## I L L I N O I S 

## O F F I C I A L 

## R E P O R T S Appellate Court

Delatorre v. Safe way Insu rance Co. , 2013 IL App (1st) 120852

Appellate Court Caption BO N IF A CI O D E L A T O RR E
, JR.
, a s a s signe e of RUBEN DEL ATORRE, P l ai n t i ff -A p p el l ee , v

. S AF E W AY I NS UR AN C E C OM P AN Y, Def endant- Appellant.

District & N o. First District, Third Division Docke t No. 1-12-0852

Filed April 17, 2013

Held (Note : T

his syl lab us

con st it ute s n o par t of the opi nio n of the cour t but has bee n pre

par ed by the Rep o 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

. ) I n an action arising from an automobile acc i d en t in which plainti ff was injured as a result of t he neglig ence of defendant’ s insured, plainti ff, as

ass ig n e e o f defe ndant’s insured, was proper ly g rante d summary judgme nt

on the issues of whether defe ndant bre ac h ed its duty to defe nd and damag es, since defe ndant o n l y reta ined counsel for its insured and forwa rded notice to counsel that a default judgme nt had been enter ed
ag ainst its insure d and those actions wer e insufficient to satisfy the duty
to defe nd, and, further
, the defa ult judgme nt was proper , even though defe ndant had exhausted the per- person policy limit s by pay ments to two other pe rsons who we re injure d.

Dec ision Under
Review Appea l from the Circuit Court of Cook County
, No. 04-L -8101; the Hon. Mary Br igid Mc Grath, J udg e, pre siding.

J udg ment Affir med and r emande d.Counsel on

Appea l Kee ly Hillison and St eve G rossi, both of P arr illo, W eiss & O ’Ha lloran, of Chicag o, for a

ppellant.

Robert Oliver and A. Valer ie Acosta, both of Be aulieu L aw Offic es, PC, of Chicag o, for a

ppellee.

Panel J USTI CE HYMAN de livered the judgme nt of the cour t, with opinion. Presiding Justice Neville conc urre d in the judgme nt and opinion.
J ustice Sterba c oncurr ed in par t and dissented in par

t, with opinion.

OP INION

¶ 1 This appea l arises out of a three -count comp l ai n t fi l ed by plaintiff-a ppellee B onifac io Del a to r r e , Jr

. , a s a s s ig

n e e o f Ru b e n D e la to r r e , ag ainst defe ndant-a

ppellant Safew ay I nsuranc e Company

. T h e o nly count at issue on appea l is count I
, alleg ing brea ch of the insurance
contract. The circ uit court g rante d summary judgme nt in favor of plaintiff on the issu e o f whether defe ndant brea ched its duty to defe nd Ruben, its insured, afte r finding that defe ndant took insufficient action on lear ning that Ruben had been defa ulted in the persona l injury suit filed ag ainst him by

plaintiff. The circ uit court also enter ed summary judgme nt in favor of plaintiff on the issue o f d am age s, awa rding him $250,000, the amount of the defa ult judgme nt entere d ag ainst Ruben. ¶ 2 On appea l, defe ndant argues that it did not brea ch its duty to defe nd wher e it reta ined an attorney to repr esent Ruben in plaintiff’s neg lige nce suit. Alternatively
, defe ndant contends
t h at it is not liable for a judgment t hat ex cee ds its policy limit s wher e it did no t ac t i n b ad faith, and wher e plaintiff did not show that the judgme nt was trac eable to its brea ch of duty to defe nd. For

the re asons that follow, we aff irm.

¶ 3 BA CKGROUND ¶ 4 I n September 1991, pla intiff was a passeng er in a car driven by

Ruben when the y

wer e involved in an acc ident in which plaintiff was injured. The driver of the other car , Thomas 1 Z entef is, as well as his passeng er, Wil liam Z enko, wer e also injured. Plaintiff, Z entef is and Z enko eac h filed suit ag ainst Ruben, seeking rec overy for persona l injuries alleg edly cause d by Ruben’s neg lige nt conduct. ¶ 5 At the t ime of t he accident, Ruben was insure d under a persona l automobile insurance policy issued by

defe ndant. The policy

car ried a bodily injury liability limit of $20,000 per person and $40,000 per acc ident. Fur ther, the policy obliga

ted defe ndant to defe nd any suit

Pla int if f a nd Ru ben ar e r el at ives. 1

-2-broug ht ag ainst the insured for bodily injury or proper ty damag e cover ed by the policy
, with the understanding that defe ndant had no obliga tion to the insured once the policy limit s wer e exhausted by

pay ment. ¶ 6 I n Dec ember 1991, plaintiff made a demand for the p o l i cy l i m i t s , wh i ch def endant ref used; howeve r, afte r lear

ning of the negli gence suits broug ht ag ainst Ruben, defe ndant
ag ree d to defe nd Ruben under a rese rvation of rig hts. I n November 1992, it informed Ruben via letter that it had reta ined attorney I .R. Striz ak to undertake his defe nse in the neg lige nce suit broug ht by plaintiff. The letter also stated that beca use plaintiff could potentially rec over

a judgme nt in excess of the policy limit s, it could be prudent for Ruben to consider reta ining additional counsel at his own ex pense. ¶ 7 Striz ak filed an appea ranc e and answe r on behalf of Ruben on Dec ember 15, 1992, but there is no evidenc e that he took any further actio n t o d efend Ruben afte r that date. Def endant admitted that it paid no fee s to Strizak in c onnection with his defe nse of Ruben, nor di d S t ri z ak submit statements for work he perf ormed on Ruben’s behalf. The plaintiff moved for sanctions, and the court eventua lly enter ed an order of defa ult a g ainst Ruben on October 4, 1994. The order specified that the b as i s for the defa ult was Ruben’s “fa ilure t o comply with outstanding discovery .” Plaintiff’s attorney sent this order direc tly to defe ndant 10 day s later. Acc ording to an aff idavit by defe ndant’s claims manag er, Michae l Tomory
, the order was sent to Striz ak on rec eipt. But this was the only written communication defe ndant had with Strizak since reta ining him in November 1992. A prove- up hear ing on the defa ult judgme nt was held in November 1995, and plaintiff was awa rded $250,000 in damag es. The

rec ord does not indicate when de fenda nt rec eived a ctual notice of the damag es aw ard. ¶ 8 At t h e s am e time this litigation was proce eding
, defe ndant was pursuing a dec laratory judgme nt action ag ainst plaintiff, Ruben, Z entef is and Z enko. Specifica lly
, defe ndant soug ht

a decla rat ion that it was not liable for damag es alleg ed ag ainst Ruben in the neg lige nce actions due to the fac t that Ruben had misrepre sented his marital status on his application for ins u ranc e, rende ring his policy void. The trial court g rante d summary judgme nt ag ainst defe ndant on the basis that it was bound by its ag ent’s actua l knowledg e of Ruben’s marital
status. This ruling was aff irmed on appea l on Marc h 20, 1998. Safeway Insurance Co. v. De La Torre
, No. 1-96-0739 (Mar

. 20, 1998) (unpublished order under Supreme Court Rule 23). ¶ 9 Severa l day s afte r lear ning of the appellate court’s ruling
, defe ndant tender ed the policy limit s to plaintiff, but the tender was reje cted. Then, in September 1999, defe ndant paid the policy limit s of $20,000 to both Z entef is and Z enko. ¶ 10 I n t h e m ea n t ime, on Dec ember 20, 1998, Ruben assig ned the cause of action he h ad
ag ainst defe ndant arising out of the contra ct of insurance to plaintiff for unspecifie d “value

rec eived.” Shortly there afte r, plaintiff, as Ruben’s assig nee, filed suit ag ainst defe ndant. This suit was voluntarily

dismiss ed on Jul y

22, 2003. ¶ 11 About one y ear later, plaintiff ref iled his complaint. After sever al rounds of ame ndment and dismiss al, the complaint contained three coun t s: brea ch of an insurance contra ct; vexatious and unrea sonable delay in settling a claim; and punitive damag es. The count seeking punitive damag es was dismiss ed on Dec ember 12, 2005, and only count I is at issue

-3-on appea l. I n count I
, plaintiff alleg ed that def en dant brea ched its duty to defe nd when it ignor ed notice that Striz ak was not provi d i n g Ruben with a meaning ful defe nse. Plaintiff
went on to alleg e that as a result of defe ndant’s failure to provide an adequate defe nse, Ruben beca me subject to a de fault judg ment ag ainst him in t he amount of $250,000. ¶ 12 I n September 2010, plaintiff moved for summary judgme nt on count I

. I n its response to plaintiff’s motion, defen d an t filed its own motion to dismiss on the basis of res judicata

. After hear ing argument, on Fe bruar y 4, 2011, the tr i al court g rante d plaintiff’s motion for
summary judgme nt on the issue of whether defe ndant brea ched its duty to defe nd and denied defe ndant’s motion to dism iss. ¶ 13 Pla i n t i ff t h en fi l ed a s up p l em en tal motion for summary judgme nt on the issue of damag es. Specifica lly
, he soug ht entry of a final judgme nt in his f avor as to c ount I
, and an

awa rd of damag es of $250,000, the amount of the defa ult judgme nt enter ed ag ainst Ruben. Def endant opposed this motion and also filed a cross-motion for summary judgme nt on the basis that it had exhausted its policy limit s on behalf of Ruben and was not liable for contra ct damag es in excess of those limit s. On Fe bruar y 28, 2012, the court, afte r hear ing argument, g rante d plaintiff’s motion for summary judgme nt, denied defe ndant’s cross-motion, and
enter ed judgme nt in favor of plaintiff in the amount of $250,000 plus costs. Def endant timely
appea ls from both the Fe bruar y 2011 and F ebrua

ry 2012 order s. 2

¶ 14 ANALYSI S ¶ 15 A s a th

r eshold matter, we addre ss defe ndant’s and plaintiff’s respe ctive motions to strike, both of which we o rd er ed taken with the case

. Def endant asks us to strike the excerpted deposition testimony of Michae l Tomory
, Richard Pancotto, Debor ah Tau, Kenne th Hirsch, and L aura McGrat h cited in plaintiff’s response brief. Def endant aptly notes that the full
transcr ipts do not appea

r in the rec ord on appea l, which is a violation of I llinois S upreme Court Rule 341(h) (ef

f. J uly 1, 2008). Acc ording ly
, we cannot consider them in our revie w. See MJ Ontario, Inc. v. Daley
, 371 I ll. App. 3d 140, 150 (2007) (mater ials not contained in

rec ord ar e not prope rly

befor e re viewing court). ¶ 16 Plaintiff contends that these deposition transcr ipts wer e b ef o re t h e circ uit court on his

m o t i o n fo r summary judgme nt and sug g ests that it was defe ndant’s burden to include t h e transcr ipts in the rec ord on appea l. T his is not the rule. As the appellee
, plaintiff had seven day s afte r defe ndant filed the rec ord to serve upon defendant any additional materia ls he believed wer e nece ssary t o i n cl u d e. I ll. S. Ct. R. 323(a) (ef f. Dec

. 13, 2005). Be cause he failed to do so, he is now held to “ ‘ac quiesce [ ] in the appellant’ s opinion that ever y part of the re cord e ssential to properly prese nt the questions raised on a ppeal ha s been c ertified to the revie wing court.’ ” City of Chicago v. Alessia
, 348 I ll. App. 3d 218, 227 (2004) (quoting Nicholl v. Scaletta , 104 I ll. App. 3d 642, 646 (1982)). ¶ 17 P l ai n t i ff al s o filed his own motion to strike portions of defe ndant’s reply brief t h at

No app eal is ta ken fr om the por ti on of the Febr uar y 2011 ord er den ying def end ant ’s m oti on 2
to dis m is s on th e ba si s of res ju dic ata

.
-4-objected to plaintiff’s citation to unfiled deposition transcr ipts. Specifica lly
, plaintiff argues

that any objection to the failure to include complete, cer tified deposition transcr ipts is forf eited beca use it was not raised befor e the trial court. But defe ndant is not objecting to the fac t that plaintiff may have relied on incomplete or uncer tified transcr ipts in the trial court , but is instea d arguing that he may not do so befor e this court

. For the rea sons stated above,

we ag ree

. I n s um, we g rant defe ndant’s motion to strike citations to unfiled deposition
transcr ipts, and deny

plaintiff’s motion to strike portions of defe ndant’s re ply brief. ¶ 18 Turning then to the merits of d ef en d an t ’s ap p ea l, at issue is whether the circ uit court

err ed in g ranting summary judgme nt in favor o f p l ai n tiff on the questions of whether defe ndant brea ched its duty to defe nd and whether defe ndant is liable for damag es. Summary judgme nt is proper when the pleading s, deposit i o n s, and aff idavits demonstrate that no g enuine issue of m ater ial fac t exis ts and that the m oving party i s en t i t led t o judgme nt as a matter of law. 735 I L CS 5/2-1005(c) (West 2010); State Farm Mutual Automobile Insurance Co. v. Coe
, 367 I ll. App. 3d 604, 607 (2006). I n making t h i s d eter mination, the rec ord materia ls must be viewed in the light most fa vorable to the nonmovant. Fede ral I nsurance Co. v. Lexington Insurance Co.
, 406 I ll. App. 3d 895, 897 (2011). Our revie w of a l o wer court’s order g ranting summary judgme nt is de novo

. Hall v. Henn
, 208 I ll. 2d 325, 328 (2003).

¶ 19 A. B rea ch of D uty to Defe nd ¶ 20 We beg in our an al y s i s wi t h the court’s order of Fe bruar y 4, 2011, g rantingsummary judgme nt in favor of plaintiff on the issue of whether defe ndant brea ched its duty to defe nd. Def endant acknow ledg es that pursuant to the terms of the insurance contra ct, it was require d
to “def end any su i t alleg ing such bodily injury or proper ty damag e and seeking damag es which are pay able under the terms of this policy .” Where an insurer has been found to have brea ched a simil ar contra ctual duty
, it has outri gh t re fused to provide its insured with a defe nse. See, e.g. , Illinois Tool W orks, Inc. v. Commerce & Industry Insurance Co.
, 2011 I L App (1st) 093084, ¶¶ 10-11; Uhlich Children’s Advantage Network v. National Union Fire Co. of Pittsburgh
, 398 I ll. App. 3d 710, 714 (2010). Her e, howeve r, defe ndant informed its insured that it would undertake his de fense in the persona l injury suits ag ainst him, subjec t to a rese rvation of rig hts. And, defe ndant reta ined attorney I .R. S t ri z ak
, who enter ed an appea ranc e on behalf of the insured. Thi s case thus prese nts a unique issue: whether an insurer that has reta ined counsel to defe nd its insured, may , in cer tain limit ed circ umstances, still be found to have bre ache d its duty to defe nd. ¶ 21 The Four

th District in Brocato v. Prairie State Farms Insurance Ass’n
, 166 I ll. App. 3d 986 (1988), answe red this question in the neg ative. I n Brocato
, the plaintiff, also the assig nee of the insured, filed a complaint ag ainst the defe ndant insurer alleg ing in part that it
neg lige n tly
, willfully and wantonly
, and/or intentionally failed to supervise or control the defe nse of its insured, as well as the actions of the attorney s it reta ined to defe nd its insured. Brocato
, 166 I ll. App. 3d at 990. As a result, the insured beca me liable for a $375,000 jury verdic t. Id. at 988. The Brocato court distinguished the defe ndant’s alleg ed inaction from a ref usal to provide a defe nse altog ether and conclude d t h at an insurer’ s obligation to its

-5-insured reg arding defe nse of the action ag ainst its insured is fulfilled when it reta ins counsel

for t h e insured. Id. at 991. This conclusion was mainly based on the court’s belief that a contra ry holding would forc e an i n s u rer to control or supervise the litigation and there by involve the insurer in the prac tice of law, from which it is prohibited in eng ag ing. Id. We find this decision unpersuasive for se vera l rea sons. ¶ 22 First, Brocato is fac tually distinguis h ab l e fr o m the case here

. I n Brocato
, the attorne y hired by the insurer “ac tually defe nded” the insured throug hout trial. Id. Thoug h the Brocato
court did not explain what it meant by “ac tual defe nse,” we cannot conce ive of any definition of the term that would rende r Striz ak’s actions satisfac tory

. To be sure, Striz ak did enter an appea ranc e, file an answe r, and initiate discovery on Dec ember 15, 1992, shortly afte r he was reta ined. But the elec tronic docket of t h e circuit court of Cook County
, made part of the

rec ord on appe al, re veals that Striz ak undertook no further action on Ruben’s beha lf in the ensuing three y ear s during which litigation was pending
, even afte r an order of defa ult was enter ed ag ainst Ruben. Fur ther, defe ndant admits that Striz ak never submitt ed statements of leg al work he perf

ormed in defe nse of Ruben. The single most rea sonable infere nce that can be draw n from these fac ts is that–unlike the insurer in Brocato –defe ndant, throug h Striz ak, failed to provide Ruben with an “a ctual def ense.” ¶ 23 Second, the implications of the rule announce d in Brocato that an insurer satisfactorily discharg es its duty to defe nd solely by reta ining an attorney for its insured are trou b l i n g

. I mportantly
, the law require s g ood faith and fair dealing by both parties in perf orming their
contra ctual obligations. Bonner v. W estbound Rec ords, Inc.
, 76 I ll. App. 3d 736, 744 (1979). The Brocato holding, howeve r, would allow an insurer to esca pe its leg al obliga

tion to provide g ood faith repr esenta tion and instead fre ely abandon its insured to an attorney who either is unwilling or

unable to undertake the defe nse, or who, a s in this case, inexpli cably deser ts the client. I n our view, an insurer’ s promise to de fend entitles the insured to e x pect that its insurer will reta in an attorney who will in fac t take action to defe nd the insured in the fac e of a defa

ult order

. The insurer’ s duty
, afte r all, is to defend
, n o t mere ly to provide
repr esentation, and is an ong oing duty throug hout the litigation. This result is in keeping with the well-e stablished rule that contra ctual terms should be rea d to avoid inequities or t h e imputation of bad faith to a pa rty

. River Forest State Bank &Trust Co. v. Rosem ary Joy ce Enterprises, Inc. , 294 I ll. App. 3d 173, 179 (1997). ¶ 24 We are persua ded by the conc lusion of the Court of Appea ls for the Seve nth Circuit in Thoresen v. Roth , 351 F.2d 573 ( 7th Cir. 1965), where the court was confr onted with f acts compar able to the fac ts here

. I n Thoresen
, the insured tender ed the defe nse of a malprac tice action broug ht ag ainst it to its insurer, who ag ree d to conduct a defe nse as to cer tain counts of t he mal p ra ct ice complaint. Thoresen
, 351 F.2d at 575. The insurer i nformed its insured that it had turned the matter over to an attorney ; howeve r, that attorney did not participate–or

even file an appea

ranc e–in the litigation. Id. at 575-76

. The Seventh Circuit found “incompre hensible” the insurer ’s ar gu m ent that “mer e rete ntion of [an attorney ] was a compliance with its obligation to defe nd the insured,” and agree d with the district court that the insurer had brea ched its duty to defe nd. Id. L ikewise we are confounde d by this argument and conclude that reta ining an attorney , standing alone, does not discharg e an insurer’ s duty to defe nd.

-6-¶ 25 Def endant maintains that it did more than mere ly reta in an attorney

. Specifica lly , when it lear ned that its insured had been subject to an order of defa ult, it sent the order to Striz ak. The circ uit co u rt fo u n d this limit ed action was insufficient to satisfy defe ndant’s duty to defe nd, and we ag ree

. Significa ntly
, we do not question the means defe ndant used to contac t Striz ak, but rathe r t h e fa ct that there is no evidenc e that defe ndant m ade any further eff ort to obtain an explanation from Striz ak as to why the defa ult was enter ed, or whether he soug ht
to have it vacated. Indeed, defe ndant admits that with the exception of the letter forwa rding the notice of defa

ult, it had no written communication with Striz ak betwe en Dec ember 3, 1992, when Striz ak acc epted responsibility for Ruben’s defe nse, until over three y ear s afte r entry of the de fault judg ment ag ainst Ruben. ¶ 26 Ulti mately
, defe ndant’s nominal, passive, and one-w ay communication with the attorne y oste n sibly reta ined to defe nd its insured leads us to conclude that defe ndant brea ched its 3 duty to defe nd. To the extent this conflicts with the holding in Brocato
, we decline to follow it. See Ree d v. Galaxy Holdings, Inc.
, 394 I ll. App. 3d 39, 46 (2009) (holding appellate court decision not binding on othe r appe llate districts). ¶ 27 Finally
, we do not share the Brocato court’s conce rn s , ec h o ed b y defe ndant, that our holding today implicates the statutory prohibition on insurers prac ticing law. See 705 I L CS 220/1 (West 2010); see also Bowers v. State Farm Mutual Automobile InsuranceCo. , 403 I ll. App. 3d 173, 176 (2010). Ou r supreme court has define d the prac tice of law as “ ‘the
g iving of advice or rendition of any sort of service by any person, firm or corpor ation when the g iving of such advice or rendition of such service require s the use of any degree of leg al knowledg e or skill.’ ” People ex rel. Chicago Bar Ass’n v. Barasch
, 406 I ll. 253, 256 (1950) (quoting People ex rel. Illinois State Bar Ass’n v. S ch a f er , 404 I ll. 45, 50 (1949))

. We fail to see how requiring an ins urer to asce rtain whe ther its insured is ac tually being defe nded, particula rly following notice of an order of defa ult, nece ssitates the use of any leg al skill or knowledg e. ¶ 28 The order of Fe bruar y 2011 g ranting summary judgme nt in favor of plaintiff on the issue of whe ther de fenda

nt brea ched its duty

to defe nd is affirme d.

¶ 29 B. D amag es ¶ 30 Having deter

mined t h at d ef

en d ant did brea ch its duty to defe nd, we next turn to the court’s order of Fe bruar

y 28, 2012, g ranting plaintiff’s motion for summary judgme nt on the issue of damag es and denying defe ndant’s cross-motion on the s ame issue. At the heart of the parties’ dispute is whether defe ndant may be liable for a $ 2 5 0
, 000 defa ult judgme nt enter ed ag ainst Ruben wher e i t h as ex hausted its policy limit s of $20,000 per person and $40,000 per a ccide nt. ¶ 31 The leading case on the issue of whe n an insurer is responsible for the full amount of a judgme nt enter ed ag ainst its insured in excess of policy limit s is Conway v. Country Casualty Insurance Co.
, 92 I ll. 2d 388 (1982). There
, the insurer, Country Casualty
, ref used to defe nd

Def end ant admits th at it neverm ade paym ent to Str izak foragree ing to re pre sen t Ru ben

. 3

-7-its insured, Conway
, in a negli gen ce s u it arising out of an automobile acc ident, on the

g rounds that it had alre ady exhausted its policy limit s b y p ay i ng the underly ing plaintiff’s
expenses resulting from her injuries. Conway , 92 I ll. 2d at 391-92. Be cause the underlying
p l aint iff did not execute a rele ase in exchang e for this pay ment, her suit ag ains t C o n wa y

rema ined pending. Id. at 392. After settling with the pl aintiff for $10,000, Conway sou ght
to rec over t h i s amount from Country Casualty
, alleg ing that it had brea ched its duty to defe nd. Id. The supreme court ag ree d that Country Casualty ’s ac tions constitut ed a brea ch of t he duty

to defe nd and then considere d whether County Casualty could be liable for the $10,000 settlement when it had a lrea dy exhausted its poli cy

limit s. Id. at 395-96. ¶ 32 T h e co u rt ci ted Reis v. Aetna Casualty & Surety Co. of Illinois
, 69 I ll. App. 3d 777 (1978), f or the followingpropositions:
“ ‘The mere failure to defen d d o es not, in the absenc e of bad faith, rende r the insurer liable for that amount of the judgme nt in excess of th e p o l i cy limit s. [C itations.] Neve rtheless, damag es for a brea ch of the duty to defe nd are not inexorably imprisoned with the policy limit s, but are measure d by the conseque nces proxi mately cause d by the brea ch.’ ” Conway , 92 I ll. 2d at 397-98 (quoting Reis , 69 I ll. App. 3d at 790). The court went on to conclude that Conway failed to establish that the $10,000 settlement

was cause d by Country M u t u al ’s b re ach of duty to defe nd, and, further more, that the trial
court c orre ctly

found that Country

Mutual had not ac ted in bad fa ith. Id. at 398-99. ¶ 33 As the I llinois Supreme Court rec og nized in Conway
, damag es for brea ch of the duty to defe nd “ ‘ar e not inexorably imprisoned within policy limit s.’ ” Conway
, 92 I ll. 2d at 397-98 (quoting Reis
, 69 I ll. App. 3d at 790). We r ead the Conway opinion to sug g est two way s in which an insured may rec over an excess judgme nt based on its i n s u re r’s breac h of dut y to defe nd: (1) tort based, as a punitive measure , wher e the insurer has acte d in bad faith, or (2)
contra ct based, as a compensatory measure , wher e t h e i n s ured’ s damag es are proxi mately

cause d by the insurer ’s bre ach of

duty

. ¶ 34 The c ase that best g uides the issue of damag es is Gree n v. J.C. Pe nney A uto Insurance Co.
, 806 F.2d 759 (7th Cir. 1986). There
, the court analy zed Conway and Reis
, concluding 4 that irrespe ctive of bad faith, an insurer may be liable for damag es bey ond the policy limit s if its brea ch of duty cause d the excess judgme nt. Id. at 762 (re ly ing on Reis
, holding insured
may rec over total amount of the judgme nt, inc luding amount exceeding policy limit s if the insured can establish that insurer “aba ndoned [t he insured’s] d ef en s e” ). See also postConway case s Fidelity & Casu a l t y Co

. o f N ew Y ork v. Mobay
, 252 I ll. App. 3d 992, 997 (1992) (“When an insurer wrong fully ref uses to defe nd [i ts insured], it is liable to the insured for brea ch of contra ct. The measure of damag es for such a contra ctual brea ch is g ener ally the
amount of the judgme nt ag ainst the insured.”) ; Gruse v. Belline
, 138 I ll. App. 3d 689, 697-98 (1985) (“In I llinois
, an acc epted measure of damag es for brea ch of an insurance contra ct to defe nd is the amount of the judg ment rende red a g ainst the insured ***.” ) ¶ 35 The entry of the final judgme nt by defa ult in the under l y i n g p er s o nal injury action,

Gree n was overr ule d on oth er grounds by Taco Bel l Corp

. v. Cont ine nta l Casu alt y Co.
, 388 4 F.3d 1069 (7 th Cir . 200 4).

-8-including that portion in excess of policy limit s, direc tly flows from the brea ch of contra ct;

that is, the proxi mate cause of the defa ult judgme nt, enter ed about 13 months following the defa ult order
, was defe ndant’s brea ch. This situation could have been aver ted altog ether had defe ndant seen to it that its insured was actua lly defe nded as contra ctually require d. To hold otherwise, we would subject the insured to the likelihood of paying some or all of the defa ult judgme nt out of his own pocket, an incong ruous result, considering that the entry of neither the defa ult order nor the defa

ult judgme nt was of his instigating or choosing
, or even known to him unti l y ear s later, but ins tead, was the natura l conseque nce of his insurer’s br eac h of
contra ct. We thus conclude that the trial court’s g rant of summary judgme nt on the issue of damag es wa s proper

. ¶ 36 As to the dissent’s rea ding of the majority opinion, rec overy of damag es over the policy limit s is not as si mple as “showing t h at a judgme nt had been entered ag ainst the i nsured.” Infra ¶ 48. The plaintiff’ s evidenc e established that the orig inal defa ult a nd the subsequent defa ult judgme nt both resulted entirely from the defe ndan t ’s b rea ch, and defe ndant put forwa rd no contra

ry evidenc e. The g ener al rule is that damag es for brea ch of contra ct should place the injured party in the same position it would have been in had the contra ct been fully perf ormed. See, e.g. , Central Information Financial Servic es, Ltd. v. First National Bank of Dec atur , 128 I ll. App. 3d 1052, 1062 (1984). Her e, no d efault, no defa ult judgme nt. Unexplained is why the insured s h o uld be place d in the predic ament of potential responsibility for pay

ment of any of the defa

ult judgme nt under the specific fac ts of this case

. Also unexpl ained is how and with what kind of evidenc e, other than sheer speculation, the insured would offe r to prove that if he had rec ei v ed a p roper defe nse the judgme nt would have been something other than $250,000. The law does not put the insured in this trick bag

. ¶ 37 We expressly limit our decision on the suitabilit y of the defa ult judgme nt enter ed ag ainst the insured as the measure of damag es to the prec ise fac ts of this case , and do not decide its applicability

to future c ases.

¶ 38 CONCL USI ON ¶ 39 For the rea sons stated, we aff irm the circ uit c ourt’s order of Fe bruar y 4, 2011, g ranting plaintiff’s motion for summary judgme nt on the issue of whether defe ndant brea ched its duty
to defe nd, and the order of Fe bruar y 28, 201 2
, gra n t ing summary judgme nt in favor of plaintiff as to damag es and denying defe ndant’s cross-motion for summary judgme nt on the same issue. ¶ 40 Finally
, beca

use defe ndant did not move for summary judgme nt on count I I of plaintiff’s complaint, which alleg ed vexatious and unrea sonable de lay in settling a c laim, we rema nd to the circ uit court for r esolution of that alleg ation.

¶ 41 Affir

med and r emande d.

¶ 42 J USTI CE STERBA, conc urringin part and dissentingin part. ¶ 43 I concur i n p ar t beca use I ag ree with the majority that defe ndant brea ched its duty to

-9-defe nd when it took limit ed, passive action to monitor the attorne y it retained to de fend its insured. Howe ver, I

cannot join in the majority ’s holding w ith respec t to damag es. ¶ 44 The majority corr ectly rea ds Conway as permitting two theories–tort and contr act–unde r which an insured may rec over damag es i n excess of t he poli cy limit s. I t is undispu t ed that
p l ai n t i ff h er e is proce eding under a contra ct t heory ; as such, it is require d to prove that its damag es wer e “proximately cause d b y t h e i n s urer ’s brea ch of duty .” Supra ¶ 33; see also Conway , 92 I ll. 2d at 397-98. The major ity believes pla intiff has met this burden. I do not. ¶ 45 I fi n d i t useful to beg in by outlining what is meant by the term “pr o x i m at e ca u s e. ” Prox imate cause encompa sses both cause in fac t and leg al cause

. Krywin v. Chicago Transit Authority
, 238 I ll. 2d 215, 225-26 (2010). At issue here is cause in fac t, which exis ts wher e there is a rea sonable cer

tainty that a defe ndant’s acts cause d the injury

. Y oung v. Bryco Arms
, 213 I ll. 2d 433, 446 (2004). We ask not whether th e i n jury “flows from” a defe ndant’s brea ch, as the majority

contends ( supra ¶ 35), but whether the i njury would have oc curr ed absent that bre ach. Y

oung , 213 I ll. 2d at 446. ¶ 46 The majority fra mes the issue as whether the defa ult judgme nt was proxi mately cause d by defe ndant’s brea ch of duty

. Howeve r, I believe the better question is whether a lesser judgme nt would have been enter ed absent defe ndant’s brea ch. See Conway
, 92 I ll. 2d at 398 (asking not whether

the settlement i tself was cause d by Country Casualty ’s breach of duty
to defe nd, but whether a settlement for a lesser amount would have been rea ched if Country Casualty had defe nded the action). T h i s p l aintiff has not shown. There is no evidenc e in plaintiff’s motion for summary judgme nt that Ruben would have been require d to pay an amount less than $250,000 if defe ndant had proper ly discharg ed its duty to defe nd him. The majority rema

rks that requiring proof of this sort place s plaintiff in a “trick bag .” Supra ¶ 36. I disag ree

. Plaintiffs are often called upon to a dduce simil ar evidenc e in many other cause s of action. For example, in order to state a claim for attorney malprac tice, a plai n t i ff must show, among other things, that but for his attorney ’s malpra ctice, he would have preva iled in the underlying action. Preferred Personnel Servic es, Inc. v. Meltzer, Purtill & Stelle, LLC
, 387 I ll. App. 3d 933, 939 (2009). I fail t o see how requir i n g p l ai n t i ff in the i nstant case to prove that a judgme nt of a lesser amount would have been enter ed is any more onerous than the proof w e re quire of pla intiffs making attorney -malpra ctice c laims. ¶ 47 Ialso find it curious that the majority corr ectly cites t o the well-settled rule of c ontrac t law that damag es are intended to place the injured party in the position he would have been if the contra ct had been fully perf ormed ( supra ¶ 36), but then does not follow this principle
to its logic al conclusion in the case at b ar. Specifica lly
, if the insurance contra ct had been fully perf ormed, and Ruben was properly defe nded, he would have been indemnified only
up to the policy limit s–$40,000. Damag es in e x cess of these limits are a windfall, and thus

are only rec overa

ble under cer

tain circ umstances (see Conway
, 92 I ll. 2d at 397-99), which

are not present he re. ¶ 48 Finally
, I am t roubled by the majority ’s citation to Mobay Chemical and Gruse

. Whil e both case s make the g ener al statement t h at damag es for brea ch of a contra ctual duty to defe nd is g ener ally the amount of the judgme nt ag ainst the insured, neither case involved an

-10-insurer that was subject to a judgme nt in excess of policy limit s. Mobay Chemical
, 252 I ll. 5 App. 3d at 996-97; Gruse
, 138 I ll. App. 3d at 691-95. Were we to take the holdings in those

case s at fac e value, we would essentially allow all plaintiffs to rec over damag es in excess of policy limit s without proving causation, a result that is p l ai nly at odds with our supreme court’s holding in Conway

. More signific antl y , adoption of these broad holdings to case s involving excess judgme nts (as opposed to judgme nts within the policy limit s) would have the practical effe ct of e liminating all bre ach- of-duty -to-def end ca ses that sound in tort. No insured would assume the burden of proving bad faith or neg lige nce if all that was require d
to rec over damag es i n excess of t he poli cy limit s was a showing that a judgment had been
enter ed ag ainst the insured. ¶ 49 For these rea sons, I would reve rse the order of Fe bruar y 28, 2 0 1 2
, granting summary judgme nt in favor of plaintiff as to damag es and denying defe ndant’s cross-motion for
summary ju d gm en t o n the s ame issue, and enter sum mary judgme nt in favor of defendant on the issue of damag es stemming f rom its breac h of the duty to defe nd. ¶ 50 Ithere fore concur in part and r espec tfully

dissent in part.

I nde ed, an ins ura nce con tr act was not even at is sue in Grus e

. T hat cas e add re sse d the is sue 5 of whet her a par ty s u b

j ect to a j udgm ent agains t it nee ded to pre sen t pro of of an abi li ty to pay or act ual paym ent bef

ore col le ct ing damages fr om it s a tt orn ey. Grus e , 138 I ll . App. 3d a t 6 97- 98.

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