text:
    THOMAS LAVELLE, Plaintiff, v. DOMINICK’S FINER FOODS, INC., et al., Defendants (Dominick’s Finer Foods, Inc., Third-Party Plaintiff-Appellant; K & S Sprinklers, Inc., Third-Party Defendant-Appellee).
    First District (4th Division)
    No. 1—91—0449
    Opinion filed March 26, 1992.

      James N. Kosmond, Michael Resis, and Ellen L. Karecki, all of Querrey & Harrow, Ltd., of Chicago, for appellant.
    Frank J. Smith, of Murphy & Smith, Ltd., of Chicago, for appellee.
   PRESIDING JUSTICE JIGANTI

delivered the opinion of the court:

Dominick’s Finer Foods, Inc., appeals from an order granting K & S Sprinklers, Inc.’s motion to dismiss two counts of the third-party complaint. The complaint sought contractual indemnity from K & S and damages for K & S’s failure to obtain insurance coverage.

Dominick’s and K & S entered into a written contract for the installation of a fire protection sprinkler system in a Dominick’s store located in Chicago. After K & S completed its work, Dominick’s made final payments. The plaintiff, Thomas Lavelle, an employee of K & S, was injured when he fell while performing sprinkler installation work at the Dominick’s store. Lavelle filed a complaint alleging negligence and violation of the Structural Work Act (Ill. Rev. Sat. 1989, ch. 48, par. 60 et seq.) to recover damages for his personal injuries and named Dominick’s as one of several defendants.

Dominick’s filed a third-party complaint against K & S. In count I, which is not a subject of this appeal, Dominick’s sought contribution from K & S for any damages assessed against Dominick’s in the event it was found liable to the plaintiff. In count II of the third-party complaint, Dominick’s sought indemnity from K & S pursuant to a contractual indemnity agreement. Count III alleged that K & S breached its contractual agreement with Dominick’s to obtain insurance naming Dominick’s as an additional insured.

K & S filed a motion to dismiss counts II and III of the third-party complaint pursuant to section 2 — 619 of the Illinois Code of Civil Procedure. (111. Rev. Stat. 1987, ch. 110, par. 2 — 619.) In its motion to dismiss, K & S argued that both counts II and III were expressly waived in a provision of the contract wherein Dominick’s, upon final payment for completion of K & S’s work, waived all claims against K & S. In the alternative, K & S argued, count II of the counterclaim must be dismissed, as a matter of law, because Dominick’s was seeking indemnification for its own negligence, prohibited under section 1 of the Illinois indemnification contracts or agreements act.

K & S further argued that count III of Dominick’s counterclaim must also be dismissed, as a matter of law, because Dominick’s impliedly waived the requirement for K & S to provide it with insurance when it failed to require K & S to file certificates of insurance prior to allowing K & S to begin work on the project. The trial court granted K & S’s motion and dismissed counts II and III of the complaint.

We first address the issue of the provision in the contract which K & S argues serves as an express waiver of all of Dominick’s claims upon final payment. The specific provision reads as follows:

“ARTICLE 15
PAYMENTS AND COMPLETION
15.5 The making of final payments shall constitute a waiver of all claims by the Owner except those arising from (1) unsettled liens, (2) faulty or defective Work appearing after Substantial Completion, (3) failure of the Work to comply with the requirements of the Contract Documents, or (4) terms of any special warranties required by the Contract Documents. The acceptance of final payment shall constitute a waiver of all claims by the Contractor except those previously made in writing and identified by the Contractor as unsettled at the time of the final Application for Payment.”

K & S argues that the language of this portion of the contract is clear and unambiguous and should be construed to mean that, upon final payment to K & S, Dominick’s waived all of its claims, including its claim for indemnification and insurance.

Dominick’s, on the other hand, urges this court to view the waiver provision in the context of the entire contract. In particular, Dominick’s points out that the waiver provision is found in an article of the contract concerning the progress of the work and compliance with the project specifications and was intended to operate as a waiver of claims which arose out of the completed work.

Dominick’s further argues that any other interpretation of the waiver provision would render meaningless the indemnity and insurance provisions contained in the agreement since any claims which Dominick’s would have against K & S for indemnification or breach of contract for failure to provide insurance were unlikely to arise or be discovered until after completion of the installation work.

It is the duty of the court to interpret a contract in accordance with the intention of the parties. (Continental Assurance Co. v. Commonwealth Edison Co. (1990), 194 Ill. App. 3d 1085, 551 N.E.2d 1054; Stamatakis Industries, Inc. v. King (1987), 165 Ill. App. 3d 879, 520 N.E.2d 770.) The court should give effect to the parties’ intentions as determined by the language of the agreement. (West Suburban Mass Transit District v. Consolidated Rail Corp. (1991), 210 Ill. App. 3d 484, 569 N.E.2d 187.) Further, contracts should be interpreted as a whole, giving meaning and effect to each provision. (In re Support of Halas (1984), 104 Ill. 2d 83, 470 N.E.2d 960; St. John v. City of Naperville (1987), 155 Ill. App. 3d 919, 508 N.E.2d 1128.) If the terms of a contract are ambiguous, or capable of more than one interpretation, parol evidence is admissible to ascertain the parties’ intent. (Quake Construction, Inc. v. American Airlines, Inc. (1990), 141 Ill. 2d 281, 565 N.E.2d 990.) Language in a contract is not rendered ambiguous simply because the parties do not agree upon its meaning. (Reynolds v. Coleman (1988), 173 Ill. App. 3d 585, 527 N.E.2d 897.) Where the contractual provisions are unambiguous, the court will enforce them according to their plain meaning. Thornton v. Illinois Founders Insurance Co. (1981), 84 Ill. 2d 365, 418 N.E.2d 744.

Neither of the parties has argued that the language of this provision in their contract is ambiguous. Rather, they argue different interpretations of the language. In considering the contract as a whole, we note that article 15 is one of 20 articles in the contract. Article 15 is entitled “Payments and Completion,” and the provisions within this section of the contract concern payment for the work performed. In the waiver provision of article 15, the owner agrees to waive “all claims” except for four itemized categories of claims. These exceptions to the claims which the owner agrees to waive are all related to the work performed by the contractor. Within the context of the entire document, we believe the waiver provision refers specifically to waiving “all claims” which are work related except for the four work-related exceptions. We do not believe that it was the parties’ intent that Dominick’s agree to waive any conceivable claim that it may have in the future against K & S upon final payment for the work. In particular, we do not believe that the parties intended to waive any future claims for indemnification or insurance. Accordingly, we find that Dominick’s did not waive its claim for indemnification and breach of contract to procure insurance, as set forth in counts II and III of its complaint.

We next address Dominick’s contention that count II of the third-party complaint stated a claim for contractual indemnity which should not have been dismissed at the pleading stage. The following provisions in the contract are at issue. The addendum to the contract states:

“Contractor shall indemnify Dominick’s Finer Foods, Inc. its agents and employees from any and all loss, claims, demands caused in whole or in part by any negligent or intentional act or omission of the contractor. This indemnification shall in no way limit the indemnification of Article 10.11 of the Abbreviated Form of Agreement Between Owner and Contractor which is incorporated in its entirety by reference.”

Section 10.11 of the contract provides:

“To the fullest extent permitted by law, the Contractor shall indemnify and hold harmless the Owner and the Architect and their agents and employees from and against all claims, damages, losses and expenses, including but not limited to attorneys’ fees arising out of or resulting from the performance of the Work, provided that any such claim, damage, loss or expense (1) is attributable to bodily injury, sickness, disease or death, or to injury to or destruction of tangible property (other than the Work itself) including the loss of use resulting therefrom, and (2) is caused in whole or in part by any negligent act or omission of the Contractor, any Subcontractor, anyone directly or indirectly employed by any of them or anyone for whose acts any of them may be liable, regardless of whether or not it is caused in part by a party indemnified hereunder. Such obligation shall not be construed to negate, abridge, or otherwise reduce any other right or obligation of indemnity which would otherwise exist as to any party or person described in this Paragraph 10.11.”

K & S argues that the indemnity provisions in the contract clearly provide that K & S is to indemnify Dominick’s for its own negligence, proscribed by statute in Illinois as void as against public policy. K & S specifically refers to the language providing for indemnification “ ‘in whole or in part *** by anyone for whose acts any of them may be liable, regardless of whether or not it is caused in part by a party indemnified hereunder.’ ” K & S contends that this language requires K & S to indemnify Dominick’s for Dominick’s own negligence. Dominick’s, on the other hand, argues that its liability and entitlement to indemnification could result from the negligence of another party in the event it were found jointly and severally liable with other defendants who were unable to pay their share of the judgment.

Section 1 of “An Act in relation to indemnity in certain contracts” (Indemnity Act) (Ill. Rev. Stat. 1985, ch. 29, par. 61) provides:

“With respect to contracts or agreements, either public or private, for the construction, alteration, repair or maintenance of a building, structure *** or other work dealing with construction, *** every covenant, promise or agreement to indemnify or hold harmless another person from that person’s own negligence is void as against public policy and wholly unenforceable.”

In order for Dominick’s to invoke the protection afforded by the indemnity agreement contained in its contract with K & S, it must first be found liable either in negligence or for violation of the Structural Work Act. A contract which purports to relieve a tortfeasor of some or all of its liability, premised upon its own negligence, cannot stand in light of the Indemnity Act. (Motor Vehicle Casualty Co. v. GSF Energy, Inc. (1989), 193 Ill. App. 3d 1, 549 N.E.2d 884.) The indemnification contract at issue was executed after the effective date of the indemnity statute. Thus, the cases relied upon by Dominick’s for the proposition that an indemnification contract should not be construed as indemnifying one against liability for one’s own negligence absent clear and explicit language are not applicable. (Cox v. Lumbermens Mutual Casualty Co. (1982), 108 Ill. App. 3d 643, 439 N.E.2d 126.) Accordingly, since Dominick’s liability can only result from its own negligent acts, count II of its complaint for indemnification was properly dismissed as it is in violation of the Indemnity Act.

Finally, Dominick’s challenges the court’s dismissal of count III of its complaint, which alleged that K & S failed to obtain insurance adding Dominick’s as an additional insured pursuant to the following provision in the addendum to the contract:

“It is extremely important and expressly understood and agreed that each Contractor shall be responsible for any and all damages to property and any and all injuries or disease or death to any one person arising directly or indirectly from, or in connection with work performed, or to be performed under this contract, including extra work. Therefore each Contractor shall purchase and maintain such insurance as will protect him from any and all claims ***.
* * *
*** The contractor shall procure insurance naming Dominick’s Finer Foods, Inc. its agents and employees as additional insured. The contractor shall submit the Certificate of Insurance to Dominick’s Finer Foods, Inc. before the commencement of the work. Dominick’s Finer Foods, Inc. will procure and maintain ‘Builders Risk Insurance’ policy.”

In its complaint, Dominick’s alleged that K & S failed to obtain the required “personal injury” insurance and umbrella policy to cover excess liability as provided in the contract and failed to obtain the required insurance adding Dominick’s as an additional insured. Dominick’s further alleged that if K & S had met its contractual obligations, Dominick’s would have been protected as an additional insured and the insurer would have been required to defend and indemnify Dominick’s in K & S’s employee’s claim.

K & S argues on appeal that Dominick’s impliedly waived its claim of breach of contract to procure insurance because Dominick’s received a certifícate of insurance from K & S in which Dominick’s was not named as an additional insured and allowed K & S to complete its work under the contract without requiring K & S to procure the insurance guaranteed under the contract. Dominick’s contends that its acceptance of the certificate of insurance is not proof of its intent to waive the contractual provision to procure insurance. Dominick’s claims it was unaware that the policy referenced in the certificate did not name Dominick’s as an additional insured. Further, since Dominick’s did not have a copy of the insurance policy issued to K & S, it was without notice as to whether it was named in the policy.

Waiver is the voluntary, intentional relinquishment of a known right. (National Tea Co. v. Commerce & Industry Insurance Co. (1983), 119 Ill. App. 3d 195, 456 N.E.2d 206.) Although waiver may be implied, it nonetheless requires that an intention to waive be clearly inferred from the circumstances. (Kelly v. Economy Fire & Casualty Co. (1990), 196 Ill. App. 3d 337, 553 N.E.2d 412.) Implied waiver has been viewed as a concept which is based on either waiver or estoppel. There must be either an intention to waive which, while unexpressed, can be clearly inferred from the circumstances, or where there is no such intention, the conduct of one party must have misled another into acting on a reasonable belief that a waiver has occurred. Tibbs v. Great Central Insurance Co. (1978), 57 Ill. App. 3d 866, 373 N.E.2d 492.

We believe that Dominick’s intention to waive the provision in the contract requiring K & S to procure insurance naming Dominick’s cannot be inferred from the facts of this case. It cannot be clearly inferred from the circumstances that when Dominick’s did not take any specific action when it was not named in the certificate of insurance, it was its intent to permanently relinquish its right to be insured. Nor do we believe that an estoppel argument applies here. K & S does not suggest that it was misled into acting in any particular way based upon a reasonable belief that a waiver had occurred. We accordingly reverse the trial court’s dismissal of count III of the third-party complaint.

Affirmed in part; reversed and remanded in part.

LINN and McMORROW, JJ., concur.


source: Caselaw Access Project

author: JUSTICE LINN

license: Public Domain

text:
    JOHN URBAN, Plaintiff-Appellant, v. LOUIS LOHAM et al, Defendants-Appellees.
    First District (4th Division)
    No. 1—91—0580
    Opinion filed March 26, 1992.

      Baskin, Server, Berke & Weinstein, of Chicago (John R. Malkinson, of counsel), for appellant.
    Heineke, Burke, Healy & Bodach, of Chicago (Robert C. Farrar, of counsel), for appellees.
   JUSTICE LINN

delivered the opinion of the court:

Plaintiff, John Urban, brought a personal injury action in the circuit court of Cook County against defendants, Louis Loham and Theodore Lowe. Plaintiff sought damages for injuries allegedly incurred as a result of an automobile collision. Defendants’ automobile liability insurer subsequently went into liquidation. The Illinois Insurance Guaranty Fund (Fund) assumed the carrier’s obligations.

The trial court dismissed the action. The court reasoned that since plaintiff did not timely seek uninsured motorist coverage from his own insurer, then he could not recover from the Fund and, further, could not maintain his action against defendants. Plaintiff appeals, assigning error to the dismissal.

We reverse the order of the trial court and remand.

Background

The trial court dismissed the action pursuant to section 2— 619(a)(9) of the Code of Civil Procedure. (Ill. Rev. Stat. 1989, ch. 110, par. 2 — 619(aX9).) In ruling on a section 2 — 619 motion to dismiss, a court may consider the pleadings, affidavits in support of the motion, answers to interrogatories, depositions, and other proofs presented by the parties. Bloomingdale State Bank v. Woodland Sales Co. (1989), 186 Ill. App. 3d 227, 232, 542 N.E.2d 435, 438 (and cases cited therein).

The record shows that on October 5, 1981, the automobiles of plaintiff and defendants collided in a parking lot located at Burlington and Prairie Avenues in Brookfield. On October 4, 1983, plaintiff brought a personal injury action against defendants, alleging that their negligence proximately caused the collision and his resulting injuries.

At the time the action arose, Lowe owned an automobile insurance policy issued through the Heritage Insurance Company. The policy had liability coverage up to $100,000. However, on February 25, 1986, the trial court found that Heritage was insolvent and entered an order of liquidation.

In a letter dated May 12, 1986, the Illinois Insurance Guaranty Fund (the Fund) notified plaintiff that it had assumed Heritage’s obligations to its policyholders and claimants, subject to the requirements of the Illinois Insurance Guaranty Fund, found in Article XXXIV of the Insurance Code (Code). (See Ill. Rev. Stat. 1989, ch. 73, par. 1065.82 et seq.) Citing Code section 546 (Ill. Rev. Stat. 1989, ch. 73, par. 1065.96), the letter notified plaintiff of a Code requirement. The letter stated that if a claimant has uninsured motorist coverage in his own automobile insurance policy, he must first exhaust his rights under his own policy prior to being entitled to any payments from the Fund. The letter further stated that if plaintiff’s “company denies uninsured motorist coverage, we suggest you call us to determine what verification we require to process your claim as an obligation of the Illinois Fund.”

Plaintiff owned an automobile insurance policy issued by the State Security Insurance Company. The policy included uninsured motorist coverage up to $15,000. The policy required plaintiff, as a condition precedent to coverage, to file with the insurer a demand for arbitration of the claim within two years of the loss.

In November 1986, approximately six months after receiving the letter from the Fund, plaintiff’s attorneys notified State Security that they represented plaintiff in the matter of the uninsured motorist claim. In January 1987, State Security requested from plaintiff copies of any special damages and proof of defendants’ lack of insurance coverage. In September 1988, plaintiff mailed the requested information to State Security. In November 1988, approximately 2xk years after receiving the Fund’s notification letter, plaintiff filed with State Security a demand for arbitration.

State Security denied plaintiff’s claim for uninsured motorist coverage and brought a declaratory judgment action against plaintiff to determine whether he was entitled to uninsured motorist coverage. On October 12, 1990, the trial court entered judgment in favor of State Security. The trial court based its finding on the fact that plaintiff failed to demand arbitration within two years of the receipt of the Fund’s notification letter.

On December 4, 1990, defendants moved to dismiss plaintiff’s personal injury action pursuant to section 2 — 619(a)(9) of the Code of Civil Procedure. (Ill. Rev. Stat. 1989, ch. 110, par. 2 — 619(a)(9).) Defendants argued that plaintiff’s failure to timely seek uninsured motorist coverage from his insurer constituted a failure to exhaust his rights under any other applicable insurance policy, as required by section 546(a) of the Code. (Ill. Rev. Stat. 1989, ch. 73, par. 1065.96(a).) Defendants further argued that this requirement was a statutory condition precedent for maintaining the action against them.

On January 9, 1991, the trial court granted defendants’ motion to dismiss. Plaintiff timely appeals.

Opinion

Insurance Code section 546(a) provides as follows:

“§546. Nonduplication of recovery, (a) Any insured or claimant having a covered claim against the Fund shall be required first to exhaust his rights under any provision in any other insurance policy which may be applicable to the claim. Any amount payable on a covered claim under this Article shall be reduced by the amount of such recovery under such insurance policy.” (Ill. Rev. Stat. 1989, ch. 73, par. 1065.96(a).)

Plaintiff contends that he exhausted his rights under any other applicable insurance policy, as section 546(a) requires. Plaintiff claims that, as a result, he is entitled to maintain his lawsuit against defendants.

The parties agree that this appeal requires us to interpret the above-quoted provision. The statute does not define the extent of a claimant’s obligation “to exhaust his rights” under other insurance policies.

The cardinal rule of statutory construction is to ascertain and give effect to the intention of the legislature in enacting a statute. In ascertaining the legislative intent, it is settled that a court may consider not only the language used in the statute, but also the reason and necessity for the law, the evils sought to be remedied, and the purposes to be achieved. (Stewart v. Industrial Comm’n (1987), 115 Ill. 2d 337, 341, 504 N.E.2d 84, 86.) Additionally, where the literal enforcement of a statute would result in great injustice, courts are bound to presume that the legislature did not intend such consequences, and to adopt a construction which, it is reasonable to assume, the legislature contemplated. Penkava v. Kasbohm (1987), 117 Ill. 2d 149, 154, 510 N.E.2d 883, 885.

The Fund is a nonprofit, unincorporated legal entity established in 1971 by Article XXXIV of the Insurance Code. (Ill. Rev. Stat. 1989, ch. 73, par. 1065.82 et seq.) In establishing the Fund, the legislature intended to protect the public from losses arising from the insolvency of Illinois insurers. In other words, the Fund seeks to place a claimant in the same position that he would have been in if the defendant’s liability insurer had been solvent. All insurance companies licensed in this State are members of the Fund as a condition of their transacting business in the State. Adams v. Illinois Insurance Guaranty Fund (1980), 85 Ill. App. 3d 867, 867-68, 407 N.E.2d 638; Lucas v. Illinois Insurance Guaranty Fund (1977), 52 Ill. App. 3d 237, 239, 367 N.E.2d 469, 470. See generally 19A J. Appleman, Insurance Law & Practice §10801 (1982); Annot., 30 A.L.R.4th 1110 (1984).

Most State insurance guaranty statutes, including that of Illinois, are very similar to the State Post-Assessment Insurance Guaranty Association Model Bill, proposed by the National Association of Insurance Commissioners. (19A Appleman §10801, at 365 n.2, quoting Sands v. Pennsylvania Insurance Guaranty Association (1979), 283 Pa. Super 217, 221, 423 A.2d 1224, 1225-26; Note, Insurance Company Insolvencies and Insurance Guaranty Funds: A Look at the Nonduplication of Recovery Clause, 74 Iowa L. Rev. 927, 932-34 (1989).) For example, the highest courts of Kansas and Massachusetts have each noted that their insurance guaranty fund statutes, including their nonduplication of recovery provisions, were “substantially similar” to that of Illinois. (Hetzel v. Clarkin (1989), 244 Kan. 698, 703-04, 772 P.2d 800, 804; Vokey v. Massachusetts Insurers Insolvency Fund (1980), 381 Mass. 386, 391, 409 N.E.2d 783, 785.) “In construing an Illinois statute, decisions of other States construing similar laws are entitled to respect and consideration.” In re Marriage of Hunt (1979), 78 Ill. App. 3d 653, 660, 397 N.E.2d 511, 517.

I

We first address the issue of whether plaintiff exhausted his right to his uninsured motorist coverage as Insurance Code section 546(a) requires. The provision required plaintiff to “first proceed under any rights conferred by his insurance policy,” i.e., his uninsured motorist coverage. (Spearman v. State Security Insurance Co. (1978), 57 Ill. App. 3d 393, 395, 372 N.E.2d 1008, 1009.) The rationale of nonduplication of recovery provisions such as section 546(a) has been explained as follows:

“The purpose of the exhaustion requirement *** is to render the Fund a source of last resort in the event of insolvency. The second sentence *** states a clear legislative policy that any recovery to which a claimant is contractually entitled under his own insurance policy shall be offset to reduce the liability of the Fund.” Vokey, 381 Mass, at 390, 409 N.E.2d at 786.

Based on this legislative policy, a plaintiff who seeks to collect from a State insurance guaranty fund must first collect from his own uninsured motorist coverage. After the plaintiff has received up to the policy limit of his uninsured motorist coverage, he is then entitled to recover from the State insurance guaranty fund up to the policy limits of the defendant’s insolvent insurer, less the amount collected from the plaintiff’s uninsured motorist coverage. In other words, the more the plaintiff receives under his own uninsured motorist coverage, the less he receives from the State insurance guaranty fund. The plaintiff thereby avoids receiving a windfall recovery. Lucas, 52 Ill. App. 3d at 239, 367 N.E.2d at 471, quoted in Hetzel, 244 Kan. at 703, 772 P.2d at 804, and Sands, 283 Pa. Super, at 226-27, 423 A.2d at 1228.

However, what is the result when a plaintiff knowingly settles with his insurer for less than the policy limits of his uninsured motorist coverage? Or, as in the case at bar, what is the result when a plaintiff knowingly fails to timely seek recovery under his uninsured motorist coverage?

The legislative policy behind section 546(a) requires a plaintiff to collect as much as he can under his uninsured motorist coverage. A plaintiff who knowingly fails to do so shall be assumed to have received the policy limits of his uninsured motorist coverage. This assumption implements the legislative intent that the Fund be a source of last resort, and that the Fund’s liability be offset by any recovery to which a plaintiff is contractually entitled under his own insurance policy. Consequently, a plaintiff who makes a claim trader his uninsured motorist coverage is deemed to have exhausted his rights under section 546(a), regardless of the amount that he actually receives. We note that the Kansas Supreme Court followed this reasoning and reached this result in a case with similar facts. Hetzel, 244 Kan. at 706-07, 772 P.2d at 806.

Indeed, the record shows that the Fund has already acted in accordance with these principles. In its May 12, 1986, notification letter to plaintiff, the Fund acknowledged the possibility that plaintiff’s insurer could deny him uninsured motorist coverage. However, the letter did not say that plaintiff would be barred recovery from the Fund. Rather, the Fund stated: “we suggest you call us to determine what verification we require to process your claim as an obligation of the Illinois Fund.”

We hold that plaintiff may proceed against the Fund, but any recovery from the Fund shall be offset by $15,000. This is the maximum amount that plaintiff could have recovered from his uninsured motorist coverage had he timely sought it.

II

We lastly address the trial court’s dismissal of plaintiff’s action against defendants. In support of the dismissal, defendants contend that the exhaustion requirement found in Insurance Code section 546(a) is a statutory condition precedent for maintaining the action against them.

We disagree. In Herriford v. Boyles (1990), 193 Ill. App. 3d 947, 550 N.E.2d 654, this court distinguished a plaintiff’s claim against the Fund from a plaintiff’s lawsuit against a tortfeasor. We noted that an insurance company, or the Fund in the case of an insolvent insurer, is not liable as the tortious wrongdoer. Rather, the insurer or the Fund merely stands ready, pursuant to the policy, to indemnify the tortfeasor for a loss. The claim against the Fund represents the amount the Fund must pay to the extent that it stands in the position of indemnifier. Section 546(a) only requires that a plaintiff must first recover any amount available under his own insurance policy before he can recover from the Fund. Herriford, 193 Ill. App. 3d at 952-53, 550 N.E.2d at 658.

However, the guaranty insurance fund statute does not contemplate an action directly against the Fund itself to determine a plaintiff’s damages. Rather, a plaintiff’s damages are determined as a collateral matter or in other proceedings. Thus, the Herriford court concluded that “[s]ection 546(a) is only relevant in determining the recovery from the Fund.” (Herriford, 193 Ill. App. 3d at 952, 550 N.E.2d at 658.) As Justice Barry reasoned in his partial concurrence:

“By statute, plaintiffs here were required to first ‘exhaust’ their rights under [their uninsured motorist coverage]. [Citation.] But, the statute also anticipates that the injured parties will be in no worse position by virtue of the defendants’ insurer’s insolvency than they would have been had the insurer been solvent. Ergo, if plaintiffs injured by liable parties whose insurers are solvent are entitled to present their case to a jury for a determination of damages, then it would be an injustice incompatible with the statutory scheme to find that the plaintiffs here should be denied an opportunity to litigate their damages in a court action.” Herriford, 193 Ill. App. 3d at 960, 550 N.E.2d at 663 (Barry, J., concurring in part and dissenting in part).

In Illinois, a tortfeasor is liable for all of the ordinary and natural consequences of his act. (Harvey v. Carponelli (1983), 117 Ill. App. 3d 448, 454, 453 N.E.2d 820, 825.) In other words, a plaintiff is entitled to recover all damages that naturally and proximately flow from the commission of a tort. Central Illinois Light Co. v. Stenzel (1964), 44 Ill. App. 2d 388, 394-95, 195 N.E.2d 207, 210-11.

In the case at bar, the record does not show the extent of plaintiff’s damages. Those damages could exceed the policy limit of his uninsured motorist coverage. Therefore, plaintiff’s failure to timely seek the maximum amount from his uninsured motorist coverage cannot deprive him of the right to seek full compensation from defendants. We note that the Pennsylvania Supreme Court followed this reasoning and reached this result in a case with similar facts. Bethea v. Forbes (1988), 519 Pa. 422, 426-27, 548 A.2d 1215, 1217.

For the foregoing reasons, the order of the circuit court of Cook County, which dismissed plaintiff’s complaint, is reversed, and the cause remanded for further proceedings not inconsistent with this opinion.

Reversed and remanded.

JIGANTI, P.J., and JOHNSON, J., concur.


author: PRESIDING JUSTICE JIGANTI

text:
    JOSEPH BUCCI, Plaintiff-Appellant, v. E. PAUL RUSTIN et al, Defendants-Appellees.
    First District (4th Division)
    No. 1—91—1455
    Opinion filed March 26, 1992.

      Joel A. Brodsky, of Brodsky & Hoxha, of Chicago, for appellant.
    Michael W. Ford and June Y. Wallace, both of Chapman & Cutler, of Chicago, for appellee E. Paul Rustin.
    Alholm & Monahan, of Chicago (Anthony J. Alholm, Peter A. Monahan, and Daniel F. D’Attomo, of counsel), for appellee Robert C. Morton.
   PRESIDING JUSTICE JIGANTI

delivered the opinion of the court:

Joseph Bucci, the plaintiff, filed an action for legal malpractice against his former attorneys, the defendants, who represented him in a bankruptcy proceeding in which the plaintiff was found to have made fraudulent transfers of property. The issue we address in this case is whether the circuit court properly granted the defendants’ motion to dismiss pursuant to section 2 — 619(9) of the Code of Civil Procedure. (Ill. Rev. Stat. 1989, ch. 110, par. 2 — 619(9).) For the reasons that follow, we reverse the court’s order of dismissal and remand the case for further proceedings.

In May 1984, Bruna Bucci, the plaintiff’s wife, filed a petition for dissolution of marriage. A judgment to dissolve Bucci’s marriage was entered in August 1985 and included the division of marital property among Bucci, Bruna, and their son. Two months later, Bucci filed a petition for bankruptcy under chapter 7 of the Bankruptcy Code. (11 U.S.C. §701 et seq. (1984).) Shortly thereafter, the trustee in Bucci’s bankruptcy filed an action under 11 U.S.C. §548(a)(1) (1984) to set aside Bucci’s prebankruptcy transfer of property to Bruna and their son alleging that Bucci had voluntarily made these transfers under the dissolution judgment with actual intent to hinder, delay, or defraud his creditors. Bucci retained attorneys Paul Rustin and Robert Morton, the defendants in the instant case, to represent him in the first adversarial bankruptcy proceeding.

At trial, Bucci alleges that Rustin and Morton were negligent in their representation of him. He claims that both attorneys failed to conduct any discovery, failed to file a motion to dismiss Bucci as a party defendant, failed to file the required pretrial statement, failed to present any evidence at trial, failed to be present in court during most of the trial, including their absence during the testimony of eight of the nine witnesses, failed to cross-examine any witness against him, failed to object to any evidence presented at trial, and failed to present a closing argument. The bankruptcy court entered judgment in favor of the trustee and set aside the properties which Bucci had transferred to Bruna and their son in his divorce proceeding.

The trustee filed a second action against Bucci pursuant to section 727 of the Bankruptcy Code (11 U.S.C. §727(a)(2)(A) (1984)) requesting that Bucci be denied a discharge because he transferred property with the intent to defraud his creditors. Bucci procured different counsel to represent him. Finding that under the doctrine of collateral estoppel, the result in the first action precluded Bucci from relitigating the issue of fraudulent intent in the section 727 proceeding, the bankruptcy court found that Bucci illegally conveyed his property and denied him the discharge. Bucci appealed this decision to the United States District Court and the Seventh Circuit Court of Appeals and in both appeals the bankruptcy court’s decision was affirmed.

Bucci filed the case at bar in the circuit court of Cook County against Rustin and Morton for legal malpractice. Bucci alleged that their negligence in the first adversary bankruptcy proceeding was the proximate cause of his nondischarge in bankruptcy. Rustin and Morton filed motions to dismiss Bucci’s complaint pursuant to section 2— 619 of the Code of Civil Procedure contending that the bankruptcy court’s finding that Bucci had committed fraud precludes him from bringing a legal malpractice action. The court granted their motion, which is the subject of this appeal.

Bucci contends that the defendants’ motion should not have been granted because the affirmative matter upon which the defendants relied was that Bucci was guilty of fraudulent transfers. Bucci argues that the gravamen of his complaint is that he would not have been found guilty in the first place if it had not been for the defendants’ negligent legal representation. Therefore, the defendants cannot rely on the court’s finding of fraud to defeat his claim for legal malpractice.

The Code of Civil Procedure, section 2 — 619(a)(9), provides:

“2 — 619. Involuntary dismissal based upon certain defects or defenses, (a) Defendant may, within the time for pleading, file a motion for dismissal of the action or for other appropriate relief upon any of the following grounds. ***
* * *
(9) That the claim asserted against defendant is barred by other affirmative matter avoiding the legal effect of or defeating the claim.” (Ill. Rev. Stat. 1987, ch. 110, par. 2 — 619(a)(9).)

The primary purpose of section 2 — 619 is to obtain at the outset of a legal action a summary disposition of issues of law or easily proved facts. (Cioni v. Gearhart (1990), 201 Ill. App. 3d 853, 559 N.E.2d 494.) A motion to dismiss admits, for purposes of determining the motion, all well-pleaded facts and all reasonable inferences which can be drawn from them but does not admit conclusions of law. (Horwath v. Parker (1979), 72 Ill. App. 3d 128, 390 N.E.2d 72.) An “affirmative matter” within the meaning of section 2 — 619(a)(9) has been defined as something in the nature of a defense that negates an alleged cause of action completely or refutes crucial conclusions of law or conclusions of material fact unsupported by allegations of specific fact contained in or inferred from the complaint. (Longust v. Peabody Coal Co. (1986), 151 Ill. App. 3d 754, 757, 502 N.E.2d 1096; Ralston v. Casanova (1984), 129 Ill. App. 3d 1050, 1056, 473 N.E.2d 444.) An “affirmative matter” must be something more than evidence to refute a well-pleaded fact in the complaint. (Cioni v. Gearhart (1990), 201 Ill. App. 3d 853, 856, 559 N.E.2d 494.) Moreover, an “affirmative matter” should not consist of mere evidence upon which the defendant expects to contest an ultimate fact in the case. Inland Real Estate Corp. v. Lyons Savings & Loan (1987), 153 Ill. App. 3d 848, 854, 506 N.E.2d 652.

In support of their section 2 — 619(a)(9) motion, the defendants attached the findings of the bankruptcy court in the case in which they were representing Bucci. As we mentioned earlier, the bankruptcy court found that Bucci engaged in a fraudulent conveyance of property within one year prior to the filing of his bankruptcy petition with the actual intent to hinder, delay, or defraud his creditors. The defendants contend that their section 2 — 619(a)(9) motion was properly granted because Bucci’s fraudulent transfers were substantial and flagrant and made long before Bucci hired the attorneys to represent him. They argue that Bucci’s fraud is an “affirmative matter” within the context of a section 2 — 619 motion which defeats his claim for legal malpractice because he stands before the court with “unclean hands.”

The defendants rely on Makela v. Roach (1986), 142 Ill. App. 3d 827, 492 N.E.2d 191, and Mettes v. Quinn (1980), 89 Ill. App. 3d 77, 411 N.E.2d 549. In Makela, the plaintiff retained an attorney to advise her on a plan to transfer marital assets from her husband for the purpose of defrauding her husband’s legitimate medical creditors and filed a legal malpractice action against the attorney when the plan did not work out as she anticipated. The court affirmed the trial court’s dismissal of the plaintiff’s claim against her attorney, stating:

“Where a party voluntarily elects to follow advice intended to extricate herself from a questionable situation, she comes to this court with unclean hands and may not seek relief from her wrongful conduct through a legal malpractice action.” (Makela, 142 Ill. App. 3d at 832, 492 N.E.2d at 195.)

In Mettes, the plaintiff sued her former attorney for breach of fiduciary duty for rendering allegedly negligent advice which caused her fraud to be uncovered. The court affirmed the trial court’s dismissal of the complaint for failure to state a cause of action, finding that the plaintiff could not recover damages from her attorney when his faulty advice precluded her from further benefiting from her fraud. Mettes, 89 Ill. App. 3d at 80, 411 N.E.2d at 551.

The case at bar is distinguishable from both cases. In Makela, the plaintiff sought recovery from her attorney for his failure to successfully assist her in a fraudulent plan. The court concluded from the allegations set forth in the plaintiff’s complaint that the plaintiff’s plan was fraudulent and thus she could not seek relief from her attorney for her wrongful conduct. In Mettes, the plaintiff sought recovery from her attorney when her fraud was uncovered as a result of the attorney’s negligent advice. The court concluded from the record that the plaintiff had entered into a fraudulent agreement which had been set aside prior to the action against her attorney. The plaintiff was not contesting that her agreement was fraudulent, but rather that her attorney’s negligent advice had caused her to lose the benefit of her agreement. Thus, the court concluded that she could not seek relief from her attorney, regardless of whether his advice was faulty.

Unlike the aforementioned cases, we cannot readily conclude that Bucci’s actions were fraudulent given the allegations of his complaint. Bucci’s contention is that if he had been adequately represented, he would not have been found guilty of fraud. The bankruptcy court’s finding is merely evidence which the defendants can use to contest their negligence. The defendants have not presented any other evidence to contest the allegations of their negligence. Accepting Bucci’s allegations as true, this court cannot determine from the bankruptcy court’s findings what the result of the proceeding would have been had Bucci’s attorneys been present during the entire proceeding, cross-examined witnesses, and generally presented a defense. Therefore, we cannot conclude that the bankruptcy court’s finding in the absence of adequate legal representation constitutes an affirmative matter for purposes of a section 2 — 619(a)(9) motion. This defense merely raises factual issues attacking the allegations in the complaint and should not be resolved by a section 2 — 619 motion.

The defendants’ other arguments are also based upon the conclusion that Bucci is guilty of fraud. The defendants contend that even if the defendants negligently represented Bucci in the proceeding, that negligence was not the proximate cause of the plaintiff’s nondischarge from bankruptcy. The proximate cause was Bucci’s fraudulent transfer of property to his ex-wife with the object of defrauding creditors. Once again, this argument begs the question. Bucci’s complaint alleges that he would not have been found guilty of fraud except for the negligent representation by his attorneys. The defendants cannot use the actual finding of fraud to establish that their legal representation was not the proximate cause of the result in the case.

The same can be said of the defendants’ argument that in order to avoid a legal malpractice action, the attorneys would have had to assist Bucci in covering up a fraud and such assistance would violate the Elinois Code of Professional Responsibility. In their briefs, the defendants state that they were not aware of any fraud at the time of the proceeding. However, by relying on the ultimate finding of fraud, the defendants now argue that if they had given him adequate representation, they would have been covering up his fraud.

Finally, the defendants argue that collateral estoppel prohibits Bucci from relitigating the fraud issue in the legal malpractice action. In order for collateral estoppel to apply, one of the requirements is that the issue decided in the prior adjudication is identical to that presented in the action in question. (Johnson v. Nationwide Business Forms, Inc. (1981), 103 Ill. App. 3d 631, 431 N.E.2d 1096.) The issue in the case at bar is not whether Bucci was fraudulent, but whether the attorneys’ negligence was the proximate cause of the bankruptcy court’s finding.

For all of the reasons stated herein, the judgment of the circuit court is reversed and the case is remanded for further proceedings.

Reversed and remanded.

LINN and McMORROW, JJ., concur.


author: JUSTICE GORDON

text:
    JOHN MAZUR, JR., Plaintiff-Appellant, v. DENA R. HUNT et al., Defendants-Appellees.
    First District (5th Division)
    No. 1—89—2473
    Opinion filed March 27, 1992.

      Sam Ranger, Jr., of Katz, Karacic & Helmin, of Chicago, for appellant.
    Gary M. Feiereisel, of Fraterrigo, Best & Beranek, of Chicago, for appellees.
   JUSTICE GORDON

delivered the opinion of the court:

Plaintiff John Mazur, Jr., appeals from the trial court’s dismissal of count V of his complaint which sought compensatory and punitive damages for alleged fraud by the defendants. For the reasons set forth below, we affirm.

This action arises from the theft of several pieces of jewelry from plaintiff’s home and the subsequent handling of his insurance claim by the defendants United States Fire Insurance Company and Crum and Forster, who issued plaintiff’s homeowners policy, and Dena R. Hunt, an agent of Crum and Forster and United States Fire Insurance Company. Plaintiff has been paid for some of the jewelry taken and has signed a proof of loss form for those items. However, defendants refuse to pay for the loss of two additional pieces which were not included on the proof of loss form. It is the defendants’ failure to compensate plaintiff for these two items, which plaintiff alleges are worth $41,000, which is the subject of this action.

Plaintiff filed a five-count complaint. Count I alleged breach by United States Fire Insurance Company and Crum and Forster of the “newly acquired property” provisions of his insurance policy. Under these provisions, defendant was required to pay the lesser of “25% of the amount of insurance for that class of property” or $10,000. Count I sought compensatory damages of $10,000, costs, prejudgment interest and attorney fees and other amounts provided for in section 155 of the Insurance Code (Ill. Rev. Stat. 1987, ch. 73, par. 767).

Count II alleged that the jewelry at issue was fully covered under the policy and alleged breach of the policy and sought compensatory damages for the full value of the jewelry, $41,000, plus costs, prejudgment interest, attorney fees and additional amounts provided for in section 155 of the Insurance Code.

Counts III and IV involved defendants not parties to this appeal.

Count V alleged fraud by defendant Dena Hunt in obtaining a signed proof of loss from plaintiff and using it to bar plaintiff’s claim for the two items of jewelry that were omitted. Plaintiff alleged fraud by defendants United States Fire Insurance Company and Crum and Forster by virtue of the acts of their agent, Hunt. The gist of the fraud allegations is that Hunt obtained plaintiff’s signature on a proof of loss that omitted two recently acquired items of jewelry, on the representation that it would not bar his subsequent claim for those two items, and that those two items would be handled separately. Plaintiff alleges he was induced to sign the proof of loss by being told that in this way he could receive some of the money due him and not lose his right to claim the two additional items of jewelry. After plaintiff signed the proof of loss, Hunt used it to deny his claim for the two additional pieces of jewelry. Count V sought compensatory damages of $41,000 and punitive damages of $2 million.

Defendants answered the complaint and asserted as an affirmative defense to counts I and II the proof of loss form signed by the plaintiff. According to defendants, the proof of loss form “was executed by the plaintiff in full satisfaction and indemnity for all claims and demands upon the insurance company issuing the Homeowner’s Insurance Policy in question.”

Defendants moved to dismiss count V pursuant to section 2 — 615 of the Code of Civil Procedure (Ill. Rev. Stat. 1987, ch. 110, par. 2— 615), contending that plaintiff’s common law action was preempted by section 155 of the Illinois Insurance Code, which provided the sole remedy available to plaintiff for denial of benefits. Defendants’ motion was granted and plaintiff now appeals.

Opinion

Plaintiff raises several issues on appeal. His primary contention is that the trial court erred in finding that count V of his complaint was preempted by section 155 of the Insurance Code. Section 155 provides:

“Attorney fees. (1) In any action by or against a company wherein there is in issue the liability of a company on a policy or policies of insurance or the amount of the loss payable thereunder, or for an unreasonable delay in settling a claim, and it appears to the court that such action or delay is vexatious and unreasonable, the court may allow as part of the taxable costs in the action reasonable attorney fees, other costs, plus an amount not to exceed any one of the following amounts:
(a) 25% of the amount which the court or jury finds such party is entitled to recover against the company, exclusive of all costs;
(b) $25,000;
(c) the excess of the amount which the court or jury finds such party is entitled to recover, exclusive of costs, over the amount, if any, which the company offered to pay in settlement of the claim prior to the action.” 111. Rev. Stat. 1987, ch. 73, par. 767 (hereinafter section 155).

The parties agree that this statute preempts a claim by an insured against his insurer for the breach of the duty of good faith and fair dealing, an implied term of a contract of insurance, a claim which was elevated to the status of an independent tort in Ledingham v. Blue Cross Plan for Hospital Care of Hospital Service Corp. (1975), 29 Ill. App. 3d 339, 330 N.E.2d 540, rev’d on other grounds (1976), 64 Ill. 2d 338, 356 N.E.2d 75. See Combs v. Insurance Co. (1986), 146 Ill. App. 3d 957, 497 N.E.2d 503; Trautman v. Knights of Columbus (1984), 121 Ill. App. 3d 911, 460 N.E.2d 350; Kinney v. St. Paul Mercury Insurance Company (1983), 120 Ill. App. 3d 294, 458 N.E.2d 79; Tobolt v. Allstate Insurance Co. (1979), 75 Ill. App. 3d 57, 393 N.E.2d 1171; Urfer v. Country Mutual Insurance Co. (1978), 60 Ill. App. 3d 469, 376 N.E.2d 1073; Debolt v. Mutual of Omaha (1978), 56 Ill. App. 3d 111, 371 N.E.2d 373.

Plaintiff urges, however, that an action for fraud is a distinct tort, arising, not from an implied term of the contract of insurance, but rather from a general duty imposed by law, and is distinguishable from the breach of the duty of good faith and fair dealing in that fraud requires an affirmative act. According to plaintiff, it is this difference which determines the applicability of section 155, and that since the duty breached in the tort of fraud does not arise from the contract, the statute is inapplicable.

It is defendants’ position that “despite Plaintiff’s attempt to characterize count V as a common law action for fraud which is independent of the actions pled in counts I and II, when the allegations of count V are examined in detail there can be no question but that all count V contains are more specific allegations of the Defendants’ refusal to pay the entire amount of Plaintiff’s claim.” Accordingly, defendants urge, plaintiff’s claim would fall within the statute as an action in which the amount of loss payable under a policy is in issue and would be preempted. We agree with the defendants.

The cases cited above have clearly held that by enacting section 155, the legislature envinced its intention to preempt the field. As stated in Debolt (56 Ill. App. 3d at 116):

“We are of the opinion that the legislature has intended to provide a remedy to an insured who encounters unnecessary difficulties with an unreasonable and vexatious insurance company. The insured can maintain an action on the contract for recovery of the withheld policy benefits and upon proper finding by the court can be awarded attorney fees in addition to all other costs. Where the legislature has provided a remedy on a subject matter we are not only loath but in addition harbor serious doubts as to the desirability and wisdom of implementing or expanding the legislative remedy by judicial decree.”

In a separate opinion in Urfer, cited with approval in Tobolt, Presiding Justice Mills stated:

“[T]he question of punitive and compensatory damages in tort for a wilful refusal to pay under a contract does give me concern. *** It strikes me that statutory causes of action, being creatures of the legislative branch, should be viewed with judicial restraint. The Debolt rationale of legislative preemption in this area — by recovery of reasonable and limited attorney’s fees — is cogent and convincing. ***
*** I agree to affirm because there can be no tortious recovery on a contract beyond the statutory prescriptions, the legislature having preempted the field.” (Urfer, 60 Ill. App. 3d at 475-76, (Mills, P.J., concurring in part, dissenting in part).)

(Accord Combs, 146 Ill. App. 3d at 961.) In Combs, the court considered the impact of the 1977 amendment to section 155 which removed the preexisting cap of $1,000 on recoverable attorney fees and for the first time added a punitive damage provision which the statute contains to the present day. The court stated, “The subject statute, as originally enacted *** allowed an aggrieved insured to recover a prescribed amount of attorney fees in addition to recovery of proceeds under the policy. In 1977, the legislature deemed it necessary to expand plaintiff’s relief to include all reasonable attorney fees, other costs, an additional sum amounting to a penalty, as well as recovery of proceeds under the policy. The Illinois legislature, by virtue of these enactments, has clearly manifested its intent to keep this matter within its power and control.” Combs, 146 Ill. App. 3d at 962-63.

Plaintiff, however, contends that section 155 was intended to address refusals of a carrier which are merely objectively unreasonable but not refusals which involve tortious misconduct. In support, he cites Evaluation Systems, Inc. v. Aetna Life Insurance Co. (N.D. Ill. 1982), 555 F. Supp. 116, where the Federal court considered the differences between a tort action for bad faith and an action brought pursuant section 155. The issue in Evaluation Systems was whether a claim brought pursuant to section 155 was legally deficient due to the plaintiff’s failure to allege bad faith or sinister motives by defendant. In holding that allegations of bad faith were not required in an action under section 155, the court stated, “[ujnder the tort theory the insurer’s bad intent is an essential component of its actionable conduct,” while an action under section 155 “appears to focus on the objective reasonableness of the insurer’s refusal to pay.” Evaluation Systems, 555 F. Supp. at 121.

However, saying that bad faith is not a required element of an action under section 155 as did the court in Evaluation Systems is not the same as saying that an action which does allege bad faith is not within the scope of section 155. In Tobolt, the court considered allegations that the insurer had made false, fraudulent and deceitful representations. These allegations were made in a claim for compensatory and punitive damages for failure to act in good faith, a claim which was held to be preempted by section 155. Similarly, in Urfer, the complaint alleged “willful and malicious” acts by the insurer, and the court found that section 155 preempted such an action. As a result, we are not persuaded that the fact that a cause of action in fraud requires an affirmative act which is not necessarily required in an action for breach of good faith and fair dealing removes plaintiff’s count V from the preemptive scope of section 155. See also Robertson v. Travelers Insurance Co. (1983), 95 Ill. 2d 441, 447, 448 N.E.2d 866 (where the court, in considering the phrase “unreasonable or vexatious delay” used in the Workers’ Compensation Act (Ill. Rev. Stat. 1973, ch. 48, par. 138.5(a)), stated “this section, while applicable in cases of ordinary delay without justification [citations] is no less applicable to delay which is malicious”).

The rationale for our conclusion in this case is not dissimilar to that of our supreme court in Richardson v. Economy Fire & Casualty Co. (1985), 109 Ill. 2d 41, 485 N.E.2d 327, where the court delineated the scope of the bar against bringing direct negligence actions against insurance carriers. There, plaintiff was injured in a motorcycle accident allegedly caused by the negligence of defendant’s insured. The defendant settled with the plaintiff for $1,500 and procured plaintiff’s signature on a release. The plaintiff and his wife later sued the defendant, alleging they were fraudulently induced to settle the claim for only $1,500, and sought damages “in excess of $15,000.”

The issue before the court was whether plaintiffs’ purported fraud action was actually a direct action against an insurance carrier for personal injury damages caused by the negligence of its insured, for if so, the claim would be barred by the public policy of the State against direct actions against insurers prior to obtaining a judgment against the insured. Based on the fact that the damages sought were “precisely the same damages they would have been able to recover had they originally brought a personal injury action against [the insured],” the court concluded that the claim was a direct action notwithstanding the allegations of fraud in obtaining the settlement. (Richardson, 109 Ill. 2d at 50.) The court noted that plaintiffs did not claim any additional damages from the fraud itself. “Plaintiffs here do not specifically plead damages for fraud. Rather, they have included in their complaint the standard ad damnum clause for personal injury actions ***.” Richardson, 109 Ill. 2d at 51.

Analogously, here count V seeks precisely the same compensatory damages plaintiff would be able to recover in an action on the insurance policy. He has not pled any additional damages from the alleged fraud. As discussed above, “any count alleging nothing more than the conduct proscribed by section 155 is preempted by the statute.” (Emphasis in original.) Combs, 146 Ill. App. 3d at 964.

Plaintiff also argues, in the alternative, that in no event should the court have dismissed his claim for compensatory damages under count V, since even if section 155 preempts a claim for punitive damages, it does not preempt a claim for compensatory damages, citing Hoffman v. Allstate Insurance Co. (1980), 85 Ill. App. 3d 631, 407 N.E.2d 156. There the court said that “section 155, on its face, does not preempt a plaintiff’s right to claim compensatory damages for a breach of good faith and fair dealing.” (Hoffman, 85 Ill. App. 3d at 635.) Several opinions from this district, however, have clearly stated that an action which seeks as compensatory damages the same relief as available under the insurance policy is preempted by section 155. For example, in Kinney, the court stated that section 155 “preempted the filing of a common law action for the same relief, i.e., for damages and for violations of duties of good faith and fair dealing.” Kinney, 120 Ill. App. 3d at 297. See also Tobolt, 75 Ill. App. 3d 57, 393 N.E.2d 1171 (section 155 preempts the field); Combs, 146 Ill. App. 3d 957, 497 N.E.2d 503 (same); Trautman, 121 Ill. App. 3d at 915 (section 155 “preempts the filing of a common law action for breach of an implied covenant of good faith and fair dealing and limits damages to that amount stated in the pertinent provisions of the Code”).

Although labeled as a fraud count, the issue in count V is the amount of loss payable under the policy, with allegations that defendant’s failure to pay is unreasonable or vexatious, a claim which is preempted by section 155. (See Combs, 146 Ill. App. 3d 957, 497 N.E.2d 503 (although styled as a claim for intentional infliction of emotional distress, when stripped of legal conclusions, count clearly frames allegations of breach of duty of good faith). See also Richardson, 109 Ill. 2d 41, 485 N.E.2d 327.) The essence of count V is that by virtue of the fraudulent representations by defendants, they have refused to pay for the two pieces of jewelry as provided in the policy. This is evident from the compensatory damages sought, $41,000, which is the amount plaintiff contends in count II is due him under his policy for the stolen jewelry. Apart from not being paid for the two pieces of jewelry, plaintiff has not alleged that he suffered any additional harm from defendants’ conduct. (See Richardson, 109 Ill. 2d 41, 485 N.E.2d 327 (plaintiffs alleged no damages as a result of fraud). See also Debolt, 56 Ill. App. 3d at 116 (“[t]he insured can maintain an action on the contract for recovery of withheld policy benefits and upon proper finding by the court can be awarded attorney fees in addition to all other costs”).) As a result, we conclude that the trial court was correct in holding that count V was preempted by section 155 of the Insurance Code.

Plaintiff cites the cases of Trautman, Kinney, and Hoffman, where similar fraud claims were filed and, in each instance, dismissed. But the dismissal in each of these cases was not grounded upon preemption but upon the failure to allege an essential element of the tort. (See Trautman, 121 Ill. App. 3d 911, 460 N.E.2d 350 (failure to allege reliance); Kinney, 120 Ill. App. 3d 294, 458 N.E.2d 79 (failure to allege reliance); Hoffman, 85 Ill. App. 3d 631, 407 N.E.2d 156 (failure to allege injury). See also Debolt, 56 Ill. App. 3d 111, 371 N.E.2d 373 (claim of intentional infliction of emotional distress dismissed for failure to allege outrageous conduct); Urfer, 60 Ill. App. 3d 469, 376 N.E.2d 1073 (claim of wilful refusal to pay dismissed for failure to allege intent); Tobolt, 75 Ill. App. 3d 57, 393 N.E.2d 1171 (claim of intentional infliction of emotional distress dismissed for failure to allege outrageous conduct).) However, the inferences to be drawn from these decisions is at best inconclusive since, having determined that no cause of action was otherwise stated, the courts had no need to consider the question of preemption. See, e.g., Trautman, 121 Ill. App. 3d at 915 (“our decision that plaintiff failed to allege the requisite elements for an independent tort of fraud obviates the need to discuss the issue of whether a cause of action for exemplary as well as punitive damages is recognized in Illinois when a breach of contract amounts to an independent wilful tort”).

Other cases cited by plaintiff in support of his argument that his fraud count is not preempted are inapplicable. (See Lewis v. Royal Globe Insurance Co. (1988), 170 Ill. App. 3d 516, 524 N.E.2d 1126; McCarter v. State Farm Mutual Automobile Insurance Co. (1985), 130 Ill. App. 3d 97, 473 N.E.2d 1015; Sommer v. United Savings Life Insurance Co. (1984), 128 Ill. App. 3d 808, 471 N.E.2d 606.) In Lewis and McCarter, the courts allowed claims of fraud against insurers to stand. Those cases, however, were claims by third parties, not the insured, and plaintiff himself acknowledges that section 155 has not been applied to claims by third parties. In Sommer, the fraud alleged was in the making of the contract and, therefore, would not fall within the scope of section 155.

Plaintiff also argues that section 155 applies only to the insurer on the policy and not to its agents and that, therefore, even if defendants’ preemption arguments are correct, they do not apply to Hunt or Crum and Forster. Plaintiff, however, did not raise this argument before the trial court, arguing there only that his claim of fraud was distinct from one for breach of the duty of good faith and fair dealing and therefore not preempted by section 155. By failure to raise the issue below, it is waived. (Lemke v. Kenilworth Insurance Co. (1985), 109 Ill. 2d 350, 487 N.E.2d 943.) In addition, plaintiff has cited no authority in his brief on this question, and failure to cite any authority in support of an argument further constitutes waiver of that argument. (Nicholl v. Scaletta (1982), 104 Ill. App. 3d 642, 432 N.E.2d 1267.) Moreover, even absent a waiver of this issue, there is a strong indication that an action against an agent of an insurer is subject to the same preemption by section 155 as is an action against the insurer. See Combs, 146 Ill. App. 3d 957, 497 N.E.2d 503 (court holds action against insurer and its adjuster preempted by section 155).

Finally, plaintiff contends that the application of section 155 to preempt an action for fraud by an insured against his insurer would make the statute unconstitutional as special legislation (Ill. Const. 1970, art. IV, §13), or violative of the equal protection clause (Ill. Const. 1970, art. I, §2). This argument is based upon plaintiff’s presumption that our ruling will bar independent common law fraud claims against insurers by both insureds and third parties, and would thereby confer a limitation of liability on insurers without a rational relationship to a legitimate government interest. However, our ruling here is not so broad. We hold only that a common law tort claim by an insured against his insurer which seeks as damages only those which might be recovered in an action on the insurance policy is preempted. In this posture, both of plaintiff’s arguments have been previously considered and rejected, and plaintiff has not convinced us to reconsider those positions. See Kaniuk v. Safeco Insurance Co. (1986), 142 Ill. App. 3d 1070, 492 N.E.2d 592 (rejecting claim that section 155 amounted to special legislation because of special public interest in regulation and control of for-profit insurers, and thus a reasonable basis existed for classifying insurers separately from other businesses); Sale v. Allstate Insurance Co. (1984), 126 Ill. App. 3d 905, 467 N.E.2d 1023 (rejecting claim that section 155 violates equal protection due to reasonable basis for distinguishing between first-party claimants and third-party claimants, and plaintiff’s failure to overcome presumption of constitutionality).

Accordingly, for all the above reasons, the judgment of the circuit court of Cook County dismissing count V is affirmed.

Affirmed.

McNULTY, P.J., and MURRAY, J., concur.


author: JUSTICE LORENZ

text:
    THE PEOPLE OF THE STATE OF ILLINOIS, Plaintiff-Appellee, v. ROBERT BROWN, Defendant-Appellant.
    First District (5th Division)
    No. 1—89—2928
    Opinion filed March 27, 1992.
    Rita A. Fry, Public Defender, of Chicago (Emily Eisner, Assistant Public Defender, of counsel), for appellant.
    Jack O’Malley, State’s Attorney, of Chicago (Renee Goldfarb, Theodore F. Burtzos, and Michelle I. Lavin, Assistant State’s Attorneys, of counsel), for the People.
   JUSTICE LORENZ

delivered the opinion of the court:

After a bench trial, defendant, Robert Brown, was convicted of armed violence and possession of a controlled substance. (Ill. Rev. Stat. 1987, ch. 38, par. 33A — 2; ch. 561/2, par. 1402(b).) Defendant argues on appeal that he was subject to double jeopardy when the trial judge initially granted a directed verdict in his favor on the armed violence count but then changed his ruling later in the same hearing. For the following reasons, we reverse defendant’s conviction for armed violence.

In count I of an information, defendant was charged with armed violence based on possession of a controlled substance with intent to deliver, and in count II, he was charged with possession of a controlled substance with intent to deliver.

At trial, Officer Stephen Worsham testified that on June 26, 1988, while travelling in an unmarked squad car with his partner, he saw defendant walking down the street carrying a purse. When defendant saw Worsham looking at him, defendant dropped the purse and continued walking. Worsham recovered the purse, which contained a loaded gun and two spent shells, and arrested defendant. Worsham searched defendant and found a clear plastic bag holding 10 smaller clear plastic bags which were filled with white powder.

The parties stipulated that Linda Rayford, a chemist for the Chicago crime laboratory, would testify that the powder inside three of the bags weighed .52 of a gram and tested positive for cocaine. The State rested.

Defendant moved for a directed verdict and neither party presented an argument. In ruling on the motion, the judge stated:

“Based on a half a gram of cocaine, the Court is asked to find that the Defendant possessed with intent to deliver. No other evidence, either circumstantial or otherwise[,] other than [what] I have recited *** aids the Court in reaching that conclusion [when] the evidence is viewed in the light most favorable to the State. Thus, the Court cannot find that the Defendant possessed cocaine with intent to deliver and as to that charge, the Defendant is found not guilty of the greater offense of possession with intent to deliver. Count 1 . of the [information] charges the offense of armed violence in that the Defendant, while committing the offense of possession of a controlled substance with intent to deliver[,] was armed with a dangerous weapon. Having found the Defendant not guilty of the offense of possession with intent to deliver[,] it follows that he was not armed with a dangerous weapon while committing that offense, and the Defendant is found not guilty of Count 1.” (Emphasis added.)

The State argued that even though the judge found defendant not guilty of possession with intent to deliver, the armed violence charge could be based on the lesser-included offense of possession. After some discussion, the judge agreed with the State and stated that the armed violence charge based on possession with intent to deliver carried with it the lesser-included offense of mere possession. Although the evidence at trial was insufficient to prove possession with intent to deliver, it was sufficient to prove possession of a controlled substance and armed violence based on possession. The judge denied defendant’s motion for a directed verdict on armed violence and the trial continued.

Defendant testified that on June 26, 1988, he was walking down the street when he found a clear plastic bag containing smaller bags of cocaine. He put the bag in the waistband of his pants, intending to use the cocaine later, and he continued walking. One minute later, police officers stopped and searched him. They found the cocaine inside his pants, and they found a black bag approximately 12 feet away from where he was standing. Defendant testified that he never had the black bag in his possession.

After closing arguments, the trial judge found defendant guilty of armed violence based on possession of a controlled substance and guilty of possession. At the sentencing hearing, the judge noted that because armed violence was a Class X felony, he was required to sentence defendant to a minimum of six years in prison. He also sentenced defendant to a concurrent term of one year in prison for possession of a controlled substance. Defendant now appeals.

Opinion

Defendant raises several arguments on appeal challenging his convictions but it is only necessary to consider whether the armed violence conviction violated principles of double jeopardy. Defendant argues his conviction violated double jeopardy because the trial judge initially granted his motion for a directed verdict on armed violence but then denied the motion later in the same hearing.

Defendant did not raise this issue in the trial court. The failure to raise the defense of double jeopardy before judgment in the trial court waives the issue for review but it may be considered if it amounted to plain error. (People v. Mink (1990), 141 Ill. 2d 163, 565 N.E.2d 975.) Plain error affecting substantial rights may be considered on review despite waiver when the evidence at trial was closely balanced or when the error was so fundamental and of such magnitude that the defendant was denied a fair trial. (Mink, 141 Ill. 2d 163, 565 N.E.2d 975.) A conviction which violates double jeopardy is a substantial injustice and may be reviewed as plain error. (In re L.R. (1982), 106 Ill. App. 3d 244, 435 N.E.2d 908.) In this case, the evidence at trial was not closely balanced; however, the alleged error was fundamental and may have denied defendant a fair trial. As a result, this court will consider the issue under the plain error doctrine.

No person shall be twice placed in jeopardy for the same offense. (U.S. Const., amend. V; Ill. Const. 1970, art. I, §10.) A judgment of acquittal triggers double jeopardy protection when it “ ‘represents a resolution, correct or not, of some or all of the factual elements of the offense charged.’ ” (People ex rel. Daley v. Crilly (1985), 108 Ill. 2d 301, 311, 483 N.E.2d 1236, 1241, quoting United States v. Martin Linen Supply Co. (1977), 430 U.S. 564, 571, 51 L. Ed. 2d 642, 651, 97 S. Ct. 1349, 1355.) The entry of a directed verdict in defendant’s favor is an acquittal for double jeopardy purposes when there was insufficient evidence to establish as a matter of law some or all of the essential elements of the crime. (Crilly, 108 Ill. 2d 301, 483 N.E.2d 1236.) It is irrelevant for the double jeopardy analysis whether the trial judge made a mistake of fact or law. People v. Poe (1984), 121 Ill. App. 3d 457, 459 N.E.2d 667.

Defendant in this case relies primarily on People v. Stout (1982), 108 Ill. App. 3d 96, 438 N.E.2d 952, to support his argument. (E.g., People v. Strong (1984), 129 Ill. App. 3d 427, 472 N.E.2d 1152; Poe, 121 Ill. App. 3d 457, 459 N.E.2d 667; L.R., 106 Ill. App. 3d 244, 435 N.E.2d 908.) In Stout, the trial judge, in an oral ruling, entered a directed verdict in defendant’s favor on one count. Later that same day, the State moved to reconsider. The judge granted the motion and stated that the directed verdict was withdrawn. The jury subsequently convicted defendant on that count and he appealed. The appellate court stated that the granting of a motion for directed verdict was an acquittal and that double jeopardy prevented the trial judge from vacating, reversing, or withdrawing the ruling. The State argued that the trial judge’s oral ruling was insufficient to constitute a directed verdict. However, the court found that reducing the oral pronouncement of acquittal to a written judgment was a formality and the failure to do so did not impair the validity of the ruling. As a result, the court held that defendant was subjected to double jeopardy when the trial continued on that count after defendant was granted a directed verdict.

In Mink, the supreme court agreed with the holding in Stout and stated that “[rjeconsideration and vacation of that order necessarily exposed the defendant to further proceedings devoted to resolving the factual elements of the offense, in violation of the double jeopardy clauses.” Mink. 141 Ill. 2d at 179. 565 N.E.2d at 982.

In response to defendant’s argument, the State in this case argues that defendant was never actually acquitted of armed violence relying on People v. Vilt (1983), 119 Ill. App. 3d 832, 457 N.E.2d 136. In Vilt, the trial judge, in an oral ruling, allowed defendant’s motion for a directed verdict on one count believing that the victim’s testimony did not support it. When the State immediately questioned the ruling, the judge realized that he confused the testimony of two witnesses and that the victim’s testimony actually supported that count. The judge then denied defendant’s motion for directed verdict. On appeal, the court found that double jeopardy principles were not violated because the trial judge immediately reversed himself and no passage of time intervened. The court distinguished Stout, which defendant here relies on, because it did not involve a situation where “the trial judge, virtually with the same breath, [indicated] that he would allow and then deny a motion for a directed verdict.” (Vilt, 119 Ill. App. 3d at 835, 457 N.E.2d at 138.) The court found that defendant was never actually acquitted of the charge and the subsequent jury verdict did not have the effect of double jeopardy.

The resolution of the present case is dependent on Stout rather than Vilt. Similar to Stout, the trial judge in this case granted defendant’s motion for a directed verdict on the armed violence count and stated that he was found not guilty of that offense. The ruling was not equivocal. The appellate court in Stout found that such a ruling was an acquittal and that double jeopardy prevented the trial judge from reconsidering the ruling. In contrast, the trial judge in Vilt granted defendant’s motion for a directed verdict and denied it a few moments later when the State pointed out a factual error. The appellate court held that under those circumstances, defendant was never actually acquitted of the offense. In this case, unlike Vilt, it cannot be held that defendant was not actually acquitted of armed violence. The trial judge found that the evidence was insufficient and stated that defendant was found not guilty of armed violence. This ruling resolved some of the factual elements of the offense. As a result, the ruling was an acquittal based on insufficient evidence which the trial judge could not reconsider. Defendant’s subsequent conviction for armed violence violated principles of double jeopardy and must be reversed.

The State argues that double jeopardy should not be applied mechanically, relying on People v. Rudi (1984), 103 Ill. 2d 216, 469 N.E.2d 580; however, Rudi is inapplicable to the present case. In Rudi, the supreme court found that double jeopardy did not prevent a new trial after an acquittal because the first trial was a sham and did not have any of the traditional characteristics of such a proceeding. In this case, unlike Rudi, the trial was valid and had the traditional characteristics of such a proceeding.

Reversed.

MURRAY and GORDON, JJ., concur.