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State Farm Fire and Casualty Co. v. Kiszkan

February 17, 2004


[6] Appeal from the Circuit Court of Cook County. No. 00 CH 7527 The Honorable John K. Madden, Judge Presiding.

[7] The opinion of the court was delivered by: Justice Garcia

[8]  In May 2000, the plaintiff, State Farm Fire and Casualty Company (State Farm), filed a declaratory judgment action against the defendants, Catherine Kiszkan, and Tracy Gordon and Earline Taylor, as administrators for the estates of Mike Matricard and Readell Taylor, respectively (Defendants). State Farm sought a declaration that its personal liability umbrella policy (PLUP), issued to its insured, Kiszkan, provided no coverage to the estate of Matricard for a personal injury and wrongful death action filed against him by the estate of Taylor. In May 2001, the circuit court granted State Farm's motion for summary judgment, finding Matricard was not an insured under Kiszkan's PLUP.

[9]  The Defendants appeal, arguing (1) State Farm was not entitled to summary judgment as a material question of fact exists regarding the source of the misrepresentation in Matricard's insurance application that he and Kiszkan were related, (2) State Farm waived its right to deny coverage under Kiszkan's PLUP, and (3) the circuit court should have applied the doctrine of estoppel because State Farm represented that Matricard was an insured under Kiszkan's PLUP. We affirm.


[11]   Since 1994, Kiszkan has been covered by a State Farm PLUP. Over the years, Kiszkan has obtained several State Farm policies through State Farm agent Andrew Oberc's office and visited Oberc's office on multiple occasions. In May 1998, Kiszkan and Matricard went to Oberc's office so that Matricard could apply for an automobile liability insurance policy (Automobile Policy) for his own vehicle. While the application for Matricard's Automobile Policy was being prepared, it was represented to Nancy Neberieza, Oberc's office manager, that Matricard was Kiszkan's grandson and lived with her. This familial relationship was noted on Matricard's Automobile Policy application that was sent to State Farm's underwriting department. In September 1998, Matricard and Taylor were involved in an automobile collision in which both men died. Matricard was driving his own vehicle and was covered by the Automobile Policy issued by State Farm.

[12]   In October 1998, the attorney for Taylor's estate wrote to Marcella Hatch, a State Farm claims specialist, requesting the dollar amount of liability coverage for Matricard under his Automobile Policy and all umbrella policies. She did not reply. Hatch was initially assigned the responsibility of handling the claims brought by Taylor's estate against Matricard's estate. She also oversaw the death benefits available to Matricard's next-of-kin under his Automobile Policy. Acting on the information in Matricard's insurance application that Kiszkan was Matricard's next-of-kin, Hatch requested Kiszkan provide State Farm with a death certificate and the medical authorization needed to obtain Matricard's medical records. According to Hatch, she also received confirmation from Kiszkan herself that she was Matricard's grandmother. In January 1999, upon receipt of Matricard's death certificate from Kiszkan and Matricard's medical records, State Farm paid Kiszkan $20,000 for death benefits, and $2,000 for medical payment benefits under Matricard's Automobile Policy based on its belief that Kiszkan was Matricard's grandmother and next-of-kin.

[13]   In February 1999, the attorney for Taylor's estate again sent State Farm a letter requesting the amount of liability coverage that was available to Matricard's estate for the September 1998 collision. In March 1999, Sharon Smith, a claims team manager at State Farm, answered that Matricard's Automobile Policy had limits of $100,000 per person and $300,000 per accident and that "there is a Personal Umbrella policy with limits of $1,000,000 for personal liability."

[14]   In April 1999, the attorney for Taylor's estate sent State Farm notice of a petition to open Matricard's estate. Included with that notice was an "Affidavit of Heirship" completed by Kiszkan, referring to herself as a "friend" of Matricard and attesting that she did not know whether Matricard had ever been married or had any children. The service list, entitled "Exhibit A," attached to the petition, listed, inter alia, "Catherine Kiszkan, grandmother, closest known next-of-kin" (Exhibit A).

[15]   In May 1999, Taylor's estate filed a wrongful death and survival action against Matricard's estate. State Farm immediately assumed Matricard's defense, as required under his Automobile Policy, and the file was assigned to Mary Lou Kovac. From her review of the file, Kovac understood Kiszkan to be Matricard's grandmother and the PLUP coverage was available to Matricard as an insured. In December 1999, the attorney for Taylor's estate made a settlement demand on State Farm requesting the entire $1.1 million in coverage available under Matricard's Automobile Policy and Kiszkan's PLUP. State Farm did not settle.

[16]   In early March 2000, Kiszkan telephoned Kovac and told her that although Matricard had lived with her, he was not her grandson, nor was he a blood relative. Within days of the telephone call, State Farm reserved its right to deny coverage to Matricard's estate under Kiszkan's PLUP based on Matricard not being related to Kiszkan. In its reservation of rights letter, State Farm stated: "It is questionable whether Michael Matricard, deceased, was a relative of the first person named as an insured so as to be an insured as defined in the policy."

[17]   In May 2000, State Farm filed a declaratory judgment action seeking a determination of its rights and obligations to Matricard under the PLUP, but continued defending Matricard pursuant to his Automobile Policy. The Defendants answered State Farm's complaint stating there was insufficient information to form a belief as to the truth of the allegation that Kiszkan and Matricard were not related. The Defendants also raised the affirmative defenses of equitable estoppel, judicial estoppel, and waiver. State Farm denied the applicability of each affirmative defense.

[18]   In June 2000, a jury awarded Taylor's estate a $6.3 million judgment against Matricard's estate arising from the automobile accident in which both died. State Farm indemnified Matricard for the $100,000 limit of his Automobile Policy.

[19]   In September 2000, State Farm moved for summary judgment in the declaratory judgment action pursuant to section 2-1005(c) of the Code of Civil Procedure (735 ILCS 5/2-1005(c) (West 2000)), based on Matricard not being a relative of Kiszkan and therefore, not an insured under Kiszkan's PLUP. In support of its motion, State Farm attached Kiszkan's deposition transcript wherein she testified that she and Matricard were not related. State Farm also attached the affidavits of Neberieza (officer manager for State Farm agent Oberc), Smith (State Farm claims team manager), and Kovac (responsible for Matricard's file upon the filing of Taylor's lawsuit against Matricard's estate). The affidavits detailed (1) how State Farm originally came to believe Matricard was Kiszkan's grandson, (2) the disclosures State Farm made regarding insurance coverage potentially available to Matricard, and (3) how State Farm learned Kiszkan and Matricard were not actually related.

[20]   The Defendants filed a response and a cross-motion for summary judgment. The Defendants did not dispute that Kiszkan and Matricard were not related; instead, the affirmative defenses of waiver, equitable estoppel, and judicial estoppel were raised. Neberieza was deposed and testified Kiszkan accompanied Matricard to Oberc's office, represented she was his grandmother, and asserted Matricard was there to apply for an automobile policy. Oberc and Neberieza were personally familiar with Kiszkan and, based on the information in the insurance application, knew Matricard and Kiszkan were living in the same household. However, Neberieza did not ask whether Kiszkan was Matricard's paternal or maternal grandmother; nor did ...

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