Pekin Ins. Co. v. St. Paul Lutheran Church

2016 IL App (4th) 150966

78 N.E.3d 941

PEKIN INSURANCE COMPANY, Plaintiff-Appellant,

v.ST. PAUL LUTHERAN CHURCH, an Illinois Religious Corporation; and Hope Farney, as Independent Administrator of the Estate of Kitty Mullins, Deceased, Defendants-Appellees.

NO. 4-15-0966

Appellate Court of Illinois, Fourth District.

Order filed October 14, 2016

Modified upon denial of rehearing January 4, 2017

Robert Marc Chemers and Richard M. Burgland (argued), of Pretzel & Stouffer Chtrd., of Chicago, for appellant.

Thomas J. Pliura (argued), of LeRoy, for appellee St. Paul Lutheran Church.

Michael J. Gravlin (argued), Sean Mussey, and Jakub D. Banaszak, of Law Offices of Michael J. Gravlin LLC, of Chicago, for appellee Hope Farney.

OPINION

JUSTICE APPLETON delivered the judgment of the court, with opinion.

¶ 1 This is an action for declaratory judgment. The plaintiff is Pekin Insurance Company (Pekin), and the two defendants are St. Paul Lutheran Church of Roberts, Illinois (church), and Hope Farney, the independent administrator of the estate of Kitty Mullins, deceased.

¶ 2 In a case separate from this one—the underlying tort case—Farney is suing the church for wrongful death, alleging that a church employee, Matthew Geerdes, while using his personally-owned car for church business, negligently crashed into Mullins's car, causing her death.

¶ 3 Pekin had issued the church an insurance policy, which covered bodily injury caused by the use of a non-owned auto for church business. In the present case, though, Pekin sought a declaratory judgment that, for two reasons (corresponding to counts I and II of its amended complaint for declaratory judgment), it had no contractual duty to defend its in sured, the church, in Farney's wrongful-death lawsuit. First, at the time of the accident, Geerdes was on his way to his other job, his job with University Lutheran Ministry of Bloomington-Normal, Illinois (University Lutheran); thus, Pekin contends, he was not using his car for church business, and there is no business liability coverage under the Pekin policy. Second, Country Mutual Insurance Company (Country Mutual) already was defending the church pursuant to the automobile liability policy it had issued to Geerdes, and the policy Pekin had issued to the church stipulated that the business liability coverage was excess coverage when it came to the use of a non-owned auto for church business and that as long as the primary insurer (in this case, Country Mutual) was defending the church, Pekin had no duty to do so.

¶ 4 The two defendants in this declaratory judgment action, the church and Farney, moved to dismiss Pekin's amended complaint for declaratory judgment on the ground of failure to state a cause action. See 735 ILCS 5/2-615 (West 2014). The trial court granted their motions without prejudice. Afterward, when Pekin moved for permission to file a second amended complaint for declaratory judgment, the court not only denied permission to do so but stated that this time its ruling was "with prejudice." Pekin appeals the dismissal of its amended complaint and, alternatively, the denial of permission to file the proposed second amended complaint.

¶ 5 We conclude that count I of the amended complaint for declaratory judgment is premature and that count II is moot. Because Pekin is silent as to count III, it has forfeited any challenge to the dismissal of that count. We find no abuse of discretion in the denial of permission to file the proposed second amended complaint, since it would not have cured the deficiencies in the amended complaint. Therefore, we dismiss this appeal as to count II of the amended complaint for declaratory judgment, and we otherwise affirm the trial court's judgment.

¶ 6 I. BACKGROUND

¶ 7 A. Pekin's Amended Complaint for Declaratory Judgment

¶ 8 In its amended complaint for declaratory judgment, Pekin made the following allegations.

¶ 9 1. The Insurance Policy That Pekin Issued to the Church

¶ 10 Pekin issued an insurance policy, No. 00BU11178, to the church. This policy, which had an effective policy period of October 24, 2012, to October 24, 2013, provided business liability coverage for " ‘bodily injury’ or ‘property damage’ arising out of the use of any ‘non-owned auto’ in [the church's] business by any person other than [the church]."

¶ 11 This business liability coverage was subject to the following condition pertaining to other insurance:

"H. OTHER INSURANCE

(1) If there is other insurance covering the same loss or damage, we will pay only for the amount of covered loss or damage in excess of the amount due from that other insurance, whether you can collect on it or not.

(2) Business Liability Coverage is excess over any other insurance that insures for direct physical loss or damage.

(3) When this insurance is excess, we will have no duty to defend any claim or ‘suit’ that any other insurer has a duty to defend. If no other insurer defends, we will undertake to do so; but we will be entitled to the insured's rights against all those other insurers."

¶ 12 2. The Underlying Lawsuit

¶ 13 In Farney v. Geerdes, Ford County Circuit Court case No. 13-L-14, Farney, as the special administrator of Mullins's estate, filed a third amended complaint against four defendants: Matthew Geerdes, Larry Thorndyke, University Lutheran, and the church. In her third amended complaint, Farney invoked the Wrongful Death Act (740 ILCS 180/2 (West 2012) ) and the Survival Act (755 ILCS 5/27-6 (West 2012) ), alleging as follows. On October 9, 2013, at 9:20 a.m., Geerdes was driving a motor vehicle in Peach Orchard, Illinois, when he negligently ran into a motor vehicle driven by Mullins, who suffered fatal injuries. At the time of the accident, Geerdes was talking on the phone with Thorndyke, in violation of section 12-610.2 of the Illinois Vehicle Code (625 ILCS 5/12-610.2 (West 2012) ). Thorndyke was the one who had made the phone call to Geerdes, and when telephoning Geerdes, he knew Geerdes was driving. Thus, Thorndyke negligently distracted Geerdes from the task of driving, causing the fatal accident. At the time of the phone call and the accident, Thorndyke was acting within the scope of his employment as an employee of the church, and Geerdes was acting within the scope of his employment as an employee of both the church and University Lutheran. Farney sought to hold the church and University Lutheran vicariously liable for the alleged negligence of their agents.

¶ 14 3. The Insurance Policy That Country Mutual Issued to Geerdes

¶ 15 Country Mutual had issued insurance policy No. A12A3355557 to Geerdes. This policy provided automobile liability coverage on a primary basis and had an effective policy period of July 3, 2013, to January 3, 2014.

¶ 16 The Country Mutual policy covered not only Geerdes but "anyone else" liable for his acts or omissions in the operation of an insured vehicle. Under the heading of "Persons Insured," the policy provided:

"Under this Section of the policy, an insured is:

"1. With respect to an insured vehicle :

a. you and any resident of the same household as you ;

b. anyone using an insured vehicle with your permission or the permission of an adult relative ;

c. anyone else, but only with respect to liability resulting from acts or omissions of an insured as defined in a. or b. above." (Emphases in original.)

¶ 17 4. Tendering the Defense

¶ 18 The church tendered the defense to Pekin. Pekin accepted the tender, but with reservations. Afterward, Pekin tendered the defense to Country Mutual, which accepted the tender without reservations.

¶ 19 5. The Judicial Declarations That Pekin Sought in Its Amended Complaint for Declaratory Judgment

¶ 20 Pekin's amended complaint for declaratory judgment had three counts.

¶ 21 In count I, Pekin alleged that "Geerdes, who was operating his own motor vehicle, was not using his motor vehicle in connection with Church business." Therefore, as to count I, Pekin requested a declaratory judgment that (1) "for the matters alleged in [case No. 13-L-14]," it was "not liable under its policy of insurance issued to [the church]"; and (2) it was "not obligated to defend [the church] in [case No. 13-L-14]."

¶ 22 Count II sought a declaration only that Pekin lacked a duty to defend the church. Pekin alleged that, as an excess insurer, it was "not obligated to defend the Church as there [was] other insurance covering the same loss, namely, Geerdes'[s] personal automobile policy with Country Mutual, and Country Mutual ha[d] accepted the Church's defense without reservation." Therefore, as to count II, Pekin requested a declaratory judgment that because Pekin was an excess insurer rather than a primary insurer, and because Country Mutual, as the primary insurer, was defending the church without reservation, the "Other Insurance" provision of the policy exempted Pekin of any obligation to defend the church.

¶ 23 In the final count of the amended complaint for declaratory judgment, count III, Pekin alleged that the policy it had issued to the church included a provision for the reimbursement of defense costs if Pekin " ‘initially defend [ed] an insured or [paid] for an insured's defense but later determine[d] that the claim [was] not covered under this insurance.’ " Therefore, as to count III, Pekin requested a declaratory judgment that the church had to "reimburse Pekin * * * for all of the defense costs and other expenses incurred on * * * behalf [of the church] in connection with [case No. 13-L-14]."

¶ 24 Also, in all three counts, Pekin alleged, "on information and belief," that defendants disagreed with the positions Pekin took in its amended complaint. By Pekin's understanding, defendants took the position "that the allegations contained in the action filed by Farney [were] covered under Pekin's policy of insurance," a position with which Pekin disagreed. Consequently, Pekin alleged, "an actual and justiciable controversy exist[ed] between the parties," a controversy that "[might] be determined by a...