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Brian Hoover and Julie Hoover v. Country Mutual Insurance Company and Michael Spann

July 18, 2012

BRIAN HOOVER AND JULIE HOOVER,
PLAINTIFFS-APPELLANTS,
v.
COUNTRY MUTUAL INSURANCE COMPANY AND MICHAEL SPANN, DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Cook County.10 L 2789 Honorable Joan Powell, Judge Presiding.

The opinion of the court was delivered by: Justice Neville

JUSTICE NEVILLE delivered the judgment of the court, with opinion.

Presiding Justice Steele and Justice Murphy concurred in the judgment and opinion.

OPINION

¶ 1 In March 2010, Brian and Julie Hoover (Hoovers), the plaintiffs, filed a complaint against their home insurer, Country Mutual Insurance Company (Country Mutual), and Michael Spann (Spann), a Country Mutual insurance agent. According to the complaint, Spann promised to provide the Hoovers with an insurance policy that would cover the cost of replacing their home and its contents, but Country Mutual refused to pay the replacement cost when an explosion completely destroyed the Hoovers' home in 2008. Country Mutual and Spann filed separate motions to dismiss the Hoovers' amended complaint, pursuant to section 2-619 of the Code of Civil Procedure (735 ILCS 5/2-619 (West 2010), claiming, inter alia, that the Hoovers failed to file their complaint within the applicable statutory limitations period and within the one-year limitation provision delineated in the policy. The trial court granted both motions, but the court granted the Hoovers leave to amend their complaint. When the Hoovers elected to stand on their verified amended complaint, the trial court entered a final order that dismissed the Hoovers' complaint against Country Mutual and Spann. On appeal, we must decide whether the trial court erred when it granted the defendants' motions to dismiss all the counts in the Hoovers' complaint as time barred.

¶ 2 We hold (1) that the insurance policy's one-year limitation period bars counts I and II against County Mutual for breach of contract and bad faith; (2) that count III of the complaint fails to state a cause of action for negligent misrepresentation; and (3) that count IV, the negligence count, was untimely under the applicable statute of limitations because the plaintiffs were given a copy of their policy and, therefore, they knew or reasonably should have known more than two years before they filed their complaint that the liability limits in their policy were inadequate to cover the replacement cost of their house and its contents. Accordingly, we affirm the trial court's order that dismissed all counts of the plaintiffs' complaint.

¶ 3 BACKGROUND

¶ 4 In 1998, the Hoovers and their family built a house on their land near Pittsfield, Illinois. In 2004, the Hoovers purchased a homeowners' insurance policy from the defendant, Country Mutual, to insure against a loss in the event of a fire or other casualty. In May 2007, the Hoovers met with Spann, a Country Mutual insurance agent, to obtain additional coverage that would cover the replacement cost of their home and its contents in the event of a loss.

¶ 5 Spann obtained a new insurance policy from Country Mutual which contained (1) definitions, (2) covered loss provisions, (3) provisions explaining how covered losses are settled, (4) personal property provisions, (5) an inflation rider, and (6) conditions that are relevant to this case and were delineated in the policy as follows

¶ 6 The policy defined replacement cost and actual cash value for buildings and structures as follows:

"Replacement Cost The cost actually and necessarily incurred to repair or replace the damaged property using standard new construction materials of like kind and quality and standard new construction techniques.

1. 'Actual cash value' means:

a. For buildings or structures the lesser of the following, as determined by 'us':

(1) The cost actually and necessarily incurred to repair or replace the damaged property using standard new construction materials of like kind and quality and standard new construction techniques, less depreciation; or

(2) Fair market value.

b. For property other than buildings and structures the lesser of the following, as determined by 'us':

(1) The cost to repair or replace the damaged property using materials of like kind and quality, less depreciation; or

(2) Fair market value."

¶ 7 The policy delineated the following covered losses:

"Loss settlement 'We' settle covered losses according to Loss Settlement1, Loss Settlement 2 or Loss Settlement 3 ***, depending on what number appears on the Declarations in the 'LOSS STLMT' column for applicable coverage *** ."

¶ 8 The policy also explained how Covered losses are settled:

"1. Loss Settlement 1 -- 80% Insurance Requirement

If '1' appears in the Declarations under 'Loss STLMT':

a. 'We' pay 'replacement cost' unless paragraph b. applies ***.

b. If the applicable limit of liability for the damaged property is less than 80% of its 'replacement cost' at the time of loss, 'we' will pay 'actual cash value.' "

¶ 9 The policy contained a personal property provision:

"Property covered under Personal Property, Coverage D will be settled under Loss Settlement 3 -- Actual Cash value at the time of loss, unless 'you' purchase ...


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