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Pekin Insurance Co. v. Campbell

Court of Appeals of Illinois, Fourth District

July 7, 2015

PEKIN INSURANCE COMPANY, Plaintiff-Appellee,
v.
TYREE CAMPBELL, d/b/a CAMPBELL CONSTRUCTION & IMPROVEMENT, Defendant-Appellant.

Appeal from Circuit Court of McLean County No. 12MR182 Honorable Rebecca Simmons Foley, Judge Presiding.

PRESIDING JUSTICE POPE delivered the judgment of the court, with opinion. Justices Knecht and Turner concurred in the judgment and opinion.

OPINION

POPE PRESIDING JUSTICE

¶ 1 Plaintiff, Pekin Insurance Company (Pekin), filed a complaint to rescind a workers' compensation policy it issued to defendant, Tyree Campbell, d/b/a Campbell Construction & Improvement (Campbell), citing misrepresentations Campbell made regarding the number of individuals he employed. Despite being served with the complaint, Campbell failed to respond or appear at the subsequent hearing. In August 2012, the trial court entered a default judgment against him.

¶ 2 In April 2014, Campbell filed a petition to vacate the default judgment. According to Campbell's argument, the default judgment was void because the trial court lacked subject matter jurisdiction to address Pekin's complaint. Specifically, Campbell contended the complaint asked the court to make factual determinations exclusively reserved for the Illinois Workers' Compensation Commission (Commission).

¶ 3 Thereafter, Pekin filed a motion to dismiss Campbell's petition, arguing the default judgment was not void because Pekin's complaint involved the rescission of an insurance policy, which was well within the trial court's subject matter jurisdiction. The court granted Pekin's motion. Campbell then filed a motion to reconsider, which the court denied. Campbell appeals that denial and we affirm.

¶ 4 I. BACKGROUND

¶ 5 On May 2, 2012, Pekin filed a complaint against Campbell seeking to rescind a workers' compensation insurance policy it had issued him. According to the complaint, Pekin and Campbell had a history of doing business together and had renewed Campbell's policy in the past. After each prior policy expired, Pekin conducted an audit to calculate the final premium amount. Pekin explained the audit is necessary because Campbell pays an estimated premium over the first nine months of the policy period. The final premium is based on, inter alia, the insured's representation of the number of employees employed during the previous policy period.

¶ 6 To its complaint, Campbell attached a certified copy of the workers' compensation policy as well as copies of its audit reports. According to Pekin, its premium is based on the risk assessed from the audits. Campbell expressly indicated he had no employees during each previous audit period. Pekin alleged although Campbell employed an individual named Joshua Poor during the audit period, Campbell still claimed he had no employees. According to Pekin, "Campbell's representations that he had 'no employees' during both the 2010 and 2011 audits were false and known by him to be false at the time he made the representations." As a result, Campbell misrepresented the risk presented to Pekin, which affected whether Pekin would have extended coverage as well as the premium amount charged for accepting that risk. Pekin alleged had it known of Poor's employment, it would not have issued the policy as written.

¶ 7 On May 12, 2012, the McLean County sheriff served Campbell with a summons and copy of Pekin's complaint. Campbell failed to file an answer or other responsive pleading.

¶ 8 On July 26, 2012, Pekin filed a motion for default judgment against Campbell pursuant to section 2-1301(d) of the Code of Civil Procedure (Procedure Code), which authorizes the trial court to enter a default judgment "for want of an appearance, or for failure to plead." 735 ILCS 5/2-1301(d) (West 2012). Notice of the motion and subsequent hearing was provided to Campbell by certified mail. Campbell did not respond to the motion.

¶ 9 On August 27, 2012, the trial court held a hearing on Pekin's motion for default judgment. Campbell failed to appear at the hearing. The court found Campbell had been served but failed to answer or appear. The court entered a default judgment against Campbell and found Pekin was entitled to rescind the policy.

¶ 10 On April 21, 2014, some twenty months later, Campbell filed a petition for relief from judgment pursuant to section 2-1401 of the Procedure Code (735 ILCS 5/2-1401 (West 2012)). In his petition, Campbell acknowledged service of Pekin's pleadings but argued the trial court's default judgment was void for lack of subject matter jurisdiction. Campbell contended Pekin's complaint improperly asked the trial court to determine whether Poor was an employee. Campbell characterized Poor as an independent contractor. According to Campbell, the question of Poor's employment status could not be resolved by the court because the Commission had "exclusive jurisdiction for the factual determination of employment relationships." Campbell requested the court declare its prior order void and allow him to plead to the original complaint. (According to Campbell's petition, he received a settlement demand letter requesting $72, 000 to settle a workers' compensation suit filed against him by Poor. The record does not reflect when Poor's claim was filed.)

¶ 11 On May 29, 2014, Pekin filed a motion to dismiss Campbell's petition pursuant to section 2-615 of the Procedure Code (735 ILCS 5/2-615 (West 2012)). Pekin argued, inter alia, Campbell's voidness argument was without merit. According to Pekin, the fact the complaint involved a workers' compensation policy did not mean the trial court's resolution of Pekin's complaint for rescission was beyond the court's jurisdiction. Pekin contended the trial court has jurisdiction over all justiciable matters, ...


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