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Byer Clinic and Chiropractic, Ltd., Individually and As the Representative of A Class of v. State Farm Fire and Casualty Company

March 12, 2013

BYER CLINIC AND CHIROPRACTIC, LTD., INDIVIDUALLY AND AS THE REPRESENTATIVE OF A CLASS OF
SIMILARLY-SITUATED PERSONS,
PLAINTIFF-APPELLANT,
v.
STATE FARM FIRE AND CASUALTY COMPANY, ENIVA USA, INC., ENIVA INTERNATIONAL, INC., ENIVA IC-DISC, INC., KAPRAUN, P.C., AND DR. MICHAEL KAPRAUN,
DEFENDANTS- APPELLEES.



Appeal from the Circuit Court of Cook County No. 11 CH 7102 The Honorable Stuart Palmer, Judge Presiding.

The opinion of the court was delivered by: Presiding Justice Harris

PRESIDING JUSTICE HARRIS delivered the judgment of the court, with opinion. Justices Quinn and Connors concurred in the judgment and opinion.

OPINION

¶ 1 Plaintiff Byer Clinic & Chiropractic, Ltd. (Byer), appeals the order of the circuit court denying its motion to reconsider the court's dismissal pursuant to section 2-619(a)(9) of the Illinois Code of Civil Procedure (Code) (735 ILCS 5/2-619(a)(9) (West 2008)), of Byer's declaratory judgment action against defendant State Farm Fire & Casualty Company (State Farm). On appeal, Byer contends the trial court erred in denying its motion to reconsider because (1) the trial court should not have based its dismissal on the finding that no justiciable controversy exists as to Dr. Michael Kapraun and Kapraun, P.C., where State Farm first raised the argument in response to Byer's answer to the motion to dismiss; (2) State Farm is judicially estopped from arguing that no case or controversy exists where it acknowledged the existence of a controversy between the parties in another case; and (3) Byer, as a third-party victim, has standing to seek a declaration of rights over an insurer's coverage when the insurer is defending its insured under a reservation of rights. For the following reasons, we conclude the circuit court correctly denied Byer's motion to reconsider and affirm.

¶ 2 JURISDICTION

¶ 3 The trial court denied Byer's motion to reconsider on September 12, 2011. Byer filed a notice of appeal on October 12, 2011. Accordingly, this court has jurisdiction pursuant to Illinois Supreme Court Rules 301 and 303 governing appeals from final judgments entered below. Ill. S. Ct. R. 301 (eff. Feb. 1, 1994); R. 303 (eff. May 30, 2008).

¶ 4 BACKGROUND

¶ 5 Byer filed a class-action complaint against Eniva USA, Inc., Eniva International, Inc., Eniva Ic-Disc, Inc. (collectively Eniva), Kapraun, P.C., Dr. Michael Kapraun (collectively Kapraun), and John Does 1through10, alleging a violation of the Telephone Consumer Protection Act of 1991 (TCPA) (47 U.S.C. § 227 (2006)). On February 24, 2011, Byer filed a complaint for declaratory judgment naming State Farm, Eniva, and Kapraun as defendants. In its declaratory judgment complaint, Byer sought a declaration "concerning the rights and obligations under the commercial general liability policies issued by State Farm to Eniva."

¶ 6 State Farm filed a section 2-619 motion to dismiss the complaint on March 29, 2011. In its motion State Farm alleged that Byer sought a declaration of rights regarding State Farm's duty to defend Eniva, a party State Farm's policies do not insure. State Farm stated that its policies insure Kapraun, not Eniva. Byer filed a response in support of its complaint, and State Farm filed a reply in which it alleged for the first time that no justiciable controversy existed as to Kapraun since State Farm was presently defending him subject to a reservation of rights.

¶ 7 On June 14, 2011, the trial court held a hearing on the motion to dismiss. At the hearing, State Farm argued that the trial court should grant its motion because the complaint alleged a duty to defend Eniva, a party its policies do not insure. Counsel for Byer replied that "all of the Eniva corporate entities have been dismissed from the underlying action at this point. So at this point, we're dealing with a coverage action only involving Michael Kapraun and Kapraun, P.C." Counsel stated that the Eniva defendants were dismissed on June 9, 2011. He offered to replead the complaint "to make it more clear" but believed "that the appropriate parties are here" and a justiciable controversy existed because State Farm was defending Kapraun subject to a reservation of rights. Counsel also argued that State Farm filed a declaratory judgment action against Kapraun in Michigan, Kapraun's place of business, which shows a controversy exists as to Kapraun's insurance coverage. The trial court responded that it had "no idea what you're talking about. There's nothing in the pleadings about that."

¶ 8 State Farm argued that no justiciable controversy exists because Kapraun is "receiving the full policy benefits, subject to a reservation, admittedly." It further argued that it could have filed a declaratory judgment action, but instead chose to defend Kapraun subject to a reservation of rights. State Farm argued that no justiciable controversy exists "unless and until State Farm withdraws that reservation." It also contended that Byer could not cure this defect through an amendment so long as State Farm agreed to defend Kapraun, and it sought dismissal of Byer's complaint with prejudice. The trial court clarified that even if it dismissed Byer's complaint with prejudice, Byer would be free to pursue an indemnity claim if Kapraun is found liable in the underlying class action suit. The trial court granted State Farm's motion to dismiss Byer's declaratory judgment complaint with prejudice, finding no justiciable controversy as to Kapraun "at this time." The court denied State Farm's request for sanctions.

¶ 9 Byer filed a motion to reconsider on July 14, 2011. In its motion, Byer requested that the trial court vacate the June 14, 2011, order dismissing its declaratory judgment complaint and grant Byer leave to amend the complaint and add Kapraun as plaintiff. In support, Byer argued that the trial court should not have considered State Farm's argument that no justiciable controversy exists when the insurer defends subject to a reservation of rights because State Farm raised the issue not in its motion to dismiss, but in its reply to Byer's answer to the motion. Byer also argued that State Farm is judicially estopped from arguing that no controversy exists because it filed a declaratory judgment action against Kapraun in Michigan alleging it has no duty to defend Kapraun. Finally, Byer argued that it has standing to bring the action. The trial court denied the motion without a hearing on September 12, 2011. Byer filed this timely appeal.

¶ 10 ANALYSIS

ΒΆ 11 As an initial matter, we address State Farm's contention that this court lacks jurisdiction to consider this appeal. Byer's complaint for declaratory judgment lists State Farm, Eniva, and Kapraun as defendants. State Farm was the only defendant that filed a motion to dismiss the complaint. At the hearing on the motion, Byer agreed to dismiss Eniva as a party. After the hearing, the trial court granted the motion to dismiss with prejudice, but the order did not contain an express finding pursuant to Illinois Supreme Court Rule 304(a) (eff. Feb. 26, 2010) that "there is no just reason for delaying either enforcement or appeal or both." Without this ...


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