No. 3-09-0763

______________________________________________________________________________ Filed De cembe r 28, 2010 I N THE APPEL L ATE COURT OF I L L I NOI S THI RD DI STRI CT A.D., 2010 WES T BEND MUTUA LI NSURANCE, ) Appe al from the Circ uit Court ) for the 21st J udicial Circuit, Plaintiff-Appellee , ) Ka nkakee County , I llinois , ) v. ) No. 01-MR-336 ) WANDA NORTON, ) Honora ble ) Ke ndall O. Wenzelman, Def endant- Appellant. ) Judge, Pre siding.

PRES I DI NG JUS TI CE HOL DRI DGE de livered the opinion of the court: Wanda Norton soug ht an awa rd of attorney

fee s from West Be nd Mutual I nsuranc e (West Be nd) base d upon her c ounterc laim that West Bend wa s vexatious and unreasona ble in delay ing the resolution of her

uninsured motorist claim. Norton’s a ction was brought pursuant to section 155 of the I llinois I nsuranc e Code (the Code) (215 I L CS 5/ 155(1)( a) ( West 2004)). The circ uit court of Ka

nkakee County

g rante d summary

judgme nt to W est Be nd, holding that it had not acted ve x atiously

or unre asonably

in handling N orton’s cla im. The trial cour t issued a written orde r in which it found no re ason to delay an appe al of its order

in spite of the fa ct that it did not dispose entirely

of the litigation, pursuant to Supreme Court Rule 304(a) . 210 I ll. 2d R. 304(a) . Norton then filed a timely appea l to this court.FACTS

On September

14, 1998, Norton wa s driving he r ca r whe n it was struck by

a ca r driven by Kar y n Patterson. At the time of the c ollisi on, Norton wa s insured by West Bend. Patter son was insure d by

Americ an F amily

I nsuranc e (A merica

n Fa mily). Norton f

iled a cla im with W est Be nd, which paid he r $2,852.50 pursua nt to her medica l cover ag e and $4,232.26 f or prope rty loss and renta l expenses. West Bend notified Ame rica n Family of the pa y ments it had made to Norton and soug ht reimburseme nt. At some point thereaf ter, Ame rica

n Family reimburse d West Be nd for the pr operty

damag e pay

ment to Norton. Norton hired c ounsel to repr esent he r in a c laim ag ainst Patterson. On June 15, 1999, Norton’s c ounsel sent cor responde nce to Ame rica

n Family indicating Norton had spe cial damag es of $18,307.87. In response , Americ an F amily offe red to settle Nor

ton’s claim for $7,800. Norton re

jected the settlement offe r and f iled suit ag ainst Patterson on Marc h 13, 2000. A def ault judgme nt was ente red a g ainst Patterson on J une 28, 2000, for $13,086. Norton’s counsel did not inform either Americ an F amily

or West Be nd of the filingof the suit ag ainst Patterson. Counsel also did not inform America n Family of the de fault judg ment ag ainst Patterson until 90 day s after entry of the judg ment. As a re sult, American F amily denied

cover ag e due to lac k of notice. A fter A merica n Family denied c overa g e, Nor

ton’s attorney

then contac ted West Bend a sserting an uninsured motorist claim. West Be nd maintained that the only

rea son Patterson was " uninsured" was that Nor ton’s attorney

had fa iled to notify

Americ an Family of the law suit and the judg ment. West Bend r equeste d that Norton’s attorney take steps to vacate the def

ault judgme nt so W est Be nd could see k reimburse ment from Amer ican F amily

. West Bend pointed out that Nor ton was contra ctually

obligated under

the policy

to cooper ate

2with West Bend to protec ts its right to subrog ation. Norton’s attorney ref used to vac ate the judgme nt ag ainst Patterson. On Octobe r 26, 2000, Norton f iled suit ag ainst West Bend see king pa y ment pursuant to the uninsured motorist provision of her West B end policy . On Dec ember 26, 2000, West Bend filed a motion to dismis s, maintaining that Norton’s policy require d that her uninsure d motorist claim be submitted to arbitration. On March 7, 2001, the circ uit court g rante d West Bend’ s motion without prejudice and dismissed Norton’s cla im. On May 11, 2001, West Bend f

iled a dec laratory

judgme nt action, see king to de termine whether it was obligated under

the policy

in light of Nor

ton’s alleg ed ac tions and inactions reg ardingher c laim ag ainst Patterson. Specifica lly , West Bend a sked the c ourt to determine whether the ac tions of Norton violated the ter ms of the policy

and compr omised West Bend’s position wit h respe ct to seekingreimburse ment from Amer ican F amily and whe ther he r ac tions prec luded cove rag e under her uninsure d motorist covera g e. West Be nd filed a motion for summary judgme nt maintaining that, a s a matter of law, Nor ton brea ched he r duty

under the policy . The trial c ourt denied the motion for summary judgme nt, finding that West Bend had failed to show " as a matter of law " that Norton had bre ache d the policy

. On Novembe r 13, 2003, an a g ree d order was e ntere d wher ein the par ties ag ree d to stay the dec laratory

judgme nt action pendingresolution of the a rbitration proc eeding s. On J anuar

y 26, 2005, the matter of

Norton’s c laim for uninsured motorist cove rag e wa s hear d by an ar bitration panel. Appr ox imately one we ek later , the ar

bitration panel issued a decision aw arding$7,113.61 to Norton. West Bend pr omptly offe red tha

t amount to Norton’s attorney on her uninsure d motorist claim. The offe r wa s ref used.

3On April 19, 2005, Norton f iled a counte rcla im in W est Be nd’s dec laratory action, seekingdamag es for

vexatious and unreasona ble delay pursuant to sec tion 155 of the Code. The parties f iled crossmotions for summary judgme nt. The cour

t gr anted West Be nd’s motion to dismiss the sec tion 155 counterc laim, stating:

"[A]fter the a

rbitration finally

occur red, N orton ref

used to ac cept the dec ision of the arbitration panel eve n though the docket e ntry in this file for Novembe r 18, 2003, states that the pa rties on that date a g ree d to go to a

rbitration. Throug hout this C ourt’s involvement with this case, West Be nd has disputed its obligation to provide cove rag e. The Court finds that there w ere bona fide

rea sons for conte sting said c overa g e. In rea chingits decision, the Court is not finding that Norton, in fa ct, bre ache d her oblig ations under the policy . That is not the issue prese nted by the pending motions. I nstead, the issue is whe ther West Be nd had a g ood faith basis for de nying a

nd contestingthe uninsured motorist claim of Norton." Norton appe aled the tr ial court’s r uling to this court. ANALYSI S Summary judgme nt is appropriate wher e the plea dings, a ffidavits, depositions, and admissions on file, when viewe d in the light most favor able to the nonmovingparty , demonstrate that there is no ge nuine issue of mate rial fa ct and that the moving party is entitled to judgment as a matter of law. Smithbergv. I llinois Municipal Retirement F und, 192 I ll. 2d 291 (2000). Review of a

trial court’ s ruling grantingsummary judgme nt is de novo. Smi thberg , 192 I ll. 2d at 4302. Howeve r, whe ther a n insurer’ s action in denying or delay ing pa y ment of a c laim is vexatious or unreasona

ble is a question of fa ct, and a trial court’ s determination re g ardingsuch will be upheld on re view unless it is an abuse of discretion. Ga ston v. Founder s I nsuranc e Co., 365 I ll. App. 3d 303, 325 (2006) (" ’While the question of whethe r the insure r’s a ction and dela y is vex atious and unre asonable is a fac tual one, it is a matter f or the discr etion of the trial c ourt. As such, the tria l court’s de termination will not be disturbed on revie w unless an a buse of discretion is demonstrate d in the rec ord [Ci tation] .’" ). Thus, we note that the abuse of discre tion standard of

revie w applies e ven thoug h the trial cour t gr anted summary

judgme nt. Gaston, 365 I ll. App. 3d at 324-25. Section 155 of the Code pr ovides, in releva nt part: "I n any action by or ag ainst a compa

ny wher ein there is in issue the liability

of a c ompany

on a policy

or policies of insura

nce or the amount of the loss pay able ther eunder , or for an

unrea sonable de lay

in settling a c laim, and it appea rs to the cour

t that such ac tion or delay

is vex atious and unre asonable , the cour t may allow as pa

rt of the taxable costs in the ac tion reasona ble attorney fee s, ***." 215 I L CS 5/ 155 (West 2004). Section 155 provides for

an aw ard of

attorney fee s and additional amounts in case s where the insurer

cause d a dela

y in settling or pa

ying a claim, and it appe ars to the tria l court that such action wa s unrea sonable a nd vexatious. Mobi l Oil Corp. v. Maryland Casualty Co., 288 I ll. App. 3d 743, 751-52 (1997) . The ke y question in a section 155 cla im is whether an insura nce company ’s conduc t is unreasona ble and ve x atious. McGee v. State Fa rm Fire & Ca sualty

Co., 315 I ll. App. 3d 673 (2000). The rele vant inquiry to determine whether

an insurer ’s ac tions were 5"unr easona ble and ve x atious" is whe ther it had a bona fide defe nse to the cla im. McGee , 315 I ll. App. 3d at 683. An insura nce c ompany

does not violate sec tion 155 merely by unsucce ssfully challeng ing a

claim. B uais v. Safew ay I nsuranc e Co., 275 I ll. App. 3d 587, 591 (1995). In addition, section 155 does not cr eate a duty to settle, and a de lay

in settling a c laim does not violate the Code if the de lay is caused by

a bona f ide dispute conc erning

cover ag e. B uais, 275 I ll. App. 3d at 592. Her e, West Be nd maintains that it had a bona f ide dispute with Norton base d upon: (1) Norton’s fa ilure to notify Americ an F amily

of her suit and judgme nt ag ainst Patterson turned what would have been a

claim payable by

Americ an F amily

into one wher e Patterson be came an uninsured motorist; and (2) Nor ton’s failure to cooper ate with West Be nd’s re quest to vaca te her defa ult judgment, which w ould have pr ovided West Bend w ith an avenue to secure reimburse ment from Amer ican F amily . West Bend points to a provision in Norton’s policy which re quired he r to coope rate with West Bend in any eff orts to seek re imbursement from a ny other sourc e: "[I ]f we make pa y ment under this policy

and the pe rson to or for whom pay

ment was made has a r ight to re cover damag es from anothe r; we sha ll be subrog ated to that rig ht. That person shall do: 1. What is necessar

y to enable us to e x erc ise our rights; and 2. Nothing a fter loss to pre judice them." The trial c ourt deter

mined that West Bend ha d a bona f ide basis for c halleng ing the claim. The c ourt noted that West Be nd did not deny the claim outright or delay the claim due to 6inaction. Instead, West Be nd responde d to the claim by immediately

maintaining that the merits of the uninsure d motorist claim and the amount of the c laim should be submitt ed to ar bitration. Shortly there afte r, while the c laim was still subj ect to ar bitration, West Bend soug ht to have a deter mination as to whether it wa s even oblig ated to pay the claim. I t was at this point that it raised the issue of Norton’ s possible failure to c omply with the terms of the policy . I t was also at this point t hat the par

ties ag ree d to await the r

uling of the ar bitration panel. We find that the trial cour t did not abuse its discretion in finding that West Bend has a bona fide defe nse to Norton’s c laim and was e ntitled to pursue that defe nse. More over, it is axiom atic that a c ause of

action base d upon vexatious delay in settling a c laim must be rooted in an insurer ’s re fusal to settle a c laim. McGee , 315 I ll. App. 3d at 677-78. In the instant matter, it is clear from the r ecor d that Norton wa s in total ag ree ment with the decision to awa it the arbitration ruling. More over, it is also clea r fr om the rec ord that West Be nd ag ree d to immediately

comply with the arbitra

tion ruling, but Norton r efuse d. Only at this point, som e five y ear s into the lit igation, did Norton raise a n alleg ation that West Bend wa s responsible for

unrea sonable a

nd vexatious delay . Clearly , any delay in resolution of this matter was attributable to Norton’ s rejec tion of the arbitration awar d and not to any action on the pa

rt of West Bend. Norton maintains that West Bend w as unre asonable and vexatious in maintaining an inconsistent positi on in that it agr eed to a rbitration but also filed a de clar atory action see king to avoid cove rag e. Nor

ton argues that West Be nd was judicially estopped fr om continuing to see k a dec laratory

judgme nt after

its mot ion for summary

judgme nt was denie d. See Wolfe v. Wolf, 375 I ll. App. 3d 702 (2007). We disag ree . Norton is mistaken when she maintains that the trial court’s de nial of West Be nd’s motion for summary judgme nt that she violated the policy as a 7matter of la w re quired West Be nd to stop further litigation and immediately provide c overa g e. The re cord shows tha

t the trial court wa s not ruling on West Be nd’s liability when it denied summary judgme nt to W est Be nd. It merely found that West Be nd’s claim that Nor ton violated the policy was a disputed question of materia l fac t and that West Bend w as not entitled to a judgme nt as a matter

of law. A s the trial cour

t noted on that issue when it dismissed Norton’s counter claim: "It would appea r that it is the argument of counse l for Norton that the languag e is a judicial findingthat there was no brea ch of c ontrac t by

Norton. The pr oper r eadingof the languag e is that plaintiff, West Bend, fa iled to prove at that time that there was no que stion of fac t as to Norton’s bre ach of the terms of the insurance contra ct. The f act West Be nd failed in their pr oof does not mean that the opposite wa s proven. That is just beca use West Be nd failed to prove a bre ach oc curr ed does not mea n that a bre ach did not occur. Instead, it was the Court’ s determination at that time that questions of fac t remaine d as to whethe r there was or w as not a bre ach." We find nothing in the trial c ourt’s rulingwhich re solved the question as to whe ther West Be nd was oblig ated to pay the claim. Thus, Nor

ton has no basis upon which to maintain that West Bend’ s failure to pay the claim af

ter the de nial of its summary judgme nt motion was

unrea sonable a

nd vexatious.

8CONCL USI ON

The trial c ourt found that it was re asonable for West Be nd to pursue its claim that Norton violated the notice provision of the insuranc e conta ct while, at the sa me time, following the prope r proc edure of submitting the cla im to arbitration as provided in the c ontrac t and ag ree d to by the par ties. We find that the trial court did not abuse its discretion in ruling that West Be nd was not unre asonable and vexatious in not pay ing N orton’s cla im. The judg ment of the c ircuit court of Kanka kee County

is affirme d. The matter

is

rema nded for further proce eding s consistent with this di sposition. Affir med and r emande d. McDAD E and O’ BRI EN, JJ ., concur .

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