Appeal from the Circuit Court of COMPANY, Kendall County. No. 10-MR-7 Honorable Timothy J. McCann, Judge, Presiding.
The opinion of the court was delivered by: Justice McLAREN
JUSTICE McLAREN delivered the judgment of the court, with opinion. Justices Zenoff and Birkett concurred in the judgment and opinion.
¶ 1 Defendant, Kyle Jungkans, was injured while he was riding in a car driven by Billy Watts. He settled with Watts and Watts' insurer, State Farm Insurance Companies (State Farm), for State Farm's policy limit, then sought underinsured motorist (UIM) coverage under his policy with plaintiff, Progressive Direct Insurance Company. Plaintiff denied coverage, on the basis that defendant's failure to notify it in advance of the settlement violated the policy's cooperation clause. Plaintiff filed an action for a declaratory judgment (735 ILCS 5/2-701 (West 2010)). The trial court granted plaintiff summary judgment (735 ILCS 5/2-1005(c) (West 2010)). Defendant appeals. We reverse the judgment and enter judgment for defendant.
¶ 2 Defendant's policy with plaintiff included UIM coverage, with limits of $250,000 per person and $500,000 per occurrence. On September 24, 1999, defendant was seriously injured while riding in a car driven by Watts. Jennifer Walker owned the car, and her policy with State Farm had limits of $100,000 per person and $300,000 per occurrence. Defendant sued Watts for negligence. On November 6, 2009, he settled with Watts for the policy limit of $100,000. Defendant and Watts signed a release discharging Watts and Walker from future liability for the accident. Defendant did not notify plaintiff of the release until November 30, 2009.
¶ 3 Defendant then sought UIM coverage from plaintiff. Plaintiff denied the coverage, asserting that, by releasing Watts, defendant had violated the policy's cooperation clause and had cut off plaintiff's right of subrogation against Watts and State Farm. Plaintiff filed a complaint for a declaratory judgment to this effect, attaching a copy of the policy. The two pertinent policy provisions follow. The first is the cooperation clause:
"NOTICE AND CONSENT REQUIREMENTS
An insured person must notify us in writing at least 30 days before entering into any settlement with the owner or operator of an uninsured motor vehicle or an underinsured motor vehicle, or any liability insurer. In order to preserve our right of subrogation, we may elect to pay any sum offered in settlement by, or on behalf of, the owner or operator of an uninsured motor vehicle or an underinsured motor vehicle. If we do this, the insured person agrees to assign to us all their rights against the owner or operator of the uninsured motor vehicle or underinsured motor vehicle, to the extent of our payment.
Any judgment or settlement for damages against an owner or operator of an uninsured motor vehicle or an underinsured motor vehicle that arises out of a lawsuit brought without our written consent is not binding on us." (Emphases in original.)
The second pertinent provision reads:
"OUR RIGHTS TO RECOVER PAYMENT
We are entitled to the rights of recovery that the insured person to whom payment was made has against another, to the extent of our payment. That insured person may be required to sign documents related to the recovery and must do whatever else we require to help us exercise those recovery rights, and do nothing after an accident or loss to prejudice those rights.
However, we may not assert rights of recovery against the owner or operator of an uninsured motor vehicle or an underinsured motor vehicle, if the person seeking coverage under Part III-Uninsured/Underinsured Motorist Coverage provides us with written notice at least 30 days prior to entering into a settlement that an offer of settlement has been made by, or on behalf of, the owner or operator of an uninsured motor vehicle or an underinsured motor vehicle, and if we do not elect to pay to, or on behalf of, that person an amount equal to the amount offered in full settlement by, or on behalf of, the owner or operator of the uninsured motor vehicle or underinsured motor vehicle.
When an insured person has been paid by us and also recovers from another, the amount recovered will be held by the insured person in trust for us and reimbursed to us to the extent of our payment. If we are not reimbursed, we may pursue ...