Schuster v. Occidential Fire And Cas. Co. of N. Am.

30 N.E.3d 458

Irina SCHUSTER, as Special Administrator of the Estate of Oleh Baranovsky, Deceased, Plaintiff–Appellant

v.OCCIDENTAL FIRE AND CASUALTY COMPANY OF NORTH AMERICA, Defendant–Appellee.

No. 1–14–0718.

Appellate Court of Illinois, First District, Fifth Division.

March 27, 2015.

Michael W. Rathsack, Alexander Gruzmark, and Andrew J. Long, all of Chicago, for appellant.

Wendy N. Enerson, of Cozen O'Connor, of Chicago, for appellee.

OPINION

Justice McBRIDE delivered the judgment of the court, with opinion.

¶ 1 The plaintiff, Irina Schuster, as special administrator of the estate of Oleh Baranovsky, deceased, appeals from the entry of summary judgment for the defendant insurer, Occidental Fire & Casualty Company (Occidental),¹ in this insurance coverage action. The main dispute is whether the insurance policy covers both owned and leased vehicles. The trial court granted summary judgment to the insurer after finding that its commercial automobile liability policy covered owned vehicles, not the leased truck that was involved in Baranovsky's fatal accident, and that leasing the truck did not trigger an “automatic insurance provision” for newly acquired vehicles. The court also rejected the plaintiff's contention that the insurer was estopped from raising policy defenses. On appeal, the plaintiff contends the findings were contrary to precedent and the facts. For the reasons below, we disagree with the estate and we affirm the court's ruling.

¶ 2 Baranovsky's accident occurred on September 8, 2005, at 12:50 p.m. when the 23–year–old Chicagoan was driving a 1997 Isuzu freight truck in Tennessee. He was southbound on Interstate 65, near mile marker 100 and the exit ramp for the community of Millersville. There, the highway curves to the east, but the freight truck crossed west over the highway median, overturned onto the driver's side, and slid into the northbound traffic lanes, where it struck a Toyota Corolla and caused the car to roll several times. The 31–year–old oil refinery worker who was driving the Toyota was only bruised and was released from the emergency room that same day. Baranovsky's injuries were more severe. He was flown from the accident scene and died in the hospital a week later.

¶ 3 In 2007, Baranovsky's estate brought an action for damages against two interstate trucking companies based in Illinois, Diamond Transportation, Inc. (Diamond), and DA Fast Express, Inc. (DA Fast); and the president of DA Fast, Dariusz Benesiewicz. The negligence allegations against Diamond are pertinent here. The estate alternatively alleged that Diamond failed to provide worker's compensation coverage to its employee driver or to properly maintain its truck. More specifically, at the time of the accident, Baranovsky was alleged to be “an employee and/or agent of, and driver for Defendant [Diamond]” who was “acting within the scope of said employment and/or agency [with Diamond]” and “operating a [1997 Isuzu] vehicle owned and/or leased by Defendant [Diamond].” Diamond was alleged to owe “the duty to exercise due care at all times to avoid placing its employees and/or agents in danger,” but in breach of that duty it had required its employee and/or agent to “drive unreasonably extended hours in excess of his ordinary physical limitations” or it failed to inspect, maintain, or repair its vehicle. The estate has abandoned the allegations regarding worker's compensation insurance and focuses its appeal on the allegations of common law negligence.

¶ 4 When Diamond received the negligence complaint, it requested claim coverage from Occidental under the “Truckers Coverage” commercial automobile policy that Diamond had purchased from Occidental for the one-year period beginning September 23, 2004. Diamond's policy provided up to $1 million liability coverage and obligated Occidental to “pay all sums an ‘insured’ legally must pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies, caused by an ‘accident’ and resulting from the ownership, maintenance or use of a covered auto.”

¶ 5 The policy's section I, “Item Three—Schedule of Covered Autos You Own,” contains a list of 14 insured trucks and cars, identified by their unique vehicle identification numbers, and their model year, trade name, and body type (e.g., “straight truck” or “van”). The Isuzu truck that Baranovsky was driving does not appear on this original policy schedule. However, a commercial policy change request form in the record on appeal shows that Diamond asked for the Isuzu truck to be added to its Occidental policy after the accident occurred based on a lease that was dated one day before the accident occurred. Diamond's insurance agent faxed the request to Occidental's agent on September 8, 2005, at 4:28 p.m. and the written lease dated September 7, 2005, indicated DA Fast was leasing the Isuzu to Diamond for a year. We emphasize that it is undisputed that DA Fast owned the Isuzu truck when the accident occurred and that Diamond has never owned that vehicle.

¶ 6 Diamond's “ ‘covered ‘autos' ” were defined by symbol 46 in a chart of coverage numbers that was included in section I of the policy. Coverage symbol 46 is labeled, “Specifically Described ‘Autos,’ ” and defined as “Only those ‘autos' described in Item Three of the Declarations for which a premium charge is shown.” Diamond contracted only for coverage symbol 46 and did not contract for other coverage symbols. For instance, Diamond did not contract for coverage symbol 41, which is labeled “Any ‘Autos' ”; or for coverage symbol 47, which is labeled, “Hired ‘Autos' Only,” and defined as “Only those ‘autos' you lease, hire, rent or borrow.”

¶ 7 Section I of the policy also contains what the parties refer to as the “automatic insurance provision.” It states:

“B. Owned Autos You Acquire After the Policy Begins

1. If Symbols 41, 42, 43, 44 or 45 are entered next to the coverage in Item Two of the Declarations, then you have coverage for ‘autos' that you acquire of the type described for the remainder of the policy period.

2. But, if Symbol 46 is entered next to a coverage in Item Two of the Declarations, an ‘auto’ you acquire will be a covered ‘auto’ for that coverage only if:

a. We already cover all ‘autos' that you own for that coverage or it replaces an ‘auto’ you previously owned that had that coverage; and

b. You tell us within 30 days after you acquire it that you want us to cover it for that coverage.”

¶ 8 Section II of the policy contains exclusions for employee injuries:

“B. Exclusions

This insurance does not apply to any of the following:

* * *

3. Workers' Compensation

Any obligation for which the ‘insured’ or the ‘insured's' insurer may be held liable under any workers compensation, disability benefits or unemployment compensation, disability benefits or unemployment compensation law or any similar law.

4. [Bodily injury to an employee of the insured arising out of and in the course of employment. This exclusion applies whether the insured may be liable as an employer or in any other capacity.]”

¶ 9 When Diamond requested claim coverage under this policy, Occidental responded that based on the facts alleged in the estate's complaint, there was no coverage. Occidental quoted the policy's express exclusions for workers' compensation liability and bodily injuries to employees and then generally stated, “By naming the specific grounds for this disclaimer of coverage, we do not waive any of our rights or any of the other provisions or conditions of the policy of insurance and specifically reserve all of our rights and remedies under this policy and under the statutes and common law.”

¶ 10 Diamond then answered the complaint but did not otherwise defend against the estate's allegations. A default judgment was entered against Diamond and the estate proved up damages totaling $4.4 million. Shortly after that, Diamond and the estate agreed that the estate would settle for an assignment of Diamond's insurance rights and the estate, as assignee, commenced this declaratory judgment action against Occidental.

¶ 11 Discovery ensued in the coverage case and indicated that DA Fast, an Illinois company, contracted to haul freight exclusively for Diamond, that Diamond was DA Fast's sole source of income, and that the relationship began in 1998 and continued for about a year after Baranovsky's accident. Benesiewicz (the president of DA Fast) testified that he bought the 1997 Isuzu truck at issue in April 2005. DA Fast's drivers' manifest logs showed that Benesiewicz drove the 1997 Isuzu as early as August 4, 2005. Another log sheet showed that Baranovsky drove the truck as early as August 5, 2005, which is when he first began driving for DA Fast, ostensibly as an independent contractor. The logs showed that the only truck Baranovsky drove for DA Fast during his six weeks with DA Fast was the 1997 Isuzu. Benesiewicz testified that he insured the Isuzu through Great West Casualty Company and that the policy was in effect when the accident occurred.

¶ 12 On cross-motions for summary judgment, the trial court found there was a question of fact as to whether Baranovsky was Diamond's employee, but that regardless of his employment status, Occidental was entitled to summary judgment. As we summarized earlier, the court found that summary judgment was warranted because the Occidental policy covered only vehicles that were owned by Diamond, the policy did not cover the leased truck that Baranovsky was driving, and the lease of the truck from DA Fast to Diamond did not trigger an “automatic insurance provision” for newly acquired vehicles. The court rejected the estate's contention that Diamond's insurer was estopped from raising defenses to coverage.

¶ 13 The estate now argues the summary judgment ruling should be reversed because Diamond timely fulfilled the requirements for automatic coverage of the newly acquired Isuzu when it submitted the change request form on September 8, within 30 days of...