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Scottsdale Insurance Co. v. Lakeside Community Committee

Court of Appeals of Illinois, First District, Second Division

November 1, 2016

SCOTTSDALE INSURANCE COMPANY, Plaintiff-Appellee,
v.
LAKESIDE COMMUNITY COMMITTEE, ROBERT F. HARRIS, COOK COUNTY PUBLIC GUARDIAN, as Independent Administrator of the Estate of Angel Hill, Deceased, ANGEL GREEN AND ANTHONY PRATER, Defendants-Appellants. LAKESIDE COMMUNITY COMMITTEE, Counterclaim-Plaintiff,
v.
SCOTTSDALE INSURANCE COMPANY, Counterclaim-Defendant. LAKESIDE COMMUNITY COMMITTEE, Third Party-Plaintiff-Appellant,
v.
W.A. GEORGE INSURANCE AGENCY, Third Party-Defendant-Appellee.

         Appeal from the Circuit Court of Cook County, No. 12 CH 23277 The Honorable Sophia Hall, Judge, presiding.

          JUSTICE HYMAN delivered the judgment of the court, with opinion. Justices Neville and Pierce concurred in the judgment and opinion.

          OPINION

          HYMAN, JUSTICE

         ¶ 1 Tragically, two-year old Angel Hill was killed while in the care of her mother, Angel Green, and her boyfriend, Anthony Prater. At the time of Angel's death, she and her siblings were wards of the court with the Illinois Department of Children and Family Services acting as the children's guardian due to findings of abuse. DCFS retained Lakeside Community Committee to monitor the children's visits to Green's home. During one visit, Green informed a Lakeside caseworker of bruises on Angel's stomach. The caseworker took no action. A few days later, Angel was dead; Green and Prater were charged with her murder.

         ¶ 2 On behalf of Angel's estate, the Cook County Public Guardian sued Lakeside for wrongful death. Lakeside agreed to a consent judgment in the amount of $3.5 million and assigned its claims against its insurer, Scottsdale Insurance Company, and its insurance broker, W.A. George Insurance Agency, to the Public Guardian. Scottsdale denied coverage and filed a declaratory judgment action. The Public Guardian then filed a third party complaint against W.A. George, alleging fraud, negligence, breach of contract, and breach of fiduciary duty in procuring the insurance policy. The trial court dismissed the third party complaint on statute of limitations grounds, finding Lakeside knew or should have known that W.A. George obtained the wrong type of insurance policy when the policy was procured, more than two years before the third party complaint was filed. We disagree and reverse. Lakeside's cause of action accrued when it learned its insurer was denying coverage, not when the policy was procured. Because Lakeside filed its claim less than two years after learning of the denial of coverage, the statute of limitations poses no bar to the action.

         ¶ 3 BACKGROUND

         ¶ 4 Lakeside, a long-established non-profit corporation, contracts with DCFS to provide foster care and child welfare services such as supervising foster families and children who have been made wards of the state, including children victimized by abuse. In early 2009, Lakeside asked W.A. George, an insurance broker, to obtain an appropriate insurance policy to cover its services. Lakeside representatives met with W.A. George agents in February 2009 to provide information about Lakeside's insurance needs and discuss the nature of the business, including its role as a DCFS contractor. Lakeside gave W.A. George a brochure describing Lakeside's programs and services and its affiliation with DCFS. Based on this information, W.A. George applied for and obtained insurance from Scottsdale Insurance Company on Lakeside's behalf. The policy was a commercial general liability policy, effective until March 2010, and then renewed for another year, to March 2011. In at least two places-the supplemental declarations page and the "sexual and/or physical liability coverage form"-the policy erroneously described Lakeside's business as a "halfway house."

         ¶ 5 Angel Hill's Short Life and Tragic Death

         ¶ 6 Angel Hill spent her entire life in DCFS custody and foster care. Her mother, Angel Green, came to the attention of DCFS in October 2006, when her two-month old son presented with multiple physical injuries, including several broken bones and swelling and bruising to the back of the head. The circuit court entered an order finding that Green's two children had been abused and neglected, made them wards of the court, appointed DCFS as their guardian, and placed the two children in foster care with their grandmother. In November 2006, DCFS assigned Lakeside to monitor and provide social services to the children and the family.

         ¶ 7 Immediately after her birth in August 2008, Angel was placed in DCFS custody due to the serious and substantial risk her mother posed. Like her two siblings, Angel's grandmother cared for her. In April 2010, the juvenile court granted Green overnight visits with her children in her home, and by October 2010, the children were spending six days a week with Green. When the juvenile court learned Green was dating Anthony Prater, a convicted murderer, the court ordered Prater not be present during the children's visits and required Lakeside to perform unannounced visits to Green's home to ensure the children's safety and well-being.

         ¶ 8 Between October 6 and 11, 2010, the children stayed at Green's home for an unsupervised visit. On the morning of October 9, Green called a caseworker to check in. Green told the caseworker Angel had a bruise on her stomach and had been crying overnight. The Lakeside caseworker did not go to Green's home to see the bruise, did not instruct Green to take Angel to the hospital, and did not take any action to ensure Angel's safety and welfare. On October 11, Green claims she found Angel dead. An autopsy determined that Angel died from multiple internal injuries caused by blunt force trauma. Green and Prater were charged with murder, as well as other lesser offenses, in connection with Angel's death.

         ¶ 9 The Circuit Court Proceedings

         ¶ 10 On March 22, 2012, the Public Guardian, as independent administrator of Angel Hill's estate, filed a complaint in the circuit court against Lakeside, Green, and Prater for wrongful death. Lakeside settled with the Public Guardian and entered into a consent judgment in the amount of $3.5 million. On April 6, 2012, Lakeside submitted the Public Guardian suit to Scottsdale through W.A. George. Scottsdale denied the claim on May 4, 2012, and filed a declaratory judgment action on June 12, 2012. (While this appeal was pending, the circuit court granted Scottsdale's motion for summary judgment, finding no coverage under the policy.)

         ¶ 11 On August 10, 2012, Lakeside filed its answer, affirmative defenses, and counterclaim to Scottsdale's declaratory judgment action. Lakeside also filed its initial third-party complaint against W.A. George, alleging fraud, negligence, breach of contract, and breach of fiduciary duty. Lakeside contended, in short, that it suffered damages because W.A. George failed to procure the proper type of policy based on the information it provided and thus left Lakeside without insurance coverage for the claim involving Angel's death. W.A. George moved to dismiss alleging, in part, that Lakeside's third-party complaint was barred by the two year statute of limitations for claims against an insurance producer under 13-214.4 of the Illinois Code of Civil Procedure (the Code) (735 ILCS 5/13-214.4 (West 2014). That section states, in part, "[a]ll causes of action *** against an insurance producer *** concerning the sale, placement, procurement, renewal, cancellation of, or failure to procure ...


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