NO. 4-03-0045

	IN THE APPELLATE COURT

	OF ILLINOIS

	FOURTH DISTRICT

BRUCE MITCHELL and DEBORAH MITCHELL,	)	Appeal from

		Plaintiffs-Appellants,		)	Circuit Court of

		v.						)	McLean County

STATE FARM FIRE & CASUALTY COMPANY,	)	No. 01MR196

		Defendant-Appellee.			)

								)	Honorable

								)	G. Michael Prall,

								)	Judge Presiding.

_________________________________________________________________

	MODIFIED UPON DENIAL OF REHEARING

				JUSTICE COOK delivered the opinion of the court:

		Plaintiffs, Bruce and Deborah Mitchell, filed suit

against defendant, State Farm Fire and Casualty Company, to

compel defendant to provide coverage pursuant to an insurance

policy.  Defendant moved to dismiss on the basis that plaintiffs'

suit was barred by a one-year limitations period found in the

insurance policy.  The trial court granted defendant's motion to

dismiss, and plaintiffs appeal.  We reverse and remand.

		According to plaintiffs' second-amended complaint,

their house burned down on November 11, 1999.  Plaintiffs had an

insurance policy through defendant that would have covered the

loss from the fire.  

		On November 23, 1999, defendant delivered a letter to

plaintiffs regarding claim number 13-Y533-90.  This letter

detailed the various steps the insurance policy required plain

tiffs to take and documentation to provide within 60 days after

the loss.

		On May 8, 2000, defendant sent a letter to plaintiffs,

notifying them of the decision to deny payment of their claim. 

The denial was based upon plaintiffs' failure to provide documen

tation and submit to an examination under oath as required by the

insurance policy.  This letter further informed plaintiffs that

if they intended to proceed with litigation, strict compliance

with the policy provisions would be required.  Specifically, the

policy requires suit to be commenced within one year after the

loss.  This period of limitations is tolled from the date on

which proof of loss is filed until the date the claim is denied

in whole or in part.  Because defendant had never received a

proof of loss, the letter explained, defendant did not believe

there was any tolling of the period of limitations.  Defendant

suggested plaintiffs had to file suit on or before November 11,

2000, if they were so inclined.  The letter ended by recommending

that plaintiffs consult their own legal advisor.

		Shortly after receiving the May 8 letter, plaintiffs

hand delivered various documents to one of defendant's claim

offices in Bloomington, Illinois.  Defendant responded with a

letter dated May 16, 2000.  This letter informed plaintiffs that

some of the documentation satisfied defendant's prior requests

and that some of it did not.  The letter finished by stating:

		"This claim remains in a state of denial as 

		indicated in our letter May, 8, 2000.  When 

		and if you comply with the requests noted 

		herein, we will consider whether such delayed 

		compliance is adequate for a reconsideration 

		of our position on your claim."  

		On November 3, 2000, plaintiffs delivered more documen

tation to defendant.  On November 11, 2000, plaintiffs filed a

sworn proof of loss with their insurance agent.  According to

plaintiffs, their agent told them that the investigator gave the

agent a list of things plaintiffs still had to do.  Plaintiffs

then asked their agent if they needed to have an attorney now

that defendant was requesting that more information be submitted. 

Plaintiffs' agent responded that he did not think defendant would

be asking for more information if defendant were not willing to

settle this claim.  

		On November 16, 2000, defendant sent a letter to

plaintiffs, which informed them that their claim had been denied

on May 8, 2000, that the claim was still denied, and that as far

as defendant knew currently, plaintiffs had failed to file suit

within the one-year limitations period.  The letter detailed the

various documents plaintiffs had provided and how these documents

did not satisfy defendant's requests.  The letter finished by

stating:

		"To summarize, if the documents you submitted 

		shortly before the period of limitations ex-

		pired had been submitted in a timely fashion, 

		they would have constituted the first step 

		towards compliance with the policy conditions 

		but they would not have been adequate to 

		fully comply with the policy conditions.  

		Your untimely and incomplete attempts to 

		reverse our stated denial of the claim are 

		ineffective and the claim remains denied."

		Plaintiffs filed their first complaint on October 24,

2001.  Defendant moved to dismiss on the basis that plaintiffs'

suit was barred by a one-year contractual statute of limitations. 

The trial court granted defendant's motion to dismiss, and

plaintiffs appeal.

		This is an appeal from an order granting a motion to

dismiss pursuant to section 2-619 of the Code of Civil Procedure. 

735 ILCS 5/2-619 (West 2000).  When a cause of action is dis

missed on a section 2-619 motion, the question on appeal is

whether there is a genuine issue of material fact and whether

defendant is entitled to judgment as a matter of law.  Illinois Graphics Co. v. Nickum, 159 Ill. 2d 469, 494, 639 N.E.2d 1282, 1293-94 (1994). 

		Section 143.1 of the Illinois Insurance Code (Code)

provides in pertinent part:

			"Whenever any policy or contract for in-

		surance *** contains a provision limiting the 

		period within which the insured may bring suit, 

		the running of such period is tolled from the 

		date proof of loss is filed, in whatever form 

		is required by the policy, until the date 

		the claim is denied in whole or in part."  

		215 ILCS 5/143.1 (West 2000).		

In this case, the insurance policy at issue contains a limiting

provision as described by the Code.  This limiting provision

states:

			"6. Suit Against Us.  No action shall be 

		brought unless there has been compliance with 

		the policy provisions.  The action must be 

		started within one year after the date of 

		loss or damage.  This one[-]year period is ex-

		tended by the number of days between the date 

		that proof of loss was filed and the date the 

		claim is denied in whole or in part."

		There is no question in this case that plaintiffs

failed to bring suit within one year of the date of loss due to

the fire.  The fire occurred November 11, 1999, and plaintiffs

filed suit on October 24, 2001.  Therefore, under the limitation

provision in the insurance policy, plaintiffs are precluded from

bringing this suit.

		Plaintiffs argue that they are not precluded from

bringing suit, however, because the one-year limitations period

has been tolled.  Specifically, plaintiffs argue that the one-

year period has been extended by the number of days between the

date that proof of loss was filed and the date the claim was

denied in whole or in part.

		 In support of this argument, plaintiffs first argue

that the May 8, 2000, letter denying plaintiffs' claim was not actually a denial of their claim.  Plaintiffs argue that they did

not file a claim until November 11, 2000, when they filed their

proof of loss.  Therefore, according to plaintiffs, the May 8

letter could not have been a denial of their claim because there

was no claim to deny.  Plaintiffs further argue that the November

16, 2000, letter, which defendant sent to plaintiffs acknowledg

ing receipt of the proof of loss on November 11, 2000, but still

denying the claim, was not a denial of the proof of loss.  Thus,

plaintiffs argue, the one-year limitations period is still being

tolled because defendant has never denied plaintiffs' claim.

		Defendant's May 8, 2000, letter was a denial of plain

tiffs' claim.  That letter, however, was not final, and it is not

correct that plaintiffs' only option was to file suit on or

before November 11, 2000.  Defendant had the obligation to

consider and respond to any information presented to it during

the one-year period.  The running of the one-year period "is

tolled from the date proof of loss is filed, in whatever form is

required by the policy, until the date the claim is denied in

whole or in part."  215 ILCS 5/143.1 (West 2000).  Defendant had

to respond to the proof of loss after it was filed; defendant

could not issue an absolute denial of the claim before the proof

of loss was filed.  Any contrary rule would allow an insurer to

ignore a meritorious proof of loss and to pretend to consider the

proof of loss while it was only waiting for the one-year period

to expire.  

		A proof of loss was filed within the one-year period in this case.  The dissent complains that plaintiffs did not file

suit until October 24, 2001, almost one year after the one-year

period expired on November 11, 20001999.  When defendant responded to

the proof of loss on November 16, 2000, however, it did not tell

plaintiffs that they had only a few days to file suit.  Defendant

told plaintiffs that it was already too late, that they should

have filed suit by November 11, 2000, before defendant had

responded to the proof of loss.  Even if plaintiffs had filed

suit on November 16, 2000, they would have been too late. 

According to defendant even a filing on November 15 would have

been too late.  There was no reason for plaintiffs to quickly

file suit after November 16, 2000.  Plaintiffs acted reasonably

in filing suit within two years of the fire.        

		Alternatively, plaintiffs argue that defendant is

equitably estopped from asserting the limitations defense.  "An

insurer will be estopped from raising a limitations defense where

its actions during negotiations are such as to lull the insured

into a false sense of security, thereby causing him to delay the

assertion of his rights."  Hermanson v. Country Mutual Insurance Co., 267 Ill. App. 3d 1031, 1035, 642 N.E.2d 857, 860 (1994).  "Cases in which an insurer's conduct is found to amount to

estoppel typically involve a concession of liability by the

insurer, advance payments by the insurer to the plaintiff in

contemplation of eventual settlement, and statements by the

insurer which encourage the plaintiff to delay filing his ac

tion."  Foamcraft, Inc. v. First State Insurance Co., 238 Ill. App. 3d 791, 795, 606 N.E.2d 537, 540 (1992).  

		In Hermanson, the court determined that the plaintiff had not been lured into such a false sense of security because

the defendant insurance company never expressed any desire to

negotiate its position.  Hermanson, 267 Ill. App. 3d at 1035, 642 N.E.2d at 860.  In Foamcraft, the court found no estoppel because the defendant insurance company had not represented that it would

settle the claim, offered advance payment, or encouraged plain

tiff not to sue.  Foamcraft, 238 Ill. App. 3d at 795, 606 N.E.2d at 540.  In this case, however, defendant indicated that it was

amenable to reconsidering its decision if plaintiffs provided the

requested documentation.  Further, according to plaintiffs, on

November 11, 2000, the last day plaintiffs had to file suit

within the one-year period of limitations, plaintiffs' insurance

agent requested more documentation from plaintiffs and indicated

a willingness on defendant's part to settle the claim.  Such

actions, if proved true, could have lulled plaintiffs into

believing that defendant was still interested in negotiating a

settlement beyond the one-year limitations period.  This creates

a genuine issue of material fact that precludes dismissal pursu

ant to section 2-619.  Illinois Graphics Co., 159 Ill. 2d at 494, 639 N.E.2d at 1293-94.  We must therefore reverse and remand for

further proceedings.

		Reversed and remanded.   

		MYERSCOUGH, P.J., concurs.

		McCULLOUGH, J., dissents.

			JUSTICE McCULLOUGH, dissenting:

		The majority finds that defendant is estopped from

denying coverage under the insurance policy.  I disagree. 

Defendant kept plaintiffs informed of the policy provisions and

the time limitations as to filing suit.

		On November 23, 1999, defendant, by letter, detailed

the various steps the insurance policy required, the documenta

tion to be provided within 60 days after the loss.  More than 60

days later, sometime shortly after May 8, 2000, plaintiff sent

some documents to defendant.

		Defendant's May 8, 2000, certified-mail, return-

receipt-requested letter, made it clear "[a]lthough the investi

gation is incomplete, we deem it appropriate to make a decision

without further delay.  A decision has now been made to deny

payment of your claim."  Defendant had requested various docu

ments from plaintiffs, which defendant stated had not been

provided.  The letter also informed plaintiffs as follows:

			"If you intend to proceed with litiga

tion,, strict compliance with policy provi

sions will be required.  The policy requires

that suit be commenced within one year after

the loss.  However, by statute in Illinois

the period of limitations is tolled from the

date on which the proof of loss is filed, in

whatever form is required by the policy,

until the date the claim is denied in whole or in part.  We have never received a proof

of loss, and therefore, we believe there is

no tolling of the period of limitations.  If

correct, that means you must file suit on or

before November 11, 2000 if you are so in

clined.  We recommend that you consult with

your own legal advisor well in advance of

that time.  He may wish to independently

compute the tolling period and the expiration

of the limitation period.  The statute is

found at 215 ILCS 5/143.1.

			Rule 9.19 of the Rules and Regulations

of the Illinois Department of Insurance re

quires that we advise you that if you wish to

take this matter up with the Illinois Depart

ment of Insurance, it maintains a Consumer

Division in Chicago at 100 West Randolph

Street, Suite 15-100, Chicago, Illinois

60601; and in Springfield at 320 West Wash

ington Street, Springfield, Illinois 62767."

		On May 13, 2000, defendant received a letter from

plaintiffs.  In response thereto, defendant sent a letter dated

May 16, 2000, to plaintiffs acknowledging receipt of plaintiffs'

letter and telling plaintiffs they had not complied with the

policy condition to provide a personal property inventory and

proof of loss within 30 days, as required by the policy.  The May 16 letter made it clear to plaintiffs that the claim remained in

a state of denial as indicated in the May 8 letter, and again

telling plaintiffs they could take the matter up with the Illi

nois Department of Insurance.

		The record shows defendant, on November 16, 2000, again

wrote a letter to plaintiffs.  The first sentence of the letter

again told plaintiffs the claim had been denied and that the

"denial letter of May 8, 2000 quoted certain policy conditions

and duties."  The November 16 letter made it clear plaintiffs had

not complied with the policy provisions and spelled out what

plaintiffs had failed to do.

		The majority refers to plaintiffs' argument that "the

one-year limitations period has been tolled" and "that the one-

year period has been extended by the number of days between the

date that proof of loss was filed and the date the claim was

denied in whole or in part."  Slip op. at 5.  This argument does

not excuse the failure to file suit until October 24, 2001,

almost 2 years after the fire of November 11, 1999, and almost

one year after the one-year period to file suit.  Defendant's

actions during negotiations did not lull the insured into a false

sense of security.  Defendant made it clear to plaintiffs that

the claim was denied on several occasions and stressed to plain

tiffs the need to file suit as required by the policy.  Plain

tiffs point to nothing that occurred to excuse the late filing.

		A review of the documents attached to plaintiffs' brief

make it clear defendant was even-handed and clearly informed plaintiffs of the limitation period and what plaintiffs needed to

do.  Plaintiffs refused to cooperate.  Hermanson and Foamcraft support the trial court's decision.

		In Foamcraft, the court stated:

		"There are no facts in the record to support

an assertion that defendant represented that

it would settle the claim, that defendant

offered advance payment, or encouraged plain

tiff not to sue.  In fact, after the second

denial of the claim, plaintiff had every

reason to believe that defendant would not

settle.  At that time, plaintiff had four

months remaining within which it could have

filed a timely suit, but did not do so." 

Foamcraft, 238 Ill. App. 3d at 795, 606 N.E.2d at 540.

In Hermanson, the court found:

		"[P]laintiff was in no way lulled into a

false sense of security which caused him to

delay filing suit.  Country Mutual at no time

wavered from its position denying plaintiff's

claim."  Hermanson, 267 Ill. App. 3d at 1035, 642 N.E.2d at 860.

		I agree with defendant's argument in its petition for

rehearing that the decision of the majority is inconsistent with

prior decisions, specifically Vala v. Pacific Insurance Co., 296 Ill. App. 3d 968, 695 N.E.2d 581 (1998), wherein this court found

the insured's complaint was time-barred and the motion to dismiss

was properly granted.

		By its decision, the majority has effectively elimi

nated the provisions of the policy as to proof of loss, the one-

year limitation period of filing suit, and the purpose and

meaning of section 143.1 of the Code.  The majority cites no

authority for its statement "Plaintiffs acted reasonably in

filing suit within two years of the fire," (slip op. at 7), and

has effectively overruled Valas, wherein we affirmed the trial court's dismissal based upon a factual background not nearly as

persuasive as in this case.

		The trial court should be affirmed.