Court Opinion

ID: 9716535
Source: CourtListenerOpinion
Date Created: 2023-08-26 06:43:04.081445+00
Date Added: 2024-06-11T10:00:07.217413
License: Public Domain

JUSTICE McMORROW, specially concurring: I agree with the majority that this case should be reversed and remanded for further proceedings. However, I am not in accord with the majority’s reasoning to arrive at that determination, and I therefore specially concur in the majority’s decision. The majority discusses at length the concept of estoppel in the context of insurance coverage cases. The majority relies upon Murphy v. Urso (1981), 88 Ill. 2d 444, 430 N.E.2d 1079, and Sims v. Illinois National Casualty Co. (1963), 43 Ill. App. 2d 184, 193 N.E.2d 123, to reach its decision in the case at bar. The case before us, however, does not involve a dispute over whether the underlying claim is within the scope of policy coverage, as was involved in the Murphy and Sims cases. Nor does the case at bar involve the propriety of an insurer raising a coverage exclusion defense in the garnishment action, as plaintiff argues. Rather, the sole issue presented is whether an insurer which fails to defend in the primary action, or institute a declaratory judgment action, is estopped, as a matter of law, from raising the insured’s alleged breach of a condition precedent as an affirmative defense in a subsequent garnishment action. It should be noted that in addition to the policy provisions referred to by the majority, the policy in this case contains the following provision: “No action shall lie against the company unless as a condition precedent, there shall have been full compliance with all the terms of this policy.” Plaintiff has not cited, nor have I found, any authority for the proposition that an insurer which has failed to defend its insured in an underlying action is thereby estopped as a matter of law from asserting the breach of a policy provision by the insured as an affirmative defense in a subsequent garnishment action. Indeed, the authorities cited by defendant contradict plaintiff’s position. In Reisman v. Delgado (1983), 117 Ill. App. 3d 331, 453 N.E.2d 902, following the entry of a default judgment against the insured in an action for damages sustained by the plaintiffs in an automobile accident, a garnishment proceeding was instituted by the plaintiffs against the insurer. The trial court granted judgment against the insurer and the insurer appealed, contending that the trial court erred in ruling that it could not assert as a defense the breach by its insured of the notice of suit provision in its policy. Quoting other authorities, the appellate court stated: “The general rule in garnishment is that a claim asserted by a judgment creditor against a garnishee must be one which the judgment debtor himself could have maintained. [Citation.] Therefore, where an insured has breached policy conditions, a garnishment action generally will not lie. [Citation.] Specifically, when the judgment creditor of an insured seeks to garnish the proceeds of an insurance policy, the insurer can assert any defenses which it could have raised against the insured, ‘absent some provision of the law which bars the insurer from raising those defenses.’ ” (Reisman, 117 Ill. App. 3d at 333-34.) Noting that the policy in Reisman was not of a statutory type, such as one issued to comply with a financial responsibility act (e.g., the Illinois Safety Responsibility Law (Ill. Rev. Stat. 1981, ch. 95½, par. 7 — 301 et seq.)), which would prohibit the insurer from asserting policy defenses against the insured’s judgment creditors, the court held that the insurer was not barred from raising a breach of policy defense in the garnishment action. Similarly, in Johnson v. R & D Enterprises (1982), 106 Ill. App. 3d 496, 435 N.E.2d 1233, the administrator of the deceased’s estate obtained a default judgment against the insured, R & D Enterprises, and then brought a garnishment action against R & D’s insurer. The insurer contended that it was not obliged to provide indemnification to an insured nor pay a judgment rendered against an insured where there has been a prejudicial noncompliance with the conditions of the insurance policy. In such circumstances, the insurer argued, those defenses which the insurer has against the insured are also available against an injured third party seeking recovery under the policy. The Johnson court agreed, stating, “[t]his is the law in Illinois absent some provision of the law which bars the insurer from raising those defenses.” (106 Ill. App. 3d at 498.) The Johnson court, however, upheld the judgment against the insurer on different grounds. Sowinski v. Ramey (1976), 36 Ill. App. 3d 690, 344 N.E.2d 635, involved an appeal from a judgment for the insurer in a garnishment action in which the insurer raised the affirmative defense of noncooperation by its insured against whom a default judgment had been entered. The court noted that “[i]n a garnishment action, the garnishee must establish by a preponderance of the evidence all affirmative defenses raised in its pleadings, including that of noncooperation.” (36 Ill. App. 3d at 693-94.) The court found that under the facts of that case, the insurer had met its burden of showing that the insured did not provide the notice or the assistance that he was obligated by the terms of the policy to provide and held that the insurer was therefore relieved of liability under the policy. See also Del Grosso v. Casualty Insurance Co. (1988), 170 Ill. App. 3d 1098, 524 N.E.2d 1042 (insurer was not estopped from asserting the breach of a notice provision as a defense in a declaratory judgment action brought by both its insured and a co-insurer seeking to compel the insurer to defend the underlying action); Ledbetter v. Crudup (1983), 114 Ill. App. 3d 401, 449 N.E.2d 265 (affirming trial court’s entry of summary judgment for insurer which asserted that it had never received notice of the lawsuit as a policy defense in a garnishment action). On the basis of the authorities cited, I am of the opinion that the trial court erred in ruling that the insurer was estopped, as a matter of law, from asserting the insured’s alleged breach of the notice of accident provision of the policy. However, I agree with the majority that the mere recital that the insured’s five-month delay in giving notice was unreasonable because not given “as soon as practicable,” as provided in the policy, is insufficient for this court to make a determination of whether such delay constituted a breach. Thus, I would reverse and remand this cause for a hearing on the correlative issues of the alleged breach of the policy by the insured and insurer, respectively. If the trial court finds the insured’s delay in notifying the insurer of the accident constituted a material breach of the insurance contract, then the insurer should not be barred from presenting its affirmative defense as against plaintiff. If the trial court finds that the insurer breached its duty to defend, then it should be estopped from raising the insured’s alleged breach as a defense in plaintiff’s garnishment action.