Nila v. Hartford Insurance Co. of the Midwest, No. 2-99-0325
2nd District, 12 April 2000
| SHARON NILA and DEBORAH KUYKENDALL, as Co-ex'rs of the Estate ofPatricia Scarff, Deceased, and JENNIFER MYRA, Plaintiffs-Appellees, v. HARTFORD INSURANCE COMPANY OF THE MIDWEST, Defendant-Appellant. | Appeal from the Circuit Court of KaneCounty. No. 97--MR--369 Honorable Patrick J. Dixon, Judge,Presiding. |
JUSTICE COLWELL delivered the opinion of the court:
Defendant, Hartford Insurance Company of the Midwest (Hartford), appeals an order of the circuit court of Kane Countygranting summary judgment in favor of plaintiffs, Sharon Nila and Deborah Kuykendall, as co-executors of the estate ofPatricia Scarff, and Jennifer Myra. The circuit court found that an automobile insurance policy delivered to Patricia did notinclude uninsured motorist coverage in an amount equal to the insured's bodily injury liability limits as required by section143a-2 of the Illinois Insurance Code (Code) (215 ILCS 5/143a-2 (West 1994)) and that Patricia never specifically rejecteduninsured motorist coverage equal to the liability limits of the policy. Therefore, the court reformed the policy to provideuninsured motorist coverage equal to the bodily injury liability limits of the policy.
On appeal, we must determine whether a surviving wife is bound by her deceased husband's initial rejection of additionaluninsured motorist coverage where the insurer later issues an automobile liability policy to the surviving wife as the solenamed insured for a term beyond the husband's last policy renewal.
I. BACKGROUND
In January 1987, Raymond Scarff contacted Hartford to procure information regarding the insurer's automobile insuranceprogram with the American Association of Retired Persons (AARP). At the time, Raymond resided with his wife, Patricia.Hartford sent Raymond a quotation package in the mail. The quotation package contained a cover letter, a quotation, a sheetentitled "Your Choices in Illinois," an application, and a special credits certification form. The quotation listed fourdifferent coverage limits for each category of coverage along with their corresponding annual premiums. Informationregarding the nature of uninsured motorist coverage was located on the reverse side of the quotation page as well as on thesheet entitled "Your Choices in Illinois."
The back of the application contained space for the applicant to select a payment plan and the desired amount of basiccoverage, uninsured/underinsured motorist coverage, and uninsured motorist property damage coverage. Theuninsured/underinsured motorist coverage selection section provided:
"UNINSURED/UNDERINSURED MOTORISTS COVERAGE
Uninsured Motorists/Underinsured Motorists Coverage is required in Illinois. Uninsured Motorist Property DamageCoverage is optional. The choice that you make below will apply to any policy which renews, extends, changes,supercedes or replaces your existing policy or any policy for which you may be applying.
Maximum amount available (an amount equal to the liability limit of your policy)
The following specific amount $_____ Minimum amount available."
Raymond selected bodily injury limits of $100,000 per person and $300,000 per occurrence ($100,000/$300,000), and heopted for the minimum amount of uninsured/underinsured motorist coverage. Raymond signed and dated the applicationand submitted it to Hartford.
Hartford issued policy No. 55PHA501263 effective March 1, 1987. The policy contained bodily injury liability limits of$100,000/$300,000 and uninsured/underinsured motorist limits of $15,000 per person and $30,000 per occurrence($15,000/$30,000). Raymond was the named insured under the policy while both Raymond and Patricia were listed asdrivers. The policy defined the terms "you" and "your" as used in the policy to include the named insured and "[t]he spouseif a resident of the same household [as the named insured]." Attached to the policy as an endorsement was a "LifetimeContinuation Agreement," in which Hartford promised to renew the policy as long as the insured satisfied certainrequirements.
Raymond renewed the policy annually effective March 1 of the years 1988, 1989, 1990, 1991, 1992, 1993, and 1994. Theuninsured motorist coverage under Raymond's policy was increased to $25,000 per person and $50,000 per occurrenceeffective March 1, 1988. However, uninsured motorist coverage was decreased to $20,000 per person and $40,000 peroccurrence ($20,000/$40,000) with the policy effective March 1, 1990. Raymond died on April 9, 1994.
Following Raymond's death, an endorsement to the policy effective April 19, 1994, deleted Raymond as a driver andchanged Patricia's marital status to widowed. An endorsement effective July 9, 1994, replaced coverage for a 1989 Chryslerwith coverage for a 1995 Plymouth. An endorsement effective July 18, 1994, replaced Raymond with Patricia as the namedinsured on the policy.
Thereafter, Patricia purchased a one-year policy of insurance from Hartford effective March 1, 1995. Patricia did notcomplete an application for the policy, and the policy was assigned the same number as the policy initially issued toRaymond. Further, the policy had the same bodily injury liability limits ($100,000/$300,000) and uninsured motorist limits($20,000/$40,000) as the policy renewed by Raymond on March 1, 1994. Patricia renewed the policy for a one-year termeffective March 1, 1996. It is uncontested that Patricia never specifically rejected uninsured motorist coverage in an amountequal to the bodily injury liability limits of her policy.
On July 22, 1996, Patricia was fatally injured when the car she was driving was struck by a vehicle driven by an uninsuredmotorist. Jennifer Myra, a passenger in Patricia's vehicle, was seriously injured in the collision. Pursuant to the terms of thepolicy issued to Patricia on March 1, 1996, Hartford paid uninsured motorist benefits of $20,000 each to Myra and toPatricia's estate. Hartford rejected plaintiffs' request to reform the uninsured motorist limits to $100,000/$300,000.
On October 15, 1997, plaintiffs filed a complaint for declaratory judgment in the circuit court of Kane County. Plaintiffscomplained that Hartford failed to offer Patricia uninsured motorist coverage equal to the bodily injury liability limits of herpolicy. Plaintiffs sought to reform the insurance policy issued to Patricia to provide uninsured motorist limits of$100,000/$300,000. Both parties filed cross-motions for summary judgment.
The circuit court granted plaintiffs' motion for summary judgment and denied defendant's motion. The basis for the court'sdecision was that, pursuant to Part F of the contract for insurance, coverage for Patricia was dependent upon herrelationship to Raymond. For Patricia to remain insured, she had to remain Raymond's spouse and reside in the samehousehold as Raymond. Following Raymond's death, Patricia no longer occupied the status of spouse residing in the samehousehold. Pursuant to the terms of the insurance policy, Hartford was obligated to extend coverage for a surviving spouseonly until the end of the policy period (March 1, 1995).
The court also observed that the first time that Patricia was responsible for decisions as to the type and amount of coveragewas when she purchased coverage beginning March 1, 1995. Patricia never specifically rejected uninsured motoristcoverage equal to the bodily injury limits of her policy as required by section 143a-2 of the Code. Accordingly, the courtreformed the policy to provide uninsured motorist coverage of $100,000/$300,000, an amount equal to the bodily injurylimits of Patricia's policy. The circuit court denied defendant's motion for reconsideration, and this timely appeal followed.
ANALYSIS
Standard of Review
A motion for summary judgment should be granted only when there is no genuine issue of material fact and the movingparty is entitled to a judgment as a matter of law. Purtill v. Hess, 111 Ill. 2d 229, 240 (1986). Our review of an ordergranting summary judgment is de novo. American Country Insurance Co. v. Kraemer Brothers, Inc., 298 Ill. App. 3d 805,810 (1998). This court may affirm summary judgment on any basis found in the record. Monticello Insurance Co. v. Wil-Freds Construction, Inc., 277 Ill. App. 3d 697, 701 (1996).
Discussion
The issue we are asked to consider is whether a surviving wife is bound by her deceased husband's initial rejection ofadditional uninsured motorist coverage where the insurer later issues an automobile liability policy to the surviving wife asthe sole named insured for a term beyond the husband's last policy renewal. The resolution of this issue requires us to focuson a rather narrow inquiry, i.e., whether the policy issued to the surviving wife was a new policy of insurance or a renewalof the policy initially issued to the husband. If we find that the policy issued to the surviving wife was a new one, theinsurer was required to provide the surviving wife with uninsured motorist coverage equal to the bodily injury liabilitylimits of her policy unless the surviving wife specifically rejected such coverage. However, if we find that the policy issuedto the surviving wife was a mere renewal, then the surviving wife was bound by her husband's initial rejection of additionaluninsured motorist coverage.
Whether the policy issued to Patricia was a "renewal" involves the interpretation of section 143a-2 of the Code (215 ILCS5/143a-2 (West 1994)). The applicable version of section 143a-2 provides in pertinent part:
"