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American Access Casualty Company v. Ana Reyes

December 28, 2012


Appeal from the Circuit Court of Kane County. No. 10-MR-56 Honorable Thomas E. Mueller Judge, Presiding.

The opinion of the court was delivered by: Justice Jorgensen

JUSTICE JORGENSEN delivered the judgment of the court, with opinion. Presiding Justice Burke and Justice Schostok concurred in the judgment and opinion.


¶ 1 The facts in this automobile-insurance-coverage case are undisputed. In September 2007, plaintiff, American Access Casualty Company, issued an automobile insurance policy to defendant Ana Reyes. The policy's statement of declarations listed Reyes as the "named insured," as well as the titleholder to the insured vehicle, a 1999 Chrysler 300M. However, in the policy's section identifying the "operators" of the vehicle, the policy listed two persons: (1) Reyes, with the notation "EXCLUDED" instead of a driver's license number; and (2) Jose M. Cazarez, with an "out of country/international" driver's license number.*fn1 Further, Reyes executed an endorsement providing that plaintiff would not afford any coverage under the policy to any claim or suit that occurred as the result of Reyes operating any vehicle. Finally, the policy contained a provision excluding bodily-injury and property-damage liability coverage for "any automobile while in control of an excluded operator."

¶ 2 On October 30, 2007 (one month after the above policy took effect), Reyes drove her car in Elgin and struck pedestrians Rocio and Sergio Jasso. Rocio was seriously injured and Sergio (a minor) died as a result of his injuries. Rocio and Sergio's father, Brigido Jasso, sued Reyes, alleging negligence.

¶ 3 Thereafter, in response to the negligence suit, plaintiff filed the instant action, seeking a declaration that, because Reyes was driving at the time of the October 30, 2007, accident, its policy provided no coverage for and no duty to defend any claims and litigation arising therefrom. State Farm (which apparently provided uninsured motorist coverage to the pedestrians) answered plaintiff's complaint and filed a countercomplaint for declaratory judgment, asking that plaintiff be estopped from excluding coverage for Reyes, because plaintiff's attempt to "specifically exclude Ana Reyes the titleholder, payer on the insurance policy, [and] resid[ent] at the address of where the vehicle is garaged and located with full access to the vehicle is contrary to law and public policy and cannot be enforced. Ana Reyes' exclusion would result in no one insured under the policy."

¶ 4 On October 20, 2011, the court granted plaintiff summary judgment on its complaint. On February 11, 2012, the court denied State Farm's motion to reconsider, which raised, for the first time, an allegation that Cazarez is an illegal alien and contended that, by allowing him to be a member of her household, Reyes was in violation of federal law and, moreover, that plaintiff, by providing insurance coverage to Cazarez, was "harboring and shielding from detection an illegal alien."*fn2

¶ 5 State Farm appeals, arguing that the insurance policy between plaintiff and Reyes violates public policy because it excludes Reyes, the only named insured and owner of the insured vehicle. Further, State Farm argues that plaintiff could not validly provide coverage for Cazarez because he does not have a valid license and is an illegal alien.

¶ 6 For the following reasons, we conclude that the provision excluding Reyes from liability coverage conflicts with relevant statutory requirements and, thus, violates public policy. Accordingly, we reverse and remand.


¶ 8 As they are purely legal, we review de novo the issues on appeal. 735 ILCS 5/2-1005(c) (West 2008) (summary judgment reviewed de novo); Founder's Insurance Co. v. Munoz, 237 Ill. 2d 424, 432 (2010) (de novo review applied to legal issues). The primary issue presented is whether the exclusion of the only named insured and automobile owner from coverage as a driver under a liability insurance policy contravenes public policy. An insurance policy is a contract, and, therefore, the rules applicable to contract interpretation govern interpretation of an insurance policy. Founder's Insurance, 237 Ill. 2d at 433. As such, unless it contravenes public policy, an unambiguous insurance policy provision will be applied as written. Id. "Statutes are an expression of public policy." St. Paul Fire & Marine Insurance Co. v. Smith, 337 Ill. App. 3d 1054, 1058 (2003).

¶ 9 Section 7-601(a) of the Illinois Safety and Family Financial Responsibility Law provides that "[n]o person shall operate, register or maintain registration of, and no owner shall permit another person to operate, register or maintain registration of, a motor vehicle designed to be used on a public highway unless the motor vehicle is covered by a liability insurance policy." 625 ILCS 5/7-601(a) (West 2006). The insurance mandated by section 7-601(a) must meet certain requirements, including, pursuant to section 7-317(b)(2) of the Safety and Family Financial Responsibility Law, that a motor vehicle owner's "liability insurance" policy "[s]hall insure the person named therein and any other person using or responsible for the use of such motor vehicle or vehicles with the express or implied permission of the insured." (Emphasis added.) 625 ILCS 5/7-317(b)(2) (West 2006). In other words, the statute mandates that a liability insurance policy insure the named insured and permissive users. The principal purpose of these mandatory liability insurance requirements is "to protect the public by securing payment of their damages." Progressive Universal Insurance Co. of Illinois v. Liberty Mutual Fire Insurance Co., 215 Ill. 2d 121, 129 (2005). A private limiting agreement may not rewrite a statute that exists for the protection of the public; if the insurance provision conflicts with the law, it will be deemed void and the statute will continue to control. Id.; see also Founder's Insurance, 237 Ill. 2d at 442 (an insurance policy provision that conflicts with section 7-317(b)(2) violates public policy and will be deemed void).

¶ 10 However, "[j]ust as public policy demands adherence to statutory requirements, it is in the public's interest that persons not be unnecessarily restricted in their freedom to make their own contracts." Progressive, 215 Ill. 2d at 129. Therefore, we exercise "sparingly" the power to declare a private contract void as against public policy. Id. We will not invalidate an agreement on public policy grounds unless it is "clearly contrary" to what our statutes or court decisions have declared to be public policy, or unless it is "manifestly injurious to the public welfare.Whether an agreement is contrary to public policy depends on the particular facts and circumstances of the case." Id. at 130. For the following reasons, and mindful that our power to declare a private contract void as against public policy should be used only sparingly, we conclude that the blanket exclusion here, precluding all liability coverage for Reyes, the only named insured, is "clearly contrary" to section 7-317(b)(2) and, thus, public policy.

¶ 11 Again, section 7-317(b)(2) mandates that an owner's "liability insurance" policy "[s]hall insure the person named therein." 625 ILCS 5/7-317(b)(2) (West 2006).*fn3 In the policy at issue here, Reyes is the only person "named therein," i.e., she is the sole named insured. Plaintiff argues that, consistent with section 7-317(b)(2)'s mandate, Reyes is covered under the policy, for it provides Reyes with uninsured-motorist, bodily-injury, property-damage, and medical-payment coverage in the event that she is injured in an accident in which she is not the driver. However, simply put, none of that equates to liability coverage. The policy exclusion operates to deny coverage when Reyes ...

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