STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Plaintiff-Appellant,
SHEENA L. EASTERLING and JANET K. WIGGINS, Defendants-Appellees
Appeal from the Circuit Court of Cook County, Illinois. No. 12 MI 017464. Honorable James Snyder, Judge Presiding.
In an action arising from an automobile accident in which plaintiff's insured suffered physical injuries and damage to his vehicle due to defendant's negligence, and plaintiff insurer and its insured signed a release for a check issued in the settlement of the insured's personal injury action against defendant tortfeasors that did not specifically include an amount designated to cover plaintiff insurer's subrogation interest in the damage to its insured's vehicle, that release did not bar plaintiff insurer from bringing a subrogation action against the tortfeasors for the property damage incurred by plaintiff's insured, especially when defendants were aware of plaintiff's subrogation claims before they filed their personal injury action.
For Appellant: Frank Stevens, Taylor Miller LLC, Chicago, IL.
For Appellees: Keely Hillison, Parrillo, Weiss & O'Halloran, Chicago, IL.
JUSTICE TAYLOR delivered the judgment of the court, with opinion. Presiding Justice Fitzgerald Smith and Justice Epstein concurred in the judgment and opinion.
[¶1] Following an automobile accident in which Frank R. Krupa was injured by a car driven by defendant Sheena Easterling and owned by her mother, defendant Janet K. Easterling-Wiggins, plaintiff State Farm Mutual Automobile Insurance Company (State Farm) paid Krupa's medical expenses and property damage and then sought reimbursement through subrogation rights from defendants' insurer, Safeway Insurance Company (Safeway). Prior to this suit, Krupa had filed a personal injury suit against Sheena Easterling, the parties settled for $20,000, and Krupa signed a general release. State Farm endorsed the settlement check resulting from that suit. State Farm's present subrogation suit against defendants was dismissed because of the prior settlement between Krupa and Easterling. This appeal followed. On appeal, defendants argue that, by signing the settlement check, State Farm gave up all its subrogation rights. State Farm argues that the settlement check only covered damages for bodily injury; therefore, it still has subrogation rights for property damage.
[¶3] On February 13, 2009, a car owned and driven by Frank Krupa was struck by a car driven by Sheena Easterling and owned by her mother, Janet K. Easterling-Wiggins. The collision caused injury
to Krupa and damage to Krupa's car. Plaintiff insured Krupa's car and paid for the property damage minus the deductible.
[¶4] On February 26, 2009, plaintiff sent Safeway a letter in which it stated: " We have been informed that you are the insurance carrier for Janet Easterling-Wiggins. Our investigation of this accident establishes that your insured, Janet Easterling-Wiggins, was responsible for this accident. Please accept this letter as notice of our subrogation rights. Should we make payments under our policy, we will be looking to you for reimbursement."
[¶5] On April 24, 2009, Safeway sent a letter to plaintiff stating: " This will acknowledge receipt of your subrogation claims. Our investigation is complete, we can settle this claim for $7,147.92." The letter further indicated that all offers were pending management approval. It further stated, " Please be advised that we require a property damage release before issuing payment***."
[¶6] On August 11, 2009, Krupa filed a lawsuit (the Krupa suit) against Sheena Easterling for personal injuries, medical expenses, and lost wages. In paragraph 8, he alleged that he " sustained property damage and had to expend monies for alternative means of transportation." Janet K. Easterling-Wiggins was not a defendant in this suit.
[¶7] On October 19, 2009, plaintiff filed a subrogation action against defendants to recover its payments. This lawsuit was the predecessor to the instant lawsuit. We shall refer to this suit as " State Farm I." Plaintiff alleged that it had paid for part or all of the personal injuries, medical expenses, and property damage incurred by Krupa as a result of the February 13, 2009 traffic accident pursuant to the Illinois motor vehicle liability statute, which states:
" (b) Owner's policy. -- Such owner's policy of liability insurance:
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3. Shall insure every named insured and any other person using or responsible for the use of any motor vehicle owned by the named insured and used by such other person with the express or implied permission of the named insured on account of the maintenance, use or operation of any motor vehicle owned by the named insured, within the continental limits of the United States or the Dominion of Canada against loss from liability imposed by law arising from such maintenance, use or operation, to the extent and aggregate amount, exclusive of interest and cost, with respect to each motor vehicle, of $20,000 for bodily injury to or death of one person as a result of any one accident and, subject to such limit as to one person, the amount of $40,000 for bodily injury to or death of all persons as a result of any one accident and the amount of $15,000 for damage to property of others as a result of any one accident." 625 ILCS 5/7-317 (West 2008).
[¶8] Plaintiff also alleged that it was assigned all claims and demands against defendants for such loss and expenses, under an insurance policy and by virtue of common law rights of subrogation due to plaintiff's payment of insured's expenses. Plaintiff also claimed it was subrogated to the amount of the insured's deductible pursuant to section 143b of the Illinois Insurance Code, which states in pertinent part:
" § 143b. Any insurance carrier whose payment to its insured is reduced by a deductible amount under a policy providing collision coverage is subrogated to its insured's entire collision loss claim including the deductible amount unless the deductible amount has been
otherwise recovered by the insured, but if the deductible amount has been otherwise recovered by the insured it shall not be included in the subrogated loss claim and shall be excluded from the amount of loss pleaded. If the deductible amount is included in the subrogated loss claim the insurance carrier shall pay the full pro rata deductible share to its insured out of the net recovery on the subrogated claim. Administrative expenses of the insurance carrier cannot be deducted from the gross recovery, and only incurred expenses of the carrier, such as attorney's fees, collection fees and adjuster's fees, may be deducted therefrom to determine the net recovery. When the insurance carrier is recovering directly from a third party a claim by means of installments, the insured shall receive his full pro rata deductible share as soon as such amount is collected and before any part of such recovery is applied to any other use." 215 ILCS 5/143b (West 2008).
[¶9] Plaintiff also alleged that it had paid for the damages, losses and expenses of its insured (Krupa), that the insured incurred a deductible and that plaintiff was now the subrogee for the amounts paid by plaintiff. State Farm then asked for an award in the amount of $8,073.30.
[¶10] Subsequently, a settlement was reached in the Krupa suit. On March 24, 2011, that lawsuit was dismissed with prejudice pursuant to settlement, with the court expressly retaining jurisdiction to adjudicate liens and stating that the case had been settled for the policy limit of $20,000. On March 31, 2011, Krupa executed a general release for Sheena Easterling and Safeway. The release did not mention plaintiff or its subrogation ...