author: JUSTICE EGAN

text:
    KERRY ELDER, on Behalf of Himself and All Others Similarly Situated, Plaintiff-Appellant, v. CORONET INSURANCE COMPANY et al., Defendants-Appellees.
    First District (6th Division)
    Nos. 1-89-0893, 1-89-1116 cons.
    Opinion filed July 27, 1990.

      Daniel A. Edelman, of Chicago, for appellant.
    Beerman, Swerdlove, Woloshin & Barezky, of Chicago (Alvin R. Becker and Timothy M. Kelly, of counsel), for appellees.
   JUSTICE EGAN

delivered the opinion of the court:

This case involves the propriety of an insurance company denying the claim of its insured based on the result of a polygraph examination. The plaintiff, Kerry Elder, filed a three-count complaint on behalf of himself and all others similarly situated against the defendants, Coronet Insurance Company (Coronet) and Elston Claim Service, Inc. (Elston). The first count alleged unfair practices in violation of the Consumer Fraud and Deceptive Business Practices Act (Ill. Rev. Stat. 1987, ch. 121V2, pars. 261 to 272) (Act or Consumer Fraud Act). The second count alleged that Coronet also committed a deceptive practice in violation of the Act. The third count alleged that Coronet breached its contract with the plaintiff. All three counts included substantially similar sections entitled “Class Action Allegations.”

The judge dismissed count I on the ground that it did not allege an unfair practice under the Act; he dismissed count II on the ground that it did not allege a deceptive practice under the Act; he struck part of count III on the ground that it did not allege a basis for class action. He certified the following question as to count III under Supreme Court Rule 308 (107 Ill. 2d R. 308): “Whether count III, judged in light of the standards of a §2 — 615 motion to dismiss sufficiently alleges the prerequisites needed to maintain a class action under §2 — 801 of the Illinois Code of Civil Procedure?” We granted leave to appeal the Rule 308 order and consolidated that appeal with the Rule 304(a) appeal of the dismissal of counts I and II.

Because this appeal presents a question as to the sufficiency of the complaint, a review of the allegations of the complaint is appropriate. The factual allegations must be taken as true.

Effective July 9, 1987, Coronet issued an automobile insurance policy to the plaintiff, which covered, among other things, loss from theft. Coronet did not inform the plaintiff when he purchased the insurance of any policy or practice employed by Coronet regarding polygraph tests. On June 11, 1988, the plaintiff’s car was stolen from a parking lot in Chicago, Illinois. The plaintiff had paid the premiums on the automobile insurance policy and had otherwise complied with the conditions of the policy, and, thus, the insurance policy was in full force and effect. The plaintiff promptly reported the theft to the police and to Coronet and filed a claim for a theft loss with Coronet.

Elston, acting on Coronet’s behalf, sent the plaintiff a letter asking him to take a polygraph test. The body of the letter stated in full as follows:

“In order to speed up investigation and settlement of your claim, we request that you submit to a polygraph test.
If you do not submit to a polygraph test, you will be required to appear and give a statement under oath, in the presence of a court reporter.
Your cooperation is required under the terms of your policy.
Please contact this office to set up an appointment as soon as possible.
Your cooperation in this matter would be most appreciated and certainly helpful.”

The defendants have a policy and practice of requesting insureds to submit to polygraph tests and denying claims based on the results of such tests, without significant other investigation. Polygraph tests, however, are not reliable.

Elston, on Coronet’s behalf, denied the plaintiff’s claim on the alleged basis of the results of the polygraph examination. The letter informing the plaintiff of this denial stated, in part, “We have tried to evaluate fairly and properly all the information and reports available to us about this accident. The results of our investigation indicate that the loss did not occur as you reported. We therefore regret that we will be unable to pay your claim.” The defendants did not provide the plaintiff with any further information as to why the claim was denied. Despite the letter’s indication to the contrary, the plaintiff alleged that “Elston and Coronet made no other significant effort besides the polygraph examination to determine what had happened to Elder’s [automobile].” The defendants showed no interest in interviewing a witness, whom the plaintiff had produced, and who had contacted Elston. The authorities recovered the plaintiff’s car in a stripped and seriously damaged condition, but Coronet continued to refuse to pay the plaintiff’s claim.

In count I of the complaint, the plaintiff incorporated the above allegations and alleged that both Coronet and Elston engaged in unfair practices in violation of section 2 of the Consumer Fraud Act (Ill. Rev. Stat. 1987, ch. 121V2, par. 262). Section 2 states that

“unfair or deceptive acts or practices, including but not limited to the use or employment of any deception, fraud, false pretense, false promise, misrepresentation or the concealment, suppression or omission of any material fact, with intent that others rely upon the concealment, suppression or omission of such material fact, *** in the conduct of any trade or commerce are hereby declared unlawful whether any person has in fact been misled, deceived or damaged thereby.”

The plaintiff alleged that each defendant committed an unfair practice that was contrary to public policy in denying insurance claims on the basis of polygraph test results. Moreover, the plaintiff alleged that denial of “a claim which is properly payable on its face [without] reliable, competent evidence that the claim is materially false or improper *** is unreasonable and vexatious * * * [and forces] the insured to resort to the courts to collect his or her claim.” Finally, the plaintiff asserted that the defendants engaged in this unfair practice in connection with the conduct of trade and commerce, thereby damaging the plaintiff.

The plaintiff sought to bring this unfair practice claim on behalf of the class of persons (1) who were insured by Coronet, (2) who made a claim on their policy, (3) who were requested to take a polygraph test, and (4) who were denied recovery on the basis of the polygraph test results. The plaintiff alleged that the class satisfied the numerosity requirement based on the defendants’ use of form letters in processing the plaintiff’s claim. The complaint alleged that common questions of law or fact predominated over individual questions, the principal issue being whether reliance on polygraph tests to deny insurance claims constitutes an unfair trade practice.

Based on the allegations in count I, the plaintiff requested the court to enter judgment in favor of the plaintiff and the class, as follows: declare the denial of insurance claims on the basis of polygraph tests to be an unfair trade practice; award compensatory and punitive damages, attorney fees, expenses and costs; and order such other and further relief as the court deemed appropriate.

In count II of the complaint, the plaintiff further alleged that Coronet also engaged in deceptive practices in violation of section 2 of the Consumer Fraud Act, the same section upon which count I is based. (Ill. Rev. Stat. 1987, ch. 121V2, par. 262.) The plaintiff asserted that Coronet committed a deceptive practice by selling the plaintiff an insurance policy without disclosing that the insurer has a policy and practice of denying claims on the basis of unreliable polygraph examinations.

The plaintiff also included in count II allegations to support a class action that were substantially similar to those in count I, except that the principal issue underlying count II’s class-action allegations was whether Coronet’s failure to disclose its practice of denying claims on the basis of polygraph examinations constituted a deceptive trade practice. Count II also included a request for damages and other relief similar to those requested in count I.

Count III set forth a breach of contract claim alleging that Coronet breached its contract with the plaintiff in denying his claim and that Coronet acted unreasonably and vexatiously in relying on a polygraph test to deny his claim. Count III also included class allegations substantially similar to those in counts I and II. The complaint alleged that common questions of law and fact predominated under count III giving rise to the following principal issues: (1) whether the denial of an insurance claim solely on the basis of a polygraph test is a breach of the insurance policy; and (2) whether the denial of an insurance claim solely on the basis of a polygraph test is vexatious and unreasonable in violation of the Insurance Code (Ill. Rev. Stat. 1987, ch. 73, par. 767). Except for the omission of a request for punitive damages, count III prayed for relief similar to that requested in counts I and II.

I

The plaintiff contends that the trial judge erroneously dismissed count I of the complaint against Coronet because Coronet’s primary reliance on a polygraph test, an inherently unreliable test, constitutes an unfair practice under the Act.

Whether sole reliance on polygraph tests in denying insurance claims constitutes an unfair trade practice is a question of first impression in Illinois. In any event, Illinois courts have stated that the determination of whether a certain practice is “unfair” under the Act requires a case-by-case determination. Scott v. Association for Childbirth at Home, International (1981), 88 Ill. 2d 279, 290, 430 N.E.2d 1012, 1018.

Section 2 of the Act (Ill. Rev. Stat. 1987, ch. 1211/2, par. 262) states, in part, that “[i]n construing this section consideration shall be given to the interpretations of the Federal Trade Commission and the federal courts relating to Section 5(a) of the Federal Trade Commission Act.”

Section 5(a) of the Federal Trade Commission Act (15 U.S.C. § 45(a)(1) (1982)) (FTCA) states: “Unfair methods of competition in or affecting commerce, are declared unlawful.” In interpreting section 5(a), the Supreme Court has set forth the criteria used to decide whether a practice is “unfair”;

“The Commission has described the factors it considers in determining whether a practice that is neither in violation of the antitrust laws nor deceptive is nonetheless unfair:
‘(1) whether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise— whether, in other words, it is within at least the penumbra of some common-law, statutory, or other established concept of fairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; (3) whether it causes substantial injury to consumers (or competitors or other businessmen).’ ” Federal Trade Comm’n v. Sperry & Hutchinson Co. (1972), 405 U.S. 233, 244-45 n.5, 31 L. Ed. 2d 170, 179 n.5, 92 S. Ct. 898, 905 n.5, quoting 29 Fed. Reg. 8355 (1964).

In People ex rel. Fahner v. Hedrich (1982), 108 Ill. App. 3d 83, 438 N.E.2d 924, the second district of this court adopted the criteria outlined in Sperry & Hutchinson in considering alleged violations of the Consumer Fraud Act. Although Sperry & Hutchinson concerned the elements of an “unfair” practice that was not also a “deceptive” practice, after analyzing these elements, the Hedrich court considered the defendant’s failure to disclose an “unfair or deceptive practice” (Hedrich, 108 Ill. App. 3d at 90), thereby somewhat blurring the distinction between the two bases for liability. Nevertheless, an application of the Sperry & Hutchinson analysis to the present case reveals that count I of the plaintiff’s complaint stated a cause of action for unfair trade practices against Coronet.

A

Coronet’s exclusive reliance on the results of a polygraph examination, “[although not] having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise.” (Sperry & Hutchinson, 405 U.S. 233, 244 n.5, 31 L. Ed. 2d 170, 179 n.5, 92 S. Ct. 898, 905 n.5.) A public policy against such reliance is suggested by the statutory prohibition against requiring a party to submit to a polygraph test in a civil trial or a pretrial proceeding (Ill. Rev. Stat. 1987, ch. 110, par. 2 — 1104) and the similar prohibition against requiring, requesting or suggesting submission to a polygraph test by a criminal defendant (Ill. Rev. Stat. 1987, ch. 38, par. 155-11).

Coronet argues that its request that the plaintiff submit to a polygraph test offended no established public policy in effect at the time relevant to this case, citing legislation providing for the licensing and regulating of polygraph examiners. (Ill. Rev. Stat. 1987, ch. 111, par. 2401 et seq.) This legislation specifically prohibits polygraphic inquiry into certain areas during preemployment or periodic employment examinations, such as inquiries into religious, racial, political, or sexual beliefs, but does not address, specifically or otherwise, inquiries in the insurance context. Thus, Coronet argues, “the articulated public policy of Illinois approves the request for a polygraph examination, and permits consideration of the results of a voluntary polygraph in the course of an insurance investigation.” At this point it is important to note that Coronet treats as one two separate aspects of its argument: a request for a polygraph examination and the use of the results of the examination. Whether Coronet is empowered to request a polygraph examination is not the issue in this case. The issue is whether Coronet may use the results of that examination as a basis for denying a claim.

The defendant’s argument misconstrues the licensing statute. Although conducting a polygraph test is not, in itself, an unlawful or criminal act, the mere existence of certain statutory licensing requirements does not constitute an “articulated public policy” justifying the use of polygraph test results in any context not specifically prohibited in that statute. The legislature specifically states in the licensing statute that “[t]he practice of the detection of deception in the State of Illinois is declared to affect the public health, safety and welfare and is subject to regulation and control in the public interest.” Ill. Rev. Stat. 1987, ch. 111, par. 2402.

Following enactment of the licensing statute in 1963, Illinois courts, although recognizing certain beneficial uses of polygraph examinations, have not hesitated to restrict the use of polygraph test results when such use would affect the substantive rights of litigants. Judicial decisions have barred polygraph test results from criminal trials, even when the parties stipulate to admissibility (People v. Baynes (1981), 88 Ill. 2d 225, 430 N.E.2d 1070), from sentencing hearings in capital cases (People v. Szabo (1983), 94 Ill. 2d 327, 447 N.E.2d 193), from hearings on post-trial motions (People v. Yarbrough (1982), 93 Ill. 2d 421, 444 N.E.2d 493), from post-conviction proceedings (People v. Hilliard (1982), 109 Ill. App. 3d 797, 441 N.E.2d 135), and from administrative proceedings (Kaske v. City of Rockford (1983), 96 Ill. 2d 298, 450 N.E.2d 314).

In Kaske, the court agreed that “a polygraph examination is an instrument of some investigatory utility and value” (96 Ill. 2d at 310), but, nevertheless, determined that such test results were not admissible in an administrative proceeding before the board of police and fire commissioners. The court stated:

“There is a real danger that the board of fire and police commissioners will find the results of the polygraph examination com-
pletely determinative of guilt or innocence. *** [Pjolygraph evidence is not reliable enough to be used as substantive evidence in an administrative proceeding before the board. The findings before a board of fire and police commissioners must be based upon facts proved by competent evidence.” (Emphasis added.) (96 Ill. 2d at 309.)

Thus, the public policy of the State as established by case law allows for the investigatory use of consensual polygraph examinations, in certain circumstances, but rejects reliance on such examinations in decision making.

The plaintiff has alleged that Coronet “denied [the plaintiff’s] claim on the alleged basis of the results of the polygraph test” and that “Coronet made no other significant effort besides the polygraph examination to determine what had happened to [the plaintiff’s car].” Those allegations are admitted by Coronet. Thus, Coronet’s actions, as alleged in the complaint, embody the dangers foreseen by the Kaslce court: reliance by a decision maker on the results of a polygraph examination. The State, all agree, has an extensive interest in the practices of insurance companies. This practice, in our judgment, offends the public policy of the State.

Finally, other indicators of a public policy against reliance on polygraphs to determine insurance claims include the Federal Employee Polygraph Protection Act of 1988 (29 U.S.C.A. §2001 et seq. (1990 Supp.)), which makes it unlawful for any employer engaged in or affecting interstate commerce “to require, request, suggest, or cause any employee or prospective employee to take or submit to any lie detector test,” and regulations promulgated by the Illinois Department of Insurance. See 50 Ill. Adm. Code §919.60(d) (1985) (preventing an insurer from requiring an insured to submit to a polygraph as a condition precedent to payment of a claim); 50 Ill. Adm. Code §919.60(d) (1985), as amended at 13 Ill. Reg. 1204, 1217 (eff. Jan. 11, 1989) (preventing an insurer from requesting or requiring an insured to submit to a polygraph examination).

Although we have already expressed the view that Coronet’s right to request a polygraph examination is not the issue, we deem it appropriate to address the question in view of subsequent litigation involving the Director of Insurance.

Coronet points out that the insurance regulation in effect at the time relevant to the plaintiff’s complaint prohibited an insurer only from requiring an insured to submit to a polygraph (50 Ill. Adm. Code §919.60 (1985)) and that the recently promulgated version of the regulation which prohibits both the requiring and the requesting of polygraph examinations was not effective when Coronet asked the plaintiff to submit to an examination. However, the fact that the insurance regulations in effect at the time did not expressly prohibit Coronet from requesting a polygraph examination is not relevant insofar as a practice can be unfair “without necessarily having been previously considered unlawful.” Sperry & Hutchinson, 405 U.S. at 244 n.5, 31 L. Ed. 2d at 179 n.5, 92 S. Ct. at 905 n.5.

After oral argument was heard in this case, the second division of this court reversed the circuit court’s injunction order (Coronet Insurance Co. v. Washburn (1990), 201 Ill. App. 3d 633) and upheld the determination of the Director of Insurance that an insurer’s request of an insured to submit to a polygraph examination was an improper claims practice.

B

Coronet’s alleged exclusive reliance on polygraph test results is oppressive under the second prong of the Sperry & Hutchinson analysis in that Coronet forces its insureds to file suit or to forego recovery although Coronet possesses no admissible evidence that would create a triable issue in court. Coronet counters that, although polygraph results are not admissible substantively, they are admissible to show an insurer’s good faith in denying a claim, citing Moskos v. National Ben Franklin Insurance Co. (1978), 60 Ill. App. 3d 130, 376 N.E.2d 388. Moskos may be authority for admissibility of the polygraph results in the plaintiff’s claim under count III for vexatious refusal to pay. But the evidence is not admissible, let alone conclusive, in the claims under counts I and II. (See Lynch v. Mid-America Fire & Marine Insurance Co. (1981), 94 Ill. App. 3d 21, 418 N.E.2d 421.) Moreover, even if the evidence is admissible under the vexatious-refusal-to-pay claim in count III (and we have strong reservations about the holding in Moskos), the evidence is just that — admissible; it is not conclusive.

C

The plaintiff also argues correctly that Coronet’s reliance on polygraph test results causes substantial injury to consumers. This injury-results from the limited choices facing the insured: file suit or forego redress. The plaintiff asserts, without contradiction by Coronet, that many claimants are deprived of redress because of the modest size of the claims and the unsophistication of Coronet’s insureds.

Coronet contends that the plaintiff’s complaint failed to state a cause of action because the plaintiff consented to take the polygraph examination rather than give a sworn statement. The defendants assert that the plaintiff “admitted the consent form, stating that he voluntarily took the test and consented to disclosure of the results.” The basis of that statement is a consent form allegedly signed by the plaintiff which was made part of the record as a response to a request to admit. The plaintiff makes no point of the propriety of our considering the form even though the motion was brought under section 2 — 615 of the Code of Civil Procedure (Ill. Rev. Stat. 1987, ch. 110, par. 2 — 615). Consequently, neither will we.

However, we must again point out that the issue is the use of the results of the polygraph examination in denying a claim. The issue is not whether the plaintiff consented to take the test and consented to the disclosure of the results. He did not consent to a denial of his claim based on the results of the test.

In sum, the plaintiff has alleged the elements necessary under Sperry & Hutchinson and Hedrich to state a cause of action for unfair trade practices against Coronet. Moreover, even if the plaintiff did consent to submit to the examination, such consent is irrelevant to his claim of unfair trade practices. For these reasons, the trial judge erred in dismissing count I of the plaintiff’s complaint against Coronet. The order dismissing count I is reversed.

II

The plaintiff also argues that count I of his complaint sufficiently stated a cause of action against Elston for unfair trade practices under the Consumer Fraud Act. The plaintiff anchors his argument on Elston’s actions, as agent for Coronet, in denying the plaintiff’s automobile-theft claim based solely on the results of the polygraph examination. Elston asserts that the complaint failed to state a cause of action against it for any unfair practice because the Act does not apply to the processing of insurance claims, because the plaintiff lacks standing as a “consumer” as to Elston, and because Elston’s tangential relationship to any consumer transaction between the plaintiff and Coronet provides an insufficient nexus to support a cause of action against Elston.

The plaintiff complains of Elston’s actions as Coronet’s agent in denying his automobile-theft claim. Because those actions alleged in count I sufficiently stated a cause of action against Coronet, as indicated above, the propriety of the dismissal of Elston depends on the validity of Elston’s arguments against imposing liability under the Consumer Fraud Act for claim-processing activities. The resolution of this issue requires an examination of the statute governing an unfair practice claim.

Section 10a of the Consumer Fraud Act (Ill. Rev. Stat. 1987, ch. 121V2, par. 270a (as amended by Pub. Act 85 — 869, §1, eff. Jan. 1,1988)) provides the basis for a private right of action as follows:

“Any person who suffers damage as a result of a violation of Section[ ] 2 *** of this Act committed by any other person may bring an action against such person. The court, in its discretion[,] may award actual damages or any other relief which the court deems proper.”

Section 2 of the Act (Ill. Rev. Stat. 1987, ch. I2IV2, par. 262) declares unlawful “unfair *** practices *** in the conduct of any trade or commerce.” Section 1 of the Act (Ill. Rev. Stat. 1987, ch. 12V-lz, par. 261) defines “trade” and “commerce” to include the “saleQ or distribution of any services.” Finally, section 11a (Ill. Rev. Stat. 1987, ch. 121V2, par. 271a) states that “[t]his Act shall be liberally construed to effect the purposes thereof.”

Thus, the plain language of the Act establishes that any person who suffers damage as a result of any other person’s unfair practice or deception in the sale or distribution of any services may bring an action for actual damages or for any other relief which the court deems proper. This statutory language is extremely broad, and the supreme court has stated that “[tjhis broad language evidences an intent that the Act have a correspondingly broad applicability.” Scott v. Association for Childbirth at Home, International (1981), 88 Ill. 2d 279, 284, 430 N.E.2d 1012, 1015.

In opposition to a reading of the Act that would include Elston’s activities in the Act’s coverage, the defendants cite Exchange National Bank v. Farm Bureau Life Insurance Co. (1982), 108 Ill. App. 3d 212, 438 N.E.2d 1247, and Frahm v. Urkovich (1983), 113 Ill. App. 3d 580, 447 N.E.2d 1007. These cases are distinguishable. The court in Exchange National Bank held that the plaintiffs failed to state a cause of action against the defendant mortgage lenders under the Act, because the plaintiffs failed to allege that the assertedly unfair and deceptive practices were “part of a pattern of defendants’ lendihg activities.” (108 Ill. App. 3d at 216.) In contrast, the plaintiff here has alleged that “Elston and Coronet have a policy and practice of denying claims on the basis of results of polygraph *** tests, without engaging in significant other investigation.” (Emphasis added.)

In Frahm the court held that the plaintiffs failed to state a cause of action against their former attorney under the Act, because attorney services were not services provided in the conduct of any trade or commerce. The court found that “[t]he interpretation urged by plaintiffs *** would necessarily equate the practice of law with an ordinary commercial enterprise, a proposition [with] no support in case law or public policy.” (113 Ill. App. 3d at 584.) In contrast, the sale of insurance is a “trade or commerce” under the Act. Fox v. Industrial Casualty Insurance Co. (1981), 98 Ill. App. 3d 543, 546, 424 N.E.2d 839, 842.

Although the decision is not binding precedent, we find persuasive the holding of the Federal district court in Barr Co. v. Safeco Insurance Co. (N.D. Ill. 1984), 583 F. Supp. 248. The court held that the plaintiff had stated a cause of action against the defendant insurer, who allegedly “engaged in a practice of not paying promptly and completely claims *** which Safeco knew were due and owing” in an effort to negotiate settlements at less than a full and fair value and who “concealed and omitted to disclose its practice.” (583 F. Supp. at 257.) The court reasoned that the “plaintiff alleges a series of misrepresentations made to a series of insureds. Plaintiff is not alleging an isolated incident. In any event, insurance contracts are matters of public policy [citations] and misrepresentations made with regard to such contracts would be the type covered by the Act.” (583 F. Supp. at 258.) Likewise, the plaintiff here has alleged a series of unfair acts by Elston and Coronet against the plaintiff and other insureds. Elston and Coronet are incorrect in asserting that the processing of insurance claims is not covered by the Act.

The defendants cite McCarter v. State Farm Mutual Automobile Insurance Co. (1985), 130 Ill. App. 3d 97, 473 N.E.2d 1015, as “specifically [holding] that the Act was not intended to reach the insurance claim adjustment process.” However, McCarter concerned an allegation that the defendant-insurer committed an unfair or deceptive act in settling the plaintiff-beneficiary’s third-party claim against an insured. In affirming the dismissal of the plaintiff’s Consumer Fraud Act claim, the court reasoned that “the transaction complained of in the present case does not involve a sale of insurance. In fact, the plaintiff is not even a consumer under these circumstances. Since the Consumer Fraud Act applies only to consumers [citation], we affirm the trial court’s dismissal of count I.” (130 Ill. App. 3d at 101.) The McCarter plaintiff was a third-party beneficiary under an insured’s policy, not a consumer (i.e., an insured who had purchased insurance). McCarter does not hold that the Act was not intended to reach the insurance claim adjustment process where the claimant is the insured. The same reasoning distinguishes Steinberg v. Chicago Medical School (1977), 69 Ill. 2d 320, 328, 371 N.E.2d 634, 638, in which the supreme court held that the plaintiff, who did not purchase or contract to purchase anything, but merely applied for admission to medical school, was not a “consumer” under the Act.

Moreover, as indicated above, section 10a of the Act (Ill. Rev. Stat. 1987, ch. 12V-k, par. 270a) establishes a broad standard for standing to bring a private cause of action: to bring an action against any person who commits an unfair practice in violation of section 2 of the Act, a plaintiff need only “suffer[] damage as a result of [that] violation.” (Ill. Rev. Stat. 1987, ch. 1211/2, par. 270a.) A consumer is defined as “any person who purchases or contracts for the purchase of merchandise not for resale in the ordinary course of his trade or business but for his use or that of a member of his household.” (Ill. Rev. Stat. 1987, ch. 1211/2, par. 261(e).) Nowhere does the definition require that privity exist between the purchaser and the provider of the merchandise. The present plaintiff purchased insurance from Coronet and contracted for a good-faith settlement of claims. Thus, the plaintiff is a consumer under the Act and has standing under section 10a to bring an action against Elston for damage suffered as a result of Elston's allegedly unfair practices in adjusting the plaintiff’s claim.

Finally, section 10a provides that a plaintiff may bring an action against any “person” who violates section 2 of the Act. “The term ‘person’ includes any natural person or his legal representative, partnership, corporation (domestic or foreign), company, trust, business entity or association, and any agent [or] employee *** thereof” (Emphasis added.) (Ill. Rev. Stat. 1987, ch. 121V2, par. 261(c).) The plaintiff has alleged that “Elston, acting on behalf of Coronet, denied [the plaintiff’s] claim on the alleged basis of the results of the polygraph test.” (Emphasis added.) Thus, the plaintiff properly stated a cause of action against Elston, who was Coronet’s agent and a “person” who performed the allegedly unfair acts.

Ill

Plaintiff next asserts as error the trial judge’s dismissal of count II of the complaint, which alleged that Coronet engaged in a deceptive practice by failing, when it sold the insurance policy, to disclose its practice of denying automobile-theft claims on the basis of polygraph examinations. Section 2 of the Act provides a nonexclusive list of deceptive practices, which includes “the concealment, suppression or omission of any material fact, with intent that others rely upon the concealment, suppression or omission of such material fact.” (Ill. Rev. Stat. 1987, ch. I2IV2, par. 262.) To establish a deceptive practice claim, a plaintiff “must show (1) a deceptive act or practice, (2) an intent by defendants that he rely on the deception, and (3) the deception occurred in the course of conduct involving a trade or commerce.” (Crowder v. Bob Oberling Enterprises, Inc. (1986), 148 Ill. App. 3d 313, 316, 499 N.E.2d 115, 117.) Moreover, in affirmative misrepresentation or omission cases under the Act, a plaintiff “must allege the misrepresentation of a material fact.” Heastie v. Community Bank (N.D. Ill. 1988), 690 F. Supp. 716, 718-19.

Courts have employed various standards to determine what constitutes a “deceptive act or practice,” the first element set forth in Crowder. Some courts have applied the unfair practice standard enunciated in Sperry & Hutchinson, previously discussed. (E.g., People ex rel. Hartigan v. All American Aluminum & Construction Co. (1988), 171 Ill. App. 3d 27, 524 N.E.2d 1067; People ex rel. Fahner v. Hedrich (1982), 108 Ill. App. 3d 83, 438 N.E.2d 924.) This court has recognized that, under section 5(a) of the FTCA, “an advertisement has been held to be deceptive on its face if it creates ‘the likelihood of deception or [has] the capacity to deceive’.” (Williams v. Bruno Appliance & Furniture Mart, Inc. (1978), 62 Ill. App. 3d 219, 222, 379 N.E.2d 52, 54, quoting Montgomery Ward & Co. v. Federal Trade Comm’n (7th Cir. 1967), 379 F.2d 666, 670.) In Crowder the court held that allegations that the defendant car salesman failed to inform the plaintiff of a used car’s salvage history sufficiently alleged deceptive conduct, stating that “[u]nder the Act the omission of any material fact is deceptive conduct.” 148 Ill. App. 3d at 316-17.

Under Crowder’s standard, the plaintiff’s assertion that Coronet failed to disclose its claims adjustment practices sufficiently alleged a deceptive act or practice. “A misrepresentation is material if ‘it relates to a matter upon which the plaintiff could be expected to rely in determining to engage in the conduct in question.’ ” (Heastie, 690 F. Supp. at 718-19, quoting Mother Earth, Ltd. v. Strawberry Camel, Ltd. (1979), 72 Ill. App. 3d 37, 49, 390 N.E.2d 393, 404.) In making a judgment whether to purchase insurance from Coronet, the plaintiff could reasonably have been expected to rely on the information that Coronet engaged in a practice of denying insurance claims on the basis of polygraph tests without significant other investigation. Common sense dictates that any prospective purchaser of insurance would be less likely to purchase insurance from a carrier that, as a matter of policy and general practice, would hire a polygraph operator to examine a claimant and justifiably deny the claim because the polygraph operator, paid by the carrier, opined that the insured had not told the truth. Consequently, the undisclosed practice was material, and Coronet’s alleged failure to disclose constituted deceptive conduct. Compare Robacki v. Allstate Insurance Co. (1984), 127 Ill. App. 3d 294, 300, 468 N.E.2d 1251, 1255 (The court affirmed summary judgment for the defendant on a Consumer Fraud Act claim, stating that “there [was] no element of deception in the dealings between [the] parties *** [because] defendant provided plaintiff with a complete explanation pamphlet *** [which] eliminate^] any possibility of confusion or misunderstanding”).

The second element required under Crowder for a deceptive-practice claim concerns the defendant’s intent that the plaintiff rely on the deception. However,

“a defendant need not be motivated by an intent to deceive. [Citation.] *** [A] violator’s good or bad faith is not important. [Citation.] Even innocent misrepresentations may be actionable. [Citation.] By its own terms, the statute requires only that a violator intend for a purchaser to rely on his acts or omissions. A party is considered to intend the necessary consequences of his own acts or conduct.” (Emphasis in original.) (Warren v. LeMay (1986), 142 Ill. App. 3d 550, 566, 491 N.E.2d 464, 474.)

Thus, Coronet is considered to have intended that the plaintiff purchase its automobile-theft insurance under the belief that Coronet would not refuse to pay otherwise facially valid claims simply on the basis of polygraph test results. Contrary to the assertions of the defendants, the plaintiff had no duty to inquire as to the insurer’s claims processing method. (Beard v. Gress (1980), 90 Ill. App. 3d 622, 627-28, 413 N.E.2d 448, 452 (“[N]either the mental state of the person making a misrepresentation nor the diligence of the party injured to check as to the accuracy of the misrepresentation [is] material to the existence of a cause of action for that misrepresentation under section 2 [of the Act].”).) The plaintiff’s claim thus established the requisite intent.

The final element to a deception claim under Crowder requires that the deception occurred in the course of conduct involving a trade or commerce. We repeat that the sale of insurance is a trade or commerce under the Act. (Fox v. Industrial Casualty Insurance Co. (1981), 98 Ill. App. 3d 543, 424 N.E.2d 839.) Thus, the plaintiff’s claim for deceptive practices has satisfied the third element as well.

The defendants rely heavily on Marcial v. Coronet Insurance Co. (N.D. Ill. 1988), 122 F.R.D. 529, affd (7th Cir. 1989), 880 F.2d 954. Marcial does not support the defendants’ position. There, the district court denied class certification of a claim against Coronet which alleged that Coronet and Elston violated the Federal RICO statutes (18 U.S.C. §§1961 through 1965 (1982)) by using polygraph tests as a means for denying insurance claims. Essential to the complaint was proof that the defendants had committed wire or mail fraud. In affirming, the court of appeals held that the plaintiffs had to prove that the defendants “knowingly schemed to defraud plaintiffs of their property and used the mail or wire services in furtherance of the scheme” (880 F.2d at 958) and that the plaintiffs had failed to so prove. As we have already expressed, an intent to deceive is not an element to be proved under the Consumer Fraud Act. Significantly, the court noted that the “plaintiffs have presented strong arguments as to why the use of a polygraph test is unfair, and possibly illegal under state law.” 880 F.2d at 958.

As the plaintiff’s claim for deceptive practices has alleged satisfactorily the requisite elements for such a claim, the order dismissing count II of the complaint is reversed.

IV

The plaintiff’s last contention is that the judge erred in dismissing his class claim from count III. Count III alleges that Coronet breached its contract of insurance by refusing to pay the plaintiff’s claim on the basis of a lie detector test, that Elder was damaged by the breach, and that it is unreasonable and vexatious for an insurer to deny claims on the basis of lie detector results. The count further alleged that the class consists of all persons who satisfy the following criteria: (a) they were insured by Coronet; (b) they made a claim under their policy; (c) they were requested to take a polygraph or “lie detector” test; and (d) their claim was denied on the basis of the results of the polygraph or “lie detector” test.

The plaintiff contended that there were questions of law and fact common to the class which predominated over any questions affecting only individual members. He identified the issues as: (a) whether the denial of an insurance claim on the basis of a lie detector test is a breach of the insurance policy; and (b) whether the denial of an insurance claim on the basis of a lie detector test is vexatious and unreasonable in violation of the Insurance Code. The relief prayed for was a declaration “that it is an unfair trade practice to deny insurance claims on the basis of lie detector tests and for appropriate compensatory damages and for costs of suit, including the additional amounts prescribed by section 157 [sic] of the insurance code and for such other and further relief as the Court deems appropriate.” (The plaintiff must have been referring to section 155 of the Code. (Ill. Rev. Stat. 1987, ch. 73, par. 767.) Section 157 is not applicable.)

Section 2 — 801 of the Code of Civil Procedure (Ill. Rev. Stat. 1987, ch. 110, par. 2 — 801) establishes the elements necessary to maintain a class action:

“An action may be maintained as a class action in any court of this State and a party may sue or be sued as a representative party of the class only if the court finds:
(1) The class is so numerous that joinder of all members is impracticable.
(2) There are questions of fact or law common to the class, which common questions predominate over any questions affecting only individual members.
(3) The representative parties will fairly and adequately protect the interest of the class.
(4) The class action is an appropriate method for the fair and efficient adjudication of the controversy.”

The defendants claim that class certification was properly denied because the trial judge found that many issues would still be unresolved even if the judge eventually held that the defendants had breached the contract with the plaintiff. We agree. Under count III, the plaintiff must prove that his car was stolen and the amount of his damages. Every other member of the class must prove the same. The defendants would be entitled to a jury trial on the claims of the plaintiff and all the other members of the class. Similarly, the plaintiff must convince the court that the refusal to pay was vexatious; so must every other member of the class. It is true that there is one question of fact common to the class — all claims were denied on the basis of the results of polygraph examinations. But we do not believe that that common question predominates over any other questions affecting only individual members to the extent that substantial differences between the individual claimants do not exist. On this aspect of the case we believe Marcial v. Coronet Insurance Co. (7th Cir. 1989), 880 F.2d 954, is persuasive.

The decision whether to certify a class is a matter committed to the sound discretion of the trial court and will be reversed only upon a clear abuse of discretion or the application of impermissible legal criteria. (Schlenz v. Castle (1981), 84 Ill. 2d 196, 417 N.E.2d 1336.) A reversal of a trial court’s decision whether to certify a class action is not justified simply because a reviewing court concludes that the trial court’s discretion was not “wisely exercised.” (McCabe v. Burgess (1979), 75 Ill. 2d 457, 389 N.E.2d 565.) We cannot say that the trial judge in this case abused his discretion in denying certification under the pleading before him.

The plaintiff has shifted positions from the relief sought in his complaint in what we judge to be an attempt to avoid the argument that the other issues must be resolved. He tells us that he asked the trial court for “a declaration that the denial of insurance claims on the basis of lie detector tests was unlawful, and to direct defendants to reprocess of all claims denied on the basis of ‘lie detector’ tests without use of such tests.” He bases that request on the catch-all part of his prayer which asks “for such other and further relief that the court deems appropriate.” In our view the relief he now requests may not be based on count III. Reprocessing of all claims is inconsistent with a claim for breach of contract and compensatory damages. Since this case is being remanded, the plaintiff may wish to amend his complaint.

The plaintiff relies principally on Van Vactor v. Blue Cross Association (1977), 50 Ill. App. 3d 709, 365 N.E.2d 638, and Carrao v. Health Care Service Corp. (1983), 118 Ill. App. 3d 417, 454 N.E.2d 781. In Van Vactor, which involved a complaint for declaratory judgment, the court expressly noted that, unlike this case, there was no claim for damages. In Carrao, the court held that a presumption existed that a physician had made a determination of medical necessity in hospitalizing a patient in good faith. The court further held that if the defendant, Blue Cross, was able to produce “clear and convincing evidence” of fraud, duress or bad faith in any of the claims, the court would deal appropriately with each claim. The trial court, we judge, concluded that the number of such instances of bad faith would be small. The Carrao court also noted pointedly that the “trial court was well within its discretion in determining that the issue of contract construction predominated over any questions affecting only individual members.” (118 Ill. App. 3d at 428.) Van Vactor also was an affirmance of the trial court’s exercise of discretion. Neither case is such authority that compels the substitution of our judgment for that of the trial judge. Therefore, we answer in the negative the certified question whether count III sufficiently alleged the prerequisites needed to maintain a class action under section 2 — 801 of the Code of Civil Procedure. The trial judge properly struck that part of count III purporting to plead a cause of action under section 2 — 801. The order striking that part of count III is affirmed.

Judgment affirmed in part; reversed in part and remanded.

LaPORTA, P.J., and McNAMARA, J., concur.


source: Caselaw Access Project

author: JUSTICE GREEN

license: Public Domain

text:
    JAMES D. COLE II, as Father and Next Friend of Jessica L. Cole, a Minor, et al., Plaintiffs-Appellants, v. THE CITY OF EAST PEORIA, Defendant-Appellee.
    Third District
    No. 3-89-0643
    Opinion filed May 21, 1990.
    Rehearing denied June 27, 1990.
    Christopher P. Ryan, of Strodel, Kingery & Durree, Associates, of Peoria, for appellants.
    Nathan R. Miller, of Miller, Hall & Triggs, of Peoria, for appellee.
   JUSTICE GREEN

delivered the opinion of the court:

On April 27, 1988, plaintiff James D. Cole II brought suit in the circuit court of Tazewell County against defendant City of East Peoria (City) seeking damages (1) on behalf of his minor daughter Jessica L. Cole for injuries she received; and (2) on his own behalf for medical expenses he paid as a result of those injuries. On October 3, 1989, the circuit court granted the defendant’s motion for summary judgment as to plaintiffs’ second-amended complaint. Plaintiffs have appealed. Summary judgment may be granted only when the pleadings and other documents before the court show no genuine issue exists as to any material fact which could prevent the movant from being entitled to judgment as a matter of law. (Ill. Rev. Stat. 1987, ch. 110, par. 2 — 1005(c).) Such is not the case here. Accordingly, we reverse and remand for further proceedings.

The second-amended complaint’s essential allegations were that (1) the minor was injured on April 13, 1988, when she was riding her bicycle on the edge of Springfield Road in the City, and the tire of her bicycle fell through a storm sewer grate with openings parallel to the edge of the road; (2) the City had a duty to maintain the road surfaces and sewer grates in a reasonably safe condition for the use of the public; (3) the City was negligent in (a) failing to maintain the sewer grate in a safe condition for bicycles to pass over it, (b) permitting sewer grates to be installed with bars that ran parallel to the curb in an area where members of the public rode bicycles, and (c) failing to replace the sewer grates which ran parallel to the roadway with grates which were “bicycle safe”; and (4) the minor’s injuries resulted from the negligent and careless acts or omissions by defendant.

The second-amended complaint also alleged (1) the City had a duty to correct or modify any improvements made by the City which constituted a danger to the public; (2) the City created and renewed striping on the roadway four feet from the edge of the roadway in a highly populated area which did not have sidewalks or other areas designated for pedestrians; (3) the City had actual knowledge through its employees that the four-foot zone at the edge of the roadway was actively used by pedestrians and bicyclists; (4) the City was negligent as previously described and for failing to modify or replace the roadway striping to make the area safe for members of the public while • riding bicycles in the area.

The question of the propriety of the summary judgment turns upon the operation of three provisions of article III of the Local Governmental and Governmental Employees Tort Immunity Act (Act) (Ill. Rev. Stat. 1987, ch. 85, par. 3 — 101 et seq.).

Section 3 — 102(a) of the Act states:

“Except as otherwise provided in this Article, a local public entity has the duty to exercise ordinary care to maintain its property in a reasonably safe condition for the use in the exercise of ordinary care of people whom the entity intended and permitted to use the property in a manner in which and at such times as it was reasonably foreseeable that it would be used, and shall not be liable for injury unless it is proven that it has actual or constructive notice of the existence of such a condition that is not reasonably safe in reasonably adequate time prior to an injury to have taken measures to remedy or protect against such condition.” Ill. Rev. Stat. 1987, ch. 85, par. 3— 102(a).

Section 3 — 103(a) of the Act states that with regard to the adoption of a plan or design of construction of an improvement to public property, a local public entity is generally not liable. That section states, however, that a local public entity is liable “if after the execution of such plan or design it appears from its use that it has created a condition that it is not reasonably safe.” (Ill. Rev. Stat. 1987, ch. 85, par. 3 — 103(a).) Section 3 — 105(a) of the Act grants local public entities immunity from liability for “injury caused by the effect of weather conditions as such on the use of streets.” (Ill. Rev. Stat. 1987, ch. 85, par. 3 — 105(a).) Sections 3 — 105(b) and (c) of the Act then provide:

“(b) Without implied limitation, neither a local public entity nor a public employee is liable for any injury caused by the failure of a local public entity or a public employee to upgrade any existing street, highway, alley, sidewalk or other public way or place, or the ways adjoining any of the foregoing, or the signals, signs, markings, traffic or pedestrian control devices, equipment or structures on or near such street, highway, alley, sidewalk or other public way or place, or the ways adjoining any of the foregoing from the standards, if any, which existed at the time of the original dedication to, or acquisition of, the right of way of such street, highway, alley, sidewalk or other public way or place, or the ways adjoining any of the foregoing, by the first local public entity to acquire the property or right of way, to standards which are or may be applicable or are imposed by any government or other person or organization between the time of such dedication and the time of such injury.
(c) Nothing in this Section shall relieve the local public entity of the duty to exercise ordinary care in the maintenance of its property as set forth in Section 3 — 102.” (Emphasis added.) Ill. Rev. Stat. 1987, ch. 85, pars. 3 — 105(b), (c).

The documents before the court at the time summary judgment was entered undisputedly showed that (1) the minor was injured in the manner alleged in the second-amended complaint; (2) the road and sewer grate over which Jessica was riding when she was injured were part of a paving improvement project started in 1964 and completed in 1966; (3) the type of sewer grate used at that time was recommended in the plans and specifications for the project by the Illinois Department of Transportation; (4) the improvement project was a joint effort of the City and Tazewell County; (5) by agreement entered into in 1965, the City agreed to maintain the portions of the road involved; (6) on the side of the road where the bicycle was being ridden, white stripes had been painted four feet from the curb in 1984; (7) except for the painting of the stripes, the area where the injury occurred was in the same condition as it was at the completion of the improvement; and (8) since sometime in the 1970’s, the proper standard for sewer grates required they have some sort of crossbars or bars at an angle such that a bicycle wheel, when ridden over them, would be unlikely to fall through the grates.

The circuit court’s decision to grant summary judgment to the City was based on a theory that section 3 — 105(b) of the Act, which concerns immunity granted local public entities in regard to failure to upgrade existing facilities and structures, relieved the City of any liability arising from the injuries to the minor. The City maintains this rule was correct because (1) the grating conformed to standards applicable when installed in the mid-1960’s; and (2) under the provisions of section 3 — 105(b), the City had no duty to upgrade the grating to meet the higher standards existing at the time of the injury to the minor. We conclude the analysis by the circuit court and the City incorrectly interpreted section 3 — 105(b) of the Act to be concerned with upgrading of facilities from standards existing when construction takes place, when actually section 3 — 105 is concerned with upgrading facilities on property dedicated to or acquired by a local governmental entity from the standards existing at the time of dedication or acquisition.

Section 3 — 105(b) of the Act states “neither a local public entity nor a public employee is liable for any injury caused by the failure *** to upgrade any existing street *** from the standards *** which existed at the time of the original dedication to, or acquisition of, the right of way *** by the first local public entity to acquire the prop erty or right of way, to standards *** applicable or are imposed *** between the time of such dedication and the time of such injury.” (Emphasis added.) (Ill. Rev. Stat. 1987, ch. 85, par. 3 — 105(b).) The language used clearly indicates the immunity granted concerns the upgrading of streets, et cetera, existing at the time of dedication of the street, et cetera, to public use or acquisition of the street by the first public entity to standards existing at the time of injury. The statutory provision is not keyed, as the City contends, to standards existing when an improvement is made to an existing roadway. Here, there is no evidence as to how or when the roadway was acquired by the first local entity or as to what appropriate standards were at that time.

If, as the City maintains, section 3 — 105(b) is keyed to the time an improvement is made to an existing street, then it would conflict with and repeal a substantial part of section 3 — 103(a) of the Act, which relieves a local public entity of liability as to defects of design but does not extend that immunity when “after the execution of such plan or design it appears from its use that it has created a condition that *** is not reasonably safe.” (Ill. Rev. Stat. 1987, ch. 85, par. 3 — 103(a).) The only legislative history to section 3 — 105 arises from a question asked on the floor of the House of Representatives concerning the effect of weather conditions in relation to the immunity granted by section 3 — 105. (84th Ill. Gen. Assem., House Proceedings, June 30, 1986, at 14.) This question obviously involved section 3 — 105(a), which concerns weather conditions.

In the absence of other explanation and in review of the wording of section 3 — 105(b) of the Act, we are persuaded the purpose of that subsection is to relieve local public entities from responsibility for upgrading streets and related facilities, particularly those in subdivisions dedicated by the subdivider when, at the time of the dedication or other acquisition, the streets and facilities meet the then existing standards. In areas of rapid growth, local public entities would be taking on a very substantial burden if they were required to upgrade all of the facilities described in section 3 — 105(b) every time the standard for those facilities rises. The public entity to which property is dedicated or by which property is acquired cannot receive any immunity for design defects as to facilities acquired under section 3 — 103(a) of the Act, which only applies to “construction of, or an improvement to public property.” Ill. Rev. Stat. 1987, ch. 85, par. 3 — 103(a).

As section 3 — 105(b) is not applicable here, the immunity which the City can claim must arise from sections 3 — 102(a) or 3 — 103(a) of the Act. Under section 3 — 102(a), the City had no immunity from a duty to maintain its property in a reasonably safe condition and to exercise ordinary care for people using the property in a foreseeable manner as long as it had actual or constructive notice of a dangerous condition for a reasonable length of time to correct the condition. Under section 3 — 103(a) of the Act, the City has immunity for the plan or design of the sewer grating, because the record shows the then Illinois Department of Public Works approved the design at the time of the construction project. However, under section 3 — 103(a), the City does not have immunity, if after the sewer grating was put in, “it [appeared] from its use that [the design] has created a condition that it is not reasonably safe.” Ill. Rev. Stat. 1987, ch. 85, par. 3 — 103(a).

The documents properly before the court at the time of entry of summary judgment showed evidence existed that (1) since at least 1979, the City knew of the danger of the type of grates used and had replaced grates which were broken or damaged with those containing safety features; (2) the area of the street where the minor’s injuries occurred had an extended white line four feet from the curb on the side of the grate; (3) the area between the white line and the nearest curb was being used extensively by bicyclists and pedestrians; and (4) prior to the injury to the minor, the City had notice that another bicyclist had been injured when a wheel of a bicycle ridden by that person had fallen through a similar grate.

Citing Swett v. Village of Algonquin (1988), 169 Ill. App. 3d 78, 523 N.E.2d 594, the City maintains the Act does not create duties upon a local public entity or its employees but merely provides for immunity under conditions where liability would result at common law. The City concedes that section 3 — 102(a) recites the common law duty of a local public entity in regard to maintenance, but indicates that duty is the only duty upon a local public entity, and that the provision of section 3 — 103(a), that a local public entity has liability “if after the execution of such plan or design it appears from its use that it has created a condition that *** is not reasonably safe” (Ill. Rev. Stat. 1987, ch. 85, par. 3 — 103(a)), neither creates a duty nor recites one which is not covered by section 3 — 102(a). (See Swett, 169 Ill. App. 3d at 95, 523 N.E .2d at 606.) We need not decide whether that is correct because we conclude that even if plaintiff must prove a cause of action under section 3 — 102(a) of the Act, a sufficient showing was made that a factual question exists in that regard.

The necessary factual question of liability is raised here by evidence that (1) the City ordered a white line painted a distance from the curb (four feet), indicating an intention the area be used by others than those driving automobiles; (2) the City became aware the area was being used by many bicyclists; (3) the City became aware that at least one person had been injured locally when a bicycle tire was caught between similar grates; and (4) the City had become aware that the type of grates used did not meet then existing standards and replaced parallel grates when they were damaged. Thus, evidence was produced that the City both intended and permitted cyclists to use the four-foot strip; it was foreseeable that the use would continue; the condition was unsafe; and the City had a reasonable time to remedy the condition of the grate, all as required by section 3 — 102(a) in order to negate immunity. In addition, the evidence could be taken to indicate the execution of the plan for the construction in the 1960’s and the use of the street had created an unsafe condition as described by section 3 — 103(a) as creating liability.

Accordingly, summary judgment in favor of the City should not have been entered. We reverse and remand to the circuit court of Tazewell County for further proceedings.

Reversed and remanded.

KNECHT and STEIGMANN, JJ., concur.


text:
    JOHN BANKS et al., Plaintiffs-Appellees, v. R.D. WERNER COMPANY, Defendant-Appellant (Kipley Construction Company, Defendant; Edwards Engineering Company, Third-Party Defendant-Appellee).
    First District (6th Division)
    No. 1-89-0923
    Opinion filed July 27, 1990.

      Tribler & Marwedel, P.C., of Chicago (Mitchell A. Orpett and Michael R. Stiff, of counsel), for appellant.
    Winkler & Gorey, of North Riverside (Stuart K. Jones, of counsel), for appellees John Banks and Donald Neumann.
    Sweeney & Riman, Ltd., of Chicago (Georgene M. Wilson, of counsel), for appellee Edwards Engineering Company.
   JUSTICE EGAN

delivered the opinion of the court:

This appeal involves settlements between the plaintiffs and their employer, which would operate to bar the defendant’s right to contribution from the employer. The trial judge upheld the validity of the settlements. The sole issue is whether the judge’s finding that the settlements were made in good faith was against the manifest weight of the evidence.

On July 18, 1986, the plaintiffs, John Banks (Banks) and Donald Neumann (Neumann), were employed by Edwards Engineering Company (Edwards) and were injured when a plywood plank upon which they were standing dislodged from a scaffold, causing the plaintiffs to fall 10 feet to the ground. The defendant, R.D. Werner Co., Inc. (Werner), manufactured the plank. Kipley Construction Company (Kipley) was the general contractor for the work project. Edwards leased the scaffold from a company which is not involved in this case.

On June 9, 1988, the plaintiffs, by their attorney Charles R. Winkler, filed a two-count complaint against the defendants, Kipley and Werner. Count I, naming only Kipley, alleged violations of the Structural Work Act (Ill. Rev Stat. 1987, ch. 48, par. 60 et seq.). Count II, naming only Werner, alleged a cause of action in strict tort liability for the unreasonably dangerous defects in the scaffolding plank manufactured by Werner. Both Werner and Kipley filed answers and initiated discovery.

On August 18, 1988, Edwards, which was not then a party to the lawsuit, filed a motion seeking approval of two proposed settlements and good-faith findings pursuant to the Contribution Act (Ill. Rev. Stat. 1987, ch. 70, par. 301 et seq.). One settlement was between “the plaintiff, John Banks, and Edwards Engineering and Donald Neumann, settling parties, by and through their respective counsel.” The other settlement was between “the plaintiff, Donald Neumann, Edwards Engineering and John Banks, settling parties by and through their respective counsel.” The motion was submitted jointly by Charles Winkler, as attorney for the plaintiffs, and the firm of Sweeney and Riman, as “attorneys for settling parties.”

The text and the substance of the motions were substantially the same. They indicated that, in full settlement of all the individual claims of the respective plaintiffs and against the respective “settling parties,” Edwards and Neumann would pay Banks $8,000, and Edwards and Banks would pay Neumann $7,000. The settling parties in the motions sought “discharge from any further liability to the plaintiff or any other tortfeasor pursuant to the common and statutory law of the State of Illinois, including but not limited to the Illinois Contribution Statute.” The settlements were contingent upon approval by the trial court, including a finding of good faith under the Contribution Act. Both motions included the affidavit of Winkler, as attorney for the plaintiffs, and the affidavit of Marvin Riman, as attorney for Edwards.

Winkler’s affidavit stated that he was the attorney for Banks and Neumann and that he had been involved personally in negotiating each proposed settlement. He believed the settlements to be fair and reasonable to all involved parties and to be in good faith. The motivation of each plaintiff in negotiating each settlement was to advance or maximize that plaintiff’s own interest. Winkler was “unaware of any collusion, bad faith or any other improper motivation of any party to the proposed settlement, including any intent to improperly prejudice any person or entity not a party to the proposed settlement.”

Riman’s affidavit stated that he also believed the settlements to be fair and reasonable to all involved parties and to be in good faith. He said that the motivation of the settling parties in negotiating was to advance or maximize the interest of the settling parties. Again, like Winkler, he was unaware of any collusion, bad faith or any other improper motivation of any party to the proposed settlement.

After the court set a briefing schedule for the motion, the time for Werner’s response was extended, and the settling parties were ordered to comply with Werner’s discovery requests.

On October 28, 1988, Banks filed answers to the interrogatories of Kipley and Werner. The answers to Werner’s interrogatories included as attachments reports prepared by Herbert J. Thomiszer of Triodyne, a consulting firm. Triodyne had performed an inspection and analysis of the scaffolding for Edwards’ workers’ compensation carrier, American Country Insurance Company (American Country). Thomiszer stated, “With regard to the scaffold deck, it is my opinion that the artifact scaffold deck was foreseeably, unreasonably dangerous.”

On October 25, 1988, Werner deposed Riman. Riman initially was retained by American Country during the insurer’s defense of the workers’ compensation claim against Edwards. Riman was not responsible for the workers’ compensation matter but was solicited for an opinion regarding the common law and statutory aspects of the plaintiffs’ accident; he prepared a written opinion regarding the matter, consulted with the engineers from Triodyne, discussed the case with the plaintiffs’ attorney, participated in the preparation of the proposed settlement agreement and drafted his affidavit.

Before negotiating the proposed settlement, Riman consulted with American Country and his partner handling the workers’ compensation claim; he read his firm’s file on the workers’ compensation claim. Riman contacted Winkler and told him that “he had a crappy case as far as [Riman’s] people were concerned.” He told Winkler, “As far as I was concerned if he was thinking about a structural case I don’t think he had a valid structural case, but I told him I thought I could probably give him a pretty good products case.” Riman supported his opinion regarding the Structural Work Act case as follows:

“[T]he reason I thought he had a cruddy case on the Structural Work Act *** was that as far as I was concerned there was no willful violation, and there couldn’t be any evidence of a willful violation as I understood the facts. Plus the fact that I told him I could probably give him a decent products case.”

Riman also said that the statements of Banks and Neumann regarding the erection of the scaffold, what they were doing and how they got there contributed to his conclusion that the structural case was not a good one.

Riman described his negotiations with Winkler as follows:

“A. I told [Winkler] I would get him about $15,000, and I would split it just about evenly. Although, I thought one of his men probably lost a little bit more time than the other. And as far as I was concerned, the money wasn’t really terribly important. It was kind of a cost of defense off [sic: offer?]. And of course I would give him the information we had that would provide him with the basis for a products liability claim against the two [sic] tortfeasors.
Q. So you exchanged information or you gave him information from your files?
A. I gave him information from my files. I got nothing from him.
Q. He eventually agreed to the $15,000 price?
A. Yes. I think he was impressed with what I said.”

Riman thought that “[the $15,000] plus the fact that [he] had provided information to the plaintiffs’ attorney about what the proximate cause of the injuries may have been and also provided him with information which was valuable and costly, that [was] an additional consideration.”

Riman based his opinion regarding the existence of a good products liability case on the report of Thomiszer, the engineer hired by Triodyne, whom American Country retained for analysis of the scaffold. Riman specifically recalled that the report indicated that the hooks on the scaffold were unreasonably dangerous, that the manufacturer used the wrong steel and that the failure of the hooks resulted from that design defect. Riman concluded that these points were “sufficient for [him] to reach the legal opinion that there was a products failure, and *** that a products liability case was viable.”

Before the filing of the proposed settlement, Riman had available to him some information from his firm’s workers’ compensation file regarding the damages suffered by the plaintiffs. That information included the medical reports and information regarding loss of earnings and time lost from employment by Banks and Neumann.

On October 6, 1988, Werner deposed Winkler. Winkler based his opinion that the settlement was fair and in good faith on the Triodyne report indicating that a defective scaffold plank caused the plaintiffs’ injuries; the expert Thomiszer had also reported that in his opinion few workers or contractors would inspect on a daily basis a scaffold such as was used. One reason was that the defect was not readily “visible and/or understandable as to its significance.” Winkler estimated the combined liability of Kipley and Edwards to be no more than 10% of the total case, which he valued at about $300,000 for both plaintiffs. He indicated that he based his settlement on 10% of $300,000, divided evenly between Kipley and Edwards which comes to $15,000 for each. His 27 years’ experience in personal injury litigation contributed to his opinion.

Winkler acknowledged the existence of a $40,000- to $50,000-com-pensation lien which had not been waived and which would, if American Country insisted on full payment, be payable out of any subsequent recovery by the plaintiff against Werner. He claimed that no thought was ever given to the lien because “the law is very clear that *** the plaintiffs would have to pay that back if [they] were successful.” He knew of no agreement or understanding between the parties that the workers’ compensation carrier would not seek to enforce its lien. Nor did he know if the carrier would seek 100% recovery of its lien.

On November 9, 1988, Kipley received leave to file a third-party complaint against Edwards. Edwards was given leave to file its appearance and to incorporate its previously filed petition for a good-faith finding as its motion to dismiss Kipley’s third-party complaint.

On December 19, 1988, Kipley filed a motion for a good-faith finding of a settlement between Kipley and the plaintiffs. The plaintiffs were to receive $2,500 from Kipley. Werner did not file a response to this motion.

On February 1, 1989, Neumann filed his answers to Werner’s interrogatories. His answers provided basically the same information as had Banks’ answers to interrogatories filed in October 1988.

On March 3, 1989, the judge conducted a hearing on the motions regarding the proposed settlements. In Werner’s response to the plaintiffs’ and Edwards’ motion to approve the settlement, Werner relied on the answers to interrogatories by Banks, the deposition of Banks, documents from Edwards, documents and photographs from Triodyne, and the depositions of Winkler and Riman. At the conclusion of the hearing, the trial judge said the following:

“I will grant the petition. As I said before the conditional aspect of the settlement is not sufficient to destroy the petition. Additionally, I think to include the company employees [Banks and Neumann] in the petition is also reasonable due to the fact that the settlement joint tortfeasor[,] if liable for the negligent act, it is reasonable to include them.
And, lastly, I find it to be in good faith as the expert stated that the scaffold defect would be very difficult to detect with the human eye and, therefore, the potential liability of the employer [Edwards] and the general contractor [Kipley] would be minimal.
And the deposition of plaintiff’s attorney [Winkler] was taken as an experienced attorney, and he has evaluated the case[,] and I am not going to disagree with his evaluation of the case either.”

The judge also found that Werner had sufficient opportunity to investigate the good-faith issue.

The judge entered three orders: He approved the settlement between Banks as a plaintiff and Neumann and Edwards as settling parties; he approved the settlement between Kipley and the plaintiffs Banks and Neumann; and he approved the settlement between Neumann as a plaintiff and Banks and Edwards as settling parties. Werner appeals only from the order approving the settlement between Neumann as plaintiff and Banks and Edwards as settling parties.

A discussion of the applicable law must begin with the Contribution Act itself. The pertinent provisions of the Act are as follows:

“(c) When a release or covenant not to sue or not to enforce judgment is given in good faith to one or more persons liable in tort arising out of the same injury or the same wrongful death, it does not discharge any of the other tortfeasors from liability for the injury or wrongful death unless its terms so provide but it reduces the recovery on any claim against the others to the extent of any amount stated in the release or the covenant, or in the amount of the consideration actually paid for it, whichever is greater.
(d) The tortfeasor who settles with a claimant pursuant to paragraph (c) is discharged from all liability for any contribution to any other tortfeasor.” Ill. Rev. Stat. 1987, ch. 70, pars. 302(c), (d).

A recent case construing the Act involved a settlement between an employee and employer. (Wilson v. The Hoffman Group, Inc. (1989), 131 Ill. 2d 308, 546 N.E.2d 524.) In that case the court held that all the surrounding circumstances must be considered in determining whether an agreement was made in good faith. It also held that once a preliminary showing of a good-faith settlement has been made, the burden shifts to the party challenging the settlement to establish that it was not made in good faith.

The court also expressly overruled LeMaster v. Amsted Industries, Inc. (1982), 110 Ill. App. 3d 729, 442 N.E.2d 1367, which had held that a settlement between an employee and his employer lacked consideration and was not in good faith because the employee had no rights which he could relinquish in exchange for a workers’ compensation lien waiver and a cash payment. In overruling LeMaster, the supreme court reasoned thus:

“It would be incongruous for us to hold that while an employer is subject to liability in tort under the Contribution Act, it cannot avail itself of the Act’s provisions to discharge that liability. Consequently, we hold that [the employee’s] release constituted consideration under the Contribution Act and that its acceptance constituted a valid settlement between [the employee] and [the employer].” Wilson, 131 Ill. 2d at 318.

The supreme court in Wilson made no expression as to the required standard of proof. The appellate courts that have addressed the issue have uniformly held that where a preliminary showing of good-faith settlement is made, a presumption of validity arises and that the burden shifts to the party opposing settlement, who must prove by clear and convincing evidence that the settlement is invalid. (See, e.g., Ruffino v. Hinze (1989), 181 Ill. App. 3d 827, 537 N.E.2d 871; Wasmund v. Metropolitan Sanitary District (1985), 135 Ill. App. 3d 926, 482 N.E.2d 351.) Our task, therefore, is to determine, as a matter of law, whether the plaintiffs and Edwards have made a preliminary showing of good faith, and if so, whether Werner has overcome the presumption of validity of the agreement by clear and convincing evidence.

Edwards has paid, and the plaintiffs have received, a total of $15,000 which may be the only money the plaintiffs will receive other than workers’ compensation awards. In addition, Edwards has made the plaintiffs aware of an expert who will assist the plaintiffs in establishing their case against Werner. In return Edwards has received a release from the plaintiffs for any potential tort liability to them. Therefore, under Wilson the agreement was supported by some consideration.

We are not persuaded to hold otherwise because the workers’ compensation carrier, American Country (not Edwards), has so far not waived its lien. Failure of even an employer to waive a workers’ compensation lien does not ipso facto render a settlement invalid as having been made in bad faith. (Cleveringa v. J.I. Case Co. (1989), 192 Ill. App. 3d 1081, 549 N.E.2d 877.) For comparison purposes the defendant cites a number of cases which upheld settlements. In all these cases the employers (or the workers’ compensation carriers) waived their lien. From those cases, the defendant extracts a legal principle that failure, to waive the lien renders the settlement invalid. The defendant’s conclusion is based on faulty logic. It is true that the evidence of consideration in those cases was stronger than the evidence in this case. However, the test is not whether the evidence of consideration could have been stronger in this case; the test is whether it was strong enough.

The plaintiffs also established that their lawyer of 27 years’ experience, specializing in the practice of personal injury law, made a judgment that the Structural Work Act case against Kipley and Edwards was a weak one. That his judgment was not a result of collusion with Edwards is buttressed by the fact that he settled the case with the general contractor, Kipley, for only $2,500. In our judgment, the plaintiffs and Edwards made a sufficient preliminary showing of good faith that shifted the burden to Werner to overcome that showing by clear and convincing evidence.

Werner relies on the following arguments:

(1) Edwards has not waived its workers’ compensation lien; therefore, the consideration flowing to the plaintiffs is virtually nonexistent.

(2) Because the plaintiffs were represented by the same attorney, Winkler, the agreement between the plaintiffs was not made in good faith.

(3) The settlements were entered into only two months after the suit was filed.

(4) The “provision” by Edwards to the plaintiffs of the expert’s opinions indicates a lack of good faith.

(5) Winkler’s investigation of the potential case against Edwards was perfunctory and, therefore, legally insufficient.

We will first consider the argument that Winkler represented both plaintiffs and that, therefore, a potential conflict of interest existed between Banks and Neumann (an argument not made in the trial court). As an abstract proposition, that might be true. We emphasize that it might be true because we are unable to reasonably conjure any set of facts that would establish any cause of action by Banks against Neumann or by Neumann against Banks.

At this juncture it is appropriate to discuss the procedures followed by the parties in the trial court, because Werner suggests in this court that its ability to present evidence was curtailed in the trial court. The record does not support that suggestion as the trial judge so found.

Beginning on August 30, 1988, Werner was given a number of extensions of time to respond to the motion for approval of a good-faith settlement. Werner filed its response on December 14, 1988, 3V2 months later. Although the response complained that “there has been little time to conduct thorough discovery in this case,” Werner did not make any request for any additional time. Banks had answered interrogatories and had been deposed. At the time of the hearing, Neumann had answered interrogatories. Werner’s response expressly noted that it was relying in part on Banks’ answers to interrogatories and Banks’ deposition. And yet, Werner made no showing in the trial court or in this court of any possible cause of action between Banks and Neumann. Consequently, we must infer that there is none and that no conflict of interest existed because of Winkler’s representation of both plaintiffs.

We have already answered Werner’s argument that the failure of Edwards to waive its workers’ compensation lien necessarily precludes the finding of a good-faith settlement.

Werner’s third and fifth arguments may be treated together. It argues that lack of good faith is illustrated because the settlements were entered into only two months after the suit was filed and that Winkler’s investigation of the potential case against Edwards was perfunctory and, therefore, legally insufficient.

We know of no case that considered significant the time lapse between the filing of the complaint and the proposed settlement. In any event, the record is clear that Triodyne first made its report to American Country in June 1987; it made another report on August 18, 1987; and a final report on September 14, 1987. Riman examined the reports of Triodyne and contacted Winkler before the suit was filed. Considering the sequence of events to which Riman testified, it is fair to assume that the initial conversation between Riman and Winkler took place, at the latest, around September 14, 1987, nine months before the suit was filed. Consequently, the two-month lapse of timS between the filing of the suit and the date of settlement has no significance.

Similarly, it cannot be said that Werner has shown inadequate investigation, as a matter of law, on the part of Winkler. Winkler, as noted, has been specializing in the practice of personal injury law for over 27 years. It would unduly lengthen this opinion to repeat all of his deposition testimony. It is enough to say that his answers disclose sufficient investigation of the plaintiffs’ claims on his part and substantial reasons in support of his judgment to settle with Edwards.

In oral argument in this court, Werner’s attorney has asked this court to express, as a matter of law, minimum standards of conduct to be followed by settling attorneys in investigating claims. We must decline to do so; if such an expression is to be made, it must be made by the highest court of review of this State, not an intermediate one.

Werner’s last argument focuses on the expert’s report that Riman made available to Winkler. The following are expressions of Werner in describing the effect of the Triodyne reports: “Edwards, in collusion with Neumann, has created and managed testimony unfavorable to Werner”; “Edwards, Banks and Neumann have reduced the Contribution Act to a litigant’s black market where evidence can be created by one party and bartered and sold to another away from the watchful eye of formal discovery anticipated by the Illinois Supreme Court Rules.”

Werner’s argument and quoted statements, in our judgment, would have been better left unsaid. There is nothing in the record to support the statement that Edwards “created” or “managed” testimony. Riman’s firm was retained by American Country to represent Edwards in the plaintiffs’ workers’ compensation claim. Riman was asked to render an opinion as to Edwards’ common law or statutory liability. Before rendering his opinion he examined a report from Triodyne, the expert that American Country had already retained. After noting some ambiguities in the report, he conferred with Triodyne. After resolving those ambiguities, he concluded that the Structural Work Act case against Edwards was extremely weak. He anticipated, correctly, that if Edwards was named as a third-party defendant, it would incur costs of defense expenses. In a desire to extricate his client from what he considered to be nonexistent liability, he contacted Winkler. Consequently, Banks and Neumann had no knowledge of the Triodyne report until after Riman contacted Winkler. American Country, not Edwards, retained Triodyne. Therefore, it is manifestly unfair to suggest that Edwards, Banks and Neumann “created” and “managed” the Triodyne report. In sum, there is no proof, there is not even a hint, of any improper conduct on the part of Edwards, Banks, Neumann, Riman or Winkler.

This case, like so many other cases, involves the discretion of a trial judge. Our response, like the response of reviewing courts in so many other cases, is that it is not our function to substitute our judgment for that of the trial judge unless it is clear to us that the trial judge abused his discretion. Considering the totality of the circumstances, we cannot say that the judge abused his discretion.

Werner next argues that the motion for a good-faith finding constituted an improper request for an advisory opinion. It is Werner’s contention that Edwards should not have been permitted to obtain a ruling that a proposed settlement, which was conditioned upon the issuance of a good-faith finding, would be made in good faith. In other words, Edwards should have settled and taken its chances that the trial court would uphold the settlement. We have found no case precisely in point. The cases cited by Edwards are not apposite. In Wilson v. The Hoffman Group, Inc. (1989), 131 Ill. 2d 308, 546 N.E.2d 524, the trial court initially refused to certify the settlement as being in good faith; the settling parties then “waived the condition that a good-faith finding be entered, and consummated the settlement.” (131 Ill. 2d at 312.) In Dixon v. Northwestern Publishing Co. (1988), 166 Ill. App. 3d 745, 520 N.E.2d 932, the parties did enter into a conditional settlement, but the conditional nature of the settlement was not addressed in the appellate court’s opinion.

Werner relies on Madison Associates v. Bass (1987), 158 Ill. App. 3d 526, 511 N.E.2d 690. That case involved a landlord’s suit on a lease; the lessee counterclaimed and alleged that the landlord had fraudulently induced him to sign a settlement agreement. The trial judge entered summary judgment for the landlord on the fraud counterclaim. The appellate court held that the landlord had established a settlement document, “legal and binding on its face,” that the burden then shifted to the tenant to show that the settlement was invalid and that the tenant had not done so. That case also is not in point.

We believe, however, that the judge’s order was not merely an advisory opinion; that it was in the nature of a declaratory judgment. It is true that Edwards filed the motion before establishing that an actual controversy existed between Edwards and Werner. (See Clyde Savings & Loan Association v. May Department Stores (1981), 100 Ill. App. 3d 189, 426 N.E.2d 955.) But it is now apparent that a controversy does exist between them. Therefore, no purpose would be served by remanding this cause for a new hearing only to have the motion recaptioned a complaint for declaratory judgment. The substance of the pleading should be considered rather than the form. See Quinlan & Tyson v. City of Evanston (1975), 25 Ill. App. 3d 879, 324 N.E.2d 65.

Werner’s final argument is that the proposed settlement is so disproportionate to the culpability of the parties that the operation of the Contribution Act in this case deprives Werner of a “complete and full remedy” in violation of article I, section 12, of the Illinois Constitution of 1970. The cited constitutional provision states as follows:

“Every person shall find a certain remedy in the laws for all injuries and wrongs which he receives to his person, privacy, property or reputation. He shall obtain justice by law, freely, completely, and promptly.” Ill. Const. 1970, art. I, §12.

The court in 0 ’Connor v. Pinto Trucking Service, Inc. (1986), 149 App. 3d 911, 501 N.E.2d 263, addressed virtually the same argument and found no constitutional violation. Werner attempts to distinguish this case from O’Connor on the basis that Werner is complaining of an incomplete remedy, rather than no remedy at all, which was the argument raised in O’Connor. We believe that the distinction suggested by Werner is no distinction and that 0 ’Connor is controlling.

For all these reasons, the judgment of the circuit court is affirmed.

Judgment affirmed.

LaPORTA, P.J., and RAKOWSKI, J., concur.