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American Service Insurance Company v. Denise D. Arive

September 20, 2012

AMERICAN SERVICE INSURANCE COMPANY,
PLAINTIFF-APPELLEE,
v.
DENISE D. ARIVE, DEFENDANT-APPELLANT.



Appeal from the Circuit Court of Cook County 09 CH 49746 Honorable Rita M. Novak, Judge Presiding.

The opinion of the court was delivered by: Justice Epstein

JUSTICE EPSTEIN delivered the judgment of the court, with opinion. Justices McBride and Taylor concurred in the judgment and opinion.

OPINION

¶ 1 This action arises out of an automobile liability insurance policy issued by American Service Insurance Company (American Service) to Marenda Schultz. The liability policy covered Marenda's Chevrolet Astro van, but contained a named-driver exclusion for Marenda's daughter, Kayla, which excluded coverage for any losses incurred while the car was driven by Kayla.

¶ 2 In October 2008, the van, driven by Kayla, collided with a bus driven by Denise Arive. Arive later filed an action against Kayla and Marenda Schultz for personal injuries sustained in the accident. Subsequently, American Service filed a declaratory judgment action against Arive, Kayla and Marenda Schultz, the bus company that operated the bus, and various passengers on the bus during the incident. American Service argued that it had no duty to defend or indemnify the defendants with respect to any claims arising from the accident because Kayla was an excluded driver on the liability policy.

¶ 3 The parties filed cross-motions for summary judgment. American Service asserted that Kayla was an excluded driver pursuant to the policy and therefore was afforded no coverage. Arive argued that the named-driver exclusion in the American Service policy was unenforceable because American Service had not listed Kayla as an excluded driver on the insurance card. In reply, American Service attached an insurance card listing Kayla as an excluded driver with its brief, along with an affidavit from a claims representative at American Service who was presented to establish that the card was a business record. Arive responded that the affidavit and attached insurance card were not timely filed and that the affiant was incompetent to testify regarding the insurance card.

¶ 4 The circuit court granted American Service's motion and denied Arive's motion. The court found that Kayla Schultz was an excluded driver under the American Service policy. The court reasoned that "pursuant to the language in the Appellate Court decision in Founders Insurance Company v. Munoz, [389 Ill. App. 3d 744 (2009), aff'd in part & rev'd in part, 237 Ill. 2d 424 (2010),] the dispute between the parties with regard to the question of whether an insurance card was issued listing Kayla Schultz as an excluded driver *** is moot." This appeal followed.

¶ 5 ANALYSIS

¶ 6 The only issue that we need to address on appeal is whether an insurer, in order to enforce a named-driver exclusion in an automobile liability policy, must list the names of the excluded drivers on the insurance card it provides to the insured. Arive does not challenge this court's decision in St. Paul Fire & Marine Insurance Co. v. Smith, 337 Ill. App. 3d 1054 (2003), which held that a named-driver exclusion in an automobile liability insurance policy does not contravene Illinois public policy. 337 Ill. App. 3d at 1062. Relying on section 7-602 of the Illinois Vehicle Code (the Code) (625 ILCS 5/7-602 (West 2008)), which provides that an insurance card "shall contain a warning" of any named-driver exclusion, Arive argues that a named-driver exclusion is void if the excluded driver's name does not appear on the insurance card provided to the insured.*fn1 The circuit court rejected this argument and granted summary judgment in favor of American Service.

¶ 7 We review the trial court's decision to grant summary judgment de novo. Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill. 2d 90, 102 (1992). Summary judgment is appropriate where "the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." 735 ILCS 5/2-1005(c) (West 2008). Summary judgment "should only be granted if the movant's right to judgment is clear and free from doubt." Outboard Marine Corp., 154 Ill. 2d at 102.

¶ 8 In St. Paul Fire & Marine Insurance Co. v. Smith, this court addressed an issue of first impression in Illinois: "whether a named driver exclusion in an automobile liability insurance policy violates Illinois public policy." St. Paul, 337 Ill. App. 3d at 1056. We examined our supreme court's holding that " 'a liability insurance policy issued to the owner of a vehicle must cover the named insured and any other person using the vehicle with the named insured's permission.' " Id. at 1059(quoting State Farm Mutual Automobile Insurance Co. v. Smith, 197 Ill. 2d 369, 372 (2001)). The court in Smith held that an exclusion that purported to deny liability coverage while any insured vehicle was given to a person engaged in an automobile business was void as against public policy, but the court cautioned that " '[t]he permissibility of other possible policy exclusions is not before us today, and we express no opinion as to any other exclusion.' " Id. at 1061 (quoting Smith, 197 Ill. 2d at 379).

¶ 9 When faced with the named-driver exclusion in St. Paul, we looked to section 6-702 of the Illinois Vehicle Code, which provides in part: "If the insurance policy represented by the insurance card does not cover any driver operating the motor vehicle with the owner's permission, or the owner when operating a motor vehicle other than the vehicle for which the policy is issued, the insurance card shall contain a warning of such limitations in the coverage provided by the policy." 625 ILCS 5/7-602 (West 2008).

St. Paul, 337 Ill. App. 3d at 1059. We reasoned that "[t]he plain language of this statute appears to recognize that insurance policies may exclude named drivers from coverage." St. Paul, 337 Ill. App. 3d at 1060. Section 7-602 and its supporting administrative regulations thus served as "evidence that the legislature intended to carve out a narrow exception for the named driver exclusion." Id. Citing several decisions from other jurisdictions, we noted the public policy rationales for a named-driver exclusion: (1) protecting all potential claimants from damages resulting from automobile accidents by enabling drivers with family members having poor driving records to obtain affordable insurance; and (2) deterring insured drivers from entrusting their vehicles to unsafe excluded drivers. Id. at 1061 (collecting cases). Our decision in St. Paul made no mention of any requirement that the insurer must list the excluded drivers on its insurance cards in order to enforce the named-driver exclusion.

ΒΆ 10 Following St. Paul, this court considered the same argument that Arive advances here in Founders Insurance Co. v. Munoz, 389 Ill. App. 3d 744 (2009), aff'd in part and rev'd in part, 237 Ill. 2d 424 (2010). Founders addressed five consolidated appeals, one of which, No. 1-07-0792, included a named-driver exclusion. We rejected the defendants' claim that the ...


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