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Zagorski v. Allstate Insurance Co.

Court of Appeals of Illinois, Fifth District

May 16, 2016

ALLSTATE INSURANCE COMPANY, Defendant-Appellant Robert L. Brady, Contemnor-Appellant

          Appeal from the Circuit Court of St. Clair County. No. 10-L-148. Honorable Lloyd A. Cueto and Andrew J. Gleeson, Judges, presiding.

         For Appellants: Robert L. Brady, Brown & James, P.C., St. Louis, MO.

         For Appellees: John H. Leskera, Leskera Law Firm, Collinsville, IL.

         Justices Welch and Goldenhersh concurred in the judgment and opinion.


         CATES, JUSTICE.

          [¶1] The plaintiffs, Valentine Zagorski and Christina Zagorski, filed an action in the circuit court of St. Clair County, against the defendant, Allstate Insurance Company (Allstate), alleging a vexatious breach of contract and common law fraud in the handling of their homeowners' insurance claim. At the request of Allstate, and its attorney, Robert Brady, the circuit court held Brady in civil contempt for refusing to comply with a discovery order. The court also imposed a fine of $25 per day, which was stayed pending appeal. Allstate and Brady appeal the contempt order and the underlying discovery order. They contend that the circuit court erred in requiring them to answer interrogatories which seek information that is irrelevant to the plaintiffs' action or protected by a statutory privilege. For reasons that follow, we vacate the contempt order and monetary sanction, we affirm in part and reverse in part the underlying discovery order, and we remand this case with directions.


          [¶3] On August 21, 2009, the plaintiffs purchased a homeowners' insurance policy from Allstate to cover their home in Fairview Heights, Illinois. Five days later, the plaintiffs' home was damaged by a fire. The plaintiffs filed a claim with Allstate, and their claim was assigned to Allstate's Special Investigation Unit.

          [¶4] On September 6, 2009, Theresa Robinson, an adjuster with the Special Investigation Unit, contacted the plaintiffs and obtained a recorded statement from each of them. On that same date, Robinson sent a letter to the plaintiffs to inform them of their responsibilities during the claims process. Enclosed with the letter was a form entitled, " Sworn Statement in Proof of Loss." Robinson instructed the plaintiffs to complete the form and return it to Allstate, signed and notarized, within 60 days. Shortly thereafter, Allstate requested sworn statements from both plaintiffs. On September 12, 2009, Allstate's attorney, Robert Brady, separately questioned each plaintiff, under oath, for more than an hour. Then, in a letter dated January 5, 2010, Robinson notified the plaintiffs that the investigation had concluded, and that Allstate had denied the claim based upon its determination that the plaintiffs had intentionally set the fire.

          [¶5] On March 29, 2010, the plaintiffs filed a complaint against Allstate in the circuit court of St. Clair County. The third amended complaint is at issue. In count I of the third amended complaint, the plaintiffs allege that Allstate breached its duties under the homeowners' insurance contract in that it vexatiously and unreasonably denied the plaintiffs' claim for insurance benefits following their fire loss. They seek contractual damages, as well as statutory penalties and attorney fees under section 155 of the Illinois Insurance Code (Code) (215 ILCS 5/155 (West 2010)). In count II, the plaintiffs assert a claim for common law fraud, alleging that Allstate's agent, Theresa Robinson, knowingly made false statements during the claims-handling process for the purpose of inducing the plaintiffs to act in reliance on her statements, that the plaintiffs acted in reliance on her statements, and that the plaintiffs were thereby damaged.

          [¶6] On August 27, 2010, the plaintiffs served their initial interrogatories and requests for production on Allstate. The plaintiffs inquired about Allstate's claims practices, including the following interrogatories which are at issue in this appeal:

" 12. During the last five years has any Illinois court assessed attorney's fees, costs, penalties, or fines against Allstate pursuant to 215 ILCS 5/155? If so, state the following:
a. the case name, number and jurisdiction;
b. the amount of the fees, costs, penalties or fines; and
c. whether the fees, costs, penalties or fines were a result of denial of a fire loss claim.
13. During the last five years has Defendant been sued in Illinois by any insured alleging Defendant failed to pay a fire loss claim? If so, state:
a. the case name, number, and jurisdiction;
b. the date the case was filed;
c. the attorneys of record;
d. whether the case was tried or settled; and
e. the amount of any settlement or jury verdict.
14. Did Defendant have a policy manual or other documents for handling fire loss claims in effect at the time of the fire? If so, identify the document.
15. During the last five years have any of Defendant's insureds made any claim with the Illinois Department of Insurance alleging improper claims practices regarding a fire loss claim? If so, please state:
a. the name and address of each claimant;
b. the date each claim was filed; and
c. the disposition of each claim."

          [¶7] On October 6, 2010, Allstate responded with objections to certain questions in the initial set of interrogatories. The stated grounds for objection to interrogatories 12, 13, 14, and 15 are identical, and are as follows:

" Objection. Defendant objects on the grounds that this interrogatory is over-broad, unduly burdensome, harassing, seeks information which is irrelevant and not calculated to lead to the discovery of admissible evidence, and seeks information protected ...

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