author: JUSTICE CERDA

text:
    ADMAN PRODUCTS COMPANY, Plaintiff-Appellant, v. FEDERAL INSURANCE COMPANY, Defendant-Appellee.
    First District (3rd Division)
    No. 1—87—2258
    Opinion filed August 9, 1989.

      William J. Sneckenberg & Associates, Ltd., of Chicago (William J. Sneckenberg and Lisa J. Brodsky, of counsel), for appellant.
    Brinton & Bollinger, of Chicago (Timothy I. McArdle, of counsel), for appellee.
   JUSTICE CERDA

delivered the opinion of the court:

This is an appeal from summary judgment for the defendant in a declaratory judgment action. The issue presented for review is whether the defendant, Federal Insurance Co. (Federal), is obligated to defend a property damage action on behalf of the plaintiff, Adman Products Co. (Adman), pursuant to a comprehensive general liability insurance policy issued by Federal to Adman. The trial court ruled that Federal does not have a duty to defend Adman on the ground that two exclusion clauses preclude coverage of the damaged property. We affirm.

Adman is an Illinois corporation engaged in the business of assembling advertising displays. Between 1975 and June 1, 1984, Adman contracted with National Creative Merchandising Corp. (NCM) to assemble displays. Throughout their business relationship, NCM delivered display materials owned by NCM or its customers to Adman for assembly. On June 1, 1984, a fire at Adman's facility located at 4444 West Chicago Avenue damaged or destroyed displays and display materials owned by NCM or its customers. NCM filed an amended three-count complaint against Adman on October 8, 1985, which Adman tendered to Federal. Federal declined Adman’s request to provide a defense against NCM’s complaint, prompting Adman to file a declaratory judgment action against Federal. Federal in turn filed a counterclaim and third-party complaint against Adman and NCM seeking a declaratory determination that Federal is not obligated to defend Adman and is not liable under the policy to Adman or NCM for the property damage.

The policy contains the basic coverage provision that “[t]he company will pay on behalf of the insured all sums which the insured shall become obligated to pay as damages by reason of liability *** for bodily injury, property damage or personal injury caused by an occurrence.” Federal also promised to “defend any suit against the insured seeking damages on account of such bodily injury, property damage or personal injury, even if the allegations of the suit are groundless, false or fraudulent.” In dispute, however, are two exclusionary clauses which the trial court found were in the nature of a “care, custody or control” exclusion. They state as follows:

“Nor does this insurance apply to:
* * *
14. property damage to:
* * *
b. property held by the insured for sale or property entrusted to the insured for storage or safekeeping;
c. property while on premises owned or occupied by or rented to the insured for the purpose of having operations performed on such property by or on behalf of the insured ***.”

After submission of briefs and a hearing, the trial court accepted Federal’s contention that the damaged displays and display materials were property for which coverage was excluded under clauses 14(b) and 14(c).

As a general rule, the duty to defend is determined by comparing the allegations of the complaint with the terms of the policy. (International Minerals & Chemical Corp. v. Liberty Mutual Insurance Co. (1988), 168 Ill. App. 3d 361, 366, 522 N.E.2d 758.) It is often stated that in determining whether there is potential coverage, only the allegations contained in the complaint may be considered. (Consolidated Rail Corp. v. Liberty Mutual Insurance Co. (1981), 92 Ill. App. 3d 1066, 1070, 416 N.E.2d 758.) The insurer must defend the insured if the complaint alleges facts within, or potentially within, policy coverage. (Tuell v. State Farm Fire & Casualty Co. (1985), 132 Ill. App. 3d 449, 452, 477 N.E.2d 70.) It is also well settled that where the allegations fall within policy coverage, the duty to defend exists despite knowledge acquired independently by the insurer that the allegations are untrue. Consolidated Rail Corp. v. Liberty Mutual Insurance Co., 92 Ill. App. 3d at 1070.

Summary judgment is granted only where the pleadings and the affidavits and depositions, if any, show there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. (Ill. Rev. Stat. 1987, ch. 110, par. 2 — 1005; Carruthers v. B.C. Christofher & Co. (1974), 57 Ill. 2d 376, 313 N.E.2d 457.) Adman initially contends on appeal that Federal improperly submitted deposition testimony in conjunction with its motion for summary judgment, contending that the trial court is limited by the general rule that only the allegations in the underlying complaint may be considered in determining whether the insurer is under a duty to defend. (Consolidated Rail Corp. v. Liberty Mutual Insurance Co., 92 Ill. App. 3d at 1070.) Though this contention has been rejected in the context of the declaratory judgment action (Fidelity & Casualty Co. v. Envirodyne Engineers, Inc. (1983), 122 Ill. App. 3d 301, 304, 461 N.E.2d 471), we do not address the question, for we find that coverage is excluded by the allegations of the underlying complaint without considering extrinsic evidence.

In interpreting an insurance policy, the court must effectuate the intent of the parties as expressed by the contract. (State Farm Fire & Casualty Co. v. Moore (1981), 103 Ill. App. 3d 250, 255, 430 N.E.2d 641.) Any ambiguity in the policy is construed against the insurer. (State Farm Fire & Casualty Co., 103 Ill. App. 3d at 255.) A provision is ambiguous if more than one reasonable interpretation may be given. (State Farm Fire & Casualty Co. v. Moore, 103 Ill. App. 3d at 255.) However, where there is no ambiguity, the policy terms are given their plain and obvious import. (State Farm Fire & Casualty Co. v. Moore, 103 Ill. App. 3d at 255.) In determining whether any ambiguity exists, the court should consider the subject matter of the contract, the facts surrounding its execution, the situation of the parties, and the predominate purpose of the contract, which is to indemnify the insured. State Farm Fire & Casualty Co. v. Moore, 103 Ill. App. 3d at 255.

When a policy exclusion is asserted to deny coverage, its applicability must be free from doubt. (Trovillion v. United States Fidelity & Guaranty Co. (1985), 130 Ill. App. 3d 695, 700.) Count I alleges that Adman is liable for negligent maintenance of its building. Count II alleges liability on a bailment theory. Count III alleges breach of contract for failure to procure insurance. The parties agree that counts II and III do not allege facts falling within policy coverage.

In count I, NCM describes the damaged property as follows:

“On June 1, 1984, property belonging to NCM and its customers was in the possession of Adman. Such property consisted of work-in-progress, stored merchandise, parts and materials for use in the assembly of displays designed by NCM and finished goods belonging to NCM and its customers on Adman’s premises for pick-up by or delivery to NCM or its customers.”

Adman concedes that work in progress, stored merchandise, and parts and materials for use in assembly are property falling within the exclusions relied upon by Federal. Adman argues, however, that finished goods fall in neither exclusion and are therefore covered. More specifically, Adman contends that clause 14(b) is not applicable because its possession of the finished goods was only incidental to the service provided for NCM and did not amount to storage or safekeeping. Adman further contends that clause 14(c) does not preclude coverage because “finished goods” are property waiting for pick-up or delivery and are not in its possession for the purpose of performing operations. Therefore, Adman asserts that Federal must defend it against NCM on the ground that “the duty to defend extends to cases where the complaint alleges several causes of action or theories of recovery against an insured even if only one or some of them are within the policy coverage.” See, e.g., Tuell v. State Farm Fire & Casualty Co. (1985), 132 Ill. App. 3d 449, 452, 477 N.E.2d 70.

Citing Topeka Ry. Equipment v. Foremost Insurance Co. (1980), 5 Kan. App. 2d 183, 614 P.2d 461, Adman advances a persuasive argument that clause 14(b) is not applicable as its possession of NCM’s goods was only incidental to the services NCM contracted for. In 7b-peka, the insured was in the business of modifying and repairing railroad cars. Pursuant to a contract with the United States government, the insured modified railroad cars owned by the government at an Air Force base. Once the cars were delivered to the base, the insured had control over the property. Two cars were damaged when one car rolled down the track, striking the other. The court held that an exclusionary clause identical to 14(b) did not preclude coverage because the storage or safekeeping of the cars was only incidental to the bailment and not the primary reason for which the cars were delivered to the insured. (Topeka Ry. Equipment, 5 Kan. App. 2d at 186, 614 P.2d at 464.) The court ruled that more than a mere bailment was required to invoke the storage or safekeeping exclusion. Topeka Ry. Equipment, 5 Kan. App. 2d at 185-86, 614 P.2d at 463. See also Prahm v. Rupp Construction Co. (Minn. 1979), 277 N.W.2d 389, 390-91.

However, while Topeka is persuasive in support of Adman’s contention that clause 14(b) is not applicable, we affirm the trial court’s ruling on the basis that clause 14(c) excludes coverage. We agree that the very purpose for NCM’s goods to be on Adman’s premises was to have work performed on the goods. Despite this fact, Adman argues that clause 14(c) does not preclude coverage of finished goods because operations are not being performed on finished goods. To adopt Adman’s interpretation would require us to believe that the parties contemplated that goods delivered to Adman’s premises would be covered until Adman began performing operations on the goods, at which time coverage ceased, and then coverage would again commence when Adman completed its work on the goods. Adman provides no explanation as to why it would desire such a policy or why Federal would provide such a policy. We do not believe that this is what the parties contemplated upon binding themselves to the policy. Clause 14(c) is unambiguous. It excludes coverage of property that is on Adman’s premises for the purpose of having operations performed on such property. The excluded property is defined by the purpose for which it is on premises owned or rented by Adman. Clause 14(c) makes no distinction regarding what stage the property is in, whether it be at the beginning or end of the operations.

We also find that Topeka supports our conclusion that clause 14(c) excludes coverage. The policy issued to the insured in Topeka also contained an “operations” exclusion identical to clause 14(c). Before addressing the applicability of the “storage or safekeeping” exclusion, the court summarily disposed of the “operations” exclusion, stating that the exclusion would have applied if the cars had been on premises owned by or rented to the insured. (Topeka Ry. Equipment, 5 Kan. App. 2d at 185, 614 P.2d at 463.) The exclusion did not apply because the insured was a permissive user of the railroad tracks at the Air Force base at the time of the occurrence. In describing the status of the boxcars at the time of the incident, the court noted that the two damaged cars were awaiting modification. Because the “operations” exclusion would have applied had the insured owned or rented the premises, it is clear by necessary implication that the exclusion’s applicability was not affected by the fact that work had not yet begun. It follows, therefore, that the exclusion is not affected where the work has been completed. Therefore, we hold that the finished goods are not covered under the policy as clause 14(c) precludes coverage. Consequently, Federal is under no duty to defend Adman.

The judgment of the circuit court is affirmed.

Judgment affirmed.

RIZZI and WHITE, JJ., concur.


source: Caselaw Access Project

author: JUSTICE WHITE

license: Public Domain

text:
    LINDA F. RIAS, Plaintiff-Appellee, v. THE DEPARTMENT OF EMPLOYMENT SECURITY et al., Defendants-Appellants.
    First District (3rd Division)
    Nos. 1—88—0101, 1—88—0241 cons.
    Opinion filed August 9, 1989.
    Neil F. Hartigan, Attorney General, of Springfield (Respicio F. Vazquez, Assistant Attorney General, of Chicago, of counsel), for appellants.
    Ron Fritsch, of Chicago, for appellee.
   JUSTICE WHITE

delivered the opinion of the court:

Plaintiff Linda E Rias filed a claim for unemployment compensation benefits after she was discharged by her employer, Admiral Maintenance Company, for fighting on the job. A claims adjudicator for defendant Illinois Department of Employment Security (the Department) denied plaintiff’s claim for unemployment compensation benefits following a determination that plaintiff had violated a known and reasonable rule of her employer against fighting. Plaintiff appealed this determination and a hearing was held before a referee of the Department. The referee found that plaintiff fought only to defend herself from an unprovoked attack by a co-worker and that plaintiff was eligible to receive unemployment compensation benefits. Plaintiff’s employer then appealed to the Board of Review (the Board), which held that plaintiff was discharged for misconduct connected with her work and was ineligible to receive unemployment compensation benefits. Plaintiff then filed a complaint in the circuit court of Cook County, Illinois, for administrative review of the Board’s decision. Judge Lucia T. Thomas of the circuit court found that the decision of the Board was against the manifest weight of the evidence and that plaintiff was entitled to the unemployment compensation benefits. The Board, the Director of the Department, the Department, and plaintiff’s employer (referred to collectively as the defendants) have appealed the decision of the circuit court. We affirm.

The evidence adduced at the hearing before the referee follows.

Plaintiff was employed by Admiral Maintenance Company from September 1983, until February 18, 1987. She was assigned to work at Loyola Hospital as a janitress. On February 18, 1987, plaintiff was returning from her locker after her break when she passed Sharon King, a co-worker, in the hallway. Sharon King turned to plaintiff and said, “Linda, you hit my arm.” Plaintiff had not touched Sharon. Sharon had actually brushed against something that was sticking out of the pocket in plaintiff’s smock. Plaintiff looked at Sharon, who then walked up to her and pushed her toward the wall. Plaintiff then said to Sharon, “[W]hat do you want to make of it, I wasn’t looking, what do you want to make of it[?]” Sharon again pushed plaintiff toward the wall. Plaintiff did not have an opportunity to withdraw. Plaintiff hit Sharon in the face and a physical altercation ensued. After four or five minutes, a security officer intervened and stopped the fight. Plaintiff and Sharon King were suspended pending an investigation and were later discharged.

Plaintiff was given company rules and regulations when she was hired. She was aware that it was a violation of these rules and regulations to participate in any physical altercation at work.

At the conclusion of the hearing, the referee found that plaintiff was physically attacked by a co-worker at work, without provocation. The referee also found that plaintiff was unable to withdraw and fought to defend herself. The referee noted that Admiral Maintenance Company did not present any testimony to contradict plaintiff’s testimony that she fought in self-defense. The referee concluded that plaintiff did not willfully disregard her employer’s interest and that plaintiff was eligible to receive unemployment benefits.

The Board elected not to hear additional evidence from the parties. It reviewed the record before the claims adjudicator and the referee and made the following findings:

“The evidence established that the claimant accidently [sic] brushed the shoulder of a co-worker on her last day of work and when the co-worker objected, the claimant replied ‘do you want to make something of it[?]’ That [sic] the co-worker then pushed the claimant into the wall [sic] a fight ensued. The claimant contended that she was acting in self defense when she hit the coworker in the face. The altercation took place in the corridor, which was the doorway of the hall. In response to the Referee’s question, ‘were you unable to withdraw[?]’ the claimant replied ‘no, I wasn’t.’ Based on the totality of the evidence, the claimant could have withdrawn and avoided the physical conflict but chose to remain as a defiant gesture. As such, it must be held that she was a participant in the fight and was subject to the consequences as was [sic] stated in the employers [sic] known rules.
Accordingly, we conclude that the claimant was discharged for misconduct connected with the work and, therefore, was subject to a disqualification of benefits *** under the provisions of Section 602A of the Illinois Unemployment Insurance Act.”

It is well settled in Illinois that the findings and conclusions of an administrative agency on questions of fact are prima facie true and correct. (Pesce v. Board of Review (1987), 161 Ill. App. 3d 879, 881, 515 N.E.2d 849; Profice v. Board of Review (1985), 135 Ill. App. 3d 254, 257, 481 N.E.2d 1229.) The function of a court of review is limited, therefore, to ascertaining whether the decision of the administrative agency is against the manifest weight of the evidence. (Ferretti v. Department of Labor (1987), 115 Ill. 2d 347, 353, 506 N.E.2d 560; Profice, 135 Ill. App. 3d at 257; Sheffv. Board of Review, Illinois Department of Labor (1984), 128 Ill. App. 3d 347, 350, 470 N.E.2d 1044.) Where it appears that the agency’s findings are not supported by substantial evidence, they will be reversed. Galarza v. Department of Labor (1987), 167 Ill. App. 3d 163, 168, 520 N.E.2d 672; Gee v. Board of Review (1985), 136 Ill. App. 3d 889, 895, 483 N.E.2d 1025.

As stated above, Judge Lucia T. Thomas found that the Board’s findings were against the manifest weight of the evidence. We agree.

Plaintiff was the only eyewitness to testify at the hearing before the referee. She testified that Sharon King pushed her toward the wall and that she was unable to withdraw to a place of safety. She explained the situation thus:

“[S]he pushed me first when I said well Sharon what do you want to make of it, so she pushed me, so I wasn’t to the wall, so she’s like I want to make something out of it, whether I couldn’t move, there was no space for me like to walk at all because she was right there on me.”

Plaintiff also testified that she did not do anything to precipitate the altercation and that she fought to defend herself.

Although the altercation took place in the hallway, there was no testimony to support the Board’s finding that plaintiff could have withdrawn to a place of safety. There was also no testimony to support the findings that plaintiff brushed Sharon King’s shoulder, that plaintiff provoked the fight and that plaintiff “chose to remain” and fight as a “defiant gesture.” We therefore reject these findings of fact.

Our analysis cannot stop at this point, however, since plaintiff did violate her employer’s rule against fighting at the workplace. We must determine whether plaintiff’s conduct was such that she should be denied unemployment compensation benefits.

Section 602(A) of the Unemployment Insurance Act states as follows:

“An individual shall be ineligible for benefits for the week in which he has been discharged for misconduct connected with his work and, thereafter, until he has become reemployed and has had earnings equal to or in excess of his current weekly benefit amount in each of four calendar weeks ***.” (Ill. Rev. Stat. 1985, ch. 48, par. 432(A).)

Our supreme court has defined “misconduct connected with *** work” which would disqualify a claimant from receiving unemployment benefits. (See Jackson v. Board of Review (1985), 105 Ill. 2d 501, 475 N.E.2d 879.) The court quoted Boynton Cab Co. v. Neubeck (1941), 237 Wis. 249, 259-60, 296 N.W. 636:

“ ‘[T]he intended meaning of the term “misconduct” *** is limited to conduct evincing such wilful or wanton disregard of an employer’s interests as is found in deliberate violations or disregard of standards of behavior which the employer has the right to expect of his employee, or in carelessness or negligence of such degree or recurrence as to manifest equal culpability, wrongful intent or evil design, or to show an intentional and substantial disregard of the employer’s interests or of the employee’s duties and obligations to his employer.’ ” (Jackson, 105 111. 2d at 511-12.)

The court further stated:

“Every violation of a company rule will not constitute misconduct. The rule must be a reasonable rule governing the conduct or performance of an employee. There must be some nexus between the rule and the employment. *** [Citation.] Thus a reasonable company rule or order governing the conduct and performance of an employee which directly concerns the employment constitutes ‘standards of behavior which the employer has the right to expect of his employees,’ as that phrase is used in the definition of misconduct quoted above. In addition to the existence of such a rule, it must be shown that the breach of the rule is deliberate or its equivalent, as stated in the above-quoted definition.” Jackson, 105 Ill. 2d at 512-13.

As stated above, plaintiff violated her employer’s rule against fighting at the workplace. However, plaintiff testified that Sharon King pushed her toward the wall and that she was unable to withdraw. Plaintiff also testified that she fought to defend herself. There is no evidence that plaintiff deliberately violated her employer’s rule or that she willfully disregarded her employer’s interests. Furthermore, plaintiff’s conduct cannot be characterized as “negligence in such degree or recurrence as to manifest culpability, wrongful intent, or evil design, or show an intentional and substantial disregard of the employer’s interest or of the employee’s duties and obligations to the employer.” We therefore conclude with Judge Thomas that the Board was incorrect in its determination and that plaintiff is entitled to receive unemployment compensation benefits. See Hodges v. Everett (1981), 2 Ark. App. 125, 617 S.W.2d 29 (self-defense is a right the exercise of which cannot be said to be an act of wanton or willful disregard of the employer’s interest); Anderson v. Florida Unemployment Appeals Comm’n (Fla. App. 1987), 517 So. 2d 754 (striking a retaliatory blow did not constitute misconduct connected with work which would preclude claimant from receiving unemployment benefits); Davis v. Florida Unemployment Appeals Comm’n (Fla. App. 1985), 472 So. 2d 800 (claimant was entitled to benefits where co-worker precipitated the entire incident by physically assaulting and verbally abusing claimant); Collins v. Blache (La. App. 1987), 509 So. 2d 718 (claimant did not disregard his employer’s interest where claimant acted under a reasonable belief that claimant was in danger); Georgia-Pacific Corp. v. Employment Division (1975), 21 Or. App. 135, 533 P.2d 829 (claimant, although not blameless, did not strike the first blow in the scuffle, and his conduct was not so seriously improper as to disqualify him from receiving benefits under the employment law); Peeples v. Commonwealth of Pennsylvania, Unemployment Compensation Board of Review (1987), 104 Pa. Commw. 504, 522 A.2d 680 (claimant was justified in using reasonable force in self-defense).

For the aforementioned reasons, the judgment of the circuit court of Cook County is affirmed.

Affirmed.

RIZZI and CERDA, JJ., concur.

      Minnie Sampel Davis, the director of housekeeping for Admiral Maintenance Company, participated in the hearing before the referee. However, it was established that Ms. Davis had not witnessed the fight which led to plaintiff’s discharge.

      The Board based its finding that plaintiff could have avoided the altercation upon plaintiff's testimony at the hearing before the referee:
      “Q. I take it then in support of your appeal then Ms. Bias, it’s your contention as you stated in the local unemployment office that you were defending yourself, is that correct?
      A. That’s very correct.
      Q. And that you were unable to withdraw?
      A. No, I wasn’t.

      Q. You testified that you were pushed by your co-worker to the wall, is that correct?
      A. That’s correct.” (Emphasis added.)
      The Board claims that plaintiff’s answer, “No, I wasn’t” meant “No, I was not unable to withdraw” and was thus an admission that plaintiff could have withdrawn to a place of safety. It is clear, however, that plaintiff was testifying that she was unable to withdraw and that she was acting in self-defense. Moreover, the Board has ignored the fact that plaintiff testified throughout the hearing that she was unable to withdraw. The Board has also ignored the finding of the referee that plaintiff was unable to withdraw. While the Board is required to make an independent assessment of the evidence, the Board is also required to give consideration to the findings of the referee (Neville v. Board of Review (1986), 143 Ill. App. 3d 548, 551, 494 N.E.2d 512; Gregory v. Bernardi (1984), 125 Ill. App. 3d 376, 380-81, 465 N.E.2d 1052.) The interpretation that the Board seeks to impose upon the answer quoted above is contrary to the finding of the referee and is unreasonable.

      Section 602(A) was subsequently amended to include the following definition of misconduct:
      “For purposes of this subsection, the term ‘misconduct’ means the deliberate and willful violation of a reasonable rule or policy of the employing unit, governing the individual’s behavior in performance of his work, provided such violation has harmed the employing unit or other employees or has been repeated by the individual despite a warning or other explicit instruction from the employing unit.” Ill. Rev. Stat. 1987, ch. 48, par. 432(A) (effective January 1, 1988).


text:
      In re MARRIAGE OF ARLENE CIERNY, Petitioner-Appellee, and RONALD CIERNY, Respondent-Appellant.
    First District (3rd Division)
    No. 1—88—0138
    Opinion filed August 9, 1989.

      Steven R. Lake & Associates, Ltd., of Chicago, for appellant.
    Batter, Capitel & Schwartz, of Buffalo Grove, and Edward I. Stein, Ltd., of Northbrook, for appellee.
   JUSTICE WHITE

delivered the opinion of the court:

The respondent, Ronald Cierny, appeals from a judgment of the circuit court dissolving his marriage to the petitioner and ordering him to pay petitioner’s attorney fees. Respondent also appeals an order finding him in contempt of court.

Facts

Respondent and petitioner were married on June 14, 1969. They had one child, Andrew, born May 30, 1979. On January 27, 1987, petitioner filed an action seeking dissolution of the parties’ marriage. A hearing on petitioner’s motion for temporary support was scheduled for April 6, 1987; however, on that date respondent’s attorney informed the court that the respondent no longer wished her to represent him and the case was continued until April 16 to give respondent an opportunity to obtain new counsel.

APRIL 16, 1987

Respondent, petitioner, and their attorneys appeared and a prove up was held, at which petitioner testified that the respondent was guilty of mental cruelty. Petitioner also testified that she, respondent, and their attorneys had negotiated an oral settlement agreement.

Petitioner testified that under the settlement agreement: (1) petitioner would have sole custody of Andrew and respondent would have visitation rights; (2) respondent would pay the greater of 20% of his income or $400 per month in child support and provide insurance coverage for Andrew; (3) respondent would pay petitioner $200 per month in maintenance for a period of 24 months; (4) petitioner would assume responsibility for payment of the mortgage on the marital residence located in Arlington Heights, Illinois, and respondent would quitclaim his interest in the house to petitioner in exchange for $28,000; (5) respondent would prepare joint 1986 Federal and State income tax returns for the parties and any refund would be divided between the parties with 60% going to respondent and 40% going to petitioner; and (6) respondent would pay $1,500 of petitioner’s attorney fees and each would be responsible for the balance of his or her own attorney fees.

Respondent then testified, stating that he was not offering a defense to petitioner’s charge of mental cruelty. He also stated that he and his attorney had spent two hours going over the settlement agreement and that he believed that the agreement was fair and reasonable. At the close of the hearing, the trial court ordered that a judgment of dissolution setting forth the parties’ agreement be prepared and submitted for his signature.

MAY 13,1987

On May 13, 1987, petitioner filed a motion seeking to have the judgment of dissolution entered instanter. At a hearing on that same date, the court was informed that respondent had hired a new attorney and that respondent intended to object to the entry of the judgment. The court pointed out that respondent had filed no pleadings indicating what objections he had to the judgment, but stated that in the interest of justice, the matter would be continued to give respondent an opportunity to be heard. The court added that because petitioner had appeared and was ready to proceed with entry of the judgment and because respondent had previously given no indication that he intended to object, all fees incurred in future proceedings would be borne by respondent.

MAY 15,1987

On May 15, 1987, respondent filed a petition to vacate the April 16 prove up. Although respondent’s petition has not been included in the record on appeal, it appears that it alleged that the prove up should be vacated because the settlement agreement was manifestly unfair, because no discovery was had prior to the prove up, and because respondent was under a mental impairment at the time of the prove up due to certain medication he was using.

At the hearing on respondent’s petition, respondent testified that he believed the April 16 court appearance was for a hearing on petitioner’s request for temporary relief and that prior to that date, he had not discussed settling the case with his attorney. Respondent also testified that on the morning of April 16, he met with his attorney, Lee Newell, prior to the hearing and was told that they might be able to settle the case. Newell then met with petitioner’s attorney and afterwards told respondent that petitioner had agreed to give respondent 40% of the equity in the marital home (approximately $27,100) and that petitioner wanted respondent to pay $2,500 of petitioner’s attorney fees. Respondent stated that he told Newell that he wanted 50% of the fair market value of the house and that he did not want to pay any of petitioner’s attorney fees. Respondent also stated that after further negotiations it was agreed that petitioner would pay respondent $28,000 in exchange for a quitclaim deed to the house and that respondent would pay $1,500 of petitioner’s attorney fees. Respondent also testified that petitioner’s attorney proposed that they divide the 1986 tax refund 50-50, but that he insisted upon a 60-40 division. According to respondent, the settlement negotiations began in the hallway outside the courtroom, but after the negotiations had become “kind of lengthy,” it was suggested that the parties and their attorneys continue their discussions in a conference room.

Respondent also testified that at the time of the prove up, he had been under psychiatric care for 16 months and that before the hearing he had taken his regular dosage of anti-anxiety and anti-depressant medications. There was also evidence that respondent, a certified public accountant with a master’s degree in accounting, had left his job with General Motors in January 1987, that he worked part time between January and April, and that he started full-time employment on April 21.

JUNE 2,1987

The hearing continued on June 2, 1987. On that date, Lee Newell, respondent’s former attorney, testified detailing his meeting with respondent on April 16 and describing the settlement negotiations. Ne-well stated that he explained the prove up to respondent, telling him what would occur, and that respondent seemed lucid and appeared to understand what was happening. Newell further stated that the negotiations lasted approximately V-k hours and that during the course of the negotiations respondent told him that he was not employed but that he expected to be working full time in the near future. Newell stated that respondent also told him that the parties’ home was worth $110,00 and that $31,000 was owed on the mortgage.

At the conclusion of the hearing, the trial court found that respondent had failed to provide any evidence in support of the allegations in his petition to vacate. The court stated that respondent had not shown how the lack of discovery prejudiced him, how he was affected by the medication he had taken, or why the settlement agreement was manifestly unfair. The court entered the judgment of dissolution and granted petitioner’s attorney 14 days to file his petition for attorney fees.

SEPTEMBER 30,1987

Subsequent to the June 2 hearing, respondent retained new counsel and filed a petition for a rule to show cause alleging that petitioner had failed to comply with the visitation provisions set forth in the settlement agreement. In addition, respondent filed a petition to vacate the judgment of dissolution, again alleging that at the time of the prove up he was confused and unaware of the nature of proceedings and also alleging that the settlement agreement was unconscionable and that he was inadequately represented during the negotiations and the prove up. On July 14, 1987, petitioner filed a response denying respondent’s allegations and a petition for attorney fees incurred in connection with the motion to vacate the prove up. Petitioner also filed a petition alleging that respondent was in arrears in child support and maintenance payments and seeking enforcement of the terms of the judgment of dissolution.

Following a hearing held on September 30, the court entered an order denying respondent’s petition to vacate the judgment of dissolution and instructing respondent to execute the quitclaim deed to the marital residence instanter. The court’s order also provided that all pending petitions would be continued until December 7, 1987.

DECEMBER 7, 1987

Prior to the hearing, petitioner filed a petition seeking to have respondent held in contempt of court for his failure to comply with the court’s order of September 30. At the hearing, respondent informed the court that he had discharged his latest attorney and was appearing pro se.

Edward Stein, petitioner’s attorney, then began presenting evidence on his petition for fees. After Stein testified concerning his qualifications and the amount of time expended, he attempted to question respondent about his employment and income; however, respondent refused to answer Stein’s questions. The trial court granted Stein’s petition for fees, stating that respondent had been given every opportunity to be heard and had failed to produce any evidence. The court concluded that, therefore, it had no alternative but to grant the fee petition.

Petitioner’s attorney then questioned respondent concerning the arrearages in child support and his failure to execute the quitclaim deed to the marital home as required by the judgment of dissolution and the court’s order of September 30. Respondent again refused to answer any questions and indicated that he would not sign the deed. Petitioner then testified that respondent’s maintenance and child support payments were $3,810.73 in arrears and that, despite numerous requests, respondent had failed to make the required payments. Petitioner also testified that respondent had failed to provide insurance coverage for Andrew as required by the judgment of dissolution.

The court entered an order finding that respondent was in contempt of court for willfully refusing to comply with its orders. The court’s order also awarded petitioner’s attorney $7,750 in fees and provided that this amount, plus the arrearages in child support and maintenance, would be deducted from the $28,000 to be paid respondent upon execution of the quitclaim deed.

DECEMBER 22,1987

At the hearing on December 22, respondent appeared in court with his fifth attorney and purged himself of the contempt by signing the quitclaim deed and tendering proof of insurance coverage. At the close of the hearing, respondent was ordered to pay petitioner’s attorney an additional $750 for fees incurred in connection with the December 7 hearing.

On December 31, 1987, respondent filed his notice of appeal from the June 3 order and judgment of dissolution, the September 30 order denying his petition to vacate, the December 7 order requiring him to pay petitioner’s attorney fees and finding him in contempt of court, and the December 22 order awarding petitioner’s attorney $750 in fees.

Opinion

The first issue we must address is the timeliness of respondent’s appeal from the denial of his motion to vacate the judgment of dissolution. Petitioner contends that because respondent’s appeal was filed more than 30 days after the trial court’s September 30 order denying respondent’s motion to vacate the judgment of dissolution, respondent’s appeal from this order is untimely and must be dismissed. Relying on Supreme Court Rule 304(a) (107 Ill. 2d R. 304(a)), respondent argues that the court’s order of September 30, 1987, was not a final and appealable order because it reserved ruling on all pending petitions including petitioner’s request for attorney fees.

Supreme Court Rule 304(a) provides that where multiple parties or multiple claims for relief are involved in an action, an appeal may be taken from a final judgment as to one or more but fewer than all parties or claims only if the trial court has made an express written finding that there is no just reason for delaying enforcement or appeal. In In re Marriage of Leopando (1983), 96 Ill. 2d 114, 449 N.E.2d 137, the Illinois Supreme Court considered the applicability of Rule 304(a) in dissolution proceedings. There, in ruling that a custody order was not a separate claim within the meaning of the rule, the supreme court stated that a petition for dissolution advances a single claim and that the numerous issues involved such as custody, property disposition, and support are merely questions that are ancillary to the main issue: the request for an order dissolving the parties’ marriage. Therefore, the supreme court concluded that until all of the ancillary issues are resolved, the petition for dissolution is not fully adjudicated.

In In re Marriage of Derning (1983), 117 Ill. App. 3d 620, 453 N.E.2d 90, the appellate court, relying on Leopando, held that an order of dissolution reserving the allocation of attorney fees was not a final and appealable order. The court stated that like a custody order, an attorney fees judgment in a dissolution of marriage case is not a separate claim, but is integral to the order dissolving the parties’ marriage. The court noted that the parties’ liability for attorney fees is similar to their liability for debts incurred during the marriage, in that both must be allocated to the parties before a reviewing court can determine if the trial court’s decision concerning property and maintenance comports with the statutory requirements.

Respondent relies on both Leopando and Derning in support for his contention that his appeal was timely. However, we believe that neither of these cases is applicable.

In the present case, the judgment which dissolved the parties’ marriage awarded child support and temporary maintenance, it contained custody and visitation provisions, it allocated attorney fees between petitioner and respondent, it provided for the disposition of the marital home, and it divided the parties’ personal property. Thus, unlike Leopando and Derning, the judgment left no issues for future resolution.

Respondent filed his petition to vacate on July 6, 1987. Subsequently other motions were filed, including petitioner’s request for attorney fees. Under Supreme Court Rule 303(a), the filing of respondent’s petition to vacate within 30 days of the judgmeht of dissolution extended the normal 30-day period for appealing the judgment until 30 days after the disposition of the last pending post-trial motion. (107 Ill. 2d R. 303(a).) The trial court’s order of September 30 was a final disposition as to respondent’s motion to vacate; however, all other pending motions were continued until December 7. Therefore because these motions were not disposed of until December 22, 1987, any notice of appeal filed prior to that time would have been premature.

A similar conclusion was reached by this court in In re Marriage of Janetzke (1981), 97 Ill. App. 3d 418, 422 N.E.2d 914. There, the parties were divorced in 1972, petitioner was awarded custody of their three minor children, and respondent was ordered to pay $100 per week in child support. In 1978, respondent filed a petition seeking custody of the children and child support. In response, petitioner filed a petition seeking to have respondent held in contempt of court and a petition for attorney fees. On November 1, 1979, an order was entered granting respondent’s petition for custody and continuing all remaining matters, including respondent’s petition for child support and petitioner’s petition for attorney fees. The trial court entered an order denying respondent’s request for child support in February 1980, and in June 1980, the court ordered respondent to pay petitioner’s attorney fees. In July 1980, respondent filed a notice of appeal from the February and June 1980 orders. On appeal, petitioner argued that this court lacked jurisdiction to review the February 1980 order. She contended that the order was a final judgment concerning the question of child support and that respondent’s failure to file a notice of appeal within 30 days of the order deprived the court of jurisdiction.

The court found that a request for attorney fees in a matrimonial action is a claim within the meaning of Supreme Court Rule 304(a) and that because respondent’s petition for child support, as well as both parties’ petitions for attorney fees, was pending at the time of the February hearing, multiple claims for relief were involved and Supreme Court Rule 304(a) was applicable. The court also found that although the February 1980 order was a final judgment in that it disposed of the rights of the parties as to child support, because the order continued for hearing at a future date the petitions for attorney fees and did not contain the Rule 304 language that there was no just reason to delay enforcement or appeal, the February 1980 order did not become appealable until June 1980.

In the present case, respondent’s motion to vacate, a petition for attorney fees, and several other claims were before the trial court at the time of the hearing on September 30, 1987. Although, as we stated above, the trial court’s order of September 30 constituted a final decision as to the motion to vacate, it continued for hearing at a future date the other claims, including the petition for attorney fees. As in Janetzke, this order did not contain a finding that there was no just reason to delay enforcement or appeal and, therefore, we find that the order was not appealable until December when a final judgment was entered on all the claims before the court.

We turn now to the merits of respondent’s appeal. Respondent first argues that the trial court abused its discretion when it denied his motion to vacate the prove up, approved the oral settlement agreement, and entered a judgment of dissolution.

In Illinois, the law looks favorably upon the amicable settlement of property rights between a husband and wife prior to the dissolution of their marriage. (In re Marriage of Moran (1985), 136 Ill. App. 3d 331, 483 N.E.2d 580; In re Marriage of Perry (1981), 96 Ill. App. 3d 370, 421 N.E.2d 274.) However, a settlement will be set aside if the court finds that the settlement agreement is unconscionable. (Ill. Rev. Stat. 1987, eh. 40, par 502(b).) A settlement agreement also will be set aside if it was procured by fraud, duress, or coercion or if it is in violation of any rule of law, public policy, or morals. James v. James (1958), 14 Ill. 2d 295, 152 N.E.2d 582; In re Marriage of Perry (1981), 96 Ill. App. 3d 370, 421 N.E.2d 274.

In James, the Illinois Supreme Court found coercion where, on the day of the trial, petitioner agreed to a settlement giving her only $25,000, and waiving her interest in nearly $200,000 in assets held by her husband, after her attorney told her that she had to accept the settlement because the case had been “assigned.” Duress and coercion were found in Moran, where the trial judge told the petitioner that the agreement was the best she could get and that her attorney would lose if they went to trial and where, on the eve of trial, petitioner’s attorney threatened to quit if petitioner did not sign a settlement agreement under which her attorney would be paid $25,000 by respondent and under which petitioner was awarded only a fraction of the parties’ substantial assets. Coercion was also found in Perry, where 15 minutes before the trial, petitioner’s attorney informed her of the terms of the settlement agreement negotiated by him, respondent, and respondent’s attorney, and advised her to accept it, despite her contention that it misrepresented respondent’s assets.

Respondent contends that the settlement agreement entered into in the present case should be set aside and the prove up vacated. Respondent claims that, as in Perry, the settlement was hastily contrived; that it was entered into at a time when he was mentally incapacitated; and that, like the petitioner in Moran, he was coerced into entering the agreement by the threats of his attorney. We disagree.

In Perry, the respondent, his attorney, and petitioner’s attorney negotiated the terms of the settlement in a 15-minute meeting held out of petitioner’s presence and without her participation. In contrast, the settlement negotiations in the present case lasted V-h to 2 hours, included discussions among both parties and their attorneys, and concluded with a conference between the parties and their attorneys.

In response to respondent’s contention that he was mentally incapacitated at the time of the hearing, we note that at the hearing on respondent’s motion to vacate the prove up, it was respondent’s testimony that he had been taking anti-anxiety and anti-depressant medication for 16 months prior to the prove up and that on the morning of the hearing he took his “regular dosage.” In addition, there was no medical testimony as to the effect of this medication, and respondent himself failed to specify how the medication prevented him from knowingly agreeing to the settlement. Thus, we agree with the trial court’s conclusion that respondent failed to establish that his mental condition at the time of the hearing required that.the prove up be vacated.

Respondent’s claim of coercion is based on a statement made by his former attorney, Lee Newell, during the course of the settlement negotiations. At the hearing on respondent’s motion to vacate, both respondent and Newell testified that during the settlement negotiations, respondent stated that, in exchange for executing the quitclaim deed, he wanted to receive 50% of the fair market value of the house, without a deduction for the mortgage. Newell testified that he told respondent that this request was unreasonable and that if respondent was going to be “bullheaded,” Newell was not interested in representing him.

We do not believe that Newell’s statement constituted a threat or that it was made in an attempt to coerce respondent into settling. Further, we do not believe that there is any other evidence in the record that can support a claim of coercion or any evidence that the settlement was procured as a result of fraud or duress.

In ascertaining whether a particular settlement agreement should be vacated, courts focus not only on whether the agreement is free of fraud and coercion, but also whether the agreement is reasonably fair and sufficient in light of the station in life and the circumstances of the parties. (Crawford v. Crawford (1976), 39 Ill. App. 3d 457, 350 N.E.2d 103.) In Crawford, as in James and Moran, the party seeking to set aside the settlement agreement was an unemployed housewife who was unaware of the full extent of her spouse’s income and assets and who had little input into the settlement negotiations. However, in Beattie v. Beattie (1977), 53 Ill. App. 3d 501, 368 N.E.2d 178, the appellate court upheld a settlement agreement entered into after a H/a-hour meeting held the day before the hearing. The court based its decision, in part, on evidence that petitioner had an above-average understanding of the bookkeeping system used in the family’s farm business, evidence that petitioner kept financial records for the family living expenses and for the farm expenses, and evidence that she knew the extent of the family’s assets.

In the present case, the record shows that respondent was a certified public accountant with a master’s degree in accounting and there was evidence that respondent prepared the parties’ Federal and State income tax returns. Thus, respondent’s circumstances are more akin to those of the spouse in Beattie than those of the spouses in Crawford, James, and Moran.

In addition, we note that despite respondent’s claim that the inequity of the settlement agreement is shown by the fact that it was entered into without obtaining an appraisal of the marital home, and by the fact that respondent was unemployed at the time of the prove up, respondent never presented any evidence of the value of the house, nor did he demonstrate that his estimate of $110,000 was inaccurate. As for respondent’s claim that the agreement was unfair in light of his unemployment, Newell testified during the hearing on respondent’s motion to vacate the prove up that, on the day of the prove up, respondent told him that he expected to be working full time soon, and respondent himself testified that he was self-employed at the time of the hearing and that he started working full time on April 21, five days after the prove up.

Respondent next argues that the trial court erred in holding him in contempt of court for failing to make the court-ordered child support and maintenance payments and for failing to provide insurance coverage for his son. Respondent points out that in order for conduct to be contumacious it must be willful and argues that, because his nonpayment was due to the fact that he was unemployed, his action was not willful.

Initially it should be noted that at the December 7 hearing, respondent was held in contempt of court not just for failing to pay child support and maintenance, but also because of his refusal to execute the quitclaim deed and his failure to prepare and sign the parties’ 1986 income tax returns. A party is in contempt of court when he willfully violates an order of the court. (In re Marriage of Betts (1987), 155 Ill. App. 3d 85, 507 N.E.2d 912.) We believe that the record in the present case clearly establishes that respondent willfully refused to comply with the trial court’s order to sign the quitclaim deed to the marital home.

In addition, the failure to make payments required by a divorce decree is prima facie evidence of contempt, and once the failure to pay is shown, the burden then shifts to the alleged contemnor to show that the conduct was not willful. (Taapken v. Taapken (1976), 39 Ill. App. 3d 785, 350 N.E.2d 794.) If the party establishes that he is unable to pay, he should not be found guilty of contempt. In re Marriage of Betts (1987), 155 Ill. App. 3d 85, 507 N.E.2d 912; Taapken v. Taapken (1976), 39 Ill. App. 3d 785, 350 N.E.2d 794.

In the present case, there was no evidence whatsoever of respondent’s inability to make the child support and maintenance payments. Petitioner testified that the payments had not been made, thereby presenting prima facie evidence of contempt and shifting the burden to respondent to prove his inability to pay. However, respondent refused to answer any questions concerning his income or his employment. In light of his actions, respondent cannot now argue that the trial court erred in failing to take into consideration the fact that he was unable to make the payments due to his unemployment.

Respondent’s final argument concerns the propriety of the trial court’s fee award. Respondent contends that it was error to order him to pay petitioner’s attorney fees despite his clear inability to do so. Respondent points to the trial court’s statement on May 13, 1987, that all fees would be borne by respondent and argues that this demonstrates that the trial court did not follow the applicable law in awarding fees. We disagree.

Section 508 of the Illinois Marriage and Dissolution of Marriage Act (Ill. Rev. Stat. 1987, ch. 40, par. 508) provides that a court may order a spouse to pay a reasonable amount for the costs and attorney fees incurred by the other spouse in connection with the maintenance or defense of any proceeding or the enforcement or modification of any order or judgment under the Act. To justify the award of fees, it must be shown that the party seeking this relief is financially unable to pay and that the other party is able to do so; however, when a party does not request a hearing on his ability to pay or his opponent’s inability to pay, the right to such a hearing is waived and the court may base its decision on the financial conditions of the parties as shown by the record. (Carvallo v. Carvallo (1978), 62 Ill. App. 3d 394, 378 N.E.2d 1288; Moore v. Moore (1977), 53 Ill. App. 3d 228, 368 N.E.2d 545.) The decision of whether to grant a request for fees rests in the sound discretion of the trial court and will not be reversed unless that discretion is clearly abused. Carvallo v. Carvallo (1978), 62 Ill. App. 3d 394, 378 N.E.2d 1288.

In the present case, respondent did not request a hearing on his ability to pay petitioner’s attorney fees and he made no effort to establish that he was unable to do so. Despite this, the trial court gave the respondent a full opportunity to be heard on the question of whether he should be required to pay petitioner’s attorney fees.

The fee petition filed by Edward Stein, petitioner’s attorney, alleged that the fees had been incurred because of respondent’s actions, that petitioner could not afford to pay the fees, and that respondent was employed and well able to pay. The hearing on the petition was held on December 7, 1987. Respondent appeared pro se at this hearing, and the record shows that the trial court took pains to explain to respondent the nature of the hearing and how he should proceed. The court informed respondent that Stein would attempt to establish what services he had rendered and the amount of time he expended and that to defeat Stein’s claim, respondent would have to demonstrate that the time or services were excessive or unreasonable or that respondent was unable to pay. After respondent repeatedly stated that he was not concerned about the time expended or services rendered by Stein, the court allowed Stein to testify about his qualifications, the work he performed, and the fees he customarily charged. Stein then attempted to cross-examine respondent about his ability to pay the fees; however, respondent refused to answer any questions concerning his employment or income. Thus, contrary to respondent's assertion that he demonstrated a clear inability to pay the fees, because of his refusal to respond to Stein’s question, the record was devoid of any evidence of respondent’s financial condition at the time of the hearing.

In Kazubowski v. Kazubowski (1970), 45 Ill. 2d 405, 416, 259 N.E.2d 282, the Illinois Supreme Court affirmed an award of attorney fees which defendant alleged was entered “without any evidence, without any testimony, without any hearing, and despite the absence of the defendant,” where the record showed that defendant was present by his attorney and that when defendant was directed to cross-examine witnesses and present evidence, he refused to do so. Similarly, in the present case, the lack of evidence of respondent’s ability to pay is the direct result of his refusal to present evidence of his financial condition and, in light of this fact, we find that respondent has waived the issue of his ability or inability to pay the attorney fees.

We also find that the order requiring respondent to pay the fees incurred in connection with the December 7 hearing was proper. At that hearing, petitioner alleged that respondent had failed to make child support and maintenance payments and had refused to execute the quitclaim deed to the marital home, as required by the judgment of dissolution. The trial court agreed and found respondent in contempt of court for his failure to comply with its orders.

It is well settled that a party who must seek court enforcement of the terms of a judgment of dissolution is entitled to reasonable attorney fees, even absent a showing of that party’s inability to pay the fees and the other party’s ability to pay, where the failure to comply with the terms of the judgment is without cause or justification. (In re Marriage of Stanley (1985), 133 Ill. App. 3d 963, 479 N.E.2d 1152; In re Marriage of Moriarty (1985), 132 Ill. App. 3d 895, 478 N.E.2d 537.) Because the primary prerequisite to any contempt finding is willful, contumacious conduct, it follows that a finding that a party is in contempt of court for failing to comply with a court’s orders carries with it an implicit finding that the failure to comply was without cause or justification. (In re Marriage of Betts (1987), 155 Ill. App. 3d 85, 507 N.E.2d 912.) Accordingly, because respondent was found in contempt of court at the December 7 hearing for his willful refusal to comply with the trial court’s orders, the trial court correctly found that petitioner was entitled to an award for attorney fees incurred in connection with the hearing.

For the foregoing reasons, the judgment of the circuit court of Cook County is affirmed.

Affirmed.

FREEMAN, P.J., and RIZZI, J., concur.

      In 1987, because July 4 occurred on a Saturday, Friday, July 3, was designated a legal holiday. Thus, the last day of the 30-day period following June 3 was July 6.


author: PRESIDING JUSTICE FREEMAN

text:
    JOSEPH CALABRESE, Plaintiff-Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Appellee.
    First District (3rd Division)
    No. 1—88—2113
    Opinion filed August 9, 1989.
    Rehearing’denied September 15, 1989.

      Terrence Michael Jordan, of Chicago, for appellant.
    Ellyn B. Dorf and Victor J. Piekarski, both of Querrey & Harrow, Ltd., of Chicago, for appellee.
   PRESIDING JUSTICE FREEMAN

delivered the opinion of the court:

Plaintiff, Joseph Calabrese, filed a three-count complaint in the circuit court of Cook County against defendant, State Farm Mutual Automobile Insurance Company. Count I sought vacatur of the arbitrators’ award for defendant under the Uniform Arbitration Act (Act) (Ill. Rev. Stat. 1985, ch. 10, par. 101 et seq.). Count II sought a declaratory judgment that the arbitration had not been completed and that no final award in conformity with the Act had been issued. Count III sought a declaratory judgment that section 143a of the Illinois Insurance Code (the Code) (Ill. Rev. Stat. 1985, ch. 73, par. 755a), which requires the arbitration of disputes relating to the uninsured motorist coverage mandated therein, and the Uniform Arbitration Act are unconstitutional. Plaintiff appeals: (1) the denial of his motion to compel discovery; (2) the dismissal of counts I and II and paragraph 21 of count III of plaintiff’s complaint; (3) the denial of leave to file an amended complaint; and (4) the summary judgment for defendant on the remainder of count III.

On October 31, 1984, plaintiff had an accident while driving east on the Eisenhower Expressway near Western Avenue. At that time, defendant insured plaintiff under an automobile insurance policy providing uninsured motorist coverage. The policy further provided for binding arbitration if the insured and defendant could not agree whether the insured was legally entitled to damages from the owner/ driver of an uninsured or underinsured vehicle or the amount of such damages. Apparently, because the record does not contain any evidence thereof, plaintiff and defendant disputed at least one of these matters. Thereafter, as required by the policy, plaintiff requested arbitration. Pursuant to the policy terms, plaintiff and defendant then selected two arbitrators who, in turn, selected a third, neutral arbitrator.

After the arbitration hearing, the arbitrators entered an award for defendant based on plaintiff’s failure to sustain his burden of proof with respect to the liability of the hit-and-run motorist who he alleged had caused his accident by colliding with his vehicle in the rear while attempting to pass his vehicle.

On appeal, plaintiff first contends that the trial court erred in denying his motion to compel discovery relating to the alleged bias of the neutral arbitrator. Plaintiff asserts that count I of his original complaint was premised on the theory that the neutral arbitrator had an undisclosed and continuing relationship with defendant.

Plaintiff sought information from defendant relating to all claims in which the neutral arbitrator had legally represented or was representing either insureds of defendant against it or claimants against an insured of defendant. Plaintiff also sought information regarding all matters during a seven-year period in which the neutral arbitrator had served as an arbitrator and to which defendant had been a party. Defendant objected to these requests on the grounds that they were irrelevant, immaterial and unduly burdensome. However, defendant did admit that it had paid the neutral arbitrator for legal services in 27 cases, in 14 of which he had served as an arbitrator and in the remaining 13 of which he had served in an undetermined capacity, although possibly as an arbitrator. The trial court concluded that the discovery sought by plaintiff was irrelevant and immaterial to plaintiff’s complaint.

Count I of plaintiff’s original complaint sought vacatur of the arbitrators’ award on the ground that it was obtained through undue means and/or that the arbitrators exceeded their powers. (Ill. Rev. Stat. 1985, ch. 10, par. 112.) Count 1 then set out the specific ways in which that had occurred. The fact that the neutral arbitrator had an undisclosed and continuing relationship with defendant was not in-eluded as one of the ways in which the award was obtained through undue means or in which the arbitrators exceeded their powers. Thus, we agree with the trial court that the discovery which plaintiff sought was irrelevant to any issue framed by plaintiff’s original complaint.

However, even assuming that fact and further assuming that the trial court properly dismissed the original complaint, we cannot say that the discovery sought by plaintiff was irrelevant to the allegations of his amended complaint.

In contrast to the original complaint, the amended complaint specifically alleged that the neutral arbitrator was representing the plaintiffs in two pending cases, Nos. 86 — L—00057 and 87 — L—19593, against insureds of defendant in the circuit court of Cook County. The complaint further alleged that the neutral arbitrator’s and defendant’s failures to disclose that fact constituted fraud in the arbitration proceedings. We believe that these allegations were sufficient to plead a claim for vacatur of the arbitration award on the basis of fraud or bias.

In so concluding, we note that it is the appearance or impression of possible bias, not only actual fraud or bias, which arbitrators must avoid. (Commonwealth Coatings Corp. v. Continental Casualty Co. (1968), 393 U.S. 145, 21 L. Ed. 2d 301, 89 S. Ct. 337.) The neutral arbitrator’s representation of the plaintiffs in the two cases pending during the arbitration proceedings, coupled with defendant’s admission in objecting to plaintiff’s discovery request, provided a sufficient basis to allege, at the pleading stage, that the neutral arbitrator was chargeable with the appearance of bias. We do not mean to suggest that every arbitrator must disclose the number of cases, no matter how small, involving one of the parties to an arbitration which he has previously arbitrated. However, we do believe that the relationship between the neutral arbitrator and defendant in this case was substantial enough that plaintiff had a right to know of it before submitting his claim against defendant to an arbitration panel including the neutral arbitrator. Even if the original complaint was insufficient at law to state a claim for vacatur of the arbitration award, the amended complaint was not.

We believe that plaintiff adequately alleged grounds for vacating the arbitration award in the amended complaint and that that amendment should have been allowed in the interests of justice. (Swaw v. Ortell (1984), 137 Ill. App. 3d 60, 74, 484 N.E.2d 780.) Therefore, defendant should have been ordered to provide plaintiff with the discovery he sought. As such, we need not decide whether, as plaintiff next contends, the arbitration award should be vacated due to the neutral arbitrator’s nondisclosure of his legal relationship with defendant.

Plaintiff also asserts that the trial court erred in striking paragraph 21 of count III, which asserted that, if section 143a of the Code was constitutional, the Uniform Arbitration Act does not apply to statutorily compelled arbitrations.

We must presume that section 143a, like any act of the legislature, is constitutional. (People v. Ortega (1982), 106 Ill. App. 3d 1018, 436 N.E.2d 606.) We must also presume, therefore, that plaintiff was properly required to arbitrate his claim against defendant. As such, plaintiff offers no cogent support for the contention that the standards of review of arbitration awards established in the Uniform Arbitration Act do not apply to the award here. The most glaring deficiency in his argument is the standard or standards to be applied to arbitral awards entered pursuant to section 143a if the Act does not apply. Whatever those standards may be, they are obviously broader than provided in the Act. However, this ignores that limited judicial review of arbitral awards is not merely dictated by the Act but, more fundamentally, is motivated by the desire to encourage arbitration as an alternative method of dispute resolution. (See Garver v. Ferguson (1979), 76 Ill. 2d 1, 389 N.E.2d 1181.) This is evidenced by the fact that even under the common law there are limited grounds, essentially the same as those found in section 12 of the Act, for vacating arbitral awards. (Garver, 76 Ill. 2d at 8.) The trial court did not err in striking paragraph 21 of count III of the complaint.

Plaintiff lastly contends that section 143a is unconstitutional in that it: (1) delegates judicial powers to nonjudges in contravention of Bernier v. Burris (1986), 113 Ill. 2d 219, 497 N.E.2d 763; and (2), coupled with the limited review of arbitration awards mandated by the Uniform Arbitration Act, denies an insured such as plaintiff the constitutional right of free and unfettered access to the courts. Ill. Const. 1970, art. I, §12; Berlin v. Nathan (1978), 64 Ill. App. 3d 940, 381 N.E.2d 1367, cert. denied (1979), 444 U.S. 828, 62 L. Ed. 2d 36, 100 S. Ct. 53.

Notwithstanding the parties’ argument on the merits of this contention, we conclude that it has been waived. In Marshall Field & Co. v. Industrial Comm’n (1922), 305 Ill. 134, 137 N.E. 121, a workmen’s compensation case, the circuit court refused to hold unconstitutional provisions of the Workmen’s Compensation Act declaring certain enterprises extrahazardous. The supreme court affirmed, holding that the employer had waived the claim. The court noted that the employer had, inter alia, appeared before the arbitrator, introduced evidence, examined and cross-examined witnesses. “Having thus submitted to the jurisdiction of the Industrial Commission without objection the [employer] waived its right to insist that the statute purporting to confer such jurisdiction was an invasion of its constitutional right.” Marshall Field, 305 Ill. at 137-38.

Plaintiff, like the employer in Marshall Field, submitted his claim to the jurisdiction of the arbitration panel contemplated in defendant’s policy without objection. He too introduced evidence, examined and cross-examined witnesses, i.e., participating fully, in the arbitration hearing. Therefore, he also has waived his claim regarding the constitutionality of section 143a and the Uniform Arbitration Act.

Finally, we note that plaintiff’s notice of appeal indicates an appeal of the order dismissing count II. However, contrary to the assertion in his reply brief, his opening brief did not raise the issue. It has therefore been waived. Batteast v. Argonaut Insurance Co. (1983), 118 Ill. App. 3d 4, 454 N.E.2d 706.

For all of the foregoing reasons, we affirm: (1) the dismissal of counts I and II of the original complaint; (2) the order striking paragraph 21 of count III; and (3) the summary judgment for defendant on the remainder of count III; and we reverse: (4) the denial of leave to file the amended complaint; and (5) the denial of the motion to compel discovery.

Affirmed in part; reversed in part and remanded.

RIZZI and WHITE, JJ., concur.


text:
    THOMAS TYRCHA, Plaintiff-Appellee, v. JAMES WESOLEK, Defendant-Appellant.
    First District (3rd Division)
    No. 1—88—2648
    Opinion filed August 9, 1989.

      James J. Jorgensen, of Chicago, for appellant.
    Gordon & Glickson, P.C., of Chicago (Alan R. Borlack, of counsel), for appellee.
   PRESIDING JUSTICE FREEMAN

delivered the opinion of the court:

Defendant, James Wesolek, appeals from an order of the trial court which granted summary judgment in favor of plaintiff, Thomas Tyrcha, on the affirmative defense of usury in an action to recover on an installment note in connection with the parties’ agreement for the sale and purchase of stock. On appeal defendant asserts that the trial court improperly found that “An Act in relation to the rate of interest and other charges in connection with sales on credit and the lending of money” (the Interest Act or Act) (Ill. Rev. Stat. 1983, ch. 17, par. 6401 et seq.) does not apply to contracts for the sale and purchase of property where a note is given to secure the balance of the purchase price.

For the reasons stated below, we affirm the judgment of the circuit court.

Plaintiff’s complaint sought to recover a judgment against defendant in the amount of $116,124.37 for the balance due, plus interest and attorney fees, on the installment note. The stock purchase agreement, executed on October 24, 1984, provided that plaintiff, the seller and owner of all of the capital stock of A.A.A. Board-Up Service, Inc., agreed to sell, and defendant agreed to purchase, 490 of the company’s 1,000 common shares. Defendant agreed to pay $35,000 at the closing of the transaction and the balance of $114,000 at the interest rate of 10% per annum in equal monthly payments.

A judgment by confession was entered. Defendant then filed an answer to the complaint, admitting he executed and delivered the note, but denying the amount due to plaintiff and raising as affirmative defenses usury and fraud. The usury defense, pertinent to the instant appeal, asserts that the installment note violates the Interest Act in that the note requires defendant to pay interest at the rate of 10% per annum, while the Act provides a lawful maximum interest rate of 9% per annum. Defendant asserts that since the note is usurious, he is entitled to recover, pursuant to the Act, twice the amount of interest due under the note, or $133,519.20, plus costs and attorney fees.

In addition to his answer, defendant also filed a motion to open the judgment by confession and an affidavit. The court ordered that the judgment by confession be opened and set aside and granted defendant leave to demand a trial by jury. Plaintiff filed a reply to defendant’s affirmative defenses, asserting, among other things, that defendant waived any claim of usury. Subsequently, plaintiff filed a motion for summary judgment on the usury affirmative defense, with affidavits of plaintiff and Milton C. Jacobson, plaintiff’s counsel, attached. Plaintiff asserted that the parties’ transaction was a purchase of property and not a loan of money, so that the Interest Act does not apply. After a hearing, the trial court granted plaintiff’s motion for summary judgment on the affirmative defense of usury.

On appeal defendant contends that the trial court improperly found that the Interest Act does not apply to the parties’ transaction. Defendant asserts that the language of the Act indicates that the statute applies not only to loan transactions, but also to credit transactions where interest is charged. Defendant points to the language in the preamble of the Act, that the Act relates to “sales on credit.” Further, defendant refers to language in sections 4 and 8 of the Act (Ill. Rev. Stat. 1983, ch. 17, pars. 6404, 6416), where the Act provides for a maximum rate of interest to be lawfully contracted for in written agreements generally. Defendant also asserts that the statute fails specifically to exclude contracts for the sale and purchase of property. Further, defendant cites Huss v. Maras (1979), 77 Ill. App. 3d 554, 396 N.E.2d 92, and Hall v. Montaleone (1976), 38 Ill. App. 3d 591, 348 N.E.2d 196, for the proposition that an installment note contract to purchase real estate, where no money was loaned or changed hands, comes under the purview of the Act.

We find that defendant’s argument must fail. The remedy for a usurious note is set forth in section 6 of the Act, which provides in pertinent part:

“If any person or corporation knowingly contracts for or receives, directly or indirectly, by any device, subterfuge or other means, unlawful interest, discount or charges for or in connection with any loan of money, the obligor may, [sic] recover by means of an action or defense an amount equal to twice the total of all interest, discount and charges determined by the loan contract or paid by the obligor, whichever is greater, plus such reasonable attorney’s fees and court costs as may be assessed by a court against the lender.” (Emphasis added.) (Ill. Rev. Stat. 1983, ch. 17, par. 6413.)

Usury is an illegal profit required and received by a lender of a sum of money from the borrower. (Clemens v. Crane (1908), 234 Ill. 215, 229-30, 84 N.E. 884, 889; McComb v. McWilliams (1987), 153 Ill. App. 3d 601, 603, 505 N.E.2d 1378.) Clemens provides the following essential elements of usury: (1) a loan or forbearance; (2) the loan must be of money or something circulating as money; (3) the loan must be repayable absolutely; and (4) something in addition to lawful interest must be exacted. (Clemens, 234 Ill. at 229-30.) Thus, there can be no usury where there is “in no sense a loaning of money” between the parties. (McComb, 153 Ill. App. 3d at 603-04, citing Manufacturers Finance Trust v. Stone (1929), 251 Ill. App. 414, 420.) The purchase and sale of property is not a loan. McComb, 153 Ill. App. 3d at 604, citing Fames v. Hardin (1884), 111 Ill. 634, 645; see also First National Bank v. Larkins (1983), 111 Ill. App. 3d 953, 444 N.E.2d 818.

In the instant case, defendant’s obligation to plaintiff resulted from his purchase of stock from plaintiff. Plaintiff did not loan defendant money. The parties’ transaction therefore fails to meet the elements of usury and the Interest Act does not apply. The cases defendant cites to support application of the Act are distinguishable from the instant case. In Huss v. Maras (1979), 77 Ill. App. 3d 554, 396 N.E.2d 92, the court considered whether purchase money due under a real estate installment contract came within the “business loan” exception to the Interest Act, an issue not argued by the parties to the instant case on the motion for summary judgment. In Hall v. Montaleone (1976), 38 Ill. App. 3d 591, 348 N.E.2d 196, the court held that a lender could not use the Act to claim that a contract for the sale of real estate was usurious. Rather, the statute was enacted to protect the buyer from usurious contracts. (Hall, 38 Ill. App. 3d at 593.) In the instant case, unlike Hall, the lender is not attempting improperly to take advantage of his own wrong.

For the foregoing reasons, the judgment of the circuit court is affirmed.

Judgment affirmed.

WHITE and CERDA, JJ., concur.


author: PRESIDING JUSTICE JIGANTI JUSTICE McMORROW,

text:
    M/A COM, INC., Plaintiff-Appellee, v. JOHN PERRICONE, d/b/a Gourmet Vending, Defendant (Merit Insurance Company, Garnishee and Defendant-Appellant).
    First District (4th Division)
    No. 1—88—0297
    Opinion filed August 10, 1989.

      McMORROW, J., specially concurring.
    Maris V. Lidaka, of Stern & Rotheiser, of Chicago, for appellant.
    David M. Lavin, of Leahy & Eisenberg, Ltd., of Chicago, for appellee.
   PRESIDING JUSTICE JIGANTI

delivered the opinion of the court:

This appeal centers upon the concept of estoppel as applied to cases involving an insurer’s failure to defend its insured. The specific issue presented is whether an insurer which refused to defend its insured is estopped from raising, as a defense in a subsequent garnishment action, the question of whether its failure to defend constituted a breach of the insurance contract.

The insurance policy provided that the insurer, Merit Insurance Company, was to indemnify the insured, John Perricone, d/b/a Gourmet Vending, for property damage arising from the use of the insured’s automobile. The policy also provided that the insurer had the right and duty to defend any suit brought against the insured even if the allegations of the suit were “groundless, false or fraudulent.” It obligated the insured to give written notice of an occurrence “as soon as practicable.” The insured was involved in an accident with the plaintiff, M/A Com, Inc., on September 24, 1985. Notice was not given to the insurer until five months later, on February 26, 1986. On July 10, 1986, the plaintiff filed suit against the insured. The insurer refused to defend the lawsuit. The plaintiff’s motion for summary judgment was granted, and a judgment was entered in favor of the plaintiff and against the insured for $1,135.38.

The plaintiff then filed the instant garnishment action against the insurer. The insurer filed an affirmative defense alleging that the insurance contract had been breached by the insured because he failed to give notice of the accident as soon as practicable. The insurer took the position that the insured’s breach relieved the insurer of all obligations under the policy, including the duty to defend. The plaintiff responded by alleging that the insurer’s failure to defend the lawsuit under a reservation of rights or to file a declaratory judgment action to determine the scope of its duty to defend served to estop it from raising any defenses regarding policy coverage. For this reason the plaintiff asked the trial court to strike the insurer’s affirmative defense. The trial court estopped the insurer from raising that defense by striking the affirmative defense and entered a judgment in favor of the plaintiff. The insurer has appealed contending that it should not have been estopped from raising the insured’s alleged breach of a policy condition as an affirmative defense to the garnishment proceeding.

The concept of estoppel has its genesis in cases where the insurer refused to defend its insured on the grounds that the claim was not covered by the terms of the policy. (Maryland Casualty Co. v. Peppers (1976), 64 Ill. 2d 187, 355 N.E.2d 24; Sims v. Illinois National Casualty Co. (1963), 43 Ill. App. 2d 184, 193 N.E.2d 123.) Typical of those cases, and contained in the policy involved here, is a provision stating that the insurer has the right and duty to defend any suit brought against the insured even if the allegations are “groundless, false or fraudulent.” In interpreting such a provision, the supreme court in Murphy v. Urso (1981), 88 Ill. 2d 444, 430 N.E.2d 1079, stated that the insurer’s duty to defend its insured is broader than the duty to indemnify and held that the duty to defend arises where the allegations of the complaint against the insured, regardless of their truth or accuracy, bring the claim potentially within the coverage of the policy. The duty to defend exists even where the insurer has facts in its possession which establish that it has no duty to indemnify. An insurer which fails to defend its insured against claims coming potentially within the coverage of the policy will be estopped from relying upon any policy defenses in a subsequent action against it. As stated in Murphy v. Urso (1981), 88 Ill. 2d 444, 451, 430 N.E.2d 1079,1082:

“An insurer taking the position that a complaint potentially alleging coverage is not covered by a policy which provides that the insurer has the right and duty to defend any claims brought against the insured cannot simply refuse to defend the insured. It must defend the suit under a reservation of rights or seek a declaratory judgment that there is no coverage. If the insurer fails to do this, it is estopped from later raising policy defenses to coverage and is liable for the award against the insured and the costs of the suit, because the duty to defend is broader than the duty to pay. (Sims v. Illinois National Casualty Co. (1963), 43 Ill. App. 2d 184, 199.)”

The plaintiff in the case at bar notes that there is no dispute that the claim here is within the coverage of the policy and argues that the doctrine of estoppel set forth in Murphy v. Urso (1981), 88 Ill. 2d 444, 430 N.E.2d 1079, should therefore bar the insurer from raising any defenses in the instant garnishment proceeding.

To assess the validity of the plaintiff’s argument, it is necessary to examine the rationale underlying the concept of estoppel in cases involving an insurer’s failure to defend its insured. The case which best states this rationale is Sims v. Illinois National Casualty Co. (1963), 43 Ill. App. 2d 184, 193 N.E.2d 123. In Sims, the complaint filed against the insured alleged that the plaintiff was a “passenger” in the insured’s automobile when the accident occurred. The policy provided for indemnity and stated that the insurer would defend all suits against the insured even if groundless, false or fraudulent. The insurance policy excluded coverage for employees of the insured. Based upon facts discovered during its investigation, the insurer refused to defend the lawsuit on the grounds that the injured plaintiff was an employee of the insured. In a subsequent garnishment action brought against the insurer by the plaintiff, the insurer attempted to raise the defense that because the plaintiff was an employee, there could be no recovery under the policy. The appellate court held that the plaintiff’s allegation that he was a passenger brought the claim potentially within the coverage of the policy and that the insurer had a duty to defend all claims potentially within policy coverage. Because the insurer breached its duty to defend, it was estopped from asserting as a defense to the garnishment action the policy provision which excluded coverage for employees. In the words of the court:

“[W]hat is really meant is that the insurer has no right to insist that the insured be bound by the provisions of the insurance contract inuring to its benefit, i.e., the ‘Exclusions’ provisions, when it has already breached the contract by violating the provisions inuring to the benefit of the insured, i.e., the defense provisions.” Sims, 43 Ill. App. 2d at 197, 193 N.E.2d at 129.

The case at bar represents a departure from the typical policy coverage case exemplified by Sims. This case involves an alleged breach of contract not by the insurer, but rather by the insured. In our estimation, this difference does not affect the proposition of law to be applied. The essential proposition of law stated in Sims is that an insurer which has breached its duty under the policy to defend the insured is estopped from later asserting any provision of the policy as a defense. That proposition is based upon the general principle of contract law that a party which has itself breached the terms of a contract may not rely on other terms of the same contract. Kinnan v. Charles B. Hurst Co. (1925), 317 Ill. 251, 148 N.E. 12; Sims, 43 Ill. App. 2d 184,193 N.E.2d 123.

By estopping the insurer from raising the affirmative defense, the trial court never reached the issue of whether the insured did in fact breach the policy and thereby relieve the insurer of its duty to defend. The court apparently accepted the plaintiff’s position that the insurer is in all cases obligated to either defend under a reservation of rights or seek a declaratory judgment as to the scope of its duty to defend. The duty to defend, although broad, is not boundless. The doctrine of estoppel arises only where a duty to defend exists and has been breached by the insurer. It does not prevent the insurer from raising the issue of whether it did in fact breach a duty to defend its insured.

In the context of the case at bar, the issue of whether a delay in notice constitutes a breach of a policy provision requiring notice “as soon as practicable” is determined by a standard of reasonableness based upon the facts and circumstances of the particular case, (United States Fidelity & Guaranty Co. v. Maren Engineering Corp. (1980), 82 Ill. App. 3d 894, 403 N.E.2d 508.) The record before us contains nothing more than a recital that a five-month delay in giving notice was not reasonable under the terms of the contract. We do not believe that the issue of reasonable notice can be decided as a matter of law on the record as it presently exists. Accordingly, the judgment of the trial court is reversed and the cause remanded for a determination of whether the insurer breached a duty to defend its insured. If a duty to defend is in fact found to exist, the insurer will be estopped from raising any defenses it may have under the policy.

The judgment of the circuit court is reversed, and the cause is remanded for proceedings consistent with this opinion.

Reversed and remanded.

JOHNSON, J., concurs.

JUSTICE McMORROW,

specially concurring:

I agree with the majority that this case should be reversed and remanded for further proceedings. However, I am not in accord with the majority’s reasoning to arrive at that determination, and I therefore specially concur in the majority’s decision.

The majority discusses at length the concept of estoppel in the context of insurance coverage cases. The majority relies upon Murphy v. Urso (1981), 88 Ill. 2d 444, 430 N.E.2d 1079, and Sims v. Illinois National Casualty Co. (1963), 43 Ill. App. 2d 184, 193 N.E.2d 123, to reach its decision in the case at bar. The case before us, however, does not involve a dispute over whether the underlying claim is within the scope of policy coverage, as was involved in the Murphy and Sims cases. Nor does the case at bar involve the propriety of an insurer raising a coverage exclusion defense in the garnishment action, as plaintiff argues. Rather, the sole issue presented is whether an insurer which fails to defend in the primary action, or institute a declaratory judgment action, is estopped, as a matter of law, from raising the insured’s alleged breach of a condition precedent as an affirmative defense in a subsequent garnishment action.

It should be noted that in addition to the policy provisions referred to by the majority, the policy in this case contains the following provision:

“No action shall lie against the company unless as a condition precedent, there shall have been full compliance with all the terms of this policy.”

Plaintiff has not cited, nor have I found, any authority for the proposition that an insurer which has failed to defend its insured in an underlying action is thereby estopped as a matter of law from asserting the breach of a policy provision by the insured as an affirmative defense in a subsequent garnishment action. Indeed, the authorities cited by defendant contradict plaintiff’s position.

In Reisman v. Delgado (1983), 117 Ill. App. 3d 331, 453 N.E.2d 902, following the entry of a default judgment against the insured in an action for damages sustained by the plaintiffs in an automobile accident, a garnishment proceeding was instituted by the plaintiffs against the insurer. The trial court granted judgment against the insurer and the insurer appealed, contending that the trial court erred in ruling that it could not assert as a defense the breach by its insured of the notice of suit provision in its policy. Quoting other authorities, the appellate court stated:

“The general rule in garnishment is that a claim asserted by a judgment creditor against a garnishee must be one which the judgment debtor himself could have maintained. [Citation.] Therefore, where an insured has breached policy conditions, a garnishment action generally will not lie. [Citation.] Specifically, when the judgment creditor of an insured seeks to garnish the proceeds of an insurance policy, the insurer can assert any defenses which it could have raised against the insured, ‘absent some provision of the law which bars the insurer from raising those defenses.’ ” (Reisman, 117 Ill. App. 3d at 333-34.)

Noting that the policy in Reisman was not of a statutory type, such as one issued to comply with a financial responsibility act (e.g., the Illinois Safety Responsibility Law (Ill. Rev. Stat. 1981, ch. 95½, par. 7 — 301 et seq.)), which would prohibit the insurer from asserting policy defenses against the insured’s judgment creditors, the court held that the insurer was not barred from raising a breach of policy defense in the garnishment action.

Similarly, in Johnson v. R & D Enterprises (1982), 106 Ill. App. 3d 496, 435 N.E.2d 1233, the administrator of the deceased’s estate obtained a default judgment against the insured, R & D Enterprises, and then brought a garnishment action against R & D’s insurer. The insurer contended that it was not obliged to provide indemnification to an insured nor pay a judgment rendered against an insured where there has been a prejudicial noncompliance with the conditions of the insurance policy. In such circumstances, the insurer argued, those defenses which the insurer has against the insured are also available against an injured third party seeking recovery under the policy. The Johnson court agreed, stating, “[t]his is the law in Illinois absent some provision of the law which bars the insurer from raising those defenses.” (106 Ill. App. 3d at 498.) The Johnson court, however, upheld the judgment against the insurer on different grounds.

Sowinski v. Ramey (1976), 36 Ill. App. 3d 690, 344 N.E.2d 635, involved an appeal from a judgment for the insurer in a garnishment action in which the insurer raised the affirmative defense of noncooperation by its insured against whom a default judgment had been entered. The court noted that “[i]n a garnishment action, the garnishee must establish by a preponderance of the evidence all affirmative defenses raised in its pleadings, including that of noncooperation.” (36 Ill. App. 3d at 693-94.) The court found that under the facts of that case, the insurer had met its burden of showing that the insured did not provide the notice or the assistance that he was obligated by the terms of the policy to provide and held that the insurer was therefore relieved of liability under the policy. See also Del Grosso v. Casualty Insurance Co. (1988), 170 Ill. App. 3d 1098, 524 N.E.2d 1042 (insurer was not estopped from asserting the breach of a notice provision as a defense in a declaratory judgment action brought by both its insured and a co-insurer seeking to compel the insurer to defend the underlying action); Ledbetter v. Crudup (1983), 114 Ill. App. 3d 401, 449 N.E.2d 265 (affirming trial court’s entry of summary judgment for insurer which asserted that it had never received notice of the lawsuit as a policy defense in a garnishment action).

On the basis of the authorities cited, I am of the opinion that the trial court erred in ruling that the insurer was estopped, as a matter of law, from asserting the insured’s alleged breach of the notice of accident provision of the policy. However, I agree with the majority that the mere recital that the insured’s five-month delay in giving notice was unreasonable because not given “as soon as practicable,” as provided in the policy, is insufficient for this court to make a determination of whether such delay constituted a breach. Thus, I would reverse and remand this cause for a hearing on the correlative issues of the alleged breach of the policy by the insured and insurer, respectively. If the trial court finds the insured’s delay in notifying the insurer of the accident constituted a material breach of the insurance contract, then the insurer should not be barred from presenting its affirmative defense as against plaintiff. If the trial court finds that the insurer breached its duty to defend, then it should be estopped from raising the insured’s alleged breach as a defense in plaintiff’s garnishment action.