Court Opinion

ID: 9691050
Source: CourtListenerOpinion
Date Created: 2023-08-24 20:05:39.782585+00
Date Added: 2024-06-11T11:17:50.591254
License: Public Domain

2023 IL App (5th) 230249-U
             NOTICE
                                                                                       NOTICE
 Decision filed 08/24/23. The
                                                                            This order was filed under
 text of this decision may be              NO. 5-23-0249
                                                                            Supreme Court Rule 23 and is
 changed or corrected prior to
                                                                            not precedent except in the
 the filing of a Petition for                 IN THE                        limited circumstances allowed
 Rehearing or the disposition of
                                                                            under Rule 23(e)(1).
 the same.
                                   APPELLATE COURT OF ILLINOIS

                               FIFTH DISTRICT
______________________________________________________________________________

SHELTER MUTUAL INSURANCE COMPANY, )             Appeal from the
                                          )     Circuit Court of
      Plaintiff-Appellant,                )     Coles County.
                                          )
v.                                        )     No. 22-MR-27
                                          )
TIM MORROW and JODIE MORROW,              )     Honorable
                                          )     Brien J. O’Brien,
      Defendants-Appellees.               )     Judge, presiding.
______________________________________________________________________________

         JUSTICE MOORE delivered the judgment of the court.
         Justices Barberis and McHaney concurred in the judgment.

                                              ORDER

¶1       Held: The circuit court did not err when it compelled the insurer to participate in the
               appraisal process as outlined in the applicable insurance policy where the issue to
               be determined was amount of loss and the appraisal clause specifically listed
               amount of loss as proper issue to be determined under that process.

¶2       The plaintiff, Shelter Mutual Insurance Company (Shelter), appeals the circuit court of

Coles County’s March 28, 2023, oral pronouncement denying its motion for judgment on the

pleadings and ordering the parties to proceed forward with the appraisal process as outlined in the

at-issue insurance policy, and the circuit court’s written March 30, 2023, order memorializing the

same. For the following reasons, we affirm.

                                                 1
¶3                                      I. BACKGROUND

¶4     Shelter issued a homeowners insurance policy, numbered 12-XX-XXXXXXX-1, to the

Morrows (the Policy). The Policy was in effect from April 7, 2021, to April 7, 2022. At all relevant

times, the Policy’s relevant provisions provided as follows:

       “SECTION I - PROPERTY PROTECTION

       COVERAGE A – DWELLING

       INSURING AGREEMENTS

       1. We cover accidental direct physical loss to the following property, except for

       those perils and losses excluded under the heading ‘Exclusions Applicable To

       Coverages A & B’.

       (a) Your dwelling, including building structures attached to it, at the residence

       premises, but only if that dwelling is used principally as a private residence. If a

       building structure is connected to the dwelling by only a utility line or fence, it will

       not be considered attached to the dwelling for purposes of this coverage.

                                                ***

       COVERAGE B - OTHER STRUCTURES

       INSURING AGREEMENTS

       1. We cover accidental direct physical loss to other structures that are permanently

       attached to the residence premises but not attached to your dwelling, except for

       those perils and losses excluded under the heading ‘Exclusions Applicable To

       Coverages A & B’. ***

                                                ***

       5. We cover accidental direct physical loss to fences on the residence premises

       under this coverage only, whether they are attached to your dwelling or not. This
                                               2
coverage does not extend to a fence used to any extent for business irrespective of

the fact that it may also be used for non-business purposes.

***

EXCLUSIONS APPLICABLE TO COVERAGES A & B

We do not cover any loss or damage if it would not have occurred in the absence

of any event or condition listed below. That loss or damage is excluded from

coverage regardless of:

(a) The proximate cause of that event or condition;

(b) The fact that other events or conditions, which are not excluded, caused the loss

or damage;

(c) The fact that other events or conditions, which are not excluded, contributed to

the loss or damage;

(d) The sequence of the events or conditions that caused the loss or damage;

(e) Whether the events and conditions that caused the loss or damage occurred

suddenly or gradually;

(f) Whether the loss or damage is isolated or widespread; or

(g) Whether the loss or damage arises from natural forces, external forces, or a

combination of such forces.

                                       ***

7. The Policy contains the following relevant definitions:

1. Accident means an action or occurrence, or a series of actions or occurrences,

that:

(a) Started abruptly;

(b) During the policy period; and
                                         3
(c) Directly resulted in bodily injury or property damage.

***

2. Accidental direct physical loss means loss of possession of, or actual physical

damage to, a part of the covered property which is caused by an accident. It does

not include:

(a) Consequential economic damage resulting from such physical damage to that

part or to the covered property as a whole;

(b) Consequential economic damage resulting from the inability to restore full

monetary value to that part or to the covered property as a whole because of the fact

that it has sustained physical damage;

(c) Consequential economic damage resulting from the loss of use of that part or

the covered property as a whole;

(d) Consequential economic damage resulting from the inability to match the parts

which are repaired or replaced with undamaged adjacent parts; or

(e) Any diminution of the pre-loss value of the covered property after the repair or

replacement of its parts.

8. The Policy also provides as follows:

SPECIAL PROVISIONS AND CONDITIONS RELATING TO SECTION I

                                         ***

10. Appraisal

If you and we fail to agree on the market value, total restoration cost, actual

cash value, or amount of loss, as may be required in the applicable policy provision,

either party may make written demand for an appraisal. Each party will select an

appraiser and notify the other of the appraiser’s identity within 20 days after the
                                        4
       demand is received. The appraisers will select a competent and impartial umpire. If

       the appraisers are unable to agree upon an umpire within 15 days, you or we can

       ask a judge of a court of record in the state where the residence premises is located

       to select an umpire.

       The appraisers shall then appraise the loss, stating separately the market value,

       total restoration cost, actual cash value, or loss to each item as may be required

       in the applicable policy provision. If the appraisers submit a written report of an

       agreement to us, the amount agreed upon shall be the market value, total

       restoration cost, actual cash value, or amount of loss as may be required in the

       applicable policy provision. If they cannot agree, they will submit their differences

       to the umpire. A written award by two will determine the market value, total

       restoration cost, actual cash value, or amount of loss. Each party will pay the

       appraiser it chooses, and equally pay expenses for the umpire and all other expenses

       of the appraisal unless the amount you demanded prior to the appraisal process is

       awarded by the appraisers pursuant to this provision. In that event, the appraisers

       and umpire will be fully paid by us.”

¶5     On December 10, 2021, a hail and windstorm occurred affecting the Morrows’ property.

The Morrows submitted a claim to Shelter for damage allegedly sustained because of the storm.

Shelter inspected the claimed property damage and determined that the damage added up to less

than the Morrows’ deductible of $1000. In response, the Morrows obtained their own report and

estimate from a public adjuster, the Accuval Group LLC, dated December 21, 2021. That report

indicated that a complete tear-off and replacement of the residence roof and garage roof, as well

as removal and replacement of the fencing would be necessary at a total cost of $38,198.15, less

the $1000 deductible.
                                                5
¶6     Following this report, Shelter obtained a second assessment, this time from Donan

Engineering, dated February 2, 2022. That report concluded that some of the damage claimed was

attributed to the storm, but other damage claimed was not. That report found that much of the

damage was attributable to installation errors, inadvertent man-made damage, and sealant strip

failure. On February 8, 2022, Shelter sent a letter informing the Morrows that it continued to view

the loss as not exceeding their deductible. On May 5, 2022, the Morrows submitted a written

demand for appraisal pursuant to the appraisal provision in the policy.

¶7     On June 21, 2022, Shelter filed a declaratory judgment action seeking to deny insurance

coverage to the Morrows for the alleged damages resulting from the December 10, 2021, storm.

On August 17, 2022, the Morrows answered the complaint and filed counterclaims asserting

breach of contract and bad faith, specifically alleging bad faith for Shelter’s refusal to submit to

the appraisal process as outlined in the Policy and as previously invoked by the Morrows on May

5, 2022. On January 13, 2023, Shelter filed a motion for judgment on the pleadings in which it

argued that (1) the appraisal clause of the policy had not been triggered, and (2) the Morrows had

failed to meet their burden of establishing that the alleged physical damage to their home was a

covered loss under the Policy. On February 28, 2023, the Morrows filed their response arguing

that (1) they had demonstrated that Shelter breached the Policy and acted in bad faith, and (2) the

parties’ dispute was fundamentally regarding the amount of covered windstorm loss which

triggered the appraisal provision.

¶8     Following briefing on the matter, on March 28, 2023, the parties appeared before the circuit

court for a hearing on the motion. At the close of the hearing, the circuit court orally denied

Shelter’s motion for judgment on the pleadings, finding that the dispute between the parties was

over the extent of the claimed damage, and granting an oral motion to compel appraisal because

the dispute between the parties was over the amount of loss. The circuit court then entered a written
                                                6
order on March 30, 2023, again denying the motion for judgment on the pleadings and ordering

the parties to proceed with the appraisal process as previously invoked by the Morrows and as

outlined in the Policy.

¶9     On April 4, 2023, the Morrows’ counsel emailed Shelter’s counsel reinvoking the appraisal

process for the second time. On April 13, 2023, Shelter filed a notice of interlocutory appeal

pursuant to Illinois Supreme Court Rule 307(a)(1) (eff. Nov. 1, 2017), which seeks review of the

circuit court’s order to proceed with appraisal, and which also seeks review of the circuit court’s

denial of Shelter’s motion for judgment on the pleadings. This timely appeal followed.

¶ 10                                     II. ANALYSIS

¶ 11   Before we begin our analysis as to the propriety of the circuit court’s denial of Shelter’s

motion for judgment on the pleadings, we must first address the Morrows’ motion to dismiss this

appeal for lack of jurisdiction.

¶ 12   Illinois Supreme Court Rule 307(a)(1) provides for an appeal as a matter of right of an

interlocutory order “granting, modifying, refusing, dissolving, or refusing to dissolve or modify

an injunction.” Ill. S. Ct. R. 307(a)(1) (eff. Nov. 1, 2017). The Morrows’ motion asserts that Rule

307(a)(1) only applies to interlocutory injunctions (i.e., temporary restraining orders and

preliminary injunctions), and does not apply to noninjunctive relief or to orders which alter the

status quo in a permanent way. See Santella v. Kolton, 393 Ill. App. 3d 889, 901-05 (2009). The

Morrows argue that Shelter is seeking review of a noninjunctive order (a denial of motion for

judgment on the pleadings) and review of a noninterlocutory order (ordering the parties into

appraisal). Thus, the Morrows contend we lack jurisdiction to hear this appeal. However, the

Morrows’ interpretation of Rule 307(a)(1) is mistaken.

¶ 13   This court recently held in Hartz v. Brehm Preparatory School, Inc., 2021 IL App (5th)

190327, ¶ 21, that an order compelling arbitration is injunctive and interlocutory in nature and
                                               7
therefore appealable under Rule 307(a)(1). Additionally, we have held that an appraisal clause is

analogous to an arbitration clause. Beard v. Mount Carroll Mutual Fire Insurance Co., 203 Ill.

App. 3d 724, 727 (1990) (“Defendant next argues that the appraisal clause in the insurance policy

is analogous to an arbitration clause ***. We agree.”). We also held in Hartz that under a Rule

307(a)(1) jurisdiction analysis, the title of a motion is not binding, or necessarily instructive on the

issue, if the resulting order has injunctive effect. Hartz, 2021 IL App (5th) 190327, ¶ 27. In Hartz,

we held that an order denying a motion to dismiss was tantamount to an order denying arbitration

and stated as our reasoning the following:

       “The substance of the action at the trial court revolved around the validity and

       applicability of the arbitration clause. In ruling on Brehm’s motion to dismiss, the

       trial court considered the arbitration clause and determined that it was substantively

       unconscionable and unenforceable. The trial court’s order effectively restrained

       Brehm’s exercise of the contractual right to compel arbitration, and thus we treat

       Brehm’s motion to dismiss as a motion to compel arbitration, even though that was

       not the motion’s title. Accordingly, based upon the content of the pleadings coupled

       with the findings of the trial court, we conclude that the order was injunctive in

       nature and, therefore, appealable under Rule 307(a)(1).” Id.

¶ 14   Therefore, we find that Shelter’s appeal, here, pursuant to Rule 307(a)(1) is proper because

the first part of the circuit court’s order compelling appraisal is analogous to an order compelling

arbitration, and the second part of the order denying Shelter’s motion for judgment on the pleadings

has the effect of compelling Shelter’s participation in the appraisal process and restrains Shelter

from exercising its contractual rights outside of the appraisal provision. Having determined that

we have jurisdiction to hear Shelter’s appeal, we now turn to our analysis of the issues raised.

                                                   8
¶ 15     The standard of review for a decision on a motion for judgment on the pleadings is de novo.

McCall v. Devine, 334 Ill. App. 3d 192, 198 (2002). The standard of review for a decision on a

motion to compel arbitration is whether there was sufficient showing to sustain the circuit court’s

order. Travis v. American Manufacturers Mutual Insurance Co., 335 Ill. App. 3d 1171, 1174

(2002). If a circuit court renders its decision without an evidentiary hearing and without findings

of factual issues, de novo review is proper. Id. A motion for judgment on the pleadings concedes

the truth of the well-pled facts of the nonmovant and requires the court to construe all pleadings in

a light most favorable to the nonmovant, as well. Gillen v. State Farm Mutual Automobile

Insurance Co., 215 Ill. 2d 381, 385 (2005).

¶ 16     While Shelter’s notice of appeal indicates its intent to challenge the circuit court’s denial

of its motion for judgment on the pleadings, it makes no argument as to that point, instead only

arguing as to why the appraisal clause has not been properly invoked under the facts of this case

and why the circuit court erred in compelling Shelter to participate in the appraisal process as set

forth in the Policy. Because Shelter fails to articulate a clear position as to how the circuit court

erred in denying its motion for judgment on the pleadings, we find it has forfeited any such

argument regarding that aspect of the circuit court’s decision. See Ill. S. Ct. R. 341(h)(7) (eff. Oct.

1, 2020) (argument must contain the contentions of the appellant, the reasons therefor, and the

citation of authorities; points not argued in an opening brief are forfeited).

¶ 17     Finding that issue forfeited, we now turn to the issue of the circuit court compelling Shelter

to participate in the appraisal process pursuant to the Policy. Following a hearing on the motion

for judgment on the pleadings, the circuit court determined that this “is not a dispute over scope

of coverage. *** [T]he dispute is over the extent of the claimed damage.” The court went on to

state:

                                                   9
       “Again the dispute is not over the scope of coverage but rather it is a dispute over

       the extent of the loss, so I believe the appraisal clause has appropriately been

       triggered by the demand from the insureds, so for those reasons I’m going to deny

       the Motion for Judgment on the Pleadings in its entirety ***.”

¶ 18   Shelter contends that a party’s “right or obligation to engage in the appraisal process is

limited to what they agreed to in the policy, and to the nature of the appraisal process itself.” It

then argues that an appraisal process is limited to “determining the price of covered damage,” but

is not the proper venue for “resolving a dispute about whether covered damage occurred,” or “the

extent of that covered damage.” Thus, Shelter takes the position that appraisers come into the

insurance claims process “only after the court determines there is a covered loss, and how much

of the property sustained a covered loss.” Taken to its logical conclusion, Shelter’s position

requires the circuit court to determine whether a covered loss occurred, the extent of that loss, and

then only if the parties disagree as to the cost of correcting or compensating for that damage would

the appraisal process begin. Under the facts presented in this matter, we disagree.

¶ 19    The appraisal clause at issue in the Policy reads as follows: “If [the Morrows] and [Shelter]

fail to agree on the market value, total restoration cost, actual cash value, or amount of loss,

as may be required in the applicable policy provision, either party may make written demand for

an appraisal.” (Emphasis in original.) Here, the Morrows’ retained adjuster, Brandon Hahn of

Accuval Group LLC, assessed the storm-caused damage in the amount of $38,198.15. Shelter’s

revised assessment found covered damage occurred to the Morrows’ property, but only assessed

it at an amount of $851.97. Shelter’s assessment acknowledged that a tornado touched down

approximately 1.8 miles northwest of the Morrows’ property on the date of the storm. The report

acknowledged that the “presence of missing shingles from neighboring properties, broken tree

limbs, and the leaning fence indicates that higher wind speeds affected [the Morrows’] property.”
                                                10
Thus, based upon these facts alone, it is evident that the question at issue is not whether a covered

loss occurred because a covered loss was found by Shelter’s own adjuster in its report. Instead, the

true dispute of the parties is the amount of that covered loss.

¶ 20   Looking to the language of the appraisal clause, it clearly states, “If [the Morrows] and

[Shelter] fail to agree on the market value, total restoration cost, actual case value, or amount of

loss, *** either party may make written demand for appraisal.” (Emphasis added; previous

emphasis omitted.) “Amount of loss” is not a term of art specifically defined in the Policy. Thus,

the issue presently before us (the amount of loss) clearly falls under the appraisal clause. To read

the language of the appraisal clause in any other manner would be to completely change the plain

meaning of the language used. “Where a policy provision is clear and unambiguous, its language

must be taken in its ‘plain, ordinary, and popular sense.’ ” Pekin Insurance Co. v. Miller, 367 Ill.

App. 3d 263, 267 (2006) (quoting United States Fidelity & Guaranty Co. v. Wilkin Insulation Co.,

144 Ill. 2d 64, 74 (1991)).

¶ 21   In its brief, Shelter “acknowledges that the federal district courts have taken a different

view of the role and scope of insurance appraisals” from the limited role Shelter is articulating

here on appeal. Referenced by both parties is the matter of Runaway Bay Condominium Ass’n v.

Philadelphia Indemnity Insurance Cos., 262 F. Supp. 3d 599, 601 (N.D. Ill. 2017), which held that

under Illinois law, questions concerning cause of damage to an insured’s property were appropriate

for appraisal pursuant to condominium association’s insurance policy allowing either party to seek

appraisal of “loss” if they could not agree on property’s value or amount of loss, despite insurer’s

argument that the matter involved legal issues that could be resolved only by court. Shelter

attempts to overcome this case law by arguing that the language in the Policy distinguishes the

case somehow based on the requirement of “accidental direct physical loss.” However, the parties’

dispute in this matter is simply over the amount of “accidental direct physical loss” from the
                                             11
December 10, 2021, storm that hit the Morrows’ home, not what constitutes an “accidental direct

physical loss.”

¶ 22    Shelter also attempts to overcome Runaway Bay and the other cited case law by relying

upon FTI International, Inc. v. Cincinnati Insurance Co., 339 Ill. App. 3d 258, 260-61 (2003).

However, FTI dealt with a different issue than the one presented here. FTI held that appraisal is

not an appropriate forum for disputes centered around questions of policy interpretation. Here, the

issue is determination of the “amount of loss,” which is expressly stated within the appraisal clause

as an appropriate issue for determination under that process. There is no coverage interpretation

issue for the circuit court to decide; therefore, FTI is not controlling.

¶ 23                                    III. CONCLUSION

¶ 24    For the foregoing reasons, we deny the Morrows’ motion to dismiss for want of

jurisdiction, and we affirm the circuit court of Coles County’s March 28, 2023, oral

pronouncement denying its motion for judgment on the pleadings and ordering the parties to

proceed forward with the appraisal process as outlined in the Policy, and its written March 30,

2023, order memorializing the same.

¶ 25    Motion denied; judgment affirmed.

                                                  12