author: PRESIDING JUSTICE GORDON

text:
    DIAMOND STATE INSURANCE COMPANY et al, Plaintiffs-Appellees, v. CHESTER-JENSEN COMPANY, INC., Defendant-Appellant (The People ex rel. George B. Peters, Chairman of the Capital Development Board, Defendant).
    First District (5th Division)
    No. 1 — 90—1760
    Opinion filed February 11, 1993.

      Keith F. Bode, Joseph Bisceglia, and Gabrielle Sigel, all of Jenner & Block, of Chicago, and Robert R. Reeder, of Philadelphia, Pennsylvania, for appellant.
    L. Barrett Bodach, of Heineke, Burke, Healy & Bodach, of Chicago, for appellees.
   PRESIDING JUSTICE GORDON

delivered the opinion of the court:

Plaintiff insurance companies brought this action for declaratory judgment seeking a determination that there was no duty to defend their insured, appellant Chester-Jensen Company, Inc. (Chester-Jensen), in a breach of contract and warranty action filed against Chester-Jensen by the State of Illinois. The State’s complaint in the underlying litigation seeks damages from certain defendants, including Chester-Jensen, resulting from the failure of the air conditioning system installed in the State of Illinois Center to adequately cool the building during the summers of 1985 and 1986. Plaintiffs filed a motion for summary judgment, contending that the insurance policies involved did not cover this potential liability. The trial court granted plaintiffs’ motion for summary judgment and Chester-Jensen appeals, contending that Illinois law requires that the policies be interpreted to provide coverage. In the alternative, Chester-Jensen contends that the trial court erred in applying Illinois law and that, under Pennsylvania law, plaintiffs would be required to defend it in the underlying litigation.

Facts

Chester-Jensen is a Pennsylvania corporation which maintains its principal place of business in that State. It is engaged in the manufacture of refrigeration and other heat-exchange equipment. In 1982, Chester-Jensen furnished 100,000-pound ice builders (thermal energy storage units) and ancillary equipment to be incorporated into the heating, ventilation and air conditioning (ETVAC) system of the State of Illinois Center located in Chicago, Illinois. These thermal banks were installed in the building by two subcontractors.

After the air conditioning system failed to perform as expected, the State of Illinois brought suit in People of the State of Illinois ex rel. George Peters v. Murphy-Knight (Cir. Ct. Cook Co.), No. 87 — L — 7496, joining as defendants 14 entities, including Chester-Jensen. The State’s complaint alleged that in the summers of 1985 and 1986 the building experienced extremely high indoor temperatures of over 90 degrees Fahrenheit on a regular basis and that temperatures of over 110 degrees Fahrenheit were present in some cases. According to the allegations of the State’s complaint, these temperatures made the building “virtually uninhabitable” as the temperatures were so high that ordinary office work and retail operations were “impossible.”

The complaint alleged that the cause of these excessive temperatures was “an inadequately designed and defectively installed and constructed air conditioning system.” Specifically, with respect to Chester-Jensen, the State alleged in count VIII of its complaint that Chester-Jensen had breached its contract to provide thermal banks and ancillary equipment in conformance with the contract specifications. In count IX of its complaint, the State alleged that Chester-Jensen breached its express warranties that the thermal banks would “produce the capacities and meet the specifications” required by the contract and as published by Chester-Jensen. Count X of the complaint charged fraud against Chester-Jensen, alleging that it knowingly misrepresented the output capability of the thermal banks. Chester-Jensen does not contend that the policies cover the allegations contained in the fraud count and it is therefore not a part of this appeal.

According to the complaint, the State “will expend at least $10,000,000 on modification and repairs to the heating, ventilation and air conditioning systems in order to have a habitable state office building in Chicago.” The complaint stated that in “addition to economic damages” it suffered other damages, including:

“a. lost rent from commercial tenants who refused to pay their rent because of extreme heat in the building;
b. lost work days from State employees who became ill and had to go either to a hospital or home because of the heat;
c. lost productivity from State employees who remained at work but who were unable to perform their duties sufficiently because of the heat in the building;
d. excess electrical consumption caused by the widespread use of portable electric fans in the building by employees and by commercial tenants.”

During the period of time at issue, Chester-Jensen was covered by two separate insurance policies. Plaintiff Diamond State, a Delaware corporation with its principal place of business in Pennsylvania, issued Chester-Jensen a general liability insurance policy for the period between October 18, 1984, through October 5, 1985. Transco Insurance Services was listed as Diamond State’s authorized representative under a Chicago address on the first policy. The second policy was issued by Illinois Insurance Exchange Transco Syndicate No. 1 also under a Chicago address. This policy covered the period of October 5, 1985, to October 5, 1986. These policies provided that “the company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of *** bodily injury or *** property damage to which this insurance applies, caused by an occurrence.”

The policies contain the following definitions among others:

“ ‘Bodily injury’ means injury, sickness or disease sustained by any person which occurs during the policy period, including death at any time resulting therefrom;
‘occurrence’ means an accident including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured;
‘property damage’ means (1) physical injury to or destruction of tangible property which occurs during the policy period, including the loss of use thereof at any time resulting therefrom, or (2) loss of use of tangible property which has not been physically injured or destroyed provided such loss of use is caused by an occurrence during the policy period ***.”

The policies also contained a number of explicit exclusions from coverage which included exclusion (e) (hereinafter insured’s product exclusion). This exclusion provides that the insurance does not apply:

“to loss of use of tangible property which has not been physically injured or destroyed resulting from
(1) a delay in or lack of performance by or on behalf of the named insured of any contract or agreement, or
(2) the failure of the named insured’s products or work performed by or on behalf of the named insured to meet the level of performance, quality, fitness or durability warranted or represented by the named insured ***.”

Additionally, each policy provided that “[it] shall not be valid unless completed by the attachment hereto of a declarations page *** and countersigned on the aforesaid declarations page by a duly authorized representative of the company.”

Chester-Jensen demanded that plaintiffs defend and indemnify it in the underlying litigation pursuant to its insurance policies. Plaintiffs undertook defendant’s defense, but reserved their right under the policies to deny coverage. On June 17, 1988, plaintiffs filed an action for declaratory judgment pursuant to section 2 — 701 of the Illinois Code of Civil Procedure (Ill. Rev. Stat. 1987, ch. 110, par. 2 — 701), naming Chester-Jensen, Inc., and the People of the State of Illinois ex rel. George Peters as defendants. Plaintiffs alleged that the State’s claims in the underlying litigation did not arise out of an “occurrence” and were not property damages covered by the policies because such claims were for economic losses which resulted from Chester-Jensen’s breach of contract, breach of express warranty, and fraud.

On February 7, 1990, plaintiffs filed a motion for summary judgment pursuant to section 2 — 1005 of the Illinois Code of Civil Procedure. (Ill. Rev. Stat. 1989, ch. 110, par. 2 — 1005.) Plaintiffs alleged that they did not have a duty to defend or indemnify Chester-Jensen in the underlying litigation because there was no potential coverage under the insurance policies. The trial court granted plaintiffs’ motion for summary judgment finding that no duty to defend was present under the policies with respect to the underlying complaint. Chester-Jensen appeals from the trial court’s order granting plaintiffs’ motion for summary judgment.

Opinion

On appeal, appellant Chester-Jensen first contends that the trial court erred in determining that under Illinois law plaintiffs had no obligation to defend it in the underlying action. We disagree. An insurance company’s obligation to represent its insureds depends on the allegations of the underlying complaint and the provisions of the insurance policy. (Thornton v. Paul (1978), 74 Ill. 2d 132, 384 N.E.2d 335; Tuell v. State Farm Fire & Casualty Co. (1985), 132 Ill. App. 3d 449, 477 N.E.2d 70.) The complaint must be liberally construed and all doubts resolved in favor of coverage for the insured. (Maryland Casualty Co. v. Chicago & North Western Transportation Co. (1984), 126 Ill. App. 3d 150, 466 N.E.2d 1091.) The “general rules which favor the insured[, however,] must yield to the paramount rule of reasonable construction which guides all contract interpretations.” (Travelers Insurance Cos. v. P.C. Quote, Inc. (1991), 211 Ill. App. 3d 719, 724, 570 N.E.2d 614.) A duty to defend will arise when the allegations of the underlying complaint may potentially come within the coverage of the policy. Zurich Insurance Co. v. Raymark Industries, Inc. (1987), 118 Ill. 2d 23, 514 N.E.2d 150.

In contending that Illinois law recognizes a duty to defend in this case, Chester-Jensen first argues that coverage is present under the “on account of bodily injury” provision of the policies. Chester-Jensen reasons that the lost productivity and work days for which the State seeks compensation resulted from the absence or decreased productivity of State employees who suffered “bodily injury” in that they became ill from the heat. Secondly, Chester-Jensen argues that coverage is extended under both prongs of the “property damage” provision as defined in the definitional section of the policy. According to Chester-Jensen, “physical injury” within the meaning of the first prong of the property damage definition is present because the complaint’s allegations of modification and repair constitute an allegation of physical injury to the HVAC system as a whole. With respect to the second prong of the definition, Chester-Jensen contends that the high temperatures in the building constituted an “occurrence” within the meaning of the policies which resulted in the “loss of use” of the building, thus invoking coverage. Plaintiffs deny that any of the coverage provisions encompass the claims against Chester-Jensen and they further argue that regardless of the applicability of the coverage provisions, these claims fall within the “insured’s product exclusion” of the policy.

Chester-Jensen’s first argument, that coverage is present under the “bodily injury” provision of the policy, is not persuasive. It ignores the nature of the complaint being made by the State. The State is not bringing this action on behalf of its employees, seeking recovery for damages sustained by them on account of their illness or other bodily injury. Nor is the State seeking to be reimbursed or indemnified for its liability to its employees. Rather, Chester-Jensen is claiming coverage for its liability to the State for the State’s economic losses simply because those economic losses of the State are alleged in part to be attributable to illness or injury of the State’s employees.

Appellant’s proposed interpretation would distort the meaning of this provision and extend its reach so as to provide coverage for any liability where bodily injury is a tangential factor. It is manifest that the core of the State’s claim for damages against Chester-Jensen is a claim for its economic losses. The fact that the State’s claim for its economic losses as a result of diminished productivity may have been occasioned in part by the illness of its employees does not transmute its economic claim for which it seeks recovery from Chester-Jensen into one for “bodily injury.” See Sentry Insurance Co. v. S & L Home Heating Co. (1980), 91 Ill. App. 3d 687, 414 N.E.2d 1218 (employer claims for lost worker productivity due to eye irritation not covered by general liability policy which included a provision that insurer was obligated to pay damages “on account of bodily injury or property damage” because such damages were economic injury to the employer). Accord Bituminous Casualty Corp. v. Gust K. Newberg Construction Co. (1991), 218 Ill. App. 3d 956, 964, 578 N.E.2d 1003 (which interpreted the same complaint and policy provisions at issue here in determining whether Bituminous had a duty to defend the general contractor of the State of Illinois Center. The court stated that the “State’s complaint alleges physical injury to State employees in that some had to be taken to the hospital, but we find these allegations are made, not for recovery for the injured employees, but are offered as evidence of the problems that resulted from the defective HVAC system”).

Chester-Jensen cites one case, Minnick’s Inc. v. Reliance Insurance Co. (1980), 47 Md. App. 329, 422 A.2d 1028, where the court determined that a loss of consortium claim brought by a spouse of an injured party was sufficient to invoke a duty to defend under the “bodily injury” portion of the policy. We are not persuaded by the reasoning of the Maryland court on this issue, particularly where it diverges from the reasoning of our own court in Bituminous and Sentry. Moreover, the loss of consortium claim in Minnick’s is distinguishable from our case since loss of consortium claims are traditionally treated as claims for bodily injury and are derivative of the claim for bodily injury sustained by the other spouse. (See Brown v. Metzger (1983), 118 Ill. App. 3d 855, 455 N.E.2d 834; Clark v. City of Chicago (N.D. Ill. 1984), 595 F. Supp. 482.) Here, the State’s claim sounds in contract and seeks compensation for economic injury. Consequently, the allegations of the State’s complaint with respect to its loss of employee productivity are insufficient to bring them within the scope of the policy provisions for coverage of damages “on account of bodily injury.”

We turn now to Chester-Jensen’s contention that coverage exists under the “property damage” definition in the policies. As stated earlier, this provision extends coverage for “all sums which the insured shall become legally obligated to pay as damages because of *** property damage to which this insurance applies, caused by an occurrence.” The definition section of the policy provides a two-pronged definition of “property damage,” stating that “ ‘property damage’ means (1) physical injury to or destruction of tangible property *** or (2) loss of use of tangible property which has not been physically injured or destroyed provided such loss of use is caused by an occurrence.” Chester-Jensen contends that coverage is provided under either prong of the “property damage” definition.

With respect to the first prong, Chester-Jensen maintains that the State’s complaint can be deemed to allege physical injury of tangible property. We disagree. We find no express allegations of physical injury to property, rather only allegations that Chester-Jensen’s thermal units failed to perform their anticipated function. Nowhere in its complaint does the State allege that its H'VAC system, or any portion or component thereof, was physically damaged, as opposed to having become simply inoperative because of the failure of the components to perform as warranted.

Moreover, the recovery sought for economic losses which it sustained are fully consistent with losses suffered through contract failure. In its complaint, the State alleges that it suffered damages in the form of lost rent from commercial tenants, lost productivity from State employees, excess electrical consumption from the use of electric fans and costs incurred for modification and repairs to the system. These allegations of economic loss cannot be deemed to satisfy the prerequisites under the policy provision that for coverage to be invoked physical injury to property must be alleged. See CMO Graphics, Inc. v. CNA Insurance (1983), 115 Ill. App. 3d 491, 450 N.E.2d 860 (holding that no coverage existed when complaint did not claim any “tangible property damage” and sought recoupment of economic losses involving financial investments, lost profits and lost good will).

The cost of repairing or replacing the insured’s own allegedly defective part is clearly not considered property damage under the policies in question. (Hamilton Die Cast, Inc. v. United States Fidelity & Guaranty Co. (7th Cir. 1975), 508 F.2d 417, 419-20 (“We do not think that the mere inclusion of a defective component, where no physical harm to the other parts results therefrom, constitutes ‘property damage’ within the meaning of the policy. *** Idled machinery is not injured or destroyed tangible property and, therefore, there is no ‘property damage’ within the coverage of the policy”); accord Sentry Insurance Co. v. S & L Home Heating Co. (1980), 91 Ill. App. 3d 687, 414 N.E.2d 1218 (insured was sued after the H'VAC system it installed in a plant failed to adequately perform; court determined that the expense of repairing the H'VAC system was economic losses which would not have been covered under the policy and only found coverage after specific physical injuries to portions of the H'VAC system were alleged); Chambers Gasket & Manufacturing Co. v. General Insurance Co. of America (1975), 29 Ill. App. 3d 998, 1000, 331 N.E.2d 203 (claim for the value or replacement of the insured’s defective gaskets “was clearly not within the scope of the policy coverage”).

Although the allegations with respect to repair could be consistent with physical injury to other portions of the system aside from the thermal banks themselves, they cannot by themselves denote that any such physical damage took place, particularly in the context of a claim against multiple defendants who were cumulatively active in the manufacture or installation of the entire system.

Mere allegations of repair and modification without any allegations of physical injury are insufficient to invoke coverage under the physical injury prong of the property damage provision. The decision of this court in Bituminous Casualty Corp. v. Gust K. Newberg Construction Co. (1991), 218 Ill. App. 3d 956, 578 N.E.2d 1003, is particularly persuasive. As noted earlier, that case addressed the duty of an insurance company (Bituminous) to defend the general contractor of the State of Illinois Center (Newberg) in the same underlying action involved here. Interpreting the identical complaint and general liability insurance policy provisions at issue here, the court found that there was no duty to defend the contractor. Concerning the allegations of physical injury, the court found that “the State’s underlying complaint does not allege property damage due to physical injury to or destruction of tangible property. The complaint alleges only economic losses due to the installation of an inadequate HVAC system.” 218 Ill. App. 3d at 963-64; Dreis & Krump Manufacturing Co. v. Phoenix Insurance Co. (7th Cir. 1977), 548 F.2d 681, 688 (holding that no duty to defend was present because the underlying complaint brought against insured press brake manufacturer did not allege damage to tangible property even though such complaint alleged that plaintiff was forced to “expend sums of money in the form of labor and equipment in an attempt to rectify these defects”); see also Thermex Corp. v. Fireman’s Fund Insurance Cos. (Minn. App. 1986), 393 N.W.2d 15 (holding that no duty to defend heating contractor existed when underlying complaint sought replacement costs for defective work and materials and rental costs for substitute quarters because there were no allegations of physical injury to the building and no “occurrence” within the meaning of the policy).

Chester-Jensen’s reliance on Pittway Corp. v. American Motorists Insurance Co. (1977), 56 Ill. App. 3d 338, 370 N.E.2d 1271, W.E. O’Neil Construction Co. v. National Union Fire Insurance Co. (N.D. Ill. 1989), 721 F. Supp. 984, Fleo Industries, Inc. v. Liberty Mutual Insurance Co. (1980), 90 Ill. App. 3d 1106, 414 N.E.2d 41, and Mara thon Plastics, Inc. v. International Insurance Co. (1987), 161 Ill. App. 3d 452, 514 N.E.2d 479, is misplaced.

The coverage requirements in Pittway were entirely different from the requirements of the policies here in issue. The policy coverage provision in Pittway required only “injury to or destruction of tangible property.” (Pittway Corp., 56 Ill. App. 3d at 341.) Thus the provision in Pittway, unlike the first prong definition of the policies here in issue, did not require “physical injury” as a prerequisite for recovery. Moreover, the Pittway policy did not contain a second prong definition. Consequently, the Pittway court felt free to determine that property damage was present under its policy “irrespective of any physical injury” to property. This freedom is not present here where the policy distinguishes between physical injury and loss of use, spelling out the different prerequisites under each.

Chester-Jensen urges that its view is strongly supported by Elco Industries, Inc. v. Liberty Mutual Insurance Co. (1980), 90 Ill. App. 3d 1106, 414 N.E.2d 41. We disagree. That case involved the installation of defective governor regulating pins in various engines. In Elco, the court determined that a duty to defend was present when the defective pins supplied by the insured had caused minor damage to relatively inexpensive gaskets and plugs contained in the engines.

Although the physical damage in Elco was relatively slight, such damage had nevertheless occurred. The underlying complaint in Elco “charged that the defect required Elco to test, identify, reinspect, rip out, replace, and repair the pins installed in its engines” and the record disclosed that the replacement of the pins physically injured several gaskets and at least one plug per engine. (90 Ill. App. 3d at 1111.) The Elco court recognized that “[t]he mere installation or removal of defective parts which causes no destruction or injury to the third person’s products *** does not constitute property damage,” but found coverage based on the damaged gaskets and plugs. (90 Ill. App. 3d at 1111-12.) Unlike the complaint in Elco, however, the complaint here does not indicate injury to any portion of the system. Without such an allegation, we cannot determine that there is coverage under this portion of the property damage provisions.

Similarly, Chester-Jensen’s reliance on W.E. O’Neil Construction Co. v. National Union Fire Insurance Co. (N.D. Ill. 1989), 721 E Supp. 984, is misplaced. There, unlike the allegations here, the underlying complaint clearly alleged that the component of the insured (steel mesh) caused damage to other portions of the structure (garage) in which it was installed. 721 F. Supp. at 986-87.

We recognize that our holding is inconsistent with Marathon Plastics, Inc. v. International Insurance Co. (1987), 161 Ill. App. 3d 452, 514 N.E.2d 479. In Marathon, the insured supplied pipe and gaskets for a water system. After the water system was completed, the gaskets supplied by the insured leaked. The Marathon court, with what we believe to be an overextended reliance on Pittway and Elco, determined that property damage was present, apparently under the physical injury to tangible property prong of the policy. The court determined that after the system was constructed, it became a finished product and that the insured’s gaskets leaked “causing] the system to become useless and diminishpng] its value.” (161 Ill. App. 3d at 463.) The court reasoned that “even though no physical injury occurred to the water system, *** that due to the diminution in value to the system caused by the leaks, property damage has occurred.” 161 Ill. App. 3d at 463.

The analysis in Marathon is inconsistent with the clear language and underlying purpose of the policies. Insurance policies must be interpreted by the standard of construction and interpretation of contracts in general. (Zitnik v. Burik (1961), 395 Ill. 182, 69 N.E.2d 888; International Minerals & Chemical Corp. v. Liberty Mutual Insurance Co. (1988), 168 Ill. App. 3d 361, 522 N.E.2d 758.) The language of the policy explicitly requires “physical injury.” It cannot be construed to provide coverage on the basis of loss or diminished use simply resulting from the failure of a component to perform as promised. (Accord Bituminous, 218 Ill. App. 3d 956, 578 N.E.2d 1003.) The construction followed in Marathon and urged here by Chester-Jensen ignores the overall purpose and design of a comprehensive general liability policy. If the Marathon interpretation were to be adopted as urged by Chester-Jensen, the policy would not only provide insurance against tort liability, but would function as a performance bond as well. As the court in Qualls v. Country Mutual Insurance Co. (1984), 123 Ill. App. 3d 831, 462 N.E.2d 1288, stated:

“[C]omprehensive general liability policies like the one here are intended to protect the insured from liability for injury or damage to the persons or property of others; they are not intended to pay the costs associated with repairing or replacing the insured’s defective work and products, which are purely economic losses. [Citations.] Finding coverage for the cost of replacing or repairing defective work would transform the policy into something akin to a performance bond.” Qualls, 123 Ill. App. 3d at 833-34.

See also Henderson, Insurance Protection for Products Liability & Completed Operations — What Every Lawyer Should Know, 50 Neb. L. Rev. 415, 441 (1971).

“The risk intended to be insured against is the possibility that the goods, products or work of the insured, once relinquished or completed, will cause bodily injury or damage to property other than to the product or completed work itself, and for which the insured may be found liable. *** The coverage is for tort liability for physical damages to others and not for contractual liability of the insured for economic loss because the product or completed work is not that for which the damaged person bargained.” (Emphasis added.)

Chester-Jensen next argues that the allegations of the State’s complaint satisfy the second portion of the property damage definition, namely “loss of use of tangible property which has not been physically injured or destroyed provided such loss of use is caused by an occurrence.” Chester-Jensen argues that the State’s complaint alleges that the building was virtually uninhabitable and that this loss of use came from the “continuous or repeated exposure to conditions” which were “neither expected nor intended from the standpoint of the insured.”

While it is true that the complaint alleges the virtual uninhabitability of the building and its consequential loss of use, that condition alone is wholly insufficient to invoke coverage without the presence of an “occurrence.” As previously noted, the policies define “occurrence” as an “accident including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured.” (Emphasis added.)

An accident, by its very nature contemplates an event that is unforeseen and neither intended nor expected. (See Travelers Insurance Companies, 211 Ill. App. 3d at 726 (“ ‘accident’ is defined as ‘an unforeseen occurrence *** of untoward or disastrous character’ or ‘an undesigned sudden or unexpected event’ ”).) Here, the State’s complaint does not allude to any such accident, it merely alleges that the product failed to perform and as a result the building was too hot or too cold. The mere failure of a product to perform as warranted is not beyond the realm of expectation and is foreseeable by the parties. In fact, it is this expectation that provides the impetus for requiring a warranty from the vendor in the first place. While such failure is most likely to be unintentional, it cannot be considered an “accident” within the meaning of the policy because the “natural and ordinary consequences of an act do not constitute an accident.” Aetna Casualty & Surety Co. v. Freyer (1980), 89 Ill. App. 3d 617, 619, 411 N.E.2d 1157; Bituminous, 218 Ill. App. 3d at 966 (“the allegations of too hot and too cold temperatures in the building are no more than the natural and ordinary consequences of installing an inadequate HVAC system).” (Emphasis added.)

Chester-Jensen, however, contends that the high temperatures in the building do constitute an “exposure to conditions which results in property damage neither expected or intended by the insured.” For support, it relies on United States Fidelity & Guaranty v. Wilkin Insulation Co. (1991), 144 Ill. 2d 64, 578 N.E.2d 926, wherein the Illinois Supreme Court found under a similar policy that an “occurrence” was present when the insured installed asbestos insulation in a building. The court determined that the “buildings and their contents (e.g., carpets, upholstery, drapery, etc.) are virtually contaminated or impregnated with asbestos fibers, the presence of which poses a serious health hazard to the human occupants” and that such a continuous exposure to the released fibers was an “occurrence” as defined by the insurance policies. 144 Ill. 2d at 75, 77.

Chester-Jensen’s reliance on Wilkin is misplaced. Wilkin involved the installation of products which directly damaged the building through the dissemination and impregnation of asbestos fibers throughout the premises. Moreover, the damage was not a result of the failure of the asbestos to perform its contractual function as an insulator. Rather its detrimental impact was caused by a wholly ancillary and coincidental phenomenon, namely the diffusion of its harmful fibers.

Therefore, unlike the facts in this case, the resulting condition in Wilkin was not encompassed by the normal expectancies which are inherent in the risk of product or performance failure. Furthermore, the court in Wilkin specifically found that the hazards now known to be inherent in asbestos use as insulation were neither known nor intended by the parties when installed. In contradistinction, it would be inconceivable that the parties would not have foreseen abnormal increases in temperatures as a possible result of the failure of the HVAC system. Consequently, we conclude that Chester-Jensen’s attempts to invoke coverage under the second half of the property damage provision fails because there has been no “occurrence” within the meaning of the policies.

Lastly, even if coverage were extended under the “loss of use” provision without requiring the concomitant “occurrence,” such coverage would be revoked under exclusion (e) of the policies, the insured’s products exclusion. (St. Paul Surplus Lines Insurance Co. v. Diversified Athletic Services (N.D. Ill. 1989), 707 F. Supp. 1506, 1509, citing Western Casualty & Surety Co. v. Brochu (1985), 105 Ill. 2d 486, 475 N.E.2d 872 (liability which falls within general declaration of policy’s coverage may be specifically removed from such coverage by exclusion).) As previously noted, under the terms of exclusion (e), coverage would not extend “to loss of use of tangible property which has not been physically injured or destroyed resulting from *** the failure of the named insured’s products or work performed by or on behalf of the named insured to meet the level of performance, quality, fitness or durability warranted or represented by the named insured.”

The State’s claim in this case is one for breach of contract and breach of warranty. The complaint alleges that Chester-Jensen had breached its contract to provide thermal banks and ancillary equipment which conformed to the contract specifications and breached its express warranties that the thermal banks would “produce the capacities and meet the specifications as called.” Further, for the reasons previously discussed, we cannot find a basis in the allegations of the underlying complaint to establish physical injury to property. (Sentry, 91 Ill. App. 3d 687, 414 N.E.2d 1218; Bituminous, 218 Ill. App. 3d 956, 578 N.E.2d 1003.) Thus, the claim would fall squarely within the named products exclusion provisions of the policies. Unifoil Corp. v. C N A Insurance Cos. (1987), 218 N.J. Super. 461, 472, 528 A.2d 47, 50-51 (determining that eight of nine claims against insured were actually claims for breach of warranty and thus precluded from coverage under the insured’s product exclusion); see also Sting Security, Inc. v. First Mercury Syndicate, Inc. (D. Md. 1992), 791 F. Supp. 555, 562 (since underlying complaint was predicated on failure of insured’s product to perform as warranted, insured’s product exclusion operates to bar coverage).

For the foregoing reasons, we find that under Illinois law plaintiffs have no duty to defend Chester-Jensen in the underlying action.

Chester-Jensen next contends that it was error to apply Illinois law and that a different outcome would have been forthcoming had the law of Pennsylvania been applied. We disagree. The trial court correctly applied Illinois conflict of law principles in determining that the substantive law of Illinois controls the interpretation of these insurance policies.

The insurance policies in question do not contain a choice of law provision. In the absence of such a provision, the general choice of law rules of the forum State, Illinois, clearly control. (Thieme v. Union Labor Life Insurance Co. (1956), 12 Ill. App. 2d 110, 138 N.E.2d 857.) Chester-Jensen contends that the choice of law rule to be followed looks to apply the law of the State that has the “most significant contacts” with the policies.

This “most significant contacts” rule has been applied in Illinois to contract actions in general. (See Purcell & Wardrope Chartered v. Hertz Corp. (1988), 175 Ill. App. 3d 1069, 530 N.E.2d 994.) The factors considered under this approach should be “evaluated in light of the relevant policies of the forum and other interested States and those States’ interest in the issue.” (Boise Cascade Home & Land Corp. v. Utilities, Inc. (1984), 127 Ill. App. 3d 4, 13, 468 N.E.2d 442.) This rule has also been followed by the Restatement with respect to contracts litigation. Restatement (Second) of Conflicts of Laws §188 (1971).

In Hofeld v. Nationwide Life Insurance Co. (1975), 59 Ill. 2d 522, 322 N.E.2d 454, the rule was specifically applied to insurance contracts. There, the Illinois Supreme Court, speaking in the context of a group health insurance policy, stated:

“[Insurance contract provisions may be governed by the location of the subject matter, the place of delivery of the contract, the domicile of the insured or of the insurer, the place of the last act to give rise to a valid contract, the place of performance, or other place bearing a relationship to the general contract.” (59 Ill. 2d at 528.)

Plaintiffs, however, contend that the place of issuance should predominate over any other contacts, citing Jadczak v. Modern Service Insurance Co. (1987), 151 Ill. App. 3d 589, 503 N.E.2d 794. Plaintiffs, pointing to a provision in the Transco policy which provides that “[plaintiffs] with offices at 175 West Jackson Boulevard Chicago, Illinois 60604, issues [sic] this insurance contract to the named insured,” argue that Illinois law controls because it was the State in which that policy was issued.

However, we do not read Jadczak with the same rigidity as plaintiffs would urge. For one thing, Jadczak specifically looked to the place of the last act to give rise to a valid contract in addition to looking to the place of issuance. (151 Ill. App. 3d at 593.) Moreover, Jadczak relies upon Hofeld, which espouses the broader based “most significant contact” rule as controlling. We also note that in Jadczak, all relevant factors except those upon which the court predicated its determination were thinly dispersed among three different States, Illinois, Michigan, and Minnesota, and could not therefore be helpful. (151 Ill. App. 3d at 593.) We are therefore not persuaded that Jadczak intended to preclude consideration of any other factors aside from the place of issuance and the place of the last act necessary to validate the policy.

We therefore agree with Chester-Jensen that the broader-based “most significant contacts” rule as postulated in Hofeld should apply. However, we disagree with Chester-Jensen’s contention that under the Hofeld analysis the substantive law of Pennsylvania controls.

In urging that Pennsylvania law has the most significant contacts, Chester-Jensen points to the fact that it is a Pennsylvania corporation and maintains its principal place of business in that State, that plaintiff Diamond State has its principal place of business there, and that the policies in question were delivered to it in Pennsylvania. It contends that the delivery of the policies constitutes the last act necessary to effectuate the contract. On the other hand, as plaintiffs correctly point out, in addition to being the apparent place of issuance, Illinois is where Chester-Jensen’s contract was to be performed and where the equipment, the thermal banks, was to be installed and permanently located. (See Occidental Fire & Casualty Co. v. Padgett (1983), 113 Ill. App. 3d 215, 446 N.E.2d 937, 940 (application of Illinois law was correct considering that the contract was to be performed in Hlinois, the location of the subject matter was in Illinois and that Illinois was the place bearing a relationship to the general contract).) We also agree with plaintiffs that Illinois is where the insured risks are permanently located.

Additionally, we may also consider the fact that the State of Illinois is the plaintiff which brought the underlying action which is the subject of the declaratory action before us. This underlying action was also filed in the Hlinois State court system. (See Boise, 127 Ill. App. 3d at 13 (stating that although both parties were Delaware corporations, the place of the execution of the contract was uncertain, and that both Indiana and Illinois had contacts to the litigation, Hlinois law should apply in contract action because enforcement of the contract was sought under Illinois law).) Moreover, the application of Hlinois law to this case does not appear contrary to the public policies of Pennsylvania. See Ckampagnie v. W.E. O’Neil Construction Co. (1979), 77 Ill. App. 3d 136, 395 N.E.2d 990 (considering in conflict of law analysis whether the application of Hlinois law would diminish or undermine any policy interest of other State); Continental Casualty Co. v. Armstrong World Industries, Inc. (N.D. Ill. 1991), 776 F. Supp. 1296 (commenting on the substantial similarity between the contract interpretation rules of Pennsylvania and Illinois).

Nor is it clear as Chester-Jensen contends that the last act necessary to give effect to the policies occurred in Pennsylvania. Both policies contain a provision that they will not be valid unless an attachment to the policy is completed by the insured and then countersigned by a representative of the insurer. Under these policies, Transco is designated as principal in one and as Diamond State’s representative in the other and in each policy Transco’s address is given as being in Chicago. It is therefore not unreasonable to assume that the last act necessary to validate each policy, namely the countersigning of it by a representative of the insurer, was to occur in Illinois in accordance with the address provided in the policies.

Pennsylvania’s contact with this case is limited to the fact that it is the insured’s home State and with respect to the Diamond State policy that Diamond State maintains its principal place of business in Pennsylvania. These factors are clearly outweighed by those favoring the application of Illinois law. Considering all relevant factors, we conclude that Illinois has more significant contacts with the policies and their interpretation than Pennsylvania.

Chester-Jensen, however, argues that if it cannot prevail under the “most significant contacts” rule applied to contracts in general, the liability insurance coverage in this case should be governed by the test provided under section 193 of the Restatement (Second) Conflicts of Laws. (Restatement (Second) of Conflict of Laws §193 (1971).) This section provides:

“The validity of a contract of fire, surety or casualty insurance and the rights created thereby are determined by the local law of the state which the parties understood was to be the principal location of the insured risk during the term of the policy, unless with respect to the particular issue, some other state has a more significant relationship under the principles stated in §6 to the transaction and the parties, in which event the local law of the other state will be applied.” Restatement (Second) of Conflict of Laws §193 (1971).

While this section does not preclude considerations of other factors in a choice of law analysis, the “location of the insured risk will be given greater weight than any other single contact in determining the state of applicable law provided that the risk can be located, at least principally in a single state.” (Restatement (Second) of Conflict of Laws §193, Comment b, at 611 (1971); Allen v. State Farm Mutual Automobile Insurance Co. (1991), 214 Ill. App. 3d 729, 574 N.E.2d 55 (applying the Restatement approach to determine that Indiana law controlled because the automobile insured by the policy was principally garaged in Indiana, even though it was occasionally driven in different States).

We need not give extensive consideration to the application of the more narrowly focused “principal location of the risk” test established in Restatement (Second) of Conflict of Laws section 193 as opposed to the broader-based test described in Hofeld. (Restatement (Second) of Conflict of Laws §193 (1971).) Under either test we conclude that the substantive law of Illinois would apply. This conclusion is predicated on the fact that the installation of the thermal banks was to occur in Hlinois and, as the banks were to become a permanent part of the system, that risk was to remain in Illinois.

Chester-Jensen argues that the thermal banks are not the risk to be insured, but rather Chester-Jensen’s entire business is to be considered the insured risk. We do not find this argument persuasive. If this approach were to be followed then a bright line approach would develop where the law of the insured’s home State would be applied no matter where the insured risk was undertaken. Such an approach disregards the focus on the application of the law of the State where the particular risk is located in favor of the law of the insured’s home State. (Cf. Restatement §193 Comment/(captioned “Multiple risk policies,” this comment provides that in certain instances courts would treat a policy insuring against risks located in several States as several policies each insuring a separate risk).) Consequently, we determine that the risk covered by the policies was located in Hlinois and that the trial court correctly determined that Illinois law applied in this case.

In view of the fact that we are persuaded that under the appropriate Illinois choice of law rule the substantive law of Hlinois controls, we will not proceed further to determine how this case would be decided under Pennsylvania law, although there is support for our conclusion of no coverage under the substantive law of Pennsylvania. See American International Underwriters Corp. v. Zurn Industries, Inc. (W.D. Pa. 1991), 771 F. Supp. 690; Continental Casualty Co. v. Armstrong World Industries, Inc. (N.D. Ill. 1991), 776 F. Supp. 1296 (noting the similarity between Pennsylvania and Hlinois contract interpretation rules).

For the foregoing reasons, we affirm the judgment of the trial court.

Judgment affirmed.

MURRAY and McNULTY, JJ., concur.

      he question as to the location of the risk will be discussed more fully in the context of our later discussion of the choice of law rule proposed under Restatement (Second) of Conflicts of Law §193 (1971).


source: Caselaw Access Project

author: JUSTICE DiVITO

license: Public Domain

text:
    ALLIED AMERICAN INSURANCE COMPANY, Petitioner and Counter-respondent-Appellee, v. FRADER CULP, Respondent and Counterpetitioner-Appellant.
    First District (2nd Division)
    No. 1—91—3846
    Opinion filed February 23, 1993.

      Sachs, Earnest & Associates, Ltd., of Chicago (Gregory R. Sun, of counsel), for appellant.
    Moss & Hillison, of Chicago (Alexandria Demos-Kardasis, of counsel), for appellee.
   JUSTICE DiVITO

delivered the opinion of the court:

Following an accident with an uninsured motorist, respondent Frader Culp (Culp) filed a demand for arbitration with the American Arbitration Association (AAA) pursuant to his automobile insurance policy with petitioner Allied American Insurance Company (Allied). An arbitrator ruled against Allied and awarded Culp $15,000. Allied then filed an application to vacate the arbitration award in the circuit court alleging that the arbitrator failed to employ the rules of evidence applicable to court proceedings, as required by the policy. The court granted the motion and vacated the award. Culp appeals, seeking a reversal of the circuit court’s ruling and reinstatement of the arbitrator’s award.

Pursuant to the uninsured motorist provision in Culp’s automobile liability insurance policy, an arbitration hearing was scheduled for October 30, 1990. Immediately before the start of the hearing, Allied’s counsel asked the arbitrator if he would follow the rules of evidence as applied in the circuit court of Cook County as required by the policy. The arbitrator responded that because AAA rules stated that conformity with the formal rules of evidence was not necessary, he would not conduct the hearing according to those rules. Following a short discussion with the arbitrator, Allied’s attorney left the hearing, taking the court reporter with him. The arbitrator conducted the hearing anyway, and on November 13, 1990, entered the award in favor of Culp.

On January 24, 1991, Allied filed a petition in the circuit court to vacate the award pursuant to section 12(a)(3) of the Uniform Arbitration Act. (Ill. Rev. Stat. 1989, ch. 10, par. 112(a)(3).) The petition alleged that the arbitrator exceeded his authority under the arbitration agreement (the insurance policy) when he refused to follow the rules of evidence. Culp did not respond to the petition and, at a hearing on May 15, 1991, his attorney argued that he had not been properly served. The court, however, deemed the appearance a general appearance and vacated the arbitration award and remanded the case for a new arbitration where the rules of evidence applicable to circuit courts would be applied.

Culp filed a motion to reconsider and a counterpetition to confirm the arbitration award. He asserted that Allied failed to meet its burden of proof that the arbitrator exceeded his authority because it presented no proof that any evidence was admitted which would not have been admissible under the rules of evidence. On October 31, 1991, the circuit court held a hearing and denied the motion. Thereafter, Culp filed a timely notice of appeal.

Allied first contends that this appeal must be dismissed because the circuit court’s order to remand the matter for a new arbitration is not final and appealable under Supreme Court Rule 301 (134 Ill. 2d R. 301). Allied claims that since the court’s order was essentially an order granting a new trial, it may not be appealed pursuant to Rule 301. We agree. When a court orders “a new trial or other further proceedings involving disputed questions of law or fact,” the order is considered interlocutory rather than final and therefore is not subject to review. (Cory Corp. v. Fitzgerald (1949), 403 Ill. 409, 414-15, 86 N.E.2d 363, 366.) Here, the circuit court remanded the case for an entirely new arbitration. We believe that the order was interlocutory, and we therefore do not have jurisdiction pursuant to Rule 301.

However, Supreme Court Rule 306 provides an exception to the general rule that such orders are not appealable. (134 Ill. 2d R. 306(a)(lXi); In re Marriage of Granger (1990), 197 Ill. App. 3d 363, 373, 554 N.E.2d 586, 592, appeal denied (1990), 133 Ill. 2d 555, 561 N.E.2d 691.) Under Rule 306(a)(l)(i), appellate review of an order granting a new trial may be obtained by petitioning the appellate court for leave to appeal. The petition will be granted if it presents grounds which are reasonably debatable and fairly challenge the propriety of the order (Keen v. Davis (1969), 108 Ill. App. 2d 55, 58-59, 246 N.E.2d 467, 469), or if it clearly demonstrates that the circuit court abused its discretion by ordering the new trial. (Baker v. Norfolk & Western Ry. Co. (1970), 120 Ill. App. 2d 296, 313, 256 N.E.2d 887, 896.) We believe that Culp has presented grounds which fairly challenge the propriety of the order and clearly demonstrate that the circuit court abused its discretion, and therefore will treat Culp’s notice of appeal as if it were a petition for leave to appeal. See In re Custody of Purdy (1986), 112 Ill. 2d 1, 4, 490 N.E.2d 1278, 1279 (noting that “in order to resolve the [matter] as quickly and economically as possible,” the appellate court should have considered the propriety of a custody order under Rule 306(a)(l)(v) rather than dismissing it as not final and appealable); see also Kemner v. Monsanto Co. (1986), 112 Ill. 2d 223, 239, 492 N.E.2d 1327, 1334 (holding that “[t]he char-

acter of a pleading is to be determined more from its content than from its label”).

Furthermore, we grant the petition at this time because we believe similar interests in judicial economy exist in arbitration cases as in custody cases. (See Board of Trustees of Community College District No. 508 v. Cook County College Teachers Union, Local 1600 (1981), 102 Ill. App. 3d 681, 683, 430 N.E.2d 249, 251 (noting that the object of arbitration is to resolve disputes “in an easier, more expeditious and less expensive manner” than litigation).) We consider it appropriate to review the circuit court’s action at this time rather than after a new arbitration hearing has taken place because we believe that little can be achieved by sending this matter to yet another forum. (See Hamilton v. Williams (1991), 214 Ill. App. 3d 230, 232, 573 N.E.2d 1276, 1277-78, appeal denied (1991), 141 Ill. 2d 540, 580 N.E.2d 114 (lamenting the fact that an arbitration case had already reached its fifth forum).) Accordingly, we conclude that our jurisdiction is proper pursuant to Supreme Court Rule 306(a)(l)(i).

Culp contends that the record before the circuit court was insufficient to support the vacatur of the arbitration award. He argues that Allied failed to satisfy its burden of proof because it neglected to provide a copy of the insurance policy either to the arbitrator or to the circuit court, and that it never demonstrated that it was prejudiced by any of the arbitrator’s evidentiary rulings. Allied responds that because Culp never denied that the policy required the application of the rules of evidence, the circuit court properly ruled that the hearing was conducted in violation of the policy. Allied also asserts that it was not required to prove either that the AAA rules of evidence differed from the rules applicable in the circuit court or that any prejudicial evidence was admitted, because the arbitrator’s decision not to apply the appropriate rules was “in and of itself an act” which exceeded his powers.

Although judicial review of a commercial arbitrator’s ruling is available, it is more limited than an appellate court’s review of a trial court’s ruling. (Rauh v. Rockford Products Corp. (1991), 143 Ill. 2d 377, 386, 574 N.E.2d 636, 641 (recognizing the presumption that the arbitrator did not exceed his authority); Garver v. Ferguson (1979), 76 Ill. 2d 1, 8, 389 N.E.2d 1181, 1183.) Arbitration is intended to serve as a means of avoiding lengthy litigation, and to allow courts to substitute their judgment for that of the arbitrator “ ‘would make an award the commencement, not the end, of litigation.’ ” (Garver, 76 Ill. 2d at 9, 389 N.E.2d at 1184, quoting Burchell v. Marsh (1854), 58 U.S. (17 How.) 344, 349, 15 L. Ed. 96, 99.) Consequently, a party seeking to vacate an arbitration award must provide clear, strong, and convincing evidence that the arbitrator exceeded his authority. (Saville International, Inc. v. Galanti Group, Inc. (1982), 107 Ill. App. 3d 799, 800, 438 N.E.2d 509, 511; American Invsco Realty, Inc. v. Century 21, Rohter & Co. (1981), 96 Ill. App. 3d 56, 59, 420 N.E.2d 692, 695.) Furthermore, a petitioner must demonstrate to the court that he has been prejudiced as a result of the arbitrator’s actions. See Kalish v. Illinois Education Association (1988), 166 Ill. App. 3d 406, 410-11, 519 N.E.2d 1031, 1032 (affirming the award and dismissing the petitioner’s contentions as speculative when no evidence of the arbitrator’s bias was presented); Saville, 107 Ill. App. 3d at 801, 438 N.E.2d at 511 (finding no prejudice where the arbitrator utilized leading questions and asked the parties if they had tried to settle).

In the instant case, Allied failed to provide the circuit court with either a copy of the insurance policy or a record of what occurred before the arbitrator. Accordingly, because there was nothing before the circuit court to support Allied’s contentions that the arbitrator exceeded his authority, the court should have assumed that no error occurred and affirmed the award. See Foutch v. O’Bryant (1984), 99 Ill. 2d 389, 392, 459 N.E.2d 958, 959 (holding that in the absence of a sufficient record, a reviewing court must presume that no error occurred).

Moreover, Allied is unable to demonstrate how it has been prejudiced. It merely alleges that the arbitrator improperly refused to apply the appropriate rules of evidence. We do not agree that the arbitrator’s mere statement was sufficient to establish that he exceeded his authority. Allied’s nonparticipation in the arbitration and its inability to indicate specific rulings inconsistent with the appropriate rules of evidence and prejudicial to its case renders its position here untenable.

By voluntarily withdrawing from the hearing, Allied lost the opportunity to present its contentions and arguments to the arbitrator; it did so at its own peril and its ability to present a proper record to the circuit court was lost because of its own actions. See Ramonas v. Kerelis (1968), 102 Ill. App. 2d 262, 273, 243 N.E.2d 711, 717 (holding that an arbitration award may be enforced against a party who refused to appear because he challenged the jurisdiction of the arbitrator).

Allied contends that if this court fails to require the arbitrator to follow the appropriate rules of evidence, its constitutional right to freely contract will be deprived without due process of law. Allied argues that because the policy provision is neither unlawful nor contrary to public policy, it must be enforced. (Smiley v. Estate of Toney (1968), 100 Ill. App. 2d 271, 278, 241 N.E.2d 116, aff’d (1969), 44 Ill. 2d 127, 254 N.E.2d 440.) Nevertheless, because Allied has been unable to demonstrate that the arbitrator did not follow the appropriate rules of evidence, there is no basis for us to rule that its rights have been violated. We reiterate that the arbitrator’s mere indication that he would not follow the rules did not justify Allied’s abandonment of the hearing.

For the foregoing reasons, the judgment of the circuit court of Cook County is reversed, and the arbitrator’s award is reinstated.

Reversed; award reinstated.

McCORMICK, P.J., and SCARIANO, J., concur.


author: JUSTICE MURRAY

text:
    JAMES C. WALLENIUS et al., Plaintiffs-Appellants, v. FRANCISCO SISON et al., Defendants-Appellees (James F. Messenger and Company, Inc., Plaintiff; Bonita J. Hyland et al., Defendants).
    First District (5th Division)
    No. 1—92—1248
    Opinion filed February 11, 1993.

      John P. Messina, of Chicago, for appellants.
    Deborah J. Gubin, of Chicago, for appellees.
   JUSTICE MURRAY

delivered the opinion of the court:

On February 28, 1991, plaintiffs-appellants James and Sheila Wallenius entered into a contract to purchase a house located at 14707 South Sunset Court, Oak Forest, Illinois, for $122,500. Francisco and Darwisa Sisón were the sellers. The Walleniuses made a downpayment of $15,000 and financed the balance with a mortgage loan from coplaintiff James F. Messenger & Co., Inc. (Messenger), in the amount of $108,500.

On April 26, 1991, the closing took place. Since the Sisons were unable to deliver possession on this date, a possession escrow of $1,100 was established with Bonita Hyland and Century 21-Beeline Realty, Inc. (Century 21), the Sisons’ real estate agents. The Sisons vacated the premises the next day, April 27.

When the Walleniuses sought to take possession on April 28, they discovered on and around the premises highly toxic and hazardous materials including but not limited to: liquid mercury, liquified phenal, ammonium hydroxide, Xylene, 12 vials of contaminated blood samples, hypodermic needles and other medical waste.

The Walleniuses immediately notified State and local government authorities regarding the contamination. The government officials determined that the premises were unsafe and prohibited occupancy of the premises until such time as the premises were cleaned and certified by a licensed toxic waste removal contractor.

On April 29, 1991, the Walleniuses notified Messenger regarding the problem of the hazardous materials. They also told Messenger that they intended to file an action for rescission and other relief against the Sisons. Messenger requested that it be included as a co-plaintiff in the suit. The Walleniuses agreed.

On May 2, 1991, the Walleniuses and Messenger jointly filed a four-count complaint. Count I sought damages against the Sisons under the Consumer Fraud and Deceptive Business Practices Act (see Ill. Rev. Stat. 1991, ch. 1211/2, par. 261 et seq.) alleging that the Sisons’ failure to disclose the presence of the hazardous and toxic materials was fraudulent. Count II sought rescission of the contract. The plaintiffs sought to recover both the purchase price and consequential damages from the Sisons. In count III Messenger alleged that the contamination of the premises had diminished the value of the real estate that was security for the Walleniuses’ mortgage loan of $108,500. Messenger requested a judgment for $108,500, the principal amount of the mortgage. Count IV alleged negligence against the broker for wrongful disbursement of the funds in the possession escrow after receiving notice that possession had not been delivered. We note the claim against the broker is not an issue in this appeal.

Also on May 2, 1991, the plaintiffs presented evidence in support of their motion for a temporary restraining order or in the alternative a preliminary injunction. The trial court entered a restraining order freezing the proceeds of the sale.

The trial court heard evidence on May 13, 14, and 20, 1991. On May 20, 1991, the trial court found that “this home is deemed uninhabitable [and] there is a right on the part of the plaintiffs to a safe home.” The trial court ordered: (1) all proceeds of the sale to be returned to plaintiffs including possession escrow funds and “all parties shall facilitate the signing [and] transferring of any necessary letters or other documents to effect the transfer of title”; (2) that Century 21 return any commission as well as earnest and possession escrow money to plaintiff; (3) granted plaintiffs rescission of the contract dated February 28, 1991; (4) the prior temporary injunction be converted into a preliminary injunction; and (5) granted plaintiffs leave to file a petition for damages and attorney fees.

As of June 20, 1991, the Sisons had not returned the proceeds of the sale or taken back title, nor had they taken any steps to clean up the premises. On June 20, 1991, the Walleniuses filed their petition for damages and attorney fees. The petition sought to recover earnest money and out-of-pocket closing costs of $27,499.31, consequential damages of $16,867, and attorney fees of $11,506.

The Walleniuses sought reimbursement for the following expenses in their claim for consequential damages: $1,985.99 in hotel and motel expenses, $1,055.83 for meals in restaurants, and moving and storage expenses of $1,933.50. The Walleniuses negotiated a short-term lease to rent a furnished home for $5,000 ($1,000 per month for five months) and since this lease prohibited pets, the Walleniuses had to board the family dog during the controversy incurring a $1,706 expense.

The Walleniuses also sought to recover the income each lost as a result of the aborted transaction, and other miscellaneous expenses. Finally, they sought damages for their pain and suffering as well as the pain and suffering of their nine-year-old son. Additionally, on June 20, 1991, Messenger filed a separate claim for damages and fees totaling $6,298.24.

The Walleniuses sought reimbursement for many expenses under their homeowners insurance policy. However, their insurer denied the claim on the ground that the policy excluded losses due to the release or dispersal of contaminants or pollutants.

On June 14, 1991, the Sisons changed attorneys. On June 22, 1991, there was a settlement meeting between the parties. A settlement was not reached on that date.

The trial court held a conference on August 9, 1991. The transcript of that date merely indicates that the attorneys for the parties were to have a conference in chambers “off the record.” On that date the parties tendered a draft settlement order to the trial court. The draft order was prepared by Thomas Grotta, the attorney for coplaintiff Messenger. James Wallenius was not present that day; however, the order is signed by Sheila and initialed by the attorneys present, including Paul Gentile, the Walleniuses’ attorney. The order provided:

“(1) That Francisco and Darwisa Sisón shall pay the sum of $141,182.23 through the repurchase of 14707 S. Sunset Court, Oak Forest, Illinois and at a closing to take place within approximately 3 weeks and the distribution of the closing and proceeds shall be distributed as follows: James F. Messenger and Company $112,955 plus interest from 8/9/91 to date of closing and Sheila and James C. Wallenius the balance of approximately $28,000.00
(2) that the settlement encompasses $53,000 previously tendered to Walleniuses, $20,000 of which they shall retain and $32,041.00 shall be tendered to James Messenger and Company pending closing of the repurchase;
(3) all other settlement to be disbursed at the closing of the repurchase of the home; [and]
(4) the parties shall sign at closing stipulation to dismiss with prejudice.”

The trial judge signed the order that day.

After leaving the courtroom the Walleniuses sent a certified letter to all the parties declaring that:

“We, James and Sheila Wallenius hereby disaffirm and rescind our acceptance of the settlement that we believe we were coerced, bullied, intimidated, threatened and hurried into accepting earlier today.
I, Sheila made a telephone call to Judge Reynold’s chambers at 3:00 p.m. today, requesting that the Clerk put aside the Order drawn today by Mr. Tom Grotta, and I ask the Judge NOT to sign it, until such time as my husband and I have had the opportunity to review the settlement figures, and obtain advice and counsel from other sources.

My complaints with regard to today’s actions are as follows:

* * * >>

On August 22, 1991, Paul Gentile filed a motion to withdraw as counsel for the Walleniuses and the Walleniuses filed a pro se motion to vacate the order of August 9, 1991. Attached to the Walleniuses’ motion as exhibit A was a letter from Commercial Federal Mortgage Corporation advising the Walleniuses that they had purchased the mortgage loan. On August 28, 1991, the trial court entered an order which: (1) allowed Paul Gentile leave to withdraw, (2) granted Messenger and the Sisons 20 days to respond, (3) granted the Walleniuses 10 days to reply, and (4) ordered that if the plaintiffs intended to rely on cases not contained in the pleadings, plaintiffs must give 14 days’ notice.

On September 11, 1991, Messenger filed a motion to strike the Walleniuses’ motion to vacate the August 9, 1991, order, a motion to strike the pleadings to dismiss the coplaintiff from the action, and a motion for turn-over of funds. On September 18, 1991, the Sisons filed a response to the motion to vacate. Attached to the Si-sons’ motion was the affidavit of Deborah Gubin, attorney for the Sisons.

On October 15, 1991, Paul Gentile filed an affidavit in support of plaintiff/buyers’ motion to vacate. On October 21, 1991, John Messina was given leave to file his appearance on behalf of the Walleniuses and the affidavit of Paul Gentile was stricken.

On September 5, 1991, Norwest Mortgage Company (Norwest) rejected the Sisons’ mortgage application. The Sisons eventually obtained financing elsewhere and the closing took place on November 13,1991.

On November 7, 1991, the trial court struck the Walleniuses’ motion to vacate and granted them seven days to file an amended motion. The trial court also granted the Sisons and Messenger seven days to file a response and the Walleniuses seven days to reply. On November 15, 1991, the Walleniuses filed an amended motion to vacate. The amended motion asserted that: (1) the agreement was based on a material mistake of fact, i.e., that the Sisons were preapproved for a mortgage and could close within three weeks; (2) James Wallenius did not consent to the settlement; (3) the agreement was procured by duress and coercion; and (4) the terms of the order were unfair, unjust, and unreasonable. Attached to the motion were the affidavits of Paul Gentile, James Wallenius and Judy Whitely (an assistant vice-president of Norwest), as well as a letter dated June 24, 1991 (from Ms. Gubin wherein the Sisons offered to settle the case), and a past-due notice from Commercial Federal Mortgage. Also attached to the motion was a letter from Lanette Dejan of Norwest indicating that based on the information provided to her by the Sisons, they were qualified to obtain a mortgage subject to the mercury spill cleanup. The affidavit of Judy Whitely indicated that the letter from Lanette Dejan did not constitute a preapproval of the Sisons’ mortgage application, that Ms. Dejan did not have authority to write such a letter and that Ms. Dejan’s employment had been terminated in September 1991.

On March 6, 1992, the trial court denied the amended motion to vacate. The trial court’s order stated:

“The order of August 9, 1991 is not unjust as it was entered into by consent of the parties. Hill Behan Lumber Co. v. First National Bank 95 Ill. App. 3rd 426 *** an order entered by consent of parties is not a judicial determination of parties but a recital of their agreement.”

On March 10, 1992, the Sisons moved for an order requiring the Walleniuses to return $2,276.77 the Sisons allegedly paid in excess of the amount that was required to be paid under the August 9, 1991, order. The Walleniuses objected and asserted several affirmative defenses. The trial court rejected these defenses and granted the Sisons’ motion on July 10, 1992.

The Walleniuses assert two issues on appeal. First, that the trial court abused its discretion in summarily denying the motion to vacate without reviewing the facts presented and, second, that the trial court abused its discretion in summarily granting the motion for a return of funds. We note that neither coplaintiff Messenger nor codefendant Century 21 has appeared or filed briefs in this appeal.

For the following reasons, we must affirm the decision of the trial court.

I

The Walleniuses argue that the trial court abused its discretion in summarily denying the motion to vacate without reviewing the facts presented. They cite Conley v. Peoples Gas, Light & Coke Co. (1980), 82 Ill. App. 3d 1094, 1100, 403 N.E.2d 625, in support of the contention that where a judge holds the erroneous belief that she lacks discretionary authority and she makes a summary ruling on that basis, the court commits reversible error. The Walleniuses maintain that their motion to vacate set forth in detail the reasons why the order of August 9 should be vacated, that the allegations in the motion were supported by affidavits and documents, but that the court did not review any of the evidence presented. Conversely, the Sisons maintain that the motion to vacate presented to the trial court was a motion to vacate a settlement agreement and not a judgment.

On August 22, 1991, a motion to vacate the order of August 9, 1991, was filed. On August 28, 1991, the trial judge set a briefing schedule and a hearing date. After briefing of the issues and a hearing, the plaintiffs’ motion to vacate was stricken and they were given seven days to file an amended motion. A new briefing schedule was set and a new hearing date was given. On January 21, 1992, a hearing was held on the amended motion. After argument by all the parties, the trial judge stated she would review the file, take it under advisement and she would advise the parties by mail.

The issues were briefed by the parties, with each of the parties supplying affidavits and other documents in support of their respective positions. The record reflects that the trial judge heard argument prior to ruling. The trial court cited the case of Hill Behan Lumber Co. v. First National Bank (1981), 95 Ill. App. 3d 426, 420 N.E.2d 268, as the basis for denial of the motion to vacate. We find no support for the contention that the trial court summarily denied the motion.

We find the Walleniuses’ agreement to the settlement terms is apparent by the face of the order. The order itself begins with the statement:

“Now in this matter coming to be heard upon the motions and petitions set for this date and a conference of all parties and the court having been conducted and parties having arrived upon full and complete settlement of all pending matters and this litigation as a whole.”

The bottom of the order is signed by Sheila Wallenius and initialed by Paul Gentile.

As a general proposition, a consent decree is not appealable because it does not constitute a resolution of a party’s rights but is a mere recordation of their private agreement. (People ex rel. Lampkin v. Brown (1980), 81 Ill. App. 3d 869, 401 N.E.2d 1171; see also People ex rel. Fahner v. Colorado City Lot Owners & Taxpayers Association (1985), 106 El. 2d 1, 476 N.E.2d 409.) Once a consent decree has been entered it is generally considered to be binding on the parties and it cannot be amended or varied without the consent of each party. (Dunaway v. Storm (1975), 30 Ill. App. 3d 880, 884, 334 N.E.2d 825.) However, this is not without exception. A trial court has potential authority to modify a consent decree if circumstances so warrant. A court of equity does not abdicate its power to revoke or modify its mandate if it is satisfied that it resulted from fraudulent misrepresentation, coercion, incompetence of one of the parties, gross disparity in the parties’ bargaining positions, or newly discovered evidence. (Kandalepas v. Economou (1989), 191 Ill. App. 3d 51, 54, 547 N.E.2d 496; In re Haber (1981), 99 Ill. App. 3d 306, 425 N.E.2d 1007.) Evidence that an agreement was entered into because of coercion, fraud or duress must be clear and convincing in order for courts to set aside the agreement. In re Marriage of Carlson (1981), 101 Ill. App. 3d 924, 930, 428 N.E.2d 1005; see also In re Marriage of De Frates (1980), 91 Ill. App. 3d 607, 414 N.E.2d 1188.

The Walleniuses argue that their motion papers raised substantial issues of duress and coercion. The Walleniuses point to the following circumstances: at the time of her acquiescence to the settlement Sheila and her family had been under the stress of living in temporary living quarters for four months, they had run out of money, and their attorney threatened to withdraw if they did not capitulate to settlement terms which they had already rejected six weeks earlier. The Walleniuses maintain that they and their attorney, Paul Gentile, were intimidated by the Sisons’ attorney and Messenger’s attorney. The Walleniuses point to the fact that Mr. Gentile was inexperienced in this area of law and that on the day of the settlement he stated that he would have to withdraw if they did not settle on that date. The Walleniuses seem to argue that the above problems were fraud on the part of the other parties. We disagree. The fact that Mr. Gentile threatened to withdraw and was inexperienced in this area of law may point to a cause of action against Mr. Gentile; however, it is not grounds for vacating this settlement agreement, and the fact that the Walleniuses rejected the same dollar amount as a settlement six weeks earlier is irrelevant.

Where consent to an agreement is secured merely because of hard bargaining positions or financial pressures, duress does not exist; a party must demonstrate inducement by a wrongful act or threat of another to execute an agreement under circumstances depriving him of the exercise of free will in order to invalidate an agreement on the basis of duress. (Willcutts v. Galesburg Clinic Association (1990), 201 Ill. App. 3d 847, 852-53, 560 N.E.2d 1.) The Walleniuses did not demonstrate fraud or duress and the trial court properly refused to vacate the settlement order.

As the court in Sheffield Poly-Glaz, Inc. v. Humboldt Glass Co. (1976), 42 Ill. App. 3d 865, 871, 356 N.E.2d 837, noted:

“[I]n all settlement agreements there is a compromising of claims. No party obtains what he alleges to be equitably his. Parties agree to accept less than their full claim in lieu of foregoing litigation.”

Based on the record in this case we are unable to find by clear and convincing evidence that the settlement agreement was entered into by fraud, coercion or duress. Accordingly, the trial court did not err in refusing to vacate the settlement agreement.

Finally, we note that there is no order contained in the record indicating that the various counts of the plaintiffs’ complaint were dismissed with prejudice. In fact, the record indicates that there never was any hearing or motions relating to the other counts in the complaint. The Sisons argue that by requesting rescission, the Walleniuses became limited to that relief. We agree. Two theories of relief, contractual damages and quasi-contractual restitution, are generally considered to be mutually exclusive; plaintiff may recover under either theory, but not both. (Crum v. Krol (1981), 99 Ill. App. 3d 651, 425 N.E.2d 1081.) The Walleniuses elected to proceed on rescission of the contract, thereby limiting their recovery to restitution. The Walleniuses argue that the Sisons waived this argument by failing to raise it in the trial court; however, it was not necessary for the Sisons to raise this point in the trial court.

II

The Walleniuses maintain that the trial court’s action in granting the Sisons’ motion to require the return of the $2,276.77 was based on the erroneous belief that the court lacked the discretionary authority to consider the merits of the Walleniuses’ affirmative defenses to the motion. The Walleniuses raised the following objections: (1) that the August 9, 1991, order was voidable because it was induced by a misrepresentation of a material fact, i.e., that the Sisons had been preapproved for a mortgage; (2) that James Wallenius did not consent to the agreement; and (3) the August 9, 1991, order was the product of duress and coercion and its terms were unfair, unjust and unreasonable. The Walleniuses maintain that the trial court committed reversible error and cite Conley v. Peoples Gas, Light & Coke Co. (1980), 82 Ill. App. 3d 1094, 1100, 403 N.E.2d 625, in support of this position.

The Sisons maintain that their motion for the return of the money is consistent with the orders of August 9, 1991, and March 6, 1992. The Sisons argue that the trial court had considered the merits of the Walleniuses’ motion to vacate the settlement and denied it and therefore Conley does not apply to the facts of this case.

In response, the Walleniuses argue that the one ruling does not automatically follow from the other and the Sisons’ motion raised issues that were not raised by the Walleniuses’ motion. The Walleniuses argue that one example is the fact that the settlement order of August 9 provided that the closing would occur within approximately three weeks, but that the closing didn’t actually take place for more than 10 weeks, on November 13. The Walleniuses maintain that this delay was the fault of the Sisons not the Walleniuses, yet the Walleniuses were required to pay the three months of additional interest and thus they are entitled to a hearing on whether these extra interest payments can be offset against the Sisons’ claim.

Consent decrees, which are utilized to effectuate settlement, are considered contracts between the parties to litigation, and accordingly the law of contracts controls their interpretation. The parties, not the court, chose the language of the document. (Citizens Utilities Co. v. Centex-Winston Corp. (1989), 185 Ill. App. 3d 610, 613, 541 N.E.2d 681, 683.) The settlement agreement could have provided that the Sisons make the additional interest payments if the closing did not take place within three weeks; it also could have incorporated a penalty provision if the closing did not take place. The same trial judge heard all the proceedings in this case. This motion was briefed by the parties and we find no support for the contention that the motion was summarily dismissed. We do not believe that Conley applies to the facts of this case. Nothing in the record suggests that the order for the return of $2,276.77 is inconsistent with the settlement agreement. Accordingly, we affirm the order granting the return of $2,276.77 in excess funds to the Sisons.

For all the reasons set forth above, we affirm the decision of the trial court.

Judgment affirmed.

GORDON, P.J., and COUSINS, J., concur.


author: JUSTICE SCARIANO

text:
      In re ESTATE OF STANLEY CIESIOLKIEWICZ, Deceased (Lawrence E. Cecil et al., Petitioners-Appellants, v. Daniel M. Cecil, Indiv. and as Co-Executor of the Instrument purporting to be the Last Will and Testament of Stanley Ciesiolkiewicz, Deceased, et al., Respondents-Appellees).
    First District (2nd Division)
    No. 1—91—1823
    Opinion filed March 2, 1993.
    Rehearing denied April 22, 1993.

      John J. Corbett, Ltd., of Chicago (John J. Corbett and Scott M. Annes, of counsel), for appellants.
    Jenner & Block, of Chicago (Gregory S. Gallopoulos, of counsel), and Kamensky & Rubinstein, of Lincolnwood (Benton C. Strauss, of counsel), for appellees.
   JUSTICE SCARIANO

delivered the opinion of the court:

Petitioners, the sole heirs at law besides co-respondent Daniel M. Cecil (Daniel), brought this action to contest the validity of the last will and testament of the decedent, Stanley Ciesiolkiewicz. Count I of the petition alleges that decedent lacked the testamentary capacity to execute the will. Count II claims that the will is invalid because Daniel, decedent’s nephew, the sole beneficiary and co-executor under the will, exerted undue influence over decedent. Petitioners requested a jury trial on both counts; the trial court, however, granted respondents’ motion for summary judgment as to both counts, and petitioners appeal from that judgment.

In support of their motion for summary judgment, respondents submitted affidavits from Daniel and Alfreda Farber (Farber), co-executors of the will; Herman Beyer (Beyer) and Marianne Brown (Brown), the two witnesses to the will; and Edward Krzyminski (Krzyminski), the attorney who prepared it. These affidavits set forth the following facts. Decedent, suffering from acute leukemia and diabetes mellitus, was brought to the emergency room of Mercy Hospital and Medical Center around midnight on May 14, 1987. After examination by hospital personnel, he was admitted as an inpatient and hospitalized until May 22. Decedent returned to the hospital on May 28 and died there on June 2.

In early May 1987, decedent hired Krzyminski to draft a deed conveying a parcel of real estate which he owned to Daniel. Krzyminski had known decedent socially for about one year before he requested his services. Krzyminski also had performed some legal services for Daniel concerning an accident case in April 1987. In addition, Krzyminski and Daniel worked for the same company; Krzyminski was an officer while Daniel was a salesman.

Krzyminski was in the process of preparing the deed for decedent when Daniel, on either May 15 or 16, informed him that his uncle was hospitalized and wanted to discuss other legal matters with Krzyminski. Krzyminski brought the finished but unsigned deed with him when he visited decedent at the hospital on May 16. When he arrived at the hospital, Krzyminski found Daniel and Farber in the room along with decedent. After decedent reviewed and executed the deed, he told Krzyminski that he wanted him to prepare his will; however, before discussing the matter any further decedent asked Daniel to leave the room, which he did. At decedent’s request, Farber remained in the room.

After Daniel left the room, Krzyminski began interviewing decedent, taking notes detailing the provisions decedent asked to have included in his will. Decedent told him that he did not have a prior will and gave him a detailed account of his property, all of which he desired to bequeath to Daniel. At this point, Farber asked decedent if he wanted to leave any of his property to anyone other than Daniel; decedent rejected this suggestion and reiterated his desire to bequeath everything to Daniel. Krzyminski stated that he later drafted the will, following decedent’s instructions. He did not disclose the terms of the will to anybody except his wife, who also served as his part-time secretary.

On May 18, 1987, Krzyminski returned to the hospital with the completed will for decedent’s review. Decedent initially read the will to himself, and then he reviewed it paragraph by paragraph with Krzyminski. After Krzyminski was satisfied that decedent understood the terms of the will, decedent told him that he wanted to sign it. Krzyminski then asked some members of the hospital staff if they would serve as witnesses, but he was informed that hospital policy prohibited employees from attesting to patients’ wills. Krzyminski suggested to decedent that two mutual friends, Beyer and Brown, could witness the execution of the will. Decedent concurred, and Krzyminski arranged for Beyer and Brown to come to the hospital.

When the witnesses arrived later that day, they found decedent in good spirits, and they talked about business and social matters. Eventually, the group began to execute the will. Decedent identified the will, and Beyer and Brown watched him sign each page of it. Thereafter, Beyer and Brown signed the will in decedent’s presence and in the presence of each other, and Krzyminski then notarized the will.

Both of the witnesses attested that decedent was mentally alert, that he signed the will with his own hand, that he acted deliberately and without prompting, and that he knew exactly what he was doing. Krzyminski, Beyer and Brown all stated that Daniel was not present when the will was executed, and Daniel also stated in his affidavit that he knew nothing of the contents of the will until after his uncle’s death.

With their reply to respondents’ motion for summary judgment, petitioners submitted affidavits of medical personnel which elicited the following facts. Erica Heit, M.D., stated that when she examined him on May 15, decedent “had an onset of mental confusion [the day before] with progressive confusion and the onset of incontinence.” She concluded that based on her examination of decedent, he was, at that time, “mentally impaired and experiencing acute mental status changes such that he could not make decisions for himself that could be relied upon by others.”

Keith Meredith Ashby, M.D., stated that when he examined decedent on May 15, he was “exhibiting acute mental status changes with focal seizure activity *** [and] experiencing] progressive confusion, and a new onset of incontinence.” Dr. Ashby concluded that decedent “was mentally impaired and experiencing mental status changes.”

Pedro Lopez, M.D., stated that throughout decedent’s period of hospitalization between May 15 and May 22, decedent “exhibited varying degrees of mental impairment.” Dr. Lopez also related that one of his nurse’s notes indicated that decedent had pulled his catheter tube from his bladder through his penis with the inflated balloon still intact. He opined that “this is something a patient who is free of mental impairment would not do.” Finally, Dr. Lopez stated that decedent “was mentally impaired and experiencing mental status changes such that he could not competently make decisions for himself that could be relied upon by others.”

Susan Mason, R.N., stated that during decedent’s week-long stay-in the hospital, he was “disoriented from time to time” and that “his mental status was unreliable.” She also indicated that during the day on which decedent’s will was executed, his “judgment was clouded and he was unable to care for himself.” Mason also stated that about three or four days after decedent was hospitalized, Daniel asked her rather adamantly to witness decedent’s will. She stated that during some periods during the day on which the will was signed, Daniel was in the room with his uncle; she also stated, however, that a will was never mentioned while she and Daniel were present in the room.

After considering these affidavits and hearing oral argument, the trial court granted respondents’ motion for summary judgment on both counts of the petition. Petitioners now appeal that decision.

I

The purpose of summary judgment is to determine if there are any genuine issues of triable fact. (Purtill v. Hess (1986), 111 Ill. 2d 229, 240, 489 N.E.2d 867, 871.) Although the use of a summary judgment procedure is encouraged as an aid in the expeditious disposition of a lawsuit (see In re Estate of Jensik (1962), 34 Ill. App. 2d 130, 135, 180 N.E.2d 740, 743 (summary judgment encouraged where appropriate in probate matters)), 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. Loyola Academy v. S & S Roof Maintenance, Inc. (1992), 146 Ill. 2d 263, 271, 586 N.E.2d 1211, 1215.

Because it is such a drastic measure, a motion for summary judgment should be granted only when the pleadings, depositions, admissions, and affidavits on file, if any, show that there is no genuine issue of material fact and that the moving party is entitled to a judgment as a matter of law. (Ill. Rev. Stat. 1991, ch. 110, par. 2 — 1005(c); Balla v. Gambro, Inc. (1991), 145 Ill. 2d 492, 508, 584 N.E.2d 104, 112.) A genuine issue of material fact exists not only when the facts are in dispute, but also where reasonable persons could draw different inferences from undisputed facts. (Loyola Academy, 146 Ill. 2d at 272, 586 N.E.2d at 1215; In re Estate of Jessman (1990), 197 Ill. App. 3d 414, 419, 554 N.E.2d 718, 720.) Thus, summary judgment is proper only where undisputed facts admit but one reasonable inference. (Jessman, 197 Ill. App. 3d at 419, 554 N.E.2d at 720.) A trial court may not weigh evidence set forth in opposing affidavits, thereby denying a right to a jury trial (In re Estate of Hoover (1992), 226 Ill. App. 3d 422, 429, 589 N.E.2d 899, 905), and we have consistently warned that summary judgment is particularly inappropriate where the inferenees sought to be drawn deal with questions of motive, intent or subjective feelings and reactions. See, e.g., Jessman, 197 Ill. App. 3d at 419, 554 N.E.2d at 721; Montgomery Ward & Co. v. Wetzel (1981), 98 Ill. App. 3d 243, 247, 423 N.E.2d 1170, 1174; Schuster v. East St. Louis Jockey Club, Inc. (1976), 37 Ill. App. 3d 483, 487, 345 N.E.2d 168,172.

The burden of establishing that there are no genuine issues of material fact is on the moving party. (Becovic v. Harris Trust & Savings Bank (1984), 128 Ill. App. 3d 107, 119, 469 N.E.2d 1379, 1387.) In determining whether the moving party has met that burden, the court must construe the pleadings, depositions, admissions, and affidavits strictly against the movant and liberally in favor of the opponent. (Loyola Academy, 146 Ill. 2d at 271, 586 N.E.2d at 1215; Purtill, 111 Ill. 2d at 240, 489 N.E.2d at 871.) Because this court must review summary judgments de novo (Myers v. Health Specialists, S.C. (1992), 225 Ill. App. 3d 68, 72, 587 N.E.2d 494, 497, appeal denied (1992), 145 Ill. 2d 635, 596 N.E.2d 630), we must analyze the facts that were before the trial court to determine whether it properly granted summary judgment on both counts of the petition.

Count I of the petition claims that decedent lacked the testamentary capacity to execute a valid will. It is well established that the law presumes every person sane until the contrary is proved; thus, the burden of proof rests on the party who asserts the lack of testamentary capacity. (Shevlin v. Jackson (1955), 5 Ill. 2d 43, 47, 124 N.E.2d 895, 897.) Testamentary capacity requires that the person making the will have sufficient mind and memory to understand the particular business in which he is engaged, to know the natural objects of his bounty, to know the character and extent of his property, and to make disposition of said property according to a plan formed in his own mind. Butler v. O’Brien (1956), 8 Ill. 2d 203, 210, 133 N.E.2d 274, 278; In re Sutera (1990), 199 Ill. App. 3d 531, 536, 557 N.E.2d 371, 374.

Petitioners assert that the affidavits submitted by hospital personnel who observed decedent shortly before he executed the will illustrate that decedent lacked the mental capacity to do so. They claim that this evidence clearly contradicts the affidavits of those present during the execution of the will in which they stated that decedent was of sound mind, thus raising a genuine issue of material fact. Respondents argue that the affidavits submitted by petitioners do not contradict theirs because they do not necessarily indicate that decedent was incompetent to make a will, and that they are irrelevant to decedent’s state of mind at the precise time the will was executed.

Respondents’ first argument is meritless. The doctors and nurses who treated decedent all opined that decedent was mentally-impaired in such a way that he could not competently make decisions for himself that could be relied upon by others. Assuming these facts to be true, as we must at this juncture, if decedent was not mentally competent to make decisions for himself, it is entirely possible that he did not know the nature of his bounty, the character of his property, or his plan as to how he wanted to dispose of that property. Accordingly, the affidavits of the medical personnel were directly relevant to the question of whether decedent lacked the testamentary capacity to execute a will. See, e.g., In re Estate of Dossett (1987), 159 Ill. App. 3d 466, 473, 512 N.E.2d 807, 811 (evidence that testator was “very weak” and very confused, as well as the fact that she was of “diminished mental capacity,” was sufficient to send case to jury for determination of testamentary capacity).

The respondents’ second assertion is equally baseless. It is well recognized that evidence of the mental condition of the testator a reasonable time before or after the making of a will is relevant to show his mental condition at the time of the execution of the instrument (Butler, 8 Ill. 2d at 211, 133 N.E.2d at 278; Peters v. Peters (1941), 376 Ill. 237, 242, 33 N.E.2d 425, 427; Central Bank v. Ziaee (1989), 188 Ill. App. 3d 936, 949, 544 N.E.2d 1121, 1130, appeal denied (1989), 128 Ill. 2d 662, 548 N.E.2d 1067; Manning v. Mock (1983), 119 Ill. App. 3d 788, 805, 457 N.E.2d 447, 457), especially where the mental condition is of a continuous nature. (Peters, 376 Ill. at 243, 33 N.E.2d at 427; accord Ziaee, 188 Ill. App. 3d at 949, 544 N.E.2d at 1130.) Our supreme court has found to be relevant proof of the mental condition of the testator two years prior to the execution of the will. Voodry v. Trustees of the University of Illinois (1911), 251 Ill. 48, 51, 95 N.E. 1034, 1035; accord Mitchell v. Van Scoyk (1953), 1 Ill. 2d 160, 176, 115 N.E.2d 226, 235; Manning, 119 Ill. App. 3d at 805, 457 N.E.2d at 457.

In the case sub judice, the doctors and nurses who submitted affidavits on behalf of the petitioners observed decedent a few days before the execution of the will. In. fact, one nurse stated that on the day the will was executed, she noticed that decedent’s “judgment was clouded.” Therefore, the facts presented by the hospital staff were indisputably of sufficient proximity to the execution of the will to be relevant to the question of decedent’s testamentary capacity.

In sum, both parties submitted affidavits that contain relevant facts which completely contradict each other concerning the question of decedent’s testamentary capacity at the time the will was executed; it is therefore quintessentially a function of the fact finder to resolve this conflict. Consequently, we reverse the trial court’s grant of summary judgment on count I of the petition.

II

Count II of the petition asserts that the will is invalid because Daniel procured it by exerting undue influence over decedent. For undue influence to invalidate a will, it must operate to prevent a testator from exercising his free will in the disposition of his estate. (Breault v. Feigenholtz (1973), 54 Ill. 2d 173, 181, 296 N.E.2d 3, 9.) The undue influence must cause the testator to make a disposition of property which is not the testator’s free and voluntary act, but which is rather the product of another person. (Hoover, 226 Ill. App. 3d at 427, 589 N.E.2d at 903.) The influence may have been exerted at any time, but it must have been directly connected with the execution of the will and in operation at the time the will was made. In re Estate of Julian (1991), 227 Ill. App. 3d 369, 376, 592 N.E.2d 39, 44.

The party asserting that a will was executed as a result of undue influence must establish the following elements to raise such a presumption: (1) a fiduciary relationship between the testator and a person who receives a substantial benefit under the will; (2) a testator in a dependent situation in which the substantial beneficiaries were in dominant roles; (3) a testator who reposed trust and confidence in such beneficiaries; and (4) a will prepared or procured and executed in circumstances wherein such beneficiaries were instrumental or participated. Redmond v. Steele (1955), 5 Ill. 2d 602, 609-10, 126 N.E.2d 619, 624; Tidholm v. Tidholm (1945), 391 Ill. 19, 25, 62 N.E.2d 473, 476; Julian, 227 Ill. App. 3d at 376, 592 N.E.2d at 44; Jessman, 197 Ill. App. 3d at 419-20, 554 N.E.2d at 721.

In the case at bar, petitioners claim that the affidavits submitted by both parties, when looked at in the light most favorable to them, establish all four elements necessary for a presumption of undue influence. Respondents reply that the evidence, even when viewed in the light most favorable to petitioners, fails to establish that Daniel was in a fiduciary relationship with decedent or that he procured or participated in the execution of the will. Because we decide the case on the former ground, we have no occasion to reach the latter.

A fiduciary relationship is established in the undue influence context where there is a special confidence reposed in one who, by reason of such confidence, must act in good faith and with due regard to the interests of the person reposing that special confidence. (In re Estate of Osborn (1984), 128 Ill. App. 3d 453, 455, 470 N.E.2d 1114, 1117.) This relationship “ ‘may exist as a matter of law between attorney-client, guardian-ward, trustee-beneficiary, and the like, or it may be the result of a more informal relationship — moral, social, domestic or even personal in its origin. [Citations].’ ” Osborn, 128 Ill. App. 3d at 455, 470 N.E.2d at 1117, quoting Swenson v. Wintercorn (1968), 92 Ill. App. 2d 88, 100, 234 N.E.2d 91, 97.

Petitioners assert that respondents concede that a fiduciary relationship existed between Daniel and decedent because they stated in their answer that he “reposed trust and confidence” in Daniel. We disagree. While this admission may satisfy petitioners’ burden to show that decedent reposed trust and confidence in Daniel under the third prong of an undue influence claim espoused above, it is insufficient to establish the fiduciary relationship, or the “special confidence,” element of the cause of action. This point was emphasized in Sterling v. Dubin (1955), 6 Ill. 2d 64, 126 N.E.2d 718, where our supreme court held that the primary beneficiary was not in a fiduciary relationship with the decedent even though she retained his trust, was his private secretary for a long period of time, had an illicit sexual relationship with him, and handled his financial affairs while he was in the hospital. Sterling, 6 Ill. 2d at 71-72, 126 N.E.2d at 722-23.

In the case at bar, petitioners point to no evidence from which we can deduce that Daniel was in a relationship of “special confidence” with decedent. That Daniel was his nephew and that decedent trusted him are not enough; there must be a factual basis in the record from which a reasonable inference can be drawn that Daniel was in a special relationship with decedent such that he was required to act with good faith and in the interest of decedent. Since the record here is devoid of such evidence, we hold petitioners could not, as a matter of law, establish that Daniel procured the will by exerting undue influence over decedent.

For all of the foregoing reasons, we reverse the trial court’s grant of summary judgment as to count I (testamentary capacity) of the petition, and affirm the court’s grant of summary judgment in favor of respondents as to count II (undue influence) of the petition.

Affirmed in part; reversed in part and remanded.

McCORMICK, P.J., and DiVITO, J., concur.