W. Bend Mut. Ins. Co. v. TRRS Corp.

2022 IL App (2d) 210506

216 N.E.3d 332

465 Ill.Dec. 1081

WEST BEND MUTUAL INSURANCE COMPANY, Plaintiff-Appellee,

v.TRRS CORPORATION; Commercial Tire Services, Inc.; and Gary Bernardino, Defendants-Appellants.

No. 2-21-0506

Appellate Court of Illinois, Second District.

Filed September 9, 2022

James M. Urtis, of Chicago, for appellants TRRS Corporation and Commercial Tire Service, Inc. No brief filed for other appellant.

No brief filed for other appellant.

Thomas F. Lucas and Kristin D. Tauras, of McKenna Storer, of Chicago, for appellee.

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

¶ 1 Defendants, TRRS Corporation, Commercial Tire Services, Inc., and Gary Bernardino (collectively, TRRS) appeal from a grant of summary judgment in favor of TRRS's insurer, West Bend Mutual Insurance Company (West Bend), which denied coverage on an underlying workers’ compensation and personal injury claim. We agree with TRRS that questions of fact remain that may affect the result and that thus summary judgment was premature. Therefore, we vacate and remand.

¶ 2 I. BACKGROUND

¶ 3 TRRS, a local tire retreading and repair company, carried a commercial general liability and workers’ compensation policy with West Bend. TRRS has a plant in Lake in the Hills, where Bernardino was the plant manager. In April 2017, Bernardino was using a forklift to install a "tire curing chamber." During the installation, Bernardino went out onto the lift's raised platform, fell off, and injured his left shoulder. This was the second time Bernardino had injured his left shoulder at work.

¶ 4 While Bernardino was in the emergency department, Michael Sardinas, TRRS's general manager, came by to visit him. Sardinas told Bernardino that TRRS would compensate him for his lost wages and medical expenses, just as it had done with his first shoulder injury a few years earlier. Bernardino either used a company credit card to pay for his medical bills or submitted them to Sardinas for the next few months.

¶ 5 Then, in March 2018, Bernardino hired his own counsel and began to chart a new course. First, he filed a workers’ compensation claim and then a personal injury suit against TRRS and two of its suppliers. Bernardino v. Michelin North America, No. 18-LA-295 (Cir. Ct. McHenry County). When TRRS received Bernardino's notice of adjustment of claim from the Illinois Workers’ Compensation Commission (IWCC), TRRS both reported the workers’ compensation claim and tendered Bernardino's suit to West Bend.

¶ 6 In response, West Bend filed this coverage action seeking a declaratory judgment that it was not obligated to cover Bernardino's claim because it had received "late notice" of his injury, which occurred 11 months earlier. West Bend also sought a declaration that it was not obligated to reimburse TRRS for its voluntary payment of Bernardino's medical expenses before it filed its insurance claim (although the record does not indicate that TRRS sought to be reimbursed).

¶ 7 West Bend then asked the trial court to stay Bernardino's proceedings before the IWCC, which the court granted. Bernardino appealed the stay, and we reversed, explaining that West Bend's late-notice claim did not grant the trial court the authority under the doctrine of primary jurisdiction to suspend the IWCC proceedings. West Bend Mutual Insurance Co. v. TRRS Corp. , 2019 IL App (2d) 180934, ¶¶ 17-34, 440 Ill.Dec. 421, 153 N.E.3d 997. Our supreme court affirmed. West Bend Mutual Insurance Co. v. TRRS Corp. , 2020 IL 124690, 443 Ill.Dec. 250, 161 N.E.3d 902.

¶ 8 While that interlocutory appeal was pending, the parties conducted discovery and ultimately West Bend filed a motion for summary judgment. West Bend asserted that TRRS's late notice was per se unreasonable and dispositive. TRRS, however, maintained that the reasonableness of its notice to West Bend was a question of fact, which precluded the entry of summary judgment.

¶ 9 At a hearing, the trial court stated that it was difficult to determine the framework for evaluating such a claim under the holding in Country Mutual Insurance Co. v. Livorsi Marine, Inc. , 222 Ill. 2d 303, 305 Ill.Dec. 533, 856 N.E.2d 338 (2006). The trial court also stated that it was uncertain how to evaluate prejudice to the insurer in this context where the notice was, at the very least, delayed, even if the parties had not jointly stipulated that it was "late."

¶ 10 The trial court granted judgment in favor of West Bend. The court found that Sardinas, as a corporate manager, was a sophisticated insured and that the 11-month gap between the injury and the notice was unreasonable. The trial court also observed that "Illinois courts have found shorter delays to be ‘unreasonable.’ " Finally, the trial court noted that, under Livorsi , 222 Ill. 2d at 317, 305 Ill.Dec. 533, 856 N.E.2d 338, "once it is determined that the insurer did not receive reasonable notice of an occurrence or lawsuit, the policyholder may not recover under the policy, regardless of whether the lack of reasonable notice prejudiced the insurer." TRRS appealed.

¶ 11 II. ANALYSIS

¶ 12 Before this court, the parties maintain the same positions they asserted in the trial court, with TRRS asserting that the reasonableness of their late notice was a question of fact. West Bend, on the other hand, asserts that reasonableness here was a matter of law and that the trial court correctly granted summary judgment. We agree with TRRS.

¶ 13 Summary judgment is proper only where the pleadings and evidence on file show "that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." 735 ILCS 5/2-1005(c) (West 2020). The purpose of summary judgment is not to try a question of fact but, rather, to determine whether a triable question of fact exists. Lewis v. Lead Industries Ass'n , 2020 IL 124107, ¶ 14, 449 Ill.Dec. 195, 178 N.E.3d 1046. A genuine issue of material fact precluding summary judgment exists where the parties either dispute the material facts or, if the facts are undisputed, reasonable persons might draw different inferences from them. Id. ¶ 15. Our standard of review is de novo. Id.

¶ 14 We begin with the language of the insurance policy, as it is a contract between the parties. The policy provides that TRRS will notify West Bend "at once if injury occurs that may be covered by this policy." As the trial court noted, there are no Illinois cases within the last century construing the phrase "at once"; however, the word "immediately" has been uniformly interpreted to mean "within a reasonable time" or "as soon as practicable." (Internal quotation marks omitted.) West American Insurance Co. v. Yorkville National Bank , 238 Ill. 2d 177, 186, 345 Ill.Dec. 445, 939 N.E.2d 288 (2010). That same interpretation seems reasonably interchangeable for the phrase "at once," and as important, West Bend does not argue for a contrary interpretation. So, although West Bend points out that an 11-month delay is not literally "at once," the ultimate question is whether, under all of the circumstances, TRRS nonetheless provided West Bend with reasonable notice.

¶ 15 Here, unresolved issues of material fact mean that, at this juncture, we cannot say whether notice was reasonable or not. We note that, in Livorsi , the insureds conceded that the notice they gave their insurer was unreasonably late. Livorsi , 222 Ill. 2d at 309, 305 Ill.Dec. 533, 856 N.E.2d 338. But here, TRRS has asserted that their notice to West Bend was reasonable under the circumstances, which a fortiori makes Livorsi distinguishable.

¶ 16 Furthermore, we note that, in Livorsi , our supreme court identified several factors that might bear on the reasonableness of a party's untimely notice. See id. at 310-20, 305 Ill.Dec. 533, 856 N.E.2d 338.

Although these factors were discussed at length, that discussion was largely tangential to the holding because, again, there the insureds had conceded that their notice was unreasonable. Instead, their argument was that the insurer needed to plead and prove prejudice arising from the late notice, even if the lateness was unreasonable, and our supreme court rejected that notion. Rather, the supreme court held that prejudice is but one factor to be considered in evaluating whether the insured's late notice was unreasonable in the first place. Id. at 317, 305 Ill.Dec. 533, 856 N.E.2d 338.

¶ 17 In addition, in Yorkville , 238 Ill. 2d at 185, 345 Ill.Dec. 445, 939 N.E.2d 288, our supreme court was clear that "[t]he timeliness of an insured's notice to its insurer generally is a question of fact for the trier of fact." The Yorkville court also clarified that "a lengthy delay in providing notice is not an absolute bar to coverage provided the insured's reason for the delay is justifiable under the circumstances." Id. at 187, 345 Ill.Dec. 445, 939 N.E.2d 288. Then, the supreme court restated the Livorsi factors as follows:

"The following factors may be considered in determining whether notice to an insurer has been given within a reasonable time: (1) the specific language of the policy's notice provision; (2) the insured's sophistication in commerce and insurance matters; (3) the insured's awareness of an event that may trigger insurance coverage; (4) the insured's diligence in ascertaining whether policy coverage is available; and (5) prejudice to the insurer." Id. at 185-86, 345 Ill.Dec. 445, 939 N.E.2d 288 (citing Livorsi , 222 Ill. 2d at 313, 305 Ill.Dec. 533, 856 N.E.2d 338 ).

¶ 18 By our count, the trial court in this case considered three of the five listed factors: that is, the language of the policy; whether Sardinas, the insured's general manager—as opposed to TRRS itself—was a sophisticated insured; and that Sardinas was aware of Bernardino's injury. We determine that those factors were insufficient to be dispositive at this point in the litigation.

¶ 19 The trial court neglected to consider TRRS's claims regarding whether its late notice was...