Opinion ID: 2041042
Heading Depth: 1
Heading Rank: 3

Heading: Lower Courts' Holdings

Text: After Nesslar testified, the plaintiffs rested. Reliance moved for a directed verdict, and the trial court granted the motion. The trial court found undisputed that Zannini and Nesslar understood that the tenant's policy would include coverage for scheduled jewelry up to $25,000, and that Nesslar agreed to and purported to bind such coverage. Further, the trial court found that Nesslar mistakenly neglected to include the jewelry schedule with the application to Reliance for the policy and, therefore, a policy was issued without additional personal property coverage. The trial court then held that the test to be applied to plaintiffs' reformation action was whether there was a unilateral mistake or a mutual mistake. The court reasoned that the issue could be resolved based on the status of Nesslar when he purported to bind coverage. The trial court found that Nesslar was acting as Zannini's broker to place the desired coverage. Further, Nesslar was acting on behalf of Zannini and not Reliance. The court therefore held that there was no mutual mistake between Zannini and Reliance. Because a meeting of the minds, a necessary element for a reformation action, was absent, plaintiffs failed to establish a prima facie case for reformation. The trial court held that the agency agreement with Reliance did not change the status of Nesslar in his dealings with Zannini. Further, the trial court found that estoppel to deny a claim did not apply to Reliance where there was no demand by Zannini for payment of the $500 under the policy. Finally, the trial court found that there was no vexatious delay in Reliance's payment of a claim for which there was no coverage. Plaintiffs filed a post-trial motion, which the trial court denied. In affirming the trial court, the appellate court also reasoned that the resolution of the instant case turned upon application of agency law, namely, a determination of whether Nesslar acted as the agent of Zannini or the agent of Reliance or both. The appellate court applied the factors of agency law set forth in Krause v. Pekin Life Insurance Co. (1990), 194 Ill.App.3d 798, 804-05, 141 Ill.Dec. 402, 551 N.E.2d 395, including who first set the agent in motion; who controlled the agent's action; who paid the agent; and whose interests the agent was attempting to protect. The appellate court held that Nesslar, as an independent representative with nonexclusive, limited agency contracts with various insurance carriers, was a blend of both agent and broker. 206 Ill.App.3d at 915-16, 151 Ill.Dec. 847, 565 N.E.2d 118. The appellate court held that Nesslar, rather than Reliance, was liable to Zannini for any loss. The appellate court agreed with the trial court that because Nesslar was acting as Zannini's agent, there was no mutual mistake which would allow for a reformation of the contract. Further, because Zannini and Nesslar did not make a demand for the $500 coverage included in the written policy, Reliance could not be held liable for unreasonable and vexatious delay for a failure to adjust the claim. In addition, estoppel did not apply because coverage was not denied.