No. 2--96--0405
_________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
SECOND DISTRICT
_________________________________________________________________
STATE FARM MUTUAL AUTOMOBILE ) Appeal from the Circuit Court
INSURANCE COMPANY, ) of McHenry County.
)
Plaintiff-Appellee, )
)
v. ) No. 96--MR--5
)
JENNIFER VILLICANA, ) Honorable
) James C. Franz,
Defendant-Appellant. ) Judge, Presiding.
_________________________________________________________________
JUSTICE RATHJE delivered the opinion of the court:
Defendant, Jennifer Villicana (Jennifer), appeals from an
order of the circuit court of McHenry County granting summary
judgment to the plaintiff, State Farm Mutual Automobile Insurance
Company (State Farm).
On appeal, Jennifer raises the following issues: (1) whether
the exclusion contained in the State Farm insurance policy at issue
violates public policy; (2) whether an ambiguity in that policy
exists; and (3) whether the case authority relied on by State Farm
in support of its motion for summary judgment is distinguishable or
is, in fact, supportive of the invalidity of the exclusion
contained in the policy.
The facts of this case are not in dispute. Jennifer was a
passenger in a 1990 Ford Mustang being driven by Jay Rebscher when
the Mustang went off the road and crashed into a tree. As a result
of the accident Jennifer sustained personal injuries.
The Mustang was owned by Bernard J. Villicana, Jr., Jennifer's
father. Mr. Villicana had insured the Mustang with State Farm
under an automobile policy which provided bodily injury "liability"
and "underinsured" limits of $100,000 per person/$300,000 per
occurrence. Under a separate policy with State Farm, Mr. Villicana
insured his 1990 Buick LeSabre. That policy provided "liability"
and "underinsured motorist coverage" limits in the sum of $250,000
per person/$500,000 per occurrence. Mr. Rebscher had insurance
coverage on his own vehicle (not involved in the accident) through
Coronet Insurance Group (Coronet) with bodily injury "liability"
limits in the sum of $20,000 per person/$40,000 per occurrence.
State Farm paid Jennifer the $100,000 limit of liability
coverage on the Mustang. Jennifer also received the $20,000 limit
of liability coverage from Coronet, Mr. Rebscher's insurer.
However, due to the amount of the damages she incurred, Jennifer
filed a claim with State Farm under Mr. Villicana's Buick's
"underinsured" coverage. State Farm denied her claim and filed the
instant declaratory judgment action maintaining that its
"Underinsured Motor Vehicle--Coverage W" did not provide coverage
to Jennifer. That portion of the policy on the Buick provided as
follows:
"UNDERINSURED MOTOR VEHICLE--COVERAGE W
You have this coverage if "W" appears in the "Coverages"
space on the declarations page.
We will pay damages for bodily injury an insured is
legally entitled to collect from the owner or driver of an
underinsured motor vehicle. The bodily injury must be caused
by accident or use of an underinsured motor vehicle.
* * *
Underinsured Motor Vehicle--means a land vehicle:
1. the ownership, maintenance or use of which:
a. is insured or bonded for bodily injury at
the time of the accident; and
b. has resulted in bodily injury of an
insured; but
2. the limits of liability for bodily injury
liability:
a. are less than the limits you carry for
underinsured motor vehicle coverage under this
policy; or
b. have been reduced by payments to persons
other than an insured to less than the limits you
carry for underinsured motor vehicle coverage under
this policy.
An underinsured motor vehicle does not include a
land motor vehicle:
1. insured under the liability coverage of this
policy;
2. furnished for the regular use of you, your
spouse or any relative;
3. owned by any government or any of its political
subdivisions or agencies;
4. while located for use as premises; or
5. designed for use mainly off public roads, and
not able to be licensed for public road use. This does
not apply while the vehicle is on public roads."
The policy also provides the following definitions:
"Relative - means a person related to you or your
spouse by blood, marriage or adoption who lives with you.
It includes your unmarried and unemancipated child away
at school.
Spouse - means your husband or wife while living
with you.
You or Your - means the named insured or insured
shown on the declarations page."
In its declaratory judgment action, State Farm contended that
because the Mustang involved in the accident was "furnished for the
regular use of" Mr. Villicana and Jennifer, there was no
underinsured coverage applicable to Jennifer's claim under the
Buick policy. Jennifer answered the complaint, alleging that the
above exclusion violated the public policy underlying underinsured
coverage, as mandated by section 143a--2(4) of the Illinois
Insurance Code (215 ILCS 5/143a--2(4) (West 1994)).
Both State Farm and Jennifer filed motions for summary
judgment. The trial court granted State Farm's motion for summary
judgment. This appeal followed.
Summary judgment is proper when the pleadings, affidavits, and
other documents on file, construed in favor of the nonmovant, show
that there is no genuine issue of material fact and that the movant
is entitled to judgment as a matter of law. Espinoza v. Elgin,
Joliet & Eastern Ry. Co., 165 Ill. 2d 107, 113 (1995). We review
the entry of summary judgment de novo. In re Estate of Hoover, 155
Ill. 2d 402, 411 (1993).
There are no facts in dispute in this case. We note that the
parties are in agreement that the above-recited policy exclusion,
if valid, would deny Jennifer the underinsured coverage benefit
under the Buick policy. However, Jennifer contends, as she did in
the trial court, that the language of the exclusion violates
Illinois public policy. Furthermore, both parties submit that this
policy provision has never been construed by an Illinois court.
Therefore, both parties rely heavily on cases from other
jurisdictions.
We begin by examining the pertinent provisions of the Illinois
Insurance Code (Code) (215 ILCS 5/1 et seq. (West 1994)). Section
143a--2(4) of the Code provides that automobile insurance policies
must provide underinsured-motorist coverage in an amount equal to
the total amount of uninsured-motorist coverage. 215 ILCS
5/143a--2(4) (West 1994). The Code defines an "underinsured motor
vehicle" as
"a motor vehicle whose ownership, maintenance or use has
resulted in bodily injury or death of the insured, as defined
in the policy, and for which the sum of the limits of
liability under all bodily injury liability insurance policies
or ***, is less than the limits for underinsured coverage
provided the insured as defined in the policy at the time of
the accident. The limits of liability for an insurer
providing underinsured motorist coverage shall be the limits
of such coverage, less those amounts actually recovered under
the applicable bodily injury insurance policies." 215 ILCS
5/143a--2(4) (West 1994).
The purpose of section 143a--2(4) is to place the insured in
the same position he would have occupied if the tortfeasor had
carried adequate insurance. Sulser v. Country Mutual Insurance
Co., 147 Ill. 2d 548, 555 (1992). Section 7--203 of the Illinois
Vehicle Code (625 ILCS 5/7--203 (West 1994)) requires insurance
coverage for bodily injury/death in the minimum amount of $20,000
for one person and $40,000 for two people in any one motor vehicle
accident plus minimum coverage of $15,000 for injury or destruction
of property of others in any one motor vehicle accident. In the
case of underinsured coverage, under section 143a--2(4), the
coverage must be equal to the total amount of uninsured-motorist
coverage provided in the polity, where the uninsured coverage
exceeds the limits set forth in section 7--203.
Given that this is a case of first impression and while both
parties have submitted an extensive list of cases from other
jurisdictions, we, nevertheless, believe that we can resolve this
issue utilizing authority from this jurisdiction. Both parties
have cited with favor Luechtefeld v. Allstate Insurance Co., 167
Ill. 2d 148 (1995). Although this case deals with uninsured-
motorist coverage, we believe the reasoning of that case applies
equally to similar issues involving underinsured coverage since the
underlying consideration for both the uninsured and the
underinsured statutory provisions is to place the insured in the
same position he would have occupied if the tortfeasor had carried
adequate insurance. See Sulser, 147 Ill. 2d at 555.
In Luechtefeld, while the plaintiff was operating his
motorcycle, he was injured when he was struck by an uninsured
driver. The motorcycle was insured under a policy with Pekin
Insurance Company, which provided uninsured-motorist coverage with
limits of $20,000 per person and $40,000 per accident. The
plaintiff also was the named insured on a policy with Allstate that
insured three vehicles owned by the plaintiff. The Allstate policy
provided uninsured-motorist coverage of $100,000 per
person/$300,000 per accident. The plaintiff received policy limits
of $20,000 under the Pekin policy. However, since his injuries
exceeded the $20,000 amount, he filed a claim with Allstate to
collect under the uninsured-motorist provisions of that policy.
Allstate denied the claim on the basis of language in its
policy that excluded coverage when the insured was in a vehicle
insured for uninsured-motorist coverage under another policy. The
plaintiff filed an action for declaratory judgment, alleging inter
alia, that the above exclusion violated public policy. The trial
court granted summary judgment to Allstate. However, the appellate
court reversed, finding that the exclusion did violate public
policy.
The supreme court granted leave to appeal and reversed the
decision of the appellate court, concluding that the exclusion did
not violate public policy. The court first noted that the
legislative purpose was to place the policyholder in substantially
the same position he would have occupied had he been killed or
injured if the wrongful driver had had the minimum liability
insurance required by the Illinois Vehicle Code. It then
determined that the enforcement of the exclusionary provision in
the Allstate policy would not violate the legislative purpose
because, despite the exclusion, the plaintiff received the $20,000
in uninsured-motorist coverage which he would have received if the
driver of the uninsured vehicle had obtained the minimum liability
insurance required by law.
The supreme court then turned to the plaintiff's argument that
under its decision in Squire v. Economy Fire & Casualty Co. 69 Ill.
2d 167 (1977), when an insured purchases an insurance policy that
includes uninsured-motorist coverage, that policy provides
uninsured-motorist protection for any vehicle the insured owns or
is injured in, even if the vehicle is insured under another policy.
The plaintiff further argued that, under Squire, the payment of the
premium to Allstate for uninsured-motorist coverage for one of his
automobiles entitled him to coverage for any injury caused by an
uninsured motorist, regardless of whether the injury occurred in a
vehicle listed in the Allstate policy; otherwise, the premium he
paid to Pekin was redundant and unnecessary.
The supreme court rejected the plaintiff's reading of Squire.
The court pointed out that the policy at issue in Squire excluded
uninsured-motorist coverage whenever the insured was injured in a
vehicle not listed in the policy regardless of whether there was
uninsured-motorist coverage on that second vehicle. Thus, the
enforcement of the exclusion could have left the insured without
any protection against injuries caused by uninsured motorists in
some circumstances. The court noted as follows:
"The Allstate exclusionary clause does not deprive the
plaintiff of uninsured-motorist coverage solely because the
vehicle in which he was riding at the time of the accident was
not listed in the Allstate policy. On the contrary, the
exclusionary clause takes effect only if the insured is
injured in a vehicle that has uninsured-motorist coverage
under another policy." Luechtefeld, 167 Ill. 2d at 155.
What we glean from Luechtefeld is that an exclusion will not
be deemed violative of public policy if it does not prevent the
insured from being placed in the same position he would occupy, in
the event of an accident, had the tortfeasor had the coverage
required by law. The decision in Luechtefeld also makes clear that
the payment of multiple premiums does not allow an insured to
"stack" coverage where the exclusionary language only limits, but
does not totally bar, recovery. Nor is public policy violated
simply because the plaintiff pays multiple premiums for uninsured-
(underinsured) motorist coverage but is limited under the policy to
a single recovery. Luechtefeld, 167 Ill. 2d at 157-58.
Applying the reasoning of Luechtefeld to the cause before us,
we conclude that the exclusion contained in the Buick policy
violates public policy. The Buick policy excluded from
underinsured motorist coverage any vehicle "furnished for the
regular use of you, your spouse or any relative." In this cause,
there is no dispute that the Mustang was a vehicle "furnished for
the regular use of" Jennifer, who was a relative of the insured, as
defined by the policy terms. Thus, had the Mustang not been
covered by insurance or was underinsured, Jennifer could not have
recovered under the Buick policy. Unlike the exclusion in
Luechtefeld, the exclusion in the Buick policy here would operate
regardless of whether or not there was underinsured-motorist
coverage available under the Mustang policy. See Luechtefeld, 167
Ill. 2d at 155.
The difficulty in this cause is that the underinsured-
motorist coverage available under the Mustang policy has placed
Jennifer in the same position she would have occupied had Mr.
Rebscher carried the same amount of insurance on his vehicle as was
carried on the Mustang. Thus, the purpose of section 143a--2(4)
has been satisfied under the particular facts in this cause.
Nevertheless, since the exclusion in the Buick policy is not
limited to those situations in which underinsurance coverage is
available under another applicable policy, under our reading of
Luechtefeld, the exclusion in the Buick policy is in violation of
the public policy expressed in section 143a--2(4) of the Code
because it could operate "in some circumstances" to leave the
insured without any protection against an underinsured motorist.
See Luechtefeld, 167 Ill. 2d at 155.
We reverse the order of the circuit court granting summary
judgment to plaintiff, and this cause is remanded for the entry of
an order granting Jennifer's motion for summary judgment.
The judgment of the circuit court of McHenry County is
reversed, and the cause is remanded.
Reversed and remanded with directions
BOWMAN and DOYLE, JJ., concur.