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Illinois Insurance Guaranty Fund v. Liberty Mutual Insurance Co.

Court of Appeals of Illinois, First District, Second Division

November 12, 2013

ILLINOIS INSURANCE GUARANTY FUND, Plaintiff-Appellant,
v.
LIBERTY MUTUAL INSURANCE COMPANY, Defendant, and ZURICH AMERICAN INSURANCE COMPANY, and INTERLAKE MATERIAL HANDLING, Defendants-Appellees.

Appeal from the Circuit Court of Cook County. No. 11 L 6510 Honorable Michael B. Hyman, Judge Presiding.

PRESIDING JUSTICE QUINN delivered the judgment of the court, with opinion. Justices Harris and Pierce concurred in the judgment and opinion.

OPINION

PRESIDING JUSTICE QUINN

¶ 1 I. INTRODUCTION

¶ 2 The circuit court correctly ruled in favor of the borrowing employer's insurance company on its motion to dismiss for failure to state a claim in an action brought by the Illinois Insurance Guaranty Fund (IIGF) seeking reimbursement from the borrowing insurance company for workers' compensation benefits IIGF paid to an injured worker after the insurance company for the lending employer that was obligated to make payments was liquidated. The additional defense of the expiration of the statute of limitations as well as other defenses raised by the borrowing employer's insurance company were also valid bases for dismissal.

¶ 3 II. BACKGROUND

¶ 4 Plaintiff, IIGF, was statutorily created in 1971 to provide protection for certain claims of policyholders under certain insurance policies issued by IIGF member companies that become insolvent. 215 ILCS 5/532 et seq. (West 2010). Skokie Castings, Inc. v. Illinois Insurance Guarantee Fund, 2013 IL 113873, ¶ 1. This action concerns IIGF's efforts to attempt to be reimbursed for workers' compensation payments from a company that borrowed an employee after the insurance company for the employee's lending employer became insolvent.

¶ 5 IIGF's second amended complaint alleges John Earley (Earley) was hired by TGI Group on December 2, 2000. It further alleges that on December 19, 2000, Earley was performing work as a borrowed employee for Interlake Material Handling (Interlake) pursuant to a written contract between TGI Group and Interlake, although IIGF did not have any contract in its possession between TGI Group and Interlake. On that day, Earley was involved in a workplace accident which resulted in a workers' compensation claim. Earley's employer, TGI Group, had a workers' compensation policy issued by Legion Insurance Company (Legion). Legion made certain workers' compensation payments to Earley on behalf of Earley's employer, TGI Group, until Legion's date of liquidation on July 28, 2003. IIGF stepped in and began paying Earley his workers' compensation benefits and continues to pay Earley to the present time.

¶ 6 On July 17, 2008, almost five years after it took over Earley's payments, IIGF filed its original complaint, which was amended on February 9, 2009. Almost three years after that, on January 19, 2012, IIGF filed a second amended complaint, which is the subject of this appeal. No allegations were made against the named defendant, Liberty Mutual Insurance Company, in the second amended complaint although IIGF named it in the caption. The second amended complaint sought reimbursement from defendants Zurich American Insurance Company (Zurich) and Interlake under a workers' compensation policy Zurich issued to Interlake, Earley's alleged borrowing employer on the date of the accident. Specifically, IIGF sought reimbursement for all workers' compensation payments IIGF had made to Earley, reimbursement for IIGF's defense in Earley's workers' compensation claim, and a judgment that Zurich is responsible for all workers' compensation benefits payable to Earley in connection with the injuries Earley sustained on December 19, 2000.

¶ 7 IIGF further alleged in the second amended complaint that both Earley's presumed lending employer, TGI Group, and his borrowing employer, Interlake, are jointly and severally liable for Earley's workers' compensation benefits. It further alleged that the Zurich policy issued to Interlake is "other insurance" as that term is defined under the Illinois Insurance Code (215 ILCS 5/546(a) (West 2010)) and is, therefore, primary coverage that must be exhausted before IIGF becomes responsible to Earley for any payments.

¶ 8 Zurich filed a combined motion to dismiss under sections 2-615 and 2-619 of the Code of Civil Procedure. 735 ILCS 5/2-615, 2-619 (West 2012). Zurich's motion to dismiss pursuant to section 2-615 asserted that IIGF's second amended complaint was replete with conclusory statements rather than allegations of fact. Specifically, Zurich cites to (1) IIGF's failure to adequately allege the identity of Earley's employer, (2) IIGF's failure to adequately allege a borrowing employer relationship, (3) IIGF's failure to cite any statutory basis for the relief it seeks, and (4) IIGF's failure to even mention the word "subrogation" or any subrogation rights it might have or its basis to maintain such a claim. The basis for Zurich's section 2-619 motion to dismiss was that IIGF's second amended complaint was untimely as against Zurich because Zurich was not added as a defendant until the filing of IIGF's first amended complaint of February 9, 2009, more than six years after any claim accrued.

¶ 9 On June 1, 2012, the circuit court ruled that IIGF did not plead a subrogation claim in its second amended complaint. The circuit court further noted that IIGF's brief in opposition to dismissal made clear that IIGF's request for reimbursement is a claim for subrogation and the second amended complaint failed to plead facts to support the elements of such a claim. The court further noted that IIGF did not argue in its response to Zurich's motion to dismiss that it could assert facts to support a subrogation claim if it was given leave to amend its complaint yet a third time. Therefore, it dismissed the second amended complaint with prejudice. The circuit court ruled that other arguments made by Zurich in its motion to dismiss were moot because the second amended complaint was dismissed for failure to state a claim. On July 2, 2012, IIGF filed a motion for reconsideration.

¶ 10 On October 11, 2012, the circuit court ruled on IIGF's timely filed and fully briefed motion for reconsideration. It stated that IIGF violated the purpose of a motion for reconsideration, which is to apprise the court of newly discovered evidence or a change in the law or errors in the court's earlier application of the law. Because IIGF's motion for reconsideration accomplished none of these purposes, the circuit court denied IIGF's motion.

ΒΆ 11 IIGF filed a timely notice of appeal from the circuit court's adverse decision on November 9, 2012. Ill. ...


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