" when they dropped the main column of the microscope. We need not consider the conclusory portion of Illingworth's affidavit because Supreme Court Rule 191(a) states that an affidavit supporting a summary judgment motion ...


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