ILLINOIS OFFICIAL REPORTS

Appellate Court

Delatorre v. Safeway Insurance Co., 2013 IL App (1st) 120852

Appellate Court

Caption

BONIFACIODELATORRE,JR., as assignee of RUBENDELATORRE,

Plaintiff-Appellee, v. SAFEWAY INSURANCE COMPANY,

Defendant-Appellant.

 District & No. First District, Third Division

Docket No. 1-12-0852

Filed April 17, 2013

Held

(Note: This syllabus

constitutes no part of

the opinion of the court

but has been prepared

by the Reporter of

Decisions for the

convenience of the

reader.)

In an action arising from an automobile accident in which plaintiff was

injured as a result of the negligence of defendant’s insured, plaintiff, as

assignee of defendant’s insured, was properlygranted summaryjudgment

on the issues of whether defendant breached its duty to defend and

damages, since defendant only retained counsel for its insured and

forwarded notice to counsel that a default judgment had been entered

against its insured and those actions were insufficient to satisfy the duty

to defend, and, further, the default judgment was proper, even though

defendant had exhausted the per-person policy limits by payments to two

other persons who were injured.

Decision Under 

Review

Appeal from the Circuit Court of Cook County, No. 04-L-8101; the Hon.

Mary Brigid McGrath, Judge, presiding.

Judgment Affirmed and remanded.
Counsel on

Appeal

Keely Hillison and Steve Grossi, both of Parrillo, Weiss & O’Halloran,

of Chicago, for appellant.

Robert Oliver and A. Valerie Acosta, both of Beaulieu Law Offices, PC,

of Chicago, for appellee.

Panel JUSTICE HYMAN delivered the judgment of the court, with opinion.

Presiding Justice Neville concurred in the judgment and opinion.

Justice Sterba concurred in part and dissented in part, with opinion.

OPINION

¶ 1 This appeal arises out of a three-count complaint filed by plaintiff-appellee Bonifacio

Delatorre,Jr., as assignee ofRubenDelatorre, against defendant-appellant SafewayInsurance

Company. The only count at issue on appeal is count I, alleging breach of the insurance

contract. The circuit court granted summary judgment in favor of plaintiff on the issue of

whether defendant breached its dutyto defend Ruben, its insured, after finding that defendant

took insufficient action on learning that Ruben had been defaulted in the personal injury suit

filed against him by plaintiff. The circuit court also entered summary judgment in favor of

plaintiff on the issue of damages, awarding him $250,000, the amount of the default

judgment entered against Ruben.

¶ 2 On appeal, defendant argues that it did not breach its duty to defend where it retained an

attorney to represent Ruben in plaintiff’s negligence suit. Alternatively, defendant contends

that it is not liable for a judgment that exceeds its policy limits where it did not act in bad

faith, and where plaintiff did not show that the judgment was traceable to its breach of duty

to defend. For the reasons that follow, we affirm.

¶ 3 BACKGROUND

¶ 4 In September 1991, plaintiff was a passenger in a car driven by Ruben when they were

involved in an accident in which plaintiff was injured. The driver of the other car, Thomas 1

Zentefis, as well as his passenger, William Zenko, were also injured. Plaintiff, Zentefis and

Zenko each filed suit against Ruben, seeking recovery for personal injuries allegedly caused

by Ruben’s negligent conduct.

¶ 5 At the time of the accident, Ruben was insured under a personal automobile insurance

policy issued by defendant. The policy carried a bodily injury liability limit of $20,000 per

person and $40,000 per accident. Further, the policy obligated defendant to defend any suit

Plaintiff and Ruben are relatives. 1

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brought against the insured for bodily injury or property damage covered by the policy, with

the understanding that defendant had no obligation to the insured once the policy limits were

exhausted by payment.

¶ 6 In December 1991, plaintiff made a demand for the policy limits, which defendant

refused; however, after learning of the negligence suits brought against Ruben, defendant

agreed to defend Ruben under a reservation of rights. In November 1992, it informed Ruben

via letter that it had retained attorney I.R. Strizak to undertake his defense in the negligence

suit brought byplaintiff. The letter also stated that because plaintiff could potentially recover

a judgment in excess of the policy limits, it could be prudent for Ruben to consider retaining

additional counsel at his own expense.

¶ 7 Strizak filed an appearance and answer on behalf of Ruben on December 15, 1992, but

there is no evidence that he took any further action to defend Ruben after that date.

Defendant admitted that it paid no fees to Strizak in connection with his defense of Ruben,

nor did Strizak submit statements for work he performed on Ruben’s behalf. The plaintiff

moved for sanctions, and the court eventually entered an order of default against Ruben on

October 4, 1994. The order specified that the basis for the default was Ruben’s “failure to

complywith outstanding discovery.” Plaintiff’s attorney sent this order directly to defendant

10 days later. According to an affidavit bydefendant’s claims manager, Michael Tomory, the

order was sent to Strizak on receipt. But this was the only written communication defendant

had with Strizak since retaining him in November 1992. A prove-up hearing on the default

judgment was held in November 1995, and plaintiff was awarded $250,000 in damages. The

record does not indicate when defendant received actual notice of the damages award.

¶ 8 At the same time this litigation was proceeding, defendant was pursuing a declaratory

judgment action against plaintiff, Ruben, Zentefis and Zenko. Specifically, defendant sought

a declaration that it was not liable for damages alleged against Ruben in the negligence

actions due to the fact that Ruben had misrepresented his marital status on his application for

insurance, rendering his policy void. The trial court granted summary judgment against

defendant on the basis that it was bound by its agent’s actual knowledge of Ruben’s marital

status. This ruling was affirmed on appeal on March 20, 1998. Safeway Insurance Co. v.

De La Torre, No. 1-96-0739 (Mar. 20, 1998) (unpublished order under Supreme Court Rule

23).

¶ 9 Several days after learning of the appellate court’s ruling, defendant tendered the policy

limits to plaintiff, but the tender was rejected. Then, in September 1999, defendant paid the

policy limits of $20,000 to both Zentefis and Zenko.

¶ 10 In the meantime, on December 20, 1998, Ruben assigned the cause of action he had

against defendant arising out of the contract of insurance to plaintiff for unspecified “value

received.” Shortlythereafter, plaintiff, as Ruben’s assignee, filed suit against defendant. This

suit was voluntarily dismissed on July 22, 2003.

¶ 11 About one year later, plaintiff refiled his complaint. After several rounds of amendment

and dismissal, the complaint contained three counts: breach of an insurance contract;

vexatious and unreasonable delay in settling a claim; and punitive damages. The count

seeking punitive damages was dismissed on December 12, 2005, and only count I is at issue

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on appeal. In count I, plaintiff alleged that defendant breached its duty to defend when it

ignored notice that Strizak was not providing Ruben with a meaningful defense. Plaintiff

went on to allege that as a result of defendant’s failure to provide an adequate defense, Ruben

became subject to a default judgment against him in the amount of $250,000.

¶ 12 In September 2010, plaintiff moved for summary judgment on count I. In its response to

plaintiff’s motion, defendant filed its own motion to dismiss on the basis of res judicata.

After hearing argument, on February 4, 2011, the trial court granted plaintiff’s motion for

summary judgment on the issue of whether defendant breached its duty to defend and denied

defendant’s motion to dismiss.

¶ 13 Plaintiff then filed a supplemental motion for summary judgment on the issue of

damages. Specifically, he sought entry of a final judgment in his favor as to count I, and an

award of damages of $250,000, the amount of the default judgment entered against Ruben.

Defendant opposed this motion and also filed a cross-motion for summary judgment on the

basis that it had exhausted its policy limits on behalf of Ruben and was not liable for contract

damages in excess of those limits. On February 28, 2012, the court, after hearing argument,

granted plaintiff’s motion for summary judgment, denied defendant’s cross-motion, and

entered judgment in favor of plaintiff in the amount of $250,000 plus costs. Defendant timely

appeals from both the February 2011 and February 2012 orders.2

¶ 14 ANALYSIS

¶ 15 As a threshold matter, we address defendant’s and plaintiff’s respective motions to strike,

both of which we ordered taken with the case. Defendant asks us to strike the excerpted

deposition testimony of Michael Tomory, Richard Pancotto, Deborah Tau, Kenneth Hirsch,

and Laura McGrath cited in plaintiff’s response brief. Defendant aptly notes that the full

transcripts do not appear in the record on appeal, which is a violation of Illinois Supreme

Court Rule 341(h) (eff. July 1, 2008). Accordingly, we cannot consider them in our review.

See MJ Ontario, Inc. v. Daley, 371 Ill. App. 3d 140, 150 (2007) (materials not contained in

record are not properly before reviewing court).

¶ 16 Plaintiff contends that these deposition transcripts were before the circuit court on his

motion for summary judgment and suggests that it was defendant’s burden to include the

transcripts in the record on appeal. This is not the rule. As the appellee, plaintiff had seven

days after defendant filed the record to serve upon defendant any additional materials he

believed were necessary to include. Ill. S. Ct. R. 323(a) (eff. Dec. 13, 2005). Because he

failed to do so, he is now held to “ ‘acquiesce[ ] in the appellant’s opinion that every part of

the record essential to properly present the questions raised on appeal has been certified to

the reviewing court.’ ” City of Chicago v. Alessia, 348 Ill. App. 3d 218, 227 (2004) (quoting

Nicholl v. Scaletta, 104 Ill. App. 3d 642, 646 (1982)).

¶ 17 Plaintiff also filed his own motion to strike portions of defendant’s reply brief that

No appeal istaken fromthe portion of the February 2011 order denying defendant’s motion 2

to dismiss on the basis of res judicata.

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objected to plaintiff’s citation to unfiled deposition transcripts. Specifically, plaintiff argues

that any objection to the failure to include complete, certified deposition transcripts is

forfeited because it was not raised before the trial court. But defendant is not objecting to the

fact that plaintiff may have relied on incomplete or uncertified transcripts in the trial court,

but is instead arguing that he may not do so before this court. For the reasons stated above,

we agree. In sum, we grant defendant’s motion to strike citations to unfiled deposition

transcripts, and deny plaintiff’s motion to strike portions of defendant’s reply brief.

¶ 18 Turning then to the merits of defendant’s appeal, at issue is whether the circuit court

erred in granting summary judgment in favor of plaintiff on the questions of whether

defendant breached its duty to defend and whether defendant is liable for damages. Summary

judgment is proper when the pleadings, depositions, and affidavits demonstrate that no

genuine issue of material fact exists and that the moving party is entitled to judgment as a

matter of law. 735 ILCS 5/2-1005(c)(West 2010); State Farm Mutual Automobile Insurance

Co. v. Coe, 367 Ill. App. 3d 604, 607 (2006). In making this determination, the record

materials must be viewed in the light most favorable to the nonmovant. Federal Insurance

Co. v. Lexington Insurance Co., 406 Ill. App. 3d 895, 897 (2011). Our review of a lower

court’s order granting summary judgment is de novo. Hall v. Henn, 208 Ill. 2d 325, 328

(2003).

¶ 19 A. Breach of Duty to Defend

¶ 20 We begin our analysis with the court’s order of February 4, 2011, granting summary

judgment in favor of plaintiff on the issue of whether defendant breached its duty to defend.

Defendant acknowledges that pursuant to the terms of the insurance contract, it was required

to “defend any suit alleging such bodily injury or property damage and seeking damages

which are payable under the terms of this policy.” Where an insurer has been found to have

breached a similar contractual duty, it has outright refused to provide its insured with a

defense. See, e.g., Illinois Tool Works, Inc. v. Commerce & Industry Insurance Co., 2011 IL

App (1st) 093084, ¶¶ 10-11; Uhlich Children’s Advantage Network v. National Union Fire

Co. of Pittsburgh, 398 Ill. App. 3d 710, 714 (2010). Here, however, defendant informed its

insured that it would undertake his defense in the personal injury suits against him, subject

to a reservation of rights. And, defendant retained attorney I.R. Strizak, who entered an

appearance on behalf of the insured. This case thus presents a unique issue: whether an

insurer that has retained counsel to defend its insured, may, in certain limited circumstances,

still be found to have breached its duty to defend.

¶ 21 The Fourth District in Brocato v. Prairie State Farms Insurance Ass’n, 166 Ill. App. 3d

986 (1988), answered this question in the negative. In Brocato, the plaintiff, also the assignee

of the insured, filed a complaint against the defendant insurer alleging in part that it

negligently, willfully and wantonly, and/or intentionally failed to supervise or control the

defense of its insured, as well as the actions of the attorneys it retained to defend its insured.

Brocato, 166 Ill. App. 3d at 990. As a result, the insured became liable for a $375,000 jury

verdict. Id. at 988. The Brocato court distinguished the defendant’s alleged inaction from a

refusal to provide a defense altogether and concluded that an insurer’s obligation to its

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insured regarding defense of the action against its insured is fulfilled when it retains counsel

for the insured. Id. at 991. This conclusion was mainly based on the court’s belief that a

contrary holding would force an insurer to control or supervise the litigation and thereby

involve the insurer in the practice of law, from which it is prohibited in engaging. Id. We find

this decision unpersuasive for several reasons.

¶ 22 First, Brocato is factually distinguishable from the case here. In Brocato, the attorney

hired by the insurer “actually defended” the insured throughout trial. Id. Though the Brocato

court did not explain what it meant by “actual defense,” we cannot conceive of any definition

of the term that would render Strizak’s actions satisfactory. To be sure, Strizak did enter an

appearance, file an answer, and initiate discoveryon December 15, 1992, shortly after he was

retained. But the electronic docket of the circuit court of Cook County, made part of the

record on appeal, reveals that Strizak undertook no further action on Ruben’s behalf in the

ensuing three years during which litigation was pending, even after an order of default was

entered against Ruben. Further, defendant admits that Strizak neversubmitted statements of

legal work he performed in defense of Ruben. The single most reasonable inference that can

be drawn from these facts is that–unlike the insurer in Brocato–defendant, through Strizak,

failed to provide Ruben with an “actual defense.”

¶ 23 Second, the implications of the rule announced in Brocato that an insurer satisfactorily

discharges its duty to defend solely by retaining an attorney for its insured are troubling.

Importantly, the law requires good faith and fair dealing by both parties in performing their

contractual obligations. Bonner v. Westbound Records, Inc., 76 Ill. App. 3d 736, 744 (1979).

The Brocato holding, however, would allow an insurer to escape its legal obligation to

provide good faith representation and instead freely abandon its insured to an attorney who

either is unwilling or unable to undertake the defense, or who, as in this case, inexplicably

deserts the client. In our view, an insurer’s promise to defend entitles the insured to expect

that its insurer will retain an attorney who will in fact take action to defend the insured in the

face of a default order. The insurer’s duty, after all, is to defend, not merely to provide

representation, and is an ongoing duty throughout the litigation. This result is in keepingwith

the well-established rule that contractual terms should be read to avoid inequities or the

imputation of bad faith to a party. River Forest State Bank & Trust Co. v. Rosemary Joyce

Enterprises, Inc., 294 Ill. App. 3d 173, 179 (1997).

¶ 24 We are persuaded by the conclusion of the Court of Appeals for the Seventh Circuit in

Thoresen v. Roth, 351 F.2d 573 (7th Cir. 1965), where the court was confronted with facts

comparable to the facts here. In Thoresen, the insured tendered the defense of a malpractice

action brought against it to its insurer, who agreed to conduct a defense as to certain counts

of the malpractice complaint. Thoresen, 351 F.2d at 575. The insurer informed its insured

that it had turned the matter over to an attorney; however, that attorney did not participate–or

even file an appearance–in the litigation. Id. at 575-76. The Seventh Circuit found

“incomprehensible” the insurer’s argument that “mere retention of [an attorney] was a

compliance with its obligation to defend the insured,” and agreed with the district court that

the insurer had breached its duty to defend. Id. Likewise we are confounded by this argument

and conclude that retaining an attorney, standing alone, does not discharge an insurer’s duty

to defend.

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¶ 25 Defendant maintains that it did more than merely retain an attorney. Specifically, when

it learned that its insured had been subject to an order of default, it sent the order to Strizak.

The circuit court found this limited action was insufficient to satisfy defendant’s duty to

defend, and we agree. Significantly, we do not question the means defendant used to contact

Strizak, but rather the fact that there is no evidence that defendant made any further effort

to obtain an explanation from Strizak as to why the default was entered, or whether he sought

to have it vacated. Indeed, defendant admits that with the exception of the letter forwarding

the notice of default, it had no written communication with Strizak between December 3,

1992, when Strizak accepted responsibility for Ruben’s defense, until over three years after

entry of the default judgment against Ruben.

¶ 26 Ultimately, defendant’s nominal, passive, and one-waycommunication with the attorney

ostensibly retained to defend its insured leads us to conclude that defendant breached its 3

duty to defend. To the extent this conflicts with the holding in Brocato, we decline to follow

it. See Reed v. Galaxy Holdings, Inc., 394 Ill. App. 3d 39, 46 (2009) (holding appellate court

decision not binding on other appellate districts).

¶ 27 Finally, we do not share the Brocato court’s concerns, echoed by defendant, that our

holding today implicates the statutory prohibition on insurers practicing law. See 705 ILCS

220/1 (West 2010); see also Bowers v. State Farm Mutual Automobile Insurance Co., 403

Ill. App. 3d 173, 176 (2010). Our supreme court has defined the practice of law as “ ‘the

giving of advice or rendition of any sort of service by any person, firm or corporation when

the giving of such advice or rendition of such service requires the use of any degree of legal

knowledge or skill.’ ” People ex rel. Chicago Bar Ass’n v. Barasch, 406 Ill. 253, 256 (1950)

(quoting People ex rel. Illinois State Bar Ass’n v. Schafer, 404 Ill. 45, 50 (1949)). We fail

to see how requiring an insurer to ascertain whether its insured is actually being defended,

particularly following notice of an order of default, necessitates the use of any legal skill or

knowledge.

¶ 28 The order of February 2011 granting summary judgment in favor of plaintiff on the issue

of whether defendant breached its duty to defend is affirmed.

¶ 29 B. Damages

¶ 30 Having determined that defendant did breach its duty to defend, we next turn to the

court’s order of February 28, 2012, granting plaintiff’s motion for summary judgment on the

issue of damages and denying defendant’s cross-motion on the same issue. At the heart of

the parties’ dispute is whether defendant may be liable for a $250,000 default judgment

entered against Ruben where it has exhausted its policy limits of $20,000 per person and

$40,000 per accident.

¶ 31 The leading case on the issue of when an insurer is responsible for the full amount of a

judgment entered against its insured in excess of policylimits is Conway v. Country Casualty

Insurance Co., 92 Ill. 2d 388 (1982). There, the insurer, CountryCasualty, refused to defend

Defendant admits that it never made payment to Strizak for agreeing to represent Ruben.

3

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its insured, Conway, in a negligence suit arising out of an automobile accident, on the

grounds that it had already exhausted its policy limits by paying the underlying plaintiff’s

expenses resulting from her injuries. Conway, 92 Ill. 2d at 391-92. Because the underlying

plaintiff did not execute a release in exchange for this payment, her suit against Conway

remained pending. Id. at 392. After settling with the plaintiff for $10,000, Conway sought

to recover this amount from Country Casualty, alleging that it had breached its duty to

defend. Id. The supreme court agreed that Country Casualty’s actions constituted a breach

of the duty to defend and then considered whether County Casualty could be liable for the

$10,000 settlement when it had already exhausted its policy limits. Id. at 395-96.

¶ 32 The court cited Reis v. Aetna Casualty & Surety Co. of Illinois, 69 Ill. App. 3d 777

(1978), for the following propositions:

“ ‘The mere failure to defend does not, in the absence of bad faith, render the insurer

liable for that amount of the judgment in excess of the policy limits. [Citations.]

Nevertheless, damages for a breach of the duty to defend are not inexorably imprisoned

with the policy limits, but are measured by the consequences proximately caused by the

breach.’ ” Conway, 92 Ill. 2d at 397-98 (quoting Reis, 69 Ill. App. 3d at 790).

The court went on to conclude that Conway failed to establish that the $10,000 settlement

was caused by Country Mutual’s breach of duty to defend, and, furthermore, that the trial

court correctly found that Country Mutual had not acted in bad faith. Id. at 398-99.

¶ 33 As the Illinois Supreme Court recognized in Conway, damages for breach of the duty to

defend “ ‘are not inexorably imprisoned within policy limits.’ ” Conway, 92 Ill. 2d at 397-98

(quoting Reis, 69 Ill. App. 3d at 790). We read the Conway opinion to suggest two ways in

which an insured may recover an excess judgment based on its insurer’s breach of duty to

defend: (1) tort based, as a punitive measure, where the insurer has acted in bad faith, or (2)

contract based, as a compensatory measure, where the insured’s damages are proximately

caused by the insurer’s breach of duty.

¶ 34 The case that best guides the issue of damages is Green v. J.C. Penney Auto Insurance

Co., 806 F.2d 759 (7th Cir. 1986). There, the court analyzed Conway and Reis, concluding 4

that irrespective of bad faith, an insurer may be liable for damages beyond the policy limits

if its breach of duty caused the excess judgment. Id. at 762 (relying on Reis, holding insured

may recover total amount of the judgment, including amount exceeding policy limits if the

insured can establish that insurer “abandoned [the insured’s] defense”). See also postConway cases Fidelity & Casualty Co. of New York v. Mobay, 252 Ill. App. 3d 992, 997

(1992) (“When an insurer wrongfully refuses to defend [its insured], it is liable to the insured

for breach of contract. The measure of damages for such a contractual breach is generally the

amount of the judgment against the insured.”); Gruse v. Belline, 138 Ill. App. 3d 689, 697-98

(1985) (“In Illinois, an accepted measure of damages for breach of an insurance contract to

defend is the amount of the judgment rendered against the insured ***.”)

¶ 35 The entry of the final judgment by default in the underlying personal injury action,

Green was overruled on other grounds by Taco Bell Corp. v. Continental Casualty Co., 388 4

F.3d 1069 (7th Cir. 2004).

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including that portion in excess of policy limits, directly flows from the breach of contract;

that is, the proximate cause of the default judgment, entered about 13 months following the

default order, was defendant’s breach. This situation could have been averted altogether had

defendant seen to it that its insured was actually defended as contractually required. To hold

otherwise, we would subject the insured to the likelihood of paying some or all of the default

judgment out of his own pocket, an incongruous result, considering that the entry of neither

the default order nor the default judgment was of his instigating or choosing, or even known

to him until years later, but instead, was the natural consequence of his insurer’s breach of

contract. We thus conclude that the trial court’s grant of summary judgment on the issue of

damages was proper.

¶ 36 As to the dissent’s reading of the majority opinion, recovery of damages over the policy

limits is not as simple as “showing that a judgment had been entered against the insured.”

Infra ¶ 48. The plaintiff’s evidence established that the original default and the subsequent

default judgment both resulted entirely from the defendant’s breach, and defendant put

forward no contrary evidence. The general rule is that damages for breach of contract should

place the injured party in the same position it would have been in had the contract been fully

performed. See, e.g., Central Information Financial Services, Ltd. v. First National Bank of

Decatur, 128 Ill. App. 3d 1052, 1062 (1984). Here, no default, no default judgment.

Unexplained is why the insured should be placed in the predicament of potential

responsibility for payment of any of the default judgment under the specific facts of this case.

Also unexplained is how and with what kind of evidence, other than sheer speculation, the

insured would offer to prove that if he had received a proper defense the judgment 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 suitability of the default judgment entered against

the insured as the measure of damages to the precise facts of this case, and do not decide its

applicability to future cases.

¶ 38 CONCLUSION

¶ 39 For the reasons stated, we affirm the circuit court’s order of February 4, 2011, granting

plaintiff’s motion for summary judgment on the issue of whether defendant breached its duty

to defend, and the order of February 28, 2012, granting summary judgment in favor of

plaintiff as to damages and denying defendant’s cross-motion for summary judgment on the

same issue.

¶ 40 Finally, because defendant did not move for summary judgment on count II of plaintiff’s

complaint, which alleged vexatious and unreasonable delay in settling a claim, we remand

to the circuit court for resolution of that allegation.

¶ 41 Affirmed and remanded.

¶ 42 JUSTICE STERBA, concurring in part and dissenting in part.

¶ 43 I concur in part because I agree with the majority that defendant breached its duty to

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defend when it took limited, passive action to monitor the attorney it retained to defend its

insured. However, I cannot join in the majority’s holding with respect to damages.

¶ 44 The majority correctly reads Conway as permitting two theories–tort and contract–under

which an insured may recover damages in excess of the policy limits. It is undisputed that

plaintiff here is proceeding under a contract theory; as such, it is required to prove that its

damages were “proximately caused by the insurer’s breach of duty.” Supra ¶ 33; see also

Conway, 92 Ill. 2d at 397-98. The majority believes plaintiff has met this burden. I do not.

¶ 45 I find it useful to begin by outlining what is meant by the term “proximate cause.”

Proximate cause encompasses both cause in fact and legal cause. Krywin v. Chicago Transit

Authority, 238 Ill. 2d 215, 225-26 (2010). At issue here is cause in fact, which exists where

there is a reasonable certainty that a defendant’s acts caused the injury. Young v. Bryco Arms,

213 Ill. 2d 433, 446 (2004). We ask not whether the injury “flows from” a defendant’s

breach, as the majority contends (supra ¶ 35), but whether the injury would have occurred

absent that breach. Young, 213 Ill. 2d at 446.

¶ 46 The majority frames the issue as whether the default judgment was proximately caused

by defendant’s breach of duty. However, I believe the better question is whether a lesser

judgment would have been entered absent defendant’s breach. See Conway, 92 Ill. 2d at 398

(asking not whether the settlement itself was caused by Country Casualty’s breach of duty

to defend, but whether a settlement for a lesser amount would have been reached if Country

Casualty had defended the action). This plaintiff has not shown. There is no evidence in

plaintiff’s motion for summary judgment that Ruben would have been required to pay an

amount less than $250,000 if defendant had properly discharged its duty to defend him. The

majority remarks that requiring proof of this sort places plaintiff in a “trick bag.” Supra ¶ 36.

I disagree. Plaintiffs are often called upon to adduce similar evidence in many other causes

of action. For example, in order to state a claim for attorney malpractice, a plaintiff must

show, among other things, that but for his attorney’s malpractice, he would have prevailed

in the underlying action. Preferred Personnel Services, Inc. v. Meltzer, Purtill &Stelle, LLC,

387 Ill. App. 3d 933, 939 (2009). I fail to see how requiring plaintiff in the instant case to

prove that a judgment of a lesser amount would have been entered is any more onerous than

the proof we require of plaintiffs making attorney-malpractice claims.

¶ 47 I also find it curious that the majority correctly cites to the well-settled rule of contract

law that damages are intended to place the injured party in the position he would have been

if the contract had been fully performed (supra ¶ 36), but then does not follow this principle

to its logical conclusion in the case at bar. Specifically, if the insurance contract had been

fully performed, and Ruben was properly defended, he would have been indemnified only

up to the policy limits–$40,000. Damages in excess of these limits are a windfall, and thus

are only recoverable under certain circumstances (see Conway, 92 Ill. 2d at 397-99), which

are not present here.

¶ 48 Finally, I am troubled by the majority’s citation to Mobay Chemical and Gruse. While

both cases make the general statement that damages for breach of a contractual duty to

defend is generally the amount of the judgment against the insured, neither case involved an

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insurer that was subject to a judgment in excess of policy limits. Mobay Chemical, 252 Ill. 5

App. 3d at 996-97; Gruse, 138 Ill. App. 3d at 691-95. Were we to take the holdings in those

cases at face value, we would essentially allow all plaintiffs to recover damages in excess of

policy limits without proving causation, a result that is plainly at odds with our supreme

court’s holding in Conway. More significantly, adoption of these broad holdings to cases

involving excess judgments (as opposed to judgments within the policy limits) would have

the practical effect of eliminating all breach-of-duty-to-defend cases that sound in tort. No

insured would assume the burden of proving bad faith or negligence if all that was required

to recover damages in excess of the policy limits was a showing that a judgment had been

entered against the insured.

¶ 49 For these reasons, I would reverse the order of February 28, 2012, granting summary

judgment in favor of plaintiff as to damages and denying defendant’s cross-motion for

summary judgment on the same issue, and enter summary judgment in favor of defendant

on the issue of damages stemming from its breach of the duty to defend.

¶ 50 I therefore concur in part and respectfully dissent in part.

Indeed, an insurance contract was not even at issue in Gruse. That case addressed the issue 5

of whether a party subject to a judgment against it needed to present proof of an ability to pay or

actual payment before collecting damages from its attorney. Gruse, 138 Ill. App. 3d at 697-98.

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