Court Opinion

ID: 4259998
Source: CourtListenerOpinion
Date Created: 2018-03-30 18:10:46.150223+00
Date Added: 2024-06-11T14:27:03.184073
License: Public Domain

2018 IL App (1st) 171048

                                                                         FIRST DIVISION
                                                                         March 30, 2018

                                         No. 1-17-1048

                                        IN THE

                              APPELLATE COURT OF ILLINOIS

                                    FIRST DISTRICT

 AMERICAN ACCESS CASUALTY COMPANY,                          )         Appeal from the
                                                            )         Circuit Court of
        Plaintiff-Appellee,                                 )         Cook County
                                                            )
 v.                                                         )
                                                            )
 KELLY NOVIT; CIPRIAN TANASE; and EILEEN                    )         No. 15 CH 6523
 CONWAY,                                                    )
                                                            )
        Defendants                                          )         The Honorable
                                                            )         Franklin U. Valderrama,
 (Eileen Conway, Defendant-Appellant).                      )         Judge Presiding.

       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
No. 1-17-1048

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 7:00 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.

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¶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 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

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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

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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.

¶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 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

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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

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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.

¶ 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, (Beacham v. Walker, 231 Ill. 2d 51, 61 (2008)),

but it has not done so. We find that the circuit court’s March 23, 2017, order was a final and

appealable order.

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No. 1-17-1048

¶ 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).

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No. 1-17-1048

¶ 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

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. 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 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 Conway with Novit’s car and that Conway 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

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No. 1-17-1048

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. (citing 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 or constructive knowledge that

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No. 1-17-1048

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 order.

¶ 24   Reversed and remanded.

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