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State Farm Mutual Automobile Insurance Company v. Du Page County and Du Page County State's Attorney's Office

June 16, 2011

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY,
PLAINTIFF,
v.
DU PAGE COUNTY AND DU PAGE COUNTY STATE'S ATTORNEY'S OFFICE, DEFENDANTS-APPELLEES (STATE FARM FIRE AND CASUALTY COMPANY, PLAINTIFF-APPELLANT; FRANK RADOSTITS, AS INDEPENDENT EXECUTOR OF THE ESTATE OF JANE E. RADOSTITS,
DECEASED, DEFENDANT).



Appeal from the Circuit Court of Du Page County. No. 08-MR-1374 Honorable Kenneth L. Popejoy, Judge, Presiding.

The opinion of the court was delivered by: Justice McLAREN

JUSTICE McLAREN delivered the judgment of the court, with opinion. Justices Hutchinson and Schostok concurred in the judgment and opinion.

OPINION

In this case, plaintiff State Farm Fire & Casualty Company (State Farm) sought equitable subrogation and reimbursement from defendant Du Page County (County), a self-insured municipality, after State Farm settled a lawsuit. The lawsuit alleged that an employee of the County struck and injured another driver while the employee was intoxicated and driving a vehicle owned by the County. State Farm appeals the trial court's denial of its motion for judgment on the pleadings and granting of the County's motion to dismiss. On appeal State Farm argues that: (1) the trial court erred by denying State Farm's motion for judgment on the pleadings, because State Farm was entitled to equitable subrogation and reimbursement against the County; and (2) the County was required to pay a settlement within the $2 million retained limit of its insurance program, under principles of horizontal exhaustion. We affirm.

I. FACTS

A. Car Accident

On May 11, 2007, the County's employee, Jane Radostits, was killed when she was involved in a car accident with Michelle Lubinski, who was injured. At the time of the accident, Jane was deputy chief of the criminal prosecutions bureau in the Du Page County State's Attorney's office. She was driving a 2003 Impala, owned by the County, an Illinois municipality. After her death, Jane's husband, Frank Radostits, was appointed independent executor of her estate (Jane's estate).

B. The Lubinski Lawsuit

Lubinski filed a complaint, followed by a first amended complaint (complaint), against Jane's estate, the County, and Joseph Birkett, Du Page County State's Attorney. Lubinski alleged that, during the morning of the day of the accident, certain Du Page County complex buildings were evacuated as a result of a bomb threat. Shortly after the evacuation, Jane left the complex with her supervisor, Jeffrey Kendall, to take care of personal errands together in the Wheaton area.

Lubinski's complaint also alleged that Kendall contacted other members of the Du Page County State's Attorney's office and told them of plans to go to the Kona Grill in Oak Brook for lunch and drinks. Kendall drove Jane in his County-owned vehicle to the Kona Grill, arriving sometime before 11:30 a.m. By 12:45 p.m., seven other members of the Du Page County State's Attorney's office joined Kendall and Jane at the Kona Grill. Jane drank between four and seven lemon martinis and one beer between 11:30 a.m. and 3 p.m. After witnessing Jane consume numerous intoxicating drinks, and knowing that Jane was intoxicated, Kendall drove Jane to the County-owned 2003 Impala, which was parked in the Du Page County complex lot. As Jane drove home, she used a Du Page County cell phone to call Kendall and discuss an upcoming court proceeding.

The complaint alleged that Jane then tried to make another cell phone call. At about the same time, Jane crossed into oncoming traffic on Winfield Road and struck Lubinski's vehicle. Jane was traveling over 80 miles per hour in a 45-mile-an-hour zone. At the time of the accident, Jane had a blood alcohol concentration of 0.25, over three times the Illinois legal limit. Lubinski suffered multiple catastrophic injuries due to the accident.

Count III of Lubinski's complaint alleged "negligence, respondeat superior," against Birkett in that Jane was acting within the scope of her employment and that Birkett was liable for Jane's negligence in violating her driving duties. Count III also alleged that Birkett was liable for Kendall's actions because he was acting within the scope of his employment when he negligently entrusted Jane to drive. Birkett denied liability.

Count IV of Lubinski's complaint alleged "willful and wanton misconduct, respondeat superior," against Birkett for the actions of both Jane and Kendall. Birkett denied liability.

Jane's estate filed a counterclaim and/or third-party complaint against the County and Birkett. The County and Birkett denied that Jane's estate was entitled to such relief.

C. Insurance Policies

At the time of the accident the Radostitses were named insureds on three car insurance policies issued by State Farm Mutual Automobile Insurance Company (State Farm car policies). These three State Farm car policies did not provide coverage for the 2003 Impala. Also, at the time of the accident, the Radostitses were named insureds on a personal liability umbrella policy issued by State Farm (State Farm umbrella policy).

The State Farm umbrella policy provided:

"1. Coverage L - Personal Liability. If you are legally obligated to pay damages for a loss, we will pay your net loss minus the retained limit. Our policy will not exceed the amount shown on the Declarations as Policy Limits -- Coverage L -- Personal Liability."

" '[N]et loss' means:

a. the amount you are legally obligated to pay as damages for bodily injury, personal injury or property damage; and

b. All reasonable expenses you incur in the investigation, settlement and defense of a claim ...


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