Court Opinion

ID: 3148083
Source: CourtListenerOpinion
Date Created: 2015-10-22 18:41:41.593599+00
Date Added: 2024-06-11T12:11:25.425816
License: Public Domain

ILLINOIS OFFICIAL REPORTS
                                        Appellate Court

             Hoover v. Country Mutual Insurance Co., 2012 IL App (1st) 110939

Appellate Court            BRIAN HOOVER and JULIE HOOVER, Plaintiffs-Appellants, v.
Caption                    COUNTRY MUTUAL INSURANCE COMPANY and MICHAEL
                           SPANN, Defendants-Appellees.

District & No.             First District, Third Division
                           Docket No. 1-11-0939

Rule 23 Order filed        April 18, 2012
Rule 23 Order
withdrawn                  May 31, 2012
Opinion filed              July 18, 2012

Held                       The one-year limitation period in plaintiffs’ homeowners’ policy barred
(Note: This syllabus       the counts of their complaint alleging breach of contract and bad faith
constitutes no part of     arising from their insurer’s refusal to pay the replacement cost in
the opinion of the court   connection with the total destruction of their house by an explosion, the
but has been prepared      count alleging negligent misrepresentation that the policy would cover the
by the Reporter of         replacement cost failed to state a cause of action, and the discovery rule
Decisions for the          did not toll the statute of limitations applicable to the negligence count;
convenience of the         therefore, the dismissal of all counts was affirmed.
reader.)

Decision Under             Appeal from the Circuit Court of Cook County, No. 10-L-2789; the Hon.
Review                     Joan Powell, Judge, presiding.

Judgment                   Affirmed.
Counsel on                 Torshen, Slobig, Genden, Dragutinovich & Axel, Ltd., of Chicago (James
Appeal                     K. Genden and Robert J. Slobig, of counsel), for appellants.

                           McKnight, Kitzinger & Pravdic, LLC (Kevin Q. Butler, Cornelius E.
                           McKnight, and Courtney A. Adair, of counsel), and Litchfield Cavo LLP
                           (Alan I. Becker and Steven M. Brandstedt, of counsel), both of Chicago,
                           for appellees.

Panel                      JUSTICE NEVILLE delivered the judgment of the court, with opinion.
                           Presiding Justice Steele and Justice Murphy concurred in the judgment
                           and opinion.

                                             OPINION

¶1           In March 2010, Brian and Julie Hoover (Hoovers), the plaintiffs, filed a complaint
        against their home insurer, Country Mutual Insurance Company (Country Mutual), and
        Michael Spann (Spann), a Country Mutual insurance agent. According to the complaint,
        Spann promised to provide the Hoovers with an insurance policy that would cover the cost
        of replacing their home and its contents, but Country Mutual refused to pay the replacement
        cost when an explosion completely destroyed the Hoovers’ home in 2008. Country Mutual
        and Spann filed separate motions to dismiss the Hoovers’ amended complaint, pursuant to
        section 2-619 of the Code of Civil Procedure (735 ILCS 5/2-619 (West 2010)), claiming,
        inter alia, that the Hoovers failed to file their complaint within the applicable statutory
        limitations period and within the one-year limitation provision delineated in the policy. The
        trial court granted both motions, but the court granted the Hoovers leave to amend their
        complaint. When the Hoovers elected to stand on their verified amended complaint, the trial
        court entered a final order that dismissed the Hoovers’ complaint against Country Mutual and
        Spann. On appeal, we must decide whether the trial court erred when it granted the
        defendants’ motions to dismiss all the counts in the Hoovers’ complaint as time barred.
¶2           We hold (1) that the insurance policy’s one-year limitation period bars counts I and II
        against County Mutual for breach of contract and bad faith; (2) that count III of the complaint
        fails to state a cause of action for negligent misrepresentation; and (3) that count IV, the
        negligence count, was untimely under the applicable statute of limitations because the
        plaintiffs were given a copy of their policy and, therefore, they knew or reasonably should
        have known more than two years before they filed their complaint that the liability limits in
        their policy were inadequate to cover the replacement cost of their house and its contents.
        Accordingly, we affirm the trial court’s order that dismissed all counts of the plaintiffs’
        complaint.

                                                 -2-
¶3                                       BACKGROUND
¶4       In 1998, the Hoovers and their family built a house on their land near Pittsfield, Illinois.
     In 2004, the Hoovers purchased a homeowners’ insurance policy from the defendant,
     Country Mutual, to insure against a loss in the event of a fire or other casualty. In May 2007,
     the Hoovers met with Spann, a Country Mutual insurance agent, to obtain additional
     coverage that would cover the replacement cost of their home and its contents in the event
     of a loss.
¶5       Spann obtained a new insurance policy from Country Mutual which contained (1)
     definitions, (2) covered loss provisions, (3) provisions explaining how covered losses are
     settled, (4) personal property provisions, (5) an inflation rider, and (6) conditions that are
     relevant to this case and were delineated in the policy as follows.
¶6       The policy defined replacement cost and actual cash value for buildings and structures
     as follows:
             “Replacement Cost
             The cost actually and necessarily incurred to repair or replace the damaged property
         using standard new construction materials of like kind and quality and standard new
         construction techniques.
                                               ***
                  1. ‘Actual cash value’ means:
                      a. For buildings or structures the lesser of the following, as determined by
                  ‘us’:
                          (1) The cost actually and necessarily incurred to repair or replace the
                      damaged property using standard new construction materials of like kind and
                      quality and standard new construction techniques, less depreciation; or
                          (2) Fair market value.
                      b. For property other than buildings and structures the lesser of the following,
                  as determined by ‘us’:
                          (1) The cost to repair or replace the damaged property using materials of
                      like kind and quality, less depreciation; or
                          (2) Fair market value.”
¶7       The policy delineated the following covered losses:
             “Loss settlement
             ‘We’ settle covered losses according to Loss Settlement1, Loss Settlement 2 or Loss
         Settlement 3 ***, depending on what number appears on the Declarations in the ‘LOSS
         STLMT’ column for applicable coverage ***.”
¶8       The policy also explained how Covered losses are settled:
             “1. Loss Settlement 1–80% Insurance Requirement
             If ‘1’ appears in the Declarations under ‘Loss STLMT’:
                  a. ‘We’ pay ‘replacement cost’ unless paragraph b. applies ***.

                                               -3-
                    b. If the applicable limit of liability for the damaged property is less than 80% of
               its ‘replacement cost’ at the time of loss, ‘we’ will pay ‘actual cash value.’ ”
¶9         The policy contained a personal property provision:
               “Property covered under Personal Property, Coverage D will be settled under Loss
           Settlement 3–Actual Cash value at the time of loss, unless ‘you’ purchase Coverage DD
           Personal Property Replacement Cost.”
¶ 10       The policy also contained an inflation rider:
           “The limit of liability specified in the Declarations for those items in SECTION 2 of the
           policy, which are indicated as having inflation coverage, will be increased at the same
           rate as the increase in Company Dwelling and Personal Property Index.”
¶ 11       Finally, the policy contained Conditions:
               “Conditions–SECTION 2 through 6 (Includes Limitations)
                    A. Insurable Interest And Limit of Liability
                    ‘We’ will not be liable in any one ‘occurrence’:
                    ***
                    2. For more than the applicable limit of liability.
                         Suit Limitation Provision
                         Suit Against Us
                         No action can be brought against ‘us’ unless there has been full compliance
                    with all the terms under SECTION 2 through 6 of this policy and the action is
                    started within one year after the date of the ‘occurrence.’ ”
¶ 12       The Hoovers’ policy declarations listed the dwelling coverage under loss settlement 1 and
       their personal property coverage under loss settlement 3. According to the complaint, Spann
       obtained a new policy with increased liability limits for the Hoovers’ home and personal
       property. Thereafter, the Hoovers began paying increased premiums on the new insurance
       policy.
¶ 13       On January 12, 2008, an explosion completely destroyed the Hoovers’ home. The
       Hoovers’ copy of their insurance policy was destroyed in the fire. In February 2008, a
       contractor working for the Hoovers estimated the cost of replacing their home at $513,000.
       The Hoovers calculated their personal property loss at $370,000. The Hoovers made a claim
       with Country Mutual for the replacement cost of their home and its contents.
¶ 14       In February 2008, the Hoovers received a letter from Greg Backoff, a property claims
       specialist at Country Mutual. The letter stated that “your homeowners policy includes
       ‘Replacement Costs’ coverage on the building and the contents.” In late February 2008,
       Country Mutual sent a check to Brian Hoover in the amount of $219,180.58, accompanied
       by a letter which stated: “this amount reflects the actual cash value of your property at the
       time of the loss. Once the repairs/replacements have been completed, please submit the paid
       receipt(s) to my attention so we can determine what additional amount will be reimbursed
       under your replacement cost coverage.”
¶ 15       Country Mutual paid the Hoovers a total of $265,000 for the loss of the dwelling and

                                                 -4-
       $198,000 for the personal property loss as of March 2008.
¶ 16        During the first week of August 2008, Brian Hoover gave Spann the Hoovers’ most
       recent paid receipts, but Spann informed Brian Hoover that Country Mutual would not be
       making any further payments on the loss.
¶ 17        Country Mutual refused to pay the Hoovers the full replacement cost for their home and
       personal property. Country Mutual argued that the Hoovers’ insurance policy did not entitle
       them to full replacement cost coverage on their house because they purchased a policy with
       a liability limit that was less than 80% of the actual replacement cost of their home.
¶ 18        On March 3, 2010, the Hoovers filed their initial four-count complaint against Country
       Mutual and Spann. Country Mutual and Spann filed separate motions to dismiss the
       Hoovers’ complaint. The court granted both motions and dismissed the complaint with leave
       to amend.
¶ 19        On September 10, 2010, the Hoovers filed their verified amended complaint. The
       amended complaint contained the same counts as the initial complaint. In counts I and II, the
       Hoovers alleged that Country Mutual breached its contract and acted in bad faith. In counts
       III and IV, they alleged that Spann and his employer, Country Mutual, had negligently
       misrepresented facts and were negligent.
¶ 20        According to the Hoovers’ amended complaint, Brian Hoover visited Spann in May 2007
       because the Hoovers realized that in the event of a catastrophic loss, they would not be able
       to rebuild their home with their own labor as they had done in the past. The complaint
       alleged that Brian Hoover told Spann that he wanted sufficient insurance coverage to cover
       the replacement cost of his home and its contents in the event of a loss by fire or other
       casualty. Brian Hoover averred in his affidavit that Spann assured him that he had procured
       full replacement cost coverage for his home and its contents.
¶ 21        The Hoovers alleged that during the process of procuring their new insurance policy,
       Spann did nothing to ascertain what the actual costs would be to replace their home in the
       event of a loss and Spann did not advise them that they would not receive the replacement
       cost to replace their home and its contents unless they purchased an insurance policy with
       liability limits of at least 80% of the actual replacement cost of their home and its contents
       at the time of the loss. In addition, the complaint alleged that based on the increased coverage
       in the new insurance policy, Spann led the Hoovers to believe that “he had obtained a
       replacement cost insurance policy that would cover the actual cost of the replacement of the
       Hoovers’ home and its contents, with a home of like kind and quality, in the event of a fire
       or casualty loss.”
¶ 22        During discovery, Country Mutual sent the Hoovers a request for admission pursuant to
       Illinois Supreme Court Rule 216 (eff. Jan. 1, 2011). The Hoovers responded and admitted
       that the attached insurance policy, which had declarations and endorsements, was a true and
       correct copy of the policy of insurance that they had with Country Mutual.
¶ 23        Country Mutual filed its motion to dismiss counts I and II of the Hoovers’ amended
       complaint, pursuant to section 2-619(a)(9) of the Code of Civil Procedure, and argued that
       the counts were barred by the applicable contractual limitation period. Country Mutual
       adopted the time limitation argument asserted by Spann in his motion to dismiss with regard

                                                 -5-
       to counts III and IV. In addition, Country Mutual argued that it could not be held liable under
       the doctrine of respondeat superior where its alleged agent did not owe a duty of care and
       where counts III and IV were also time barred. Lastly, Country Mutual argued that neither
       Country Mutual nor Spann owed the Hoovers a duty to provide adequate insurance coverage.
¶ 24       Spann filed a motion to dismiss counts III and IV of the Hoovers’ verified amended
       complaint pursuant to section 2-619(a)(5) of the Code of Civil Procedure. Spann alleged in
       his motion that the court should dismiss counts III and IV of the Hoovers’ complaint because
       the applicable statute of limitations barred both counts and because the Hoovers failed to
       show that Spann owed them a duty that would support their claims of negligent
       misrepresentation and negligence.
¶ 25       Spann also argued that the plaintiffs knew or should have known of their injury no later
       than February 2008. Spann supported his motion with the deposition transcript of attorney
       Kenneth Carlson. Mr. Carlson testified during his deposition that Brian Hoover was his
       wife’s cousin and that he had acted as an attorney for the Hoovers in February 2008,
       regarding the claims process on their fire loss. Carlson also testified that he spoke with Spann
       in late February 2008 to ensure that the Hoovers’ receipt of any check would not be
       accompanied by any waivers or releases. During the deposition, Spann’s attorney produced
       a note from the Hoovers’ claim file which indicated that the conversation between Spann and
       Carlson might have taken place on February 21, 2008, and it also confirmed Carlson’s
       testimony that he requested a copy of the policy’s declarations. Carlson further testified that
       he could not recall the exact date but he believed it to have been sometime in late February
       or early March 2008 that he received a copy of the policy’s declarations from Brian Hoover’s
       mother. Finally, he testified that he did not speak with the Hoovers after he received the
       policy’s declarations.
¶ 26       In the Hoovers’ response to Spann’s motion to dismiss counts III and IV, they argued that
       their claims against Spann were not time barred because the discovery rule postponed the
       running of the limitations period until the Hoovers learned of their injury, and they learned
       of the injury in August 2008 when Spann advised the Hoovers that Country Mutual would
       not be making any further payments.
¶ 27       On December 27, 2010, the circuit court held a hearing on the motions to dismiss. After
       the hearing, the circuit court dismissed all counts as time barred, but it granted the Hoovers
       leave to file a second amended complaint. The Hoovers decided to stand on their amended
       complaint, and they filed a motion requesting that the court enter a final and appealable order
       disposing of all four counts. On March 16, 2011, the trial court entered the following order:
                “1. The Plaintiffs’ Verified Amended Complaint was dismissed without prejudice on
           December 27, 2010, based upon certain defects and affirmative matters.
                2. On December 27, 2010, the plaintiffs were given leave to file a second amended
           complaint on or before January 26, 2011.
                3. The plaintiffs*** have expressly elected to stand on the Verified Amended
           Complaint in order to obtain a final, appealable order.
                4. In light of the foregoing, the plaintiffs’ Verified Amended Complaint in its entirety
           is hereby dismissed with prejudice.”

                                                 -6-
¶ 28      The Hoovers timely filed their notice of appeal pursuant to Supreme Court Rules 301 and
       303. Ill. S. Ct. R. 301 (eff. Feb. 1, 1994); Ill. S. Ct. R. 303 (eff. May 30, 2008).

¶ 29                                        ANALYSIS
¶ 30                                    Standard of Review
¶ 31        In this case, the trial court granted the defendants’ motions to dismiss that were
       predicated on section 2-619 of the Code of Civil Procedure (Code) (735 ILCS 5/2-619(a)
       (West 2010)). A motion to dismiss under section 2-619 of the Code admits the legal
       sufficiency of the complaint, but asserts affirmative matters outside the complaint that defeat
       the cause of action. Kean v. Wal-Mart Stores, Inc., 235 Ill. 2d 351, 361 (2009). Specifically,
       section 2-619(a)(5) of the Code permits a court to dismiss a complaint if it was not
       commenced within the time limited by law. 735 ILCS 5/2-619(a)(5) (West 2010). Section
       2-619(a)(9) permits an involuntary dismissal when the claim is “barred by other affirmative
       matter avoiding the legal effect of or defeating the claim.” 735 ILCS 5/2-619(a)(9) (West
       2010). When ruling on a section 2-619 motion, a court must accept as true all well-pleaded
       facts in the plaintiff’s complaint and all reasonable inferences. Hermitage Corp. v.
       Contractors Adjustment Co., 166 Ill. 2d 72, 85 (1995) (citing Burdinie v. Village of Glendale
       Heights, 139 Ill. 2d 501, 505 (1990)). The motion should be granted if, after construing the
       documents in support of and in opposition to the motion in the light most favorable to the
       nonmoving party, there are no disputed issues of material fact. Whetstone v. Sooter, 325 Ill.
       App. 3d 225, 229 (2001) (citing Noesges v. Servicemaster Co., 233 Ill. App. 3d 158, 162
       (1992)). We review an order dismissing a case based on section 2-619 of the Code de novo.
       Kean, 235 Ill. 2d at 361.
¶ 32        In order to determine whether the circuit court properly dismissed all four counts of the
       Hoovers’ complaint, we must construe a statute of limitations and an insurance policy, which
       is a contract. Therefore, because construction of a statute and a contract present questions of
       law, we also employ a de novo standard of review. American States Insurance Co. v. Koloms,
       177 Ill. 2d 473, 479-80 (1997); Belleville Toyota, Inc.v. Toyota Motor Sales, U.S.A., Inc., 199
       Ill. 2d 325, 345 (2002).

¶ 33                                     Breach of Contract
¶ 34       The Hoovers contend that the trial court erred when it dismissed count II as time barred
       based on the one-year contractual limitation provision because their copy of the insurance
       policy was destroyed in the fire and the circuit court therefore could not determine whether
       the provision was in fact contained in the policy. We note, however, that the Hoovers
       admitted in their response to Country Mutual’s Rule 216 request to admit that the copy of
       the insurance policy that Country Mutual appended to the request to admit was a true and
       correct copy of the policy of insurance that they had with Country Mutual. Admissions made
       pursuant to a request to admit under Rule 216 are tantamount to judicial admissions and as
       such are taken as true. Mt. Zion State Bank & Trust v. Consolidated Communications, Inc.,
       169 Ill. 2d 110, 125 (1995) (citing City of Champaign v. Roseman, 15 Ill. 2d 363 (1958)).
       Therefore, once the Hoovers admitted that the insurance policy Country Mutual appended

                                                -7-
       to the Rule 216 request to admit was a true and correct copy of their insurance policy, the
       Hoovers cannot now claim, because the policy was destroyed in the fire, that the suit
       limitation provision contained in their insurance policy does not exist.
¶ 35       The suit limitation provision in the Hoovers’ insurance policy provided that all suits
       against Country Mutual must be brought within one year of the date of the occurrence. In
       Cramer v. Insurance Exchange Agency, 174 Ill. 2d 513 (1996), our supreme court held that
       compliance with a suit limitation provision within a policy is a condition precedent to
       recovery under the policy. Cramer, 174 Ill. 2d at 530 (citing Schoonover v. American Family
       Insurance Co., 214 Ill. App. 3d 33, 44 (1991)). In Cramer, the insurance policy at issue had
       a one year suit limitation provision similar to the one in this case. The policy provision
       provided that a suit on the policy must be brought within one year of the loss. The court
       found that the plaintiff’s suit was untimely because the plaintiff filed the complaint more
       than one year after the loss. Cramer, 174 Ill. 2d at 530. Here, the Hoovers’ home was
       destroyed on January 12, 2008. The Hoovers filed their initial complaint against Country
       Mutual on March 3, 2010, more than two years after the explosion. Therefore, based on the
       one-year suit limitation provision in the policy, the Hoovers’ breach of contract claim was
       untimely. Cramer, 174 Ill. 2d at 530.
¶ 36       The Hoovers next contend that notwithstanding the suit limitation provision in the policy,
       the court should apply the discovery rule to determine if the suit was untimely. In Wilson v.
       Indiana Insurance Co., 150 Ill. App. 3d 669 (1986), this court noted that Illinois case law
       establishes that insurance policies may validly set forth contractual time limitations requiring
       suits to be brought within a specified period of time. Wilson, 150 Ill. App. 3d at 672 (citing
       Peoria Marine & Fire Insurance Co. v. Whitehill, 25 Ill. 382 (1861)). A limitation provision
       is but another provision of the standard policy, one of many that may effectively bar relief
       to the insured. Wilson, 150 Ill. App. 3d at 672. The Wilson court refused to apply the
       discovery rule to the facts in that case, noting that no court of this state had adopted the
       discovery rule with regard to the time limits of policies for filing suits to recover for losses
       covered thereby. Wilson, 150 Ill. App. 3d at 672 (citing Naghten v. Maryland Casualty Co.,
       47 Ill. App. 2d 74 (1964)). The Wilson court concluded that the plaintiff’s complaint was
       untimely because the plaintiff failed to comply with the contractual limitation provision in
       the policy. Wilson, 150 Ill. App. 3d at 673. In light of Wilson, we will not apply the discovery
       rule to the Hoovers’ breach of contract count. Accordingly, we hold that the trial court did
       not err when it dismissed the breach of contract count.

¶ 37                                    Insurance Bad Faith
¶ 38       Next, the Hoovers contend that the one-year suit limitation provision does not apply to
       their bad-faith claim against Country Mutual because it is not an action for breach of
       contract. Section 155 of the Illinois Insurance Code provides:
           “In any action by or against a company wherein there is in issue the liability of a
           company on a policy or policies of insurance or the amount of the loss payable
           thereunder, or for an unreasonable delay in settling a claim, and it appears to the court
           that such action or delay is vexatious and unreasonable, the court may allow as part of

                                                 -8-
            the taxable costs in the action reasonable attorney fees, other costs ***.” 215 ILCS 5/155
            (West 2010).
¶ 39        In Cramer, our supreme court addressed the tort of bad faith and unfair dealing and
       explained that historically, a policyholder’s only recourse was to seek a breach of contract
       remedy to receive the policy proceeds. Cramer, 174 Ill. 2d at 521. The Cramer court further
       explained that section 155 created a limited statutory exception that allowed insureds to
       recover attorney fees and punitive damages from insurers that unreasonably delayed or
       denied payment of an insurance claim. Cramer, 174 Ill. 2d at 521. The Cramer court found
       that the tort of bad faith is not a separate and independent tort action that is recognized in
       Illinois. Cramer, 174 Ill. 2d at 519-26. The Cramer court held:
            “[T]he statute provides an extracontractual remedy for policyholders who have suffered
            unreasonable and vexatious conduct by insurers with respect to a claim under the policy.
            It presupposes an action on the policy. As such, nothing in the statute addresses tortious
            conduct or tort liability in general. The statute simply provides an extracontractual
            remedy to an action on the policy.” Cramer, 174 Ill. 2d at 523-24.
¶ 40        The Cramer court explained that the statute presupposes an action on the policy, and
       therefore, in order for a plaintiff to recover under section 155, he must also succeed in the
       action on the policy. See Cramer, 174 Ill. 2d at 524; Johnson Press of America, Inc. v.
       Northern Insurance Co. of New York, 339 Ill. App. 3d 864, 875 (2003) (citing Martin v.
       Illinois Farmers Insurance, 318 Ill. App. 3d 751, 764 (2000) (the court found that the
       plaintiff’s loss was not covered by the insurance policy and held that the defendant could not
       be held liable for section 155 relief where no benefits were owed)).
¶ 41        Therefore, because the breach of contract action was time barred, and the Hoovers’ claim
       for bad faith against Country Mutual was dependent on the success of the breach of contract
       action, the trial court did not err when it dismissed the bad-faith count against Country
       Mutual. See Johnson Press of America, Inc., 339 Ill. App. 3d at 875.

¶ 42                                 Negligent Misrepresentation
¶ 43       In count III of the Hoovers’ amended complaint, they alleged that Spann negligently
       misrepresented facts and led them to believe that he had procured full replacement cost
       coverage for their home and personal property. The trial court dismissed count III as time
       barred. The defendants ask us to affirm the dismissal both because the Hoovers did not
       timely file the complaint and because the complaint does not allege facts that show the
       defendant owed the Hoovers a duty not to negligently misrepresent the policy coverage. A
       reviewing court need not accept the reasons given by the circuit court for its judgment.
       “Rather, a reviewing court can uphold the decision of the circuit court on any grounds which
       are called for by the record regardless of whether the circuit court relied on those grounds and
       regardless of whether the circuit court’s reasoning was correct.” Ultsch v. Illinois Municipal
       Retirement Fund, 226 Ill. 2d 169, 192 (2007) (citing Rodriguez v. Sheriff’s Merit Comm’n,
       218 Ill. 2d 342, 357 (2006)).
¶ 44       We first note that the suit limitation provision in the contract does not apply to count III
       because the negligent misrepresentation count is a tort action against Spann and Country

                                                 -9-
       Mutual and it is not an action for breach of the Hoovers’ contract with Country Mutual. See
       Adams v. Northern Illinois Gas Co., 211 Ill. 2d 32, 67 (2004). Before we decide if the
       applicable limitations period bars the negligent misrepresentation count, we must first
       address the defendants’ argument that the Hoovers have not alleged sufficient facts to state
       a cause of action for negligent misrepresentation.
¶ 45        In order to state a cause of action for negligent misrepresentation, a complaint must first
       allege facts establishing that the defendants owed the plaintiff a duty to communicate
       accurate information. Brogan v. Mitchell International, Inc., 181 Ill. 2d 178, 183 (1998)
       (citing Board of Education v. A, C & S, Inc., 131 Ill. 2d 428, 452 (1989)). Our supreme court
       explained in Brogan that it has recognized a duty to communicate accurate information in
       only two circumstances. First, the court has imposed a duty to avoid negligently conveying
       false information where the information results in physical injury to a person or harm to
       property. Brogan, 181 Ill. 2d at 183-84 (citing Board of Education, 131 Ill. 2d at 454-56).
       Second, the court has imposed a duty to avoid negligently conveying false information where
       one is in the business of supplying information for the guidance of others in their business
       transactions. Brogan, 181 Ill. 2d at 184 (citing Moorman Manufacturing Co. v. National
       Tank Co., 91 Ill. 2d 69, 89 (1982)). Cases addressing the tort of negligent misrepresentation
       have also held that negligent misrepresentation actions are almost universally limited to
       situations involving a defendant who, in the course of his business or profession, supplies
       information for the guidance of others in their business relations with third parties. Lang v.
       Consumers Insurance Service, Inc., 222 Ill. App. 3d 226, 235 (1991) (citing Black, Jackson
       & Simmons Insurance Brokerage, Inc. v. International Business Machines Corp., 109 Ill.
       App. 3d 132, 135 (1982)).
¶ 46        Here, the information that Spann supplied to the Hoovers did not result in any physical
       harm to the Hoovers, nor did the Hoovers’ reliance on Spann’s information cause the damage
       to their home and property. See Restatement (Second) of Torts § 311 cmt. d, illus. 8 (1965).
       Therefore, the first test a court uses to determine whether to impose a duty on a defendant
       to communicate accurate information does not apply in this case.
¶ 47        Next, we must determine whether the defendants in this case were in the business of
       supplying information for the guidance of others in their business transactions which would
       impose a duty on defendants to communicate accurate information to the Hoovers.
       According to the allegations in the Hoovers’ complaint, Country Mutual is in the business
       of selling insurance. The parties agree that Spann was acting as an agent of Country Mutual
       at the time of the occurrence. Because Spann was Country Mutual’s agent, he too was
       engaged in the business of selling homeowners’ insurance. See Lang, 222 Ill. App. 3d at 234.
       A true agency requires that the agent’s function is to carry out the principal’s business. Lang,
       222 Ill. App. 3d at 234 (citing Clapp v. JMK/Skewer, Inc., 137 Ill. App. 3d 469, 472 (1985)).
       Based on the allegations in the plaintiffs’ complaint, both Country Mutual and Spann were
       selling homeowners’ insurance to members of the public, including the plaintiffs. The
       defendants sold the Hoovers homeowners’ insurance, but at no time were they engaged in
       the business of providing information to the plaintiffs for guidance in business transactions.
       See Lang, 222 Ill. App. 3d at 234. Therefore, any information that Spann gave to the Hoovers
       was not supplied to aid the Hoovers in doing business with a third party but was merely

                                                -10-
       ancillary to his sale of homeowners’ insurance. See Lang, 222 Ill. App. 3d at 236; Fireman’s
       Fund Insurance Co. v. SEC Donohue, Inc., 176 Ill. 2d 160, 168 (1997) (the negligent
       misrepresentation exception to the Moorman doctrine is not applicable if the information
       supplied is merely ancillary to the sale of a product).
¶ 48        The Hoovers also argued that Spann voluntarily assumed the duty to make a correct
       representation when Spann “affirmatively assured” Brian Hoover that he had obtained the
       replacement cost policy that Hoover had requested. We find that the Hoovers’ voluntary
       undertaking argument fails because, as Spann argued, such a cause of action is limited to
       cases where the plaintiff suffers physical harm caused by action taken in reasonable reliance
       on the information supplied by defendant. See Vancura v. Katris, 238 Ill. 2d 352, 382 (2010)
       (citing Restatement (Second) of Torts § 323 (1965), and Frye v. Medicare-Glaser Corp., 153
       Ill. 2d 26, 32 (1992)).
¶ 49        Accordingly, we hold that the Hoovers have failed to allege facts that state a cause of
       action for negligent misrepresentation against Spann and Country Mutual, and, therefore,
       there is no need to address whether the negligent misrepresentation claim was time barred.

¶ 50                                          Negligence
¶ 51       Finally, the Hoovers contend in count IV of their complaint that Spann was negligent
       when he failed to procure an insurance policy that provided replacement cost coverage
       according to their instructions. First, we must determine whether the plaintiffs’ negligence
       count was timely. The statute of limitations for a negligence action against an insurance
       producer, like Spann, is found in section 13-214.4 of the Code. 735 ILCS 5/13-214.4 (West
       2010). Section 13-214.4 of the Code provides that all actions against an insurance producer
       must be brought within two years of the date the cause of action accrues. 735 ILCS 5/13-
       214.4 (West 2010).
¶ 52       In determining when a cause of action accrues under the statute, this court has explained
       that for contract actions and torts arising out of contractual relationships, the cause of action
       accrues at the time of the breach of the contract, not when a party sustains damages. Indiana
       Insurance Co. v. Machon & Machon, Inc., 324 Ill. App. 3d 300, 303 (2001). In this case, the
       cause of action accrued in May 2007 when Spann allegedly procured an insurance policy for
       the Hoovers that did not comply with their requests, and the statute of limitations would have
       expired in May 2009. Therefore, since the Hoovers filed their initial complaint on March 3,
       2010, more than two years after the cause of action accrued, the complaint was untimely,
       unless tolled by the discovery rule.

¶ 53                                    The Discovery Rule
¶ 54        The parties acknowledge that the discovery rule may be used to toll the applicable statute
       of limitations. However, the dispute concerns when the plaintiffs’ knew or reasonably should
       have known of their injury.
¶ 55        The discovery rule relating to the statute of limitations has been applied across a broad
       spectrum of litigation to alleviate what has been viewed as harsh results resulting from the

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       literal application of the statute. Knox College v. Celotex Corp., 88 Ill. 2d 407, 414 (1981).
       Cases applying the discovery rule hold that the statute starts to run when the plaintiff knows
       or reasonably should know that he has been injured and that his injury was wrongfully
       caused. Witherell v. Weimer, 85 Ill. 2d 146, 156 (1981) (citing United States v. Kubrick, 444
       U.S. 111 (1979)); Knox College, 88 Ill. 2d at 415. At that point, the injured person possesses
       sufficient information concerning his injury and its cause to put a reasonable person on notice
       to determine whether actionable conduct is involved. Knox College, 88 Ill. 2d at 416. The
       court should enter judgement as a matter of law when the undisputed facts allow for only one
       conclusion as to when the plaintiff had sufficient information. Jackson Jordan, Inc. v.
       Leydig, Voit & Mayer, 158 Ill. 2d 240, 250 (1994).
¶ 56        In the present case, the facts establish that Brian Hoover received a copy of Country
       Mutual’s policy because he indicates in his affidavit that it was destroyed in the fire. In May
       2007, the facts establish that Hoover only sought to increase the liability limits in the policy
       for his house and its contents. But, the facts also establish that at no time did Hoover seek
       to change two provisions in the policy: (1) the provision which required losses with loss
       settlement 1 to have an 80% insurance requirement, and (2) the condition which provided
       that the company will not be liable in any one occurrence for more than the applicable limit
       of liability.
¶ 57        The Hoovers’ dwelling was covered under loss settlement 1 in the policy which states
       that the liability limit for the dwelling had to be at least 80% of what the cost would be to
       replace the property in order to satisfy the requirement for replacement cost coverage. In the
       event the liability limits were not 80% of the costs to replace the property, Country Mutual
       would only pay actual cash value for the property.
¶ 58        The declarations delineated the policy limits for the Hoovers’ home and personal
       property as follows: dwelling $258,000; and personal property $193,500. We note that the
       inflation rider increased the liability limits to $265,000 for the dwelling and $198,000 for
       personal property. Regardless of the actual replacement cost, the policy contained a
       limitation on the amount that Country Mutual would pay. The conditions section of the
       policy provided that Country Mutual would not be liable in any one occurrence for more than
       the applicable limit of liability.
¶ 59        Therefore, Country Mutual acted pursuant to the terms of the policy when it paid the
       Hoovers the liability limits as dictated by the terms of the policy. While laymen may not, as
       a common practice, read insurance policies, we cannot excuse plaintiffs from their burden
       of knowing the terms and liability limits of their insurance policies and bringing alleged
       discrepancies to the attention of their insurance company. Foster v. Crum & Forster
       Insurance Cos., 36 Ill. App. 3d 595, 598 (1976).
¶ 60        We find that once the Hoovers received the policy, they were in the best position to
       determine if the policy’s $258,000 liability limit for their house was sufficient to meet the
       80% replacement cost requirement, and by receiving the policy prior to the fire, they had an
       opportunity to read their insurance policy and determine whether the policy limits with
       Country Mutual were adequate.
¶ 61        When Country Mutual provided the Hoovers with a copy of their insurance policy, which

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       delineated the liability limits for the house and its contents, they had all the information that
       they needed to determine the limits of their coverage. Therefore, we hold that the discovery
       rule does not toll the statute of limitations because the Hoovers knew or should have known
       more than two years before they filed their complaint that the policy did not contain liability
       limits that would provide them with full replacement coverage. Accordingly, because the
       negligence count was untimely, we need not address the issue of whether Spann had a duty
       to provide the Hoovers with the coverage that they requested.

¶ 62                                        CONCLUSION
¶ 63       We hold (1) that the trial court did not err when it dismissed the breach of contract count
       against Country Mutual, and (2) that the trial court did not err when it dismissed the bad-faith
       count against Country Mutual. We also hold that the Hoovers failed to state a cause of action
       for negligent misrepresentation in count III against Spann and Country Mutual. Finally, we
       hold that count IV, the negligence count, was barred by the statute of limitations and that the
       discovery rule does not toll the statute of limitations because Country Mutual provided the
       Hoovers with a copy of their policy and, therefore, they knew or should have known that the
       liability limits in their policy did not provide full replacement coverage on their home and
       personal property more than two years before they filed their complaint against the
       defendants.

¶ 64       Affirmed.

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