Barth v. State Farm Fire and Casualty Co.

NO. 4-06-0208 Filed 2/20/07

IN THE APPELLATE COURT

OF ILLINOIS

FOURTH DISTRICT

RODNEY J. BARTH, ) Appeal from
Plaintiff-Appellant, ) Circuit Court of
v. ) Sangamon County
STATE FARM FIRE AND CASUALTY COMPANY, ) No. 04L220
Defendant-Appellee. )
) Honorable
) Patrick W. Kelley,
) Judge Presiding.
______________________________________________________________

JUSTICE TURNER delivered the opinion of the court:

In March 2005, plaintiff, Rodney J. Barth, filed a

second-amended complaint against defendant, State Farm Fire and

Casualty Company, claiming defendant failed to pay an insurance

claim following a house fire. In December 2005, a jury found in

favor of defendant.

On appeal, plaintiff argues (1) the trial court erred

in failing to give plaintiff's instructions to the jury, (2) the

trial judge erred in not recusing himself from the case, (3) the

court erred in prohibiting plaintiff from presenting certain

evidence, (4) the court erred in not granting the motion for

judgment notwithstanding the verdict as to the second affirmative

defense, and (5) the jury's verdict on the second affirmative

defense was against the manifest weight of the evidence. We

affirm.

I. BACKGROUND
 In March 2005, plaintiff filed a second-amended com-

plaint against defendant, seeking to recover losses that resulted

from a house fire in Auburn. Plaintiff alleged (1) defendant

breached its homeowner's policy by failing to pay the claim, (2)

defendant's refusal to pay and/or delay in settlement was unrea-

sonable and vexatious, and (3) the denial amounted to intentional

infliction of emotional distress.

In April 2005, defendant set forth three affirmative

defenses, including the "intentional act provision" of the

policy, the "concealment or fraud provision" of the policy, and

set-off. Under the second affirmative defense concerning con-

cealment or fraud, defendant alleged plaintiff hid the actual

status of his financial condition by misrepresenting the status

of his mortgage, his satellite-television service, and his

ability to withdraw money from an automated teller machine (ATM),

and by not revealing the existence of his American Express card.

Defendant alleged plaintiff's financial condition was a motive

for the fire.

In June 2005, plaintiff filed a motion for substitution

of judge for cause pursuant to section 2-1001(a)(3) of the Code

of Civil Procedure (Procedure Code) (735 ILCS 5/2-1001(a)(3)

(West 2004)). The motion alleged Judge Patrick Kelley had

recently disclosed he was an insured of defendant, thereby

creating an appearance of partiality. Judge Kelley referred the

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motion to Judge Robert Eggers for a hearing on the matter. Judge

Eggers indicated he too was insured by State Farm and reassigned

the case. Judge Leo Zappa heard the motion, denied it, and

referred the case back to Judge Kelley for trial. In December

2005, Judge Kelley filed an order to clarify that his prior

referral of the motion for substitution to Judge Eggers was

considered as a motion for recusal and Judge Kelly intended to

deny that motion by referring it to Judge Eggers.

At trial, William Bolletta testified he was certified

as an arson investigator in 1996. On June 2, 2003, Bolletta

responded to a fire at plaintiff's home in Auburn. Upon arrival,

he was advised that the fire appeared to have different points of

origin. Bolletta talked to an individual, suggested by counsel

to be William Penn, who remarked he had been at the scene of

other fires and was "amazed" at how fast the fire department

responded. Bolletta spoke with plaintiff, who was sitting in a

vehicle and appeared "very agitated."

On cross-examination, Bolletta testified he believed

the fire in the kitchen had "a couple of points of origin" that

appeared to be unrelated. The fire in the bedroom was also

unrelated to the kitchen fire. He came to the conclusion the

bedroom fire was not accidental. It was Bolletta's opinion that

the occupants of the house started the fire, left, then returned

to see the fire did not take, and started another fire.

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 Plaintiff called Cheryl Jyawook as an adverse witness.

She worked as a claim representative for State Farm. After the

fire, Jyawook provided plaintiff with various forms to inventory

property. She stated the coverage limits on the property

amounted to $102,599. Jyawook determined that plaintiff was

behind in his mortgage payments. Defendant denied the claim on

March 31, 2004.

Plaintiff's evidence deposition was read to the jury.

Plaintiff testified he suffered from polio and had been in a

wheelchair since he was 12 years old. He obtained a bachelor's

degree and a master's degree in education and worked in state

government for over 20 years. He quit working because of his

weakened physical condition and depression, and he began receiv-

ing disability income. Plaintiff paid $77,500 for his house in

Auburn with monthly mortgage payments totaling $511.74. He had

the house insured with State Farm. After the fire, the house was

sold for $52,500.

In 2002, plaintiff did not have a driver's license and

used a taxi to take him to Springfield. He met William Penn,

whom he later hired to drive him when necessary. Plaintiff

allowed Penn to keep his car and would call him if he needed a

ride. At one point, Penn introduced plaintiff to William

Burmeister, "a sidekick of Penn's."

In March 2003, plaintiff discovered he had bounced

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checks in his bank account. He also thought he failed to receive

some of his mail. As of June 2003, plaintiff believed he had a

net worth of $72,638. He had received an American Express card

in January or February 2003, and the $4,202.86 in charges for

February 2003 were not authorized by him. Penn had borrowed the

American Express card, and plaintiff authorized the purchase of

eyeglasses and a tattoo. Plaintiff did not authorize $3,200

worth of cash advances on his Visa card in March 2003. Penn also

had access to the Visa card. Near the time of the fire, plain-

tiff gave Penn $700 in cash to pay $511.74 for the mortgage and

$188.16 for the car payment. Plaintiff believed Penn did not

deliver the money because the amount was not recorded. Plaintiff

later made up the payments in August 2003.

On June 2, 2003, Penn and Burmeister showed up at

plaintiff's residence at around 4:15 p.m. At around 7:30 p.m.,

the three men decided to leave. Penn lifted plaintiff into the

car and placed his wheelchair in the trunk. Penn also took

plaintiff's shaving kit from the house and put it in the car.

Plaintiff found this "odd" but did not say anything. The men

traveled to Chatham and stopped at a cigar store and then a gas

station. They then drove aimlessly around Chatham before re-

turning to Auburn at around 9 p.m. The men exited the car and

talked in the garage. Some time later, Penn and Burmeister

wanted to rent some movies. Penn entered the house for about 10

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minutes, while plaintiff used his cellular phone to call his

neighbor to borrow $20.

The men reentered the car and headed toward Virden.

They stopped at a bank around 10:20 p.m. so plaintiff could get a

cash advance using his Visa card. Plaintiff gave Penn the card

and the personal identification number, but the transaction was

declined for insufficient funds. Penn tried again with the same

result. Plaintiff was "surprised" because he thought he had

enough money available in the account. They continued to a video

store, and Penn and Burmeister were in the store for about 20

minutes.

The men returned to Auburn, and Penn stopped the car in

the driveway. Penn indicated he needed to use the bathroom.

Plaintiff watched Penn open the door and noticed "what looked

like steam" coming out of the house. Penn returned to the car

and asked plaintiff for his keys. Penn then tried the front door

and opened it, and plaintiff saw smoke. Penn came back to the

car and yelled for plaintiff to call the fire department.

Plaintiff made the call at 10:52 p.m. and then waited for the

fire department to arrive. Because of the fire damage, plaintiff

stayed at a hotel with help from the Red Cross.

After the fire, plaintiff met with representatives from

State Farm. Plaintiff told Jyawook his satellite-television

service had been disconnected because he owed $100. He also

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provided her with a copy of his credit report in August 2003.

The report showed his accounts with American Express and Visa.

If he failed to mention the American Express card in a June 10,

2003, recorded statement, it was "inadvertent." Plaintiff

testified he did not start and did not tell anyone to start the

fire. Plaintiff learned from Jyawook that Penn and Burmeister

had criminal records.

On cross-examination, plaintiff acknowledged he did not

identify to State Farm in his June 10, 2003, recorded statement

that he had an American Express card. He received the card in

February 2003 and used it "a few times." American Express

contacted him in May 2003, and he was surprised at the balance.

Penn had the card for several months and put off returning it.

At the time of the fire, plaintiff was not current with his

utility bills.

John Pinneo testified he worked as a fire investigator

for the Sangamon County sheriff's office. He responded to the

fire at plaintiff's residence and found the fire was suspicious.

He determined at least two fires started in two separate areas of

the house. Pinneo opined the two distinct and separate fires led

him to conclude an incendiary arson fire had occurred. Several

weeks after the fire, Pinneo asked to talk to plaintiff through

his attorney, but he found the restrictions that would be placed

on the interview to be unacceptable. Pinneo contacted defendant

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and indicated the fire had been set.

Jeff Jones worked in collections with the Bank of

Springfield. Jones testified he contacted plaintiff in November

2002 to tell him he was past due on his mortgage payment. Jones

contacted plaintiff in December, indicating he was past due for

his November payment. As of June 2, 2003, plaintiff was two

months behind on his mortgage payments, but payment would have

been accepted by June 15 without a late charge being applied.

Following closing arguments, the jury found for defen-

dant and against plaintiff. The verdict form indicated the jury

found defendant proved by clear and convincing evidence that

plaintiff concealed or misrepresented a fact or circumstance or

made a false statement relating to the insurance, or he misrepre-

sented any material fact to defendant either before or after the

claim. The jury also found (1) the fact concealed or misrepre-

sented, or the subject of the false statement, was material; (2)

the concealment, misrepresentation, or false statement was made

to defendant or their agents; and (3) the concealment, misrepre-

sentation, or false statement was made knowingly, willfully, and

with intent to deceive defendant.

In January 2006, plaintiff filed a posttrial motion,

seeking judgment notwithstanding the verdict or for a new trial.

In February 2006, the trial court denied the motion. This appeal

followed.

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 II. ANALYSIS

A. Jury Instructions

Plaintiff argues the trial court should have given his

proposed jury instructions on the law of misrepresentation as the

policy only contained an exclusion for intentional misrepresen-

tation without any further definition or limitation. We dis-

agree.

A party has the right to have the jury clearly and

fairly instructed on each theory supported by the evidence.

Leonardi v. Loyola University of Chicago, 168 Ill. 2d 83, 100,

658 N.E.2d 450, 458 (1995). Whether to give a jury instruction

is within the discretion of the trial court. Snelson v. Kamm,

319 Ill. App. 3d 116, 139, 745 N.E.2d 128, 148 (2001). A trial

court's refusal to give a tendered instruction will result in the

granting of a new trial only when the refusal amounts to a

serious prejudice to a party's right to a fair trial. Linn v.

Damilano, 303 Ill. App. 3d 600, 607, 708 N.E.2d 533, 538 (1999).

In determining the propriety of the trial court's tendered

instructions, the test is "whether, taken as a whole, the in-

structions fairly, fully, and comprehensively apprised the jury

of the relevant legal principles." Schultz v. Northeast Illinois

Regional Commuter R.R. Corp., 201 Ill. 2d 260, 273-74, 775 N.E.2d

964, 973 (2002).

In the case sub judice, the "concealment or fraud"

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provision of the insurance policy stated as follows:

"This policy is void as to you and any

other insured, if you or any other insured

under this policy has intentionally concealed

or misrepresented any material fact or cir-

cumstance relating to this insurance, whether

before or after a loss." (Emphasis in origi-

nal.)

On the affirmative defense of misrepresentation, the

trial court instructed the jury that defendant must prove (1)

plaintiff concealed or misrepresented a fact or circumstance, or

made a false statement, relating to the insurance at issue; (2)

the fact concealed or misrepresented, or the subject of the false

statement, was material; (3) the concealment, misrepresentation,

or false statement was made to State Farm or its agents; and (4)

the concealment, misrepresentation, or false statement was made

knowingly, willfully, and with intent to deceive State Farm.

Plaintiff, however, argues the court should have instructed the

jury on two additional elements of common-law fraudulent misrep-

resentation, requiring action by a party in reliance on the truth

of the statements and damage to that party as a result of the

reliance. See Board of Education of City of Chicago v. A, C & S,

Inc., 131 Ill. 2d 428, 452, 546 N.E.2d 580, 591 (1989).

"An insurance policy is a contract, and the general

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rules governing the interpretation of other types of contracts

also govern the interpretation of insurance polices." Hobbs v.

Hartford Insurance Co. of the Midwest, 214 Ill. 2d 11, 17, 823

N.E.2d 561, 564 (2005). "Under policy provisions voiding cover-

age if the insured willfully conceals any material fact, or in

the case of fraud or false swearing, courts will deny recovery to

an insured who has made deliberate material misstatements in the

sworn proof of loss." Marvel Engineering Co. v. Commercial Union

Insurance Co., 118 Ill. App. 3d 844, 848, 455 N.E.2d 545, 548

(1983).

In this case, defendant did not raise a claim of

fraudulent misrepresentation. Instead, defendant's second

affirmative defense concerned the "concealment or fraud" provi-

sion of its insurance policy. That provision indicates the

policy is void if the insured intentionally concealed or misrep-

resented a material fact or circumstance relating to the insur-

ance. Thus, the issue centers on whether plaintiff misrepre-

sented or concealed material facts, not whether defendant detri-

mentally relied on those misrepresentations.

In Passero v. Allstate Insurance Co., 196 Ill. App. 3d

602, 604, 554 N.E.2d 384, 385 (1990), the insurance policy at

issue contained a provision voiding the policy if the insured

intentionally concealed or misrepresented any material fact or

circumstance before or after the loss. The appellate court

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focused on the material nature of the misrepresentations and

noted the definition of material misrepresentation is different

in insurance law than in cases involving common-law, statutory,

and consumer fraud. Passero, 196 Ill. App. 3d at 606, 554 N.E.2d

at 387. The question in Passero dealt with whether the misrepre-

sentations were material and did not indicate prejudice and

detrimental reliance had to be shown by the insurer to succeed in

denying the claim under the policy.

In contrast, plaintiff cites A&A, Inc. v. Great Central

Insurance Co., 259 Ill. App. 3d 73, 76, 630 N.E.2d 1002, 1004

(1994), where the insurer asserted the affirmative defense that

the insured was barred from recovery because it misrepresented a

subject matter of the policy and engaged in conduct to defraud

the insurer. The policy also included a provision indicating

concealment or misrepresentation of material facts or an attempt

to defraud the insurer would void the policy. A&A, 259 Ill. App.

3d at 76, 630 N.E.2d at 1004. On appeal, the First District

found the jury should have been given instructions on whether the

alleged false statement was material and the definition of fraud-

ulent misrepresentation, thereby raising the issues of material-

ity and reliance on the misrepresentation. A&A, 259 Ill. App. 3d

at 83, 630 N.E.2d at 1008-09.

Here, however, the policy language at issue did not

invoke fraud as a basis for voiding the policy, and defendant's

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second affirmative defense was not based on a claim that plain-

tiff attempted to defraud defendant. Thus, no proof of fraud or

detrimental reliance was required. Instead, defendant had to

show plaintiff misrepresented or concealed a material fact to

void the policy. The instructions given by the trial court

adequately informed the jury of the law on the issue that was

decided given the evidence presented. We find no abuse of

discretion.

B. Recusal

Plaintiff argues the trial judge erred in not recusing

himself when he had an ongoing relationship with defendant as an

insured of State Farm. We disagree.

Section 2-1001(a)(3)(iii) provides as follows with

respect to substitution of judge for cause:

"Upon the filing of a petition for sub-

stitution of judge for cause, a hearing to

determine whether the cause exists shall be

conducted as soon as possible by a judge

other than the judge named in the petition."

735 ILCS 5/2-1001(a)(3)(iii) (West 2004).

Here, plaintiff's motion was referred to and denied by

Judge Zappa. "A reviewing court will not reverse a determination

on allegations of judicial prejudice unless the finding is

contrary to the manifest weight of the evidence." Jacobs v.

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Union Pacific R.R. Co., 291 Ill. App. 3d 239, 244, 683 N.E.2d

176, 180 (1997). We, however, cannot make a determination on

Judge Zappa's findings because none appear in the record.

Counsel for both parties appeared at an August 2005 hearing on

the motion and argued the merits. No transcript has been pro-

vided and no bystander's report has been included in the record.

Absent a transcript or suitable substitute for proceedings in the

trial court, a reviewing court will not consider the alleged

errors. Smith v. Central Illinois Public Service Co., 176 Ill.

App. 3d 482, 497, 531 N.E.2d 51, 61 (1988). Thus, we will not

consider whether Judge Zappa's decision was against the manifest

weight of the evidence.

Plaintiff, however, appears to argue that Judge Kelley

should have sua sponte recused himself under Supreme Court Rule

63(C)(1) (188 Ill. 2d R. 63(C)(1)). Rule 63 provides, in part,

as follows:

"A judge shall disqualify himself or

herself in a proceeding in which the judge's

impartiality might reasonably be questioned,

including but not limited to instances where:

* * *

(d) the judge knows that he or

she, individually or as a fiduciary

***, has an economic interest in

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 the subject matter in controversy

or in a party to the proceeding, or

has any other more than de minimus

interest that could be

substantially affected by the pro-

ceeding." 188 Ill. R. 63(C)(1)(d).

Plaintiff concedes a trial judge merely being an

insured of a mutual insurance company would constitute a de

minimus economic interest. Plaintiff has cited no cases that

would require a judge to recuse himself solely because he was to

preside over a case involving an insurance company of which he

just happened to be an insured. We note the preamble to the Code

of Judicial Conduct defines "economic interest" as ownership of a

more than de minimus legal or equitable interest and states "the

proprietary interest of a policyholder in a mutual insurance

company *** is not an economic interest in the organization

unless a proceeding pending or impending before the judge could

substantially affect the value of the interest." 145 Ill. 2d.,

Code of Judicial Conduct, Preamble, at xxix (eff. August 6,

1993). Here, plaintiff has not shown Judge Kelley had a direct,

personal, and substantial pecuniary interest in this litigation.

Accordingly, we find plaintiff's claim of partiality is not

supported by the facts.

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 C. Evidentiary Rulings

Plaintiff argues the trial court erred in evidentiary

rulings that prohibited him from presenting evidence that defen-

dant did not reasonably rely to its detriment upon the alleged

misrepresentation or that defendant was not sufficiently preju-

diced or injured by the alleged misrepresentation. We find this

issue forfeited.

"Mere contentions, without argument or citation of

authority, do not merit consideration on appeal." Elder v.

Bryant, 324 Ill. App. 3d 526, 533, 755 N.E.2d 515, 521-22 (2001).

"A court of review 'is not simply a depository into which an

appealing party may dump the burden of argument and research.'"

In re Austin C., 353 Ill. App. 3d 942, 948, 823 N.E.2d 981, 986

(2004), quoting In re Estate of Thorp, 282 Ill. App. 3d 612, 616,

669 N.E.2d 359, 362 (1996). "A conclusory assertion, without

supporting analysis, is not enough." Wolfe v. Menard, Inc., 364

Ill. App. 3d 338, 348, 846 N.E.2d 605, 613 (2006).

Here, plaintiff makes a conclusory argument that the

trial court erred in its evidentiary rulings, and his only

citation to authority focuses solely on the standard of review.

Plaintiff's reply brief merely repeats the claim that the court

erred in its evidentiary rulings. By failing to sufficiently or

properly present this issue for review, plaintiff has forfeited

this issue on appeal.

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 D. Judgment Notwithstanding the Verdict

Plaintiff argues the trial court erred in not granting

the motion for judgment notwithstanding the verdict as to the

second affirmative defense. We disagree.

"A judgment notwithstanding the verdict is

properly entered only if all the evidence,

when viewed in its aspect most favorable to

the opponent, so overwhelmingly favors the

movant that no contrary verdict based on that

evidence could ever stand. [Citation.] In

ruling on a motion for a judgment notwith-

standing the verdict, a court does not weigh

the evidence, nor is it concerned with the

credibility of the witnesses; rather, it may

only consider the evidence and any inferences

therefrom, in the light most favorable to the

party resisting the motion." Board of Trust-

ees of Community College District No. 508 v.

Coopers & Lybrand, 208 Ill. 2d 259, 274, 803

N.E.2d 460, 469 (2003).

"Judgment notwithstanding the verdict is not appropriate if

'reasonable minds might differ as to inferences or conclusions to

be drawn from the facts presented.'" McClure v. Owens Corning

Fiberglas Corp., 188 Ill. 2d 102, 132, 720 N.E.2d 242, 257

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(1999), quoting Pasquale v. Speed Products Engineering, 166 Ill.

2d 337, 351, 654 N.E.2d 1365, 1374 (1995).

In this case, the jury found plaintiff misrepresented a

material fact or circumstance, or made a false statement, to

defendant's agents with the intent to deceive State Farm. "False

sworn answers are material if they might have affected the

insurer's action or attitude, or if they may be said to have been

calculated to discourage, mislead, or deflect the insurer's

investigation in any area that might have seemed to it, at that

time, a relevant area to investigate." Passero, 196 Ill. App. 3d

at 609, 554 N.E.2d at 388.

Here, the evidence indicated plaintiff obtained an

American Express card in January or February 2003, and he admit-

ted approving some transactions with the card, including glasses

and a tattoo for Penn. Later, $4,000 in charges accrued, and

plaintiff did not attempt to make payments. Plaintiff did not

mention the existence of this credit card in his June 10, 2003,

recorded statement to Jyawook or his October 31, 2003, deposi-

tion, even though American Express had called him in May 2003.

The balance on the card, and other financial concerns, provided

motive for plaintiff to facilitate the fire to collect insurance

proceeds. Also, plaintiff told Jyawook in his recorded statement

that he could not retrieve funds from the ATM on the evening of

the fire because he may have used the wrong password. At his

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October 31, 2003, deposition, plaintiff stated his ATM card was

rejected because of insufficient funds. Moreover, plaintiff

claimed in his deposition he was current on his mortgage payments

at the time of the fire, but Jeff Jones testified he would have

contacted plaintiff prior to the fire regarding his late mortgage

payments and computer-generated notices would have been mailed.

The jury considered the evidence and testimony pre-

sented at trial. It was in the best position to determine the

credibility of the witnesses and decide whether plaintiff made an

innocent mistake or materially misrepresented his financial

condition to mislead State Farm's investigation. Considering the

evidence in the light most favorable to defendant, we find the

evidence does not so overwhelmingly favor plaintiff that a

verdict in favor of defendant cannot stand. Thus, the trial

court did not err in denying plaintiff's motion for judgment

notwithstanding the verdict.

E. Second Affirmative Defense

Plaintiff argues the jury's verdict on the second

affirmative defense was contrary to the manifest weight of the

evidence. We disagree.

"A reviewing court will set aside a

jury's verdict only if it was against the

manifest weight of the evidence. [Citation.]

Under this standard of review, we will re-

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 verse a jury verdict only (1) if it is unrea-

sonable, arbitrary, and not based on evi-

dence, or (2) when the opposite conclusion is

clearly apparent to us. [Citation.]"

Bachman v. General Motors Corp., 332 Ill.

App. 3d 760, 803, 776 N.E.2d 262, 300 (2002).

"'[I]t is the province of the jury to resolve conflicts in the

evidence, to pass upon the credibility of the witnesses, and to

decide what weight should be given to the witnesses' testimony.'"

Redmond v. Socha, 216 Ill. 2d 622, 652, 837 N.E.2d 883, 900

(2005), quoting Maple v. Gustafson, 151 Ill. 2d 445, 452, 603

N.E.2d 508, 511-12 (1992).

Here, the jury heard the evidence and had the opportun-

ity to judge the credibility of the witnesses. The jury resolved

the case in defendant's favor, and the record fails to demon-

strate an opposite conclusion is clearly evident or that the

verdict was unreasonable and not based on the evidence. Thus,

the jury's verdict was not against the manifest weight of the

evidence.

III. CONCLUSION

For the reasons stated, we affirm the trial court's

judgment.

Affirmed.

KNECHT, J., concurs.

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 COOK, J., dissents.

JUSTICE COOK, dissenting:

I respectfully dissent. The jury should have been

instructed that a misrepresentation is not material unless the

insurer somehow could have relied on it. I would reverse and

remand for a new trial.

It is incorrect to say that "fraud" has no application

to this case. The clause upon which State Farm relies to void

this policy is captioned "Concealment or Fraud." Innocent

misrepresentations are not enough; the misrepresentations must be

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fraudulent or something like it. We should deal with a "Conceal-

ment or Fraud" clause carefully. In the context of common-law

fraud, the law presumes that transactions are fair and honest;

fraud is not presumed. Accordingly, fraud must be proved by

clear and convincing evidence. Avery v. State Farm Mutual

Automobile Insurance Co., 216 Ill. 2d 100, 191, 835 N.E.2d 801,

856 (2005).

Exclusionary clauses, which run counter to the basic

purpose of the policy to afford coverage, are strictly construed

against the insurer. Outboard Marine Corp. v. Liberty Mutual

Insurance Co., 154 Ill. 2d 90, 119, 607 N.E.2d 1204, 1217 (1992);

Wasik v. Allstate Insurance Co., 351 Ill. App. 3d 260, 267, 813

N.E.2d 1152, 1158 (2004) (innocent insured entitled to recover

despite arson of co-insured). "Illinois courts will liberally

construe any doubts as to coverage in favor of the insured,

especially when the insurer seeks to avoid coverage based on an

exclusion." Johnson Press of America, Inc. v. Northern Insurance

Co. of New York, 339 Ill. App. 3d 864, 871-72, 791 N.E.2d 1291,

1298 (2003). In the general nature of things, information is

usually developed during an investigation; what is believed or

assumed to be correct at the beginning may be explained to be

otherwise at the end. We should avoid an interpretation that

allows the insurer, in hindsight, to seize upon any misstatement

made during its investigation and use that misstatement to void

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the policy. It should not be enough that the insurer "feels"

that it has been misled.

The "Concealment or Fraud" clause provides an easy

fall-back position for an insurer that cannot prove the insured

committed arson. For example, in A&A, the jury first found that

the insured had not been involved in setting the fire but then

went on to find the insured had violated the "Concealment or

Fraud" clause. A&A, 259 Ill. app. 3d at 74, 630 N.E.2d at 1003.

The appellate court reversed and remanded. It is interesting

that, in the present case, the jury was first asked whether the

insured had violated the clause and, after it had answered that

question in the affirmative, it did not even address the question

whether the insured had been involved in setting the fire,

despite the fact that arson had been the focus of the evidence

presented. The real question in this case was whether Penn and

Burmeister took advantage of the insured, but State Farm was

allowed to limit the jury's inquiry to whether the insured, even

if he had been taken advantage of, had made a misstatement.

It is not enough to void a policy that an insured has

made a misstatement on an unimportant matter. "[F]alse answers

are material if they might have affected the attitude and action

of insurer, and they are equally material if they may be said to

have been calculated either to discourage, mislead, or deflect a

company's investigation in any area that might seem to the

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company, at that time, a relevant or productive area to investi-

gate." (Emphasis added.) Couch on Insurance §197:16, 197-38,

197-39 (3d ed. 2005). The same statement is made in Passero.

Passero, 196 Ill. App. 3d at 609, 554 N.E.2d at 388. State

Farm's instruction appears to be taken from Passero, but it

significantly changes the highlighted language. State Farm's

instruction states: "A concealment, misrepresentation[,] or

false statement is material if a reasonable insurer would attach

importance to it at the time it was made. A reasonable insurer

would attach importance to any fact or statement that would

affect the insurer's action or attitude regarding a claim by an

insured."

There are several problems with State Farm's instruc-

tion. First of all, it is phrased in the abstract. It would

make no difference that State Farm, in this particular case,

could not have been affected by the alleged misstatement. The

question is how a "reasonable insurer" would have been affected.

It is not clear where that language came from; it did not come

from Passero, the principal case on which State Farm relies. The

language whether a reasonable insurer "would attach importance to

it" is also troubling. It should not be enough that an insurer

might "feel" that an answer is important. Something more is

required than a general statement that insurers rely on insured's

representations when ascertaining the true facts of a loss.

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Couch on Insurance §197:19, 197-44, 197-47 (3d ed. 2005). State

Farm's instruction is defective because it significantly lessens

the requirement that the alleged misstatement be one that "might

have affected" the insurer. Under the instruction, any misstate-

ment, no matter how minor, can be used to void the policy.

In a case similar to ours, the First District has

stressed the importance of the materiality definition. Without

holding that a definition of fraudulent misrepresentation must be

given, the First District said that at least if that instruction

had been given, the jury would have known that it was necessary

that "'the person to whom the representation was made had a right

to rely upon it and in fact did so.'" A&A, 259 Ill. App. 3d at

83, 630 N.E.2d at 1009. A&A did not explain the extent to which

an insurer must "in fact" rely on the representation, but cer-

tainly materiality requires that the insurer "had a right to

rely" upon the representation.

"Reliance" has been a difficult concept in these cases.

Certainly the insurer is not required to pay improper claims as a

precondition to its denial of the same claims on grounds of

violation of the policy condition. State Farm Fire & Casualty

Insurance Co. v. Graham, 567 N.E.2d 1139, 1141 (Ind. 1991).

"However, as used in the policy condition,

the phrase 'if any insured has intention-

ally concealed or misrepresented any

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 material fact or circumstance' reasonably

means more than momentary or inadvertent con-

cealment or misrepresentation. Facts demon-

strating a voluntary correction of error

would be probative evidence on the issue of

intentional concealment or misrepresentation."

Graham, 567 N.E.2d at 1141.

This court has previously required reliance, recognizing that

insurers are unlikely to "give any significant weight to" a

speculative assertion by an insured. Nagel-Taylor Automotive

Supplies, Inc. v. Aetna Casualty & Surety Co., 81 Ill. App. 3d

607, 612, 402 N.E.2d 302, 306 (1980) (recovery allowed despite

clearly unreasonable estimate of lost profits; jury rejected

evidence that insured was complicit in arson).

The Passero case, which stated that the definition of

material misrepresentations is "quite different" in the realm of

insurance law, involved a unique situation, very different from

our case. In Passero, the insureds argued that their admittedly

false statements, consisting of altered receipts for personal

property, were not material because their policy provided

replacement-cost coverage. Passero, 196 Ill. App. 3d at 609, 554

N.E.2d at 389. The First District rejected the insured's techni-

cal argument that the statements were not material and affirmed

summary judgment for the insurer. Passero, 196 Ill. App. 3d at

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611, 554 N.E.2d at 390. Passero did not hold that reliance was

irrelevant under the "Concealment or Fraud" clause. Passero held

that false answers were material only if they might have affected

the insurer, which is another way of saying only if the insurer

"had a right to rely" upon the representations. Passero, 196

Ill. App. 3d at 608-09, 554 N.E.2d at 388; see also A&A, 259 Ill.

App. 3d at 83, 630 N.E.2d at 1009 ("had a right to rely").

Passero recognized that "relatively innocent" misrepresentations

were not a basis for voiding a policy. Passero, 196 Ill. App. 3d

at 610, 554 N.E.2d at 389.

There was no misrepresentation in the present case that

might have affected the disposition of the claim. Plaintiff met

with State Farm's adjuster on June 10, 2003, after the fire.

Plaintiff told the adjuster about his financial problems. He did

not mention his American Express card, but he told her he would

furnish a credit report. The credit report was furnished in

August 2003, showing the $4,202.86 in charges on the American

Express card. There is no way State Farm could have been harmed

by the brief failure to mention the American Express card. State

Farm did not ask plaintiff about the American Express card when

it took his evidence deposition on October 31, 2003. Plaintiff

told State Farm on June 10 that he could not use his ATM card,

perhaps because he used the wrong password. At the deposition,

he told State Farm he had learned the card was rejected because

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of insufficient funds. Plaintiff was making mortgage payments in

2003 but, at the time of the fire, was two months behind, al-

though he had not incurred any late-payment charges.

It is not an adequate discharge of our duties to simply

leave the matter to the jury, particularly when the jury has not

been properly instructed. There has to be evidence to support a

jury verdict. How could State Farm have been harmed by anything

the insured said, or did not say, regarding the American Express

card? State Farm's other complaints are equally trivial. The

insured misrepresented whether he had satellite television

service at the time of the fire? The insured disclosed that he

could not draw money from his ATM but misrepresented the reason

why? The jury should not have been allowed to conclude that any

misstatement, no matter how insignificant, could be material.

The fact that insurers generally rely on insureds' representa-

tions does not mean that every alleged misrepresentation is

material. Couch on Insurance §107:19 (3d ed. 2005).

The instruction defining what is "material" did not

adequately state the law. As in A&A, if the insured's instruc-

tion had been given, the jury would at least have known that the

person to whom the representation was made had to have a right to

rely upon it. A&A, 259 Ill. App. 3d at 83, 630 N.E.2d at 1009.

The jury's verdict is contrary to the manifest weight of the

evidence. No reasonable jury could have concluded that State

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Farm could have been affected by these statements or that the

insured, who provided all the information, had any intent to

deceive.

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