Allstate Insurance Co. v. Davenport, No. 1-97-2777

1st District, December 21, 1999

SECOND DIVISION

JUSTICE McBRIDE delivered the opinion of the court:

Plaintiff Allstate Insurance Company (Allstate) brought this declaratory judgment action against defendant Leonard D. Davenport, in which it sought to determine whether benefits were due to defendant on an automobile insurance policy. The trial court entered summary judgment in favor of plaintiff. Defendant now appeals, contending that material questions of fact exist and the trial court was thus precluded from entering summary judgment in favor of plaintiff.

On April 14, 1986, defendant was involved in an automobile accident. At the time of the accident, defendant was in the scope of his employment with the Chicago Transit Authority (CTA) and was operating a vehicle owned by the CTA.

Defendant sustained injuries to his back that kept him from working from the time of the accident until June 1986. Defendant returned to his job as a supervisor of rail maintenance at the CTA in early June of 1986 and worked until July 8, 1986. After further treatment, defendant again returned to work at the CTA from October 30, 1986, until May 22, 1987. During these periods of work, defendant received the same amount of pay and had the same job title as he had had previously but his duties were lessened due to his back condition. At his deposition in this case, defendant indicated that he could not perform many of the duties related to his job and received significant aid from others in carrying out those duties during the periods he returned to work. After May 22, 1987, defendant entered the hospital for surgery on his back and has not worked since. The only injury defendant had suffered to his back was from the April 14, 1986, automobile accident. According to reports in the record from Dr. David Birnbaum, defendant's physician, defendant suffers from arachnoiditis, degenerative disc disease and intermittent sciatica. These conditions, the result of the accident, have disabled defendant. Dr. Birnbaum's report indicated that defendant will continue to suffer severe, incapacitating pain and his condition is not expected to improve.

At the time of the accident, defendant had an automobile insurance policy with plaintiff that included coverage for disability income protection. Defendant's policy with plaintiff stated that plaintiff would pay defendant's disability income benefits only if the disability:

"(1) commences within 20 days of the date of the accident; and

(2) during the first year after commencement continuously prevents the insured person from performing every duty pertaining to his occupation; and

(3) during the second and subsequent years after commencement continuously prevents the insured person from engaging in any occupation or employment for wage or profit."

In addition to the provisions regarding "own occupation" disability benefits (provision 2, above), and "any occupation" disability benefits (provision 3, above), the policy included an exclusion stating that the coverage did not apply to a disability sustained in the course of an occupation while operating or performing any duties related to the use of a commercial automobile.

In September 1990, Allstate paid defendant one year's worth of disability benefits under the "own occupation" disability benefits provision in the policy.

As a result of the accident, defendant filed a claim for workers' compensation benefits. In a March 14, 1994, decision by an arbitrator, defendant was found to have sustained injuries that caused him to be completely disabled and that rendered him "wholly and permanently incapable of work." The arbitrator awarded defendant a worker's compensation benefit of $511.81 per week for the remainder of his life.

In 1995, plaintiff filed a complaint for declaratory judgment, alleging that defendant's "own occupation" disability benefits were not payable because defendant was not continuously prevented from performing every duty related to his occupation in the first year after his accident. Plaintiff also alleged that "any occupation" disability benefits were not payable because defendant was not continuously prevented from engaging in any occupation or employment for wage or profit during the second year following his accident. The complaint further alleged that defendant was not entitled to either type of disability benefits because his accident fell within the exclusion for injuries sustained while operating a commercial automobile in the course of an occupation.

Defendant filed an answer and counterclaim alleging that plaintiff's failure to pay him disability benefits was "vexatious and without reasonable cause."

Plaintiff moved for summary judgment on its complaint for declaratory judgment. Defendant responded, maintaining, among other things, that plaintiff had waived its objections to paying him disability benefits by paying him "own occupation" disability benefits in 1990. At an April 9, 1997, hearing on plaintiff's motion for summary judgment, the attorney for plaintiff informed the court that because plaintiff had voluntarily paid defendant "own occupation" total disability benefits for the first year, the only issue before the court was whether Allstate owed "any occupation" payments to defendant for the second and subsequent years following the accident. Plaintiff's attorney argued that because defendant had continued to work at his job with the CTA for at least a full month into the second year, he was not continuously prevented from engaging in any occupation. The trial court entered summary judgment in favor of plaintiff and against defendant. The court noted that the standards for receiving "own" and "any" disability benefits were different and found that because defendant had worked for a portion of the second year following his accident, he had engaged in an occupation for a period of time and was not entitled to further benefits. On June 10, 1997, the trial court denied defendant's motion for rehearing and reconsideration and entered summary judgment in favor of plaintiff and against defendant with respect to defendant's counterclaim.

Defendant contends that the trial court erred in granting summary judgment for plaintiff because defendant had raised material questions of fact concerning waiver by plaintiff of its objections to payment under the policy and as to defendant's entitlement to disability income protection pursuant to the terms of the policy. Summary judgment should be granted where there are no genuine issues of material fact and the movant is entitled to judgment as a matter of law. McKinney v. American Standard Insurance Co. of Wisconsin, 296 Ill. App. 3d 97, 99, 694 N.E.2d 200 (1998). Although the use of summary judgment is encouraged to aid in the expeditious disposition of lawsuits, it is a drastic means of disposing of litigation and should be used only when the right of the moving party is clear and free from doubt. Bedoya v. Illinois Founders Insurance Co., 293 Ill. App. 3d 668, 674, 688 N.E.2d 757 (1997). Where reasonable persons could draw divergent inferences from undisputed material facts or a dispute as to a material fact exists, summary judgment should be denied. Allstate Insurance Co. v. Smiley, 276 Ill. App. 3d 971, 977, 659 N.E.2d 1345 (1995). A grant of summary judgment is reviewed de novo. McKinney, 296 Ill. App. 3d at 99.

Defendant asserts that plaintiff waived its right to challenge his entitlement to "any occupation" disability payments under the policy by paying him "own occupation" disability benefits under the policy in September 1990. Allstate acknowledges that by paying defendant under the "own occupation" disability provision, it conceded that defendant was unable to perform the duties related to his job. Allstate maintains, however, that such payment did not concede that defendant was unable to work at any occupation. We agree.

The policy clearly differentiates between "own occupation" benefits and "any occupation" benefits and sets forth different standards for the payment of benefits under each provision. Notes in the record made by Allstate representatives and an affidavit from defendant's prior attorney indicate that at the time the "own occupation" benefit was paid, a determination as to payment of "any occupation" benefits had not yet been made. Approval of "any occupation" benefits was awaiting an independent medical examination that would determine if defendant was unable to work at any occupation. Such an examination apparently never took place. The record thus does not support defendant's waiver argument but instead establishes that at the time Allstate paid defendant "own occupation" benefits, it reserved the right to contest payment of "any occupation" benefits. Payment of the "own occupation" benefits did not, under the circumstances present here, constitute a waiver of plaintiff's right to contest defendant's eligibility for "any occupation" benefits.

Defendant next contends that he had raised a material question of fact as to whether or not he was entitled to "any occupation" disability income benefits under the policy. Defendant, in his attempt to return to his job with the CTA, worked approximately six weeks into the second year following his accident. The trial court found that because defendant worked for a period of time he was not continuously prevented from engaging in any occupation and Allstate, as a matter of law, could deny defendant payment of "any occupation" total disability benefits.

Provisions in insurance policies that limit or exclude coverage are to be construed liberally in favor of the insured. State Farm Mutual Automobile Insurance Co. v. Villicana, 181 Ill. 2d 436, 443, 692 N.E.2d 1196 (1998). Under the policy, benefits will be paid if the disability, "during the second and subsequent years after commencement continuously prevents the insured person from engaging in any occupation or employment for wage or profit."

The term "continuously" means "in unbroken sequence; without intermission or cessation." Black's Law Dictionary, p. 322. However, the term has been given a more liberal definition in insurance cases. In Jacobson v. Mutual Benefit Health & Accident Ass'n., 70 N.D. 566, 296 N.W. 545, 553 (1941), the Supreme Court of North Dakota examined the meaning of the term "continuously" in a policy that required the insured to be "wholly and continuously" disabled in order to receive benefits. The court held that in such a policy, "the word 'continuously' means regularly, protracted, enduring and without any substantial interruption of sequence, as contradistinguished from irregularly, spasmodically, intermittently or occasionally." Jacobson, 296 N.W. at 553. The court went on to note that continuously did not necessarily mean constantly and did not denote ceaseless and absolute continuity. Jacobson, 296 N.W. at 553. The only Illinois case cited by the parties, Grau v. Travelers Insurance Co. of Hartford, Conn., 303 Ill. App. 212, 24 N.E.2d 882 (1940), fails to provide much guidance. The court in Grau, 303 Ill. App. At 216, found that where an injured plaintiff had worked approximately 41 days out of 55 following an accident, it was obvious that he was not "wholly and continuously" disabled from the date of the accident as required by the insurance policy in question. The court did not elaborate, therefore, on how the term continuous should be defined. Although there are no Illinois cases directly on point, the definition of continuous found in Jacobson has been cited approvingly in a number of cases from other jurisdictions and in other authorities. See 10 Couch on Insurance 3d,