Opinion
NO. 4-20-0453
05-10-2021
SHANA KRIDNER, as Independent Administrator of the Estate of Lynse Stokes, Deceased, Plaintiff-Appellant, v. THE ESTATE OF JOSE PADILLA and S.L.D., INC., d/b/a/ Pizza by Marchelloni, Defendants (S.L.D., Inc., d/b/a Pizza by Marchelloni, Defendant and Third-Party Plaintiff-Appellant v. Austin Hough, Third-Party Defendant-Appellee).
NOTICE
This Order was filed under Supreme Court Rule 23 and is not precedent except in the limited circumstances allowed under Rule 23(e)(1).
Appeal from the Circuit Court of Livingston County
No. 17L5
Honorable Jennifer H. Bauknecht, Judge Presiding.
JUSTICE STEIGMANN delivered the judgment of the court.
Justices DeArmond and Holder White concurred in the judgment.
ORDER
¶ 1 Held: The appellate court affirmed the trial court's entry of summary judgment in favor of third-party defendant because the third-party claim was barred by the statute of limitations.
¶ 2 In March 2018, Shana Kridner, as independent administrator of the estate of Lynse Stokes (the Estate), filed an amended complaint against S.L.D., Inc. (SLD), d/b/a Pizza by Marchelloni, alleging Jose Padilla, an employee of SLD, caused the death of Lynse Stokes by negligently causing a car accident that resulted in Lynse's death while acting in the scope of his employment.
¶ 3 Later in March 2018, SLD filed a third-party complaint against Austin Hough, the insurance agent that provided SLD with its business liability policy. The claim alleged that Hough
negligently failed to procure an insurance policy that covered the liability of delivery drivers. Hough filed an answer and affirmative defenses, alleging, in relevant part, that SLD's claim was barred by the two-year statute of limitations for insurance claims. See 735 ILCS 5/13-214.4 (West 2016).
¶ 4 In May 2020, Hough filed a motion for summary judgment. In September 2020, the trial court granted summary judgment in favor of Hough, concluding that the negligent procurement claim accrued in 2011 when the policy was received, and therefore, SLD's claim was time barred.
¶ 5 SLD and the Estate appeal, arguing the trial court erred when it entered summary judgment in favor of Hough. We disagree and affirm.
¶ 6 I. BACKGROUND
¶ 7 A. The Underlying Action
¶ 8 In March 2018, the Estate filed an amended complaint against SLD, alleging that in September 2016, Lynse Stokes was riding as a passenger in the car of Jose Padilla, who was working as a delivery driver for SLD at the time. Padilla attempted to make a left-hand turn onto a highway. An oncoming car, which had the right of way, collided with Padilla's car, resulting in Padilla's death and Lynse's death a few days later.
¶ 9 Later in March 2018, SLD filed a third-party complaint against Hough, asserting that Hough was the agent responsible for procuring SLD's business liability policy. SLD requested a policy to cover its "core business," which was pizza delivery. Hough provided a policy from Farmers Insurance (Farmers), but when SLD submitted a claim for the accident, Farmers denied the claim based on an auto exclusion. SLD alleged that Hough failed to exercise ordinary and reasonable care by (1) failing to name SLD as an insured, (2) failing to provide coverage for
delivery drivers, and (3) failing to communicate to Farmers all the necessary information to obtain the coverage requested.
¶ 10 In April 2018, Hough filed an answer and affirmative defenses to SLD's complaint, asserting, among other things, that SLD's claim was barred by the statute of limitations. See id. Hough further contended that a cause of action for negligent procurement accrues at the time of the alleged breach. Because the insurance policy at issue began providing coverage in January 2016, SLD's third-party complaint was filed more than two years after the alleged breach.
¶ 11 B. Hough's Motion for Summary Judgment
¶ 12 In May 2020, Hough filed a motion for summary judgment in which he argued that SLD's complaint was filed seven years after the statute of limitations expired. In support of his motion, Hough attached (1) a copy of the third-party complaint, (2) a copy of the business owners' policy, and (3) the depositions of Letitia Stokes, Dale Stokes, and Hough.
¶ 13 1. The Deposition of Letitia Stokes
¶ 14 Letitia testified that she started working for the Pontiac Pizza by Marchelloni in 1993. In 1996, she and Dale Stokes formed SLD, and SLD purchased the Pizza by Marchelloni store. In 1998, the franchiser of Pizza by Marchelloni went bankrupt, and SLD purchased the naming rights. Marchelloni provided carry out and delivery pizza. Letitia ran the entire business herself and was the only person who worked in the store; when she was not working, the store was closed. Letitia hired high school and college students to work as part time delivery drivers. When she hired employees, she made sure they had auto insurance.
¶ 15 From 1996 to 2010, SLD got insurance through American Family and agent Kelly Kinate. Letitia testified that American Family insured "[t]he business plus we had driver's insurance for noninsured vehicles. Noninsured drivers, I think ***."
¶ 16 In late 2010, Letitia's brother referred her to Hough, and Hough set up a meeting at Marchelloni's to provide an estimate. Letitia testified that she "told [Hough] I needed to [insure] the building, plus I needed driver's insurance for my drivers." Letitia gave Hough a copy of the American Family policy "in order to do that." She also walked him through the restaurant to show him the property. Letitia and Hough talked about what the insurance would be covering, such as the building and equipment. Letitia denied telling Hough that she did not need insurance for her drivers but did agree that she told Hough she required her drivers to have insurance and that she asked Hough "for insurance coverage for all business risks related to" Marchelloni's.
¶ 17 Letitia acknowledged that in her response to interrogatories she stated, "Prices of insurance were discussed, and Mr. Hough talked about the building coverage; but Hough and Letitia never discussed liability exposure of drivers." The following exchange occurred:
"Q. So which is true, that you never discussed liability exposure of drivers or that you asked for coverage for your drivers?
A. I asked him to cover my business, which includes my drivers.
* * *
Q. Did you tell him you want your drivers insured specifically?
A. Probably not specifically. I just told him to do the same as my other insurance was."
¶ 18 Letitia agreed that her American Family policy contained the same auto exclusion as her Farmers policy. Letitia stated that she did not know that the American Family policy or the Farmers policy contained an auto exclusion and she did not know that her drivers were not covered under the American Family policy.
¶ 19 Letitia stated she received a copy of the Farmers policy in January 2011 but neither
she nor Dale reviewed the policy. Hough called Letitia to let her know that the policy was renewed and that he was sending the renewal. Letitia stated she did not recall ever receiving any of the renewed policies and she did not receive a copy of the 2016 policy.
¶ 20 Letitia testified that the accident occurred in September 2016 and she notified Farmers the next day. In January 2017, Farmers sent Letitia a letter explaining that it was denying coverage because of the auto exclusion.
¶ 21 Letitia stated that she did not know what "non-owned auto insurance" was and Hough never asked or told her about it or that she needed it. He never went over what the policy covered with Letitia because he never delivered the policy to her. Hough never asked Letitia for additional information, just for the American Family policy. Hough never told Letitia that Farmers did not cover autos for delivery businesses. Counsel asked Letitia, "Was it [your] understanding that you were getting coverage similar to what you had before but it would just cost less?" Letitia responded, "Yes."
¶ 22 2. The Deposition of Dale Stokes
¶ 23 Dale testified that he was Letitia's husband. Dale and Letitia formed SLD to purchase Marchelloni's and had recently sold the business. Dale stated that Letitia ran the business and his only involvement was delivering pizzas in the late nineties.
¶ 24 Dale stopped by the business on the night Hough met with Letitia to get information for a quote. Dale told Hough "at that time that we had to have coverage like we had before. That was it, and I left." Dale agreed that he never saw the 2011 policy or any policy since. The following exchange occurred:
"Q. So it was your understanding that Mr. Hough placed insurance that was like the insurance you had with American Family, correct?
A. That was my exact orders to him.
Q. Did you tell him: We got to cover delivery people? Did you say that?
A. Yes, I did."
¶ 25 Dale stated that even though Letitia required her delivery drivers to have auto insurance, SLD needed "[a]uto insurance covering the drivers for delivery" because "when it was a franchise, that was required." Dale agreed that Letitia sought out Hough because their insurance premium was getting high and she was looking for less expensive insurance "[b]ut still the same coverage." Dale stated that he "presume[d]" Lynse's accident would have been covered under the American Family policy "because of what was required by the franchise," though he had never read it. Dale stated that the franchise required SLD to provide a copy of the insurance for review prior to their being able to purchase it to ensure it complied with franchise requirements. Dale stated he never discussed the insurance with Letitia because (1) she knew what the franchise had required and (2) the policy always renewed and he "presumed it was the same."
¶ 26 Dale testified that he had several other businesses and had insurance for all his businesses' vehicles, equipment, property, and liability. Dale stated that he mostly did not review any of his insurance policies when he received them because "I trust the agent. But I'm beginning to wonder." Dale testified that Hough never told him or Letitia that they were missing any type of coverage.
"Q. If he would have said that, would you have gotten it?
A. That's correct. I thought I had it."
¶ 27 3. The Deposition of Austin Hough
¶ 28 Hough testified he had been working for Farmers as an insurance agent since 2007. In November 2010, Hough met with Letitia at Pizza by Marchelloni. Letitia wanted a quote for
her business insurance, so Hough asked her some general questions and for her existing policy, which they then discussed.
¶ 29 The old policy was a "standard" busines owners policy that covered liability, the building, inventory, and the like. Hough stated that "if you look at them side by side, they're almost identical. They're both business owners policies. She said here's my business owners policy, match what I have, get me a better price, that was the conversation." Hough said that usually when policy holders ask for the same coverage at a better price, all the information Hough needed and relied on was in their policy. Hough stated that he went back to his office and entered the information—including that the insureds were Letitia and Dale d/b/a Marchelloni's and no business autos—from the American Family policy into an electronic application for a Farmers insurance policy. Hough got a quote, called Letitia, and later returned to Marchelloni's to go over the proposal with Letitia. Hough testified he told her he "was able to match up coverages from [her] old policy" with a lower premium and Letitia accepted.
¶ 30 Hough testified that Farmers did not offer any coverages to delivery businesses through a business owners policy. Hough stated that (1) non-owned auto coverage would cover restaurant employees using their own cars for business purposes and (2) he could have acquired that coverage for Letitia through a third-party had she requested it.
¶ 31 Hough stated that the insurance policy came to him and that he would have hand delivered it to Letitia because she was a new client and he always hand delivered policies to new clients. Hough agreed that Letitia later also received personal auto insurance from Farmers through Hough. Hough stated that when he delivered the policy, "We must have gone over the high points, the important parts." Hough explained that for renewals, he typically mailed his clients their policies, called them, told them if the premium or coverage changed, and asked if they wanted to
renew. Hough stated he did this with Letitia every year until she sold the business.
¶ 32 Hough stated that he walked through the business with Letitia and asked her questions about her equipment and the building to determine what coverages were needed and for how much. Hough said he kept notes in his head or on a legal pad. He said, "She told me that she did not need coverage for her delivery drivers, and the reason why, when I asked, was because she said that she makes sure that every delivery driver she hires has insurance, she asks them if they have insurance, personal auto insurance coverage, and that she doesn't need coverage on her business policy for delivery drivers." Hough did not ask to see her delivery drivers' personal policies or who provided their policies. Hough acknowledged that there can be a business exclusion in personal auto policies. For Farmers, Hough testified about examples of what types of uses of a personal auto would be excluded, including "if I delivered pizza for a pizza place."
¶ 33 Hough stated that he believed that Dale and Letitia's auto policies either went hand in hand or slightly after the business policy. Hough was asked if he could say which policy, personal or business, would have covered the accident if Dale had been driving rather than an employee. Hough replied, "I would feel very uncomfortable telling you that he would be covered under either of his policies. In a claims situation something like this there's a reason why we have adjusters with the company, and they're the ones that have to examine all of the evidence." Hough testified people called him "with hypotheticals all the time." Hough told those people that he could not answer the hypotheticals, and if he asked a claims adjuster, the adjuster would tell him they could not answer until a claim was submitted. He was then asked if Farmers in fact excluded delivery under their personal coverage and Hough said it did.
"Q. So, in my hypothetical if Dale Stokes had delivered a pizza he would not be covered under any insurance?
A. I'm going to say—I'm going to hypothetical [sic] answer you—yes, he would not be covered."
¶ 34 Hough was asked if Letitia's comment that she did not need her delivery drivers to be covered by the business policy because they had personal insurance "raise[d] any red flags to you to explain to her what she actually need[ed]?" Hough responded, "I told her specifically that on this policy there is no coverage for delivery drivers, they are not going to be covered under this policy." Hough continued, "And she replied that she makes sure that her delivery drivers—she doesn't hire anybody without personal insurance, they don't have auto insurance they're not hired, that was the conversation, that's what I remember." Counsel asked, "And did you explain to her that is not sufficient?" Hough replied, "I don't think I said that is not sufficient, because in all honesty I didn't know. She required her delivery drivers to have insurance, if they had insurance that didn't have an exclusion on delivery who am I to say that she needed coverage?" Counsel asked, "If you honestly don't know, how is she supposed to know?" Hough replied, "I don't really know how to answer that, with all due respect."
¶ 35 Counsel further asked, "Is there any way for Dale or Letitia Stokes, if they had been delivering, to be covered under this policy?" Hough responded, "I have to ask an adjuster that."
¶ 36 4. Hough's Arguments
¶ 37 Hough argued that SLD's cause of action accrued in January 2011 when the non-conforming policy was delivered. Here, Letitia and Dale admitted they received the 2011 policy but did not read it. Hough contended that the auto exclusion was clear in the policy and the statute of limitations barred the claim, just like the Illinois Supreme Court's decision in American Family Mutual Insurance Co. v. Krop, 2018 IL 122556, ¶ 35, 120 N.E.3d 982.
¶ 38 C. SLD's Response
¶ 39 In July 2020, SLD filed a response to Hough's motion for summary judgment, largely relying on the same documents and depositions as Hough. SLD argued that Hough misled Letitia and Dale by failing to correct the misapprehension that their employees were covered under the policy. SLD contended that Hough's conduct constituted an exception to the rule in Krop because an insurance producer's misrepresentations would excuse an insured from reading or understanding the policy, and summary judgment should be denied.
¶ 40 D. The Estate's Response
¶ 41 The Estate argued in its response that, although Krop applied, Krop left open possible exceptions that were present in this case. The Estate argued that (1) the policy was overly complicated, (2) Letitia specifically requested a type of coverage, (3) Hough was the only one in a position to know if SLD was covered, and (4) even Hough was confused.
¶ 42 E. The Trial Court's Ruling
¶ 43 In January 2019, the trial court conducted a hearing on Hough's motion for summary judgment. SLD argued that SLD relied upon Hough's expertise to provide them all the coverage it needed. SLD quoted a parenthetical from Krop which (1) cited an Indiana Supreme Court case and (2) summarized the holding of that case as follows: "reasonable reliance upon the agent's representation can override an insured's duty to read the policy." SLD relied upon the Indiana cases cited in Krop to support its argument that Illinois would recognize an insured's reliance on an agent's representation as an exception to the general rule in Krop. SLD argued the additional facts in this case distinguished it from Krop, noting in particular that Hough (1) held himself out as an expert, (2) asked about drivers' insurance, and (3) failed to correct Letitia's misunderstanding that personal auto insurance would cover business uses.
¶ 44 The trial court granted summary judgment in favor of Hough, stating the following:
"THE COURT: I understand the conversation in general, but she did at the end say I want the same coverage I had before. Right? And that's also what Mr. Stokes said, give me the same coverage I had before. Did they both not say that?
MR. MANN: It's possible, Judge.
THE COURT: Okay. So, I believe that is exactly what they said, so they, so it's a situation just like Krop. Get me the insurance I had before. It's a basic policy. There's no unusual language in the policy that has been identified other than a typical insurance policy. They had every opportunity to read it. Because it's just a basic policy, they should be reasonably expected to understand its terms.
The argument that is trying to be made is that they would not have known they did not have this coverage *** if it wasn't for them relying on Hough. But I don't have that. *** I don't have anything that indicates to me that this is a special situation. And the [Illinois] Supreme Court said like I think we all agree there's no contradictory provisions or failure to define terms. That was one example. Or circumstances giving rise to the liability are so unexpected that typical customers would not be expected to understand.
They should have understood that when they looked at this policy, I don't know what their automobile policy said, and I don't have their automobile policy. But this policy that we're here on, they should have understood when they looked at it; and all they had to do was look at the first page to say, well, crap, they don't even have the name of the business on here. And they both admitted they didn't read the policy.
And now, so I don't think this is an unusual situation. I don't think that it's,
it has any unusual language. It's pretty straightforward; and *** because the [Illinois] Supreme Court has said that the insurer, insured has an obligation to read their policy, and in this case they chose not to, I don't think the discovery rule kicks in. I don't think this is the special circumstances [sic] that was being referenced in the Krop case. I think this is the Krop case. It is dead on. There's very few differences between this case and the Krop case.
So, I do think that the breach of contract occurred back in 2011 to the extent that there was a breach. But the cause of action I guess—I don't mean breach of contract—cause of action would have accrued in 2011 when the policy was issued which did not contain automobile coverage that they think they should have had.
So, I think the statute of limitations applies. I just don't see how you get around it. So, the motion for summary judgment is granted."
¶ 45 This appeal followed.
¶ 46 II. ANALYSIS
¶ 47 SLD and the Estate appeal, arguing the trial court erred when it entered summary judgment in favor of Hough. We disagree and affirm.
¶ 48 A. The Applicable Law and the Standard of Review
¶ 49 1. Summary Judgment
¶ 50 Summary judgment is appropriate when "the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." 735 ILCS 5/2-1005(c) (West 2018). "A genuine issue of material fact precluding summary judgment exists where the material facts are disputed, or, if the material facts are undisputed, reasonable persons
might draw different inferences from the undisputed facts." (Internal quotation marks omitted.) Monson v. City of Danville, 2018 IL 122486, ¶ 12, 115 N.E.3d 81. When examining whether a genuine issue of material fact exists, a court construes the evidence in the light most favorable to the nonmoving party and strictly against the moving party. Beaman v. Freesmeyer, 2019 IL 122654, ¶ 22, 131 N.E.3d 488.
¶ 51 Summary judgment is a drastic means of disposing of litigation and "should be allowed only when the right of the moving party is clear and free from doubt." Id. A trial court's entry of summary judgment is reviewed de novo. Id.
¶ 52 SLD and the Estate argue that the trial court erred by (1) shifting the burden of proof to the nonmovants, (2) ignoring facts favorable to the nonmovants, and (3) resolving factual issues. We note that this court may affirm the entry of summary judgment for any reason apparent in the record. Hermansen v. Riebandt, 2020 IL App (1st) 191735, ¶ 75. To the extent the court erred in the way it characterized its findings, we conclude that its error is not a basis for reversal because Hough was entitled to judgment as a matter of law on his statute of limitations defense.
¶ 53 2. Statute of Limitations
¶ 54 Section 13-214.4 of the Code of Civil Procedure provides a two-year statute of limitations for all causes of action "under any statute or any legal or equitable theory against an insurance producer." 735 ILCS 5/13-214.4 (West 2016). "[W]hen customers have the opportunity to read their insurance policy and can reasonably be expected to understand its terms, the cause of action for negligent failure to procure insurance accrues as soon as the customers receive the policy." Krop, 2018 IL 122556, ¶ 2. However, the supreme court recognized that "there will be a narrow set of cases in which the policyholder reasonably could not be expected to learn the extent of coverage simply by reading the policy." Id. ¶ 36. The court listed the following as examples:
the insurance policy contains (1) contradictory provisions, (2) fails to define key terms, or (3) "the circumstances that give rise to the liability [are] so unexpected that the typical customer should not be expected to anticipate how the policy applies." Id.
¶ 55 Illinois courts have applied the discovery rule in certain circumstances to avoid the harsh results of a statute of limitations. Id. ¶ 21. The discovery rule "delays the start of the limitations period until the claimant knew or reasonably should have known of the injury and that the injury was wrongfully caused." Id. When a plaintiff uses the discovery rule to delay commencement of the statute of limitations, the plaintiff has the burden of proving the date of discovery. Super Mix of Wisconsin, Inc. v. Natural Gas Pipeline Co. of America, 2020 IL App (2d) 190034, ¶ 36. "When a complainant should have discovered an injury is a question of fact, but [a] court can determine when the limitations period began if the facts are undisputed and only one answer is reasonable." Krop, 2018 IL 122556, ¶ 21.
¶ 56 Here, the undisputed facts show that (1) Letitia requested a policy from Hough in late 2010, (2) Hough procured that policy in January 2011, and (3) Letitia received a copy of the policy shortly thereafter. SLD filed its negligent procurement claim in 2018, more than seven years after the cause of action accrued. Accordingly, unless the discovery rule applies, SLD's third-party claim against Hough is time barred.
¶ 57 B. This Case
¶ 58 We must decide whether the default rule from Krop or one of its exceptions applies. The gist of SLD's argument is that Hough had a duty to act the same as a reasonable insurance producer under the circumstances and he failed to do so in several respects, all of which, taken together, constitute a genuine issue of material fact as to whether SLD could "reasonably understand" the terms of the policy. In essence, SLD claims that Hough misled or failed to correct
a misunderstanding that Letitia had that her old policy covered her delivery drivers or that her delivery drivers would be covered by their personal liability policies, which are required by state law. SLD lists various facts that distinguish the present case from Krop and argues that those facts qualify as an exception to the rule set forth in Krop. We disagree.
¶ 59 SLD concedes that Letitia and Dale never read the initial policy they received in 2011. SLD does not argue that the terms of the policy were contradictory or undefined, or that the factual circumstances giving rise to damages is so unusual as to be unforeseeable. Instead, SLD relies upon the exception set forth in a pair of Indiana Supreme Court cases cited by the Illinois Supreme Court in Krop.
¶ 60 In Krop, the Illinois Supreme Court expressly stated it agreed with approach to the statute of limitations taken by courts in Indiana and Delaware. Krop, 2018 IL 122556, ¶ 35 (citing Filip v. Block, 879 N.E.2d 1076, 1083 (Ind. 2008) and Kaufman v. C.L. McCabe & Sons, Inc., 603 A.2d 831, 834 (Del. 1992)). When discussing the "narrow set of cases in which the policyholder reasonably could not be expected to learn the extent of coverage simply by reading the policy," the Illinois Supreme Court mentioned the "highly unusual circumstances of Scottsdale" and then cited an Indiana case as follows: "see also Groce [ v. American Family Mutual Insurance Co.], 5 N.E.3d [1154,] 1159 [(Ind. 2014)] (finding that although ' "reasonable reliance upon an agent's representations can override an insured's duty to read the policy," ' the insurance agent's statement that he would have the agreement ' "written up" ' was not a sufficient representation to absolve the customers of the obligation to read their own policy (quoting Filip, 879 N.E.2d at 1084))." Id. ¶ 36.
¶ 61 We conclude that the Illinois Supreme Court did not adopt the exception set forth in Groce when it announced the rule in Krop. The court specifically stated that "there will be a
narrow set of cases" in which the discovery rule will apply and then set forth three, and only three, examples of such cases. Although the court mentioned the rule in Groce, it did so in a parenthetical after discussing "highly unusual circumstances" that would justify an exception. The court could have clearly set forth Groce as an example of an exception to the accrual rule, but it did not. Many policy reasons justify the adoption and the non-adoption of the exception in Groce, and in the absence of guidance from the supreme court, we will not expand the holding of Krop.
¶ 62 The Filip court used facts emphasized by SLD and the Estate here—visiting the property and the duty to advise—to determine that a "special relationship" existed, which gave rise to a duty to advise (which is not recognized by Illinois), but determined that such duty occurred only at the time of procurement and no evidence existed that the agent "undertook an ongoing review" of the insureds' needs. Filip, 879 N.E.2d at 1086. Further, the exception recognized in Filip is a longstanding rule of insurance law in Indiana, dating back to at least 1981. See id. at 1084 (citing Village Furniture, Inc. v. Associated Insurance Managers, Inc., 541 N.E.2d 306, 308 (Ind. Ct. App. 1989) (citing Town & Country Mutual Insurance Co. v. Savage, 421 N.E.2d 704 (Ind. Ct. App. 1981)). Illinois does not have any similar rule, and caselaw is actually contrary to the position. See Hoover v. Country Mutual Insurance Co., 2012 IL App (1st) 110939, ¶¶ 21-22, 975 N.E.2d 638 (ignoring the homeowners allegation that (1) they asked for specific coverage and (2) the agent affirmatively represented that he would provide the coverage and misled the homeowners into thinking the coverage was provided; instead focusing on the insureds' ability to understand the requested provisions at the time they received the policy). The Illinois Supreme Court repeatedly cited Hoover approvingly in Krop.
¶ 63 The supreme court also approved of the reasoning applied by the court in Scottsdale, in which the First District described a situation so unusual and unforeseeable that a
party, even after reading the policy, could not be expected to know whether it had specific coverage for the claim, namely, the murder of a child in its care. Scottsdale Insurance Co. v. Lakeside Community Committee, 2016 IL App (1st) 141845, ¶¶ 36-37, 76 N.E.3d 1. The First District stated the following:
"Lakeside hired [an insurance broker] to procure a policy that would cover multiple types of claims it might file in the course of its business as a social services agency and DCFS contactor. Even if representatives from Lakeside had read the policy, they would not know in advance that a claim involving the murder of a child in DCFS custody was not covered until the claim was denied." Id. ¶ 37.
¶ 64 SLD could have argued (although it did not) that its case was similar to Scottsdale in that (1) SLD did not have an existing policy with Farmers and (2) was relying on Hough to provide a policy that would cover many different types of claims. However, in Krop, the Illinois Supreme Court said the distinguishing feature in Scottsdale was the "highly unusual circumstances" giving rise to liability. Krop, 2018 IL 122556, ¶ 36.
¶ 65 In sum, it is not entirely clear how the Illinois Supreme Court would handle this case after a close examination of Filip and Scottsdale. For the reasons stated earlier, we leave that decision to the court to clarify. Nonetheless, summary judgment is still proper in this case because looking at the facts in the light most favorable to SLD, this case is most similar to Krop itself.
¶ 66 Both cases involve an insured asking a new agent to get a policy similar to the one currently held by another company. In both cases, the agent delivered insurance that did not conform with the insureds' request. Here, Letitia and Dale both testified that they specifically asked for coverage for their drivers and Hough did not provide it. In both cases, the insureds admit they received the policy and did not read the policy. The problems in coverage were both clearly
discernable from the face of the policy. To be sure, in Krop, the problem was on the very first page of the policy and would have been immediately apparent by holding the policies side by side. Here, Hough admitted that the policies were virtually identical when placed side by side. But SLD wanted and asked for different coverage. So, comparing policies would not have helped. And to discover the defect in the Farmers policy, SLD needed to consult multiple sections of the policy to read and understand the auto exclusion on page 93, nowhere near as simple a task as in Krop.
¶ 67 Still, the auto exclusion is present, reasonably clear, and in language that is extremely standard for the industry. (This court has had cases from different companies with identical provisions. See Country Mutual Insurance Co. v. Oehler's Home Care, Inc., 2019 IL App (4th) 190080, ¶ 11, 160 N.E.3d 977.) SLD wanted its drivers covered. It asked for its drivers to be covered. Had it read the policy, it would have at least been concerned if not actually on notice that its drivers were not covered. The public policy justifications for the insured's duty to read and understand their coverage given by the court in Krop apply with equal force to this case. Because SLD points to no material facts that could support a judgment in their favor, we conclude that the trial court properly entered summary judgment in favor of Hough.
¶ 68 SLD and the Estate provide a laundry list of facts and expert opinions distinguishing Krop and suggesting that Hough's negligence is what caused SLD to misunderstand its coverage. The facts include Hough's expertise, SLD's reliance on Hough to provide all coverages necessary, a duty to advise as to missing coverages, a duty to acquire all necessary information from the insureds, Hough's lack of understanding of the coverages available, and others. We need not address these facts in detail because they fall into two camps. The facts either go toward potential bases for an exception under Filip or Scottsdale previously discussed or toward Hough's negligence in procuring the policy. However, the Illinois Supreme Court has not extended an
exception to those circumstances, and we will not do so in the absence of guidance from the supreme court.
¶ 69 In particular, the facts of this case demonstrate the need for judicial restraint. Far from being "highly unusual," the facts and circumstances SLD points to as excepting them from the accrual rule are typical and what we would expect to find in many, if not most, cases. The typical negligent procurement case will involve a dispute concerning what type of coverage was requested and whether the insured was under a misunderstanding that the agent did not realize or correct. If we were to accept SLD's interpretation of the exception, then the exception would threaten to swallow the rule.
¶ 70 That is not to say that such a broad exception would be ill advised or a bad result. Reasonable people can disagree about how much responsibility should lie with the insured versus the agent, but such a nuanced approach is best left to the Illinois Supreme Court to resolve. Based on the discussion in Krop, the general rule is that insureds must read their policies and they are presumed to understand the terms of the policy, even though insurance contracts can be long and written in less than easy to understand language.
¶ 71 Here, we assume, as we must, that Letitia specifically asked for her drivers to be covered and that Hough generally agreed to provide a conforming policy. Letitia and SLD need to point to something more, some specific reason for their reliance on Hough that would justify departing from the normal rule that requires insureds to read their policies. In Scottsdale, the court noted that Lakeside specifically relied upon the agent's expertise and went over the entire business to determine what types of coverage were needed. The supreme court stated that Scottsdale was exceptional because the underlying facts giving rise to a claim, the murder of a child in DCFS care, were highly unusual and unforeseeable. Viewing the facts in the light most favorable to SLD,
Hough was retained to review the business and provide all necessary insurance. There is a dispute as to whether Letitia was relying on Hough to tell her exactly what the business needed. Even if we assume that Letitia and Dale specifically asked for their drivers to be covered, which is reasonable based on the evidence, SLD presented no evidence that Hough made any special representations to them that the drivers would be covered. This case therefore is similar to Krop and others in Illinois where the insured asked for coverage and the agent failed to provide it.
¶ 72 Finally, SLD suggests that the failure by Hough to deliver renewal policies to SLD is a material fact. However, SLD points to no facts that would suggest that anything changed between the time the initial policy was received and the renewal of the policy in 2016. That is to say, at most, SLD claims that Hough failed to advise it of gaps in coverage or ask if any policy changes were requested. Illinois law is clear that insurance producers such as Hough have no such obligations. See Skaperdas v. Country Casualty Insurance Co., 2015 IL 117021, ¶ 42, 28 N.E.3d 747; Melrose Park Sundries, Inc. v. Carlini, 399 Ill. App. 3d 915, 920, 927 N.E.2d 132, 136 (2010). The situation could be different if Letitia asked Hough, at some point after receiving the 2011 policy, if her delivery drivers were covered or asked him to make sure her delivery drivers were covered and had Hough assured her they were or assured her he would provide such coverage to her. Instead, all of the acts or omissions of Hough that SLD claims caused it to misunderstand the coverages in the policy occurred prior to the receipt of the 2011 policy. Accordingly, any disputed issues of fact regarding the receipt of renewal policies are not "material" because they have no legal effect on the relevant issue: when the cause of action accrued.
¶ 73 III. CONCLUSION
¶ 74 For the reasons stated, we affirm the trial court's judgment.
¶ 75 Affirmed.