Court Opinion

ID: 3143380
Source: CourtListenerOpinion
Date Created: 2015-10-22 17:59:05.175686+00
Date Added: 2024-06-11T11:54:57.430568
License: Public Domain

Filed 2/21/08                NO. 4-07-0488

                      IN THE APPELLATE COURT

                              OF ILLINOIS

                            FOURTH DISTRICT

JACOB SAATHOFF,                        )    Appeal from
          Plaintiff-Appellant,         )    Circuit Court of
          v.                           )    Piatt County
COUNTRY MUTUAL INSURANCE COMPANY and   )    No. 06L6
COUNTRY CASUALTY INSURANCE COMPANY,    )
          Defendants-Appellees.        )    Honorable
                                       )    Chris E. Freese,
                                       )    Judge Presiding.
_________________________________________________________________

          JUSTICE MYERSCOUGH delivered the opinion of the court:

          Plaintiff, Jacob Saathoff, filed a complaint against

defendants, Country Mutual Insurance Company (Country Mutual) and

Country Casualty Insurance Company (Country Casualty) seeking to

recover money he claimed was owed him under an insurance policy.

Defendants filed respective motions to dismiss that were granted

by the trial court.   Saathoff appeals.      We affirm.

                             I. BACKGROUND

          Saathoff owned a multiunit residential apartment

building at 198 Commercial Street in White Heath, Illinois.

Saathoff purchased a policy of insurance, policy No. AM1921670,

issued by Country Mutual.

          On January 4, 2005, while the policy was in effect, the

property was substantially destroyed by fire.       Saathoff submitted

his claim for loss; and after investigating the claim, Country

Mutual issued a $128,576.01 check to Saathoff for settlement of

the claim.   Saathoff refused Country Mutual's check because he

thought the loss was substantially greater than the amount
offered.   Defendants then notified Saathoff of their demand for

an appraisal pursuant to the terms of the insurance policy.

           Condition 1 of section 3 of the policy states as

follows:

                   "Appraisal: If you and we fail to agree

           on the amount of the loss, either may demand

           that the amount of the loss be set by ap-

           praisal.    If either makes a written demand

           for appraisal, each will select a competent,

           independent appraiser and notify the other of

           the appraiser's identity within 20 days of

           receipt of the written demand.    The two ap-

           praisers will then select a competent, impar-

           tial umpire.    If the two appraisers are un-

           able to agree on an umpire within 15 days,

           you or we may ask a judge of a court of re-

           cord in the state where the insured premises

           is situated to select an umpire.    The ap-

           praisers will then set the amount of the

           loss.    If the appraisers submit a written

           report of an agreement to us, the amount

           agreed on will be the amount of the loss.      If

           the appraisers fail to agree within a reason-

           able time, they will submit their differences

           to an umpire.    A written agreement signed by

           any two of these three will set the amount of

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          the loss.   For properties other than residen-

          tial properties occupied by four or less

          families covered by this policy, each ap-

          praiser will be paid by the party selecting

          that appraiser.    Other expenses of the ap-

          praiser and the compensation of the umpire

          will be paid equally by you and us."

          Defendants selected John Mackling as their appraiser,

while Saathoff selected David Gard.     The two appraisers selected

Jody Wesley as the umpire.    On November 22, 2005, the appraisers

and umpire reached an agreement.    The replacement cost of the

property was set at $311,856.    After depreciation, the actual

cash value was set at $240,358.    On December 22, 2005, Country

Mutual issued a check to Saathoff in the amount of $239,358,

which constituted the actual cash value set by the appraisal

process minus a $1,000 deductible.      Saathoff cashed the settle-

ment check in January 2006.

          In a letter dated January 24, 2006, after Saathoff

cashed the settlement check, Saathoff's attorney sent a letter

addressed to Roger Loyd of Country Insurance.     The letter re-

quested payment in the amount of $7,647 for personal property

lost in the fire because the appraisers and umpire excluded

personal property from the appraisal process.     The letter also

noted the fire loss required certain code updates, which was

fixed at $12,741.   Next, Saathoff's attorney requested reimburse-

ment for the $8,916.59 Saathoff paid for the umpire and his

                                - 3 -
appraiser.   Saathoff's letter also requested $37,400 for lost

rent because repair or replacement had been delayed by a year

because of Country Insurance's refusal to pay the correct amount

of the loss.   Saathoff also claimed he was not paid the amount

set by the appraisal process.   He alleged defendants violated

Illinois laws pertaining to improper claims practices and that he

was owed $60,000 in statutory penalties plus $15,000 in attorney

fees.   In total, the letter claimed Saathoff was still due

$213,202.59.

           Defendants refused to comply with Saathoff's demand.

On April 20, 2006, Saathoff filed a one-count complaint alleging

breach of contract against defendants.   The complaint alleged the

parties entered into an insurance contract and, during the policy

period, Saathoff suffered a loss of $368,000 as a result of the

fire, including building damage, personal property, and loss of

rental income.   The complaint alleged defendants still owed in

excess of $200,000.   Finally, the complaint alleged Saathoff was

entitled to $60,000 in attorney fees.

           On August 10, 2006, Country Casualty filed a section 2-

619 motion to dismiss (735 ILCS 5/2-619(a)(9) (West 2006)) on the

grounds that Country Mutual was the insurer, not Country Casu-

alty, and that the policy declarations were not attached to the

complaint and therefore the complaint violated section 2-606 of

the Illinois Code of Civil Procedure (735 ILCS 5/2-606 (West

2006)).   The motion noted the "General Policy Conditions," which

stated the following:

                                - 4 -
               "16. No Action Against COUNTRY Insurance

          & Financial Services.    Nothing in this policy

          gives any person, organization,

          corporation[,] or other entity any rights or

          cause of action against any parent corpora-

          tion, affiliate[,] or subsidiary of the com-

          pany issuing the policy.       No rights are cre-

          ated or implied against any member of COUNTRY

          other than the company described in the dec-

          larations."

Attached to the motion was a copy of the declarations page and a

copy of the policy itself.   A provision in the policy that

describes the agreement states, "We will provide the insurance

described in the policy through the company named in the declara-

tions if you have paid the premium and have complied with the

policy provisions."   The top of the declarations page indicates

Country Mutual is the insurer.

          On August 10, 2006, Country Mutual filed a section 2-

619 motion to dismiss.   Country Mutual asserted the complaint

must be dismissed because it paid Saathoff the actual cash value

for the property damaged as a result of the loss.       The motion

stated Saathoff was only entitled to replacement costs if he had

repaired or replaced the property, and Saathoff had not done so.

The motion also stated Saathoff accepted the check tendered by

Country Mutual in the amount of the actual cash value determined

through the appraisal process.    The motion noted that the section

                                 - 5 -
of the policy regarding replacement costs states the following:

               "a. Except for loss to money and securi-

          ties, losses will be adjusted on the basis of

          the replacement cost of the property insured

          under this policy.   However, we will pay no

          more than the smallest of the:

                     (1) full cost of replacement

               of the property at the same site,

               using new material of like kind and

               quality without deduction for de-

               preciation;

                     (2) cost of repairing the

               insured property within a reason-

               able time;

                     (3) amount of insurance for

               such property as stated in the

               declarations;

                     (4) amount actually and neces-

               sarily spent to repair or replace

               the damaged property.

               b.   If you elect not to repair or re-

          place the property, the loss settlement will

          be made on an Actual[-]Cash[-]Value basis

          rather than on a replacement[-]cost basis.

          Even if you elect this option, you still have

          the right to make a claim on a replacement[-]

                               - 6 -
            cost basis.   You must, however, notify us in

            writing within 180 days after the loss."

Saathoff never gave written notification that he intended to

repair or replace the property within 180 days of the loss.

            Plaintiff filed a response on October 11, 2006, claim-

ing the loss was set at $324,529 by the appraisal process.

Attached were affidavits from the appraiser and umpire stating

the loss was set at that amount.     All the affidavits stated the

award was filed with Country Mutual.

            Following a hearing on the motions, the trial court

granted defendants' motions to dismiss.     No transcript of the

hearing was included in the record on appeal.

            On January 21, 2007, plaintiff filed a motion to

reconsider.    The trial court denied the motion.   This appeal

followed.

                             II. ANALYSIS

            On appeal, Saathoff argues defendants' motions to

dismiss were improperly granted.     "When a cause of action is

dismissed on a section 2-619 motion, the question on appeal is

whether there is a genuine issue of material fact and whether

defendant is entitled to judgment as a matter of law."      Mitchell

v. State Farm Fire & Casualty Co., 343 Ill. App. 3d 281, 284, 796
N.E.2d 617, 619 (2003).     A dismissal under section 2-619 is

reviewed de novo.    Zahl v. Krupa, 365 Ill. App. 3d 653, 658, 850
N.E.2d 304, 309 (2006).

            Plaintiff claims Country Casualty should not have been

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dismissed as a defendant because it was an insurer along with

Country Mutual.    Country Casualty denies this.   In respect to

Country Mutual, Saathoff claims the appraisal process set the

value at $324,597 and Country Mutual improperly reduced the loss

to $239,358.   Country Mutual contends the $239,358 is all

Saathoff was entitled to under the policy and that amount re-

flects the actual cash value minus the $1,000 deductible.     We

agree with both defendants.

          This case turns on the interpretation of the insurance

policy at issue.    "The general principles governing the interpre-

tation and construction of insurance contracts do not differ from

those controlling in other contracts."     Rivota v. Kaplan, 49 Ill.

App. 3d 910, 914, 364 N.E.2d 337, 341 (1977).

                  "In construing insurance contracts, the

          court's primary purpose is to give effect to

          the intention of the parties as expressed

          therein. [Citation.]    Where the terms of a

          policy are clear and unambiguous, their plain

          meaning will be given effect. [Citation.]

          Where, however, a provision in an insurance

          policy is subject to more than one reasonable

          interpretation, it is ambiguous and must be

          construed against the insurer and in favor of

          the insured. [Citations.]"     Elson v. State

          Farm Fire & Casualty Co., 295 Ill. App. 3d 1,

          6, 691 N.E.2d 807, 811 (1998).

                                 - 8 -
               A. Country Casualty Was Not an Insurer

            Saathoff, citing Szymkus v. Eureka Fire & Marine

Insurance Co., 114 Ill. App. 401 (1904), contends that when two

companies issue a policy of insurance, both are liable for the

loss.   Thus, according to Saathoff, both Country Casualty and

Country Mutual are liable for the loss he suffered.      As discussed

herein, this joint liability claim is ultimately immaterial

because Country Mutual paid Saathoff what he was due.      Moreover,

Szymkus is inapplicable to this case.      In Szymkus, the policy

specifically stated "'[t]his policy being a joint policy.'"

Szymkus, 114 Ill. App. at 404.    Moreover, the policy in Szymkus

set forth that each company got one half of the premium and that

each of the companies insured the plaintiff.       Szymkus, 114 Ill.

App. at 410.   No policy at issue in the case sub judice refers to

the policy as a joint policy or states that each company received

a portion of the premium or that each defendant insured Saathoff.

            This policy states "We will provide the insurance

described in this policy through the company named in the decla-

rations."   (Emphasis in original.)      The policy goes on to define

"we" as "the [c]ompany name in the declarations."      The declara-

tions page lists only Country Mutual, not Country Casualty.      The

policy further states "No rights are created or implied against

any member of COUNTRY other than the company described in the

declarations."   Thus, by the terms of the policy, Country Mutual

is the sole insurer.

            Further, the checks submitted in payment of the claim

                                 - 9 -
were issued by Country Mutual.   The checks have three boxes with

a company's name next to each box.     Country Mutual and Country

Casualty each have their own box.    The check indicates that the

check is drawn by the company marked "x."     The box next Country

Mutual is marked "x."

               B. Rule 375(b) Sanctions Are Denied

          Country Casualty argues Saathoff's appeal of the

judgment in favor or Country Casualty was not brought in good

faith and requests sanctions against Saathoff under Supreme Court

Rule 375(b) (155 Ill. 2d R. 375(b)).     Rule 375(b) provides that,

if a reviewing court determines an appeal was taken for an

improper purpose such as to harass or increase the costs of

litigation or was not taken in good faith, an appropriate sanc-

tion may be entered against the party or attorney of the party.

155 Ill. 2d R. 375(b).   "If, under an objective standard of

conduct, a reasonably prudent attorney in good faith could have

brought the appeal, a request for sanctions will be denied."        In

re Marriage of Schneider, 298 Ill. App. 3d 103, 111, 697 N.E.2d
1161, 1167 (1998).   While ultimately unsuccessful, Saathoff's

appeal with respect to Country Casualty does not appear to have

been brought in bad faith or for an improper purpose.     Country

Casualty's request for sanctions is, therefore, denied.

       C. Country Mutual Paid the Appraisal Award Properly

          Saathoff claims Country Mutual improperly reduced the

award set by the appraisal process.     Country Mutual claims that

it was only required to pay the amount it tendered, which was the

                              - 10 -
actual cash value minus the $1,000.      We agree with Country

Mutual.

            After Country Mutual tendered a check to settle the

claim, which Saathoff deemed inadequate, Saathoff demanded an

appraisal pursuant to the terms of the insurance policy.      The

appraisers and umpire determined the replacement cost was

$311,856 and the actual cash value was $240,358.      Again, the

policy states it will pay no more than the smallest of the (1)

full cost of replacement, (2) cost of repairing the insured

property within a reasonable time, (3) amount of insurance for

such property stated in the declarations, and (4) the amount

actually and necessarily spent to repair or replace the damaged

property.    As previously quoted, the policy also states the

following:

                 "If you elect not to repair or replace

            the property, the loss settlement will be

            made on an Actual[-]Cash[-]Value basis rather

            than on a replacement[-]cost basis.    Even if

            you elect this option, you still have the

            right to make a claim on a replacement[-]cost

            basis.   You must, however, notify us in writ-

            ing within 180 days after the loss."

Clearly, under the terms of the policy, Saathoff can either (1)

repair or replace the property and receive the replacement cost

or (2) not repair or replace the property and collect the actual

cash value.    Saathoff did not repair or replace the property, nor

                                - 11 -
did he notify Country Mutual of his intent to replace the loss

within 180 days of the loss.    Accordingly, under the terms of the

policy, Saathoff was entitled to the actual cash value, which is

what he received.

            Although not discussed in Saathoff's brief, one of his

contentions in his demand letter was that payment for lost rent

should be extended an additional year because of unreasonable

delay in settling the claim.    He claimed he was thus owed $37,400

in additional lost rent.    This contention ignores the plain

language of the policy, which states "We will pay only for loss

of business income sustained, and extra expenses incurred, within

12 consecutive months from the date of direct physical loss to

covered property."

                           III. CONCLUSION

            For the reasons stated, we affirm the trial court's

judgment.

            Affirmed.

            APPLETON, P.J., and McCULLOUGH, J., concur.

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