Court Opinion

ID: 6498562
Source: CourtListenerOpinion
Date Created: 2022-07-07 21:03:06.51891+00
Date Added: 2024-06-11T08:51:23.752786
License: Public Domain

2022 IL App (1st) 211227-U
                                    Order filed: July 7, 2022
                                                                          FIRST DISTRICT
                                                                          FOURTH DIVISION

                                         No. 1-21-1227

NOTICE: This order was filed under Supreme Court Rule 23 and is not precedent except in the
limited circumstances allowed under Rule 23(e)(1).
______________________________________________________________________________

                                    IN THE
                        APPELLATE COURT OF ILLINOIS
                           FIRST JUDICIAL DISTRICT
______________________________________________________________________________

MICHAEL SCHODROF and STEPHANIE                  )     Appeal from the
SCHODROF,                                       )     Circuit Court of
                                                )     Cook County.
       Plaintiffs-Appellants,                   )
                                                )
v.                                              )     No. 2019 L 14156
                                                )
CC SERVICES, INC., d/b/a Country Financial,     )
and MIKE P. THAUER, d/b/a Mike P.               )
Thauer Insurance Agency,                        )     Honorable
                                                )     Michael F. Otto,
        Defendants-Appellees.                   )     Judge, presiding.
______________________________________________________________________________

       JUSTICE ROCHFORD delivered the judgment of the court.
       Presiding Justice Reyes and Justice Lampkin concurred in the judgment.

                                           ORDER

¶1     Held: Plaintiffs filed a complaint alleging that defendants negligently failed to procure
             homeowner’s insurance covering water damage to their property. The circuit court
             granted summary judgment for defendants. We affirmed, holding that defendants
             had no duty to procure insurance covering water damage to plaintiffs’ property in
             the absence of a specific request for such coverage.

¶2     Plaintiffs, Michael and Stephanie Schodrof, purchased a home that they intended to leave

vacant for several months while they had it remodeled. Michael P. Thauer, an agent and broker for

CC Services, Inc., doing business as Country Financial, procured a homeowner’s policy for

plaintiffs with American Modern Property and Casualty Insurance Company (American Modern).

The policy was American Modern form DP-1, which insures properties that are expected to remain
No. 1-21-1227

vacant for more than 30 days. Form DP-1 provides coverage for certain specified perils such as

fire and windstorm, but it does not include coverage for water damage to the property. After

plaintiffs’ home suffered extensive water damage, they made a claim under the policy with

American Modern, which denied coverage. Plaintiffs then brought a three-count amended

complaint against American Modern, Thauer, and Country Financial. Count I alleged breach of

contract against American Modern. Count II alleged negligent failure by Thauer and Country

Financial (collectively defendants) to procure adequate homeowner’s insurance covering the water

damage to their home. Count III alleged that defendants breached their fiduciary duty to plaintiffs

to provide them with a homeowner’s policy covering the water damage to their home. The circuit

court granted summary judgment for American Modern on count I, and it granted summary

judgment for defendants on counts II and III. Plaintiffs appeal only the grant of summary judgment

for defendants on count II. We affirm.

¶3     Plaintiffs filed their amended complaint on December 18, 2020, alleging that they

purchased a home at 125 Sunset Avenue in LaGrange (Sunset Avenue property), which they

intended to leave vacant for several months while they had it remodeled. Plaintiffs asked Thauer

“to procure adequate insurance coverage for the home while it remained vacant and while [they]

considered certain remodeling options.” Plaintiffs “indicated” to Thauer that “they desired to

procure coverage that would cover all potential losses in a situation like the one they were facing

with their new home standing vacant for several months, being remodeled *** during the cold

winter months.”

¶4     Thauer procured an American Modern homeowner’s policy, form DP-1, for plaintiffs that

provided coverage to the vacant property for certain specified perils but did not cover water

damage. Thauer informed plaintiffs that the policy “adequately covered all of the potential losses

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No. 1-21-1227

[plaintiffs] had expressed concern about.” Thauer did not provide plaintiffs with a copy of the

insurance policy at the time it was issued.

¶5      Subsequently, on January 4, 2018, the Sunset Avenue property “suffered a catastrophic

loss as a result of significant water infiltration into the property from unknown causes.” Plaintiffs

brought a claim for coverage under their insurance policy with American Modern. On January 12,

2018, American Modern sent plaintiffs a letter denying coverage.

¶6      In count II of their amended complaint, plaintiffs alleged that Thauer, as an agent of

Country Financial, failed to exercise ordinary care and skill when procuring a homeowner’s policy

for them that did not cover the water damage to the Sunset Avenue property. Defendants thereby

violated section 2-2201(a) of the Code of Civil Procedure (Code) (735 ILCS 5/2-2201(a) (West

2020)), which requires an insurance producer to “exercise ordinary care and skill in renewing,

procuring, binding, or placing the coverage requested by the insured or proposed insured.”

¶7      During the course of discovery, defendants submitted Thauer’s written “Declaration”

certified under section 1-109 of the Code (735 ILCS 5/1-109 (West 2020))1 stating that he is an

agent of the Country group of insurance companies (Country). Under his contract, Thauer only

can sell insurance products provided by Country unless the insured seeks insurance for a type of

risk that Country does not insure. In that situation, Thauer can offer insurance from another

        1
           Section 1-109 provides that a document verified by certification must state in substantially the
following form: “Under penalties as provided by law pursuant to Section 1-109 of the Code of Civil
Procedure, the undersigned certifies that the statements set forth in this instrument are true and correct,
except as to matters therein stated to be on information and belief and as to such matters the undersigned
certifies as aforesaid that he verily believes the same to be true.” Id. Section 1-109 states that any such
certified document “may be used in the same manner and with the same force and effect as though
subscribed and sworn to under oath, and there is no further requirement that the *** document be sworn
before an authorized person.” Id.

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No. 1-21-1227

insurance company for which Country’s brokerage unit, CC Services, has a brokerage

arrangement.

¶8     Country does not insure residential properties that are known to be vacant except for

seasonal homes or residential homes expected to be occupied within 30 days by a new purchaser.

American Modern offers insurance for residential properties that are expected to remain vacant for

more than 30 days. CC Services has a brokerage relationship with American Modern that enables

Thauer to procure insurance for customers who seek coverage for residential properties that will

remain vacant for more than 30 days.

¶9     Thauer stated in his Declaration that in 2015, Michael Schodrof purchased three vacant

houses, one on Badger Lane in Homer Glen, one on Kolmar Avenue in Oak Lawn, and one in

Plainfield. In March 2016, Schodrof purchased a vacant house located at 448 S. Madison Avenue

in LaGrange. Schodrof requested that Thauer procure insurance for all four of those vacant

properties. In response, Thauer provided an American Modern form DP-1 insurance policy for

each of the properties. Schodrof never informed Thauer that the terms of any of those insurance

policies failed to conform to the insurance he had requested.

¶ 10   On November 30, 2017, Schodrof called Thauer and told him that he and his wife Stephanie

(collectively, plaintiffs) had sold their house and purchased the Sunset Avenue property, which

they planned to renovate before moving into it as their permanent residence. Schodrof provided a

brief description of the Sunset Avenue property and its purchase price and told Thauer that while

it was being renovated, plaintiffs would be leasing a house at 341 S. Catherine Avenue in LaGrange

for six months.

¶ 11   Thauer stated in his Declaration that during the phone conversation, Schodrof asked him

to procure insurance for the Sunset Avenue property; however, Schodrof did not ask him to

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No. 1-21-1227

“procure any specific type of insurance coverage.” (Emphasis added.) Schodrof did not ask Thauer

to procure any insurance coverage different than the coverage procured for the Plainfield, Homer

Glen, Oak Lawn, and LaGrange properties, nor did he ask Thauer to “procure coverage for frozen

or burst water pipes or for any type of water damage” for the Sunset Avenue property.

¶ 12    Thauer procured a policy from American Modern for the Sunset Avenue property. The

policy was form DP-1, the same as those procured for the Plainfield, Homer Glen, Oak Lawn, and

LaGrange properties.

¶ 13    Schodrof testified in his discovery deposition that he has purchased multiple vacant

residential houses to “flip.” A flip property is bought with “the intention of putting some sweat

equity into it and turning it around and putting it back on the market for a higher price than you

bought it for.” Schodrof has obtained insurance for all of his flip properties from Thauer.

¶ 14    Schodrof identified the Plainfield, Homer Glen, and Oak Lawn properties as flip properties

he purchased for which Thauer procured insurance through American Modern form DP-1.

Schodrof identified the LaGrange property as a rental/investment property he purchased for which

Thauer also procured insurance through American Modern form DP-1. Schodrof admitted he made

no objections to any of the American Modern form DP-1 insurance policies procured by Thauer

for his Plainfield, Homer Glen, Oak Lawn, and LaGrange properties and in fact he renewed those

policies.

¶ 15    In December 2017, plaintiffs purchased the Sunset Avenue property that they planned to

renovate before moving into it as their permanent residence. During the renovation period,

plaintiffs intended for the Sunset Avenue property to remain vacant for up to six months while

they stayed in a rental property.

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No. 1-21-1227

¶ 16   During a phone conversation lasting less than five minutes, Schodrof asked Thauer to

procure insurance for the Sunset Avenue property. Schodrof testified:

                “Q. When you spoke with Mike Thauer about insurance for [the Sunset Avenue

       property], what information did you provide him about the property?

                A. I would have told him that this is not an investment property, that we’re going

       to live in this home.

                Q. Did you tell him when you would move into the home?

                A. I wasn’t certain about that. So, no, I didn’t.

                Q. Did you tell Mike Thauer that the [Sunset Avenue property] would be vacant for

       some period of time?

                A. Yeah. I *** let him know that there would be some amount of work being done,

       but, again, I’m not sure how extensive the work would be.

                                                         ***

                Q. Did you ask Mr. Thauer to procure any particular types of coverage for the

       property?

                A. I don’t recall.

                Q. In the course of your discussion with Mr. Thauer, was there any reference made

       to the insurance policies that *** he had procured for you from American Modern for the

       investment properties?

                A. No.

                Q. Did you tell Mr. Thauer that you wanted coverage for [the Sunset Avenue

       property] that would be different from the coverage you had for the investment properties?

                                                         ***

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No. 1-21-1227

                A. I don’t recall.”

¶ 17   Schodrof later submitted a written “Declaration” certified under section 1-109 of the Code

stating that in 2015, plaintiffs purchased the Plainfield home for the purpose of flipping it.

Schodrof called Thauer, informed him that they had purchased the Plainfield home to flip it, and

asked him to procure “an inexpensive policy to provide minimal coverage while the property was

being renovated. He procured a policy appropriate for those circumstances.” Schodrof “went

through that process” with Thauer for additional properties in Homer Glen, Oak Lawn, and

LaGrange that plaintiffs intended on flipping. Thauer procured policies for the Homer Glen, Oak

Lawn, and LaGrange properties similar to the policy for the Plainfield property.

¶ 18   Schodrof further stated in his Declaration:

                “In November 2017, I called Mr. Thauer to advise him that my wife and I had

       purchase[d] [the Sunset Avenue property]. I explained to Mr. Thauer that we were not

       flipping this house; that we intended to move into the house and live there indefinitely as

       our family home.

                I perceived on the call that Mr. Thauer presumed [the Sunset Avenue property] was

       another house we intended to flip. I, therefore, explicitly told him that we were not going

       to flip this house and needed an insurance policy appropriate for our permanent home,

       rather than a policy appropriate for a short-term flipping project. Such a policy naturally

       would have included coverage for water damage.”

¶ 19   Thauer subsequently informed Schodrof that he had procured “adequate coverage” for the

Sunset Avenue property. Plaintiffs did not receive a copy of the form DP-1 policy procured by

Schodrof until after receiving American Modern’s January 12, 2018, letter denying coverage for

the water damage.

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No. 1-21-1227

¶ 20   Following the denial of coverage, plaintiffs filed a three-count complaint, only count II of

which is the subject of this appeal. Count II was a negligence claim alleging that defendants

violated section 2-2201(a) of the Code by failing to exercise ordinary care and skill when procuring

a homeowner’s policy for them that did not cover the water damage to the Sunset Avenue property.

The circuit court granted summary judgment in favor of defendants. Plaintiffs appeal.

¶ 21   To recover on a claim of negligence, plaintiffs must show a duty owed to them by

defendants, a breach of that duty, and an injury proximately caused by the breach. Melrose Park

Sundries, Inc. v. Carlini, 399 Ill. App. 3d 915, 919 (2010). The determination of whether

defendants owed plaintiffs a duty of care is a question of law to be determined by the court. Id.

Where no duty is owed, there is no negligence, and plaintiffs are precluded from recovery as a

matter of law. Id.

¶ 22   Summary judgment is appropriate when “the pleadings, depositions, and admissions on

file, together with the affidavits, if any, show that there is no genuine issue as to any material fact

and that the moving party is entitled to a judgment as a matter of law.” See 735 ILCS 5/2-1005(c)

(West 2020). In ruling on a motion for summary judgment, the pleadings and evidence must be

strictly construed against the movant and liberally in favor of the opponent. Beaman v. Freesmeyer,

2019 IL 122654, ¶ 22. Review is de novo. Id.

¶ 23   Initially, we note that during the summary judgment proceedings, Schodrof and Thauer

each submitted a Declaration certified under section 1-109 of the Code, not a sworn affidavit. This

court has held that the better procedure for summary judgment proceedings is to submit a sworn

affidavit, not a Declaration. See People ex rel. Illinois Department of Labor v. General Electric

Co., 347 Ill. App. 3d 72, 74 n. 1 (2004). However, where, as here, neither party objects to the use

of a Declaration in lieu of an affidavit, the issue is forfeited and the Declaration may be considered

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No. 1-21-1227

both by the circuit court and the reviewing court. Id. Accordingly, we consider the Declarations

submitted by Schodrof and Thauer when deciding plaintiffs’ appeal from the circuit court’s

summary judgment order.

¶ 24   On appeal, plaintiffs argue that the circuit court erred in granting defendants’ motion for

summary judgment on the basis that they had no duty under section 2-2201(a) of the Code to obtain

coverage for the water damage to the vacant Sunset Avenue property. Melrose Park Sundries, Inc.

v. Carlini, 399 Ill. App. 3d 915 (2010) and Skaperdas v. Country Casualty Insurance Co., 2015 IL

117021 are instructive.

¶ 25   In Carlini, 399 Ill. App. 3d at 917, the owner and the manager of a liquor store asked a

licensed insurance producer to obtain insurance for the store. The owner testified during her

deposition that she asked the insurance producer to “make sure that all of the requirements for

insurance [were] taken out, including the building, *** the liquor, any type of liability policy.” Id.

The owner admitted she did not specifically request workers’ compensation insurance or ask

whether such insurance was needed. Id. The manager testified that he only asked whether the

insurance producer was going to “take care of the insurance”; the issue of workers’ compensation

insurance was not specifically addressed. Id. at 918.

¶ 26   The insurance producer obtained coverage for “liquor liability” and other forms of

coverage for the business and its premises, but did not include workers’ compensation insurance

coverage. Id. at 917. Subsequently, a store employee was injured while working at the store. Id.

The corporate owner of the store filed suit against the insurance producer, alleging he negligently

failed to procure workers’ compensation insurance and failed to advise that such insurance was

required by law. Id. at 918. In affirming the circuit court’s grant of summary judgment for the

insurance producer, we held that he had no duty under section 2-2201(a) to obtain workers’

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No. 1-21-1227

compensation insurance that was not requested, nor was he obligated to advise the insured

regarding the need for such insurance. Id. at 920. “To hold [the insurance producer] responsible

for insurance coverage beyond that requested by [the insured] would extend the duty of ordinary

care beyond that expressly defined by the legislature.” Id.

¶ 27   In Skaperdas, 2015 IL 117021, ¶¶ 3-4, the insured met with the insurance company’s agent

and requested that his fiancée be added to his automobile insurance policy. The agent prepared the

policy but failed to add the fiancée as requested. Id. ¶ 4. The fiancée subsequently made a claim

under the policy that the insurance company denied because she was not a named insured. Id. ¶ 5.

The plaintiffs filed a complaint alleging that the agent was negligent for failing to procure the

requested coverage naming the fiancée as an insured. Id. ¶ 6. The circuit court dismissed the

plaintiffs’ complaint, finding that the agent owed them no duty of care in procuring the requested

insurance coverage. Id. ¶¶ 7-8. The appellate court reversed and remanded, holding that as an

insurance producer, the agent owed the plaintiffs a duty of care under section 2-2201(a) in

procuring the requested coverage. Id. ¶ 9.

¶ 28    On appeal to our supreme court, the primary issue was whether a “captive insurance

agent,” i.e., an agent who is contractually bound to sell only his company’s insurance, is an

“insurance producer” subject to section 2-2201(a)’s requirement that insurance producers exercise

“ordinary care and skill in renewing, procuring, binding, or placing the coverage requested by the

insured.” 735 ILCS 5/2-2201(a) (West 2020). The agent argued that section 2-2201(a) only applies

to insurance brokers, i.e., to the individuals who procure insurance and act as middlemen between

the insured and the insurer. Skaperdas, 2015 IL 117021, ¶ 12. The supreme court found that

insurance agents as well as insurance brokers are insurance “producers” subject to the duty of

ordinary care imposed under section 2-2201(a). Id. ¶¶ 17-37. The agent argued that if such a duty

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No. 1-21-1227

of ordinary care is imposed on him, he could be held liable for failing to place coverage with a

different company if it would better suit the customer’s needs. Id. ¶ 38. The supreme court found

that such concerns were misplaced because “[s]ection 2-2201 does not require an agent to obtain

the best possible coverage for a customer, but only requires the agent to exercise ordinary care and

skill in obtaining the coverage requested by the insured or proposed insured.” Id. ¶ 39.

¶ 29   The supreme court then addressed the scope of section 2-2201(a) and whether it imposes a

duty on an insurance producer to procure a specific type of coverage even when the insured has

only made a vague or general request for “coverage.” Id. ¶ 40. The supreme court discussed Carlini

and agreed with its determination that section 2-2201(a) “only imposes a duty of ordinary care

after a specific request is made. Thus, *** a duty may not be imposed under section 2-2201(a)

based on a vague request to make sure the insured is covered.” Id. ¶ 42.

¶ 30   The supreme court found that the plaintiffs’ complaint adequately alleged that the agent

failed to exercise ordinary care in procuring the insurance coverage that was specifically requested

and it affirmed the appellate court’s judgment reversing the dismissal order and remanding for

further proceedings. Id. ¶ 44, ¶ 48.

¶ 31   Pursuant to Carlini and Skaperdas, defendants here had a duty under section 2-2201(a) to

provide only the level of coverage for the Sunset Avenue property actually requested by plaintiffs.

The only request made by Schodrof was that Thauer should procure an “appropriate” and

“adequate” insurance policy covering “all potential losses” for the permanent home on Sunset

Avenue that was to remain vacant for several months while it was renovated. In his Declaration,

Schodrof indicated his belief that “[s]uch a policy naturally would have included coverage for

water damage,” but he never stated that he actually told Thauer to procure coverage for water

                                               - 11 -
No. 1-21-1227

damage nor did he make a request for any specific type of coverage different than the coverage

provided for his other vacant properties under American Modern form DP-1.

¶ 32   Schodrof’s request for “appropriate” and “adequate” coverage for “all potential losses,” in

the absence of a discussion or meeting of the minds regarding the meaning thereof, is the type of

vague request that Skaperdas and Carlini held was insufficient to support a claim against an

insurance producer under section 2-2201(a). See Skaperdas, 2015 IL 117021, ¶ 42 (“a duty may

not be imposed under section 2-2201(a) based on a vague request to make sure the insured is

covered”); Carlini, 399 Ill. App. 3d at 918 (the insured’s request that he be “covered on

everything” did not impose a duty on the insurance producer to procure workers’ compensation

insurance that was not specifically requested).

¶ 33   Despite the vagueness of the request, Thauer procured a form DP-1 policy for the Sunset

Avenue property through American Modern. Thauer explained in his Declaration that as the Sunset

Avenue property was intended to stand vacant for several months, he could not offer coverage

through Country, which only insures vacant homes expected to be occupied within 30 days by a

new purchaser. Thauer only could provide coverage for a home expected to remain vacant for

several months through American Modern. Based on their prior course of dealing, Thauer procured

an American Modern form DP-1 policy for the vacant Sunset Avenue property similar to the

policies he previously had procured for Schodrof’s vacant Plainfield, Homer Glen, Oak Lawn, and

LaGrange properties, all of which excluded coverage for water damage and were never objected

to by Schodrof. See Pickett v. First American Savings and Loan Association, 90 Ill. App. 3d 245,

252 (1980) (holding that “the elements of the contract to procure insurance may be implied from

past dealings between the parties”). Thauer thereby satisfied his duty under section 2-2201(a) to

exercise ordinary care and skill in procuring the coverage requested by Schodrof for the vacant

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No. 1-21-1227

Sunset Avenue property; section 2-2201(a) imposed no additional duty on him to procure extra

coverage for water damage that had not been specifically requested.

¶ 34   Plaintiffs now argue that Thauer had a duty to provide not merely the coverage requested

(i.e., the American Modern form DP-1 for properties standing vacant longer than 30 days) but he

also had a duty to discern that Schodrof actually was thinking that he wanted additional coverage

for water damage. However, Carlini and Skaperdas make clear that the insurance producer’s duty

is to provide the coverage actually requested, not to anticipate what other coverage might

potentially be needed or to read the insured’s mind and provide coverage other than what was

requested.

¶ 35   As Thauer owed Schodrof no duty to procure insurance coverage for water damage to the

vacant Sunset Avenue property that was never specifically requested, plaintiffs’ negligence claim

necessarily fails and the circuit court properly entered summary judgment for defendants on count

II of the amended complaint.

¶ 36   For all the foregoing reasons, we affirm the judgment of the circuit court. As a result of our

disposition of this case, we need not address the other argument on appeal.

¶ 37   Affirmed.

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