Court Opinion

ID: 3144179
Source: CourtListenerOpinion
Date Created: 2015-10-22 18:02:11.599025+00
Date Added: 2024-06-11T15:06:51.890750
License: Public Domain

No. 2--06--0139                   filed: 2/6/07
______________________________________________________________________________

                                             IN THE

                              APPELLATE COURT OF ILLINOIS

                              SECOND DISTRICT
______________________________________________________________________________

DEBORAH ST. PIERRE,                    ) Appeal from the Circuit Court
                                       ) of Winnebago County.
       Plaintiff-Appellee,             )
                                       )
v.                                     ) No. 04--L--188
                                       )
KARL C. KOONMEN,                       )
                                       )
       Defendant                       )
                                       ) Honorable
(Ohio Casualty Insurance Company,      ) Joseph G. McGraw,
Intervenor-Appellant).                 ) Judge, Presiding.
______________________________________________________________________________

       JUSTICE CALLUM delivered the opinion of the court:

       Intervenor, Ohio Casualty Insurance Company (Ohio Casualty), appeals the circuit court's

order denying its claim for a lien against the proceeds of a legal malpractice settlement between

plaintiff, Deborah St. Pierre, and her former attorney, Karl C. Koonmen. The court ruled that Ohio

Casualty was not entitled to reimbursement because Koonmen did not cause the injury for which

Ohio Casualty paid benefits. Ohio Casualty argues that its policy unambiguously provides that it is

entitled to reimbursement regardless of whether St. Pierre recovered from the original tortfeasor.

We affirm.

       When St. Pierre was involved in an auto accident, Ohio Casualty paid her benefits. Ohio

Casualty's policy provides that if Ohio Casualty pays under the policy and the insured "recovers

damages from another," she shall reimburse Ohio Casualty for any payments it made.
No. 2--06--0139

       St. Pierre hired Koonmen to sue the other driver, who was allegedly at fault for the accident.

However, Koonmen did not file suit within the limitations period. St. Pierre then sued Koonmen

for legal malpractice. The parties eventually settled the malpractice action for $100,000. Ohio

Casualty asserted against the settlement proceeds a lien in the amount of the payments it made. The

trial court adjudicated the lien by holding that St. Pierre was not required to reimburse Ohio

Casualty. Ohio Casualty appeals.

       Ohio Casualty contends that it may assert its lien against the proceeds of the malpractice

action. It contends that its policy provides that if the insured recovers damages "from another," it

is entitled to reimbursement regardless of the party from whom the insured recovers. Thus, the fact

that St. Pierre sued her attorney rather than the original tortfeasor should not bar recovery.

       Initially, we note that the trial court based its ruling primarily on its interpretation of the

policy. The construction of a contract is an issue of law that we review de novo. Illinois Farmers

Insurance Co. v. Marchwiany, 222 Ill. 2d 472, 476 (2006).

       The trial court relied on Eastman v. Messner, 188 Ill. 2d 404 (1999). There, an insurance

company paid workers' compensation benefits to the plaintiff. The plaintiff hired the defendant

attorney to pursue a negligence action against a third party that was responsible for the plaintiff's

injuries. When the defendant did not file a complaint within the limitations period, the plaintiff sued

him for malpractice. The insurer sought to intervene, claiming a lien against any damages that the

plaintiff might recover. The trial court denied the petition to intervene. Eastman, 188 Ill. 2d at 406-

07. The supreme court affirmed, holding that the plain language of section 5(b) of the Workers'

Compensation Act (820 ILCS 305/5(b) (West 2004)) did not permit the insurer to be reimbursed

from the plaintiff's malpractice recovery. Eastman, 188 Ill. 2d at 409-10.

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No. 2--06--0139

       Section 5(b) provides that where compensation is payable under circumstances creating a

"legal liability for damages on the part of some person," legal proceedings may be instituted against

that person, provided that if a judgment or settlement is obtained from "such other person," then the

workers' compensation insurer is entitled to be reimbursed for the benefits it paid out. 820 ILCS

305/5(b) (West 2004). Eastman held that the statute's plain language limits the insurer's right of

reimbursement to cases where the judgment or settlement is against the person responsible for the

injury for which the insurer made the payment. Because the legal malpractice defendant did not

cause the initial injury, the insurer was not entitled to be reimbursed from the settlement proceeds.

Eastman, 188 Ill. 2d at 409-10.

       Ohio Casualty contends that Eastman is distinguishable because it interpreted a statute rather

than contractual language, as is at issue here. Ohio Casualty points out that section 5(b) specifically

restricts the right of reimbursement to situations where damages are recovered from "such other

person," which refers to the person responsible for the specific injury for which the insurance

benefits were paid. Ohio Casualty argues that its policy does not contain a similar restriction and

that its reimbursement provision applies if the insured recovers from anyone.

       If Eastman held only that section 5(b)'s plain language prohibited the insurance company

from receiving reimbursement, we might agree with Ohio Casualty that it is inapposite. However,

Eastman contains additional policy rationales that apply with equal force here.

       Eastman remarked on a provision of section 5(b) that allowed the insurance company to

institute a subrogation action if the insured failed to file his or her own action. Eastman, 188 Ill. 2d

at 414, citing 820 ILCS 305/5(b) (West 1996). The court noted that allowing the insurer to maintain

a subrogation action against the insured's attorney had the potential to interfere with the attorney-

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No. 2--06--0139

client relationship. The court noted that generally "a malpractice plaintiff must prove that the

attorney owed the plaintiff a duty of care arising from the attorney-client relationship." Eastman, 188

Ill. 2d at 414. For this reason, Illinois is among the majority of states holding that malpractice claims

may not be assigned. See Christison v. Jones, 83 Ill. App. 3d 334, 338-39 (1980); see also National

Union Fire Insurance Co. v. Salter, 717 So. 2d 141 (Fla. App. 1998).

        Here, the record gives no indication that Ohio Casualty interfered in any way with St. Pierre's

action against Koonmen. Nevertheless, permitting an insurer to be reimbursed from the proceeds

of such an action could create an incentive for the insurer to meddle in the client's relationship with

her attorney, allowing the insurer to do indirectly what it could not do directly.

        Eastman also pointed out that the malpractice plaintiff might not be fully compensated if he

had to reimburse the insurer. While the collateral source rule would permit the insured to recover

in the underlying tort case the amounts reimbursed by insurance, those amounts are not recoverable

in a malpractice action. Malpractice damages are strictly limited to the amount the client actually

lost due to the malpractice, which would exclude amounts received from insurance. Eastman, 188

Ill. 2d at 412-13.

        Here, because the malpractice case was settled, we have no way of knowing what specific

damages the settlement was intended to cover. The malpractice complaint is rather vague and does

not attempt to itemize damages. Nevertheless, under Eastman, the presumption is that the settlement

was not intended to allow St. Pierre compensation for the amounts she had already received from

her insurer.

        Ohio Casualty insists that the policy provision in question unambiguously requires

reimbursement and should be given effect. It is true that where a policy provision is clear and

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No. 2--06--0139

unambiguous, its language must be taken in its plain, ordinary, and popular sense. Travelers

Insurance Co. v. Eljer Manufacturing, Inc., 197 Ill. 2d 278, 301 (2001). However, the provision in

question is not unambiguous.

       Read literally, the reimbursement provision would require repayment if the insured recovers

any damages from anyone for any reason. The absurdity of such a construction is seen by

considering a scenario in which the insured is involved in another and unrelated automobile accident,

or even some other incident that does not involve insurance. According to Ohio Casualty's

interpretation, it would then be entitled to proceeds from the insured's recovery in the unrelated case

sufficient to offset its payment to the insured in this case. The error of this view of the policy

language is also seen by noting that the policy is for automobile-related risks, and not professional

negligence or malpractice. St. Pierre suffered injury from Koonmen's alleged malpractice. It is this

injury for which the settlement compensated her. While the measure of damages might be her

damages stemming from the auto accident, the injury is nevertheless beyond the scope of coverage

in Ohio Casualty's policy. Thus, we are justified in reading additional language into the provision

to clarify the parties' meaning. Accordingly, we hold that the provision is ambiguous and we

construe it against the drafter, in this case, Ohio Casualty. See State Farm Fire & Casualty Co. v.

Hooks, 366 Ill. App. 3d 819, 829 (2006). We thus infer that the injury for which the insured collects

damages must be the same injury for which the insurer paid benefits. Accordingly, the policy

language does not dictate a departure from Eastman.

       The judgment of the circuit court of Winnebago County is affirmed.

       Affirmed.

       O'MALLEY and BYRNE, JJ., concur.

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