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Marcelino Guzman, Bertha Guzman and v. 7513 West Madison Street

March 29, 2013


Appeal from the Circuit Court of Cook County. No. 09 L 15784 Honorable Moira S. Johnson, Judge Presiding.

The opinion of the court was delivered by: Justice Howse

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

Presiding Justice McBride and Justice Palmer concurred in the judgment and opinion.


¶ 1 In this case we consider a question certified by the trial court concerning the obligation of the Illinois Insurance Guaranty Fund when the Fund assumes the defense of a dramshop case because the defendants' insurer is declared insolvent. We granted leave to appeal in this permissive interlocutory appeal pursuant to Supreme Court Rule 308 (Ill. S. Ct. R. 308 (eff. Feb. 26, 2010)).

¶ 2 The following question was certified by the circuit court: "In a case under the Dram Shop Act where the defendant dram shop is being defended by the Illinois Insurance Guaranty Fund after defendant's dram shop liability insurer was declared insolvent and the plaintiffs have already made insurance recoveries from their underinsured motorist insurer and/or from the alleged intoxicated person's auto liability insurer and/or from their group health insurer, and the jury returns a verdict in excess of the Defendant's maximum liability under the Dram Shop Act, is the reduction for 'other insurance' recoveries set forth in Section 546(a) of the Illinois Insurance Guaranty Fund Act applied against the Defendant's maximum dram shop liability of $58,652.333 to each Plaintiff?"

¶ 3 For the reasons that follow we answer the question in the affirmative.


¶ 5 On June 18, 2009 plaintiff Marcelino Guzman was operating a motor vehicle with a passenger, his wife, Bertha Guzman. They were struck by a vehicle driven by Nikki Klassert. A third plaintiff, Beverly Myers, was a pedestrian who was injured as a result of the collision of the two automobiles. Plaintiffs alleged that at the time of the accident Klassert negligently operated her vehicle, that Klassert was intoxicated and that she had been served alcoholic liquors by Duffy's Tavern, the defendant.

¶ 6 On July 20, 2009, the Guzman plaintiffs filed a negligence action against Ms. Klassert in the circuit court of Cook County seeking to recover for the injuries they allegedly sustained in the collision. This case was subsequently settled by the payment of $40,000, the policy limits of Klassert's automobile liability insurer, Safeway Insurance Co. The settlement payment was divided among the Guzmans and Beverly Myers. Marcelino Guzman received $13,333.34. Bertha Guzman and Myers each received the sum of $13,333.33 from the settlement.

¶ 7 Plaintiffs recovered insurance proceeds from other solvent insurers as a result of the injuries they suffered. Plaintiffs Marcelino Guzman and Bertha Guzman each received $36,666.66 from their own underinsured motorist coverage in addition to the Klassert settlement. Plaintiff Myers received $236,666.67 from her own automobile liability insurer and $87,529.78 from her group health insurer.

¶ 8 On May 5, 2010, plaintiffs filed the instant action against defendant under the Dramshop Act (Act) (235 ILCS 5/6-21 (West 2008)), seeking damages for their injuries. The Dramshop Act provides limited no-fault liability where a plaintiff can demonstrate that a patron was intoxicated as a result of liquor provided by a bar and the plaintiff suffered resulting injuries because of the patron's intoxication. The Dramshop Act provides: "in no event shall the judgment or recovery for injury to the person or property of any person exceed" the maximum recovery allowed under the Act. 235 ILCS 5/6-21 (West 2008). The maximum amount recoverable in a dramshop case may increase or decrease annually depending on a formula provided in the Act which is based on the consumer price index. The parties agree the maximum amount of damages recoverable by the plaintiffs for their injuries in this case under the Dramshop Act is $58,652.33 per plaintiff.

¶ 9 At the time of the accident, defendant was insured under a liquor liability policy issued by Constitutional Casualty Company, which had a $1 million policy limit. On January 21, 2011, Constitutional Casualty Company was declared insolvent and placed into liquidation by the Illinois Department of Insurance. The Illinois Insurance Guaranty Fund (the Fund) has assumed responsibility for the obligations of Constitutional Casualty Company to Illinois claimants and policyholders, subject to the limitations and conditions of the Illinois Insurance Code (hereinafter Guaranty Fund Act)(215 ILCS 5/532 et seq. (West 2008)). Accordingly, attorneys engaged by the Fund assumed the defense of this case on behalf of the defendant.

¶ 10 The attorneys retained by the Fund filed an affirmative defense. As an affirmative defense, defendant alleged that the Dramshop Act set the maximum recovery of each plaintiff in this case at $58,652.33, and, therefore, $58,652.33 is the extent of the obligation of the Fund. Defendant argues that under section 546(a) of the Guaranty Fund Act, the obligation of the Fund and the defendant's liability to each of the plaintiffs is required to be reduced in an amount equal to each plaintiff's recovery from other insurance companies. Therefore, because Marcelino and Bertha Guzman had each received $50,000 from other insurance, the Fund's obligation and defendant's liability to them is reduced in the same amount and the maximum recovery for each of the Guzman plaintiffs would be $8,652.33. Defendant argued Beverly Myers would not be entitled to any recovery because her recovery from other insurance exceeded the $58,652.33 obligation of the Fund under section 546(a).

¶ 11 Section 546(a) provides: "An insured or claimant shall be required first to exhaust all coverage provided by any other insurance policy, regardless of whether or not such other insurance policy was written by a member company, if the claim under such other policy arises from the same facts, injury, or loss that gave rise to the covered claim against the Fund. The Fund's obligation under Section 537.2 shall be reduced by the amount recovered or recoverable, whichever is greater, under such other insurance policy.*** To the extent that the Fund's obligation under Section 537.2 is reduced by application of this Section, the liability of the person insured by the insolvent insurer's policy for the claim shall be reduced in the same amount." 215 ILCS 5/546(a) (West 2008).

ΒΆ 12 Plaintiffs filed a motion to strike defendant's affirmative defense. The plaintiffs did not contest that the funds received from Klassert's liability insurer, their own underinsured policy and the amounts from group health insurance are subject to the reductions required in section 546(a). ...

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