author: PRESIDING JUSTICE GOLDENHERSH

text:
    PROFESSIONAL THERAPY SERVICES, INC., Plaintiff-Appellee, v. SIGNATURE CORPORATION, d/b/a Aurora Nursing Center, Nursing Center of Canton, Clarytona Manor, Flora Nursing Center, Heights Colonial Manor, Sandhaven Convalescent Center, Hillview Retirement Center, Country Care Manor, Cambridge Court Manor, and Meline Manor, Defendant-Appellant.
    Fifth District
    No. 5 — 90—0465
    Opinion filed January 29, 1992.

      Heyl, Royster, Voelker & Allen, of Edwardsville (William J. Becker, of counsel), for appellant.
    P. Michael Read, of Storment & Read, of Belleville, for appellee.
   PRESIDING JUSTICE GOLDENHERSH

delivered the opinion of the court:

Defendant, Signature Corporation, a corporation doing business as Aurora Nursing Center, Nursing Center of Canton, Clarytona Manor, Flora Nursing Center, Heights Colonial Manor, Sandhaven Convalescent Center, Hillview Retirement Center, Country Care Manor, Cambridge Court Manor, and Meline Manor, appeals from a default judgment of the circuit court of Bond County entered in favor of plaintiff, Professional Therapy Services, Inc. After the default judgment was entered, plaintiff commenced garnishment proceedings to enforce the judgment. This appeal arises out of the trial court’s refusal to vacate the default judgment and/or quash the garnishment summons. Defendant raises the following issues: (1) whether the trial court obtained jurisdiction over defendant; (2) in the alternative, if jurisdiction was obtained over defendant, whether the trial court erred in refusing to vacate the default judgment; and (3) whether the trial court erred in awarding attorney fees under section 2 — 611 of the Code of Civil Procedure (the Code) (Ill. Rev. Stat. 1989, ch. 110, par. 2 — 611). We affirm.

The evidence reveals that on February 22, 1989, plaintiff filed suit against defendant for breach of contract, seeking $23,037.12 plus reasonable attorney fees, costs, and interest. The summons was made out to: “Gershon Bassman, c/o Signature Corporation, 6253 North Central Park, Chicago, Illinois 60659.” A return of service was filed on March 17, 1989. Return of service was on a standardized form which provided three categories of service. The deputy who served the summons was to mark the category under which he had served defendant. The form provided, in pertinent part:

“(A) I CERTIFY THAT I SERVED THIS SUMMONS ON THE DEFENDANT AS FOLLOWS:
..X..1 PERSONAL SERVICE: BY LEAVING A COPY OF THE SUMMONS AND COMPLAINT WITH THE NAMED DEFENDANT PERSONALLY.
.....2 SUBSTITUTE SERVICE: BY LEAVING A COPY OF THE SUMMONS AND A COPY OF THE COMPLAINT AT THE DEFENDANT’S USUAL PLACE OF ABODE WITH SOME PERSON OF THE FAMILY, OF THE AGE OF 13 YEARS OR UPWARDS, AND INFORMING THAT PERSON OF THE CONTENTS THEREOF. ALSO, A COPY OF THE SUMMONS WAS MAILED on the _ DAY OF _ 19_ , IN A SEALED ENVELOPE WITH POSTAGE FULLY PREPAID, ADDRESSED TO THE DEFENDANT AT HIS OR HER USUAL PLACE OF ABODE. SAID PARTY REFUSED NAME_
.....3 SERVICE ON: CORPORATION_BUSINESS_ PARTNERSHIP _ BY LEAVING A COPY OF THE SUMMONS AND COMPLAINT (OR INTERROGATORIES) WITH THE REGISTERED AGENT, AUTHORIZED PERSON OR PARTNER OF THE DEFENDANT.”

In the instant case the deputy who allegedly served the summons marked the first category entitled, “Personal Service.” The return stated that Gershon Bassman was served on March 9, 1989, at 8 p.m.

Defendant did not file an answer to the complaint. On October 10, 1989, plaintiff filed a motion for default judgment; the trial court found defendant to be in default on October 12, 1989, and entered judgment against defendant in the amount of $23,037.12 plus $68.80 for court costs and $750 for attorney fees. On October 24, 1989, plaintiff provided the trial court with a copy of the contract between plaintiff and the Flora Nursing Center which stated that the “facility agrees to reimburse therapist for reasonable collection expenses on delinquent accounts, including attorney fees.”

On March 15, 1990, plaintiff filed an affidavit for nonwage garnishment on Albank/Albany Bank & Trust Co., NA, to recover the judgment entered in its favor. On March 23, 1990, the garnishment summons was served with return of service filed on April 3, 1990. On April 16, 1990, defendant filed a motion to quash the garnishment summons upon the bank and to bar the court from entering a turnover order. In its motion, defendant argued that the trial court never obtained jurisdiction over defendant. At the same time, defendant filed a motion to vacate judgment asserting that there was no jurisdiction over defendant and that defendant had “good and valid defenses” to the litigation. The affidavit of Gershon Bass-man accompanied the motion. In his affidavit, Mr. Bassman swore he was not served with summons on March 9, 1989, at 8 p.m. at 6253 North Central Park Avenue, that such address is the address of his ex-wife, and that he has not lived at that address for approximately 5x/2 years. He also swore that he had not received a summons or notification of default until he was notified by the bank that he was overdrawn as a result of the garnishment. Mr. Bassman swore that plaintiff never performed any services for defendant and that defendant was not indebted to plaintiff for any amount of money.

On April 23, 1990, plaintiff filed a response to the motion to vacate judgment which incorporated the counteraffidavit of Michael Riley, president of Professional Therapy Services, Inc. In his affidavit, Riley swore that Bassman was aware of the lawsuit as early as February 27, 1989. Riley’s knowledge came from a personal conversation with Bassman concerning the lawsuit as well as the amounts owed to plaintiff. A copy of the letter of understanding between Bassman and Riley dated February 27, 1989, was attached to and made part of Riley’s affidavit. It reads:

“LETTER OF UNDERSTANDING

February 27, 1989

Signature Corporation

Gershin Bassman

2501W. Peterson Avenue

Chicago, IL 60659

Re: Therapy Services

Dear Mr. Bassman:

Please take this as a letter of understanding. We received your checks February 27, 1989 totalling $2,840.00. On March 30th we understand we will receive checks totalling $2,064.00 and $2,500.00. On April 30, 1989 we understand we will receive checks totalling $2,193.00 plus an amount of $3,106.20. On May 30, 1989 we understand we will receive checks total-ling $4952.42 plus $1,000.00.

If you have any questions, please feel free to call.

Sincerely,

Michael R. Riley President”

Mr. Riley also swore that on or about March 24, 1989, Bassman called him again. In that conversation, Riley and Bassman talked about the pending lawsuit and a payment schedule. Following that conversation, Bassman penned a follow-up letter to Riley. It, too, was attached to and made part of Riley’s affidavit. It read:

“March 24, 1989

Mr. Michael R. Riley, President Professional Therapy Services, Inc.

Copper Bend Centre

824 South 59th Street

Belleville, IL 62223

Dear Mike:

Per our conversation, please contact your attorney to inform him that we have reached a payment schedule agreement on the outstanding balances, so that he can withdraw the lawsuit. Thanks for your cooperation.

Very truly yours,

I si Gershon Bassman

Gershon Bassman Chairman

GB:kt

cc: P. Michael Read, Attorney at Law LaDonna Rosenthal”

Upon receipt of Bassman’s letter, plaintiff’s attorney sent a letter to Bassman concerning the status of the lawsuit and the payment schedule. That letter was also attached to and made part of Riley’s counteraffidavit. It reads:

“March 28, 1989

Mr. Gershon Bassman Chairman

Signature Corporation

2501 West Peterson Avenue

Chicago, IL 60659

Re: Professional Therapy Services, Inc. v. Signature Corporation

Dear Mr. Bassman:

I have received a copy of your letter dated March 24, 1989, addressed to Michael P. Riley. I also have a copy of a memorialization or an oral agreement wherein Signature Corporation is to pay Professional Therapy Services, Inc. certain amounts pursuant to an oral agreement. Please be advised that I am not authorized to dismiss the law suit. I will give you an extension of time to plead up to and including the date of the last payment which is due and owing. My records show that that last payment should be made on or about May 30, 1989.

Following the receipt of the last payment, I will have my client execute a release and I will forward to you a Stipulation for Dismissal so that the action may be dismissed.

Very truly yours,

P. MICHAEL READ

PMR/cmb

cc: Michael R. Riley”

On May 21, 1990, defendant filed a response by Gershon Bass-man to the counteraffidavit of Michael Riley. Bassman swore that defendant, Signature Corporation, was not the owner of any nursing homes which received physical therapy services from plaintiff, that no contracts were signed between plaintiff and defendant, that a contract which had been attached as an exhibit to Riley’s counter-affidavit was not a copy of a contract between plaintiff and defendant, that Bassman did have a conversation with Riley in which Bassman had been told that the suit was going to be filed or had been filed and that such suit would be withdrawn if payments were made according to the schedule, that Bassman did know that suit had been filed but did not know the particulars because he had never been served, that payments were made in accordance with the payment schedule which was incorporated into Riley’s counter-affidavit as exhibit “A,” and that in February it was Bassman’s belief that suit would be withdrawn because payments had been made according to the agreement. On that same day, May 21, 1990, the trial court heard arguments by both parties’ counsel. Plaintiff’s counsel filed the affidavit of the Cook County deputy sheriff who allegedly served the summons in question. The deputy swore that he served a person who identified himself as Gershon Bassman at 8 p.m. on March 9, 1989. After hearing arguments and after considering the file, the trial court denied defendant’s motion to vacate judgment, denied defendant’s motion to quash the garnishment summons, allowed plaintiff’s motion for sanctions pursuant to section 2 — 611 of the Code, and pursuant thereto awarded $725 to plaintiff’s attorney for fees against defendant, Signature Corporation. A stay was ordered pending the outcome on appeal.

On May 22, 1990, defendant filed a notice of appeal. On May 29, 1990, defendant filed a motion to stay enforcement of the judgment pending the outcome of defendant’s motion to reconsider and/ or request for an evidentiary hearing, which were also filed by defendant on May 29, 1990. Defendant then filed a motion to dismiss the appeal in this court. That motion was granted on June 14, 1990. On June 11, 1990, plaintiff filed a motion to dismiss and/or strike defendant’s motion to reconsider and/or request for an evidentiary hearing.

On June 21, 1990, another hearing was held in the trial court. Defendant tendered an affidavit by Miriam Bassman, Gershon Bass-man’s ex-wife. The trial court heard arguments of counsel but refused to consider either Miriam Bassman’s affidavit or the testimony of Gershon Bassman, who was present to testify. Upon reconsideration, the trial court denied defendant’s request to vacate judgment or to have an evidentiary hearing.

A motion to stay was approved in part and denied in part, and defendant was given leave to make an offer of proof. Defendant filed an offer of proof on July 5, 1990. Defendant stated that if given the opportunity, it would have called Gershon Bassman to testify. Bassman would testify that he did not receive the summons and complaint, that he was not at the residence of his ex-wife at 6253 North Central Park on March 9, 1989, that Bassman was and had been a participant in a Thursday night basketball league, and that defendant would call several other participants of the basketball league to testify that he played in such a league and rarely, if ever, missed a Thursday night game. Defendant also stated that it would retender the affidavit of Bassman’s ex-wife in which she swore that on March 9, 1990, Gershon Bassman did not reside at 6253 North Central Park Avenue, that a document was left by the Cook County sheriff’s department at her residence, and that whatever was left by the sheriff’s department would have been delivered to her ex-husband by his children.

On July 23, 1990, defendant again filed a notice of appeal to this court. It is this appeal we now address.

The first issue we are asked to consider is whether the trial court obtained jurisdiction over defendant. Defendant argues, first, that no jurisdiction was obtained over it because Bassman, if served at all, was served as an individual and not as an agent of defendant. Plaintiff responds that Bassman was properly served as the registered agent and/or officer of the corporation and that service upon him binds defendant. Plaintiff contends that the process server’s mistake in marking the category entitled “PERSONAL SERVICE” on the return of service is not controlling, but what is controlling is defendant’s knowledge of service. We agree with plaintiff.

Section 2 — 204 of the Code provides:

“§2 — 204. Service on private corporations. A private corporation may be served (1) by leaving a copy of the process with its registered agent or any officer or agent of the corporation found anywhere in the State; or (2) in any other manner now or hereafter permitted by law. A private corporation may also be notified by publication and mail in like manner and with like effect as individuals.” Ill. Rev. Stat. 1989, ch. 110, par. 2 — 204.

The object of process is to notify a party of pending litigation in order to secure his appearance. (Mid-America Federal Savings & Loan Association v. Kosiewicz (1988), 170 Ill. App. 3d 316, 324, 524 N.E.2d 663, 668; Public Taxi Service, Inc. v. Ayrton (1973), 15 Ill. App. 3d 706, 712, 304 N.E.2d 733, 738.) “In construing sufficiency of the notice, courts focus not on ‘whether the notice is formally and technically correct, but whether the object and intent of the law were substantially attained thereby.’ ” In re Marriage of Wilson (1986), 150 Ill. App. 3d 885, 888, 502 N.E.2d 447, 448, quoting Fienhold v. Babcock (1916), 275 Ill. 282, 289-90, 113 N.E. 962, 965.

Bassman is clearly an agent for defendant. Bassman never disputed his affiliation with defendant and never disputed plaintiff’s assertion that he was president of Signature Corporation. Moreover, in a letter to Michael Riley, which was printed on Signature Corporation’s stationery, Bassman identified himself as “Chairman” of Signature Corporation. The question remains, however, whether Bassman was served in an individual capacity or as an agent of the corporation.

The caption in the instant case reads: “Professional Therapy Services, Inc., A Corporation, v. Signature Corporation, A Corporation, d/b/a,” and thereafter names nine separate nursing homes. The summons in the instant case was made out to: Gershon Bass-man, do Signature Corporation, 6253 North Central, Chicago, Illinois 60659. After a review of the summons in the instant case, we believe it is clear that defendant is Signature Corporation, not Bassman, and, further, that Bassman is being served in his capacity as agent of the corporation rather than in his individual capacity.

Defendant complains that the return of service clearly shows that the summons was intended to be served by personal service on an individual because the deputy who delivered the summons clearly marked the personal service category provided on the form and failed to connect service on Bassman with the corporation in any way. While one can and should consider the return of service in determining whether proper notice was given (see State Bank v. Thill (1986), 113 Ill. 2d 294, 497 N.E.2d 1156; Mid-America Federal Savings & Loan Association v. Kosiewicz (1988), 170 Ill. App. 3d 316, 524 N.E.2d 663), we can find no precedent or legislative enactment that would require us to consider only the return of service. We refuse to consider the return of service in a vacuum but instead choose to consider all the information in the record. After a review of such evidence, we agree with the trial court that summons was properly served on Bassman in his capacity as an agent for defendant and, thus, there was no defect in notice to defendant. As a result, the trial court had proper jurisdiction over Signature Corporation.

Defendant analogizes the instant situation to Leonard v. City of Streator (1983), 113 Ill. App. 3d 404, 447 N.E.2d 489, and First State Bank & Trust Co. v. Winfrey (1987), 165 Ill. App. 3d 767, 520 N.E.2d 763. Neither of these cases is on point. Leonard is distinguishable because there the plaintiff’s intent and ultimately its actions were to file suit against the individual and to serve him as an individual when in fact there was a mistaken belief that the individual was the correct defendant and the real party in interest was a corporation. (Leonard, 113 Ill. App. 3d at 408, 447 N.E.2d at 491-92.) Only after the plaintiff learned of its mistake did the plaintiff attempt to assert that service was actually on the corporation. (113 Ill. App. 3d at 406, 447 N.E.2d at 489-90.) Likewise, Winfrey is distinguishable from the instant case because service was never obtained on the corporate defendant, which was found to be an indispensable party. Winfrey was a breach of contract complaint against “J.P. Winfrey, Individually and d/b/a Illinois Wrecking Co.” (165 Ill. App. 3d at 770, 520 N.E.2d at 765.) Summons was served on J.P. Winfrey through his nephew by substitution. The Winfrey court determined that such substitute service was good only as to the individual and not the corporation, and since the corporate defendant was an indispensable party, failure to obtain jurisdiction over the corporate defendant required vacation of the judgment even as to the individual. (165 Ill. App. 3d at 770, 520 N.E.2d at 765.) Both Leonard and Winfrey are readily distinguishable from the case before us. We are unconvinced by defendant’s arguments and find that the trial court had jurisdiction over defendant.

Defendant next contends, in the alternative, that the trial court erred in finding that the evidence sustained a showing of service on Gershon Bassman. We do not agree.

In the case of personal service, the law is clear that the sheriff’s return of service is prima facie proof of service and can be overcome only by clear and convincing evidence, and courts are required to indulge every reasonable presumption in favor of the sheriff’s return. Mid-America Federal Savings & Loan Association v. Kosiewicz (1988), 170 Ill. App. 3d 316, 524 N.E.2d 663; Mitchell v. Tatum (1982), 104 Ill. App. 3d 986, 433 N.E.2d 978.

The evidence here is conflicting. Bassman was adamant that he was not served on the alleged day of service at 6253 North Central Park Avenue and that he had not lived at such an address for 5V2 years. The return of service indicated that a deputy served a person who identified himself as Gershon Bassman and that person was a white male approximately 45 years of age. In an affidavit later filed by plaintiff, the deputy sheriff who delivered the summons swore that he served the papers on a white male 45 years of age who identified himself as Bassman. The trial court heard this evidence and determined that Bassman did not overcome the presumption of proper service. Given the conflicting testimony in this case, the decision rested on the trial court’s evaluation of the credibility of the witnesses. (See Mitchell, 104 Ill. App. 3d at 988, 433 N.E.2d at 980.) We cannot say that the trial court erred in its determination. Accordingly, we find no error in the trial court’s finding that service was obtained on Mr. Bassman.

Defendant next contends, in the alternative, that even if defendant did not present enough evidence to overcome the presumption in favor of the sheriff’s return, enough evidence was presented that the trial court should have allowed defendant’s request for an evidentiary hearing. Plaintiff responds that the trial court properly denied defendant’s request for an evidentiary hearing. We agree with plaintiff.

Defendant cites Newell v. Jackson (1979), 72 Ill. App. 3d 598, 391 N.E.2d 22, in support of its proposition that the trial court should have conducted an evidentiary hearing. However, nothing in Newell convinces us that the trial court erred in denying defendant’s request for an evidentiary hearing. In Newell, the plaintiff brought an action to recover damages for personal injuries sustained in a fire. The trial court entered a default judgment in favor of the plaintiff, and the defendant filed a special appearance and a petition to vacate judgment alleging she had never been served. The trial court denied the defendant’s petition. The defendant later filed a motion supported by affidavits to vacate the trial court’s order denying the defendant’s petition to vacate. The trial court conducted an evidentiary hearing but ultimately denied the defendant’s motion. The Newell court reversed the trial court’s order, finding that when all the evidence offered by the defendant was considered, the presumption of valid service was overcome by clear and convincing evidence. (Newell, 72 Ill. App. 3d at 600, 391 N.E.2d at 24.) Newell, however, does not stand for the proposition that the trial court must conduct an evidentiary hearing following the denial of a motion to vacate a default judgment. We believe the trial court was within its discretion to refuse defendant’s motion to conduct an evidentiary hearing. The trial court listened to both counsel’s arguments on the issue and heard nothing which convinced it that any new evidence would be proffered by defendant.

The next issue we are asked to address is whether the trial court erred in refusing to vacate the default judgment entered against defendant. Defendant argues that the trial court erred in refusing to vacate the judgment because defendant had meritorious defenses which were presented at the May 21, 1990, hearing. Plaintiff replies that defendant did not assert any meritorious defenses, nor did defendant exercise due diligence in presenting any defense to the default judgment, requirements which must be met before a section 2 — 1401 motion will be granted.

Section 2 — 1401 of the Code provides a comprehensive statutory procedure by which final orders, judgments, and decrees may be vacated “after 30 days from the entry thereof.” (Ill. Rev. Stat. 1989, ch. 110, par. 2 — 1401(a).) The requirements which must be met before a section 2 — 1401 motion will be granted have been set out by our supreme court in Smith v. Airoom, Inc. (1986), 114 Ill. 2d 209, 499 N.E.2d 1381:

“To be entitled to relief under section 2 — 1401, the petitioner must affirmatively set forth specific factual allegations supporting each of the following elements: (1) the existence of a meritorious defense or claim; (2) due diligence in presenting this defense or claim to the circuit court in the original action; and (3) due diligence in filing the section 2 — 1401 petition for relief. (Bonanza International, Inc. v. Mar-Fil, Inc. (1984), 128 Ill. App. 3d 714, 717[, 471 N.E.2d 221, 224]; In re Application of County Treasurer (1983), 114 Ill. App. 3d 921, 923[, 449 N.E.2d 879, 881]; Verni v. Imperial Manor of Oak Park Condominium, Inc. (1981), 99 Ill. App. 3d 1062, 1065[, 425 N.E.2d 1344, 1347]; Lammert v. Lammert Industries, Inc. (1977), 46 Ill. App. 3d 667, 673[, 360 N.E.2d 1355, 1360]; see Nichols, Illinois Civil Practice sec. 4631, at 140-41 (1981); see generally Davis, The Scope of Section 72 of the Civil Practice Act, 55 Ill. B.J. 820 (1967).) The quantum of proof necessary to sustain a section 2 — 1401 petition is a preponderance of the evidence. (Mitchell v. Seidler (1979), 68 Ill. App. 3d 478, 482[, 386 N.E.2d 284, 286]; David Plywood & Lumber Co. v. Sloan (1977), 52 Ill. App. 3d 71, 74[, 367 N.E.2d 101, 103]; McKinnon v. Yellow Cab Co. (1975), 31 Ill. App. 3d 316, 317[, 333 N.E.2d 659, 661].) Whether a section 2 — 1401 petition should be granted lies within the sound discretion of the circuit court, depending upon the facts and equities presented. (Beno v. DeBoer Asphalt Paving Co. (1983), 114 Ill. App. 3d 871, 873-74[, 449 N.E.2d 1021, 1024]; Canton v. Chorbajian (1980), 88 Ill. App. 3d 1015, 1021[, 410 N.E.2d 1166, 1171]; Eastman Kodak Co. v. Guasti (1979), 68 Ill. App. 3d 484, 487[, 386 N.E.2d 291, 293].) As such, a court of review is justified in disturbing the judgment of the circuit court only if it finds that the court abused its discretion. Stallworth v. Thomas (1980), 83 Ill. App. 3d 747, 751[, 404 N.E.2d 554, 557]; M.L.C. Corp. v. Pallas (1978), 59 Ill. App. 3d 504, 510[, 375 N.E.2d 560, 565]; George F. Mueller & Sons, Inc. v. Ostrowski (1974), 19 Ill. App. 3d 973, 977[, 313 N.E.2d 684, 687].” 114 Ill. 2d at 220-21, 499 N.E.2d at 1386.

Defendant’s two specific arguments in this vein seem to us to be contradictory and unable to stand together. First, defendant argues that it had no contracts with plaintiff, that it did not own any of the nursing homes to which plaintiff supplied services, and that plaintiff did not provide any services to defendant. Second, defendant argues that there was an accord and satisfaction. It is well known “that to constitute an accord and satisfaction there must be an honest dispute between the parties, a tender with the explicit understanding of both parties that it was in full payment of all demands, and an acceptance by the creditor with the understanding that the tender is accepted in full payment.” (Hennecke v. Warp (1952), 347 Ill. App. 425, 430, 107 N.E.2d 185, 187.) Thus, defendant, by arguing accord and satisfaction in the instant case, virtually admits the existence of a contract between the parties. Notwithstanding this almost outright admission, we believe the evidence presented to the trial court is contrary to the arguments made by defendant that it did not owe plaintiff any money for services rendered and that defendant cannot be connected to any contractual obligation to plaintiff.

Plaintiff’s complaint alleged that defendant is the owner and operator of several nursing homes and that plaintiff had several contracts with these nursing homes to provide physical therapy services. Defendant denies owning the nursing homes, but its agent, Gershon Bassman, admitted that Signature Corporation is the management company of the various nursing homes listed by plaintiff in its caption of the case. Moreover, defendant’s chairman, Gershon Bassman, wrote a letter to the president of plaintiff corporation, Michael Riley, dated March 24, 1989, in which Bassman asked Riley to notify Riley’s attorney that a payment schedule had been reached and to recommend that the lawsuit be dismissed. Thereby, Bassman acknowledged the lawsuit had been filed and acknowledged defendant owed money to plaintiff for services plaintiff rendered to defendant. In “exhibit A” attached to Michael Riley’s counteraffidavit, a letter written by Riley to Bassman, do Signature Corporation, Riley confirmed payments made by defendant to plaintiff from several nursing homes, most of which were listed in the complaint’s caption. The record is replete with evidence that defendant was doing business with plaintiff, that defendant owed plaintiff money for services rendered, and that defendant knew it owed plaintiff such money. Plaintiff’s complaint stated a cause of action which defendant all but ignored. Defendant must now suffer the consequences of its inertia.

Defendant next contends that it has a meritorious defense in the nature of an accord and satisfaction. An accord is an agreement or settlement of an existing dispute, controversy or demand which presupposes a disagreement as to the amount due. (Quaintance Associates, Inc. v. P L M, Inc. (1981), 95 Ill. App. 3d 818, 420 N.E.2d 567.) Satisfaction is the execution or carrying into effect of an accord. (Black’s Law Dictionary at 1342 (6th ed. 1990).) The following are the requirements of an accord and satisfaction: (1) a bona fide dispute; (2) an unliquidated sum; (3) consideration; and (4) a shared and mutual intent to compromise the claim. (Grove v. Winter (1990), 197 Ill. App. 3d 406, 413, 554 N.E.2d 722, 726.) Here, defendant has not convinced us that it has met any of the requirements of an accord and satisfaction.

We have concluded that the parties agreed money was owed to plaintiff; however, defendant, through Bassman, has contended that it owed no money to plaintiff. The letters between the presidents of the two corporations involved in this litigation agreed upon a payment schedule, but nothing in the record indicates what amount was agreed upon as due and owing. Defendant has not given us any indication what the consideration for this accord may have been. Finally, defendant has not shown us that there was any shared intent to compromise this claim. Because the record is devoid of an amount agreed upon by the parties as due and owing, there is no way to determine if this amount was compromised and if plaintiff agreed to a lesser amount.

The facts indicate that defendant had notice and opportunity to avoid the default judgment by filing an answer or appearance. Instead, defendant, through Bassman, worked out a payment schedule, which according to plaintiff was never completed. “ ‘Relief under section [2 — 1401] is available only to those who diligently pursue their legal defenses and remedies in court, not to those who disregard these procedures on the gamble that better results can be obtained through other procedures or at a cheaper cost.’ ” (Smith v. Airoom, Inc., 114 Ill. 2d at 224, 499 N.E.2d at 1388, quoting Abbell v. Munfield (1979), 76 Ill. App. 3d 384, 388, 395 N.E.2d 78, 81.) We are unconvinced by defendant’s arguments that it had a meritorious defense to this litigation. Accordingly, we find no error in the trial court’s refusal to vacate the default judgment.

The final issue we are asked to consider is whether the trial court erred in awarding attorney fees under section 2 — 611 of the Code. Basically, defendant argues that it does not make sense that the trial court awarded attorney fees pursuant to section 2 — 611 of the Code after the first hearing on May 21, 1990, and then denied plaintiff’s request for attorney fees pursuant to section 2 — 611 of the Code subsequent to the June 21, 1990, hearing on defendant’s motion to reconsider. Plaintiff replies that in the totality of the evidence before the court on the May 21, 1990, hearing, the trial court was within its discretion to award attorney fees. We agree.

Section 2 — 611 of the Code, which provides for attorney fees and costs to be paid by the party opponent, states in pertinent part:

“If a pleading, motion, or other paper is signed in violation of this Section, the court, upon motion or upon its own initiative, shall impose upon the person who signed it, a represented party, or both, an appropriate sanction, which may include an order to pay to the other party or parties the amount of the reasonable expenses incurred because of the filing of the pleading, motion or other paper, including a reasonable attorney’s fee.” Ill. Rev. Stat. 1989, ch. 110, par. 2— 611.

Section 2 — 611 “contains a general grant of power to impose sanctions in a wide variety of situations in which the judicial process is being subverted, and its general application has made it much used.” (Ill. Ann. Stat., ch. 110, par. 2 — 611, Historical and Practice Notes, at 265 (Smith-Hurd 1983).) Whether to award attorney fees lies within the sound discretion of the trial court, and absent an abuse of such discretion, an award of attorney fees pursuant to section 2 — 611 will not be disturbed. Fried v. Barad (1989), 187 Ill. App. 3d 1024, 1027, 543 N.E.2d 1018, 1020.

In the instant case, the trial court did not give any specific reasons for the allowance of attorney fees after the May 21, 1990, hearing nor any reasons for the denial of attorney fees after the June 21, 1990, hearing. However, a review of the record supports the trial court’s award. Initially, defendant, through Bassman’s affidavit, denied owing any money to plaintiff for services rendered, but later admitted that it had set up a payment schedule with plaintiff in the hopes that the litigation would be dismissed. Obviously, defendant knew about the pending litigation but waited until its bank account was garnished before participating in the judicial process. We believe that it is just this type of situation that section 2 — 611 seeks to redress by allowing attorney fees.

The fact that the trial court did not award attorney fees after the June 21, 1990, hearing does not mean that the trial court abused its discretion by awarding the $725 in fees after the first hearing. In our estimation, the trial court refused to punish defendant for asking the trial court to reconsider its decision. We decline to say that the allowance of attorney fees after one hearing, but not after a second hearing where no new evidence is presented, is as a matter of law an abuse of discretion. Therefore, we find that the trial court did not err in awarding attorney fees under section 2 — 611.

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

Affirmed.

RARICK and CHAPMAN, JJ., concur.


source: Caselaw Access Project

author: JUSTICE LEWIS

license: Public Domain

text:
    CHARTER BANK, Plaintiff, v. JAMES E. ECKERT et al., Defendants and Counterplaintiffs (Donald A. Cook, Defendant and Counterdefendant and Counterplaintiff-Appellant; J. Clarke Nims, as Personal Representative for Frederick C. Stiles, Deceased, Defendant and Counterdefendant-Appellee; Forrest Hall et al., Defendants).
    Fifth District
    No. 5 — 90—0685
    Opinion filed January 29, 1992.

      Robert P. Schulhof, of Carbondale, for appellant.
    Norma J. Beedle, of Carbondale, for appellee.
   JUSTICE LEWIS

delivered the opinion of the court:

Plaintiff, Charter Bank (Charter) (formerly First Federal Savings and Loan Association of Sparta), filed a complaint for foreclosure upon the property referred to as Forrest Hall, a student dormitory located in Carbondale, Illinois. In Charter’s complaint, the named defendants included James Eckert, Lary Eckert, and Eckert Land Co. (the Eckerts), Donald A. Cook (Cook), and Frederick C. Stiles (Stiles). Subsequently, the Eckerts filed a counterclaim against Cook, claiming that Cook was personally obligated on the mortgage as he had expressly agreed to pay and to assume the mortgage on Forrest Hall in a purchase agreement involving that property. In turn, Cook filed a counterclaim against Stiles, claiming Stiles was liable to Cook for any liability incurred as a result of the mortgage foreclosure under an indemnification covenant contained in a contract executed between Stiles and Cook. Ultimately, the circuit court of Jackson County entered a judgment for foreclosure on Forrest Hall, Forrest Hall was sold at a public auction, and a deficiency judgment was entered against the Eckerts and in favor of Charter. Following the consideration of the Eckerts’ counterclaim against Cook and of Cook’s counterclaim against Stiles, the court held that Cook was liable to the Eckerts for the deficiency judgment on Forrest Hall and for other related costs, but the court determined that Stiles was not liable to Cook for the deficiency judgment under the indemnification covenant invoked by Cook. Cook appeals from this order, but the Eckerts and Charter are not involved in this appeal.

On appeal, Cook raises three issues: (1) that the court’s decision that Stiles was not liable to Cook was erroneous; (2) that the court erred in its decision of September 14, 1990, as the court had already ruled on liability in a previous order in which the court held that Stiles was liable to Cook, thereby reversing itself by its subsequent decision; and (3) that the parties were denied a fair and impartial hearing because of the judge’s improper and prejudicial comments. We affirm.

The facts of this case are as follows: On August 29, 1986, Charter and the Eckerts entered into a mortgage concerning Forrest Hall, a dormitory located in Carbondale, Illinois, to secure a note of indebtedness of $450,000 between Charter and the Eckerts. On December 31, 1986, Cook purchased Forrest Hall from the Eckerts for $550,000. Under the purchase agreement between Cook and the Eckerts, Cook was to pay a down payment of $100,000 cash to the Eckerts and was to assume the Eckerts’ mortgage on Forrest Hall for the balance of the purchase price. According to the language of the purchase agreement, the Eckerts understood that immediately following the Eckerts’ sale of Forrest Hall to Cook, Cook was to transfer the title to Forrest Hall to a partnership in which Cook and Stiles were partners. The Eckerts further understood that, although the partnership was taking title to the property, the partnership was not assuming the personal obligation of Cook on the mortgage. An amendment to the purchase agreement between Cook and the Eckerts, also executed on December 31, 1986, stated that Cook agreed to “indemnify and save harmless Seller [Eckerts] from all claims, costs, attorneys fees and damages which Seller may incur by reason of default in payment of the aforesaid note and mortgage” on Forrest Hall by Cook.

Cook and Stiles entered into a partnership agreement on December 30, 1986, the day before Cook purchased Forrest Hall. Under the partnership agreement, the purpose of the partnership was to own, manage and lease Forrest Hall as student housing. Pursuant to the partnership agreement, Cook was to purchase Forrest Hall and was to assume the mortgage of this real estate, but immediately following Cook’s purchase of Forrest Hall, he was to convey the property to the partnership “subject to the mortgage,” which Cook did. Under the purchase agreement between Cook and the partnership, executed the same day as the partnership agreement, Cook sold Forrest Hall to the partnership for $650,000. The purchase price of Forrest Hall consisted of a down payment of $200,000 cash from the partnership ($150,000 from Stiles and $50,000 from Cook), and the balance of $450,000 consisted of the first mortgage with Charter Bank. Under the purchase agreement between Cook and the partnership, neither the partnership nor Stiles was assuming personal liability on the mortgage, but Cook was to continue to assume the obligation of the mortgage. After conveying Forrest Hall to the partnership, the partnership made the mortgage payments and paid the real estate taxes on the property.

Subsequently, on September 30, 1988, Stiles and Cook dissolved their partnership. Under the purchase agreement wherein Stiles bought out Cook’s interest in the partnership, Stiles agreed to “indemnify and hold Cook harmless with respect to any and all liability, loss, expense which may be incurred by Cook as a result of any actions taken or not taken” by Stiles or the partnership after the execution of the agreement. Subsequent to this purchase agreement, the partnership discontinued paying the mortgage payments and the real estate taxes on Forrest Hall.

As a result of the nonpayment on the mortgage, Charter filed a complaint for foreclosure on Forrest Hall against the Eckerts, Cook and Stiles on January 4, 1989. As was noted previously, in the Eckerts’ answer to the complaint filed on February 16, 1989, the Eckerts counterclaimed against Cook based upon their purchase agreement. On March 1, 1989, Cook filed his answer to the complaint for foreclosure, his answer to the Eckerts’ counterclaim, and a counterclaim against Stiles. All of Cook’s pleadings filed on March 1, 1989, were verified. Subsequently, on March 15, 1989, Stiles filed an unverified answer to the complaint for foreclosure and an affirmative defense to the complaint, and on March 21, 1989, Stiles filed his unverified answer to Cook’s counterclaim and an affirmative defense to the counterclaim.

Cook filed a motion for a judgment on the pleadings against Stiles on April 5, 1989. In that motion, Cook averred that since Stiles filed an unverified answer to Cook’s counterclaim, all of the matters alleged in Cook’s counterclaim were admitted pursuant to section 2— 605 of the Code of Civil Procedure. (Ill. Rev. Stat. 1989, ch. 110, par. 2 — 605.) Because all matters in his counterclaim were admitted, Cook asked that the court enter a judgment on the pleadings in his favor.

Upon considering Cook’s motion for judgment on the pleadings, the court entered an identical order on both July 13, 1989, and July 21, 1989, in which the court found that Stiles’ “unexcused unverified Answer to Cook’s verified Counter Claim does not constitute an Answer, and that a judgment on the pleadings is justified” and granted Cook’s motion for judgment on the pleadings. Further, the court found that, even if Stiles’ answer were considered, Stiles’ responses to the counterclaim did not go to the heart of the counterclaim. The court held that Stiles was liable to Cook for all costs, attorney fees, and other expenses incurred, “including any liability to Eckert on a possible deficiency.” The amount of damages was reserved for prove up at a later date. In this order, the court stated that there was no just reason for delaying appeal, so Stiles appealed the court’s order granting Cook’s judgment on the pleadings to this court. In an earlier opinion entered by this court (Charter Bank v. Eckert (1990), 198 Ill. App. 3d 499, 555 N.E.2d 1212), Stiles’ appeal of this issue was dismissed as it was determined that the order granting Cook judgment on the pleadings was not a final and appealable order, and that this court had no jurisdiction to consider the appeal.

Prior to considering Cook’s motion for judgment on his pleadings against Stiles, the court entered a judgment for foreclosure on Forrest Hall and ordered a public sale of the property on May 19, 1989. In the judgment of foreclosure, it was determined that Charter Bank was entitled to a total balance of $481,904.15 on the mortgage of Forrest Hall, and that the property was to be sold at a public auction on August 18, 1989. At the public sale of the property, Forrest Hall was sold to the Eckerts for $305,000 at the sale, which left a deficiency on the mortgage.

On August 15, 1989, the court entered an order granting the Eckerts’ motion for judgment on the pleadings against Cook. The court found that Cook was liable to the Eckerts for any deficiency resulting from the foreclosure on the mortgage owed by the Eckerts to Charter. A report of the public sale established that a deficiency of $189,845.99 remained on the mortgage after the sale, and on August 24, 1989, the court confirmed the report and entered a deficiency judgment.

The court held the hearing on the prove up of damages on August 15, 1990, and entered an order on September 14, 1990. In this order, the court again determined that Cook was liable to the Eckerts for costs, attorney fees and other expenses, including the deficiency judgment entered on August 24, 1989, against the Eckerts and in favor of Charter, for a total amount of $237,249.30 plus interest. The court also held that Stiles was not liable to Cook on the note subject to the foreclosure or for the deficiency judgment, attorney fees or other expenses. It is from this order that Cook appeals.

Because of the nature of Cook’s contentions, we will discuss the issues out of the order raised and will first consider Cook’s issue that the circuit court erred when it found Stiles not liable to Cook for the deficiency judgment resulting from the sale on the foreclosure of Forrest Hall. Cook argues that since the court had previously found Stiles liable to Cook in its order of July 21, 1989, the court was only to consider the amount of damages owed to Cook by Stiles at the August 15, 1990, hearing. Cook argues that the court’s refusal to follow its prior order was reversible error.

A search of the law has revealed no cases absolutely on point; however, in the Historical and Practice Notes under section 2 — 615 of the Code of Civil Procedure it is stated:

“The motion for judgment on the pleadings, authorized by subsection (e), is similar to a motion for summary judgment (as to which see section 2 — 1005, infra), but usually comes at or shortly after the answer and reply, if any, are filed.” (Ill. Ann. Stat., ch. 110, par. 2 — 615, Historical and Practice Notes, at 409 (Smith-Hurd 1983).)

Given the foregoing, we find that the law applicable to summary judgments is helpful in the determination of this issue.

It has been held that a circuit court has the inherent power to modify or vacate an interlocutory order granting summary judgment at any time before final judgment. (Rowe v. State Bank (1988), 125 Ill. 2d 203, 531 N.E.2d 1358.) Thus, if a court can vacate a summary judgment before final judgment is entered, so can the court vacate a judgment on the pleadings prior to entry of the final judgment, even when the order is vacated sua sponte, as the court did here. Further, because the court’s initial order granted judgment on the pleadings on an erroneous basis, the court had an obligation to correct itself.

The court, in granting the judgment on the pleadings in favor of Cook, determined that the judgment was justified since Stiles had not filed verified pleadings to Cook’s counterclaim and, thus, Stiles’ unverified answer did not constitute an answer. In that regard the court was correct, for “[wjhere the complaint is verified, an unverified answer must be disregarded as an answer.” (Florsheim v. Travelers Indemnity Co. (1979), 75 Ill. App. 3d 298, 308, 393 N.E.2d 1223, 1232.) The effect of filing an unverified answer has the same effect as if no answer had been filed at all. (Florsheim, 75 Ill. App. 3d at 309, 393 N.E.2d at 1232.) Where no answer is filed, all well-pleaded facts are admitted, but that is all the effect it has. (Florsheim, 75 Ill. App. 3d at 309, 393 N.E.2d at 1232.) However, the failure to file an answer does not admit the truth of legal conclusions alleged, does not admit that the facts alleged constitute a cause of action, and does not act to admit facts not alleged in the complaint. (Florsheim, 75 Ill. App. 3d at 309, 393 N.E.2d at 1232.) In Cook’s complaint, he alleged that Stiles had agreed to indemnify Cook for liability incurred as a result of actions taken or not taken by Stiles or the partnership, and since it was Stiles’ failure to pay the mortgage {i.e., action not taken by Stiles) which incurred the deficiency judgment for which Cook was liable, Stiles was liable to Cook. We find that these assertions constituted legal conclusions and, as such, are not well-pleaded facts justifying a judgment on the pleadings.

Similarly, verified allegations do not constitute evidence except by way of admission. (In re Marriage of Osborn (1990), 206 Ill. App. 3d 588, 594, 564 N.E.2d 1325, 1328.) However, these admissions are limited to those of facts and not of law. (Osborn, 206 Ill. App. 3d at 594, 564 N.E.2d at 1328.) As this court stated in Osborn, “[Questions of contractual validity or interpretation are matters of law for the court to decide.” (Osborn, 206 Ill. App. 3d at 594, 564 N.E.2d at 1328.) Here, Cook’s allegation that Stiles had agreed to indemnify him was a matter of contractual interpretation and, thus, a question of law. Therefore, the court erred in determining in its order of July 21, 1989, that Stiles was liable to Cook in its judgment on the pleadings, as this was a matter of contractual interpretation and a question of law and could not be accepted as an admission by Cook in his counterclaim. The issue of Stiles’ liability under the contractual interpretation remained for determination, and the court erred in its statement that Stiles was liable to Cook in its previous order. Because the court’s holding in its earlier order was erroneous, it was obligated to vacate its ruling prior to entry of its final order, which the court did. Therefore, the court did not err when it, in essence, vacated its prior order finding Stiles liable to Cook.

We next consider whether the court’s construction of the indemnity covenant in the purchase agreement in which Stiles bought out Cook’s interest in the partnership, that Stiles was not liable to Cook under the indemnity clause, was erroneous. An indemnity agreement is to be construed as any other contract, and under the rules of contract construction, the intention of the parties is the paramount concern. (Plepel v. Nied (1982), 106 Ill. App. 3d 282, 435 N.E.2d 1169.) When construing an agreement to indemnify, the agreement must be given a fair and reasonable interpretation based upon a consideration of all the language and provisions. (Bates v. Select Lake City Theater Operating Co. (1979), 78 Ill. App. 3d 153, 397 N.E.2d 75.) The interpretation of an indemnity agreement also depends upon the factual setting of the case. (Svenson v. Miller Builders, Inc. (1979), 74 Ill. App. 3d 75, 392 N.E.2d 628.) An indemnity agreement must be set forth in clear and explicit language so that an indemnitor’s obligations are manifestly determinable. (See Burlington Northern R.R. Co. v. Pawnee Motor Service, Inc. (1988), 171 Ill. App. 3d 1043, 525 N.E.2d 910.) Although indemnity agreements are not void, they nevertheless are not favored and must be strictly construed. Bates, 78 Ill. App. 3d at 155. 397 N.E.2d at 77.

The indemnity provision which Cook contends establishes Stiles’ liability was included in the purchase agreement between Cook and Stiles, wherein Stiles bought out Cook’s interest in two partnerships in which Stiles and Cook were partners. The pertinent paragraph involved states as follows:

“INDEMNIFICATION. Stiles and H. Stiles [Stiles’ wife] agree that that [sic] they will indemnify and hold Cook harmless with respect to any and all liability, loss, [and] expense which may be incurred by Cook as a result of any actions taken or not taken by Stiles, H. Stiles or the Partnerships after the execution of this Agreement.”

It is Cook’s contention that Stiles’ failure to pay the mortgage and the real estate taxes on Forrest Hall was an action “not taken” by Stiles which incurred the deficiency judgment, as well as Cook’s attorney fees and expenses incurred in defense of the foreclosure action, and that under the indemnity clause of the purchase agreement, Stiles was liable to Cook for the deficiency judgment and his attorney fees and related costs.

Using the principles of construction of contracts and indemnity agreements enumerated above, we determine, based upon the circumstances surrounding the purchase agreement and the language of the purchase agreement containing the indemnity covenant as a whole, that Stiles was not liable to Cook for the deficiency judgment on Forrest Hall. The language used in the indemnity covenant was very broad and nonspecific, and a review of the purchase agreement containing the indemnity covenant reveals that the other terms contained therein concern the rights and the withdrawal of the rights in the partnerships, i.e., an accounting of the partnerships’ activities, the payment due to Cook to buy out his interest in the partnerships, and so on. Nothing in these clauses clarified what the indemnitor’s obligations were to be under the indemnity covenant. It is especially notable that there was no reference to the mortgage for Forrest Hall included in this purchase agreement, but there was another clause in the agreement concerning notes of indebtedness on Freeman Hall (Cook’s and Stiles’ other partnership) on which both Cook and Stiles were liable. In the clause involving the notes on Freeman Hall, Stiles expressly agreed to indemnify and hold Cook harmless as to liability on the two notes, in the event Stiles was unable to obtain a release of Cook’s liability on the notes. Hence, given the specific reference to two notes held on Freeman Hall from which it can be inferred that both Stiles and Cook had liability, the omission of any reference to the mortgage on Forrest Hall, and the lack of specificity in the indemnification covenant itself, it appears that the parties did not intend that Stiles or the partnership was to indemnify Cook with regard to the mortgage.

Further, an analysis of the language of the purchase agreements between Cook and the Eckerts and between Cook and Stiles, in which the title to Forrest Hall was conveyed, indicates that neither the Forrest Hall partnership nor Stiles had personal liability on the mortgage of Forrest Hall. In the purchase agreement between the Eckerts and Cook, the following pertinent provision stated:

“2. TERMS OF PURCHASE.
* * *
B. The balance of FOUR HUNDRED FIFTY THOUSAND ($450,000) DOLLARS by taking the premises subject to the FIRST MORTGAGE on the premises, with FIRST FEDERAL SAVINGS AND LOAN OF SPARTA [predecessor to Charter Bank], as Mortgagee, in that approximate amount, by agreeing to assume all obligations with respect thereto and by agreeing to hold harmless SELLER [Eckerts] from any obligation with reference thereto. SELLER understands and agrees that PURCHASER [Cook] will immediately after closing transfer title to the premises to a partnership of which he is a partner, and that although the partnership will also take title subject to the mortgage, the partnership will not assume the personal obligation under the promissory under the promissory [sic] note.”

Similarly, the purchase agreement conveying title to Forrest Hall from Cook to the partnership stated in pertinent part as follows:

“2. TERMS OF PURCHASE.
* * *
B. The balance of FOUR HUNDRED AND FIFTY THOUSAND ($450,000) DOLLARS by taking the premises subject to the FIRST MORTGAGE with FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF SPARTA as Mortgagee, in that approximate amount, provided, however that neither PURCHASER [the partnership] or its partners [Cook and Stiles] in such capacity are assuming the personal obligation to pay the promissory note secured by said Mortgage, an obligation which will have been assumed (at least as to the Makers thereof) by SELLER [Cook] in connection with his purchase of the property immediately preceding this closing.
* * *
6. LEASES.
PURCHASER acknowledges the existence of certain leases on apartments located in the properties in question, of which a sample is attached as Exhibit B, and agrees that possession shall be delivered subject to such leases, and all terms and provisions thereof. All leases and damage deposits shall be given and assigned to PURCHASER. It is understood that PURCHASER shall assume all rights, obligations and duties of SELLER under the existing leases as of possession. PURCHASER agrees to indemnify and save harmless SELLER from all claims, costs, attorneys fees and damages which they might incur by reason of any claims made by lessees of existing leases on account of any matter occurring after possession.”

From the foregoing provisions, it is clear that the Eckerts transferred title to Forrest Hall to Cook subject to the mortgage, and additionally, Cook expressly agreed in the purchase agreement between Cook and the Eckerts to agree to pay and to assume the mortgage on Forrest Hall. However, in the purchase agreement between Cook and Stiles, such agreement and assumption of the mortgage was not present. Generally, the law provides that when a person takes property “subject to” an indebtedness, he does not have a personal obligation to pay the indebtedness or to indemnify the grantor against the payment of the indebtedness unless he has expressly agreed to do so. (Pollard v. Wag-goner (1988), 165 Ill. App. 3d 501, 519 N.E.2d 18.) Thus, since Stiles had no personal obligation to pay the indebtedness on the mortgage, we perceive no basis upon which to hold that Stiles was to indemnify Cook for this obligation. Further, the language in the purchase agreement between Cook and the partnership for the transfer of title to Forrest Hall to the partnership discussed indemnification for liability on the leaseholds involved with Forrest Hall. It is more logical to infer that the indemnity covenant included in the buyout purchase agreement was intended to cover the liability involved in the leases of Forrest Hall than it is to infer that the indemnity covenant concerned the mortgage upon which the partnership had no legal obligation. Therefore, the court correctly interpreted the covenant of indemnification included in the partnership buyout purchase agreement to exclude the note of indebtedness on the mortgage of Forrest Hall.

The last issue raised by Cook is that the court failed to give the parties a fair and impartial hearing. Cook supports his contention by asserting two statements made by the trial judge. We find that Cook has waived this issue. Supreme Court Rule 341(e)(7) requires that arguments in a brief contain a reference to the record and a citation of authorities relied upon. (134 Ill. 2d R. 341(e)(7).) In addition, not only must an argument contain citations to authority under the supreme court rules, but the authority cited must be relevant authority. (Britt v. Federal Land Bank Association (1987), 153 Ill. App. 3d 605, 608, 505 N.E.2d 387, 389.) Failure to cite relevant authority in support of a bare argument will not merit consideration of the issue on appeal. (Britt, 153 Ill. App. 3d at 608, 505 N.E.2d at 389.) The issue raised by Cook in his last argument was that he failed to receive a fair and impartial trial because of the trial court’s alleged prejudicial and improper remarks, but the only authority cited by Cook, J.R. Sinnott Carpentry, Inc. v. Phillips (1982), 110 Ill. App. 3d 632, 443 N.E.2d 597, concerned issues regarding the manifest weight of the evidence. This is not relevant authority. Thus, Cook has not complied with the requirements of Supreme Court Rule 341(e)(7) as he has devoted two paragraphs to this issue and the sole authority cited by Cook is not relevant to the issue presented. Therefore, we decline to consider this issue.

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

Affirmed.

HOWERTON and CHAPMAN, JJ., concur.


author: JUSTICE RARICK

text:
    HARLEY EMERSON et al., Plaintiffs-Appellees and Cross-Appellants, v. AMERICAN BANKERS INSURANCE COMPANY OF FLORIDA, Defendant-Appellant and Cross-Appellee.
    Fifth District
    No. 5 — 89—0787
    Opinion filed January 29, 1992.

      Thomas F. Crosby, of Winters, Brewster, Murphy, Crosby & Patchett, of Marion, for appellant.
    Douglas N. Dorris, of Harris & Lambert, of Marion, for appellees.
   JUSTICE RARICK

delivered the opinion of the court:

Plaintiffs, Harley Emerson and Rogelio Arcuino, brought an action in the circuit court of Pope County against American Bankers Insurance Company of Florida (American) for refusing to pay the full cash value of a $50,000 livestock insurance policy covering a standard-bred stallion named Tough Cookie. The initial complaint alleged breach of contract. Pursuant to policy provisions, the dispute was submitted to arbitration and plaintiffs were awarded $40,000. Plaintiffs thereupon added additional counts to their complaint, seeking damages under section 155 of the Illinois Insurance Code (Ill. Rev. Stat. 1987, ch. 73, par. 767) and damages for breach of the duty of good faith and fair dealing. The trial court dismissed the breach of contract claim and entered judgment on the arbitration award. Plaintiffs subsequently added another count seeking damages for intentional infliction of emotional distress. Prior to trial, the trial court denied American’s motion in limine to exclude evidence that the horse had a value greater than that awarded by arbitration, and the court granted plaintiffs’ motion in limine to exclude evidence of the arbitration award.

Emerson and Arcuino were in the business of breeding horses. Plaintiffs testified that a premier stallion was vital to the operation’s success. According to the record, Tough Cookie was purchased in 1983 to fulfill this role. Plaintiffs obtained insurance from American through Classic Insurance Company, a Kentucky insurance agency. Livestock policies were rewritten each year, and in 1985 Classic sent Emerson an application requesting, inter alia, the number of mares serviced in 1985. According to the application, Tough Cookie serviced 27 mares in 1984 and was to service 30 in 1985. A $50,000 policy was issued in March of 1985 covering any claim made while the horse was in the United States or Canada. Tough Cookie died in January of 1986. Included with plaintiffs’ proof of loss were breeding reports for 1984 and 1985, which indicated that Tough Cookie had serviced 20 mares in 1984 and 19 in 1985, 12 of which were owned by plaintiffs. Because of the discrepancy between the application and the breeding reports, American had Tough Cookie appraised by two appraisers. They valued the horse at $10,000 and $15,000, respectively, but considered only the market in the United States and Canada. Emerson also obtained two appraisals of Tough Cookie, one for $50,000 and one for $55,000. These appraisers testified that their appraisals were based upon sale in the European market.

American rejected plaintiffs’ proof of loss. According to the rejection letter, the bases for American’s decision were:

“1. The insurance policy is based on actual cash value at the time of death. Although the two appraisals that you furnished the insurance company on your behalf reflected a value of $50,000 to $55,000, these appraisals were based on the animal being shipped overseas. Even if this transaction would have taken place during the policy period, there still would have been shipping costs, fees, commissions, import tax, etc. It is apparent that these costs would have made it uneconomical to the seller.
2. Misrepresentation regarding the application for insurance. The application that you prepared stated that the stallion services 27 mares during 1984 and had serviced 30 mares in 1985. However, our investigation revealed that 20 mares were bred to the stallion in 1984 and 19 mares were bred in 1985. The animal’s stud fee was listed at $1000[;] however, the majority of the mares were either owned by you or Dr. Arcuino. It is apparent that the revenue that was generated by the stallion in 1985 was very minimal.”

The letter made a settlement offer of $25,000. Plaintiffs refused and this suit followed.

At trial, Tom Keller, the adjuster, testified that Skip Whitlock, American’s director of casualty claims, made the decision not to consider the overseas market because Tough Cookie was never overseas and because plaintiffs’ appraisers did not take into account exportation costs in making their appraisals. Whitlock testified that in 1986 he had no knowledge of an overseas market for trotters, nor was he aware of any custom or practice regarding who paid export costs. Whitlock further testified that he did not feel that plaintiffs’ appraisals were relevant because the horse was in the United States at the time of death. Tony Sholes, American’s senior claims supervisor, and Keller also testified that they were not familiar with the overseas market.

After rejection of the claim, Emerson obtained a replacement stud named San Phillipe for $9,500. Emerson indicated that a stallion closer to Tough Cookie’s stature could have been obtained had American paid the full policy amount. San Phillipe had never raced, had no breeding performance record, and generated much lower revenues.

Emerson testified that Arcuino was very upset and angry when told that American would not pay full policy proceeds. Emerson also testified that he too was angry and upset and had argued with Keller numerous times. He stated that Keller told him that American would not go beyond $25,000 and that he might just as well hire an attorney because American “[had] lawyers just sitting around doing nothing.” Keller denied this. Janet Emerson testified that her husband has been short-tempered and irritable since this incident, but she admitted that he never sought any type of medical treatment.

The jury found in favor of plaintiffs and awarded them $45,000 on count III and a total of $55,000 on count IV. The trial court entered judgment thereon and awarded plaintiffs $33,072.23 on their section 155 claim. American appeals.

American first argues that plaintiff’s complaint failed to state a cause of action for breach of the duty of good faith and fair dealing. American maintains that compensatory damages for breach of the duty of good faith and fair dealing are preempted by section 155 of the Illinois Insurance Code (Ill. Rev. Stat. 1987, ch. 73, par. 767) unless the alleged breach involves conduct other than that prescribed by statute. Section 155 provides in pertinent part:

“(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.” Ill. Rev. Stat. 1987, ch. 73, par. 767.

There has been considerable disagreement both among the various divisions of our appellate court and among numerous Federal district court decisions over the preemptive effects of section 155. (W.E. O’Neil Construction Co. v. National Union Fire Insurance Co. (N.D. Ill. 1989), 721 F. Supp. 984.) 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, this court held that punitive damages could be recovered from an insurer who breaches its duty to act in good faith. The effect of section 155 was not addressed as it was inapplicable, because at the time Ledingham was decided, section 155 provided for an award of attorney fees but no other penalty.

The General Assembly, in 1977, amended section 155 to provide for the imposition of additional penalties where an insurer’s refusal or delay in payment of claims was vexatious or unreasonable. Several subsequent decisions of the appellate court declined to follow Ledingham, holding that section 155 preempts any common law action based upon breach of the implied covenant of good faith and fair dealing, and that damages were limited to those provided by section 155. Combs v. Insurance Co. of Illinois (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 Co. (1983), 120 Ill. App. 3d 294, 458 N.E.2d 79; Hamilton v. Safeway Insurance Co. (1982), 104 Ill. App. 3d 353, 432 N.E.2d 996; Tobolt v. Allstate Insurance Co. (1979), 75 Ill. App. 3d 57, 393 N.E.2d 1171.

Both Kaniuk v. Safeco Insurance Co. (1986), 142 Ill. App. 3d 1070, 492 N.E.2d 592, and Debolt v. Mutual of Omaha (1978), 56 Ill. App. 3d 111, 371 N.E.2d 373, held that section 155 preempted punitive damages but left open the question of whether section 155 preempted compensatory damages for breach of the duty of good faith and fair dealing.

Other decisions have held that section 155 preempts punitive damages, but not compensatory damages. (Calcagno v. Personalcare Health Management, Inc. (1991), 207 Ill. App. 3d 493, 565 N.E.2d 1330; McCall v. Health Care Service Corp. (1983), 117 Ill. App. 3d 107, 452 N.E.2d 893; Hoffman v. Allstate Insurance Co. (1980), 85 Ill. App. 3d 631, 407 N.E.2d 156.) Addressing the effect of the amendment to section 155, this court, in Kohlmeier v. Shelter Insurance Co. (1988), 170 Ill. App. 3d 643, 525 N.E.2d 94, departed from Ledingham, holding that common law tort actions seeking punitive damages have been preempted by the statute. Citing agreement with Hoffman, however, this court further held that in appropriate cases, compensatory damages might be recovered for a breach of the duty of good faith and fair dealing. (Kohlmeier, 170 Ill. App. 3d at 657, 525 N.E.2d at 104.) We reaffirm that position today, and to the extent our holding conflicts with the positions taken by the other districts of this court, we decline to follow them. The question of what type of conduct will support a recovery of compensatory damages leads us to American’s second argument: Whether plaintiffs allege the necessary elements to state a claim for breach of the duty of good faith and fair dealing.

What constitutes bad faith depends largely upon the particular circumstances of the case, particularly the insurer’s conduct and its reasons for nonpayment. (See Annot., 33 A.L.R.4th 579, 583 (1984).) Reviewing various authorities which discuss this issue, we find mention of elements such as the insurer’s refusal to pay despite knowledge that it was liable and knowledge that refusal would result in serious damage to the insured. (See Scheinfeld, v. American Family Mutual Insurance Co. (N.D. Ill. 1985), 624 F. Supp. 698; Langendorf v. Travelers State Insurance Co. (N.D. Ill. 1985), 625 F. Supp. 1103; Barr Co. v. Safeco Insurance Co. (N.D. Ill. 1984), 583 F. Supp. 248.) Examples of conduct found to support a finding of bad faith include: failure to adequately investigate a claim or denial of the claim without adequate supporting evidence; failure to evaluate a claim objectively; interpreting policy provisions in an unreasonable manner; unreasonably low settlement offers; reliance on misrepresentations in the insurance application which are very minor, or where the insurer’s agent knowingly filled out the application falsely; and abusive or coercive practices designed to compel compromise of a claim. See Annot., 33 A.L.R. 4th 579 (1984); see also Cohen, No Faith in Bad Faith, 41 Hastings L.J. 201, 205-06 (1989), citing S. Ashley, Bad Faith Liability §212 (1987).

American argues that mere refusal to pay a claim does not constitute a breach of the duty of good faith and fair dealing. (Florsheim v. Travelers Indemnity Co. (1979), 75 Ill. App. 3d 298, 310, 393 N.E.2d 1223, 1233.) Citing Siegal v. Health Care Service Corp. (1980), 81 Ill. App. 3d 784, 401 N.E.2d 1037, this court in Pekin Insurance Co. v. Home Insurance Co. (1985), 134 Ill. App. 3d 31, 479 N.E.2d 1078, held that the refusal to pay must be accompanied by “vexatious, unreasonable, outrageous conduct,” using language very similar to that contained in section 155. Indeed, “bad faith” has been held to be the semantic equivalent of “vexatious and unreasonable” conduct. (See McCall, 117 Ill. App. 3d at 112, 452 N.E.2d at 897; see also Roberts v. Western-Southern Life Insurance Co. (N.D. Ill. 1983), 568 F. Supp. 536.) We conclude that conduct such as that set forth in the preceding paragraph constitutes “vexatious, unreasonable and outrageous” conduct and supports a finding of bad faith for which compensatory damages may be recovered.

Count III of plaintiffs’ complaint alleges, inter alia, that American rejected plaintiffs’ claim for the full policy proceeds despite the knowledge that:

“At the time of this rejection and settlement offer, the defendant knew the following: 1) an overseas trotting market existed and was strong, and the custom and practice was that buyers paid all exportation costs; 2) the two figures allegedly misrepresented by the plaintiffs on their application were in one instance supplied by the insurer and in the second instance were necessarily only an estimate of future breeding performance for an upcoming season, or, in the alternative, were the number of mares which were exposed to the stallion, as opposed to the number of mares which actually became impregnated; 3) that it was ignoring factors — overseas market value and the Illinois Breeder’s Cup Program — which it knew would increase the actual cash value of the horse; and 4) defendant’s own agents had appraised the horse at $50,000 and had accepted premiums for the amount of coverage, and now only a few months later defendant’s agents were claiming that the horse appraised for as little as $10,000. The conveyance by the insurer to the insureds of this rejection letter, despite the insurance company having knowledge of this information contradicting the reasoning behind the rejection, was intended to induce and to coerce the insureds into accepting a settlement in an amount substantially less than the actual cash value ***.”

We find the allegations in count III of the complaint sufficient to state a cause of action for breach of duty of good faith and fair dealing.

American next argues that the verdict on count III was against the manifest weight of the evidence. On review, a verdict will not be overturned “unless, considering all the evidence in the light most favorable to the party who prevailed at trial, the jury’s conclusion is palpably erroneous and wholly unwarranted.” (Holmes v. Sahara Coal Co. (1985), 131 Ill. App. 3d 666, 674, 475 N.E.2d 1383, 1389.) With this standard in mind, we turn to review the evidence presented at trial. One of the bases upon which plaintiffs’ claim of bad faith rests is American’s refusal to consider the overseas market in determining the actual cash value of Tough Cookie. American’s defense of its refusal to consider the overseas market potential of Tough Cookie was the insurance policy’s geographic-limitation provision. That provision provided that American “[would] not be liable for any claim on any animal that is removed from: 1) the U.S.; and/or 2) Canada.” American maintained at trial, and maintains on appeal, that this provision excludes consideration of overseas markets in assessing actual cash value because the risk was underwritten based upon the horse’s presence in the United States or Canada.

Only one of American’s appraisers, Curt Greene, testified at trial. Greene was the general manager of Tattersaw Sales, a sale barn in Lexington, Kentucky. Greene testified that as general manager, he was engaged primarily in public relations and administrative duties. When a horse was sold, he always hired a pedigree reader. Curiously enough, the reader he usually employed was Carl Becker, whom Greene described as “without question” the foremost pedigree reader in the nation. In rendering his appraisal of $15,000, Greene did not consider the overseas market because “[t]hat wasn’t what [he] was asked to do.” Greene testified that there was a strong overseas market for standardbred stallions and that he told American that Tough Cookie would probably bring a higher price overseas. Finally, Greene admitted that he did not consider the Breeders Cup Program in making his appraisal.

Carl Becker, one of the appraisers employed by plaintiffs, testified that he raises and sells standardbred stallions and has worked as a pedigree reader since 1965. He stated that he worked every standard-bred sale in the nation except one. Becker indicated that his appraisal was based upon Tough Cookie’s export potential and racing history. Factors important to European buyers were pedigree and racing history, both of which were strong points for Tough Cookie. Becker further testified that the European market has been a factor in the price of trotters for 25 years and that the market had been very strong for the last 10 years. Becker stated that the first thing anyone wishing to sell a trotter thinks about is the European market and that most people who knew the standardbred business turned to Europe when they had a horse to sell. Becker indicated that in January of 1986, 60% of all domestic standardbreds were sold overseas, and that such figure had held true as far back as 1976.

Plaintiffs’ other appraiser, Per Henricksen, was a Norwegian who has been buying and selling trotting horses overseas since 1974. He indicated that he had been involved in 150 to 200 exportations from America. Henricksen testified that Tough Cookie would have been attractive to European buyers and could have been sold for $50,000.

Given the expertise of plaintiffs’ appraisers, their intimate familiarity with the business, their testimony regarding the importance of the European market in determining a horse’s value, and the fact that there is no mention of the geographic-limitation provision in either the rejection letter or the adjustment file, the jury could have concluded that American well knew that the European market would have valued Tough Cookie considerably higher than the domestic market and employed a strained interpretation of a contract provision in order to exclude the European market from consideration, thereby deflating Tough Cookie’s actual cash value, and that this defense was developed after the fact, in order to justify American’s position.

Another basis of plaintiffs’ allegation of bad faith was American’s accusation that plaintiffs misrepresented Tough Cookie’s breeding history on the insurance application and that this misrepresentation diminished the horse’s value. The insurance application required disclosure of the number of mares “serviced” in the prior year and the current year. The application indicates the number of mares serviced as 27 and 30, respectively. The insurance adjuster, Livestock Services, sent plaintiffs a proof-of-loss form requesting, inter alia, a livestock-breeding report for the last two years. The breeding reports, which are prepared for the United States Trotting Association (USTA), indicated that 20 mares were bred to Tough Cookie in 1984, 80% of which produced colts, and 19 mares were bred in 1985, 12 of which were owned by plaintiffs and so generated no stud fees. At trial, Emerson indicated that the lower numbers represented mares actually “in foal and reported in foal,” not the total number of mares bred. Janet Emerson testified that plaintiffs bred mares from mid-February through July, and that the breeding reports had to be turned in to the USTA and the Illinois Breeding Program by the first of September. Mrs. Emerson stated that she did not list the names of mares that had been bred but did not conceive foals. Mrs. Emerson indicated that it was her impression that the insurance application required the number of mares actually serviced by Tough Cookie.

The jury could easily have concluded that the alleged “misrepresentation” was merely a misunderstanding by the insureds as to what information American wanted, that it was of a minor nature, and that it was utilized by American as a pretext for refusing to pay the full value of the insurance contract and offering an unreasonably low settlement. Given the evidence presented, we cannot say that the jury’s finding that American acted in bad faith was against the manifest weight of the evidence.

American next argues that plaintiffs failed to state a cause of action for intentional infliction of emotional distress, again contending that such a claim is preempted by section 155. As we have previously stated, section 155 bars all punitive-damage claims, but as with the case of bad-faith conduct, we do not interpret section 155 to preempt compensatory-damage claims for the intentional infliction of emotional distress. American also contends that plaintiffs failed to allege facts sufficient to state a claim for intentional infliction of emotional distress. The elements necessary to state a cause of action for intentional infliction of emotional distress are: “First, the conduct involved must be truly extreme and outrageous. Second, the actor must either intend that his conduct inflict severe emotional distress, or know that there is at least a high probability that his conduct will cause severe emotional distress. Third, the conduct must in fact cause severe emotional distress.” (Emphasis in original.) (McGrath v. Fahey (1988), 126 Ill. 2d 78, 86, 533 N.E.2d 806, 809, citing Public Finance Corp. v. Davis (1976), 66 Ill. 2d 85, 90, 360 N.E.2d 765, 767.) Count IV of plaintiffs’ complaint alleged that defendant attempted to coerce them into accepting a settlement substantially lower than the policy amount “and that the defendant either knew, or should have known, that at least a high probability existed that this conduct would cause the plaintiffs severe emotional distress.” Count IV further alleges:

“That this conduct by the defendant caused both the plaintiffs to become extremely and severely emotionally distressed, angered, and upset and exposed them to economic hardship, causing them further consternation, and further that defendant’s conduct, including the charge that the plaintiffs had misrepresented figures in the application for insurance, went beyond mere insult, indignity, annoyance, petty oppression, or triviality.
The conduct of the defendant appeared to the plaintiffs to be in the form of extortion, and plaintiffs perceived that the defendant was in a position of power as compared to the plaintiffs and that the defendant had actual power to damage the plaintiffs’ reputation and economic interest and was willing to act in such a way, and in fact did act in such a way, to attempt to coerce and induce the plaintiffs into accepting a settlement less than the fair amount to which the plaintiffs were entitled under the policy.”

We conclude that the allegations were sufficient to state a cause of action for intentional infliction of emotional distress.

American also argues that the jury’s verdict on count IV, the emotional distress claim, was against the manifest weight of the evidence. After reviewing the evidence contained in the record, we agree and therefore find that the jury’s verdict on count IV was against the manifest weight of the evidence.

One of the considerations in determining whether conduct is “outrageous” is the degree of power or authority which a defendant has over a plaintiff. As noted by the court in Milton v. Illinois Bell Telephone Co. (1981), 101 Ill. App. 3d 75, 427 N.E.2d 829:

“As Dean Prosser pointed out, ‘The extreme and outrageous nature of the conduct may arise not so much from what is done as from abuse by the defendant of some relation or position which gives him actual or apparent power to damage the plaintiff’s interests. The result is something very like extortion.’ ” (101 Ill. App. 3d at 79, 427 N.E.2d at 832, quoting W. Prosser, Torts §56 (4th ed. 1971).)

The jury clearly could conclude from the evidence that American was in a position of power relative to plaintiffs and that it abused this position by attempting to coerce plaintiffs into accepting a settlement much less than the policy amount. Another significant consideration is whether the defendant reasonably believed that its objective was legitimate. As we have already determined above, the evidence is such that a jury could easily conclude that American knew it had no legitimate basis to refuse to pay the full amount of the policy. The record is devoid, however, of any evidence that American intended to cause severe emotional distress, or that American knew that there was a high probability that its conduct would cause severe emotional distress. Clearly plaintiffs were upset and angry, and knowledge that refusing to pay the full policy amount would upset and anger plaintiffs can doubtless be imputed to American, but this alone does not support a finding that American knew there was a high probability that its conduct would cause severe emotional distress. Obviously, something more than the insurer’s knowledge that its insured will be angry and upset is required. While the evidence in this present case might sustain a finding that plaintiffs would suffer severe emotional upset, the evidence fails to support a finding that American had reason to be aware of this fact and so fails to support a finding in plaintiffs’ favor as to the second element set forth in McGrath. Regarding the third element, while the evidence might have supported the jury’s finding that American’s conduct did in fact cause severe emotional distress, absent evidence of American’s knowledge, the second element of the cause of action is unproven, and we must find the jury’s verdict to be against the manifest weight of the evidence.

American also argues that the trial court abused its discretion in imposing penalties under section 155. Whether an insurer has engaged in vexatious and unreasonable conduct must be determined by examining the totality of the circumstances. (Kohlmeier, 170 Ill. App. 3d at 659, 525 N.E.2d at 105.) Having previously concluded that the evidence supported the jury’s finding that American’s conduct breached the duty of good faith and fair dealing, we cannot say that the trial court’s finding is an abuse of discretion.

American next argues that the court failed to properly instruct the jury on the issues and the burden of proof. Specifically, American argues that the evidence did not support giving many of the charges with respect to count IV, the emotional distress claim. Having already determined that the jury’s finding with respect to count IV was against the manifest weight of the evidence, we need not address this argument.

American also contends that there was no adequate proof of damages suffered under count III. Specifically, American maintains that the trial court erred in permitting plaintiffs to testify that they purchased San Phillepe for $9,500 as a replacement for Tough Cookie, and that they lost money because of San Phillepe’s lower quality and stature, because there was no evidence that the $50,000 policy proceeds would have enabled plaintiffs to purchase a horse closer to Tough Cookie’s caliber. Janet Emerson testified that plaintiffs could have come closer to purchasing a horse of Tough Cookie’s quality with $50,000, but when asked on cross-examination if she could have purchased a stallion with Tough Cookie’s pedigree and racing history for $50,000, she stated, “probably not,” and “[p]ossibly a hundred to two hundred [thousand] probably” would be needed. American argues that it is responsible only for income lost from a horse that could have been purchased with the policy proceeds, and there is no evidence of what that income would have been. Mrs. Emerson’s statement on cross-examination does not support American’s contention that the evidence demonstrated that Tough Cookie could not have been replaced for $50,000. This isolated statement is hardly conclusive as to Tough Cookie’s value. Further evidence demonstrates that Tough Cookie would have been worth $50,000 to $55,000 on the European market. We find that the evidence provided a sufficient basis upon which damages could be computed, and the trial court did not err in allowing plaintiffs to introduce evidence regarding lost income resulting from purchasing a stallion of lower quality.

Finally, American argues that the trial court erred in excluding evidence of the amount of the arbitration award and in denying American’s motion in limine to exclude evidence that the horse had a value greater than the amount awarded in arbitration. We conclude that the trial court was correct in excluding the amount of the arbitration award and in denying American’s motion in limine. Arbitration did not occur until over two years after American’s denial of the claim, and the issue at trial was whether American’s conduct in denying the claim was made in bad faith. Further, a limiting instruction was given, at American’s request, instructing the jury that value was not an issue and that the exhibits which addressed Tough Cookie’s value were to be considered only in connection with American’s conduct in adjusting plaintiffs’ claim. Regarding the testimony of various appraisers as to Tough Cookie’s value at the time of death, such testimony was relevant to the reasonableness of American’s denial of the full amount of the policy and hence to the question of bad faith. The appraisers’ testimony regarding the existence of the European market, the higher value it attached to trotters, and how often American trotters were sold there all bore directly on the issue of bad faith.

For the foregoing reasons, we affirm that part of the judgment of the circuit court of Pope County awarding plaintiffs $45,000 on count III, their claim for breach of the duty of good faith and fair dealing. We likewise affirm the court’s award of $33,072.23 under section 155. That part of the judgment awarding Emerson $50,000 and Arcuino $5,000 for the intentional infliction of emotional distress is reversed.

Affirmed in part; reversed in part.

CHAPMAN and WELCH, JJ., concur.


author: JUSTICE McLAREN

text:
    DAVID CARLSON, Plaintiff-Appellant, v. AMERICAN FAMILY INSURANCE COMPANY, Defendant-Appellee.
    Second District
    No. 2 — 91—0601
    Opinion filed January 23, 1992.

      David A. Decker, of Decker & Linn, Ltd., of Waukegan, for appellant.
    Kathleen Ryan, of Ryan & Ryan, of Waukegan, for appellee.
   JUSTICE McLAREN

delivered the opinion of the court:

The plaintiff, David Carlson, filed an amended complaint in the circuit court of Lake County naming as defendant American Family Mutual Insurance Company (American Family) and seeking a declaration that the plaintiff was entitled to uninsured motorist coverage under his father’s insurance policy. The trial court granted the defendant’s motion for judgment on the pleadings, and the plaintiff filed this appeal.

The only issue raised by the plaintiff is whether the defendant’s exclusion of coverage under the plaintiff’s father’s uninsured motorist insurance provisions conflicts with public policy supporting broad uninsured motorist coverage.

The facts relevant to this appeal are as follows. The plaintiff’s amended complaint alleges that on November 18, 1989, the plaintiff sustained injuries while a passenger in an uninsured vehicle apparently owned by a third party. He was 18 years old and resided with his father at the time of the accident. Prior to the accident, American Family issued two automobile insurance policies to his father and one automobile insurance policy to him. His father’s policies provided for a $100,000-per-person limit under their uninsured motorist coverages, and his policy had a $25,000 uninsured motorist limit per person. Although the amended complaint does not allege that the plaintiff owned the vehicle which he insured with a policy from American Family, that is a fact not contested by the parties.

The plaintiff sought coverage under the higher limits of the uninsured motorist provisions of either one of his father’s policies. American Family, by letter, denied coverage under his father’s policies and tendered an offer of $25,000, the limit under the plaintiff’s policy, to settle the claim. The plaintiff then initiated this action.

American Family moved for judgment on the pleadings pursuant to section 2 — 615(e) of the Code of Civil Procedure (Ill. Rev. Stat. 1989, ch. 110, par. 2 — 615(e)). In that regard, American Family argued that the plaintiff was not an insured under his father’s policy. Specifically, American Family relied on that portion of the policy which includes relative within the definition of insured but excludes as a relative “any person who, or whose spouse, owns a motor vehicle.” American Family also argued that such exclusive language does not violate public policy. American Family presented no other basis for its denial of coverage under the plaintiff’s father’s policies in either its denial letter, its motion for judgment on the pleadings or its reply to the plaintiff’s response to its motion.

The trial court granted American Family’s motion, and the plaintiff filed this timely appeal.

We begin our analysis by referring to the language of American Family’s insurance policy relied upon to deny coverage to the plaintiff. Under “PART III-UNINSURED MOTORISTS COVERAGE,” an insured person is defined as the named insured or a “relative.” The term “relative” is defined as a person living in the household of the named insured and related to the named insured by blood, marriage or adoption. The policy excludes from its definition of “relative” “any person who, or whose spouse, owns a car.” Thus, under the plain language of the insurance policy at issue, the plaintiff is excluded from uninsured motorist coverage because he is not a named insured nor is he a “relative” by virtue of the fact that he owns his own vehicle.

Accordingly, the only issue that remains to be decided is whether such a provision violates the public policy embodied in section 143a of the Illinois Insurance Code (Code) (Ill. Rev. Stat. 1989, ch. 73, par. 755a). In this regard, the plaintiff argues that the legislature intended to provide extensive uninsured motorist coverage in enacting section 143a of the Code. He further maintains that where a specific exclusion in an insurance policy conflicts with the liberal purpose behind section 143a, such exclusion should be rendered unenforceable.

The legislative intent in passing section 143a was to provide extensive uninsured motorist coverage for those insured under an automobile liability policy. (Zurich v. Country Mutual Insurance Co. (1978), 65 Ill. App. 3d 608, 611.) Furthermore, the legislature intended, by enacting section 143a of the Code, to insure that persons injured by an uninsured motorist are protected at least to the extent that compensation is made available for persons injured by a motorist insured for the minimum limits under section 7 — 203 of the Elinois Safety Responsibility Law (Ill. Rev. Stat. 1973, ch. 951/2, par. 7 — 203). (Severs v. Country Mutual Insurance Co. (1982), 89 Ill. 2d 515, 519.) More importantly, the purpose underlying a statute may not be circumvented by the insertion of a contrary or restricting provision in an insurance policy. Severs, 89 Ill. 2d at 520.

The dispositive question in this appeal is simply whether the provision in the insurance policy which excludes the plaintiff from coverage by virtue of his ownership of a vehicle is violative of the purpose underlying section 143a of the Code. One Elinois court has had occasion to address this issue under facts similar to the facts of this case. In American Family Mutual Insurance Co. v. Kittinger (1986), 147 Ill. App. 3d 586, the defendant, who owned an uninsured vehicle, sought coverage under the uninsured motorist provisions of her brother-in-law’s insurance policy. The court held that she was not an insured under a definition similar to the one at issue here because she owned a vehicle. The court further determined that such a provision did not violate the policy underlying section 143a of the Code. (147 Ill. App. 3d at 589.) The court also noted that the defendant, because she had not insured her own vehicle, was precisely the type of person the statute was enacted to address. 147 Ill. App. 3d at 589.

There is simply no basis under these facts to conclude that the purpose behind section 143a would be abrogated by enforcing the express language of the uninsured motorist provisions of the plaintiff’s father’s insurance policy. Under those provisions, the plaintiff is not an insured by virtue of his owning a vehicle. He is thus not entitled to recover under his father’s policy.

We further note that plaintiff’s reliance on Illinois Emasco Insurance Co. v. Doran (1987), 160 Ill. App. 3d 927, is misplaced. That case, while recognizing the public policy underlying section 143a of the Code, addressed a different factual issue arising under an entirely different policy exclusion from the one at issue in this case. Thus, we do not believe that Doran compels us to reverse the decision of the trial court.

For the foregoing reasons, we affirm the judgment of the circuit court of Lake County granting the defendant’s motion for judgment on the pleadings.

Affirmed.

GEIGER and NICKELS, JJ., concur.