Court of Appeals of Illinois, First District, Third Division
AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Plaintiff-Counterdefendant-Appellee,
WALTER KROP, individually and as father and next friend of T.K., a minor; LISA KROP and MARY ANDRELOAS, as next best friend of A. A., a minor; Defendants-Counterplaintiffs-Third-Party Defendants-Appellants, Andy Vargas, Third-Party Defendant-Appellee.
from the Circuit Court of Cook County No. 14 CH 17305
Honorable Neil Cohen, Judge Presiding.
JUSTICE COBBS delivered the judgment of the court, with
opinion, Presiding Justice Fitzgerald Smith and Justice Lavin
concurred in the judgment and opinion.
1 Plaintiff American Family Mutual Insurance Company
(American Family) brought a complaint for declaratory
judgment against Walter Krop and Lisa Krop (collectively, the
Krops) seeking a declaration that the Krops were not entitled
to coverage or protection under its home insurance policy
procured in 2012. In response, the Krops brought a
counterclaim against American Family and a third-party
complaint against American Family agent Andy Vargas. Both
American Family and Vargas moved to dismiss the counterclaim
and third-party complaint pursuant to sections 2-615 and
2-619 of the Illinois Code of Civil Procedure (the Code). 735
ILCS 5/2-615, 2-619 (West 2014). The trial court granted
their motions pursuant to section 2-619 and made no ruling as
to section 2-615. For the reasons that follow, we reverse and
2 I. BACKGROUND
3 This appeal arises from the dismissal of defendants'
counterclaim and third-party complaint. Before considering
the issues raised on appeal, we first set out the relevant
facts as alleged in the counterclaim and third-party
4 In March 2012, Walter and Lisa Krop met with Vargas, an
American Family sales agent, regarding their homeowner's
insurance. At that time, the Krops were insured through
Travelers Insurance Company. The Travelers policy provided
coverage for certain intentional acts, bodily injury,
property damage, and personal injury. Under the Travelers
policy, personal injury included libel, slander, defamation
of character, and invasion of privacy. The Krops expressed to
Vargas that they wanted an insurance policy with equivalent
coverage to the Travelers policy. The Krops alleged Vargas
stated that American Family could provide equivalent coverage
at a lower or comparable rate.
5 American Family issued its homeowner's policy to the
Krops on March 21, 2012. The American Family policy includes
coverage for bodily injury and property damage. The policy
does not provide coverage for personal injury, injury
resulting from intentional acts, or abuse. After receiving
the policy in 2012, the Krops did not complain about the
limits of coverage and subsequently renewed the policy in
2013, 2014, and again in 2015.
6 On May 14, 2014, the Krops' son, T.K., was sued by Mary
Andreloas, as next best friend of A.A., a minor, in the
circuit court of Cook County. The Andreloas complaint sought
damages for defamation, invasion of privacy, and intentional
infliction of emotional distress as the result of alleged
harassment and bullying by minor defendants including T.K.
The Krops made a claim for coverage under the American Family
policy. Their request was denied on August 20, 2014.
7 In the six-page denial letter sent to the Krops, American
Family restated the limitations of the Krops' policy,
specifically, citing the policy's definition of
"bodily harm, " which did not include
"emotional or mental distress, mental anguish, mental
injury, or any similar injury unless it arises out of actual
bodily harm to the person" and the exclusion of coverage
for damages or injury resulting from abuse or intentional
conduct. American Family also stated that the facts that gave
rise to the complaint occurred in 2011, thus predating the
8 On October 30, 2014, American Family filed a complaint
seeking a declaratory judgment regarding coverage for the
Krops under the homeowner's insurance policy.
Specifically, American Family sought a declaration that the
allegations in the Andreloas complaint fell within the
exclusions of the Krops' insurance policy, thus requiring
no coverage or protection.
9 The Krops filed a counterclaim against American Family and
a third-party complaint against Vargas on September 22, 2015.
The Krops alleged that Vargas, as an agent of American
Family, negligently failed to procure the level of insurance
coverage they requested. Subsequently, both American Family
and Vargas filed motions to dismiss alleging that the
Krops' claims were filed after the two-year statute of
limitations for actions against insurers and thus barred. On
February 4, 2016, the trial court granted American
Family's and Vargas's motions, finding that the
Krops' counterclaim and third-party complaint were filed
outside of the two-year statute of limitations.
10 II. ANALYSIS
11 On appeal, the Krops argue that both their counterclaim
and third-party complaint are timely because the discovery
rule tolled the statute of limitations. Specifically, the
Krops argue the statute of limitations did not start to run
until they were denied coverage in August 2014. In its
response, American Family asserts that the Krops' claims
were untimely because the statute of limitations began to run
once the Krops received the policy in 2012. American Family
further argues that the discovery rule is inapplicable to the
Krops' claims because they had a duty to read their
policy. Vargas filed a separate response ...