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RVP, LLC v. Advantage Insurance Services, Inc.

Court of Appeals of Illinois, Third District

June 14, 2017

RVP, LLC, and RIVER VALLEY RECYCLING, LLC, Plaintiffs-Appellants,
v.
ADVANTAGE INSURANCE SERVICES, INC., COMMERCIAL INSURANCE GROUP, INC., and TOM ROULE, Defendants-Appellees.

         Appeal from the Circuit Court of the 21st Judicial Circuit, Kankakee County, Illinois. Circuit No. 2013-L-000113 Honorable Adrienne W. Albrecht, Judge, presiding.

          JUSTICE CARTER delivered the judgment of the court, with opinion. Justices Lytton and O'Brien concurred in the judgment and opinion.

          OPINION

          CARTER, JUSTICE

         ¶ 1 Plaintiffs filed a complaint alleging negligence and breach of contract counts against their insurance broker agencies, Advantage Insurance Services, Inc. (Advantage) and Commercial Insurance Group, Inc. (CIG), and their insurance agent, Tom Roule. In the complaint, plaintiffs alleged defendants were negligent and in breach of contract for failing to procure sufficient insurance coverage, resulting in plaintiffs being unable to recover insurance proceeds for property that was destroyed in a fire. The trial court granted defendants' motion for summary judgment because the plaintiffs' complaint was filed beyond the applicable two-year statute of limitations. Plaintiffs appealed, arguing that (1) the trial court erred in finding, as a matter of law, that plaintiffs knew or should have known the insufficient coverage limits upon their receipt of the insurance policies; (2) the trial court erred by failing to apply the established rule in Perelman v. Fisher, 298 Ill.App.3d 1007 (1998), which provided that where an insured brings a claim against its insurance broker or insurance agent, a court cannot presume the insured knew or should have known of the contents of the insurance policy merely because the insured received that policy; and (3) the trial court erred in finding, as a matter of law, that plaintiffs' claim that defendants' failed to procure sufficient coverage was barred by the statute of limitations. We affirm the trial court's grant of summary judgment in favor of defendants.

         ¶ 2 FACTS

         ¶ 3 Plaintiff, RVP, owned real property at 1244 Grinnell Road and 1246 Grinnell Road, in Kankakee, Illinois. In 2007, plaintiff, River Valley Recycling, began operating a recycling facility out of a portion of RVP's building at 1244 Grinnell Road. Mark Fill was a member of RVP and the Chief Financial Officer (CFO) of River Valley Recycling. Fill was responsible for the procurement and for the management of insurance issues for plaintiffs.

         ¶ 4 Defendants, Advantage and CIG, were the insurance broker agencies that procured insurance on behalf of plaintiffs. Defendant, Tom Roule, was an insurance agent employed by Advantage and, after September 7, 2009, by CIG. In 2007 or early 2008, Fill began to use Roule to provide insurance broker services for plaintiffs.

         ¶ 5 A. Travelers Policy

         ¶ 6 On March 1, 2008, Roule procured a policy for RVP from Travelers Casualty Insurance Company (Travelers policy) for "building[s] 1 and 2, " which were the buildings located at 1244 and 1246 Grinnell Road, with coverage limits of $3, 000, 000 and $600, 000, respectively. On April 21, 2008, a "Change Endorsement" was issued, revising the limits to $1, 500, 000 for the 1244 building and $1, 500, 000 for the 1246 building, with blanket limits so that $3, 000, 000 of coverage could have applied to either or both of the buildings. Fill could not recall the reason for change in coverage and had not initiated the process for the change but would have been the person who authorized the change. On April 1, 2009, the policy was renewed with the limits increased to $1, 545, 000 for each building, with blanket coverage also provided. The increase in coverage was due to Travelers' standard policy of a three percent increase each following year. On January 18, 2010, Travelers issued a notice of nonrenewal, indicating that the policy would not be renewed on its expiration date of April 1, 2010.

         ¶ 7 B. Universal Policy

         ¶ 8 In July of 2008, River Valley Recycling was issued a commercial insurance policy through Universal Underwriters Insurance Company (Universal policy) for $1, 300, 000 of blanket replacement cost coverage for its equipment and $1, 000, 000 of coverage for its stock and inventory. The Universal policy was renewed some time prior to July 1, 2009. On July 1, 2009, River Valley Recycling was given notice that the Universal policy was being canceled effective August 1, 2009.

         ¶ 9 C. Erie Policies

         ¶ 10 When the Universal policy was canceled, Fill faxed Roule the canceled policy and asked Roule to find the same or similar coverage to what plaintiffs had prior to the cancellation. When Travelers had canceled plaintiffs' policy, Fill instructed Roule to find the same or similar coverage as plaintiffs had under the canceled Travelers policy. Roule had a copy of the Travelers policy so he knew all the information.

         ¶ 11 In applying for new insurance coverage for business personal property, on July 29, 2009, Fill executed a five-page Erie insurance application for $75, 000 of coverage for plaintiffs' business personal property. Roule did not send Fill the entire application. Fill executed his signature on the last page of the application and returned it to Roule. Fill denied seeing the entire five-page application. It was Fill's custom to certify insurance applications without seeing all the pages. Fill did not review the application to determine whether ...


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