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Yaccino v. State Farm Mutual Automobile Insurance Co.
State: Illinois
Court: 2nd District Appellate
Docket No: 2-02-1247, 2-02-1248 cons. Rel
Case Date: 02/05/2004

Nos. 2--02--1247 & 2--02--1248 cons.



IN THE

APPELLATE COURT OF ILLINOIS

SECOND DISTRICT


MICHAEL YACCINO,

          Plaintiff,

v.

STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY,

          Defendant and Cross-Plaintiff-
          Appellant

(Intergovernmental Risk Management Agency,
Defendant and Cross-Defendant-Appellee;

Guadalupe Alba; Veronica Flores; and The City
of West Chicago, Defendants).
 

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Appeal from the Circuit Court of Du Page
County.


No. 01--MR--1039









Honorable
Edward R. Duncan, Jr.,
Judge, Presiding.
 


MICHAEL YACCINO,

          Plaintiff-Appellee,

v.

INTERGOVERNMENTAL RISK
MANAGEMENT AGENCY and THE CITY
OF WEST CHICAGO,

          Defendants-Appellants

(Guadalupe Alba; Veronica Flores; and
State Farm Mutual Automobile Insurance
Company, Defendants).

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Appeal from the Circuit Court of Du Page
County.


No. 01--MR--1039








Honorable
Edward R. Duncan, Jr.,
Judge, Presiding.

 

JUSTICE CALLUM delivered the opinion of the court:

Plaintiff, Michael Yaccino, sought a declaratory judgment (735 ILCS 5/2--701 (West 2002))specifying whether defendant and crossplaintiff-appellant's, State Farm Mutual Automobile InsuranceCompany's (State Farm's), and defendant and crossdefendant-appellee's, Intergovernmental RiskManagement Agency's (IRMA's), uninsured motorist coverages were primary or excess. State Farmfiled a cross claim against IRMA, seeking a declaration that IRMA's uninsured motorist coverage wasprimary and that State Farm's was excess. Upon cross-motions for summary judgment (735 ILCS5/2--1005 (West 2002)) on State Farm's cross claim and on part of plaintiff's complaint, the trial courtfound that State Farm's coverage was primary and IRMA's was excess, and it granted IRMA and theCity of West Chicago's motion. In appeal number 2--02--1247, State Farm appeals that order.

Upon subsequent cross-motions for summary judgment addressing the extent of IRMA'scoverage, the trial court found, inter alia, that Officer Michael Beamish was not a necessary party tothe litigation, and it granted plaintiff's and State Farm's motions and denied IRMA and WestChicago's motion. In appeal number 2--02--1248, IRMA and West Chicago appeal the trial court'sfinding that Officer Beamish was not a necessary party.

We affirm in appeal number 2--02--1247, and we dismiss appeal number 2--02--1248 as moot.

I. BACKGROUND

In his complaint, plaintiff alleged that, on December 18, 1999, he occupied a police vehiclethat was stopped facing south off of Route 59 in West Chicago. The police vehicle was owned byWest Chicago and insured by IRMA. Codefendant Guadalupe Alba was driving a vehicle owned bycodefendant Veronica Flores. The vehicle operated by Alba, which was traveling south on Route 59,left the roadway and struck the police vehicle occupied by plaintiff, resulting in personal injuries toplaintiff. The Alba vehicle was uninsured.

State Farm had issued to plaintiff an automobile insurance policy. The policy provides, inrelevant part:

"UNINSURED MOTOR VEHICLE - COVERAGE U

You have this coverage if 'U' appears in the 'Coverages' space on the declarationspage.

We will pay damages for bodily injury an insured is legally entitled to collect from theowner or driver of an uninsured motor vehicle. The bodily injury must be sustained by aninsured and caused by accident arising out of the operation, maintenance or use of anuninsured motor vehicle.

* * *

UNINSURED MOTOR VEHICLE - COVERAGE U1 (Damages for Bodily Injuryor Property Damage Caused by Uninsured Motor Vehicles)

You have this coverage if 'U1' appears in the 'Coverages' space on the declarationspage.

We will pay damages for:

1. bodily injury an insured is legally entitled to collect from the owner oroperator of an uninsured motor vehicle; and

2. property damage an insured is legally entitled to collect:

a. as the result of actual physical contact of an uninsured motorvehicle with your car or a newly acquired car, and

b. if the owner or operator of the at-fault uninsured motor vehicleis identified.

The bodily injury must be sustained by an insured. The bodily injury orproperty damage must be caused by accident arising out of the operation, maintenanceor use of an uninsured motor vehicle.

* * *

If There Is Other Uninsured Motor Vehicle Coverage - Coverages U and U1

1. If uninsured motor vehicle coverage for bodily injury is available to aninsured from more than one policy provided by us or any other insurer, the total limitof liability available from all policies provided by all insurers shall not exceed the limitof liability of the single policy providing the highest limit of liability. This is the mostthat will be paid regardless of the number of policies involved, persons covered,claims made, vehicles insured, premiums paid or vehicles involved in the accident.

2. Subject to item 1 above, any coverage applicable under this policy shallapply:

a. on a primary basis if the insured sustains bodily injury whileoccupying your car, or while not occupying a motor vehicle or trailer.

b. on an excess basis if the insured sustains bodily injury whileoccupying a vehicle not owned by or leased to you, your spouse or anyrelative." (Emphasis added.)

IRMA, a pool of self-insured municipalities, had issued to West Chicago a coverage documenteffective January 1, 1999, through December 31, 1999. Section IV of the "Business Auto CoverageForm" of the IRMA document, which is entitled "Business Auto Conditions," provides in relevantpart:

"5. Other Insurance

a. For any covered 'auto' you own, this Coverage Form provides primarycoverage. For any covered 'auto' you don't own, the coverage provided by thisCoverage Form is excess over any other collectible insurance.

* * *

d. When this Coverage Form and any other insurance policy covers on thesame basis, either excess or primary, we will pay only our share. Our share is theproportion that the Limit of Coverage of our Coverage Form bears to the total of thelimits of all the Coverage Forms and insurance policies covering on the same basis."

A section entitled "Illinois Uninsured Motorists Coverage" (uninsured motorist amendment), whichamends the "Business Auto Coverage Part," provides in relevant part:

"A. Coverage

1. We will pay all sums the 'Member' is legally entitled to recover ascompensatory damages from the owner or driver of an 'uninsured motor vehicle.' Thedamages must result from 'bodily injury' sustained by the 'Member' caused by an'accident.' The owner's or driver's liability for these damages must result from theownership, maintenance or use of the 'uninsured motor vehicle.' "

A "member" is defined as "Anyone*** 'occupying' a covered 'auto.' "

A section entitled "Changes in Conditions" in the uninsured motorist amendment provides,in relevant part:

"The CONDITIONS are changed for UNINSURED MOTORISTS COVERAGE as follows:

1. OTHER INSURANCE is replaced by the following:

For any covered 'auto' you own, this Coverage Form provides primarycoverage. For any covered 'auto' you don't own, the coverage provided by thisCoverage Form is excess over any other collectible primary uninsured motoristscoverage.

If this Coverage Form and any other insurance policy providing similarcoverage apply to the same 'accident,' the maximum limit of coverage under allCoverage Forms or insurance policies shall be the highest applicable limit of coverageunder any one Coverage Form or policy.

When this Coverage Form and any other insurance policy cover on the samebasis, either excess or primary, we will pay only our share. Our share is theproportion that the Limit of Coverage of our Coverage Form bears to the total of thelimits of all the Coverage Forms and insurance policies covering on the same basis."

"Amendment #10," also called the "Other Insurance Amendment," amends the"Business Auto Coverage Form." It provides:

"Section IV - #5 Other Insurance wording of the Business Auto Coverage Form isreplaced by the following:

This self-insurance pool (IRMA) shall not cover a loss which is insured by acommercial insurance policy, except on an excess basis. The placement ofcommercial insurance by a Member, either as a Named Insured or as an AdditionalInsured, shall not cause this self-insurance pool (IRMA) to be construed as providingconcurrent primary coverage to the 'Member'.

This self-insurance pool shall always be deemed excess over commercialinsurance, whether primary, excess, pro rata, contingent or any other basis. Since weshall always be deemed excess, we shall have no duty to defend any claim or suitwhere a commercial insurer has a duty to defend. If a commercial insurer shall refuseto defend a 'Member's' claim or suit, we will undertake the defense and be entitled tothe 'Member's' rights against such insurer. Since we shall always be excess overcommercial insurance, we shall pay only our share of the amount of a 'Member's' loss,if any, that exceeds the sum of:

(i) the total amount that commercial insurance would pay for suchloss in the absence of this self-insurance pool; and

(ii) the total amount of such 'Member's' deductible (and any self-insurance).

A commercial insurer shall have no claim or rights against this self-insurancepool. The foregoing is subject to the coverage document terms and MemberAggregate limits."

On July 12, 2002, the trial court granted summary judgment for IRMA and West Chicago onpart of plaintiff's complaint and on State Farm's cross claim against IRMA. Relying on AetnaCasualty & Surety Co. of Illinois v. James J. Benes & Associates, Inc., 229 Ill. App. 3d 413 (1992),and Antiporek v. Village of Hillside, 114 Ill. 2d 246 (1986), the trial court found that State Farm'scoverage was primary and IRMA's was excess because IRMA does not constitute a private insurancecarrier. The court did not rule upon the extent of IRMA's excess coverage.

Subsequently, State Farm, IRMA, West Chicago, and plaintiff moved for summary judgmenton the issue of the extent of IRMA's uninsured motorist coverage. In their motion, IRMA and WestChicago alleged that Officer Michael Beamish was a necessary party to the action. On October 15,2002, the trial court granted plaintiff's and State Farm's motions for summary judgment and deniedIRMA and West Chicago's motion for summary judgment. It found that IRMA's policy provides $1million in uninsured motorist coverage per accident and that Officer Beamish was not a necessaryparty to the litigation.

In appeal number 2--02--1247, State Farm appeals the trial court's July 12, 2002, orderdenying its summary judgment motion and granting IRMA and West Chicago's motion. In appealnumber 2--02--1248, IRMA and West Chicago appeal the court's October 15, 2002, order denyingIRMA and West Chicago's motion for summary judgment and granting State Farm's and plaintiff'smotions.

II. STANDARD OF REVIEW

Summary judgment is appropriate only where there is no genuine issue of material fact andthe pleadings, depositions, and affidavits show that the moving party is entitled to a judgment as amatter of law. Farm Bureau Mutual Insurance Co. v. Alamo Rent A Car, Inc., 319 Ill. App. 3d 382,386 (2000). The construction of terms contained in an insurance policy is a question of lawappropriate for summary judgment disposition. Continental Casualty Co. v. McDowell & Colantoni,Ltd., 282 Ill. App. 3d 236, 241 (1996). Summary judgment orders are reviewed de novo. OutboardMarine Corp. v. Liberty Mutual Insurance Co., 154 Ill. 2d 90, 102 (1992).

III. ANALYSIS

A. Appeal Number 2--02--1247

In appeal number 2--02--1247, State Farm argues that IRMA's coverage is primary and thatState Farm's coverage is excess. It contends that the "other coverage" clause in its policy should beread to include IRMA's form of self-insurance. State Farm then suggests that certain provisions inthe IRMA document be interpreted as providing primary coverage. IRMA responds that, as itprovides a form of self-insurance, the "other coverage" clause in the State Farm policy is inapplicableand therefore State Farm's policy provides primary coverage to Yaccino.

We examine first the uninsured motorist provisions in State Farm's policy. The "othercoverage" provision provides as follows:

"If There Is Other Uninsured Motor Vehicle Coverage - Coverages U and U1

1. If uninsured motor vehicle coverage for bodily injury is available to aninsured from more than one policy provided by us or any other insurer, the total limitof liability available from all policies provided by all insurers shall not exceed the limitof liability of the single policy providing the highest limit of liability. This is the mostthat will be paid regardless of the number of policies involved, persons covered,claims made, vehicles insured, premiums paid or vehicles involved in the accident.

2. Subject to item 1 above, any coverage applicable under this policy shallapply:

a. on a primary basis if the insured sustains bodily injury whileoccupying your car, or while not occupying a motor vehicle or trailer.

b. on an excess basis if the insured sustains bodily injury whileoccupying a vehicle not owned by or leased to you, your spouse or anyrelative." (Emphasis added.)

State Farm argues that, regardless of whether IRMA's coverage is insurance or not, clause2.b. in the foregoing provision applies and State Farm provides excess uninsured motorist coveragefor Yaccino's claim. We disagree with State Farm's interpretation of the provision. The provisionclearly addresses cases where there is other uninsured motor vehicle coverage. The first paragraphof that provision explains that "other coverage" means coverage that is available from other insurers. It then discusses the total limit of liability. The second paragraph of the provision addresses when State Farm's coverage will be primary and when it is excess, subject to paragraph 1. State Farmessentially suggests that we read the second paragraph in a vacuum and ignore the precedingparagraph's definition of other uninsured coverage. We decline to read the paragraph in this way andchoose instead to read it in the context of the entire provision, which addresses other uninsuredcoverage. Accordingly, reading the provision as a whole, it is clear to us that paragraph 2 is operativeonly if the other uninsured coverage is provided by a policy issued by an insurer. Thus, we mustdetermine if IRMA constitutes an insurer.

Relying on Antiporek and Aetna, as did the trial court, IRMA maintains that self-insuranceis not insurance and thus State Farm's "other coverage" clause is not operative. In those cases, as wediscuss below, the courts relied on the distinction between commercial insurance and self-insuranceand the public policy interest in protecting public funds.

In Antiporek, the supreme court held that membership in IRMA amounts to pooled self-insurance of governmental entities that share risks and costs of civil liabilities and does not operateas waiver of municipal tort immunity. Antiporek, 114 Ill. 2d at 251-52. In that case, the plaintiffsued a municipality that was a member of IRMA, alleging negligence when her daughter was injuredwhile sledding on property owned and maintained by the municipality. The village raised immunityas an affirmative defense.

The plaintiff argued that IRMA is analogous to an insurance company because participantsmust pay a premium in consideration for indemnification from IRMA on the occurrence ofenumerated perils. The supreme court rejected that argument. The court noted that IRMA'sparticipants have not shifted the risk to for-profit risk takers, but have instead decided to share therisk among themselves. IRMA's governing documents require supplemental contributions from allmembers, including those that have submitted no claims. Moreover, because there are no privateinvestors or nongovernmental participants, there is no danger that private persons will receive anunconscionable profit by accepting premiums while asserting immunities to avoid claims. Thus,because the court found that "the substance of IRMA is pooled self-insurance," it held that themunicipality's immunities were not waived by its participation in IRMA. Antiporek, 114 Ill. 2d at251-52.

In Aetna, this court considered whether IRMA had the same obligation to contribute to thesettlement of a claim as a commercial insurer. Pursuant to its request, a municipality was added asan additional insured under a general contractor's commercial general liability policy with Aetna. Theestate of a deceased employee of the general contractor sued the municipality. Aetna paid for themunicipality's defense. IRMA provided risk management services to the municipality. Aetna soughta declaration that it was entitled to reimbursement from IRMA for one-half of the defense andsettlement payments made by Aetna on behalf of the municipality in the underlying suit. IRMArefused.

The trial court denied Aetna's motion for summary judgment and granted IRMA's cross-motion for summary judgment. Relying on Antiporek, this court affirmed, holding that IRMA is notand should not be treated as a private insurance carrier. Aetna, 229 Ill. App. 3d at 421. We rejectedAetna's argument that Antiporek was restricted to the issue of a municipality's waiver ofgovernmental immunity and that IRMA functions as an insurance company for purposes of equitablecontribution by providing risk protection. We concluded that Antiporek was not so limited and reliedon the distinction the Antiporek court made between commercial insurance and self-insurance andthe public policy interest in protecting public funds and property.

State Farm suggests that Aetna and Antiporek were limited to the issues of tort immunity andequitable contribution. We do not read them in such a limited manner. The Antiporek court'sdistinction between commercial insurance and self-insurance and its reliance on the public policyinterest in protecting public funds are as valid in this context as they were in the earlier cases.

Next, State Farm maintains that Chicago Hospital Risk Pooling Program v. Illinois StateMedical Inter-Insurance Exchange, 325 Ill. App. 3d 970 (2001), is instructive. In that case, a staffphysician of a city hospital was sued for malpractice. Two policies potentially covered the claim: thehospital's self-insurance coverage with Chicago Hospital Risk Pooling Plan (CHRPP) and thephysician's professional liability policy with Illinois State Medical Inter-Insurance Exchange (ISMIE). ISMIE administered a trust whereby participating nonprofit hospitals pooled certain risks associatedwith the treatment and care provided to their patients.

Because the claim arose from his employment at the hospital, the physician selected CHRPPto respond to this loss, pursuant to Illinois's selective tender rule. Subsequently, CHRPP soughtequitable contribution from ISMIE. ISMIE argued that the insured's selective tender barred thecontribution action. The Appellate Court, First District, noted that an insured has a paramount rightunder the selective tender rule to choose or knowingly forgo an insurer's participation in a claim. While it acknowledged that the trust funds are not insurance, the court held that CHRPP providedthe same service as traditional carriers and therefore it was bound by the same common lawobligations imposed upon such carriers, including the obligation to honor the insured's decision toforgo other potentially available coverage. Chicago Hospital Risk Pooling Program, 325 Ill. App.3d at 978-79. Examining the trust agreement, the court further noted that it resembled an insurancecontract. Accordingly, it held that CHRPP should be treated the same as a traditional insurer forpurposes of applying common-law insurance principles as they relate to coverage issues. ChicagoHospital Risk Pooling Program, 325 Ill. App. 3d at 978-79. Where CHRPP had a concurrentobligation to cover the physician's risk, the physician had the right to select his CHRPP coverage tothe exclusion of his ISMIE coverage. Thus, CHRPP's status as a risk-pooling trust did not defeatapplication of the selective tender rule. Chicago Hospital Risk Pooling Program, 325 Ill. App. 3d at980.

Addressing whether CHRPP could state a cause of action for equitable contribution againstISMIE, the court noted that a "true" self-insured does not share an identity of insurable interests andrisks with a traditional insurance carrier because it has chosen to retain its risk rather than shift anyof that risk to a commercial carrier. Therefore, there can be no equitable contribution from or to thecommercial carrier. Chicago Hospital Risk Pooling Program, 325 Ill. App. 3d at 982. However,distinguishing Aetna and other cases, the court found significant the presence of an "other insurance"clause in the CHRPP document. Chicago Hospital Risk Pooling Program, 325 Ill. App. 3d at 983. This indicated to the court that CHRPP sought to share the risk of loss with a commercial carrierwhen they had coincidental coverage, and therefore to transform its coverage into something otherthan pure self-insurance. Accordingly, the court held that CHRPP's status as a risk-pooling trust didnot defeat its cause of action for contribution. Chicago Hospital Risk Pooling Trust, 325 Ill. App.3d at 983.

State Farm maintains that, because the IRMA coverage document resembles an insurancecontract, this court should utilize the analysis in Chicago Hospital Risk Pooling Trust and hold that IRMA be treated like a commercial insurer. We disagree. We believe that the public policyconsiderations discussed in Antiporek and Aetna, as we discussed above, are determinative. Suchconsiderations were not present in Chicago Hospital Risk Pooling Trust because the hospitals,although nonprofit institutions, were not public entities and, therefore, there was no risk that publicfunds would be expended to pay claims.

Having determined that IRMA should not be treated as an insurer for purposes of givingeffect to the "other coverage" clause in State Farm's policy, we must turn to the policy's uninsuredcoverage provisions. The section that describes the coverages labeled "U" and "U1" provides thatState Farm's policy will pay damages for bodily injury and property damage that an insured is entitledto collect from the owner or operator of an uninsured vehicle. Therefore, as is apparent from thislanguage, where the "other coverage" clause in State Farm's policy is not operative, State Farmprovides primary coverage.

We turn next to the IRMA document's uninsured motorist provisions. Three provisions arerelevant: one in the main document--the business auto coverage provision--and two amendments thatmodify the main document provision. The business auto coverage provision states that IRMAprovides primary coverage for any member-owned auto. Two amendments modify this provision: (1) the uninsured motorist amendment, which addresses only uninsured motorist coverage and states,as does the business auto coverage provision, that IRMA provides primary coverage for any member-owned auto; and (2) amendment No. 10, which provides that IRMA's coverage "shall always bedeemed excess over commercial insurance." State Farm argues that the amendments conflict and thatthe only way they can be reconciled is to read the uninsured motorist amendment as controlling foruninsured motorist coverage because it specifically addresses such coverage. We disagree.

State Farm's argument is based on the assumption that one amendment necessarily completelytrumps the other. In the absence of policy language to that effect, we do not read the provisions asState Farm suggests. Essentially, State Farm's reading of IRMA's document renders amendment No.10 superfluous in all uninsured motorist cases. There is no language in the IRMA documentindicating to us that it should be read in such a limited way. We conclude that amendment No. 10does not directly conflict with the uninsured motorist amendment because it states that, in caseswhere there is other "commercial insurance," IRMA's coverage shall "always" be deemed excess. We read the word "always" to include uninsured motorist scenarios otherwise addressed by theuninsured motorist amendment. Thus, read together, the uninsured motorist amendment andamendment No. 10 provide that, in uninsured motorist cases where there is other commercialinsurance, as is the case here, IRMA's coverage is excess. In an uninsured motorist scenario, forexample, where there is other non-commercial insurance, amendment No. 10 would not apply, andthe uninsured motorist amendment's provision that IRMA provides primary coverage would control. We believe that this reading of the IRMA document is the only reasonable interpretation because itgives full effect to both amendments.

For the reasons stated above, we affirm the trial court's July 12, 2002, order granting IRMAand West Chicago's motion for summary judgment and denying State Farm's motion.

B. Appeal Number 2--02--1248

In appeal number 2--02--1248, IRMA and West Chicago appeal the trial court's October 15,2002, order. In that order, the trial court determined that IRMA's policy provides $1 million inuninsured coverage per accident and that Officer Beamish is not a necessary party. On appeal, IRMAand West Chicago argue solely that Officer Beamish is a necessary party.

Before addressing this argument, we must consider whether this appeal should be dismissedas moot. The existence of an actual controversy is a prerequisite to appellate jurisdiction, and courtsof review will generally not decide abstract, hypothetical, or moot questions. Steinbrecher v.Steinbrecher, 197 Ill. 2d 514, 523 (2001). An appeal is considered moot where it presents no actualcontroversy or where the issues have ceased to exist. Richardson v. Rock Island County OfficersElectoral Board, 179 Ill. 2d 252, 256 (1997).

We conclude that whether Officer Beamish is a necessary party is moot. In their motion forsummary judgment, IRMA and West Chicago argued that the trial court could not decide the extentof excess coverage unless Officer Beamish was made a party to the action. In their response to StateFarm's motion for summary judgment, IRMA and West Chicago again asserted that the trial courtcould not issue a "binding" order addressing the coverage limit because a necessary party had notbeen added to the case. On appeal, IRMA and West Chicago do not challenge the trial court's rulingthat IRMA provides $1 million in uninsured motorist coverage. They argue only that Officer Beamishis a necessary party and request that we vacate that aspect of the trial court's ruling and remand thecause for further proceedings. Additionally, they now assert that the amount of coverage issue andthe necessary party issue are independent. However, IRMA and West Chicago are precluded onappeal from asserting a position inconsistent with one they took in the trial court. See, e.g., Autonv. Logan Landfill, Inc., 105 Ill. 2d 537, 543 (1984). Thus, because IRMA and West Chicago'srequest to add Officer Beamish as a necessary party was made in the context of the extent ofcoverage, and because that coverage issue was resolved by the trial court and has not been appealed,we conclude that IRMA and West Chicago's appeal is moot. Accordingly, we dismiss the appeal.

IV. CONCLUSION

For the foregoing reasons and with respect to appeal number 2--02--1247, the judgment ofthe circuit court of Du Page County is affirmed. Appeal number 2--02--1248 is dismissed.

No. 2--02--1247--Affirmed.

No. 2--02--1248--Appeal dismissed.

BOWMAN and GILLERAN JOHNSON, JJ., concur.

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