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State Farm Mutual Auto. Ins. Co. v. Progressive Northern Ins. Co.

Court of Appeals of Illinois, First District, Fifth Division

March 27, 2015

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Plaintiff-Appellant,
v.
PROGRESSIVE NORTHERN INSURANCE COMPANY, Defendant-Appellee (State Farm Fire and Casualty Company, Plaintiff; Andrew Toig, Randall M. Toig and Teri E. Zenner, Defendants)

Page 441

Appeal from the Circuit Court of Cook County. No. 2011 CH 31467. The Honorable Thomas R. Allen, Judge, presiding.

FOR APPELLANT: Frank C. Stevens, TAYLOR MILLER LLC, Chicago, Illinois.

FOR APPELLEE: Thomas L. Buck, MAGNANI & BUCK LTD., Chicago, Illinois.

JUSTICE GORDON delivered the judgment of the court, with opinion. Justices McBride and Reyes concurred in the judgment and opinion.

OPINION

GORDON, JUSTICE.

Page 442

[¶1] On this direct appeal, plaintiff State Farm Mutual Automobile Insurance Company (State Farm) appeals the trial court's grant of summary judgment in favor of defendant Progressive Northern Insurance Company (Progressive).

[¶2] Plaintiff State Farm brought a declaratory judgment action seeking a declaration that its underinsured motorist coverage did not cover Andrew Toig (Andrew) for injuries he sustained in an automobile accident while a student at Colorado College. Andrew had sought coverage pursuant to the State Farm auto policies held by his father, Randall Toig, and stepmother, Teri Zenner (collectively, the Toigs), and pursuant to a single Progressive policy held by Andrew's mother, Allison Wines. The principal question before the trial court and now before this court is whether Andrew is a " relative," as defined by the State Farm policies.

[¶3] For the following reasons, we affirm.

[¶4] BACKGROUND

[¶5] I. The Policies

[¶6] Plaintiff State Farm provided three automobile insurance policies to the Toigs: two to the father and one to the stepmother. The question is whether these automobile policies provide underinsured motorist coverage to Andrew. The parties agree that Andrew is covered if he is a " relative," as defined by the State Farm auto policies:

" Relative --means a person related to you or your spouse by blood, marriage or adoption who resides primarily with you. It includes your unmarried and unemancipated child away at school." (Emphases in original.)

State Farm does not challenge coverage under any other provision of its policies.

[¶7] There is no dispute among the parties: that the term " relative" specifically includes a " child away at school," and specifically excludes married and emancipated children, and that Andrew was at school and was not married or emancipated at the time of the accident.

[¶8] State Farm Fire & Casualty Company (State Farm Fire) also provided the Toigs with two personal liability umbrella policies. However, these umbrella policies did not include underinsured motorist coverage, and the trial court ruled that these umbrella policies did not apply. No one has appealed this ruling, so these policies are not at issue on appeal.

[¶9] Defendant Progressive provided an automobile insurance policy to Allison Wines, Andrew's mother. However, Progressive does not dispute coverage on appeal, so that policy is also not before us.

[¶10] II. Undisputed Facts

[¶11] In the case below, both State Farm and Progressive filed motions for summary judgment, thereby acknowledging that

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there were no material issues of fact preventing a grant of summary judgment. Gaudina v. State Farm Mutual Automobile Insurance Co., 2014 IL App. (1st) 131264, ¶ 16, 380 Ill.Dec. 418, 8 N.E.3d 588 ( where both parties file cross-motions for summary judgment, they concede the absence of a genuine issue of material fact and invite the court to decide the question as a matter of law); 735 ILCS 5/2-1005(c) (West 2012) (a party seeking summary judgment must show " that there is no genuine issue as to any material fact" ). Thus, on appeal, neither party argues that there was a material issue of fact which barred the trial court's entry of summary judgment. Both parties agree that the question before us on appeal is purely a question of law and that it involves solely the application of law to undisputed facts.

[¶12] The trial court summarized the undisputed facts as follows:

" Andrew is related to his father by blood and stepmother by marriage. The undisputed facts of this case indicate that Andrew was unmarried, unemancipated, and living in a campus-owned apartment in Colorado at the time of the accident. Andrew considers both his father's and mother's homes to be his residences, and when he returned to Chicago during vacations and holidays he attempted to split his time between the households on a '50-50' basis. He came and went from both households as he pleased; he had keys to both houses and kept possessions at both locations. The facts show that Andrew used his father's address for school billing records as well as for his health care and health insurance." State Farm Mutual Automobile Insurance Co. v. Toig, No. 2011 CH 31467, slip op. at 2 (Cir. Ct. Cook Co. Sept. 30, 2013).

[¶13] Neither party has argued on appeal that the trial court's above recitation of facts was incorrect.

[¶14] III. Procedural History

[¶15] One issue on appeal is whether forfeiture applies to several claims now raised by appellant State Farm. We therefore describe in detail the procedural history.

[¶16] On September 7, 2011, plaintiffs State Farm and State Farm Fire filed a declaratory judgment action in the trial court. The complaint stated, upon information and belief, that defendant Progressive " has or will claim" that the Toigs' State Farm and State Farm Fire policies provide underinsured motor vehicle coverage on a pro rata basis with the coverage provided by Progressive.

[¶17] Count I, which was brought solely by State Farm, alleged that the auto policies did not provide coverage to Andrew for the sole reason that " he did not reside primarily with" the Toigs.

[¶18] Count II, which was brought solely by State Farm Fire, alleged that its personal liability umbrella policy did not provide coverage to Andrew because the policy " did not include motor vehicle coverage." As already stated above, this count is not at issue on this appeal.

[¶19] On November 14, 2011, Progressive filed an answer and also a counterclaim for a declaratory judgment that the three State Farm auto policies[1] and the one Progressive policy shared coverage for the accident " on an equal basis" or " 25 percent each." In its counterclaim, Progressive also alleged that the total amount of coverage allowed Andrew from all policies was $500,000 because that was the highest amount of any one policy, and that the $40,000 paid by the tortfeasor's insurance must be subtracted from the $500,000,

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leaving Andrew with a maximum of $460,000 that he could collect from both State Farm and Progressive.

[¶20] On January 13, 2012, State Farm filed an answer to Progressive's counterclaim. In its answer, it " [a]dmit[ted]" Progressive's allegations that the State Farm auto policies define the word " relative" to mean a person related to the named insured or the named insured's spouse by blood, marriage or adoption who resides primarily with the named insured, and that the " policies also define 'relative' to include the named insured's unmarried and unemancipated child away at school."

[¶21] On September 20, 2012, State Farm and State Farm Fire filed an amended complaint which added allegations relating only to State Farm Fire. The amended complaint added count III which concerned a personal liability umbrella policy issued by State Farm Fire to Andrew's stepmother. The complaint also amended count II to add an allegation that Progressive " has or will claim" that the father's personal umbrella liability policy provides underinsured motorist coverage on a pro rata basis.

[¶22] On November 21, 2012, State Farm and State Farm Fire filed a joint motion for summary judgment. The first claim was that State Farm Fire's personal umbrella liability policies do not provide underinsured motorist coverage. As stated before, this claim is not at issue on appeal.

[¶23] The motion's next three claims concerned State Farm and claimed: (1) that the two separate lines of the policy's definition of " relative" must both apply for someone to be a relative, and that Andrew did not satisfy the first line, which required him to reside " primarily" with the Toigs, since he divided his residence equally between the Toigs and his mother; (2) that Andrew did not reside " primarily" with his parents in Chicago, because he registered to vote in Colorado; and (3) that, even if the State Farm auto policies covered Andrew, the maximum amount of coverage available to him is $500,000, because its policies provide that the total available under all policies shall be the highest amount allowed by any one policy.[2]

[¶24] In its motion, State Farm did not argue: (1) that Andrew failed to satisfy the second line of the " relative" definition; (2) that, if coverage applied, the three State Farm auto polices and the one Progressive policy should not share coverage for the accident on an equal basis or 25 % each, as Progressive had argued in its counterclaim; (3) that Andrew was excluded from coverage from his stepmother's policy because he was a child by marriage rather than a biological child; or (4) that the $40,000 recovered from the tortfeasor's insurer should be subtracted from the limits of each of the applicable policies rather than from the total.

[¶25] On December 21, 2012, Progressive filed its response to State Farm's motion and also its own cross-motion for summary judgment. Progressive's arguments were all directed to State Farm's auto insurance policies.

[¶26] In its cross-motion, Progressive agreed with State Farm that the total amount of coverage allowed Andrew was $500,000 because that was the highest amount of any one policy, but it further argued that the $40,000 paid by the tortfeasor's insurance must be subtracted from the $500,000, leaving Andrew with a

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maximum of $460,000 that he could collect from both State Farm and Progressive.

[¶27] In its cross-motion, Progressive argued, as it had in its counterclaim, that the three State Farm auto and the one Progressive policy provided coverage on an equal basis, or 25 %, with each policy providing coverage limited to $115,000, or 25 % of $460,000.

[¶28] On February 22, 2013, the trial court struck the previously scheduled hearing date of February 28, 2013, and permitted State Farm to file a " Response/Reply to Progressive's Response and Cross Motion." In its reply to this document, Progressive observed that, while State Farm acknowledged in its response that the combined limit was $500,000, State Farm's reply does not mention the setoff for the $40,000 already paid by the tortfeasor's insurance, which reduced the combined limit to $460,000. Progressive stated: " No party has contested this position by motion, response or reply."

[¶29] On May 8, 2013, the trial court set the hearing on State Farm's and Progressive's summary judgment motions for July 31, 2013.

[¶30] On July 31, 2013, at the hearing, the trial court observed that it had " dueling cross motions for summary judgment" before it. The State Farm attorney asked the court if the court wanted to ask questions or if it preferred the attorneys to proceed with their prepared argument, and the court indicated the latter. The State Farm attorney stated first, on behalf of State Farm Fire, " it is not contested in any of the briefs, that those [personal liability umbrella] policies do not provide underinsured motorist coverage."

[¶31] Then, on behalf of State Farm, the attorney argued that the question was " whether or not Andrew Toig resided primarily with Randall Toig and Teri Zenner [Andrew's father and stepmother] on the date of the accident because the policy definition of 'relative' means a relative must reside primarily with the named insured."

[¶32] State Farm also argued that " the most that Andrew Toig could ever recover under all applicable underinsured motorist coverage would be $500,000," which is also the amount of the Progressive policy. As a result, " the real dispute" was not between the Toigs and State Farm, but between State Farm and Progressive. State Farm observed: " This has really become a dispute as to whether State Farm should be sharing pro rata with Progressive on any payment made to Andrew Toig for his underinsured claim." State Farm's " response to that is State Farm doesn't provide coverage."

[¶33] Progressive argued next and observed that " [t]here are four legal issues that have been presented to the Court" and " only one of those legal issues is contested," and that is " whether or not Andrew Toig qualifies as an insured relative under his father's ...


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