Digitally signed by
Reporter of Decisions
Illinois Official Reports Reason: I attest to the
accuracy and
integrity of this
document
Appellate Court Date: 2018.07.18
16:15:36 -05'00'
American Access Casualty Co. v. Novit, 2018 IL App (1st) 171048
Appellate Court AMERICAN ACCESS CASUALTY COMPANY, Plaintiff-
Caption Appellee, v. KELLY NOVIT; CIPRIAN TANASE; and EILEEN
CONWAY, Defendants (Eileen Conway, Defendant- Appellant).
District & No. First District, First Division
Docket No. 1-17-1048
Filed March 30, 2018
Decision Under Appeal from the Circuit Court of Cook County, No. 15-CH-6523; the
Review Hon. Franklin U. Valderrama, Judge, presiding.
Judgment Reversed and remanded.
Counsel on Pfaff, Gill & Ports, Ltd., of Chicago (Michael T. Gill, of counsel), for
Appeal appellant.
James P. Newman & Associates, LLC, of St. Charles (William H.
Ransom, of counsel), for appellee.
Panel PRESIDING JUSTICE PIERCE delivered the judgment of the court,
with opinion.
Justices Harris and Mikva concurred in the judgment and opinion.
OPINION
¶1 In this declaratory judgment action, defendant Eileen Conway appeals from the circuit
court’s judgment finding that plaintiff American Access Casualty Company (American
Access) had no duty to defend or indemnify its insured, defendant Kelly Novit, in connection
with an underlying personal injury action (the underlying action). In the underlying action,
Conway sued to recover damages for injuries she sustained when she was struck by Novit’s
vehicle, which was driven by defendant Ciprian Tanase. Conway asserted that Tanase was
negligent when he struck Conway with Novit’s vehicle and that Novit negligently entrusted
her vehicle to Tanase because Novit knew or should have known that Tanase was intoxicated.
Novit’s automobile insurer, American Access, filed this declaratory judgment action seeking a
declaration of rights regarding its duties to defend and indemnify Tanase and Novit in the
underlying action. The circuit court granted summary judgment in favor of American Access,
finding that it had no duty to defend or indemnify either Tanase or Novit. Conway appeals
from the portion of the circuit court’s judgment finding that American Access had no duty to
defend or indemnify Novit. For the following reasons, we reverse and remand for further
proceedings.
¶2 BACKGROUND
¶3 The following facts are set forth in Conway’s two-count amended complaint in the
underlying action. On March 29, 2014, at around noon, Novit and Tanase were together at a
forest preserve where Novit observed Tanase “consume an alcoholic beverage.” Novit then
allowed Tanase to drive her 2012 Dodge Avenger, with her as a passenger, to a 7-Eleven.
While at the 7-Eleven, Novit observed Tanase consume “multiple alcoholic beverages.” Novit
then again allowed Tanase to drive her vehicle, with her as a passenger, to a pizza restaurant.
While there, Novit observed Tanase “consume at least one alcoholic beverage.” Novit then
again allowed Tanase to drive her vehicle, again with her as a passenger, to a gyros restaurant
where Novit exited the vehicle and then gave Tanase “express or implied permission” to
continue using her vehicle. Novit “knew or should have known that [Tanase] was intoxicated,
incompetent, or reckless” and “knew or should have known that her [vehicle] would likely be
used in a manner involving an unreasonable risk of harm to others.” After leaving the gyros
restaurant alone in Novit’s vehicle, Tanase struck Conway at around 7 p.m. as she crossed the
street, resulting in Conway’s injuries. Conway alleged that Tanase’s “intoxication,
incompetency, or recklessness” was a proximate cause of her injuries.
¶4 After Conway initiated the underlying action, American Access filed this declaratory
judgment action and filed a three-count amended complaint. American Access acknowledged
that it issued Novit an auto insurance policy and that she is the named insured under the policy.
In count I, American Access asserted that it had no duty to defend or indemnify Tanase
because he was not an insured under Novit’s policy and was operating the vehicle without
Novit’s express or implied permission. American Access asserted in count II that it had no duty
to defend or indemnify either Novit or Tanase under the “reasonable belief” exclusion to the
auto policy, which excluded coverage for “any person operating the vehicle without a
reasonable belief that he or she is entitled to do so.” American Access contended that Tanase
was not the named insured under the policy and that he did not have a valid driver’s license at
the time of the accident, and therefore he had no reasonable belief that he was entitled to
-2-
operate Novit’s vehicle. Count III asserted that American Access had no duty to defend or
indemnify Novit against Conway’s negligent entrustment claim because the policy did not
provide coverage for bodily injuries caused by the separate tort of negligent entrustment.
¶5 American Access moved for summary judgment on its “reasonable belief” exclusion
claims in count II. The motion was fully briefed, and on July 26, 2016, the circuit court entered
a written order granting American Access’s motion with respect to Tanase but denying the
motion with respect to Novit. The circuit court examined the policy, which contained an
exclusion that provided, “This policy does not apply to and does not provide coverage [for
bodily injury liability and property damage liability] for: *** (q) any person operating an
automobile without a reasonable belief that he or she is entitled to do so, however, this
exclusion does not apply to operation of the owned automobile by the named insured or
relative.” The circuit found that American Access had no duty to defend or indemnify Tanase
because he could not have had a reasonable belief that he was entitled to operate Novit’s
vehicle since he did not have a driver’s license. The circuit court further found that the
reasonable belief exclusion did not apply to Novit because she was not driving the automobile
at the time of the accident and, even if she had been, the exclusion would not apply to her
because she was the named insured under the policy. The circuit court’s written order states
“that the [reasonable belief] exclusion does not exclude Novit from coverage under the
[p]olicy based on the allegations of the underlying complaint,” and concluded that “based on
the allegations of the [u]nderlying complaint, the reasonable belief exclusion does not apply to
Novit.” We note that the circuit court did not conclude that American Access had a duty to
defend Novit based on the inapplicability of the reasonable belief exclusion; the circuit court
found that that the reasonable belief exclusion did not apply and therefore was not a basis from
which it could conclude that the American Access had no duty to defend under the policy.
¶6 American Access then filed a motion for partial summary judgment on its claim in count III
that the policy did not provide coverage for claims of negligent entrustment and a motion for
reconsideration of the circuit court’s summary judgment order on the “reasonable belief”
exclusion claim in count II as it pertained to Novit. On March 9, 2017, the circuit court denied
American Access’s motion to reconsider. After briefing on American Access’s motion for
summary judgment on count III, the circuit court entered a handwritten order on March 23,
2017, drafted by counsel for American Access, granting summary judgment in favor of
American Access, finding “there is no coverage for [d]efendant Novit on the claim of negligent
entrustment.” The order also stated that the circuit court previously resolved American
Access’s “reasonable belief” exclusion claims. The order further stated that American Access
voluntarily dismissed its claim in count I that it had no duty to defend or indemnify Tanase on
the grounds that he was not a named insured. The circuit court’s March 23, 2017, order states
that it is “a final order with all claims of all parties now being disposed of.”
¶7 Conway filed her notice of appeal on April 21, 2017, from the March 23, 2017, order.
American Access moved to dismiss Conway’s appeal for lack of appellate jurisdiction, arguing
that its “reasonable belief” claim against Novit had not been fully resolved. A panel of this
court originally dismissed this appeal but later vacated the dismissal order on Conway’s
motion.
-3-
¶8 ANALYSIS
¶9 On appeal, Conway argues that the circuit court effectively concluded that, as a matter of
law, a negligent entrustment claim is not an “accident” and that the circuit court misapplied our
holding in General Agents Insurance Co. of America, Inc. v. Midwest Sporting Goods Co., 328
Ill. App. 3d 482 (2002). She contends that General Agents stands for the proposition that
insurance coverage is unavailable for a negligent entrustment claim only where the underlying
complaint “is based purely on deliberate actions.” She further argues that the “substantial
probability” test from General Agents is not met here. Finally, she contends that public policy
favors coverage for her negligent entrustment claim. We need not resolve this issue, however,
because we find that American Access has a duty to defend Novit under the plain language of
the policy.
¶ 10 Before we reach the merits of this appeal, we must consider American Access’s argument
that we lack appellate jurisdiction. It contends that the circuit court never entered a final
judgment with respect to the “reasonable belief” exclusion claim in count II of the amended
complaint. American Access argues that the circuit court granted summary judgment on the
“reasonable belief” exclusion claim as to Tanase but denied summary judgment as to Novit,
and therefore count II has not been fully adjudicated. American Access further argues that it
has been deprived of “its opportunity to cross-appeal on an issue which it may have lost had the
order been final.” We disagree.
¶ 11 Pursuant to the Illinois Constitution, our jurisdiction is limited to appeals from final
judgments. Ill. Const. 1970, art. VI, § 6; Ill. S. Ct. R. 301 (eff. Feb. 1, 1994). Absent a supreme
court rule, we lack jurisdiction to review judgments, orders, or decrees that are not final.
Blumenthal v. Brewer, 2016 IL 118781, ¶ 22 (citing EMC Mortgage Corp. v. Kemp, 2012 IL
113419, ¶ 9). A “final judgment” for the purposes of appeal is one that fixes absolutely and
finally the rights of the parties in a lawsuit and determines the litigation on the merits so that, if
affirmed, the only thing remaining is to proceed with the execution of the judgment. Indiana
Insurance Co. v. Powerscreen of Chicago, Ltd., 2012 IL App (1st) 103667, ¶ 22; see also In re
Detention of Hardin, 238 Ill. 2d 33, 42-43 (2010).
¶ 12 Here, American Access sought, in relevant part, a declaration of its rights with respect to its
duties to defend and indemnify Novit in the underlying action. It presented two alternative
theories as to why Novit was not entitled to coverage under the policy: (1) the policy’s
“reasonable belief” exclusion applied and (2) the policy provided coverage for bodily injuries
caused by automobile accidents but did not provide coverage for the separate tort of negligent
entrustment. Both claims sought the same relief: an order declaring that American Access had
no duty to defend or indemnify Novit in the underlying action. The circuit court found that the
“reasonable belief” exclusion did not apply to Novit because she was the named insured. In
doing so, the circuit court concluded that American Access could not rely on the “reasonable
belief” exclusion in order to avoid its duty to defend or indemnify Novit in the underlying
action. The circuit court did not conclude that inapplicability of the “reasonable belief”
exclusion gave rise to a duty to defend but did conclude that the exclusion was inapplicable and
was therefore not determinative of American Access’s duty to defend. In doing so, and by
subsequently denying American Access’s motion to reconsider, the circuit court conclusively
resolved count II of American Access’s declaratory judgment complaint in favor of
defendants.
-4-
¶ 13 The circuit court subsequently agreed with American Access that Novit was not entitled to
coverage under the policy because the policy only applied to accidents and not to a separate
tort claim for negligent entrustment. By granting summary judgment in favor of American
Access on its claim that the policy did not provide coverage for claims of negligent
entrustment, the circuit court granted American Access all of the relief it sought in its
complaint with respect to Novit: an order declaring that it had no duty to defend or indemnify
Novit in the underlying action.
¶ 14 We also reject American Access’s contention that it has been deprived of “its opportunity
to cross-appeal on an issue which it may have lost had the order been final.” When a judgment
grants a party all of the relief that it sought and the judgment has no prejudicial effect on the
prevailing party, that party has no right to an appeal. Material Service Corp. v. Department of
Revenue, 98 Ill. 2d 382, 386 (1983). American Access had no right to cross-appeal from the
circuit court’s denial of summary judgment on its “reasonable belief” exclusion claim because
no portion of the circuit court’s judgment—that American Access had no duty to defend or
indemnify Novit in the underlying action—was adverse to American Access. American
Access could have advanced its “reasonable belief” exclusion arguments on appeal as an
alternative basis for affirming the circuit court’s judgment (see Beacham v. Walker, 231 Ill. 2d
51, 61 (2008) (explaining that we may affirm the circuit court’s judgment on any grounds
called for by the record, regardless of whether the circuit court relied on those grounds)), but it
has not done so. We find that the circuit court’s March 23, 2017, order was a final and
appealable order.
¶ 15 Turning to the merits, the sole issue on appeal as framed by the parties is whether
Conway’s claim for negligent entrustment alleges an “accident” covered by the policy such
that American Access has a duty to defend Novit against Conway’s negligent entrustment
claim and potentially indemnify Novit for any damages for which she was found liable. We
need not reach the question of whether a claim for negligent entrustment amounts to an
“accident” under the policy, however, because the plain language of the policy provides that
American Access will pay compensatory damages for accidents resulting in bodily injury that
arise out of Novit’s use or ownership of the vehicle.
¶ 16 To determine whether an insurer has a duty to defend, a court must look to the allegations
of the underlying complaint and compare those allegations to the relevant portions of the
insurance policy. Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill. 2d 90,
107-08 (1992). If the underlying complaint alleges facts that fall or potentially fall within the
policy’s coverage, the insurer’s duty to defend arises, even if the allegations in the underlying
complaint are groundless, false, or fraudulent. Northbrook Property & Casualty Co. v.
Transportation Joint Agreement, 194 Ill. 2d 96, 98 (2000). The insurer must defend “unless the
allegations of the underlying complaint demonstrate that the plaintiff in the underlying suit will
not be able to prove the insured liable, under any theory supported by the complaint, without
also proving facts that show the loss falls outside the coverage of the insurance policy.” Illinois
Emcasco Insurance Co. v. Northwestern National Casualty Co., 337 Ill. App. 3d 356, 361
(2003). Insurance policies are to be liberally construed in favor of coverage, and any doubt as
to the insurer’s duty to defend is resolved in favor of the insured. United Services Automobile
Ass’n v. Dare, 357 Ill. App. 3d 955, 963 (2005).
¶ 17 Under the relevant portion of Novit’s policy, American Access agreed to “pay on behalf of
[Novit] *** compensatory damages *** because of (1) bodily injury, or (2) property damage
-5-
caused by accident [sic] arising out of the ownership, maintenance or use of the owned
automobile.” (Emphases added.) The policy does not contain an exclusion for negligent
entrustment and does not define “accident.” Where a term in an insurance policy is not defined,
we afford that term its plain, ordinary, and popular meaning. Founders Insurance Co. v.
Munoz, 237 Ill. 2d 424, 436 (2010). We have recognized that for purposes of insurance
coverage claims, an “accident” is “ ‘an unforseen [sic] occurrence, usually *** an undesigned
sudden or unexpected event of an inflictive or unfortunate character.’ ” State Farm Fire &
Casualty Co. v. Young, 2012 IL App (1st) 103736, ¶ 26 (quoting Aetna Casualty & Surety Co.
v. Freyer, 89 Ill. App. 3d 617, 619 (1980); see also West American Insurance Co. v. Midwest
Open MRI, Inc., 2013 IL App (1st) 121034, ¶ 22. Furthermore, “the words ‘arising out of’ have
been interpreted broadly to mean originating from, incident to, or having a causal connection
with the ownership, maintenance or use of the vehicle.” Aryainejad v. Economy Fire &
Casualty Co., 278 Ill. App. 3d 1049, 1051 (1996) (citing 6B John A. Appleman & Jean
Appleman, Insurance Law and Practice § 4317, at 360-63 (1979)).
¶ 18 There is no dispute that Conway’s underlying complaint alleges an accident: she plainly
alleges that Tanase negligently struck her with Novit’s car and that she suffered injuries as a
result. The dispositive question then, for purposes of determining whether American Access
has a duty to defend Novit, is whether the complaint alleges that the accident arose out of the
ownership, maintenance, or use of Novit’s insured vehicle. We find that it does.
¶ 19 A claim for negligent entrustment asserts that the defendant gave another person express or
implied permission to use or possess a dangerous article or instrumentality which the
defendant knew or should have known would likely be used in a manner involving an
unreasonable risk of harm to others. Evans v. Shannon, 201 Ill. 2d 424, 434 (2002). In the
context of automobiles, “There are two primary considerations in negligent-entrustment
analysis: (1) whether the owner of the vehicle entrusted the car to an incompetent or unfit
driver, and (2) whether the incompetency was a proximate cause of a plaintiff’s injury.” Id.
(citing Taitt v. Robinson, 266 Ill. App. 3d 130, 132 (1994)). The general rule is that “the
alleged incompetence of the driver must be a proximate cause of the negligent act that caused
the injury [citation], and the entrustor is liable, but only if his conduct is the legal cause of the
complained-of bodily harm.” Watson v. Enterprise Leasing Co., 325 Ill. App. 3d 914, 922
(2001). “Legal cause” is a component of proximate cause and is “largely a question of
foreseeability.” Abrams v. City of Chicago, 211 Ill. 2d 251, 258 (2004). “The relevant inquiry
is whether ‘the injury is of a type that a reasonable person would see as a likely result of his or
her conduct.’ ” (Emphasis in original.) Id. (quoting First Springfield Bank & Trust v. Galman,
188 Ill. 2d 252, 260 (1999)).
¶ 20 Here, the allegations in Conway’s complaint fall within or potentially within the coverage
of American Access’s policy. The complaint alleged that (1) Novit gave Tanase express or
implied permission to use her vehicle, (2) Novit knew or should have known that Tanase was
intoxicated, and (3) Tanase struck Conway with the vehicle, resulting in bodily harm. It can be
inferred from the allegations in the underlying complaint that Conway is alleging that Novit’s
negligent entrustment was a legal cause of Conway’s injuries because Novit knew or should
have known that Tanase was intoxicated, incompetent, or reckless and that Tanase’s
intoxication, incompetence, or recklessness was a proximate cause of the accident and
Conway’s injuries. Conway’s underlying complaint alleges a causal connection between
Novit’s alleged entrustment of her insured vehicle—which she owned—to Tanase with actual
-6-
or constructive knowledge that Tanase was intoxicated and that the accident caused Conway’s
injuries. In other words, Conway has alleged that the injury “arises out of” Novit’s use or
ownership of the insured vehicle and her negligent entrustment of that vehicle was a proximate
cause of Conway’s injuries. Therefore, the circuit court’s order granting summary judgment in
favor of American Access with respect to its duty to defend Novit in the underlying action is
reversed.
¶ 21 We remand for further proceedings so that, following a determination of liability in the
underlying action, the parties may address whether American Access has a duty under the
policy to indemnify Novit. We express no opinion as to whether American Access has a duty
to indemnify Novit under the policy.
¶ 22 CONCLUSION
¶ 23 For the foregoing reasons, the judgment of the circuit court is reversed. We remand for
further proceedings consistent with this opinion.
¶ 24 Reversed and remanded.
-7-