## I L L I N O I S 

## O F F I C I A L 

## RE P O R T S Appellate Court

Aut o-Owners Insu rance Co. v. Yocum , 2013 IL App (2d) 111267

Appellate Court Caption A U T O

- O W N E R S I N S U R A N C E C O M P A N Y
, P l a i n t i f f a n d Counterdef

endant- Appellant and Cross-Appellee
, v. MERL E YOCUM, MERL E YOCUM TRUCKI NG, GAR Y E. DOWDI NG, HARMON GRAI N, L L C, and MI CHI GAN MI L L ERS MUTUAL I NSURANCE COMPANY, Def

endants and Counterplaintiffs-Appe llees and CrossAppellants.–

AU T O

- O WN E RS I

N SU RA NCE COMPANY, Plaintiff and Counterdef

endant- Appellant, v. MERL E YOCUM, MERL E YOCUM TRUCKI NG, GARY E. DOWDI NG, HARMON GRAI

N, L L C, and MI CHI GAN MI L L ERS MUTUAL I NSURANCE COMPANY, Def endants a nd Counterplaintiffs-Appe llees.

District & N o. Second District Docke t Nos. 2-11-1267, 2-12- 0092 cons.

Filed Marc h 29, 2013

Held (Note : Th is syl lab us

con st it ute s no pa r t of the opi nio n of the cour t but has bee n pre

par ed by the Repo rt er of D e c i s i o n s f

o r t h e

c o n v e n i e n c e o

f t h e

rea der

. ) In an action by defen dant’s insurer seeking a decla ratory judgme nt that the insurer had no duty to defe nd o r i n d emnify an underly ing lawsuit

ar i s ing from a fata l collision involving one of defe ndant’s vehicles,
summary judgme nt was p roper ly enter ed for defe ndant and ag ainst the insurer, notwithstanding the insurer’ s contention that the policy was

canc elled just befor e the acc ident, since the rec ord showed that althoug h the insurer did can ce l the policy due to defe ndant’s failure to pay the premium, at that time, defe ndant’s acc ount contained an excess premium arising from defe ndant’s canc ellation of cover ag e for two vehicl es n ot involved in the claim, and under the circu m s tance s, the insurer should have applied t hose funds to the pay ment of t he p remium and the policy should not have bee n canc elled.

Dec ision Under
Review Appea l from the Circuit Court of Og le County , No. 09-MR-2; the Hon. Robert T. Ha

nson, J udg e, pre siding.J udg ment Affir med.

Counsel on Appea l R obert Marc Chemers, Richard M. Waris, Donald P. Eckler
, David N. L arson, and Scott L

. Howie, all of Pretzel & Stouffer, Chtrd., of Chicag o, for a ppellant.

Edwar d M. Kay
, Amy R. Paulus, Kathlee n A. J ohns o n , an d Donald R. Sampen, all of Clausen Miller P.C., of Chicag o, for a ppellees.

Panel J USTI CE SC H O ST O K d e li v ere d the judgme nt of the court, with opinion.
J ustices McL are n and Z enoff concur red in the judg ment and opinion.

OP INION

¶ 1 Def

endants Merl e Yo cu m an d Merle Yocum Trucking (collec tively Yocum) had an automobile insurance policy wit h t h e p laintiff, Auto-Owne rs Insuranc e Company

. On September 22, 2005, defe ndant Gar y Dowding
, while driving a truck owned by Yocum and hauling a trailer owned by defe ndant Har mon Gra in, L L C ( Har

mon), was in a

n automobile

acc ident with a car driven by J oseph Ker win I I I

. Ker

win died. Ker

win’s repr esentative filed

a wrong ful d ea th suit ag ainst Yocum, Dowding
, and Har mon. Yocum, Dowding
, and Har mon tend er ed t heir defe nse to Auto-Owne rs. Def endant Michig an Millers Mutual Insuranc e Company (Millers) insured Har mon and asser

ted a claim ag ainst Auto-Owne rs for equitable contribution. Auto-Owne rs filed a decl ar atory judgme nt action seeking a decla ration that it had no duty to defe nd or indemnify in the underly ing suit beca

use Yocum’s policy had been eff

ectively canc elled prior to t h e d at e of the acc ident. Both parties filed cross-motions for summary judgme nt. On November 17, 2011, following a hear ing, the trial
court denied Auto-Owne rs’ motion and g rante d summary judgme nt in fa v o r of the defe ndants. The trial court also denied the defe ndants’ claim for sanctions under section 155 of the I llinois Insuranc e Code (Insuranc e Code) (215 I L CS 5/155 (West 2008)). AutoOwner s appea ls, and the def endants c ross-appe al, from the tr ial court’s or der. We a ffirm.

¶ 2 I . BA CKGROUND ¶ 3 Yocum purcha sed an au t o m o b ile insurance policy from Auto-Owne rs, eff ective f rom J une 23, 2004, throug h J une 23, 2005. Two vehicles wer e cove red unde r the policy . When the policy was issued, Yocum was require d to pay approximately two months’ premium up front. There afte r, Yocum was require d to make additional premium pay ments on a monthly basis. At the end of 2004, Yocum had failed to make a timely monthly premium pay ment on

-2-two occa sions. Both times, Auto-Owne rs sent a notice of canc ellation, requiring pay ment by

a ce rtain date and war

ning that the policy would be canc elled if pay ment was not rec eived. Both times, Yocum made the re quired pa y ment befor e the c ance llation date. ¶ 4 On April 14, 2 0 0 5
, Au t o -O wn ers issued an endorse ment eff ective Marc h 22, 2005, addinga third vehic le to the policy . This increa sed the policy premium. On May

16, 2005, the policy was rene wed for the period of J une 23, 2005 throug h J une 23, 2006. When Yocum did not make the premium pay ment due May 3, 2005, Auto-Owne rs sen t a notice of

canc ellation on J une 3, 2005, reque sting $876.72, which was $342

. 2 2 fo r the rema ining premium on t h e 2 0 0 4 -05 policy
, plus late fee s ($20), plus two months’ premium for the 2005-06 policy ($257.25 p er m o n t h for a total of $514.50). Yocum paid the reque sted amount on J une 23, 2005, and ultimately rec eived a

reinstateme nt notice informinghim to disreg ard the prior ca

ncellation notice. ¶ 5 On J une 29, 2005, two of the vehicles on Yocum’s po l i cy we re damag ed in a tra ffic

acc ident, and they wer e no longe r being used. As a r esult, Yocum reque sted that those two vehicles be remove d from the policy

. Ultimately
, Auto-Owne rs i ss u ed an endorsement on August 30, 2005, eff

ective as of J une 30, 2005, ref lecting the reduc ed number of vehicles on the policy and the reduc ed policy premium. The orig inal monthly premium was $257.25, and the reduc ed monthly premium was $104. The auto policy provided that “[p] remium adjustments will be made at t he ti me of such chang es or when we [Auto-Owners] become

awa re of the chang es, if later.” There is no documentar y evidenc e of Yocum’s reque st to

remove the two vehicle s, other than the e ndorsement. ¶ 6 Yocum failed to make t h e monthly premium pay ment in J uly 2005 and Auto-O wner s mailed him a notice of canc ellation dated August 3, 2005. The notice require d Yocum to pay $539.50 (two premium pay ments of $257.25 plus additional fee s of $25) by August 25, 2005, and stated that the policy would be canc elled on that date if pay ment wer e not rec eived. The notice also stated that “if y ou wish, you may pay any amount g reater than the Minimum Due
up to y our Acc ount Ba lance .” Yocum did not make any pay ments or reque st any extensions
to do so. On August 31, 2005, Auto-Owne rs sent Yocum a notice of canc ellation, stating that the pol icy was cance lled eff ective Augu s t 2 5
, 2 0 05. On S eptember 7, 2005, Auto-Owne rs issued a chec k to Yocum in the amount of $238.6 6
, a re fund for unear ned premium. The chec k was sent to Yoc um’s insurance ag ent, who re ceive d it on September 12, 2005. ¶ 7 On September 22, 2005
, Do wd i n g, an em p l o y ee of Yocum, was in an automobile

acc ident while driving a truck that was owned by Yocum and had been cover ed by the 2005- 06 Auto-Owne rs policy at issue. The acc ident resulted in Ker win’s death. At the time of the

acc ident, Dowding was pulling a trailer, owned by Har mon and insured by Millers. Yocum and Dowding wer e additional insureds under the Millers policy
, but on an excess basis. On Fe bruar y 28, 2007, Ker

win’s repr esentative filed a wrong ful death suit aga inst Yocum, Dowding
, and Har

mon. Yocum, Dowding
, and Har mon tend er ed their defe nse to AutoOwner s. Addit i o n all y , Millers asser ted a claim ag ainst Auto-Owne rs for equitable contribution. Auto-Owne rs denied cover ag e to the defe ndants on the g round that the policy had been cancelled. Millers de fende d the under lying c ase a nd eventua lly

settled the suit in J uly 2009 for $2 million.

-3-¶ 8 In an aff idavit, Yocum attested as follows. He never rec eived a canc ellation notice from Auto-Owne rs dated August 3 or August 31, 2005. The first time he knew that his policy was

canc elled was afte r the September 22, 2005, acc ident. Since he had paid the $876.72 on J une 23, 2005, he believed that his insurance was in eff ect at the time of the acc ident. On J une 29, 2005, he was involved in a collision and two of his vehicles wer e badly damag ed. As a result of the acc ident, he called his insurance ag ent to reque st that the two vehicles be dropped from his policy beca

use they wer e no longe r being used. He understood that this lowere d his total annual premium from $3,300 to $1,248. He believed that the amount paid in J une 2005 was sufficie nt to provide cover ag e, beca use he had dropped the two vehicles from the policy

. He did not rec eive a premium ref und chec k until afte r the September 2005 acc ident. He informed his insurance ag ent of the acc ident, but Auto-Owne rs denied any cover ag e. Yocum there fore reque sted that Millers handle his def ense. ¶ 9 On J uly 10, 2007, Auto-Owne rs filed a decla ratory judgme nt action in Cook County . On November 20, 2008, the defe ndants’ motion to t ra n s fe r venue was g rante d. Auto-Owne rs ref iled its complaint in Og le County

. On Ap ril 24, 2009, Auto-Owne rs filed an amende d complaint. In its amende d complaint, Auto-Owne rs noted that Yocum, Dowding
, and Har mon ha d been named in a wrong ful death suit filed by Ker win’s repr esentative and had tender ed their defe nse to Auto-Owne rs. Auto-Owne rs further noted that Millers had asser ted

a cl aim ag ainst Auto-Owne rs for equitable contribution based on its alleg ed cover ag e of mutual insure ds involved in the Ker win suit. Additionally
, Har mon a nd Millers had filed a small claims suit ag ainst Yocum an d Au t o-Owne rs to rec over for damag e to the load of beans in the Har

mon trailer at the time of the acc ident. The defe ndants had eac h soug ht

cover ag e from Auto-Owne rs for defe nse and indemni fi cation in these suits. Auto-Owne rs denied cover ag e to eac h on the basis that prior to the September 22, 2005, acc ident the policy had been cancelled for nonpay ment of premium, eff

ective Aug ust 25, 2005. Auto-Owners
soug ht a decla

ration that the policy was proper ly canc elled and that it owed no duty to defe nd or indemnify

in the underlying suits. ¶ 10 On May 6, 2009, the defe ndants filed an answe r, which included multipl e af fi rm at i v e defe n s es

. T h e affirmative defe nses wer e based on arguments that there had been no nonpay ment of premium beca

use there was a cre dit on Yocum’s acc ount, which should have been used to satisfy the premium pay ment due. On J anuar

y 13, 2010, the defe ndants filed a four- count counter claim ag ainst Auto-Owne rs, alleg ing claims based on brea ch of contra ct, waiver and estoppel, and equitable contribution. Additionally
, the defe ndants alleg ed a claim for sa nctions, under se ction 155 of t he I nsuranc e C ode (215 I L CS 5/155 (West 2008)), for b ad fa i t h and vexatious and unrea sonable delay

. The defe ndants arg ued that there was n o

rea sonable basis for Auto-Owne rs to ref use to defe nd and provide indemnity cover ag e in the Ker win suit. ¶ 11 On J une 16, 2010, Auto-Owne rs filed a m o t i o n fo r summary judgme nt pursuant to section 2-1005 of the Code of Civil Procedur e (Code) (735 I L CS 5/2-1005 (West 2008)). Auto-Owne rs argued that its c ance llation notice clea rly informed Yocum that $539.50 was due by August 25, 2005. I t also stated that the “excess premium (i f an y ) above the ear

ned premium [would] be ref

und ed.” The canc ellation notice was mailed to Yocum when the
pay ment was not rec eived. Auto-Owne rs argued that it was entitled to canc el the policy and

-4-proper ly did so. Auto-Owne rs acknow ledg ed the defe ndants’ argument that no premium was

due beca use the policy chang e in J une, removing two v eh i cl es , resulted in a reduc ed premium. Auto-Owne rs argued that there was no evidenc e that it knew o f the reque sted chang e in J une. Auto-Owne rs also argued that Yocum should have contacted it had he believed that there was an issue with the reque sted amount. Auto-Owne rs further argued that the only logic al infere nce was that it did not know of the reque sted policy chang e until it was implemented on August 30, 2005, afte r the policy was canc elled. It then cre dited Yocum the premium retr oactive to June 30, 2005. ¶ 12 On Dec ember 1, 2010, the defe ndants filed a cross-motion for summary judgme nt. The defe ndants arg

ued that Auto-Owne rs was aw are, at t he ti me t he poli cy was cance lled, that there was a cre dit on Yocum’s acc ount due to the fac t that Yocum had remove d two vehicles from his policy at the end of J une. The defe ndants argued that, based on the prior course of dealing
, Yocum rea sonably believed that the cre dit would be applied to satis fy h i s J u l y premium pay

ment. ¶ 13 The defe ndants further argued that, beca use there was no nonpay

ment of premium, there

was no basis to canc el Yocum’s policy and, by doing so, Auto-Owne rs brea ched its duty of
g ood faith and fair dealing . The de fenda nts also argued that Auto-Owne rs waived its rig ht
to claim that there was no cover ag e, beca use Yocum had reque sted the chang e to his policy in J une 2005 and no ref

und was issued prior to the acc ident. Acc ordingl y , t h e d ef endants contende d that it was rea sonable for Yocum to believe that there was a cre dit on his acc ount and that he st ill had covera g e. Finally
, the defendants argued that Auto-Owne rs’ failure t o provide a defe nse to the Ker win suit was vexatious and unrea sonable. The defe ndants argued that, once Yocum reque sted cover ag e, Auto-Owne rs should have rea liz ed its failure to apply the premium cre dit to Yocum’s policy and provided the cover ag e for which Yocum had paid. ¶ 14 On J uly 12, 2011, a hear ing was held on the parties’ motions for summary judgme nt. T he parties’ arguments wer e consistent with their written motions. At t h e cl ose of the hearing
, the trial court took the matter und er ad v isement. On November 17, 2011, the trial court issued a written order

. The trial court denied Auto-Owne rs’ motion for summary judgme nt and g rante d the defe ndants’ cross-motion for summary judgme nt. The trial court noted that the pol icy stated t hat “[ p]remium adjustments will be made at t he ti me of such chang es or when we become awa

re of the chang es, if later.” The trial court also noted that the chang es to Yocum’s auto policy
, althoug h not completed until August 30, 2005, wer e made eff ective J une 30, 2005, and that “[t] here was no e x planation for the delay in proce ssing the chang e reque st.” The trial court found that, if the adjustment to the policy had been made promptly
, Auto-Owne rs would have r ealized that there was a premium cre dit on Yocum’s acc ount at the time the J uly

23, 2005, premium was due. Relying on Leach v. F ederal Life Insurance Co.
, 296 I ll. App. 88 (1938), the trial court found that Auto-Owne rs was obligated to apply the premium cre dit on Yocum’s acc ount to the premium amount due and that, there fore
, the defe ndants wer e entitled to judgme nt as a matter of law. Finally
, the trial court found that the defe ndants wer e not entitled to section 155 sanctions, bec ause Auto-Owne rs had not ac ted i n bad faith and there was a bona fide dispute as to whether the policy was proper ly

canc elled. There afte r, Au t o -O wn ers filed a notice of appea l dockete d in this court as case number 2-11- 1267.

-5-¶ 15 On December 9, 2011
, t h e d ef endants filed a motion, pursuant to section 2-1203(a) of the Code (735 I L CS 5/2-1203(a) (West 2008)), to modify the judgme nt to include an awa rd of damag es. On Dec ember 14, 2011, the trial court g rante d the motion and enter ed judgme nt in favor of the defe ndants in the amount of $926,979.97, plus a per diem interest of $113.29 throug h the judgme nt date. There afte r, the defe ndants filed a notice of cross-a ppeal, and Auto-Owne rs filed a second notice of appea l, which was docket ed i n t h is court as case number 2-12-0092. On Fe bruar y 17, 2012, this court g rante d Auto-Owne rs’ motion to consolidate these case s on appea l.

¶ 16 I I . ANALYSI S ¶ 17 On appea l, Auto-Owne rs argues that the trial court erred i n d en y i n g its motion for
summary judgme nt and in g ranting summary judgme nt in favor of the defe ndants. Summary judgme nt is appropr iate wher e the pleading s, aff idavits, depositions, and admissions on file, when viewed in the light most favor able to the nonmovi n g p ar t y , show that there is no g enuine issue of materia l fac t and that the moving party is entitled to a judgme nt as a matter of law. 735 I L CS 5/2-1005(c) (West 2008). By filing cross-motions for summary judgme nt, parties ag ree that only a question of law is involved and invite the court to decide the issues based on the rec ord. Martin v. Keeley & Sons, Inc.
, 2012 I L 1 1 3 2 7 0, ¶ 25. We revie w de

novo a trial court’s decision on a motion for summary judgme nt. Outboard Marine Corp. v. Liberty Mutual Insurance Co. , 154 I ll. 2d 90, 102 (1992). ¶ 18 Auto-Owne rs ar gu es t h at i t is entitled to summary judgme nt beca use it followed the
proper proce dures, unde r both the policy and the Insuranc e Code, for canc elling the policy for nonpay

ment of the premium. Auto-Owne rs further argues that it had no obligation to use the premium ref

und due to Yocum to satisfy his J uly premium pay ment. In arguing the latter, Auto-Owne rs re l i es on Hernande z v. State Farm Insurance Co.
, 170 I ll. App. 3d 1090 (1988). ¶ 19 In Hernande

z , the plaintiff (i n s u re d ) h ad o btained from the defe ndant (insurer) two insurance polices providing uninsured motorist cover ag e. Id. at 1092. At the commence ment of the policy
, the insured paid premiums for the first month of cover ag e and for an additional month (the rese rve)

. Id. He paid additional premiums once a month. Id. The insured missed

a monthly premium pay

ment due Marc h 3. Id. The insurer sent a notice stating that premiums for two months we re due April 3. Id. The insured paid one month’s worth of premium on Marc h 25. Id. The insurer then sent a notice stating that an additional monthly premium was due April 15. Id. at 1093. The insured never made this pay ment. Id. On April 21, the insurer
sent a notice stating that, due to nonpay ment of the premium, the policy would be canc elled as of Ma y 4. Id. On May

15, the insured g ave his insura nce ag ent a chec k in the amount of
two monthly premiums. The insurer returne d the chec k uncashe d, stating that the policy had been canc eled as of May 4. Id. The insured subsequently filed a decla ratory judgme nt action,
arguing that the policy was in eff ect on May 12, when his son was injured in a collision with

an uninsured motorist. Id. at 1091. The trial court g rante d summary judgme nt in favor of the insured. Id. at 1092. The insure r appe aled. Id. ¶ 20 On appea l, the revie wing court reve rsed and g rante d summary judgme nt in favor of the

-6-insurer. The revie wingcourt he ld:
“We conclude that the exis tence of the rese rve did not neg ate the obligation of [t he insured] to pay the April premium. Although the April cover ag e was ultimately paid for by application o f t he rese rve, [t he insured] did not pay the premium prior to the

canc ellation date. Thus, t h e 1 0 -d ay notices of canc ellation wer e proper ly sent for
nonpay ment of the April pre mium. The rese rve ensure d cover ag e only to Ma y 3, 1980. Consequently
, the May 15, 1980, pay ment of two premiums was made 11 day s afte r the policies had be en ca

ncelled a nd was, ther efor e, untimely .” Id. at 1094-95.
Auto-Owne rs argues that this deter mination supports the p r o p o s ition that it was not obligated to apply Yocum’s pr emium refund to the pr emium amount due. ¶ 21 Auto-Owne rs’ relianc e on Hernande z is misplaced. The holding in Hernande z stands for the proposition that it is pr oper for an insurer to se nd a canc ellation notice befor e a rese rve is fully used. In other words, the insurer in Hernande z did not have to wait until the rese rve

was used up, then send a 10-day notice of canc ellation, and essentially provide fre e insurance for those 1 0 d ay s

. T h e holding in Hernande z in no way supports the proposition that the

rese rve need not be applied to the premium due. In fac t, the opposite occur red in Hernande

z

. The rese rve ensure d cover ag e until May 3, and that was the date when the insurer canc elled the cove rag e for

nonpay ment of the pre mium. ¶ 22 In deter

mining whether Auto-Ow n er s h ad an o bligation to apply the premium ref und owed to Yocum to h i s J uly premium, we find persua sive Leach
, 296 I ll. App. 88, the case

on which the trial court relied. In Leach
, an insured filed a complaint in equity to require his insurer to maintain a disability insurance policy

previously

issued to the i nsured. Id. at 89. The insurer had claimed that the policy lapsed due to nonpay ment of a premium that was due April 30, 1936. Id. The insured arg ued that, at the time the pay ment was due, a disability b en efits claim was pending and those benef its should have been applied to pay the Apr i l premium. Id. Following a hear ing, the trial court ruled in favor of the insured. Id. The insurer
appea led. The r eviewingcourt a ffirme d the trial cour t’s deter mination. Id. at 95. ¶ 23 The insurance policy at issue in Leach provided benef its for acc idental loss of life, limb,

or sight, and loss of time throug h sickness or acc ident. Id. at 90. The policy was issued to the insured on April 30, 1930. Id. An annual premium of $110.50 was due April 30 of eac h y ear

. Id. The policy provided a 31-day g rac e period for pay ment in the case of defa

ult. Id. Under the t erms of the pol icy
, the i nsured was to rec eive $150 per m o n t h fo r l o s s of t ime, which

was to be paid afte r the insured g ave notice of loss to the insurer, furnished aff irmative proof of loss, a nd permitted examination of the insured by the insurer’ s phy sician. Id. The policy further provided that any disability pay ments would be “ ‘paid at the expiration of eac h thirty day s duringthe continuanc e of the period’ ” for whic h the insurer was liable. Id. ¶ 24 In Leach
, the insured was hospitaliz ed on Dec ember 18, 1935. Id. at 91. On J anuar y 25, 1936, the insured provided to the insurer p re l i m i n ary proof of loss, which included

cer tificates from his phy sician and his employ er as to his illness. Id. at 92. On Marc h 2, 1936, the insured provided proof of termination of his disability
, advising that the disability ended

as of Fe bruar

y 12, 1936. Id. At no time afte r he filed his claim was the insured ever advised that his proof of loss was insufficient. Id. at 93. The insurer’ s phy sician examined the insured

-7-o n Marc h 10, 1936, and in ear ly April the i nsurer rec eived permission from the ins u re d t o

inspect other medical rec ords. Id. On J une 4, 1936, the insurer approve d the insured’s claim and issued a chec k to him for $310. Id. This was four day s afte r the g rac e period ended for
pay ment of the Apr il 30 premium. Id. ¶ 25 In aff

irming the trial court, the r eviewingcourt noted a s follows:
“ ‘[I ]f money is absolutely due by [a n insurer] to [an insured] policy holder when a premium falls due, the [i nsurer ] should apply the same towards the premium and there by
, if possi b l e, avoid forf

eiture of the policy

. This includes any excess of premiums paid, dividends, profits, benef

it pay ments and the li ke, but the offsetting of such credits will only be require d wher e the company actua lly has in its hands at the time funds which are absolutely due and payable.’ ” Id. at 94 (quoting Long v. Monarch Acc ident Insurance Co. of Springf

ield, Massachusetts , 30 F.2d 929, 930 ( 4th Cir. 1929)). The reviewing court held that, under the policy at i ssue, the insurer was to pay the i nsured within 30 day s of proof of loss, that final proof of loss was submitt ed on Marc h 2, and that the insurer beca

me liable to the insured to the extent of $310 by April 2. The revie wing court not ed t h at there was no evidenc e to justify the insured’s failure to make the disability
pay ment when due. The revie wing court conclude d that the “[insurer] h av ing wrong fully withheld the disability pay ments was obligated to pay the [Apri l 3 0 ] p re m i um out of [t he insured’s] money

in its hands.” Id. at 95. ¶ 26 In the prese nt c ase, the auto policy provided that “[p] remium adjustments will be made
at the time of su ch ch an g es or when we [Auto-Owners] become awa re of the chang es, if later.” Auto-Owne rs sent an e ndorsement on August 30, 2005, makingthe re moval of two vehicles from Yocum’s policy eff ective as of J une 30, 2005. Ba sed on the fore g oing policy languag e, this could be construed as an acknow ledg ment that it was awa re of the chang e on J une 30. In its appellant brief, Auto-Owne rs conce des that Yocum had reque sted the chang e to his policy on J une 30. At the very latest, howeve r, Auto-Owne rs was awa re of the chang e by August 30, when it sent t h e en d orsement letter. This was one day befor e it sent the

canc ellation notice on August 31. The remova l of the two vehicles reduc ed the monthly premium from $257.25 to $104. Yocum had paid $514.50 toward the premium on his policy

on J une 23, 2005. Acc ording ly
, the reco rd cl ear ly demonstrates that, at the time the J uly premium was due, there was excess premium on Yocum’s acc ount. Auto-Owne rs there fore

never had any basis to canc el the policy based on nonpay ment of the premium. Auto-Owne rs had sufficie nt funds in its hands at the time t h e J uly premium was due and should have applied those funds towa

rd the pa y ment of that pre mium. Id. at 94-95. ¶ 27 Auto-Owne rs argues that Leach is a dated decision and insufficient support for the trial court’s deter

mination. I t further argues that L ea ch d o es not cite any of the sections of the Insuranc e Code that g overn canc ellation of a policy for nonpay ment of a premium, let alone

rec oncile them with the require ment that excess funds in an insurer’ s hands must be used to pay an insured’s premium. These arguments are unavailing

. First, despite the fac t that Leach is a dated decision, it is still binding authority on all circ uit c ourts and persua sive authority in this court. Pee rless Enterprises, Inc. v. Kruse
, 317 I ll. App. 3d 133, 143 (2000). Fur ther, althoug h Leach d o es not cite the Insuranc e Code, Auto-Owne rs has failed to provide any

-8-authority to support its insinuation t h at Leach is somehow at odds with that Code.

Acco rd i n gl y , this arg

ument is forf

eited. Elder v. Bryant
, 324 I ll. App. 3d 526, 533 (2001) (ar g uments without supporting authority are forf eited). ¶ 28 On cr oss-appe al, the def endants a rgue that the tria l c ourt err ed in denying the ir reque st for sanctions pursuant to section 155 of the Insuranc e Code (215 I L CS 5/155 (West 2008)). Section 155 provides: “(1) In any action by or ag ainst a company wher ein there is in issue the liability of a company on a policy or policies of insurance o r t he amount of the loss payable there under, or for an unrea sonable delay in settling a claim, and i t 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 rea sonable attorney fee s, other costs, plus a n amount not to exceed any

one of the following amounts: (a) 60% of the amount which the court or jury finds such party is entitled to rec over ag ainst the company , exclusive of all costs; (b) $60,000[.]” Id.
Acc ording ly
, s ection 155 allows for an awa rd of attorney fee s and costs for an insurer’ s “unre asonable and vexatious” re fusal to comply with its policy obligations. Cramer v. InsuranceExc hange Age ncy , 174 I ll. 2d 513, 523-24 (1996). ¶ 29 “An insurer will not be liable fo r at t o rn ey fe es an d co s t s under section 155 of the [I nsuranc e] Code mere ly beca use it litigated and lost the issue o f insurance cover ag e.” American States Insurance Co. v. CFM Construction Co.
, 398 I ll. App. 3d 994, 1003 (2010). “[W ]here a bonafide dispute conce rning cover ag e exis ts, costs and sanctions [under section 155] are inappropriate.” State Farm Mutual Automobile Insurance Co. v. Smith
, 197 I ll. 2d 369, 380 (2001). In deter

mining whether an insurer’ s conduct is vexatious and unrea sonable,

a trial court must consider the totality of the circ umstances, including the insurer’ s attitude, whether the insured wa s forc ed to sue to rec over, a nd whether

the insured wa s deprived of the use of his proper

ty

. Statewide Insurance Co. v. Houston Gene ral Insurance Co.
, 397 I ll. App. 3d 410, 426 (2009). The parties ag ree that th e t ri al co u rt’s denial of section 155 sanctions should be revie wed for an abuse of discretion. We there fore addre ss the issue based

on the agr eed- upon standard of revie w. Cable America, I nc. v. Pace Electronics, Inc.
, 396 I ll. App. 3d 15, 19 (2009). ¶ 30 In arguing that the trial court err ed in denying their reque st for section 155 sanctions, the defe ndants rely on Pee rless

. In Pee rless
, an insured obtained automobile insurance cover ag e

on J uly 2, 1993, and was involved in an accident on J uly 13, 1993. Pee rle s s , 317 I ll. App. 3d at 136, 138. The r eviewingcourt a ffirme d the trial cour t’s finding that the insurer acte d vexatiousl y and unrea sonably when it denied insurance cover ag e for the insured. Id. at 144. In so ruling, the revie wingcourt noted the g ener al policy that, when there is a dispute over potential insurance cover ag e, an insurer must either defe nd the suit under a rese rvation of rig hts or seek a d eclaration of no cover ag e. Id. at 145. The insurer in Pee rless had done neither of those, but had mere ly ref used to defe nd the insured. Id. The revie wing court also noted that there was no evidenc e to support the insurer’ s claim that the insured had canc elled the policy
, eff

ective the date of its inception on J uly 2, 1993. Rather, the evidenc e indicated

-9-that the ca ncellation wa s to be eff

ective on July

22, 1993, the date it was requested, which was nine da

y s after the ac cident occ urre d. Id. ¶ 31 The prese nt case is distinguishable from P ee r less

. Her e, Auto-Owne rs did not simpl y ref use to provide cover ag e; it filed a decla ratory judgme nt action seeking a decla ration of no

cover ag e. Additionally
, unlike the insurer in Pee rless
, Auto-Owne rs sent a n o t i ce of

canc ellation and intended the canc ellation to take eff ect prior to the acc ident at issue. Moreove r, althoug h a notice of canc ellation was sent to Yocum on August 3, Auto-Owne rs

was never contac ted as to any err ors in t h e p re m i um due. The trial court found that AutoOwner s had not acte d in bad faith and that there was a bona fide dispute as t o whether the policy was proper ly canc elled. Ba sed on the rec ord befor e us, we cannot s ay t h at the trial
court a bused its discretion in makingthat deter mination.

¶ 32 I I I . CONCLUSI ON ¶ 33 For

the fore g oing r easons, we aff irm the judg ment of the c ircuit court of Og le County

.

¶ 34 Affir

med.

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