Appeal from the Circuit Court for the 21st Judicial Circuit, Kankakee County, Illinois, No. 01-MR-336 Honorable Kendall O. Wenzelman, Judge, Presiding.
The opinion of the court was delivered by: Justice Holdridge
PRESIDING JUSTICE HOLDRIDGE delivered the opinion of the court:
Wanda Norton sought an award of attorney fees from West Bend Mutual Insurance (West Bend) based upon her counterclaim that West Bend was vexatious and unreasonable in delaying the resolution of her uninsured motorist claim. Norton's action was brought pursuant to section 155 of the Illinois Insurance Code (the Code) (215 ILCS 5/155(1)(a) (West 2004)). The circuit court of Kankakee County granted summary judgment to West Bend, holding that it had not acted vexatiously or unreasonably in handling Norton's claim. The trial court issued a written order in which it found no reason to delay an appeal of its order in spite of the fact that it did not dispose entirely of the litigation, pursuant to Supreme Court Rule 304(a). 210 Ill. 2d R. 304(a). Norton then filed a timely appeal to this court.
On September 14, 1998, Norton was driving her car when it was struck by a car driven by Karyn Patterson. At the time of the collision, Norton was insured by West Bend. Patterson was insured by American Family Insurance (American Family). Norton filed a claim with West Bend, which paid her $2,852.50 pursuant to her medical coverage and $4,232.26 for property loss and rental expenses. West Bend notified American Family of the payments it had made to Norton and sought reimbursement. At some point thereafter, American Family reimbursed West Bend for the property damage payment to Norton.
Norton hired counsel to represent her in a claim against Patterson. On June 15, 1999, Norton's counsel sent correspondence to American Family indicating Norton had special damages of $18,307.87. In response, American Family offered to settle Norton's claim for $7,800. Norton rejected the settlement offer and filed suit against Patterson on March 13, 2000. A default judgment was entered against Patterson on June 28, 2000, for $13,086. Norton's counsel did not inform either American Family or West Bend of the filing of the suit against Patterson. Counsel also did not inform American Family of the default judgment against Patterson until 90 days after entry of the judgment. As a result, American Family denied coverage due to lack of notice. After American Family denied coverage, Norton's attorney then contacted West Bend asserting an uninsured motorist claim. West Bend maintained that the only reason Patterson was "uninsured" was that Norton's attorney had failed to notify American Family of the lawsuit and the judgment. West Bend requested that Norton's attorney take steps to vacate the default judgment so West Bend could seek reimbursement from American Family. West Bend pointed out that Norton was contractually obligated under the policy to cooperate with West Bend to protects its right to subrogation. Norton's attorney refused to vacate the judgment against Patterson.
On October 26, 2000, Norton filed suit against West Bend seeking payment pursuant to the uninsured motorist provision of her West Bend policy. On December 26, 2000, West Bend filed a motion to dismiss, maintaining that Norton's policy required that her uninsured motorist claim be submitted to arbitration. On March 7, 2001, the circuit court granted West Bend's motion without prejudice and dismissed Norton's claim.
On May 11, 2001, West Bend filed a declaratory judgment action, seeking to determine whether it was obligated under the policy in light of Norton's alleged actions and inactions regarding her claim against Patterson. Specifically, West Bend asked the court to determine whether the actions of Norton violated the terms of the policy and compromised West Bend's position with respect to seeking reimbursement from American Family and whether her actions precluded coverage under her uninsured motorist coverage. West Bend filed a motion for summary judgment maintaining that, as a matter of law, Norton breached her duty under the policy. The trial court denied the motion for summary judgment, finding that West Bend had failed to show "as a matter of law" that Norton had breached the policy.
On November 13, 2003, an agreed order was entered wherein the parties agreed to stay the declaratory judgment action pending resolution of the arbitration proceedings.
On January 26, 2005, the matter of Norton's claim for uninsured motorist coverage was heard by an arbitration panel. Approximately one week later, the arbitration panel issued a decision awarding $7,113.61 to Norton. West Bend promptly offered that amount to Norton's attorney on her uninsured motorist claim. The offer was refused.
On April 19, 2005, Norton filed a counterclaim in West Bend's declaratory action, seeking damages for vexatious and unreasonable delay pursuant to section 155 of the Code. The parties filed crossmotions for summary judgment. The court granted West Bend's motion to dismiss the section 155 counterclaim, stating:
"[A]fter the arbitration finally occurred, Norton refused to accept the decision of the arbitration panel even though the docket entry in this file for November 18, 2003, states that the parties on that date agreed to go to arbitration. Throughout this Court's involvement with this case, West Bend has disputed its obligation to provide coverage. The Court finds that there were bona fide reasons for contesting said coverage. In reaching its decision, the Court is not finding that Norton, in fact, breached her obligations under the policy. That is not the issue presented by the pending motions. Instead, the issue is whether West Bend had a good faith basis for denying and contesting the uninsured motorist claim of Norton."
Norton appealed the trial court's ruling ...