Court of Appeals of Illinois, First District, First Division
STATE FARM FIRE & CASUALTY COMPANY, Plaintiff-Appellant and Counterdefendant-Appellant,
PAUL DUBROVSKY; JEFF DUBROVSKY; and, SETERUS, INC., f/k/a IBM Lender Business Processes, Inc. Services, Defendants, Paul Dubrovsky and Jeff Dubrovsky, Defendants-Appellants; Seterus, Inc., Defendant-Appellee and Counterplaintiff-Appellee.
from the Circuit Court of Cook County 13 CH 4880 The
Honorable Rita Novak and Sanjay Tailor, Judges Presiding.
JUSTICE delivered the judgment of the court, with opinion.
Presiding Justice Pierce and Justice Simon concurred in the
judgment and opinion.
1 Plaintiff State Farm Fire & Casualty Company (State
Farm) filed this action against defendants Seterus, Inc.
(Seterus), Paul Dubrovsky, and Jeff Dubrovsky, seeking a
declaration that it owed no coverage under a homeowner's
insurance policy issued to Jeff Dubrovsky for a certain
property owned by Paul Dubrovsky, subject to a mortgage
executed by Paul Dubrovsky, and currently serviced by Seterus
as the mortgagee. The circuit court granted summary judgment
in favor of Seterus, finding that the policy's standard
mortgage clause created a separate and distinct contract,
under which Seterus was entitled to coverage. The circuit
court also granted summary judgment to Seterus as to the
distribution of the insurance proceeds. For the following
reasons, we affirm.
2 I. BACKGROUND
3 A. The Parties
4 Paul Dubrovsky purchased a residential property at 1826
Park Avenue in North Chicago, Illinois (the Property), and
executed a mortgage on the Property in 2007. Jeff Dubrovsky
is Paul's father and the named insured on the insurance
policy, which was issued by State Farm. Seterus is the
current mortgagee of the mortgage and loan issued to Paul and
secured by the Property.
5 B. The Policy
6 The relevant policy provision states as follows:
"10. Mortgage Clause. The word 'mortgagee'
a. If a mortgagee is named in this policy, any loss payable
under Coverage A shall be paid to the mortgagee and you, as
interests appear. If more than one mortgagee is named, the
order of payment shall be the same as the order of precedence
in the mortgages.
b. If we deny your claim that denial shall not apply to a
valid claim of the mortgagee, if the mortgagee:
(1) notifies us of any change in ownership, occupancy, or
substantial change in the risk of which the mortgagee is
(2) pays on demand any premium due under this policy, if you
have not paid the premium; and
(3) submits a signed, sworn statement of loss within 60 days
after receiving notice from us of your failure to do so.
Policy conditions relating to Appraisal, Suit Against Us and
Payment apply to the mortgagee.
d. If we pay the mortgagee for any loss and deny payment to
(1) we are subrogated to all the rights of the mortgagee
granted under the mortgage on the property; or
(2) at our option, we may pay to the mortgagee the whole
principal on the mortgage plus any accrued interest. In this
event, we shall receive a full assignment and transfer of the
mortgage and all securities held as collateral to the
e. Subrogation shall not impair the right of the mortgagee to
recover the full amount of the mortgagee's claim."
7 C. The Present Action
8 State Farm filed its complaint against the Dubrovskys and
Seterus on February 19, 2013. This case was resolved on
cross-motions for summary judgment. The following facts were
undisputed on summary judgment, except where noted.
9 Paul purchased and executed a mortgage on the Property on
August 21, 2007. Paul had, in the past, obtained an insurance
policy for the Property through Country Mutual Insurance
Company. Country Mutual insured Paul from August 2007 through
September 2009. But, according to State Farm, Paul
"submitted multiple claims with Country Mutual"
during that time period, and Country Mutual ultimately either
"non-renewed or cancelled the policy."
10 On September 9, 2009, Jeff, Paul's father, applied for
a homeowner's insurance policy with State Farm for the
Property. State Farm alleged that, as a part of the
application, Jeff provided the Property address as his own.
Jeff admitted this in his answer, but the application itself
does not appear in the record. That same ...