Court Opinion

ID: 4307407
Source: CourtListenerOpinion
Date Created: 2018-08-24 22:07:16.7405+00
Date Added: 2024-06-11T14:41:29.360713
License: Public Domain

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                                       Appellate Court                              Date: 2018.07.18
                                                                                    16:15:36 -05'00'

                 American Access Casualty Co. v. Novit, 2018 IL App (1st) 171048

Appellate Court           AMERICAN ACCESS CASUALTY COMPANY, Plaintiff-
Caption                   Appellee, v. KELLY NOVIT; CIPRIAN TANASE; and EILEEN
                          CONWAY, Defendants (Eileen Conway, Defendant- Appellant).

District & No.            First District, First Division
                          Docket No. 1-17-1048

Filed                     March 30, 2018

Decision Under            Appeal from the Circuit Court of Cook County, No. 15-CH-6523; the
Review                    Hon. Franklin U. Valderrama, Judge, presiding.

Judgment                  Reversed and remanded.

Counsel on                Pfaff, Gill & Ports, Ltd., of Chicago (Michael T. Gill, of counsel), for
Appeal                    appellant.

                          James P. Newman & Associates, LLC, of St. Charles (William H.
                          Ransom, of counsel), for appellee.

Panel                     PRESIDING JUSTICE PIERCE delivered the judgment of the court,
                          with opinion.
                          Justices Harris and Mikva concurred in the judgment and opinion.
                                             OPINION

¶1       In this declaratory judgment action, defendant Eileen Conway appeals from the circuit
     court’s judgment finding that plaintiff American Access Casualty Company (American
     Access) had no duty to defend or indemnify its insured, defendant Kelly Novit, in connection
     with an underlying personal injury action (the underlying action). In the underlying action,
     Conway sued to recover damages for injuries she sustained when she was struck by Novit’s
     vehicle, which was driven by defendant Ciprian Tanase. Conway asserted that Tanase was
     negligent when he struck Conway with Novit’s vehicle and that Novit negligently entrusted
     her vehicle to Tanase because Novit knew or should have known that Tanase was intoxicated.
     Novit’s automobile insurer, American Access, filed this declaratory judgment action seeking a
     declaration of rights regarding its duties to defend and indemnify Tanase and Novit in the
     underlying action. The circuit court granted summary judgment in favor of American Access,
     finding that it had no duty to defend or indemnify either Tanase or Novit. Conway appeals
     from the portion of the circuit court’s judgment finding that American Access had no duty to
     defend or indemnify Novit. For the following reasons, we reverse and remand for further
     proceedings.

¶2                                         BACKGROUND
¶3       The following facts are set forth in Conway’s two-count amended complaint in the
     underlying action. On March 29, 2014, at around noon, Novit and Tanase were together at a
     forest preserve where Novit observed Tanase “consume an alcoholic beverage.” Novit then
     allowed Tanase to drive her 2012 Dodge Avenger, with her as a passenger, to a 7-Eleven.
     While at the 7-Eleven, Novit observed Tanase consume “multiple alcoholic beverages.” Novit
     then again allowed Tanase to drive her vehicle, with her as a passenger, to a pizza restaurant.
     While there, Novit observed Tanase “consume at least one alcoholic beverage.” Novit then
     again allowed Tanase to drive her vehicle, again with her as a passenger, to a gyros restaurant
     where Novit exited the vehicle and then gave Tanase “express or implied permission” to
     continue using her vehicle. Novit “knew or should have known that [Tanase] was intoxicated,
     incompetent, or reckless” and “knew or should have known that her [vehicle] would likely be
     used in a manner involving an unreasonable risk of harm to others.” After leaving the gyros
     restaurant alone in Novit’s vehicle, Tanase struck Conway at around 7 p.m. as she crossed the
     street, resulting in Conway’s injuries. Conway alleged that Tanase’s “intoxication,
     incompetency, or recklessness” was a proximate cause of her injuries.
¶4       After Conway initiated the underlying action, American Access filed this declaratory
     judgment action and filed a three-count amended complaint. American Access acknowledged
     that it issued Novit an auto insurance policy and that she is the named insured under the policy.
     In count I, American Access asserted that it had no duty to defend or indemnify Tanase
     because he was not an insured under Novit’s policy and was operating the vehicle without
     Novit’s express or implied permission. American Access asserted in count II that it had no duty
     to defend or indemnify either Novit or Tanase under the “reasonable belief” exclusion to the
     auto policy, which excluded coverage for “any person operating the vehicle without a
     reasonable belief that he or she is entitled to do so.” American Access contended that Tanase
     was not the named insured under the policy and that he did not have a valid driver’s license at
     the time of the accident, and therefore he had no reasonable belief that he was entitled to

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     operate Novit’s vehicle. Count III asserted that American Access had no duty to defend or
     indemnify Novit against Conway’s negligent entrustment claim because the policy did not
     provide coverage for bodily injuries caused by the separate tort of negligent entrustment.
¶5       American Access moved for summary judgment on its “reasonable belief” exclusion
     claims in count II. The motion was fully briefed, and on July 26, 2016, the circuit court entered
     a written order granting American Access’s motion with respect to Tanase but denying the
     motion with respect to Novit. The circuit court examined the policy, which contained an
     exclusion that provided, “This policy does not apply to and does not provide coverage [for
     bodily injury liability and property damage liability] for: *** (q) any person operating an
     automobile without a reasonable belief that he or she is entitled to do so, however, this
     exclusion does not apply to operation of the owned automobile by the named insured or
     relative.” The circuit found that American Access had no duty to defend or indemnify Tanase
     because he could not have had a reasonable belief that he was entitled to operate Novit’s
     vehicle since he did not have a driver’s license. The circuit court further found that the
     reasonable belief exclusion did not apply to Novit because she was not driving the automobile
     at the time of the accident and, even if she had been, the exclusion would not apply to her
     because she was the named insured under the policy. The circuit court’s written order states
     “that the [reasonable belief] exclusion does not exclude Novit from coverage under the
     [p]olicy based on the allegations of the underlying complaint,” and concluded that “based on
     the allegations of the [u]nderlying complaint, the reasonable belief exclusion does not apply to
     Novit.” We note that the circuit court did not conclude that American Access had a duty to
     defend Novit based on the inapplicability of the reasonable belief exclusion; the circuit court
     found that that the reasonable belief exclusion did not apply and therefore was not a basis from
     which it could conclude that the American Access had no duty to defend under the policy.
¶6       American Access then filed a motion for partial summary judgment on its claim in count III
     that the policy did not provide coverage for claims of negligent entrustment and a motion for
     reconsideration of the circuit court’s summary judgment order on the “reasonable belief”
     exclusion claim in count II as it pertained to Novit. On March 9, 2017, the circuit court denied
     American Access’s motion to reconsider. After briefing on American Access’s motion for
     summary judgment on count III, the circuit court entered a handwritten order on March 23,
     2017, drafted by counsel for American Access, granting summary judgment in favor of
     American Access, finding “there is no coverage for [d]efendant Novit on the claim of negligent
     entrustment.” The order also stated that the circuit court previously resolved American
     Access’s “reasonable belief” exclusion claims. The order further stated that American Access
     voluntarily dismissed its claim in count I that it had no duty to defend or indemnify Tanase on
     the grounds that he was not a named insured. The circuit court’s March 23, 2017, order states
     that it is “a final order with all claims of all parties now being disposed of.”
¶7       Conway filed her notice of appeal on April 21, 2017, from the March 23, 2017, order.
     American Access moved to dismiss Conway’s appeal for lack of appellate jurisdiction, arguing
     that its “reasonable belief” claim against Novit had not been fully resolved. A panel of this
     court originally dismissed this appeal but later vacated the dismissal order on Conway’s
     motion.

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¶8                                                ANALYSIS
¶9          On appeal, Conway argues that the circuit court effectively concluded that, as a matter of
       law, a negligent entrustment claim is not an “accident” and that the circuit court misapplied our
       holding in General Agents Insurance Co. of America, Inc. v. Midwest Sporting Goods Co., 328
Ill. App. 3d 482 (2002). She contends that General Agents stands for the proposition that
       insurance coverage is unavailable for a negligent entrustment claim only where the underlying
       complaint “is based purely on deliberate actions.” She further argues that the “substantial
       probability” test from General Agents is not met here. Finally, she contends that public policy
       favors coverage for her negligent entrustment claim. We need not resolve this issue, however,
       because we find that American Access has a duty to defend Novit under the plain language of
       the policy.
¶ 10        Before we reach the merits of this appeal, we must consider American Access’s argument
       that we lack appellate jurisdiction. It contends that the circuit court never entered a final
       judgment with respect to the “reasonable belief” exclusion claim in count II of the amended
       complaint. American Access argues that the circuit court granted summary judgment on the
       “reasonable belief” exclusion claim as to Tanase but denied summary judgment as to Novit,
       and therefore count II has not been fully adjudicated. American Access further argues that it
       has been deprived of “its opportunity to cross-appeal on an issue which it may have lost had the
       order been final.” We disagree.
¶ 11        Pursuant to the Illinois Constitution, our jurisdiction is limited to appeals from final
       judgments. Ill. Const. 1970, art. VI, § 6; Ill. S. Ct. R. 301 (eff. Feb. 1, 1994). Absent a supreme
       court rule, we lack jurisdiction to review judgments, orders, or decrees that are not final.
       Blumenthal v. Brewer, 2016 IL 118781, ¶ 22 (citing EMC Mortgage Corp. v. Kemp, 2012 IL
113419, ¶ 9). A “final judgment” for the purposes of appeal is one that fixes absolutely and
       finally the rights of the parties in a lawsuit and determines the litigation on the merits so that, if
       affirmed, the only thing remaining is to proceed with the execution of the judgment. Indiana
       Insurance Co. v. Powerscreen of Chicago, Ltd., 2012 IL App (1st) 103667, ¶ 22; see also In re
       Detention of Hardin, 238 Ill. 2d 33, 42-43 (2010).
¶ 12        Here, American Access sought, in relevant part, a declaration of its rights with respect to its
       duties to defend and indemnify Novit in the underlying action. It presented two alternative
       theories as to why Novit was not entitled to coverage under the policy: (1) the policy’s
       “reasonable belief” exclusion applied and (2) the policy provided coverage for bodily injuries
       caused by automobile accidents but did not provide coverage for the separate tort of negligent
       entrustment. Both claims sought the same relief: an order declaring that American Access had
       no duty to defend or indemnify Novit in the underlying action. The circuit court found that the
       “reasonable belief” exclusion did not apply to Novit because she was the named insured. In
       doing so, the circuit court concluded that American Access could not rely on the “reasonable
       belief” exclusion in order to avoid its duty to defend or indemnify Novit in the underlying
       action. The circuit court did not conclude that inapplicability of the “reasonable belief”
       exclusion gave rise to a duty to defend but did conclude that the exclusion was inapplicable and
       was therefore not determinative of American Access’s duty to defend. In doing so, and by
       subsequently denying American Access’s motion to reconsider, the circuit court conclusively
       resolved count II of American Access’s declaratory judgment complaint in favor of
       defendants.

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¶ 13       The circuit court subsequently agreed with American Access that Novit was not entitled to
       coverage under the policy because the policy only applied to accidents and not to a separate
       tort claim for negligent entrustment. By granting summary judgment in favor of American
       Access on its claim that the policy did not provide coverage for claims of negligent
       entrustment, the circuit court granted American Access all of the relief it sought in its
       complaint with respect to Novit: an order declaring that it had no duty to defend or indemnify
       Novit in the underlying action.
¶ 14       We also reject American Access’s contention that it has been deprived of “its opportunity
       to cross-appeal on an issue which it may have lost had the order been final.” When a judgment
       grants a party all of the relief that it sought and the judgment has no prejudicial effect on the
       prevailing party, that party has no right to an appeal. Material Service Corp. v. Department of
       Revenue, 98 Ill. 2d 382, 386 (1983). American Access had no right to cross-appeal from the
       circuit court’s denial of summary judgment on its “reasonable belief” exclusion claim because
       no portion of the circuit court’s judgment—that American Access had no duty to defend or
       indemnify Novit in the underlying action—was adverse to American Access. American
       Access could have advanced its “reasonable belief” exclusion arguments on appeal as an
       alternative basis for affirming the circuit court’s judgment (see Beacham v. Walker, 231 Ill. 2d
51, 61 (2008) (explaining that we may affirm the circuit court’s judgment on any grounds
       called for by the record, regardless of whether the circuit court relied on those grounds)), but it
       has not done so. We find that the circuit court’s March 23, 2017, order was a final and
       appealable order.
¶ 15       Turning to the merits, the sole issue on appeal as framed by the parties is whether
       Conway’s claim for negligent entrustment alleges an “accident” covered by the policy such
       that American Access has a duty to defend Novit against Conway’s negligent entrustment
       claim and potentially indemnify Novit for any damages for which she was found liable. We
       need not reach the question of whether a claim for negligent entrustment amounts to an
       “accident” under the policy, however, because the plain language of the policy provides that
       American Access will pay compensatory damages for accidents resulting in bodily injury that
       arise out of Novit’s use or ownership of the vehicle.
¶ 16       To determine whether an insurer has a duty to defend, a court must look to the allegations
       of the underlying complaint and compare those allegations to the relevant portions of the
       insurance policy. Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill. 2d 90,
       107-08 (1992). If the underlying complaint alleges facts that fall or potentially fall within the
       policy’s coverage, the insurer’s duty to defend arises, even if the allegations in the underlying
       complaint are groundless, false, or fraudulent. Northbrook Property & Casualty Co. v.
       Transportation Joint Agreement, 194 Ill. 2d 96, 98 (2000). The insurer must defend “unless the
       allegations of the underlying complaint demonstrate that the plaintiff in the underlying suit will
       not be able to prove the insured liable, under any theory supported by the complaint, without
       also proving facts that show the loss falls outside the coverage of the insurance policy.” Illinois
       Emcasco Insurance Co. v. Northwestern National Casualty Co., 337 Ill. App. 3d 356, 361
       (2003). Insurance policies are to be liberally construed in favor of coverage, and any doubt as
       to the insurer’s duty to defend is resolved in favor of the insured. United Services Automobile
       Ass’n v. Dare, 357 Ill. App. 3d 955, 963 (2005).
¶ 17       Under the relevant portion of Novit’s policy, American Access agreed to “pay on behalf of
       [Novit] *** compensatory damages *** because of (1) bodily injury, or (2) property damage

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       caused by accident [sic] arising out of the ownership, maintenance or use of the owned
       automobile.” (Emphases added.) The policy does not contain an exclusion for negligent
       entrustment and does not define “accident.” Where a term in an insurance policy is not defined,
       we afford that term its plain, ordinary, and popular meaning. Founders Insurance Co. v.
       Munoz, 237 Ill. 2d 424, 436 (2010). We have recognized that for purposes of insurance
       coverage claims, an “accident” is “ ‘an unforseen [sic] occurrence, usually *** an undesigned
       sudden or unexpected event of an inflictive or unfortunate character.’ ” State Farm Fire &
       Casualty Co. v. Young, 2012 IL App (1st) 103736, ¶ 26 (quoting Aetna Casualty & Surety Co.
       v. Freyer, 89 Ill. App. 3d 617, 619 (1980); see also West American Insurance Co. v. Midwest
       Open MRI, Inc., 2013 IL App (1st) 121034, ¶ 22. Furthermore, “the words ‘arising out of’ have
       been interpreted broadly to mean originating from, incident to, or having a causal connection
       with the ownership, maintenance or use of the vehicle.” Aryainejad v. Economy Fire &
       Casualty Co., 278 Ill. App. 3d 1049, 1051 (1996) (citing 6B John A. Appleman & Jean
       Appleman, Insurance Law and Practice § 4317, at 360-63 (1979)).
¶ 18        There is no dispute that Conway’s underlying complaint alleges an accident: she plainly
       alleges that Tanase negligently struck her with Novit’s car and that she suffered injuries as a
       result. The dispositive question then, for purposes of determining whether American Access
       has a duty to defend Novit, is whether the complaint alleges that the accident arose out of the
       ownership, maintenance, or use of Novit’s insured vehicle. We find that it does.
¶ 19        A claim for negligent entrustment asserts that the defendant gave another person express or
       implied permission to use or possess a dangerous article or instrumentality which the
       defendant knew or should have known would likely be used in a manner involving an
       unreasonable risk of harm to others. Evans v. Shannon, 201 Ill. 2d 424, 434 (2002). In the
       context of automobiles, “There are two primary considerations in negligent-entrustment
       analysis: (1) whether the owner of the vehicle entrusted the car to an incompetent or unfit
       driver, and (2) whether the incompetency was a proximate cause of a plaintiff’s injury.” Id.
       (citing Taitt v. Robinson, 266 Ill. App. 3d 130, 132 (1994)). The general rule is that “the
       alleged incompetence of the driver must be a proximate cause of the negligent act that caused
       the injury [citation], and the entrustor is liable, but only if his conduct is the legal cause of the
       complained-of bodily harm.” Watson v. Enterprise Leasing Co., 325 Ill. App. 3d 914, 922
       (2001). “Legal cause” is a component of proximate cause and is “largely a question of
       foreseeability.” Abrams v. City of Chicago, 211 Ill. 2d 251, 258 (2004). “The relevant inquiry
       is whether ‘the injury is of a type that a reasonable person would see as a likely result of his or
       her conduct.’ ” (Emphasis in original.) Id. (quoting First Springfield Bank & Trust v. Galman,
       188 Ill. 2d 252, 260 (1999)).
¶ 20        Here, the allegations in Conway’s complaint fall within or potentially within the coverage
       of American Access’s policy. The complaint alleged that (1) Novit gave Tanase express or
       implied permission to use her vehicle, (2) Novit knew or should have known that Tanase was
       intoxicated, and (3) Tanase struck Conway with the vehicle, resulting in bodily harm. It can be
       inferred from the allegations in the underlying complaint that Conway is alleging that Novit’s
       negligent entrustment was a legal cause of Conway’s injuries because Novit knew or should
       have known that Tanase was intoxicated, incompetent, or reckless and that Tanase’s
       intoxication, incompetence, or recklessness was a proximate cause of the accident and
       Conway’s injuries. Conway’s underlying complaint alleges a causal connection between
       Novit’s alleged entrustment of her insured vehicle—which she owned—to Tanase with actual

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       or constructive knowledge that Tanase was intoxicated and that the accident caused Conway’s
       injuries. In other words, Conway has alleged that the injury “arises out of” Novit’s use or
       ownership of the insured vehicle and her negligent entrustment of that vehicle was a proximate
       cause of Conway’s injuries. Therefore, the circuit court’s order granting summary judgment in
       favor of American Access with respect to its duty to defend Novit in the underlying action is
       reversed.
¶ 21       We remand for further proceedings so that, following a determination of liability in the
       underlying action, the parties may address whether American Access has a duty under the
       policy to indemnify Novit. We express no opinion as to whether American Access has a duty
       to indemnify Novit under the policy.

¶ 22                                        CONCLUSION
¶ 23       For the foregoing reasons, the judgment of the circuit court is reversed. We remand for
       further proceedings consistent with this opinion.

¶ 24      Reversed and remanded.

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