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American Access Casualty Co. v. Novit

Court of Appeals of Illinois, First District, First Division

March 30, 2018

AMERICAN ACCESS CASUALTY COMPANY, Plaintiff-Appellee,
v.
KELLY NOVIT; CIPRIAN TANASE; and EILEEN CONWAY, Defendants (Eileen Conway, Defendant-Appellant).

          Appeal from the Circuit Court of Cook County No. 15 CH 6523 The Honorable Franklin U. Valderrama, Judge Presiding.

          PRESIDING JUSTICE PIERCE delivered the judgment of the court, with opinion. Justices Harris and Mikva concurred in the judgment and opinion.

          OPINION

          PIERCE PRESIDING JUSTICE

         ¶ 1 In this declaratory judgment action, defendant Eileen Conway appeals from the circuit court's judgment finding that plaintiff American Access Casualty Company (American Access) had no duty to defend or indemnify its insured, defendant Kelly Novit, in connection with an underlying personal injury action (the underlying action). In the underlying action, Conway sued to recover damages for injuries she sustained when she was struck by Novit's vehicle, which was driven by defendant Ciprian Tanase. Conway asserted that Tanase was negligent when he struck Conway with Novit's vehicle, and that Novit negligently entrusted her vehicle to Tanase because Novit knew or should have known that Tanase was intoxicated. Novit's automobile insurer, American Access, filed this declaratory judgment action seeking a declaration of rights regarding its duties to defend and indemnify Tanase and Novit in the underlying action. The circuit court granted summary judgment in favor of American Access, finding that it had no duty to defend or indemnify either Tanase or Novit. Conway appeals from the portion of the circuit court's judgment finding that American Access had no duty to defend or indemnify Novit. For the following reasons, we reverse and remand for further proceedings.

         ¶ 2 BACKGROUND

         ¶ 3 The following facts are set forth in Conway's two-count amended complaint in the underlying action. On March 29, 2014, at around noon, Novit and Tanase were together at a forest preserve where Novit observed Tanase "consume an alcoholic beverage." Novit then allowed Tanase to drive her 2012 Dodge Avenger, with her as a passenger, to a 7-Eleven. While at the 7-Eleven, Novit observed Tanase consume "multiple alcoholic beverages." Novit then again allowed Tanase to drive her vehicle, with her as a passenger, to a pizza restaurant. While there, Novit observed Tanase "consume at least one alcoholic beverage." Novit then again allowed Tanase to drive her vehicle, again with her as a passenger, to a gyros restaurant where Novit exited the vehicle and then gave Tanase "express or implied permission" to continue using her vehicle. Novit "knew or should have known that [Tanase] was intoxicated, incompetent, or reckless, " and "knew or should have known that her [vehicle] would likely be used in a manner involving an unreasonable risk of harm to others." After leaving the gyros restaurant alone in Novit's vehicle, Tanase struck Conway at around 7:00 p.m. as she crossed the street, resulting in Conway's injuries. Conway alleged that Tanase's "intoxication, incompetency, or recklessness" was a proximate cause of her injuries.

         ¶ 4 After Conway initiated the underlying action, American Access filed this declaratory judgment action and filed a three-count amended complaint. American Access acknowledged that it issued Novit an auto insurance policy and that she is the named insured under the policy. In count I, American Access asserted that it had no duty to defend or indemnify Tanase because he was not an insured under Novit's policy and was operating the vehicle without Novit's express or implied permission. American Access asserted in count II that it had no duty to defend or indemnify either Novit or Tanase under the "reasonable belief" exclusion to the auto policy, which excluded coverage for "any person operating the vehicle without a reasonable belief that he or she is entitled to do so." American Access contended that Tanase was not the named insured under the policy and that he did not have a valid driver's license at the time of the accident, and therefore he had no reasonable belief that he was entitled to operate Novit's vehicle. Count III asserted that American Access had no duty to defend or indemnify Novit against Conway's negligent entrustment claim because the policy did not provide coverage for bodily injuries caused by the separate tort of negligent entrustment.

         ¶ 5 American Access moved for summary judgment on its "reasonable belief" exclusion claims in count II. The motion was fully briefed, and on July 26, 2016, the circuit court entered a written order granting American Access's motion with respect to Tanase, but denying the motion with respect to Novit. The circuit court examined the policy, which contained an exclusion that provided, "This policy does not apply to and does not provide coverage [for bodily injury liability and property damage liability] for: * * * (q) any person operating an automobile without a reasonable belief that he or she is entitled to do so, however, this exclusion does not apply to operation of the owned automobile by the named insured or relative." The circuit found that American Access had no duty to defend or indemnify Tanase because he could not have had a reasonable belief that he was entitled to operate Novit's vehicle since he did not have a driver's license. The circuit court further found that the reasonable belief exclusion did not apply to Novit because she was not driving the automobile at the time of the accident, and even if she had been, the exclusion would not apply to her because she was the named insured under the policy. The circuit court's written order states "that the [reasonable belief] exclusion does not exclude Novit from coverage under the [p]olicy based on the allegations of the underlying complaint, " and concluded that "based on the allegations of the [u]nderlying complaint, the reasonable belief exclusion does not apply to Novit." We note that the circuit court did not conclude that American Access had a duty to defend Novit based on the inapplicability of the reasonable belief exclusion; the circuit court found that that the reasonable belief exclusion did not apply and therefore was not a basis from which it could conclude that the American Access had no duty to defend under the policy.

         ¶ 6 American Access then filed a motion for partial summary judgment on its claim in count III that the policy did not provide coverage for claims of negligent entrustment, and a motion for reconsideration of the circuit court's summary judgment order on the "reasonable belief" exclusion claim in count II as it pertained to Novit. On March 9, 2017, the circuit court denied American Access's motion to reconsider. After briefing on American Access's motion for summary judgment on count III, the circuit court entered a handwritten order on March 23, 2017, drafted by counsel for American Access, granting summary judgment in favor of American Access, finding "there is no coverage for [d]efendant Novit on the claim of negligent entrustment." The order also stated that the circuit court previously resolved American Access's "reasonable belief" exclusion claims. The order further stated that American Access voluntarily dismissed its claim in count I that it had no duty to defend or indemnify Tanase on the grounds that he was not a named insured. The circuit court's March 23, 2017, order states that it is "a final order with all claims of all parties now being disposed of."

         ¶ 7 Conway filed her notice of appeal on April 21, 2017, from the March 23, 2017, order. American Access moved to dismiss Conway's appeal for lack of appellate jurisdiction, arguing that its "reasonable belief" claim against Novit had not been fully resolved. A panel of this court originally dismissed this appeal but later vacated the dismissal order on Conway's motion.

         ¶ 8 ANALYSIS

         ¶ 9 On appeal, Conway argues that the circuit court effectively concluded that, as a matter of law, a negligent entrustment claim is not an "accident, " and that the circuit court misapplied our holding in General Agents Insurance Co. of America v. Midwest Sporting Goods, Co., 328 Ill.App.3d 482 (2002). She contends that General Agents stands for the proposition that insurance coverage is unavailable for a negligent entrustment claim only where the underlying complaint "is based purely on deliberate actions." She further argues that the "substantial probability" test from General Agents is not met here. Finally, she contends that public policy favors coverage for her negligent entrustment claim. We need not resolve this issue, however, because we find that American Access has a duty to defend Novit under the plain language of the policy.

         ¶ 10 Before we reach the merits of this appeal, we must consider American Access's argument that we lack appellate jurisdiction. It contends that the circuit court never entered a final judgment with respect to the "reasonable belief" exclusion claim in count II of the amended complaint. American Access argues that the circuit court granted summary judgment on the "reasonable belief" exclusion claim as to Tanase, but denied summary judgment as to Novit, and therefore count II has not been fully adjudicated. American Access further argues that it has been deprived of "its opportunity to cross-appeal on an issue which it may have lost had the order been final." We disagree.

         ¶ 11 Pursuant to the Illinois Constitution, our jurisdiction is limited to appeals from final judgments. Ill. Const. 1970, art. VI, § 6; Ill. S.Ct. R. 301 (eff. Feb. 1, 1994). Absent a supreme court rule, we lack jurisdiction to review judgments, orders, or decrees that are not final. Blumenthal v. Brewer, 2016 IL 118781, ¶ 22 (citing EMC Mortgage Corp. v. Kemp, 2012 IL 113419, ΒΆ 9). A "final judgment" for the purposes of appeal is one that fixes absolutely and finally the rights of the parties in a lawsuit, and determines the litigation on the merits so that, if affirmed, the only thing remaining is to proceed with the execution of the ...


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