Entire Book - Heyl Royster

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26th Annual Claims Handling Seminar
!
ed
ct
Casualty & Property
Thursday, May 19, 2011
Bloomington, Illinois
Suite 600
Chase Building
124 S.W. Adams Street
Peoria, IL 61602
309.676.0400
Springfield
Suite 575, PNC Bank Building
1 North Old State Capitol Plaza
PO Box 1687
Springfield, IL 62701
217.522.8822
Urbana
Suite 300
102 E. Main Street
PO Box 129
Urbana, IL 61803
217.344.0060
Rockford
2nd Floor, PNC Bank Building
120 West State St.
PO Box 1288
Rockford, IL 61105
815.963.4454
Edwardsville
Suite 100, Mark Twain Plaza III
105 West Vandalia Street
PO Box 467
Edwardsville, IL 62025
618.656.4646
Chicago
Theater District Business Center
60 W. Randolph St.
Suite 237
Chicago, IL 60601
312.762.9235
© 2011 Heyl, Royster, Voelker & Allen
heylroyster.com
May 19, 2011
IN RE: 26th Annual Claims Handling Seminar
Dear Seminar Attendee:
On behalf of the firm, I want to welcome you to our 26th Annual Claims Handling Seminar.
Our attorneys have endeavored to prepare materials and presentations which will benefit you in
your daily work, whether you are a claims professional, risk manager, corporate counsel or
employer.
Please be sure to fill out the database update and evaluation form which is with your materials.
Your feedback regarding this seminar and your suggestions for future topics are very important
to us. We also ask that you be sure to provide your e-mail address since we are now distributing
publications such as our Quarterly Review of Recent Decisions and Below the Red Line, our
workers’ compensation newsletter, via e-mail.
In order to receive Continuing Education verification, be sure to sign the attendance sheet at the
registration table both before the session begins and immediately following the conclusion of
our sessions this afternoon. Attendance verification certificates will be e-mailed only to those
who sign the attendance sheet both at the beginning and end of the seminar.
Once again, we appreciate your taking the time to join us today, and thank you for your
confidence in selecting us as your attorneys.
HEYL, ROYSTER, VOELKER & ALLEN
By:
Gary D. Nelson
Managing Partner
309.676.0400
[email protected]
CASUALTY & PROPERTY AGENDA
GET CONNECTED! UPDATES & CHANGES
THURSDAY, MAY 19, 2011
1:00 - 4:30 P.M.
BLOOMINGTON, ILLINOIS
1:00 p.m.
Welcome & Introductions
– Gary Nelson, Peoria
1:05 p.m.
Investigation of Catastrophic Accidents
– Joe Feehan, Peoria
1:20 p.m.
Insurance Coverage Update
– Patrick Cloud, Edwardsville
1:35 p.m.
Liquor Liability: Social Hosts & Other Issues
– Mike Denning, Rockford
1:50 p.m.
Premises Liability Update
– Jeff Bash, Edwardsville
2:05 p.m.
Property Insurance Case Law Update
– Dave Perkins, Peoria
2:20 p.m.
Recent Developments: Pain Doctors & Injections
– Matt Hefflefinger, Peoria
2:30 p.m.
Break
2:50 p.m.
What’s on the Horizon? Cases Pending in the Illinois Supreme Court
– Craig Unrath, Peoria
3:10 p.m.
Medicare Set-Aside Trusts
– Brad Peterson, Urbana
3:20 p.m.
Settlement Pitfalls
– Maura Yusof, Chicago
3:35 p.m.
Uninsured and Underinsured Motorist Update
– Mark McClenathan, Rockford
3:50 p.m.
Building a Solid Foundation for Defense: Statement Taking Techniques
– Heidi Ruckman, Rockford
4:00 p.m.
Building a Solid Foundation for Defense: Gathering and Preservation of Evidence
– Doug Heise, Edwardsville
4:15 p.m.
Case Law Update
– Matt Booker, Springfield
4:30 p.m.
Cocktails & Hors d’oeuvres
CASUALTY AND PROPERTY
CONTACT ATTORNEYS
HEYL, ROYSTER, VOELKER & ALLEN
Rockford
Chicago
ILLINOIS
Peoria
Urbana
Springfield
St. Louis
PEORIA
Gary D. Nelson
[email protected]
309.676.0400
SPRINGFIELD
Fredrick P. Velde
[email protected]
217.522.8822
URBANA
Edward M. Wagner
[email protected]
217.344.0060
ROCKFORD
Douglas J. Pomatto
[email protected]
815.963.4454
Edwardsville
EDWARDSVILLE
Robert H. Shultz, Jr.
[email protected]
618.656.4646
CHICAGO
Douglas J. Pomatto
[email protected]
815.963.4454
www.heylroyster.com
CASUALTY & PROPERTY
GET CONNECTED! UPDATES & CHANGES
Welcome & Introductions ...................................................................................................................................... A-1
Investigation of Catastrophic Accidents .............................................................................................................B-1
Insurance Coverage Update................................................................................................................................... C-1
Liquor Liability: Social Hosts & Other Issues ................................................................................................... D-1
Premises Liability Update ......................................................................................................................................... E-1
Property Insurance Case Law Update .................................................................................................................. F-1
Recent Developments: Pain Doctors & Injections ......................................................................................... G-1
What’s on the Horizon? Cases Pending in the Illinois Supreme Court .................................................. H-1
Medicare Set-Aside Trusts ........................................................................................................................................ I-1
Settlement Pitfalls ........................................................................................................................................................J-1
Uninsured and Underinsured Motorist Update ...............................................................................................K-1
Building a Solid Foundation for Defense: Statement Taking Techniques ............................................. L-1
Building a Solid Foundation for Defense: Gathering and Preservation of Evidence ....................... M-1
Case Law Update ........................................................................................................................................................ N-1
The cases and materials presented here are in summary and outline form. To be certain of their applicability and use
for specific claims, we recommend the entire opinions and statutes be read and counsel consulted.
© 2011
2010 Heyl, Royster, Voelker & Allen
WELCOME & INTRODUCTIONS Presented and Prepared by:
Gary D. Nelson
[email protected]
Peoria, Illinois • 309.676.0400
PEORIA • SPRINGFIELD • URBANA • ROCKFORD • EDWARDSVILLE • CHICAGO
A-1
Gary D. Nelson
- Managing Partner
Professional Recognition
 Martindale-Hubbell AV Rated
 Selected as a Leading Lawyer in Illinois. Only
five percent of lawyers in the state are named
as Leading Lawyers.
 Named to the Illinois Super Lawyers list (20082011). The Super Lawyers selection process is
based on peer recognition and professional
achievement. Only five percent of the lawyers
in each state earn this designation.
 Illinois State Bar Association, Past Chair,
Insurance Law Section Council
 American Bar Association, Past Chair, SelfInsurers & Risk Managers Committee
 American Bar Association, Past Chair, Insurance
Law Coverage Committee
 Illinois Association of Defense Trial Counsel,
Past Chair, Insurance Coverage Committee
 Abraham Lincoln American Inn of Court
(Master)
Gary currently serves as the Managing Partner of the
firm. He began his legal career with Heyl Royster in
1977 and became a partner with the firm in 1985.
Gary is also the Chair of our state-wide Insurance
Coverage Practice Group. He concentrates his practice
on liability insurance coverage cases for CGL,
umbrella/excess, automobile, home, life, health and
disability policies, as well as civil litigation in trial and
ADR settings with a special focus on trucking and
common carrier disputes, construction litigation, and
architect/engineer professional liability claims.
He has represented more than 100 insurers and selfinsureds in over 1,000 cases in his career.
He has litigated a wide range of coverage issues in
both the state and federal courts, including the
defense of insurance carriers in bad faith and
vexatious refusal to pay cases as well as representing
insurance agents in errors and omissions claims. He
has also had the opportunity to represent several
trucking companies and construction companies in
catastrophic injury cases, utilizing accident
reconstruction and animation techniques, defending
against fatigue, distraction, and conspicuity issues, as
well as the medical and biomechanical issues
confronted in those types of catastrophic injury cases.
Professional Associations
 Council on Litigation Management
 Federation of Defense and Corporate Counsel
 Defense Research Institute
 Illinois Association of Defense Trial Counsel
 Trucking Industry Defense Association
 American Bar Association
 Illinois State Bar Association
 Peoria County Bar Association
Gary is a frequent speaker on insurance issues to bar
and industry groups, both in Illinois and nationally, as
well as addressing motor carrier groups and counsel
and design professionals on issues unique to those
industries. He has authored a chapter on "Other
Insurance" in The Law & Practice of Insurance
Coverage Litigation published by West Group and has
published a chapter on "The Intentional Act Exclusion"
in the Illinois Institute of Continuing Legal Education
handbook on Commercial and Professional Liability
Insurance.
Court Admissions
 State Courts of Illinois
 United States District Court, Central District of
Illinois (Trial Bar)
 United States Courts of Appeals, Seventh
Circuit
 United States Supreme Court
Education
 Juris Doctor, University of Illinois, 1977
 Bachelor of Arts-Political Science, University of
Illinois, 1972
Gary served in the U.S. Army in Korea from 1972-1974.
A-2
Learn more about our speakers at www.heylroyster.com
INVESTIGATION OF CATASTROPHIC ACCIDENTS Presented and Prepared by:
Joseph G. Feehan
[email protected]
B-1
INVESTIGATION OF CATASTROPHIC ACCIDENTS
I.
INTRODUCTION............................................................................................................................................B-3
II.
COORDINATION OF THE INITIAL INVESTIGATION .........................................................................B-3
III.
THE INITIAL INVESTIGATION ...................................................................................................................B-4
A.
B.
C.
The First Call ....................................................................................................................................B-4
Immediately Notify Insured’s Management or Employer..............................................B-4
Gather Data and Evidence at the Accident Site .................................................................B-4
1.
2.
3.
4.
5.
6.
D.
E.
F.
G.
H.
I.
J.
K.
L.
M.
IV.
Time and Location .........................................................................................................B-4
Accident Scene ................................................................................................................B-5
Parties Involved ...............................................................................................................B-6
Witnesses, Law Enforcement, and Emergency Responders ...........................B-6
Vehicles Involved and Property Damage ..............................................................B-7
Injuries and Fatalities ....................................................................................................B-8
Respond to the Injured ...............................................................................................................B-8
Secure the Accident Scene ........................................................................................................B-8
Accident Reconstructionist and Other Experts ..................................................................B-8
Alcohol and Drug Testing ..........................................................................................................B-9
Care and Support for the Insured Employee(s) .................................................................B-9
Obtain Witness Statements .................................................................................................... B-11
Secure Documents ..................................................................................................................... B-11
Secure Vehicle Computer Devices ....................................................................................... B-12
Obtain Reports and Evidence from the Authorities ...................................................... B-13
Internet Resources ..................................................................................................................... B-13
CONCLUSION ............................................................................................................................................. B-13
B-2
INVESTIGATION OF CATASTROPHIC ACCIDENTS
I.
INTRODUCTION
When a catastrophic accident occurs, prompt and efficient collection of evidence is critical to
minimizing liability exposure. Within 24 hours of the incident, if the fieldwork has not begun, the
evidence begins to fade away. Weather conditions, emergency personnel, law enforcement, and
other factors can quickly change the accident scene and may remove critical pieces of evidence.
Witnesses’ memories of specific details begin to fade as the accident is no longer fresh. As time
elapses following the accident, the who, what, when, where, why, and how of a catastrophic
accident become unattainable.
With proper planning and coordination, accident investigators can maximize the collection and
preservation of critical pieces of evidence. At the same time, prompt action can minimize the
potential for making common investigation errors. The key is to develop a thorough method for
collecting reliable, clear, and comprehensive information about an accident which will allow for
an early evaluation of liability and damages.
II.
COORDINATION OF THE INITIAL INVESTIGATION
It may be advisable to designate an “investigation coordinator” to oversee the initial
investigation in order to eliminate confusion and redundancy. It is often prudent to promptly
retain the services of an attorney and a law firm with experience in handling the initial
investigation, as well as the defense of catastrophic accidents. The benefits of involving an
attorney from the very beginning of the investigation include:

Coordination of investigative efforts to reduce duplicate and unnecessary investigation
during the critical initial stages;

Assistance with the assignment and hiring of claims
reconstructionists, and other specialized investigators or experts;

Undertake necessary action to ensure the preservation of helpful evidence at the
accident scene and to avoid spoliation of evidence;

Protection of all communications concerning the investigation via the attorney-client and
attorney-work product privileges; and

Formulate an initial evaluation of the potential liability issues and gear the investigation
toward the defense of impending litigation.
B-3
adjusters,
accident
It is helpful to have a list of attorneys and law firms prepared in advance by state and locality,
along with contact information. Retain a law firm that has the resources which are required to
promptly coordinate the investigation and the experience to ensure that the necessary
components are in place to successfully complete the initial investigation, including retention of
highly qualified experts.
III.
THE INITIAL INVESTIGATION
A.
The First Call
The first call usually comes from the insured driver, employee, company, or law enforcement
officials.
Obtain preliminary facts from these individuals and entities, such as:

Whether the accident involved any injuries or fatalities.

Extent of property damage – to vehicles, equipment, buildings, and products.

Location, type, and configuration of accident scene.

Accident conditions, i.e., weather, time of day, lighting, etc.

Details of the accident, i.e., location of vehicles, equipment, buildings, or products
involved, identification of witnesses, nature and extent of physical evidence, etc.
 Existence of photographs or videotapes.
B.

Immediately Notify Insured’s Management or Employer
Compile a list of home, office, fax, e-mail, pager, and cell phone contacts for the insured
company officials who will serve as contacts and assist throughout the investigation.
C.
Gather Data and Evidence at the Accident Site
Depending on the severity of the accident, promptly retaining an accident reconstructionist,
engineer, or other experts/investigators can aid tremendously in determining exposure, event
chronology, and necessary additional investigation. After obtaining the preliminary facts, the
investigation moves to the scene of the accident where there are crucial pieces of evidence that
must be secured and preserved as soon as possible.
1.

Time and Location
Date and time of the accident
B-4

Precise location: state/county/city; route or street, street address; building identification
or name; intersection or junction of routes; distance from nearest community; distance
from mile markers, utility poles, highway bridges, etc.
2.
Accident Scene
(a)

Get to the scene as soon as possible to determine the physical factors and/or traffic
conditions that may have played a role in causing the accident.
(b)

Time is of the Essence
Construct a Chronology
Obtain statements from witnesses to determine the sequence of events. If the incident
was a car or truck accident, obtain information on the directions of travel of each vehicle
to the point of impact and from the point of impact to its final resting place.
(c)
Measurements

Width of the traffic lanes or highway, clearance between parked vehicles, buildings,
traffic islands, or other obstructions.

Distance of the site of the accident or point of impact from identifiable stationary
objects, such as telephone poles, fire hydrants, mile posts, etc.

Length of skid marks and direction the vehicles traveled after the point of impact.

Distance from the point of impact to detached parts of vehicles.
(d)
Photographs/Videotapes

Scene from various angles.

Resting position of vehicles, equipment, products or other physical evidence involved.

Damage to all vehicles, property, buildings, equipment, products or other physical
evidence involved.

Pre-accident paths of the vehicles, i.e., tire tracks, skid marks, fluid trails, etc.

Area where debris landed.

Avoid gory photographs of injured parties.
B-5

Determine existence of security video.

Potential Police/Fire Department Computer Evidence and vehicle generated video.

Cell phone photographs/video.
(e)
Record Road, Traffic, Weather, and Lighting Conditions
(f)
Electronic Data

Potential Computer Forensic Expert

Preserve Cell Phones, Blackberrys, etc.

Preserve Computers
3.

Parties Involved
Names and addresses of:
–
–
–
Injured party(ies), co-workers, supervisors, other potential witnesses.
Owners, drivers, and passengers of all vehicles involved.
Owners of all other property involved.

Determine the location of each party before and after the accident.

Determine which parties sustained injuries.

Identify fatalities and try to determine whether they survived the accident for any period
of time.
4.
Witnesses, Law Enforcement, and Emergency Responders
Witness Statements: The most important information about an accident usually comes from
witnesses. Therefore, witness statements are vital to the investigation.

Allow the witness to tell his/her own story and then ask clarifying questions.

Interview witnesses separately.

Do not reveal the name or testimony of one witness to another.

Determine the source of the witness’ information, whether it is from first-hand
observation or hearing from another witness.
B-6

Obtain a signed or recorded statement from each witness, if appropriate.
Information to obtain:

Names and addresses of individuals first on the scene.

Interview investigating police officers and any state or federal agency officials (i.e., OSHA,
DOT, State Fire Marshal EPA, etc.) to determine their initial opinions, if they
photographed the scene, their level of expertise in accident reconstruction, and if they
surveyed the area. Also, obtain the name, badge numbers, and address of each law
enforcement or agency official.

Identify the ambulance service and emergency technicians.

Identify fire and rescue personnel on the scene.

Identify wrecker or towing service and their employees to determine the condition of the
vehicles/cargo/equipment/debris transported and whether further damage was
sustained during transport.

Describe witnesses who refuse to identify themselves, i.e., license plate info, physical
characteristics, etc.
5.

Vehicles Involved and Property Damage
Insured vehicle:
–
–
Make, model, year of manufacture, serial number, body type, type of cargo, and
gross weight.
Identify each vehicle in a combination unit, i.e., tractor, trailer, etc.

For any vehicles operated by a motor carrier, obtain the certificate or permit number
issued by the U.S. Department of Transportation or state agency.

For any leased vehicles, record the names and addresses of both the lessor and lessee.

If a vehicle is a bus, obtain the information listed above, as well as the number of
passengers on board, a list of the passengers, and a diagram showing where each
passenger was sitting or standing. It is important to obtain an immediate count of
passengers.

If a vehicle is a passenger car or other small vehicle, record the make, year of
manufacture, VIN number, body type, and current license number.
B-7

Describe the damage:
–
–
–
sustained by each vehicle involved;
to any cargo in any vehicle; and
to any real property.

Estimate the dollar value of damage to each vehicle, its cargo, and other property
damage.

Determine the cause of damage to each vehicle and related property.
6.
Injuries and Fatalities

Obtain name, address, sex, age, marital status, number of dependent children, and
employment status of each injured person.

Describe the nature and extent of injuries.

Obtain the name of the doctor and hospital involved in the initial treatment. Describe the
nature of the treatment administered. If possible, identify the treating physician(s).

For fatalities, obtain the clinical cause of death and events that established the cause of
death.

Obtain the date and place of death for each person killed, including persons dying at a
later date from injuries sustained in the accident. Possible sources of information include
obituaries, newspaper articles, and autopsy or medical examiner’s reports.
D.
Respond to the Injured
Respond to the injured by determining the extent of the injuries and obtaining appropriate
medical care.
E.
Secure the Accident Scene
Secure the accident scene in coordination with local law enforcement to prevent further
accidents, injuries, damage, and to preserve the evidence.
F.
Accident Reconstructionist and Other Experts
The retention of an accident reconstructionist, engineer, or other appropriate expert should be
made by or with the attorney so that any potential privileges will be preserved.
B-8
G.
Alcohol and Drug Testing
In trucking accidents, Federal Motor Carrier Regulations require that employers must conduct
alcohol testing within eight hours of the accident and drug testing must occur within 32 hours
of the accident. If the tests are not completed within the time requirements, the trucking
company must maintain a file with documentation of the reasons why the tests were not
administered.
Testing must be completed for the truck driver if:

The accident involved the loss of human life or

The driver received a citation within eight hours of the accident under state or local law
for a moving violation, if the accident involved:
–
–
bodily injury to any person who immediately receives medical treatment away from
the scene of the accident; or
one or more of the vehicles involved in the accident incurred disabling damage such
that the vehicle had to be towed or transported away from the accident scene.
Federal law sets forth the requirements for drug testing in the Code of Federal Regulations, 49
C.F.R. § 382.303. Proper procedures should be in place that go to great lengths to complete
these tests in order to avoid later accusations and allegations by potential plaintiffs.
Alcohol and drug testing should also be considered in other catastrophic accidents. Frequently,
law enforcement or other governmental officials may request that the plaintiff or the insured’s
employees undergo testing. Even if such tests are not always required, it may be helpful to show
that your insured’s employee or driver was not under the influence.
H.
Care and Support for the Insured Employee(s)
By the time the attorney or the claims adjuster comes into contact with the insured, the
employee(s) involved frequently has already given a statement to the police or other
governmental agency. Unfortunately, employees involved in accidents are often in a high level
of mental and emotional distress. As a result, their statements or representations are often
incoherent, full of remorse, or distorted by their state of mind. For better or worse, statements
made by such employees often become the most significant version of events due to their
proximity in time with the accident. Other than the information required by law enforcement, it
is imperative that the insured employee(s) should not give any written or recorded
statements.
An experienced claims handler and/or attorney can work to protect the employee(s) from
making spontaneous, emotional and discoverable admissions and speculations. Also, in the
B-9
event of possible criminal charges, the attorney can retain criminal defense counsel to protect
the employee(s) rights.
Consider the following in dealing with the insured’s employee(s):

Contact the employee immediately and assure them that you are on their side.

Determine whether the employee needs medical attention.

Arrange for the employee to submit to alcohol and drug testing.

Determine if the employee needs counseling, refer him to his employer’s Employer
Assistance Program.

Evaluate the content of any statement given by the employee to the investigating law
enforcement authorities and to any other parties.

Obtain the employee’s own account of the accident, including the chronological events
leading up to the accident, and facts leading to the cause of the accident.

Determine the location of documents related to the vehicle, equipment or product
involved.

Obtain authorization from the employee for release of their medical records, determine if
he suffers from any medical conditions or wears glasses or contacts.

Obtain employee’s personal contact information.

Advise employee on how to deal with the media.

Explain to the employee what to expect if a civil suit is filed or if criminal charges are
made against him.

Determine if the employee received a citation or ticket and if so, make arrangements to
respond to the citation or ticket.

Determine if criminal charges have been filed and make arrangements for a defense, if
appropriate.

Determine if there were any maintenance, mechanical, or operational problems
experienced before the accident with the vehicle, equipment, or product involved.
B-10
I.
Obtain Witness Statements
Often, the most important source of information comes from persons who were involved in
investigating or responding to the scene. Preliminary facts that may not be ascertainable at a
later date, such as condition of injured parties, initial statements, physical evidence, roadway and
weather conditions, status of the vehicles, equipment or product, etc. are essential.
Statements should be obtained from the following persons:





Insured employees
Company employees on the scene
Law enforcement
Emergency responders: fire and EMT
Eyewitnesses
J.
Secure Documents
Documents often serve as key pieces of evidence in litigation. They contain information that may
reveal confidential information or information that may lead to liability. Some documents may
be protected by a privilege, which would prevent disclosure to plaintiffs. However, many
documents are not privileged, and may later be subject to a spoliation claim if the documents
are not secured from the very beginning of the investigation and then preserved.
Even if litigation is uncertain, it is still worthwhile to secure the following documents:

Driver’s logs for 30 days prior to the accident.

Equipment inspection reports for 30 days prior to the accident.

Dispatch records relating to the driver for a week prior to the accident.

Bills of lading and shipping documents for the trip involving the accident.

Fuel receipts for 30 days prior to the accident.

Weight tickets for at least one week prior to the accident.

Toll receipts for at least one week prior to the accident.

All maintenance files for the vehicle, equipment, or product involved.

Employer’s investigation file, including photographs and statements, secured by its own
employees.
B-11

Employer’s policies, procedures, and training materials in force at the time of the
accident.

Information relating to the insured’s employees:
–
–
–
–
–
K.
qualifications and credentials.
drug and alcohol testing results.
payroll records for 30 days prior to the accident.
cell phone records for the month of the accident.
any disciplinary record in personnel file.
Secure Vehicle Computer Devices
Heavy trucks manufactured after the mid-1990s are likely to be equipped with on board
electronic control modules (“ECM”), which record the truck’s movements prior to the accident.
Similarly, some trucks may be equipped with global position systems (“GPS”), which can
calculate the exact positioning of a truck. Passenger cars also have technology that can provide
useful accident information. Some newer cars contain a car data retrieval (“CDR”) system that
downloads information from the air bag control system. All these computer devices can provide
critical information such as the speed of the vehicle, the driver’s actions leading up to, during,
and after an accident.
Likewise, many other types of products and equipment (i.e., tractors, combines, large machinery)
contain similar types of computer generated information stored in devices on the equipment.
In order to preserve this type of evidence, consider the following steps:

After the vehicle, equipment or product is released by the authorities, secure it until a
technician can download the ECM data.

During the retrieval of the information, have a court reporter present to swear in the
technician to establish on the record his qualifications and procedures in downloading
the data.

After downloading, secure a digital and hard copy of the data.

Contact the insured company to determine if they have any GPS or other digital data.

Contact the owner of any cars or other passenger vehicles involved in the accident and
try to reach an agreement to preserve and obtain the CDR information.
B-12
L.
Obtain Reports and Evidence from the Authorities
Another source of critical evidence and data is the investigating law enforcement agencies.
Beyond the police report, documents from state agencies and other authorities may provide
important information. Obtain the following documents from the appropriate authorities:

Any commercial motor vehicle inspection reports regarding the working condition of the
equipment.

Any citations issued by IDOT, other state agencies, or other local law enforcement
officials.

Preliminary, final, and supplemental accident reports.

Any photographs or diagrams of the scene and the objects involved in the accident.

Any accident reconstruction files generated by authorities with such expertise.

Official weather reports.
M.
Internet Resources
Investigate parties and witnesses through Facebook, MySpace, and other online resource sites.
IV.
CONCLUSION
A catastrophic accident can occur at any time. Conducting a thorough initial investigation is
critical to preserve the evidence which will serve as the foundation of the ongoing investigation
and potential litigation.
In order to conduct the initial investigation, claims handlers should prepare and plan the
procedures for conducting the investigation in advance. It is advisable that claims adjusters
compile emergency contact information for their insureds. A roster of attorneys and
independent adjusters by state and locality should be kept to allow for immediate access to
investigation coordinators and investigators after a major accident.
A prompt and thorough investigation will allow you to gain an advantage in avoiding mistakes –
which could otherwise result in unfavorable factual surprises later on, during litigation.
Investigating and preserving the evidence will enable you mitigate the damages by settling the
case early; laying the foundation for a defense to avoid prolonged litigation; and the
opportunity to reduce the risk of a negative outcome in the event the case goes to trial.
B-13
Joseph G. Feehan
- Partner
Publications
 Life After "Same Part of the Body:" An Update
on Admissibility of Prior Injuries, Illinois Bar
Journal
 Contract Law Handbook; Chapter on UCC
Warranties, Disclaimers and Limitations, Illinois
Institute for Continuing Legal Education (2008
and 2005 editions)
 Life After Daubert and Kumho Tire: An Update
on the Admissibility of Expert Testimony,
Illinois Bar Journal
Joe has spent his entire legal career with Heyl Royster,
beginning in 1988 in the Peoria office. He is the cochair of the firm's Truck/Motor Carrier Litigation
Practice Group. Joe concentrates his expertise in all
areas of civil litigation including product liability,
sexual torts, trucking/transportation, premises liability,
auto, and commercial litigation.
In recent years, Joe has developed a special focus on
defending sexual tort claims, particularly those
brought against corporations and religious entities.
Many of his cases are against leading Chicago and
national counsel where damages sought against these
target defendants typically reach several million
dollars.
as Leading Lawyers
Distinguished Service Award, 2007
Although always prepared to try cases when
necessary, Joe is a skilled negotiator and has had
great success resolving cases through mediation. Over
the last five years, Joe has resolved over 40 lawsuits
through mediation.
Joe is a frequent speaker at programs and seminars
on civil litigation, including such topics as effective
trial techniques, expert witnesses, and evidentiary
issues. Joe has published many articles on various trial
practice and evidence issues. He served as Editor-inChief of the Illinois Defense Counsel Quarterly, the
official journal of the Illinois Association of Defense
Trial Counsel, and as a contributor to the IDC
Quarterly's Evidence and Practice Tips column for
several years. Joe co-authored the chapter on UCC
Warranties in the Contract Law Handbook published
in 2008 and 2005 by the Illinois Institute of Continuing
Legal Education. Currently, Joe serves as Chair of the
Peoria County Bar Association's Continuing Legal
Education Committee and is President of the Abraham
Lincoln Chapter of the Inns of Court. Joe was recently
elected to the Board of Directors of the Illinois
Association of Defense Trial Counsel.
 National Diocesan Attorneys Association
 Trucking Industry Defense Association
(IDC Quarterly regular columnist, past Editorin-Chief, and current Board member)
 Abraham Lincoln Inn American Inn of Court
(presently President)
 Peoria County Bar Association (Chair of
Continuing Legal Education Committee)
Court Admissions
 United States District Court, Central and
Northern Districts of Illinois
Joe enjoys an "AV" rating by Martindale-Hubbell. He
has been designated an Illinois "Super Lawyer" (top
five percent) as a result of a survey of Illinois attorneys
and judges conducted by Chicago magazine, as were
13 of his partners. Joe has also been selected as a
Leading Lawyer in Illinois.
Education
 Juris Doctor (Cum Laude), Northern Illinois
University College of Law, 1988
 Bachelor of Arts-Business Administration,
Illinois State University (1983)
B-14
INSURANCE COVERAGE UPDATE Presented and Prepared by:
Patrick D. Cloud
[email protected]
Edwardsville, Illinois • 618.656.4646
C-1
INSURANCE COVERAGE UPDATE
I.
WHO IS AN INSURED – ADDITIONAL INSURED ENDORSEMENTS.......................................... C-4
A.
B.
II.
INSURING AGREEMENTS AND LIMITS OF LIABILITY ..................................................................... C-6
A.
B.
C.
III.
Pekin Ins. Co. v. Roszak/ADC, LLC .......................................................................................... C-4
Pekin Ins. Co. v. Pulte Home Corp. ......................................................................................... C-5
Scope of “Bodily Injury” Coverage: Medmarc Cas. Ins. Co.
v. Avent America, Inc. .................................................................................................................. C-6
Definition of Advertising Injury: Santa’s Best Craft, LLC
v. Zurich American Ins. Co........................................................................................................ C-7
Limits of Liability and Anti-Stacking Clauses: Progressive
Premier Ins. Co. of Illinois v. Kocher ...................................................................................... C-8
EXCLUSIONS ................................................................................................................................................. C-9
A.
B.
Intellectual Property Exclusion: Santa’s Best Craft, LLC
v. St. Paul Fire and Marine Ins. Co. ......................................................................................... C-9
Intentional Acts Exclusion ....................................................................................................... C-10
1.
2.
3.
C.
IV.
American Family Mut. Ins. Co. v. Guzik ................................................................ C-10
West Bend Mut. Ins. Co. v. State ............................................................................. C-10
Pekin Ins. Co. v. Wilson .............................................................................................. C-11
Reasonable Belief Exclusion: Founders Ins. Co. v. Munoz ............................................ C-12
GENERAL PROVISIONS OF THE POLICY ........................................................................................... C-12
A.
B.
Choice of Law: Liberty Mut. Fire Ins. Co. v. Woodfield Mall, LLC................................ C-12
Termination of Insurer/Insured Relationship ................................................................... C-13
1.
2.
C.
Cancellation versus Non-Renewal: Yunker v.
Farmers Auto. Management Corp. ......................................................................... C-13
Cancellation of Policy Covering a Government Vehicle:
American Home Assurance Co. v. Taylor............................................................. C-14
Duties of the Insured ................................................................................................................ C-14
1.
2.
Lack of Notice: West American Ins. Co. v. Yorkville Nat. Bank .................... C-14
Duty to Cooperate: Founders Ins. Co v. Shaikh ................................................ C-15
C-2
V.
MUTUAL MISTAKE BY THE PARTIES ................................................................................................... C-16
A.
B.
Mutual Mistake of Fact: Mid-Century Ins. Co. v.
Founders Ins. Co. ......................................................................................................................... C-16
Mutual Mistake of Law: Hartford Cas. Ins. Co. v. Moore............................................... C-17
VI.
AGENCY: APPARENT AGENCY: FIRST CHICAGO INS. CO. V. MOLDA .................................... C-18
VII.
DUTY TO DEFEND: DETERMINATION OF DUTY TO DEFEND:
KONSTANT PRODUCTS, INC. V. LIBERTY MUT. FIRE INS. CO. .................................................. C-19
VIII.
INTERPLEADERS AND THE DUTY TO DEFEND: AMERICAN SERVICE INS.
CO. V. CHINA OCEAN SHIPPING CO. ................................................................................................ C-20
C-3
INSURANCE COVERAGE UPDATE
I.
WHO IS AN INSURED – ADDITIONAL INSURED ENDORSEMENTS
A.
Pekin Ins. Co. v. Roszak/ADC, LLC
In Pekin Ins. Co. v. Roszak/ADC, LLC, 402 Ill. App. 3d 1055, 931 N.E.2d 799, 341 Ill. Dec. 902 (1st.
Dist. 2010), a subcontractor added a general contractor to its CGL policy as an additional
insured. The additional insured endorsement contained the following provisions:
Who Is An Insured (Section II) is amended to include as an insured any person
or organization for whom you are performing operations when you and such
person or organization have agreed in writing in a contract or agreement that
such person or organization be added as an additional insured on your policy.
Such person or organization is an additional insured only with respect to liability
incurred solely as a result of some act or omission of the named insured and not
for its own independent negligence or statutory violation.
Pekin Ins. Co., 402 Ill. App. 3d at 1058.
A worker was injured at the jobsite and sued the general contractor and the subcontractor. The
complaint against the general contractor contained two counts: 1) negligence and 2) premises
liability. The counts against the general contractor made various assertions of negligence,
including assertions that the general contractor “[f]ailed to reasonably inspect, supervise and
control the work site and the work being done thereon,” “[f]ailed to follow it[s] own safety rules,”
and “[f]ailed to follow OSHA safety rules and procedures.” Id. at 1057. Each count against the
general contractor ended with an assertion: “That as a direct and proximate result of the
negligence of [the general contractor], [the injured worker] was struck by a load of structural
steel, suffering serious and permanent personal and pecuniary injuries.” Id. at 1057-1058. The
complaint made no allegations about the relationship between the general contractor and
subcontractor.
The general contractor tendered its defense to the subcontractor’s insurer pursuant to the
additional insured endorsement. The insurer denied the defense, and a declaratory judgment
action ensued. On appeal, the Illinois Appellate Court found that no duty to defend existed
under the additional insured endorsement. In doing so, the Appellate Court compared the
allegation of the complaint to the terms of the additional insured endorsement. The Appellate
Court noted that general contractor was only an additional insured under the subcontractor’s
policy if the general contractor was being held liable “solely as a result of some act or omission
of the” subcontractor and “not for its own independent negligence or statutory violation.” Id. at
1060. The Appellate Court found that nothing in the injured party’s complaint suggested that
the general contractor would be held vicariously liable for the subcontractor’s negligence.
Rather, the complaint sought recovery for the general contractor’s own negligence. As a
C-4
consequence, the Appellate Court read the injured worker’s complaint “as alleging direct liability
against [the general contractor], which is not liability ‘incurred solely as a result of some act or
omission of the named insured’ as required for coverage.” Id. at 1066. Thus, the additional
insured endorsement did not apply.
B.
Pekin Ins. Co. v. Pulte Home Corp.
In Pekin Ins. Co. v. Pulte Home Corp., 404 Ill. App. 3d 336, 935 N.E.2d 1058, 343 Ill. Dec. 830 (1st
Dist. 2010), a general contractor was an additional insured under its subcontractor’s CGL policy.
The additional insured endorsement stated as follows:
Who is an Insured (Section II) is amended to include as an insured any person
or organization for whom you are performing operations when you and such
person or organization have agreed in writing in a contract or agreement that
such person or organization be added as an additional insured on your policy.
Such person or organization is an additional insured only with respect to liability
incurred solely as a result of some act or omission of the named insured and not
for its own independent negligence or statutory violation.
Pekin Ins. Co., 404 Ill. App. 3d at 338.
A worker at the jobsite was injured and sued the general contractor and the subcontractor,
alleging that he was injured when he fell through an unguarded sewer manhole. The injured
worker sued both the general contractor and subcontractor asserting that their negligence
caused his injuries. The allegations of the complaint asserted theories of direct negligence. It did
not explicitly assert a theory of vicarious liability. That said, in response to requests for
admission, the injured worker admitted that “he anticipated contending at the time of trial that
[the general contractor’s] liability in the underlying litigation is vicarious to or imputed from acts
or omissions of” the subcontractor. Furthermore, the subcontractor made “several admissions
that raise the possibility that it will be found solely liable to [the injured worker] in the
underlying litigation.” Id. at 342.
The general contractor tendered its defense to the subcontractor’s insurer pursuant to the
above-referenced additional insured endorsement, and the subcontractor’s insurer denied the
claim. In the ensuing coverage litigation, the Appellate Court ruled in favor of the general
contractor and found that the subcontractor’s insurer had a duty to defend under the
endorsement. According to the Appellate Court, when determining the existence of a duty to
defend, it is not restricted to a review of the underlying complaint but can consider matters that
fall outside the pleadings. As such, although, “pursuant to the allegations in the underlying
complaint, [the general contractor] might be found independently liable to [the injured worker],”
Id. Consideration of the above-referenced admissions by the injured worker and the
subcontractor suggested that it would be possible, if not likely, that any liability attributed to the
general contractor would be vicarious in nature. Therefore, the additional insured endorsement
was triggered.
C-5
II.
INSURING AGREEMENTS AND LIMITS OF LIABILITY
A.
Scope of “Bodily Injury” Coverage: Medmarc Cas. Ins. Co. v. Avent America,
Inc.
In Medmarc Cas. Ins. Co. v. Avent America, Inc., 612 F.3d 607 (7th Cir. 2010), a manufacturer was
insured under a CGL policy obligating the insurer to:
pay those sums that the insured becomes legally obligated to pay as damages
because of “bodily injury” or “property damage” included within the “productscompleted operations hazard” to which this insurance applies. . . . However, we
will have no duty to defend the insured against any “suit” seeking damages for
“bodily injury” or “property damage” to which this insurance does not apply.
Medmarc, 612 F.3d at 612.
The policy defined “bodily injury” as “bodily injury, sickness or disease sustained by a person,
including death resulting from any of these at any time.” Id. The manufacturer was sued in a
number of class actions for manufacturing plastic baby bottles containing Bisphenol-A (BPA).
According to one of the complaints:
This action arises out of Defendants’ misrepresentations and/or omissions and
failures to warn of and/or otherwise disclose that their Baby Products are
manufactured using a dangerous chemical recognized to be toxic in several
respects for years and which poses serious risks to an individual’s health as the
fact that it leaches into food and beverages in the course of normal, everyday
use.
Id. at 610.
While the complaints discussed the alleged negative health effects of BPA in some detail, the
complaints never alleged that any of the plaintiffs suffered any physical harm. Instead, the
complaint sought recovery for economic harm and asserted many causes of action, including
consumer fraud, breach of express and implied warranties, intentional misrepresentation,
negligent misrepresentation, and unjust enrichment.
The manufacturer submitted these complaints to its CGL carrier for a defense, and the CGL
carrier denied the claim. In the ensuing coverage litigation, the Seventh Circuit Court of Appeals
ruled that the carrier had no duty to defend under the CGL policy because the underlying
complaints did not assert liability “because of bodily injury.” The Seventh Circuit noted that:
[T]he complaints in the underlying suits do not reach the level of asserting claims
“because of bodily injury.” Implicit in [the manufacturer’s] argument is that the
damages claimed are somehow, at least tangentially, tied to a bodily injury
C-6
caused by BPA. As discussed above, that simply is not the case here. The theory
of relief in the underlying complaint is that the plaintiffs would not have
purchased the products had [the manufacturer] made certain information known
to the consumers and therefore the plaintiffs have been economically injured.
The theory of the relief is not that a bodily injury occurred and the damages
sought flow from that bodily injury.
Id. at 616.
B.
Definition of Advertising Injury: Santa’s Best Craft, LLC v. Zurich American
Ins. Co.
In Santa’s Best Craft, LLC v. Zurich American Ins. Co., ___ Ill. App. 3d ___, 941 N.E.2d 291, 346 Ill.
Dec. 733 (1st Dist. 2010), the insureds were insured under a CGL policy that provided coverage
for “personal and advertising injury.” The policy defined “personal and advertising injury” as an
injury “arising out of one or more of the following offenses: . . . f. The use of another’s
advertising idea in your ‘advertisement’; or g. Infringing upon another’s copyright, trade dress or
slogan in your ‘advertisement.’” The policy defined “advertisement” as “a notice that is broadcast
or published to the general public or specific market segments about your goods, products or
services for the purpose of attracting customers and supporters.” Santa’s Best Craft, 941 N.E.2d
at 302.
The insureds were manufacturers of Christmas lights. Every year, the insureds and its
competitors would invite 75-100 retailers who were the primary purchasers of Christmas
decorations to their showrooms to display their products. These appointments would occur
“approximately 18 months before the Christmas season in which their products would appear on
the retailers’ store shelves.” No purchases were made during these appointments, but the
retailers would purchase items that the retailers viewed in the showrooms as the Christmas
season approached. The insureds manufactured Christmas lights named “Stay On” – which
allegedly stayed on when one light went off. One of the insureds’ competitors made a similar
product called “Stay Lit.” The competitor sued the insureds, alleging that, during these
presentations to the 75-100 retailers, the insureds copied its packaging and slogans and put
them on the products and packages that the insureds put into their showroom. The competitor
sued the insureds alleging a number of causes of action, including “(1) trademark infringement;
(2) false designation of origin and trade dress infringement; (3) false advertising; (4) trademark
dilution; [and] (5) deceptive trade practices.” Id. at 296.
After the insureds submitted the lawsuit to its CGL carrier asserting that the lawsuit qualified for
coverage as a “personal and advertising injury,” the insureds and the CGL carrier disputed
whether the case involved injuries arising out of an “advertisement.” As such, the ensuing
coverage litigation focused on the definition of “advertisement.” When interpreting the policy’s
definition of “advertisement,” the Seventh Circuit Court of Appeals noted that the dictionary
defined “broadcast” as meaning “to make widely known: disseminate or distribute widely or at
random” and “publish” as meaning “to declare publicly: make generally known: disclose,
C-7
circulate.” Consequently, according to the Court, “under the terms of the CGL policy, an
‘advertisement’ must be widely disseminated to its intended audience, regardless of whether the
audience is the general public or a specific market segment thereof.” Id. at 303. Applying this
definition to the facts of the case, the Circuit Court of Appeals determined that the underlying
lawsuit did not satisfy the definition of “advertisement.” The Court reasoned:
[The insureds] invited each of their 75 to 100 potential customers to their
showroom to view their products. The retailers made individual appointments to
view the products and received personal presentations about the products
displayed. Additionally, as [insureds] admit, they did not send out any mailers or
fliers or conduct any Internet-based advertising to attract potential customers. . . .
[W]e do not regard [insureds’] “in-person form of promotion” as a broadcast or
publication of the type required of an “advertisement” under the terms of the
CGL policy.
Id. at 305.
C.
Limits of Liability and Anti-Stacking Clauses: Progressive Premier Ins. Co. of
Illinois v. Kocher
In Progressive Premier Ins. Co. of Illinois v. Kocher, 402 Ill. App. 3d 756, 932 N.E.2d 1094, 342 Ill.
Dec. 633 (5th Dist. 2010), the insurer issued a policy that listed both an ATV and a motorcycle as
insured vehicles. The declarations of the policy listed each vehicle separately and separately
listed a limit of liability for liability coverage for each vehicle of $100,000 per person. The policy
also contained the following provision:
The limit of liability shown on the Declarations Page is the most we will pay
regardless of the number of:
1.
2.
3.
4.
5.
6.
7.
claims made;
covered vehicles;
trailers shown on the Declarations Page;
insured persons;
lawsuits brought;
vehicles involved in the accident; or
premiums paid.
Progressive Premier, 402 Ill. App. 3d at 757.
The declarations page also stated that, “The policy limits shown for a vehicle may not be
combined with the limits for the same coverage on another vehicle.” Id.
A child was riding as a passenger in the ATV vehicle when the ATV collided with the motorcycle
insured by the policy. The child submitted a claim against the policy under its liability provisions,
C-8
asserting that he was entitled to $200,000. The insurer objected to this interpretation, asserting
that the above-referenced anti-stacking provisions limited liability to $100,000. During the
following coverage litigation, the Illinois Appellate Court found that the policy was ambiguous
given the facts of the claim. The Appellate Court first noted that this was not the traditional
stacking scenario. According to the Court, “[s]tacking ordinarily involves combining or
aggregating the policy limits applicable to more than one vehicle where the other vehicles are
not involved in the accident.” Id. at 760. Then, the Court stated that the layout of the
declarations page created an ambiguity, reasoning:
[T]he declarations page contains separate headings for each vehicle and an
additional heading for the general policy coverage. Significantly, uninsured- and
underinsured-motorist protection is provided under the general policy provision
section and appears to be applicable to any or all of the vehicles with a single
limit. By contrast, the other types of coverage – including the bodily injury liability
coverage, which is what is at issue here – are listed separately for each vehicle
under a heading that indicates the vehicle for which the coverage is provided.
The most logical implication of this layout is that if any vehicle is involved in an
accident, the limit of bodily injury liability coverage available is the limit listed
under that vehicle, whether or not any of the other covered vehicles are involved.
Id. at 764.
Therefore, the Illinois Appellate Court permitted the stacking of the two limits of liability and
permitted a recovery of $200,000.
III.
EXCLUSIONS
A.
Intellectual Property Exclusion: Santa’s Best Craft, LLC v. St. Paul Fire and
Marine Ins. Co.
In Santa’s Best Craft, LLC v. St. Paul Fire and Marine Ins. Co., 611 F.3d 339 (7th Cir. 2010), insureds
who manufactured Christmas lights with the name “Stay On” were sued by a competitor who
manufactured Christmas lights with the name “Stay Lit.” According to the lawsuit, the insureds
copied the “Stay Lit” lights packaging design and sold “Stay On” lights using false and deceptive
language. The competitors sued the insured for Lanham Act trademark infringement, false
designation of origin, false advertising, trademark dilution, and deceptive trade practices. The
insureds’ policy provided coverage for a claim for “[u]nauthorized use of . . . any slogan . . . of
others in your advertising.” The policy, however, excluded coverage for “injury or damage . . .
that results from any actual or alleged infringement or violation of any of the following rights or
laws: . . . trade dress, . . . trademark, other intellectual property rights or laws.” This exclusion,
however, had an exception for “unauthorized use of . . . trademarked slogan . . . of others in your
advertising.” Santa’s Best, 611 F.3d at 347-348.
C-9
After the insurer denied the insureds’ request for a defense, the insureds sued the insurer in an
action for declaratory judgment. In determining whether a duty to defend existed under the
Policy, the Seventh Circuit Court of Appeals compared the allegations of the complaint to the
terms of the policy. According to the Court, a duty to defend was triggered because the policy
provided coverage for claims related to the unauthorized use of a slogan and the complaint
alleged that the insureds copied its competitor’s slogans. Furthermore, the Seventh Circuit
found that the intellectual property exclusion did not exclude coverage because, even if the
intellectual property exclusion applied, the exception to the intellectual property exclusion
would have been triggered as well.
B.
Intentional Acts Exclusion
1.
American Family Mut. Ins. Co. v. Guzik
In American Family Mut. Ins. Co. v. Guzik, 406 Ill. App. 3d 245, 941 N.E.2d 936, 347 Ill. Dec. 67 (3d
Dist. 2010), the insured was covered by a liability insurance within a homeowners policy that
excluded:
[b]odily injury or property damage caused intentionally by or at the direction of
any insured even if the actual bodily injury or property damage is different than
that which was expected or intended from the standpoint of any insured.
(Emphasis in original.)
American Family, 406 Ill. App. 3d at 247.
After the insured lost his job and had attempted to sell his home, he set fire to his house. The
fire caused the insured’s home to explode, and the explosion damaged the homes of the
insureds’ neighbors. The neighbors submitted claims against the insured’s policy. After the
insurer denied the claim, it filed a complaint for declaratory judgment. During the declaratory
judgment action, the Illinois Appellate Court found that the intentional acts exclusion within the
insured’s policy excluded his neighbors’ claims. The Court reasoned that the insured
“intentionally caused the explosion and fire on his premises,” and “[t]he fire spreading to the
neighbors’ properties was ‘expected’ in that it was a rational and probable consequence of the
explosion and fire.” Consequently, “the damage to the neighboring homes falls within the
parameters of the exclusionary clause even if it was different than that which [the insured]
expected or intended.” Id. at 249.
2.
West Bend Mut. Ins. Co. v. State
In West Bend Mut. Ins. Co. v. State, 401 Ill. App. 3d 857, 929 N.E.2d 606, 340 Ill. Dec. 955 (1st Dist.
2010), a general contractor was insured under a CGL policy that contained an exclusion for
“intended or expected injury.” The contractor was sued for fraud in a number of lawsuits alleging
that the contractor defrauded its customers. The insurer filed for declaratory judgment asserting
that no coverage existed under the Policy, and the Illinois Appellate Court concurred on various
C-10
grounds, including the fact that the policy’s intentional acts exclusion applied to this case.
According to the Appellate Court,
The four underlying complaints that are the subject of this declaratory judgment
action similarly allege intentional misconduct designed to defraud customers of
[the contractor]. The four underlying plaintiffs’ complaints do not allege that [the
contractor] acted negligently. Instead, the four plaintiffs’ complaints allege that
[the contractor] knowingly performed improper home repair and remodeling.
Thus, the exclusion for expected or intended injury bars coverage for the acts
alleged in all four of the underlying complaints.
West Bend, 401 Ill. App. 3d at 938.
3.
Pekin Ins. Co. v. Wilson
In Pekin Ins. Co. v. Wilson, 237 Ill. 2d 446, 930 N.E.2d 1011, 341 Ill. Dec. 497 (2010), an insurer
issued a policy with an intentional acts exclusion precluding coverage for “‘Bodily injury’ or
‘property damage’ expected or intended from the stand point of the insured.” The intentional
acts exclusion contained an exception, however, stating that the intentional acts exclusion did
“not apply to ‘bodily injury’ resulting from the use of reasonable force to protect persons or
property.” A plaintiff filed a personal injury lawsuit against the insured, alleging that the insured
assaulted him. The insured responded to the complaint by asserting that he acted in selfdefense.
In the following complaint for declaratory judgment, the trial court found that the insurer had
no duty to defend because the plaintiff’s complaint fell within the scope of the policy’s
intentional acts exclusion. On appeal, the Illinois Appellate Court reversed, stating that the selfdefense exception created a duty to defend. The Illinois Supreme Court then affirmed the Illinois
Appellate Court’s reversal of the trial court, concurring with the Appellate Court’s analysis and
permitting the consideration of insured’s counter-claim to trigger the duty to defend. According
to the Supreme Court,
[C]onsideration of a third-party complaint in determining a duty to defend is in
line with the general rule that a trial court may consider evidence beyond the
underlying complaint if in doing so the trial court does not determine an issue
critical to the underlying action. The trial court should be able to consider all the
relevant facts contained in the pleadings, including a third-party complaint, to
determine whether there is a duty to defend. (Emphasis in original.)
Pekin Ins. Co., 237 Ill. 2d at 460.
The Supreme Court also determined that, “in light of the broad scope of [insurer’s] policy, and
the clear language of the self-defense exception, the policy requires the defense of the insured
C-11
where a genuine issue of material fact exists as to whether the intentional acts of the insured
were committed in self-defense.” Id. at 466.
C.
Reasonable Belief Exclusion: Founders Ins. Co. v. Munoz
In Founders Ins. Co. v. Munoz, 237 Ill. 2d 424, 930 N.E.2d 999, 341 Ill. Dec. 485 (2010), the insurer
issued personal auto policies including as “persons insured” the “named insured” and “any other
person using such automobile with the permission of the named insured, provided the actual
use thereof is within the scope of such permission.” The personal auto policies also excluded
coverage for “bodily injury or property damage arising out of the use by any person of a vehicle
without a reasonable belief that the person is entitled to do so.” Founders Ins., 237 Ill. 2d at 428.
A number of claims were submitted to the insurer alleging that permissive users of vehicles
belonging to one of the insurer’s named insureds injured an underlying plaintiff. These
permissive users, however, did not have a valid driver’s license – they either never had one or
the license had been suspended. The insurer denied the claims on the basis of the abovereferenced exclusion stating that the permissive users without a valid license did not have a
“reasonable belief” that they were entitled to operate the named insured’s vehicle. In the
ensuing coverage litigation, the Illinois Supreme Court concurred. The Illinois Supreme Court
interpreted the word “entitle” to mean “to give a right or legal title to: qualify (one) for
something: furnish with proper grounds for seeking or claiming something.” Founders Ins., 237
Ill. 2d at 436. According to the Supreme Court, “[w]ithout a valid license, a person has not been
given the ‘right’ to drive; has not been ‘qualified’ to drive; has not been ‘furnished with proper
grounds’ for doing so.” Id. at 439. As such, a permissive user without a valid driver’s license does
not have a reasonable belief that he is “entitled” to operate a motor vehicle.
IV.
GENERAL PROVISIONS OF THE POLICY
A.
Choice of Law: Liberty Mut. Fire Ins. Co. v. Woodfield Mall, LLC
In Liberty Mut. Fire Ins. Co. v. Woodfield Mall, LLC, ___ Ill. App. 3d ___, 941 N.E.2d 209, 346 Ill. Dec.
651 (1st Dist. 2010), the named insureds included a New York parent corporation and at least 33
subsidiary corporations. One of these subsidiary corporations was located in Ohio and was
headquartered in Ohio. The insurer, a Massachusetts corporation, issued a CGL policy for the
named insureds. The CGL policy was negotiated by a broker located in New York and
representatives of the named insureds located in Ohio. The policy was delivered to the named
insureds in Ohio. The named insured that was located in Ohio operated “an extensive,
nationwide chain of hundreds of retail eyeglass stores.” The CGL policy provided coverage for
the named insureds, including the Ohio subsidiary, on a nationwide basis. The CGL did not
contain a choice of law provision.
The Ohio subsidiary corporation operated a retail chain store at a mall located in Northern
Illinois. Pursuant to its lease agreement, it was required to name the mall owners and managers
C-12
as additional insureds to its CGL policy. The mall owners and managers were not specifically
named in the CGL policy as additional insureds but the CGL policy had a general endorsement
that automatically added entities as additional insureds if certain requirements were met. The
mall owners and managers were sued when a personal injury occurred at the Ohio subsidiary
corporation’s location in Illinois. After litigation was initiated over the application of the CGL
policy to the claim, a dispute arose over the applicable state law. This dispute was eventually
addressed by the Illinois Appellate Court.
According to the Appellate Court, when a policy does not contain an express choice of law
provision, the policy’s “provisions are governed by the substantive law of (1) the location of the
subject matter, (2) the domicile of the insured or of the insurer, (3) the place of the last act to
give rise to an enforceable contract, (4) the place of performance, or (5) any other place bearing
a rational relationship to the contract.” The Court noted that “[t]hese factors do not have equal
significance and are to be weighed according to the issue involved,” but that “[a] choice-of-law
analysis should consider the contracting parties’ justified expectations, yield certain, predictable,
and uniform results, and avoid inconsistent interpretations of the same insurance contract.”
Liberty Mut., 941 N.E.2d 215.
After considering these principles, the Illinois Appellate Court determined that Ohio law applied
to this dispute. First, the Court ruled that the location of the insured risk was not an important
factor in this case because the CGL policy covered the named insureds’ risks on a nationwide
basis and the location of the accident and injuries in Illinois had little bearing on the analysis. On
the other hand, the subsidiary named insured involved was headquartered in Ohio, the CGL
policy was negotiated by representatives of the named insureds located in Ohio, and the policy
was delivered to the named insureds in Ohio.
B.
Termination of Insurer/Insured Relationship
1.
Cancellation versus Non-Renewal: Yunker v. Farmers Auto.
Management Corp.
In Yunker v. Farmers Auto. Management Corporation, 404 Ill. App. 3d 816, 935 N.E.2d 630, 343 Ill.
Dec. 622 (3d Dist. 2010), an insurer had issued a personal auto policy to an insured. The policy
period for the personal auto policy ended on July 20, 2006. On June 14, 2006, the insurer sent
the insured a notice stating: “THIS IS THE ONLY NOTICE YOU WILL RECEIVE PRIOR TO THE DATE
PREMIUM IS DUE[.] YOUR POLICY WILL EXPIRE IF PREMIUM IS NOT RECEIVED BY THE DUE
DATE.” Yunker, 404 Ill. App. 3d at 818. The insured did not pay the premium by July 20, 2006,
and the policy expired on July 20, 2006. After the insured was involved in an accident on
August 7, 2006 and submitted a claim against the insurer for coverage, the insurer sent the
insured a correspondence informing the insured that the policy had expired. The insured
subsequently sued the insurer.
During the coverage litigation, the Illinois Appellate Court found that the insurer had acted
appropriately, and no coverage existed. According to the Appellate Court, a cancellation means
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the termination of the policy by the insurer before the expiration date of the policy, and insurers
must strictly conform to the procedures laid out in its policy along with the Insurance Code
when canceling a policy. This case, however, involved a non-renewal due to the expiration of a
policy. As such, the requirements of the policy and the Insurance Code for cancellations did not
apply.
2.
Cancellation of Policy Covering a Government Vehicle: American
Home Assurance Co. v. Taylor
In American Home Assur. Co. v. Taylor, 402 Ill. App. 3d 549, 931 N.E.2d 313, 341 Ill. Dec. 705 (1st
Dist. 2010), an insurer issued an auto policy covering the insured’s vehicles. The insured
operated medical transport vehicles. When procuring its policy, the insured executed a power of
attorney in favor of a premium finance company. According to this power of attorney, the
insured authorized the premium finance company to cancel the policy if timely payments were
not made on the premium loan. The insured failed to make its premium payment due in March
2006. The premium finance company sent the insured a letter stating that it would cancel the
insured’s policy in 10 days if it did not receive the premium payment. When the insured failed to
make payment on the loan, the premium finance company sent the insured a letter stating that
the policy was canceled effective April 4, 2006. Neither the premium finance company nor the
insurer ever sent notification to the Illinois Secretary of State that the insured’s policy was being
canceled. After the effective date of cancellation, the insured was involved in an accident. The
uninsured motorist carrier for the injured driver then brought a declaratory judgment action
against the insured’s insurer alleging that the April 4th cancellation was ineffective.
The Appellate Court agreed with the uninsured motorist carrier. Citing 625 ILCS 5/8-110, the
Appellate Court noted that the Illinois Vehicle Code requires that an insurer give the Illinois
Secretary of State notice when it cancels a policy covering a medical transport vehicle.
Furthermore, the Court stated that, under the Insurance Code, when an insured has granted a
premium finance company power of attorney enabling the premium finance company to cancel
the insured’s policy, an insurer must nonetheless comply with any statutory restrictions requiring
that the insurer give notice to governmental agency prior to cancellation. Thus, reading the
Vehicle Code and Insurance Code harmoniously, the Court found that the cancellation of the
insured’s policy was ineffective because neither the insurer nor the premium finance company
gave the Secretary of State notice, and there was coverage under the insured’s policy.
C.
Duties of the Insured
1.
Lack of Notice: West American Ins. Co. v. Yorkville Nat. Bank
In West American Ins. Co. v. Yorkville Nat. Bank, 238 Ill. 2d 177, 939 N.E.2d 288, 345 Ill. Dec. 445
(2010), the insured was a bank and insured under a CGL policy that required the insured to give
its insurer written notice of a claim “as soon as practicable.” The insured learned that an
individual might sue it for defamation in November 2000. On September 24, 2001, the insured
was sued for defamation. In late 2001 or early 2002, the insured informed the insurer’s agent of
C-14
the lawsuit. The insurer’s agent told the insured that the suit would “probably not” be covered
under the CGL policy. Furthermore, the insurer’s agent was on the insured’s board of directors
and attended various meetings where the lawsuit against the insured was discussed. In January
2004, the insured was advised that its CGL policy should cover the defamation lawsuit. On
January 19, 2004, the insured gave written notice of the claim to the insurer  approximately 27
months after the filing of the lawsuit and less than three months prior to the trial date. The
insurer denied the claim and filed a complaint for declaratory judgment alleging breach of the
policy’s notice provisions. The trial court ruled against the insurer and found that the insurer had
a duty to defend and indemnify the insured. The Illinois Supreme Court affirmed the ruling.
According to the Illinois Supreme Court, “[a] policy provision requiring notice ‘as soon as
practicable’ means notice must be given ‘within a reasonable time.’” West American, 238 Ill. 2d at
185. Whether the insured gave notice within a reasonable time depends on the facts and
circumstances of the case and is a question of fact. Certain factors may be considered when
determining whether notice was given within a reasonable time, including “(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 185-186. After considering these factors, the Supreme Court found that the
trial court’s decision was not against the manifest weight of the evidence (the appropriate
standard of review) and affirmed its decision. In doing so, the Court noted that while written
notice was not given until January 2004, the insurer had actual notice of the lawsuit when its
agent received notice at various times in 2001 and 2002. Furthermore, the Court found that the
insured was diligent in determining whether coverage existed because it asked the insurer’s
agent whether coverage existed in 2001 and the agent informed the insured that the policy
probably did not cover the defamation lawsuit.
2.
Duty to Cooperate: Founders Ins. Co v. Shaikh
In Founders Ins. Co. v. Shaikh, 405 Ill. App. 3d 367, 937 N.E.2d 1186, 344 Ill. Dec. 845 (1st Dist.
2010), the insurer’s policy with the insured imposed the following duty to cooperate with the
insurer during the investigation of a claim:
As a condition precedent to the Company’s duty of indemnity with respect to
suits against an insured, the insured shall cooperate with the Company and, upon
the Company’s request, assist in making settlements, in the conduct of suits and
in enforcing any right of contribution or indemnity against any person or
organization who may be liable to the insured ***; and the insured shall attend
hearings and trials and assist in securing and giving evidence and obtaining the
attendance of witnesses. *** The insured must cooperate with us in the
investigation, settlement or defense of any claim or suit, failure to cooperate fully
will be deemed a breach of contract.
Founders, 405 Ill. App. 3d at 371.
C-15
After the insured was sued for allegedly causing an automobile accident, he notified his insurer
of the claim. When the insured reported the claim, the insurer procured the insured’s current
address and phone number. The insurer subsequently assigned the insured an attorney.
Approximately six months after reporting the claim, mail sent to the insured came back
undeliverable, and his phone number was disconnected. The insurer then attempted to locate
the insured, including personally checking each known address for the insured, hiring an
investigator, speaking with the insured’s estranged son, and checking prison records. After these
efforts proved futile in locating the insured, the insurer then filed an action for declaratory
judgment for failure to cooperate.
The Appellate Court found that the insured breached his duty to cooperate in this case.
According to the Appellate Court, “[i]n order to establish breach of a cooperation clause, the
insurer must show that it exercised a reasonable degree of diligence in seeking the insured’s
participation and that the insured’s absence was due to a refusal to cooperate.” Id. at 374.
Whether the insurer satisfied this duty is based on the facts and circumstances at hand.
Furthermore, “as a matter of public policy, an insurer will not be relieved of its contractual
responsibilities unless it proves it was substantially prejudiced by the insured’s actions or
conduct in regard to its investigation or presentation or defense of the case.” Id. at 375. In this
case, the Court found that the insurer satisfied these requirements. The Court found that the
insurer was diligent in attempting to secure the insured’s cooperation and that the insured’s
disappearance after reporting the claim demonstrated his willful refusal to cooperate with the
insurer. The Court also found that the insurer was substantially prejudiced by the insured’s
noncooperation because the insured was the only individual who knew facts about the accident
other than the underlying personal injury plaintiff.
V.
MUTUAL MISTAKE BY THE PARTIES
A.
Mutual Mistake of Fact: Mid-Century Ins. Co. v. Founders Ins. Co.
In Mid-Century Ins. Co. v. Founders Ins. Co., 404 Ill. App. 3d 961, 936 N.E.2d 780, 344 Ill. Dec. 251
(1st Dist. 2010), the insured owned two vehicles: a Durango and a Cavalier. The insureds
procured insurance policies from two different insurers. One insurer was supposed to cover the
Durango, and the other insurer was supposed to cover the Cavalier. Due to a mistake during
underwriting, the policy that was supposed to cover the Durango listed the Cavalier as the
insured vehicle instead. The evidence was clear, however, that both the insurer and insured
made a mistake and that this policy was supposed to list the Durango as the insured vehicle. The
insured was in an automobile accident while driving the Cavalier. After the accident occurred, a
dispute arose between the two insurers over the amount that each should contribute to the
settlement claim. Due to the existence of the mutual mistake of fact between the insured and
one of the insurers, the Appellate Court reformed the policy that was supposed to cover the
Durango and ruled that the insurer that made a mistake had no duty to contribute to the claim
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arising out of the Cavalier’s accident. In doing so, the Appellate Court considered the following
principles:
A mutual mistake of fact occurs when the parties reach a good-faith agreement,
but that agreement “is not expressed in the written reduction of the agreement”
due to error. . . . “Thus, the mistake must have existed at the time of the execution
of the instrument, must have been mutual and common to all parties, and must
have been such that the parties intended to say one thing but by the written
instrument expressed another.”
Mid. Century, 404 Ill. App. 3d at 967.
The Appellate Court found that these elements were satisfied in this case.
B.
Mutual Mistake of Law: Hartford Cas. Ins. Co. v. Moore
In Hartford Cas. Ins. Co. v. Moore, 731 F. Supp. 2d 800 (C.D. Ill. 2010), an insurer issued a
professional liability policy for its insured law firm. The professional liability policy protected the
insured law firm against legal malpractice claims. According to the terms of the policy, the
retroactive date of the policy was December 21, 2006. According to the law firm, during the
procurement of the policy, the agent selling the policy informed the insured that the retroactive
date of the policy would provide the firm with malpractice insurance retroactive to the inception
of the law firm.
In 2008, the law firm was sued for legal malpractice for mishandling three appeals that took
place in 2005 and 2006. The last appeal ended on July 27, 2006. The law firm tendered the
defense of this suit to the malpractice insurer. The insurer stated that it had no duty to defend
because the lawsuit predated the retroactive date of the policy. In the ensuing coverage
litigation, the federal district court found that the claim predated the policy. It also found that
whether the agent told the insured that the retroactive date of the policy would cover the firm
back to its inception was irrelevant. According to the district court,
In order for a court to reform an instrument on the ground of mistake, “the
mistake must be of fact and not of law, mutual and common to both parties, and
in existence at the time of the execution of the instrument, showing that at such
time the parties intended to say a certain thing and, by a mistake, expressed
another.” The law of reformation applies to insurance policies.
Hartford, 731 F. Supp. 2d at 806.
The district court found that the dispute in this case was not over the facts surrounding the
policy but the legal effect of the language of the policy. Because a mistake over the legal effect
of the policy would be a mistake of law and not a mistake of fact, the contract could not be
reformed.
C-17
VI.
AGENCY: APPARENT AGENCY: FIRST CHICAGO INS. CO. V. MOLDA
In First Chicago Ins. Co. v. Molda, No. 1-10-1138, 2011 WL 1205480 (1st Dist. Mar. 29, 2011), the
insured had a commercial auto policy with the insurer. The policy stated that the insured must
give the insurer or its “authorized representative” “prompt notice” of any loss or accident. The
policy listed the contact information for the insured’s broker. The policy contained no other
contact information and did not identify an “authorized representative.” Furthermore, if an
accident or loss happened, the policy did not refer the insured to a telephone number or list an
authorized representative for the insured to contact.
On August 17, 2005, an employee of the insured was involved in an automobile accident that
injured another driver. Shortly after the accident, the insured advised his broker of the accident
but did not advise the insurer directly. The broker never advised the insurer of the accident.
According to the corporate treasurer of the insured, when the insured had a question or
insurance need, it always contacted its broker, and, when a loss, accident, or occurrence
happened, the insured would report the claim to its broker. On August 17, 2007, the driver
injured in the 2005 accident sued the insured’s employee. In January 2008, the insured’s
employee informed the insured about the lawsuit. On March 10, 2008, the injured driver
amended his complaint to add the insured. On March 26, 2008, the insured advised the insurer
of the claim directly. After receiving notice, the insurer filed a complaint for declaratory
judgment, asserting that the insured’s late notice forfeited coverage. After the trial court granted
the insurer summary judgment, the Illinois Appellate Court reversed, finding that a question of
fact existed over whether the broker was an agent of the insurer.
According to the Appellate Court, where an insurance producer is an insurance broker and not a
general agent of the insurer, he is generally an agent for the insured and not the insurer. That
said, even where the producer is a broker, he can act as the agent of the insurer in certain
circumstances. Furthermore, “even if the broker does not have the actual authority to act as the
insurer’s agent for notice, it may have apparent authority to do so.” Whether a broker has
apparent authority to act for the insurer is determined by examining “the course of dealings
between the broker and the insurance company.” “Where an insurer’s manner of dealing with
the broker in regard to the insured would lead the insured to believe that the broker had the
authority to perform the acts in question, the insurer is estopped to deny the broker’s authority
to perform those acts.” First Chicago, 2011 WL 1205480 at *6. In this case, the Court found that a
question of fact existed over whether the insured’s broker had the apparent authority of the
insurer to accept notice of a loss or claim. The Court reasoned:
In the case at bar, there is evidence that [the broker] could have had apparent
authority to act on [the insurer’s] behalf with regard to accepting notice from [the
insured]. [The broker] had been placing clients with [the insurer] since
approximately 1996, and [the insured] had had an insurance policy with [the
insurer] for several years at the time of the accident. The [insurer’s] policy
included [the broker’s] name, address and telephone number on its declarations
page as the producer. It did not provide any other contact information, nor was
C-18
any other individual or business other than [the broker] named anywhere within
the policy. If a claim was to be made there was no reference to a phone number
or person in his representative capacity to contact other than “our authorized
representative.” [The insured’s treasurer] testified that during the course of his
dealings with [the broker] and [the insurer], he followed the same pattern:
speaking with [the broker] about an incident and deciding what action to take,
after which [the broker] would report the claim and obtain a claim number from
[the insurer] and assist [the treasurer] filing a claim. Thus, there was a pattern of
conduct on prior claims between [the insurer] and [the broker] in which [the
broker] would accept notice of a claim and submit the information to [the
insurer.]
Id. at *7.
VII.
DUTY TO DEFEND: DETERMINATION OF DUTY TO DEFEND: KONSTANT PRODUCTS,
INC. V. LIBERTY MUT. FIRE INS. CO.
In Konstant Products, Inc. v. Liberty Mutual Fire Ins. Co., 401 Ill. App. 3d 83, 929 N.E.2d 1200, 341
Ill. Dec. 121 (1st Dist. 2010), an insurer issued a commercial auto policy for a truck owned by a
scrap metal company. The policy covered permissive users of the truck. An employee of the
scrap metal company drove the truck to a facility, where he was in the process of picking up
scrap metal. While picking up scrap metal, he became pinned between a dumpster and the
truck. One of the facility’s workers then got into the truck in order to help the scrap metal
company’s employee. Instead of reversing the truck, however, the worker placed the truck in the
wrong gear, moved the truck forward, and injured the scrap metal employee.
The scrap metal employee then sued the facility and its worker. In his initial verified complaint,
the scrap metal employee stated:
Against Plaintiff’s verbal request, [the facility’s worker] negligently and carelessly
entered Plaintiff’s vehicle, against Plaintiff’s request and drove the vehicle into the
dumpster three (3) times causing Plaintiff each time to be pinned between the
truck and the dumpster.
Konstant Products, 401 Ill. App. 3d at 86.
The scrap metal employee filed amended complaints, however, that dropped this allegation. The
suit was submitted to the scrap metal company’s commercial auto carrier on the grounds that
the facility’s worker was a permissive user of the insured vehicle. The commercial auto carrier
denied the claim. In the ensuing coverage litigation, the court concurred with the commercial
auto carrier. The Court started from the initial proposition that a court determines whether a
duty to defend exists by comparing the allegations of the complaint to the terms of the policy.
According to the Court, despite the underlying complaint’s subsequent amendments, the
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allegations of the initial complaint were binding as judicial admissions because these allegations
were verified. When compared to the terms of the policy, the initial allegations clearly disqualify
the facility’s worker as a permissive user of the insured vehicle. As a consequence, the insurer
had no duty to defend under the policy.
VIII.
INTERPLEADERS AND THE DUTY TO DEFEND: AMERICAN SERVICE INS. CO. V.
CHINA OCEAN SHIPPING CO.
In American Service Ins. Co. v. China Ocean Shipping Co., 402 Ill. App. 3d 513, 932 N.E.2d 8, 342
Ill. Dec. 117 (1st Dist. 2010), after a multi-vehicle accident, an insurer attempted to interplead the
policy limits with the circuit court and avoid providing its insured with a defense during the
underlying personal injury actions. The insurer’s policy stated:
The company will pay on behalf of the insured all sums, except for punitive or
exemplary damages, which the insured shall become legally obligated to pay as
damages because of A. bodily injury or B. property damage to which this
insurance applies, . . . and the company shall defend any suit alleging such bodily
injury or property damage and seeking damages which are payable under the
terms of this policy, even if any of the allegations of the suit are groundless, false
or fraudulent.
American Service, 402 Ill. App. 3d at 515.
The policy further provides that “the company will not defend any suit after it has paid the
applicable limit of its liability for the accident which is the basis of the lawsuit.” Id. On appeal, the
Illinois Appellate Court refused to permit the insurer to avoid the duty to defend by
interpleading the policy limits with the circuit court. According to the Appellate Court, “Illinois
cases have consistently held that an insurer cannot discharge its duty to defend by simply
depositing policy limits with the court.” Id. at 526. Furthermore, the Court held that an insurer
has not “paid the applicable limit of its liability” for purpose of eliminating the duty to defend
until it exhausts the policy limits through settlement or payment of a judgment.
C-20
Patrick D. Cloud
- Associate
Public Speaking
 “Personal Auto Policy: The Fundamentals”
PLRB/LIRB Claims Conference & Insurance
Services Expo, Nashville, TN (2011)
 “Insurance Coverage Update”
Heyl Royster’s 25th Annual Claims Handling
Seminar (2010)
Patrick, a native of the Saint Louis area, has spent his
entire legal career with Heyl Royster. He started as a
law clerk in the Edwardsville office in 2002 and joined
the firm as an associate in 2004. While in law school,
Patrick also served as an Associate Editor for the
Washington University Global Studies Law Review. At
Heyl Royster, Patrick concentrates his practice on toxic
tort matters, insurance coverage litigation, complex
civil litigation, and governmental law.
 Madison County Bar Association
As part of his practice, Patrick routinely takes a lead
role in the preparation and argument in significant
pretrial motions and briefs, such as those involving
issues concerning the doctrine of forum non
conveniens, venue, the Illinois Frye doctrine, consumer
fraud, choice-of-law issues, and insurance coverage
matters. Patrick also regularly defends the firm's
clients in depositions in asbestos litigation pending in
Illinois and Missouri.
Court Admissions
 State Courts of Illinois and Missouri
 United States District Court, Southern District
of Illinois
Education
 Juris Doctor (Order of the Coif), Washington
University School of Law, 2004
 Bachelor of Arts-Economics (Summa Cum
Laude), University of Notre Dame, 2001
Significant Cases
 Rix v. Heartland Regional Medical Center, No. 507-0006 (5th Dist. 2008) - Affirmation of
dismissal of class action claim brought
pursuant to the Illinois Consumer Fraud Act
regarding hospital pricing of services provided
to uninsured patients.
Publications
 Co-author, "Intentional Act Exclusion
(Supplement)," supplement to chapter in
Illinois Institute for Continuing Legal Education
Handbook, Commercial and Professional
Liability Insurance (2010)
C-21
LIQUOR LIABILITY: SOCIAL HOSTS & OTHER ISSUES Presented and Prepared by:
Michael J. Denning
[email protected]
Rockford, Illinois • 815.963.4454
D-1
LIQUOR LIABILITY: SOCIAL HOSTS & OTHER ISSUES
I.
INTRODUCTION........................................................................................................................................... D-3
II.
ILLINOIS LIQUOR CONTROL ACT (DRAMSHOP) ............................................................................. D-3
A.
B.
C.
D.
Creation of Cause of Action ..................................................................................................... D-3
Who May Recover........................................................................................................................ D-3
Damages .......................................................................................................................................... D-4
Who Is Liable ................................................................................................................................. D-4
1.
2.
3.
E.
F.
G.
Elements of Proof......................................................................................................................... D-5
One Year “Condition Precedent” ............................................................................................ D-5
Defenses .......................................................................................................................................... D-6
1.
2.
H.
I.
J.
III.
Provocation ..................................................................................................................... D-6
Complicity ........................................................................................................................ D-6
Statutory Liability Cap ................................................................................................................ D-7
Contribution and Set-off ........................................................................................................... D-8
Interplay with Other Causes of Action ................................................................................. D-8
SOCIAL HOST DOCTRINE ......................................................................................................................... D-8
A.
B.
General Rule ................................................................................................................................... D-8
History and Recent Precedent................................................................................................. D-9
1.
2.
C.
D.
E.
Cruse v. Aden – The Strong and Able Bodied Man .......................................... D-9
Charles v. Seigfried – Judicial Restraint ................................................................. D-9
Recognition of Voluntary Undertaking Theory ...............................................................D-11
1.
2.
IV.
Licensed Seller ................................................................................................................ D-4
Hotel/Motel Sponsor ................................................................................................... D-4
Knowledgeable Land Owner ..................................................................................... D-5
Wakulich v. Mraz – Voluntary Undertaking Theory Emerges .....................D-11
Bell v. Hutsell – Ignorance Is Bliss .........................................................................D-12
Simmons v. Homatas – An Extreme Exception ................................................................D-14
Exception for Minors .................................................................................................................D-15
CONCLUSION .............................................................................................................................................D-16
D-2
LIQUOR LIABILITY: SOCIAL HOSTS & OTHER ISSUES
I.
INTRODUCTION
In general terms, the liability for damages facing a person or entity who provides alcohol to
someone, who in turn becomes intoxicated from ingesting that alcohol has basically been
settled since the late nineteenth century, pursuant a portion of the long-standing Illinois Liquor
Control Act, otherwise known as the “Dramshop Act.” The Act treats private citizens and
commercial suppliers of alcohol much differently. Until recently, a private citizen who provided
alcohol to another adult generally could not be held liable for injuries caused by the intoxicated
adult. However, a commercial supplier of alcohol is generally strictly liable for injuries caused by
an intoxicated guest or customer.
However, Illinois courts have recently permitted creative theories that circumvent this wellsettled area of the law, leaving previously protected “social hosts” wondering what to do, and
what not to do, when alcohol is being consumed on their property. This presentation reviews
the basics of Illinois’ dramshop legislative scheme, describes these new theories of liability and
analyzes the present state of social host liability in the State of Illinois.
II.
ILLINOIS LIQUOR CONTROL ACT (DRAMSHOP)
A.
Creation of Cause of Action
The civil liability portions of the Liquor Control Act are codified at 235 ILCS 5/6-21. This section
of the Act is commonly referred to as the Dramshop Act. The Act creates a cause of action and
provides a remedy for individuals who suffer personal injury or property damage as a result of
the actions of an intoxicated person. Specifically, the Act permits recovery from any licensed
supplier of alcohol who, by providing alcohol to someone, causes them to be intoxicated.
Causes of action under the Dramshop Act are based on strict liability, or “no fault” liability. These
causes of action are not based on the traditional elements of negligence such as duty, breach
and proximate cause. The purpose of dramshop acts across the country and in Illinois is to shift
the financial burden and risk of loss associated with intoxication from those injured by
intoxicated individuals to the industry supplying the intoxicating beverages. Since this burden
can be insured and ultimately passed on to the consumer of alcoholic beverages, the risk is
inevitably spread across the group of people most likely to be responsible for such injuries.
B.
Who May Recover
Any person in Illinois who suffers personal injury or property damage caused by an intoxicated
person may recover damages subject to the elements of proof and classification of damages
detailed below.
D-3
In 1986, the legislature amended the Dramshop Act to extinguish any cause of action for
personal or property injury suffered by the intoxicated person as a result of the intoxication.
Additionally, the Act now prohibits recovery for any person who claims loss of society or loss of
means of support as a result of injury to the intoxicated person.
C.
Damages
As noted above, any party injured by an intoxicated person may recover damages for personal
injury or property damage, including pain and suffering, disability, lost wages, etc. Additionally, a
party may recover damages related to loss of means of support or loss of society (but not both).
However, every person claiming loss of means of support or loss of society from the injury or
death of a single person is limited to one aggregate recovery not to exceed the statutory
maximum. Thus, if a father is killed by an intoxicated person, the children will have one,
aggregate claim for the specified damages of loss of society/loss of support, irrespective of how
many children actually suffer the claimed loss.
Since dramshop liability is statutorily capped, this right to recover is often subject to creative
theories by plaintiff’s attorneys. For example, when a wife suffers personal injuries caused by an
intoxicated person, she obviously has a right to recover her damages. However, since both she
and her husband are obligated by the Illinois Rights of Married Persons Act to pay any medical
bills she incurs for medical treatment, he has also suffered injury (financial) as a result of the
intoxication. See 750 ILCS 65/15. To avoid any prohibition against a “double recovery” and to
expose more than one statutory “cap,” the wife might limit her claim to recovery for pain and
suffering and lost wages resulting from the injuries, while her husband claims the cost of the
medical bills for the treatment. That way, both spouses are permitted to recover damages up to
statutory maximum on each of their claims, as opposed to one, joint claim under one maximum
recovery.
D.
Who Is Liable
According to the statute, three general classes of defendants are liable for injuries caused by an
intoxicated person:
1.
Licensed Seller
Any entity licensed by any state to sell alcohol is liable for injuries caused by individuals in
Illinois who become intoxicated from alcohol they obtain by sale or gift from the entity.
2.
Hotel/Motel Sponsor
Any person at least 21 years old who pays for a hotel or motel room or facility knowing that the
room will be used by minors for the unlawful consumption of alcohol will be liable for any
damages caused by the intoxicated minor, as long as consumption of alcohol at the facility
causes the minor to become intoxicated.
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3.
Knowledgeable Land Owner
Any person who owns, rents, leases or permits the occupation of a building or premises with
knowledge that alcohol will be sold on the property will be jointly or severally liable with the
seller for injuries caused by resulting intoxication.
E.
Elements of Proof
In any action brought pursuant to the Dramshop Act, the plaintiff must establish each of the
following elements by a preponderance of the evidence:
1.
That the alleged intoxicated person was intoxicated at the time of the occurrence;
2.
That the defendant, his agents or employees, sold or gave intoxicating liquor
consumed by the intoxicated person;
3.
That the liquor consumed caused the intoxication of the intoxicated person;
4.
That the intoxicated person’s intoxication was at least one cause of the
occurrence in question;
5.
That as a result of the occurrence the plaintiff suffered injury or damage to his
property.
Mohr v. Jilg, 223 Ill. App. 3d 217, 586 N.E.2d 807, 166 Ill. Dec. 849 (4th Dist. 1992).
F.
One Year “Condition Precedent”
The Act mandates that any action under the Dramshop Act must be commenced within one year
of the accrual of the cause of action. 235 ILCS 5/6-21. However, this is not a statute of limitations
per se. Filing suit within one year of the plaintiff’s injury is a condition precedent to the right to
recover. Courts have held that since the cause of action conferred by the Act did not exist at
common law and is thus entirely a creature of statutory creation, the one year “restriction” is an
integral part of the statute and thus a condition precedent to recovering the statutory damages.
See Morales v. Fail Safe, Inc., 311 Ill. App. 3d 231, 724 N.E.2d 174, 243 Ill. Dec. 865 (1st Dist. 1999).
The statute is an offer of an action on condition that it be commenced within the
specified time. If the offer is not accepted in the only way in which it can be
accepted, by a commencement of the action within the specified time, the action
and the right of action no longer exist, and the defendant is exempt from liability.
Thompson v. Capasso, 21 Ill. App. 2d 1, 5, 157 N.E.2d 75 (1st Dist. 1959).
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Note that the one year condition precedent applies even when the potential plaintiff is a minor
or incompetent adult. Demchuk v. Duplancich, 92 Ill. 2d 1, 440 N.E.2d 112, 64 Ill. Dec. 560 (1982).
G.
Defenses
Even though the liability scheme established in dramshop cases is one of strict liability, there are
certain, limited defenses available to defendants. The Dramshop Act itself is silent as to any
defenses, yet these two defenses – preferably plead as affirmative defenses – may successfully
defeat a dramshop claim.
1.
Provocation
Courts have held that the notions of contributory negligence or comparative fault have no
application to dramshop causes of action, since these actions are created by statute and involve
strict liability, i.e., there is no measurement of the fault or negligence of any party, including the
plaintiff. However, evidence that the plaintiff provoked the actions that caused plaintiff’s injuries
may be sufficient to defeat a dramshop claim. Gilman v. Kessler, 192 Ill. App. 3d 630, 548 N.E.2d
1371, 139 Ill. Dec. 657 (2d Dist. 1989). This doctrine is obviously primarily applicable in “bar
fight” cases, where an intoxicated individual attacks someone after drinking alcohol at a licensed
tavern. While provocation is a valid defense, mere words and gestures are insufficient to
constitute provocation. People v. Reyes, 102 Ill. App. 3d 820, 833, 429 N.E.2d 1277, 57 Ill. Dec.
914 (1st Dist. 1981).
The idea of provocation as a defense initially seems odd in light of the strict liability nature of
dramshop liability. However, if provocation is considered as part of causation, its appeal as a fair
defense to a dramshop claim is evident. If it is the provocative action of the plaintiff which
causes an incident during which the plaintiff is injured at the hands of an intoxicated person, the
jury should be permitted to determine whether the cause of plaintiff’s injuries was merely
coincidental with the intoxication or whether it was directly related. In other words, the jury must
decide whether the sale of alcohol caused the plaintiff’s injuries, or whether plaintiff’s own
actions caused the injuries. See Gilman v. Kessler, 192 Ill. App. 3d 630, 548 N.E.2d 1371, 139 Ill.
Dec. 657 (2d Dist. 1989).
2.
Complicity
The doctrine of complicity is also a defense to dramshop actions and yet, like provocation, it
also does not appear in the text of the Dramshop Act. The theory of complicity applies when the
injured plaintiff “actively contribute[s] to or procure[s]” the intoxication of the individual causing
the plaintiff’s damages. Walter v. Carriage House Hotels, Ltd., 164 Ill. 2d 80, 646 N.E.2d 599, 207
Ill. Dec. 33 (1995). In Walter, the Illinois Supreme Court stated:
The Dramshop Act was intended to place the economic consequences of
intoxicated behavior primarily on the businesses that profited from the liquor
trade. By defining complicity in terms of the plaintiff's active and material role in
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causing the inebriate's intoxication, leading to plaintiff's injury, the Nelson court
attempted to balance the purposes of the Dramshop Act against the common
law concept which precluded plaintiffs from recovering damages if their own
negligence contributed to their injuries.
Walter, 164 Ill. 2d at 89.
Again, the mere existence of this defense seems out of place, since liability in dramshop cases is
not based on measuring fault, but is instead based on strict liability. However, the Illinois
Supreme Court distinguishes the measurement of fault from causation itself, holding that
“[c]ontributory negligence relates to the plaintiff's role in causing his own injury, while complicity
concerns the plaintiff's role in causing the inebriate's intoxication.” Id.
Summary judgment on the complicity defense may be proper under some circumstances:
Complicity is an affirmative defense for the dramshop defendant to plead and
prove by the preponderance of the evidence. If defendant is unable to present
sufficient evidence to demonstrate that plaintiff's conduct actively contributed to
or procured the inebriate's intoxication, the complicity defense should not be
submitted to the jury. The nonexistence of complicity is for judicial determination.
Where the material facts establishing plaintiff's procurement of the inebriate's
intoxication are undisputed and capable of only one conclusion, summary
judgment or directed verdict for the defendant dramshop is appropriate.
Id. at 94-5. (citations omitted).
H.
Statutory Liability Cap
The Dramshop Act establishes maximum liability limits for each proper plaintiff, including both
personal injury and property damages. Between 1985 and 1999, these damages caps gradually
increased according to a statutory schedule. By law, the caps began to increase (or decrease) in
1999 in accordance with the percentage change in the “consumer price index-u,” as published
by the United States Department of Labor. The limits are adjusted each year on January 20, and
are available from the Illinois Comptroller’s office. The applicable limits to any verdict or
settlement will be those limits in place at the time final judgment is entered or when a
settlement is reached. The current 2011 limits are as follows:
Personal Injury/Property Damage:
$61,151.39 (each person incurring damages)
Loss of means of support
OR loss of society:
$74,740.59 (aggregate amount)
See http://www.ioc.state.il.us/ioc-pdf/Dram_Shop_Liability_All.pdf
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I.
Contribution and Set-off
The law does not recognize the right to contribution against dramshop defendants. Courts have
held that the cause of action against a dramshop defendant is statutorily created and, since it is
based on strict liability and has no genesis or counterpart in common law, it is not an action that
“sounds in tort.” Since the Contribution Act only applies to actions sounding in tort, it does not
apply to dramshop actions. Furthermore, the Dramshop Act itself provides no right to
contribution. Therefore, the intoxicated individual has no right to contribution against the tavern
owners and operators who served him, and likewise, the owners and operators cannot seek
contribution from the intoxicated individual or other potential dramshop defendants. See
Hopkins v. Powers, 113 Ill. 2d 206, 497 N.E.2d 757, 100 Ill. Dec. 579 (1986) and Jodelis v. Harris,
118 Ill. 2d 482, 517 N.E.2d 1055, 115 Ill. Dec. 369 (1987).
While contribution in dramshop cases is not applicable, the theory of a “set-off” is. Dramshop
defendants are permitted to assert “set-offs” of damages already recovered from other parties
such as the intoxicated defendant. The “set-off” is taken against the total damages awarded in a
dramshop case prior to any reduction for the statutory maximum liability caps.
J.
Interplay with Other Causes of Action
The Dramshop Act provides the only remedy against tavern owners and operators for injuries
caused by intoxicated individuals. Illinois has consistently refused to acknowledge the existence
of a common law action against these licensees for injuries by intoxicated patrons. However,
nothing generally prevents the injured party from attempting recovery against all tortfeasors
who caused or contributed to cause the injuries. Thus, it is common for a plaintiff to file suit
against the intoxicated individual who caused the damages as well as any potential dramshop
defendants. However, the Act exempts from liability any licensed distributors or brewers whose
only connection with furnishing the alcohol which allegedly caused the intoxication was the
furnishing or maintenance of apparatus for the dispensing or cooling of beer.
III.
SOCIAL HOST DOCTRINE
A.
General Rule
Illinois does not recognize social host liability: “For over one century, this court has
spoken with a single voice to the effect that no social host liability exists in Illinois.”
Charles v. Seigfried, 165 Ill. 2d 482, 486, 651 N.E.2d 154, 209 Ill. Dec. 226 (1995).
However, the analysis of potential liability for social hosts does not end with this seemingly
insurmountable pronouncement by the Illinois Supreme Court.
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B.
History and Recent Precedent
1.
Cruse v. Aden – The Strong and Able Bodied Man
In 1889, the Illinois Supreme Court first considered whether a common law cause of action
existed against what we now know as a “social host.” In 1884, Adde Aden gave his friend,
George Cruse, two drinks of an intoxicating liquor, which he drank. Mr. Cruse then left for his
home on horseback. The horse threw Mr. Cruse from its back on the way home and he died
from his injuries. His wife sued Mr. Aden under an early version of the Dramshop Act. Cruse v.
Aden, 127 Ill. 231, 20 N.E. 73 (1889).
The Illinois Supreme Court declared that there was no common law cause of action for giving or
selling “intoxicating liquor to ‘a strong and able-bodied man.’” Id. at 234. The Court also noted
that any plausible cause of action Mrs. Cruse had was purely statutory and dependent upon the
Dramshop Act. This laid a solid foundation for the rule of non-liability for social hosts, which has
survived several judicial and countless statutory challenges over the last 125 years.
2.
Charles v. Seigfried – Judicial Restraint
In 1995, the Illinois Supreme Court reinforced its holding in Cruse and refused to create a
common law cause of action against social hosts when it decided Charles v. Seigfried, 165 Ill. 2d
482, 651 N.E.2d 154, 209 Ill. Dec. 226 (1995). In Charles, the Supreme Court actually consolidated
and decided two similar cases. In both cases, the plaintiffs alleged that defendants hosted social
gatherings, that they served alcohol to persons they knew to be underage and that the minors
became intoxicated as a result of drinking the alcohol. In one case, the intoxicated minor left the
gathering in her own vehicle and was killed in an automobile accident. In the other case, the
minor left the premises in a vehicle driven by another intoxicated minor and they were involved
in motor vehicle accident as well, although that plaintiff survived. Charles, 165 Ill. 2d at 484.
Both plaintiffs filed complaints premised, in part, on theories of social host liability. In both
cases, the circuit courts dismissed the complaints for failure to state a cause of action, and in
both cases, the appellate courts reversed the trial courts, choosing instead to “create” and then
expand social host liability in Illinois. Id.
The Supreme Court reversed both Appellate Court decisions, although Justice McMorrow issued
a contentious dissenting opinion. Writing for the majority, Justice Bilandic stated simply and
convincingly:
For over one century, this court has spoken with a single voice to the effect that
no social host liability exists in Illinois. * * * [I]t has been, and continues to be,
well-established law that Illinois has no common law cause of action for injuries
arising out of the sale or gift of alcoholic beverages; that the legislature has
preempted the field of alcohol-related liability; and that any change in the law
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governing alcohol-related liability should be made by the General Assembly, or
not at all.
Charles, 165 Ill. 2d at 486.
The Court went on to explain that there was no cause of action in common law against a social
host, primarily because it is the drinking of intoxicating beverages which causes intoxication, not
the furnishing of alcohol. The provision of alcohol, according to the majority, was too remote to
constitute the proximate cause of an injury by an intoxicated person. Id.
The Court then noted that the only source of liability for furnishing of alcoholic beverages is the
Dramshop Act. Since social host liability did not exist prior to the creation of the Dramshop Act,
and since it was never inserted into the Dramshop Act in any amendments to the statute, the
Court determined that the legislature did not intend to create liability for social hosts. The Court
noted that “the General Assembly has preempted the entire field of alcohol-related liability
through its passage and continual amendment of the Dramshop Act.” Id. at 488.
Justice Bilandic then took great pains to describe why the Supreme Court was declining the
invitation to judicially create social host liability. He reasoned that such “primary expression of
Illinois public and social policy should emanate from the legislature,” as the legislators
responsible for such a decision are charged with the duty of creating the law and are also more
directly accountable to the people of the State of Illinois for those decisions. Id. at 492-94.
The Court also noted the more pragmatic issues in creating social host liability, which are truly
concerns for insurers and defense counsel in the “voluntary undertaking” cases on the horizon
and more fully described below:
We are realistic enough to know that in virtually every instance where an
underage driver is involved in an alcohol-related car accident, a clever plaintiff's
attorney would drag into court any and all adults who may qualify as a social
host. The focus at trial would then shift from the drunk driver to the alleged social
hosts. Accidents following a wedding, for example, would include the typical
targets of the bride, the groom, the parents of the bride and groom, the servers,
and anyone else who may have handed the underage person a drink. Ironically,
these “social hosts” could be held responsible for the underage person's drinking
even if that person's parents were also in attendance. Courts and jurors would
then be faced with evaluating the social host's conduct. For example: Did the
social host do enough to stop the underage drinker from his or her own illegal
actions? Did the host check identification to determine the guests' ages? Should
the host have allowed the guests to serve themselves? Should the host have
allowed underage persons to be present? Could the host have done more to
prevent a guest's departure? Did the host know that the guest was visibly or
obviously intoxicated? We are unwilling to open up this “Pandora's Box” of
unlimited liability through judicial decision. If civil liability is to be imposed in
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these situations, the legislature should carefully delineate the standards of
conduct expected of social hosts.
Charles, 165 Ill. 2d at 502-03.
Justice McMorrow’s dissent focused on what she considered to be a recent surge in the number
of teenage deaths and injuries related to underage drunk driving and alcohol-related accidents.
In choosing not to create social host liability, she accused the majority of turning “its back on a
development in the common law that is long overdue.” Charles, 165 Ill. 2d at 505. In her opinion,
the job of the Illinois Supreme Court was to “facilitate the evolution of our common law in order
to accommodate the changing needs of our citizens.” Id. at 518. In Justice McMorrow’s view, the
Court was obligated to create this theory of liability.
C.
Recognition of Voluntary Undertaking Theory
1.
Wakulich v. Mraz – Voluntary Undertaking Theory Emerges
In 2003, the Illinois Supreme Court again declined an invitation to create social host liability in
Wakulich v. Mraz, 203 Ill. 2d 223, 785 N.E.2d 843, 271 Ill. Dec. 649 (2003). In Justice Fitzgerald’s
words, the Court was “adhering” to its decision in Charles v. Seigfried. Indeed, the Court refused
to create social host liability per se, but it did permit plaintiff to advance a voluntary undertaking
theory – arguably an “end run” around the prohibition of social host liability.
On June 15, 1997, 16-year-old Elizabeth Wakulich was at the home of Michael Mraz (21 years
old), Brian Mraz (18 years old) and their father, Dennis Mraz. According to the complaint, the
defendants encouraged and pressured Elizabeth to drink a quart of Goldschlager, after which
she lost consciousness. Michael and Brian laid her in the living room of the house and placed a
pillow under her head to prevent her from aspirating. They did not contact her parents, did not
seek medical attention and “actually prevented other individuals at the home from calling 911 or
seeking other medical intervention.” Wakulich, 203 Ill. 2d at 227. Plaintiff alleged that Dennis
Mraz then ordered his sons to remove Elizabeth from the home during the morning hours of
June 16, 1997. They complied. She died later that day. Id.
Plaintiff sought recovery under two theories – social host liability and the voluntary undertaking
doctrine, claiming that the defendants did not act reasonably to protect Elizabeth after
voluntarily assuming that duty when she became unconscious. The trial court dismissed the
complaint and the Appellate Court reversed, finding that the plaintiff properly alleged a cause of
action under the voluntary undertaking theory. The Supreme Court affirmed.
The Court initially discussed the Charles opinion and relied upon it in refusing to recognize
social host liability in Illinois. However, the Court then moved on to discuss the plaintiff’s
allegations under the voluntary undertaking theory, which the Court defined as:
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one who undertakes, gratuitously or for consideration, to render services to
another is subject to liability for bodily harm caused to the other by one's failure
to exercise due care in the performance of the undertaking.
Wakulich, 203 Ill. 2d at 241.
Plaintiff alleged that the defendants undertook this duty by placing Elizabeth in another room,
by checking on her and observing her condition, and by taking steps to prevent her from
aspirating. Plaintiff claims they breached that duty by failing to seek medical care, preventing
others from seeking care for her and removing her from the premises. Id. at 241-42.
Defendants argued that permitting the plaintiff to advance the voluntary undertaking theory
was an attempt to circumvent the long-standing rule of non-liability for social hosts in situations
involving alcohol-related injuries. The Court concluded, however, the liability of the defendants
in this case was “not contingent on their status as social hosts.” Id. at 242. Liability was not based
on whether they were social hosts, but instead on the fact that they undertook a voluntary duty
to care for Elizabeth in a drunken state. The Court then simply concluded that the voluntary
undertaking theory, in this case, was not an attempt to circumvent the rule against social host
liability.
However, the Court acknowledged defendants’ argument that any duty assigned to the
defendants was limited by the extent of the undertaking. Defendants argued that merely
permitting an intoxicated guest to “sleep it off” does not mean that the host automatically
assumes an “open-ended duty to care for the guest and assess the guest’s medical condition.”
The Court agreed, but noted that the plaintiff alleged that defendants did much more than
simply make the floor of their home available to Elizabeth, since they checked on her
periodically, tried to prevent aspiration and prevented others from attending to her. Id. at 243.
2.
Bell v. Hutsell – Ignorance Is Bliss
The Bell case is the most important recent appellate case concerning the social host doctrine. In
Bell, the Appellate Court determined that the plaintiff’s allegations that defendants failed to
prevent the consumption of alcohol by persons on their property when the defendants allegedly
voluntarily undertook that duty were not barred by the Dramshop Act or the prohibition against
social host liability. Bell v. Hutsell, 402 Ill. App. 3d 654, 931 N.E.2d 299, 341 Ill. Dec. 691 (2d Dist.
2010). As will be discussed below, the case potentially presents social hosts with an untenable
choice between doing nothing to monitor their guests’ drinking, or assuming some duty with
respect to monitoring the consumption of alcoholic drinks and facing certain litigation should
any guest later cause any injury to any person. Defendants filed a petition for leave to appeal
this case to the Illinois Supreme Court, which was granted in November 2010. In March 2011,
the Supreme Court heard oral argument on the case, and an opinion is expected sometime in
2011.
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According to the plaintiff’s complaint, 18-year-old Jonathon Hutsell had a party at his family’s
home. A number of Jonathon’s underage friends attended the party, including the decedent,
Daniel Bell. Prior to the party, Hutsell’s parents told him that they would not permit alcoholic
beverages at the party and that they would be present during the party to “check on the
partygoers.” They told him that they would “monitor and inspect” the lower level of the house,
the garage and the driveway to ensure that no one was drinking alcohol. Bell, 402 Ill. App. 3d at
655. However, plaintiff alleged that defendants were present throughout the evening while
partygoers drank beer, vodka and rum. The alcohol was apparently furnished by the guests, and
was not provided by the Hutsells. The Hutsells actually stocked their bar with soft drinks. Daniel
Bell apparently became intoxicated from alcohol he consumed at the party. He got into his car
with several others and struck a tree. He died from his injuries. Id. at 655-56.
Plaintiff filed suit, alleging that the Hutsells voluntarily undertook the duty to monitor the
underage guests at the party to ensure that they did not consume alcohol, and that they were
negligent in failing to prevent the consumption of alcohol on their premises. The defendants
moved to dismiss the complaint, asserting the rule of non-liability for social hosts and arguing
that the voluntary undertaking doctrine was an attempt to circumvent that rule. The trial court
dismissed the complaint, and plaintiff appealed.
The Appellate Court reversed, and began its analysis by repeating the above-referenced
definition of the voluntary undertaking doctrine. The Court then quoted the popular but evernarrowing rationale for the rule against social host liability expressed by the Supreme Court in
Charles v. Seigfried. Bell, 402 Ill. App. 3d. at 657-59.
The Bell court held that plaintiff properly stated a cause of action under the voluntary
undertaking theory and that the rule against social host liability did not prohibit the cause of
action because, according to the Court, the Hutsells were not social hosts during the party. The
court based this conclusion on the fact that the Hutsells did not supply the alcohol:
They did not supply the alcohol that Daniel consumed to the point of
impairment. They stocked the lower bar area with soft drinks, and the alcohol
that was brought onto the premises was supplied by the invited partygoers. That
defendants may have negligently failed to prevent the consumption of alcohol on
the premises does not convert them into social hosts.
Bell, 402 Ill. App. 3d at 660.
Defendants argued the obvious and arguably impossible situation the Court’s opinion would
create – that parents who provided alcohol for a similar party would have no liability, while
parents who purchased soft drinks and attempted to curtail the consumption of alcohol face
unlimited liability for the actions of the guests if the guests somehow become intoxicated. In
other words, the parents who attempt to ensure that underage guests do nothing face more
liability than the parents who actually furnish alcohol. The Court tossed this argument aside by
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noting that the parents who purchased soft drinks and agreed to monitor the party could also
avoid liability if they simply chose not to monitor the party. Id.
The Court cited a long list of cases refusing to hold social hosts liable for the damages caused
by intoxicated guests. Referring to that list, the Court distinguished those cases from the Bell
case and stated:
In the above cases, the defendants were alleged to have served the alcohol or
permitted it to be served, unlike the case at bar where defendants were alleged
to have undertaken a duty to prevent the consumption of alcoholic liquor.
Bell, 402 Ill. App. 3d at 662.
Here, the Appellate Court implies that traditional social host non-liability should not be
overturned. The conclusion to be drawn from the opinion, however, is that the protection
afforded by the long-standing social host doctrine is narrower than ever.
D.
Simmons v. Homatas – An Extreme Exception
If one thing is to be learned from recent trends in social host cases, it is that the definition of the
defendant is essential, and any analysis of liability must include an honest examination of
whether a defendant is truly a “social host” and/or whether it is a licensee under the Dramshop
Act. As is evident from reviewing Wakulich and Bell, the simple fact that an intoxicated person
causes injury does not automatically generate the protections of the Dramshop Act or of the
doctrine of social host non-liability.
The Simmons case involved an adult entertainment club operated by defendant, On Stage, that
neither sold nor provided alcohol to its guests, yet the Court found that the club had a duty not
to encourage and assist patrons in driving while intoxicated. Simmons v. Homatas, 236 Ill. 2d
459, 925 N.E.2d 1089, 338 Ill. Dec. 883 (2010). While the club did not sell or provide alcohol, it
allegedly encouraged its guests, including Mr. Homatas, to bring alcohol and to drink it at the
club, and the club even provided glasses, ice, soft drinks and other mixers for its guests. In this
case, Mr. Homatas and his friend became so intoxicated that he was found vomiting in the club’s
restroom. The club ejected the men from the premises, instructed the valet service to bring their
car around to the front door, and then placed Homatas in the drivers’ seat of the car while
directing him to leave the premises. He later collided with a vehicle driven by plaintiff’s
decedent, killing her, her unborn child and the passenger in his own car. Homatas survived and
recovered from his injuries. Simmons, 236 Ill. 2d at 462.
Multiple complaints were filed by multiple plaintiffs. The club moved to dismiss, asserting that
its policy of not selling or serving alcohol prohibited plaintiffs from maintaining any action under
the Dramshop Act, and that the Dramshop Act provided the sole remedy for “alcohol-related”
injuries. The motion was granted in part and the case was eventually appealed to the Illinois
Supreme Court. The Court determined that plaintiffs stated a cause of action against the club,
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not under the social host doctrine or the Dramshop Act, but under an “in concert” negligence
theory. The Court found that the club encouraged or assisted Homatas’ tortious conduct of
driving while intoxicated:
Similarly, On Stage's duty does not arise from providing alcohol to Homatas.
Indeed, the parties agree that the club did not provide any alcohol at all. Rather, a
duty under the facts alleged arose later, following a series of actions taken by
club employees in response to discovering Homatas vomiting in the club's
restroom. At that point, employees allegedly ejected Homatas and Chiariello from
the club, ordered the parking attendant to bring Homatas's car around to the
front door, and assisted Homatas and Chiariello into the vehicle, directing him
then to leave the premises.
Simmons, 236 Ill. 2d at 473.
These facts are extreme, and the Supreme Court noted the nature of the facts in its decision:
As the circuit court recognized, this case presents a set of special circumstances.
We do not hold today that restaurants, parking lot attendants or social hosts are
required to monitor their patrons and guests to determine whether they are
intoxicated. We hold only that where, as here, a defendant is alleged to have
removed a patron for being intoxicated, places the patron into a vehicle and
requires him to drive off, such facts are sufficient to state a common law
negligence cause of action that is not preempted by the Dramshop Act.
Id. at 481.
Here, the Supreme Court also explained that its statement in Charles that “the General Assembly
`has preempted the entire field of alcohol-related liability through its passage and continual
amendment of the Dramshop Act’” does not extend so far as to preempt every, conceivable
action to recover for an alcohol-related injury. Id. at 469.
E.
Exception for Minors
The Drug or Alcohol Impaired Minor Responsibility Act works in concert with the Dramshop Act
and the social host doctrine. Pursuant to section 5 of that Act, any person 18 years of age or
older who willfully supplies alcohol or illegal drugs to someone younger than 18 and causes the
impairment of that person is liable for death, personal injury or property damage caused by the
impaired minor. 740 ILCS 58/5. The Act also assigns liability for alcohol-related injuries to a
person over the age of 18 who owns or controls “non-residential” premises and willfully permits
people under the age of 18 to consume alcohol or illegal drugs on the premises to the point of
impairment. Id. The Act creates a cause of action against such defendants for people injured by
these impaired minors, and permits the recovery of economic damages, non-economic
damages, attorneys’ fees, costs of suit and punitive damages. 740 ILCS 58/10.
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IV.
CONCLUSION
As the above-referenced statement from the Supreme Court in Simmons illustrates, the
traditional rule of non-liability for social hosts is still intact, though it is likely narrower than the
sweeping language found in Charles v. Siegfried. Furthermore, clever plaintiff’s attorneys are sure
to continue to develop and assert new theories to avoid the traditional protection for social
hosts. The nature of the liability facing social hosts in Illinois is dynamic. The forthcoming
opinion from the Supreme Court in Bell v. Hutsell will hopefully give some guidance on the issue
to social hosts, insurers, and litigants in alcohol-related injury cases.
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Michael J. Denning
- Associate
Significant Cases
 Proper venue for personal injury action against
deputy sheriff is county in which sheriff's office
is located, not plaintiff's county of residence.
Mike began his career with Heyl Royster by clerking
for the firm's Peoria office during law school. At
Northern Illinois University, he served as the Editor-inChief of the Law Review and was awarded the NIU
Scribes award in 2001 for legal scholarship. After
graduating, he served as Senior Law Clerk to Justice
Tom Lytton of the Illinois Appellate Court, Third
District. Mike joined the Rockford office in June 2004.
Publications
 "Illinois Courts Expand, Then Narrow Validity of
Arbitration Agreements in Nursing Home
Litigation," IDC Defense Update, Vol. 12, No. 14
(2011)
 "Code Blue! Ambulance Manufacturing
Specifications May Pre-empt State Common
Law Claims," Northern Illinois University Law
Review (2001)
Mike concentrates his practice in civil defense
litigation, including medical malpractice and nursing
home litigation; auto, premises and trucking litigation;
and the defense of toxic tort and asbestos claims.
As counsel, Mike has defended the firm's clients and
their interests at depositions, including those of
plaintiffs, co-defendants, witnesses, treating
physicians, and expert witnesses. He has presented
physicians, nurses and nursing assistants for
deposition in numerous professional liability cases. He
has drafted and argued motions, including: discovery,
dismissal and summary judgment motions. Mike has
represented the firm's clients at high-exposure
mediations and settlement conferences, and has
assisted in the trial of cases. He has represented
Fortune 500 companies, local businesses,
professionals and insurance companies in a variety of
cases.
 Winnebago County Bar Association
 State Bar of Wisconsin
Court Admissions
 State Courts of Illinois and Wisconsin
 United States District Court, Northern District
of Illinois and Eastern District of Wisconsin
Mike is a certified arbitrator for the Seventeenth
Judicial Circuit Court.
Education
 Juris Doctor (Cum Laude), Northern Illinois
University College of Law, 2002
 Bachelor of Science-Business Administration,
Bradley University, 1999
D-17
PREMISES LIABILITY UPDATE Presented and Prepared by:
Jeffrey T. Bash
[email protected]
Prepared with the Assistance of:
Michael P. McGinley
[email protected]
E-1
PREMISES LIABILITY UPDATE
I.
INTRODUCTION............................................................................................................................................ E-4
II.
RESTATEMENT (THIRD) AND ITS IMPACT ON ILLINOIS LAW ..................................................... E-4
A.
B.
A Comparison Between Restatement (Second) and Restatement (Third) ................. E-4
1.
Illinois Law and Restatement (Second); Application to
Landowners/Operators ................................................................................................ E-4
2.
Illinois Law and Restatement (Third); Application to
Landowners/Operators ................................................................................................ E-5
3.
Exceptions ......................................................................................................................... E-6
Conclusion ....................................................................................................................................... E-7
III.
LEGISLATION.................................................................................................................................................. E-7
IV.
DUTY ................................................................................................................................................................. E-8
A.
No Duty Owed in Take Home Asbestos Exposure Case to
Family Members Because Plaintiff Not an “Entrant” ........................................................ E-8
B.
Landowner Has Duty to Exercise Reasonable Care to Prevent
Unreasonable Risk of Harm Arising from Trees Near a Roadway .............................. E-9
C.
“Special Relations” Giving Rise to Duty to Aid or Protect – Owners
of Indoor Football Arena Had a Duty to Protect Spectator Against an
Unreasonable Risk of Injury ................................................................................................... E-10
D.
Criminal Attack – “Special Relations” and the Voluntary Undertaking
Doctrine – Landlord Had No Duty to Protect Tenant From Criminal
Activities by Third Persons Despite Having a “Special Relationship”
with Plaintiff ................................................................................................................................. E-11
E.
Recreational Use Doctrine and Act – Recreation Association and
Coach Immune From Premises Liability After Spectator Hit with Ball
at Baseball Game ........................................................................................................................ E-13
E-2
V.
SLIP & FALL CASES ................................................................................................................................... E-14
A.
The Open and Obvious Exception and the Exceptions to the
Exception –Summary Judgment for Premises Owner Despite
Plaintiff Tripping on Empty Pallet Because Risk Was “Open and
Obvious.” Further, the “Distraction Exception” and “Deliberate
Encounter Exception” Did Not Apply. ................................................................................ E-14
B.
How Is the Open and Obvious Exception Applied to a Minor
Who Falls on Home Exercise Equipment? ........................................................................ E-16
C.
Snow and Ice Removal Act – Immunity Provided by the Act
Does Not Apply to Driveways Even If Primary Ingress and
Egress to Premises ..................................................................................................................... E-17
D.
Slip and Fall – The Distraction Exception to the Open and
Obvious Exception ..................................................................................................................... E-18
1.
Fall on Sidewalk of Apartment Complex While Carrying
Groceries – Distraction Exception Does Not Apply Because
Distraction Solely Caused by Plaintiff .................................................................. E-18
2.
Fall On Parent’s Front Steps After “Eating, Studying, Watching
Television and Napping” – Distraction Exception Does Not Apply ......... E-19
E.
Slip and Fall at Construction Site – Distraction and Deliberate Encounter
Exceptions Do Not Apply to Construction Worker Who Fell While Talking
on His Cell Phone as He Was Familiar with Ruts at Construction Site ................... E-19
F.
Slip and Fall on Municipal Property .................................................................................... E-20
1.
Fall on Sidewalk Owned by City but Allegedly Appropriated by
Adjacent Property Owner. Homeowner’s Acts of Raking Leaves,
Mowing Around and Salting During Winter Do Not Give Rise to a
Duty to Ensure the Safe Condition of a Public Sidewalk. ............................. E-20
2.
Municipality Maintained Alley – Tort Immunity Act Did Not Apply
Because Plaintiff Was a Permitted and Intended User of Alley ................. E-21
3.
Municipality Maintained Sidewalk –Tort Immunity Act Applied
Because Sidewalk Increased the Usefulness of Public Property
Intended to Be Used for Recreation .................................................................... E-22
E-3
PREMISES LIABILITY UPDATE
I.
INTRODUCTION
Premises Liability litigation can take many forms and cases involve persons injured while on
another person’s property. This presentation reviews current developments in the case law and
statutes on common theories of liability in premises-related personal injury claims.
II.
RESTATEMENT (THIRD) AND ITS IMPACT ON ILLINOIS LAW
In 2005, the American Law Institute (ALI) approved nine chapters of the Restatement (Third) of
Torts. Since then, only the first seven chapters have been published. Chapter 9 dealing with a
land possessor’s duties has yet to be published but will become part of a second volume of the
Restatement (Third) of Torts: Liability for Physical and Emotional Harm. At first blush, Chapter 9
appears to drastically change the approach of the corresponding chapters in the Restatement
(Second). However, reviewing the cases that have been decided since the Restatement (Second)
was published reveals that the changes may have very little impact on premises liability
litigation.
A.
A Comparison Between Restatement (Second) and Restatement (Third)
Under the Restatement (Second), a land possessor’s duty was determined based upon the status
of the entrant to the land, as well as the source of the risk, such as whether a hazardous
condition of the land was due to the land possessor’s conduct, an artificial condition or a natural
condition.
The new Restatement (Third) takes a different approach. It adopts a single possessor duty of
“reasonable care” to all entrants to the possessor’s land, including trespassers. The “reasonable
care” standard applies regardless of the source of the risk, in all situations except as to “flagrant
trespassers” for natural conditions on the land.
1.
Illinois Law and Restatement (Second); Application to
Landowners/Operators
The Illinois Supreme Court, in Ward v. Kmart Corp., 136 Ill. 2d 132, 554 N.E.2d 223, 143 Ill. Dec.
288 (1990), explained the duty of landowners/operators to invitees, licensees, and trespassers
under the current state of the law in Illinois:
With respect to conditions on land, the scope of the landowner's or occupier's
duty owed to entrants upon his premises traditionally turned on the status of the
entrant. The operator of a business, though not an insurer of his customer's
safety, owed his invitees a duty to exercise reasonable care to maintain his
E-4
premises in a reasonably safe condition for use by the invitees. Licensees and
trespassers were owed substantially narrower duties. [Citations omitted].
Ward, 136 Ill. 2d at 141.
The Illinois General Assembly enacted the Premises Liability Act (740 ILCS 130/1), which
provides, in pertinent part:
§ 2. The distinction under the common law between invitees and licensees as to
the duty owed by an owner or occupier of any premises to such entrants is
abolished.
The duty owed to such entrants is that of reasonable care under the
circumstances regarding the state of the premises or acts done or omitted on
them.
Id.
In Ward, the Illinois Supreme Court continued:
The duty expressed in the Act is phrased somewhat differently than the duty
owed to invitees under the common law. Under the common law, the
landowner's or occupier's duty was to use reasonable care to maintain his
premises in a reasonably safe condition. However, even under the common law, if
he chose to maintain a dangerous condition on his premises, it was generally
held that an adequate warning to invitees would suffice to render the condition
“reasonably safe.” He did not have to actually remove all dangers from his
premises in order to avoid liability. The Premises Liability Act thus does not
significantly alter the common law duty owed by an owner or occupier of
premises to invitees thereon, but rather retracted the special but limited
immunity from tort liability enjoyed by owners and occupiers of land with respect
to licensees.
Id. at 141-142.
2.
Illinois Law and Restatement (Third); Application to
Landowners/Operators
(a)
Standard of Care
When published, Restatement (Third) of Torts: Liability for Physical and Emotional Harm, will
impact the standard of care owed by a landowner to their land’s entrants. However, this may
have very little impact on Illinois law due to the General Assembly’s elimination of the common
law distinction between invitees and licensees by statute. See, 740 ILCS 130/2. The real change
E-5
and challenge will be the interpretation of the “flagrant” trespasser, and how this affects
landowners/operators’ duty to all trespassers.
For states that still adhere to the rigid plaintiff classification system of Restatement (Second) to
determine the duty owed by landowners/operators to plaintiffs, Restatement (Third) announces
the elimination of the existing system. Restatement (Third) adopts a unitary landowner/operator
duty standard of “reasonable care” to all entrants to the landowner/operator’s land, including
trespassers, with the sole exception of “flagrant trespassers.” See, Hope T. Cannon, The New
Restatement, Chapters 8 and 9, For The Defense (January 2011). Consequently, “Courts . . . no
longer have to address whether an entrant is a licensee, an invitee or a trespasser in determining
whether and which duty applies. Instead, under the Restatement (Third), a fact finder has to
decide only if an entrant is a trespasser, a non-trespasser or a flagrant trespasser.” Id. at 19.
(b)
Flagrant Trespasser
The definition of “flagrant trespasser” was not clearly articulated by the American Law Institute
when drafting the Restatement (Third). Thus, individual trespassers are to be so classified on
case-by-case basis according to the degree to which their entry invades the possessor's right to
exclusive possession. James A. Henderson, Jr., The Status of Trespassers on Land, 44 Wake Forest
L.Rev. 1071 (Winter 2009).
The overarching concern will be fairness:
It will be observed that the notion of flagrant trespasser, as the drafters use it, is
essentially a noninstrumental, fairness-based norm. Comment a to section 52
[Chapter 9, Restatement (Third)] says it would be “unfair” to allow “bad-guy”
trespassers to insist on reasonable care; comment h says it would be “unjust.”
44 Wake Forrest L.Rev. at 1075.
3.
Exceptions
The exceptions to the general duty of reasonable care owed by a landowner/operator to
entrants on land are stated in § 52 of Chapter 9 Restatement (Third):
A land possessor’s duty to a flagrant trespasser and to a trespasser for natural conditions on
uninhabited and unimproved land is limited to:
(a) not acting in an intentional, willful, or wanton manner to cause physical harm to the
trespassers; and
(b) exercising reasonable care for a trespasser who reasonably appears to be:
(1) imperiled; and
(2) helpless or unable to protect himself or herself.
E-6
Thus, the landowner/operator’s general duty is limited when it comes to warning a trespasser
about a hazard created by natural conditions. See, Hope T. Cannon, The New Restatement,
Chapters 8 and 9, For The Defense (January 2011). Also, the landowner/operator’s duty is limited
to refraining from acting intentionally wantonly or willfully in injuring a flagrant trespasser; this
applies regardless of whether the condition is an artificial condition, a natural condition or a
condition resulting from the landowner’s active conduct. Thus, a landowner/operator owes a
duty of reasonable care to flagrant trespassers or trespassers for a natural condition only if they
are in peril or helpless and unable to protect themselves. James A. Henderson, Jr., The Status of
Trespassers on Land, 44 Wake Forest L.Rev. 1071. (Winter 2009)
B.
Conclusion
Although adopting a unitary duty standard of care owed by a landowner/operator to his or her
land’s entrants in accordance with Restatement (Third) seems to differ considerably from the
status-based traditional rule of the Restatement (Second), the change should not have much
impact on the majority of premise liability cases in the State of Illinois. Illinois has applied a
unitary standard of care to invitees and licensees for many years, with only trespassers deserving
a narrower standard of care.
As to the flagrant trespasser issue, what the drafters really want is to give trial courts discretion
to treat unprivileged trespassers differently based on differences regarding why those
trespassers came onto the land; morally relevant differences that entitle some trespassers, but
not others, to insist that possessors invest resources to protect them from harm. Id.
Thus, Restatement (Third), when published, will likely have very little impact on the majority of
premises liability cases in the State of Illinois.
III.
LEGISLATION
Illinois House Bill 1899 and Illinois Senate Bill 1978 are both pending in the Illinois House and
Senate’s Rules Committees as of March 2011. Both are attempts to reenact and change
provisions of the Premises Liability Act, 740 ILCS 130 et seq., that were added by Public Act 89-7
which was held to be unconstitutional in its entirety by the Illinois Supreme Court in Best v.
Taylor Mach. Works, 179 Ill. 2d 367, 689 N.E.2d 1057, 228 Ill. Dec. 636 (1997). The reenacted
provisions describe the duty of reasonable care owed to invited entrants by an owner or
occupier of premises, and provide that an owner or occupier of land owes no duty of care to an
adult trespasser other than to refrain from willful and wanton conduct that would endanger the
safety of a known trespasser from a condition of the property or an activity conducted on the
property. The proposed provisions would apply to causes of action accruing on or after the
effective date of reenactment.
The proposed legislation is consistent with the Restatement (Third) of Torts.
E-7
IV.
DUTY
A premises-liability action is a negligence claim. See, Salazar v. Crown Enterprises, Inc., 328 Ill.
App. 3d 735, 740, 767 N.E.2d 366, 262 Ill. Dec. 906 (1st Dist. 2002). The essential elements of a
cause of action based on common-law negligence are the existence of a duty owed by the
defendant to the plaintiff, a breach of that duty, and an injury proximately caused by that
breach. Ward v. Kmart Corp., 136 Ill. 2d 132, 140, 554 N.E.2d 223, 143 Ill. Dec. 288 (1990).
“With respect to conditions on land, the scope of the landowner's or occupier's duty owed to
entrants upon his premises traditionally turned on the status of the entrant.” (Emphases added.)
Ward, 136 Ill. 2d at 141. “Traditionally, the liability of a landowner in Illinois has been delineated
in terms of the duty owed to persons present on the land.” (Emphasis added.) Lee v. Chicago
Transit Authority, 152 Ill. 2d 432, 445-46, 605 N.E.2d 493, 178 Ill. Dec. 699 (1992). The operator of
a business owed his invitees a duty to exercise reasonable care to maintain his premises in a
reasonably safe condition for use by the invitees. Licensees and trespassers were owed narrower
duties. The legislature abolished the distinction between invitees and licensees with the
enactment of the Premises Liability Act (740 ILCS 130/1 et seq. (West 2004)) in 1987. Ward, 136
Ill. 2d at 141.
A.
No Duty Owed in Take Home Asbestos Exposure Case to Family Members
Because Plaintiff Not an “Entrant”
Nelson v. Aurora Equipment Co., 391 Ill. App. 3d 1036, 909 N.E.2d 931, 330 Ill. Dec. 909 (2d Dist.
2009) – Eva, the deceased, was married to Vernon and was John's mother. Vernon was employed
by Aurora Equipment Co. (“Aurora”) in Aurora, Illinois, from 1968 to 1987, and John was
employed from 1977 to 1993. Aurora painted, packaged, and sold steel manufactured items. Eva
was never employed by Aurora and did not encounter any condition on Aurora's premises as a
result of being an entrant onto those premises.
According to plaintiffs' third amended complaint, Vernon and John were regularly exposed to
asbestos fibers and dust at Aurora's facility, and those fibers and dust attached themselves to
Vernon's and John's work clothing, which they wore home. Eva was around Vernon when he was
wearing the contaminated clothing and she washed the clothes and breathed in the asbestos
fibers and dust, thus becoming exposed. Plaintiffs alleged that, as a direct and proximate result
of her exposure to asbestos from defendant's facility, Eva developed mesothelioma and colon
cancer, which caused her death on January 9, 2004.
Plaintiffs alleged that Aurora had a duty of ordinary care “to provide a reasonably safe place for
persons lawfully on property and to those who could foreseeably be harmed by dangerous
conditions on [Aurora's] premises.” Nelson, 391 Ill. App. 3d at 1038. Plaintiffs urged the Court to
impose a duty on Aurora to guard against off-premises injury caused by airborne asbestos
generated on Aurora's premises, because it was foreseeable that such exposure would cause
injury and death. Aurora argued that the law imposes no duty because it had no relationship
with Eva and, absent a relationship, foreseeability of injury was not relevant. The trial court found
E-8
that Eva's injuries and death were foreseeable, but it held that to impose a duty would create a
limitless number of potential plaintiffs, as literally anyone who came in contact with Vernon's
and John's work clothes could be exposed.
The plaintiffs in Nelson have not based their action against Aurora on the statute but on the
common-law duty of a landowner or occupier toward an invitee to use reasonable care to
maintain his premises in a reasonably safe condition. See, Ward, 136 Ill. 2d at 141. Because Eva
was not an entrant on Aurora's land, and thus not an invitee, a licensee, nor a trespasser, her
action had to fail. “Premises” is a house or a building along with its grounds. Black's Law
Dictionary 1219 (8th ed. 2004). While Eva is alleged to have come into contact with the asbestos
fibers and dust on Vernon's and John's work clothes, those fibers and dust were no longer a
condition on Aurora's premises.
Thus, the Court held that plaintiff’s claims failed because the defendant cannot be liable under a
theory of premise liability to a party that was never physically on its premises.
B.
Landowner Has Duty to Exercise Reasonable Care to Prevent Unreasonable
Risk of Harm Arising from Trees Near a Roadway
Eckburg v. Presbytery of Blackhawk of Presbyterian Church (USA), 396 Ill. App. 3d 164, 918 N.E.2d
1184, 335 Ill. Dec. 371 (2d Dist. 2009) – This case was brought by a motorcyclist who was injured
when a tree fell on him and his wife as they traveled along a rural state road adjacent to
defendant’s property. The tree killed the motorcyclist’s wife. The complaint alleged the
following: defendant owned some densely wooded property adjoining Illinois Route 2 in Ogle
County. A number of rotted and otherwise defective trees on defendant’s property were
immediately adjacent to the edge of Route 2. Route 2 was a heavily traveled rural road that
connected the cities of Rockford, Byron, Oregon, and Dixon. Defendant received actual notice
one week prior to the accident that there were rotted trees on his property that posed a threat
of falling onto the roadway.
Plaintiff alleged that defendant owed a duty to him and to the general public to exercise
reasonable care in the inspection and maintenance of the trees upon his property immediately
adjoining the road. Further, defendant owed a duty to plaintiff and the general public to
respond upon receipt of a complaint of trees that were defective and posed a danger.
Defendant argued that section 363 of the Restatement (Second) of Torts, which is followed in
Illinois, shielded it from liability. Section 363 provides:
§ 363. Natural Conditions
(1) Except as stated in Subsection (2), neither a possessor of land, nor a vendor,
lessor, or other transferor, is liable for physical harm caused to others outside of
the land by a natural condition of the land.
(2) A possessor of land in an urban area is subject to liability to persons using a
public highway for physical harm resulting from his failure to exercise reasonable
E-9
care to prevent an unreasonable risk of harm arising from the condition of trees
on the land near the highway.” (Restatement (Second) of Torts § 363, at 258
(1965))
Eckburg, 396 Ill. App. 3d at 166. Defendant argued that because its land was not in an urban
area, it could not be liable for plaintiff's injuries as a matter of law.
The Appellate Court held that:
(1) [the] rural nature of landowner's property was not dispositive in determining
whether landowner had a duty to exercise reasonable care in maintaining trees
abutting roadway;
(2) . . . traditional negligence analysis applies in determining whether a landowner
has a duty to exercise reasonable care to prevent an unreasonable risk of harm
arising from the condition of his trees on his land near a highway; and
(3) motorcyclist sufficiently alleged that landowner had actual notice of
dangerous condition of trees on his land so as to give rise to a duty to prevent an
unreasonable risk of harm arising from condition of trees adjacent to roadway.
Eckburg, 396 Ill. App. 3d at 164.
C.
“Special Relations” Giving Rise to Duty to Aid or Protect – Owners of Indoor
Football Arena Had a Duty to Protect Spectator Against an Unreasonable
Risk of Injury
Pickel v. Springfield Stallions, Inc., 398 Ill. App. 3d 1063, 926 N.E.2d 877, 339 Ill. Dec. 402 (4th Dist.
2010) – Defendants were partners who operated a football team called the Springfield Stallions.
The team played in the auditorium of the Springfield Convention Center, which defendants
“possessed” and “controlled” for that purpose. Defendants invited the public to attend these
indoor football games and charged an admission fee, which defendants divided among
themselves.
On April 14, 2007, plaintiff went to the Convention Center, paid the admission fee, and entered
the auditorium to watch a Springfield Stallions football game. She “was situated in an area
designated by [defendants] for spectators to sit or stand [in] and view the football game.” Pickel,
Ill. App. 3d at 1064. A wall, provided by defendants, separated plaintiff and other spectators
from the playing field. The purpose of this wall, plaintiff alleges, was to protect spectators from
being struck by football players during the game. During the game, a player unexpectedly fell
over the wall from the playing field to the spectator area and came into sudden and violent
contact with the plaintiff. Id. at 1065.
Plaintiff filed suit alleging that the defendant (1) encouraged plaintiff and other spectators to sit
or stand in an area that was dangerously close to the playing field; (2) failed to warn plaintiff and
other spectators of the danger of being in this designated area; and (3) failed to erect a wall that
E-10
was high enough and sturdy enough to protect plaintiff and other spectators from being hit by
football players during the game.
In its analysis, the Appellate Court stated that Illinois law has long recognized that certain special
relationships may give rise to a duty to protect another against an unreasonable risk of physical
harm. The Restatement (Second) of Torts sets forth these special relationships. Marshall, 222 Ill.
2d at 438. That section provides as follows:
§ 314A. Special Relations Giving Rise to Duty to Aid or Protect
(1) A common carrier is under a duty to its passengers to take reasonable
action
(a) to protect them against unreasonable risk of physical harm, and
(b) to give them first aid after it knows or has reason to know that they
are ill or injured, and to care for them until they can be cared for by
others.
(2) An innkeeper is under a similar duty to his guests.
(3) A possessor of land who holds it open to the public is under a similar
duty to members of the public who enter in response to his invitation.
(4) One who is required by law to take or who voluntarily takes the custody
of another under circumstances such as to deprive the other of his normal
opportunities for protection is under a similar duty to the other.
Restatement (Second) of Torts § 314A, at 118 (1965). Comment d states that “[t]he duty to protect
the other against unreasonable risk of harm extends to risks arising out of the actor's own
conduct, or the condition of his land or chattels. It extends also to risks arising from * * * the acts
of third persons, whether they be innocent, negligent, intentional, or even criminal.” Restatement
(Second) of Torts § 314A, Comment d, at 119 (1965).
After comparing the Restatement (Second) to the facts of this case, the Appellate Court held that
the defendant team owners had a special relationship with the injured spectator, their invitee.
This relationship obliged them to take reasonable action to protect her against an unreasonable
risk of injury either from the conduct of their agents (the players) or the conduct of third
persons. The Court further found that the plaintiff had not assumed the risk of injury. Pickel, 398
Ill. App. 3d at 1063.
D.
Criminal Attack – “Special Relations” and the Voluntary Undertaking
Doctrine – Landlord Had No Duty to Protect Tenant From Criminal Activities
by Third Persons Despite Having a “Special Relationship” with Plaintiff
Sanchez v. Wilmette Real Estate and Management Co., 404 Ill. App. 3d 54, 934 N.E.2d 1029, 343
Ill. Dec. 426 (1st Dist. 2010) – Tenant at apartment complex filed suit against owners of
apartment building and property manager after plaintiff was attacked by an unknown individual
who exited a vacant apartment. Testimony in the case indicated that the both the front and back
doors to the vacant apartment were opened and unlocked. Defendant filed a motion for
E-11
summary judgment. The trial court granted the motion, finding that there existed no duty and
no special relationship with the plaintiff.
Generally, a landowner has no duty to protect others from criminal activities by third persons.
However, a duty to protect others from criminal activities by a third person does exist where
there is a special relationship between the parties. See, Rowe v. State Bank of Lombard, 125 Ill. 2d
203, 215-16, 531 N.E.2d 1358, 126 Ill. Dec. 519 (1988). Illinois courts have recognized four
categories of special relationships that may give rise to a duty to protect an individual from
criminal activities by third person, including: (1) common carrier and passenger; (2) inn-keeper
and guest; (3) custodian and ward; and (4) business invitor and invitee. However, before a duty
will be imposed, the plaintiff must demonstrate that the criminal attack was reasonably
foreseeable. See, Hills v. Bridgeview Little League Ass’n, 195 Ill. 2d 210, 243-44, 745 N.E.2d 1166,
253 Ill. Dec. 632 (2000).
The Illinois Supreme Court has repeatedly held that “the simple relationship between a landlord
and tenant . . . is not a ‘special’ one imposing a duty to protect against the criminal acts of
others.” Rowe, 125 Ill. 2d at 216. However, a landlord may be responsible for the criminal acts of
others if the landlord has voluntarily undertaken to provide security measures, it performs the
undertaking negligently, and the negligence is the proximate cause of the injury to the plaintiff.
One who voluntarily provides a service must do so with reasonable care. Id. at 217.
In accord with these principles, section 324A of the Restatement (Second) of Torts, provides:
One who undertakes, gratuitously or for consideration, to render services to
another which he should recognize as necessary for the protection of a third
person or his things, is subject to liability to the third person for physical harm
resulting from his failure to exercise reasonable care to protect his undertaking, if:
(a) his failure to exercise reasonable care increases the risk of such harm, or
(b) he has undertaken to perform a duty owed by the other to the third
person, or
(c) the harm is suffered because of reliance of the other or the third person
upon the undertaking.
Restatement (Second) of Torts § 324A (1965). The comments to subsection (c) provide: “Where
the reliance of the other, or of the third person, has induced him to forgo other remedies or
precautions against such a risk, the harm results from the negligence as fully as if the actor had
created the risk.”
In this case, there was no evidence that the defendants had a contract to provide building
security or agreed to be responsible for protecting the plaintiff from the criminal acts of third
parties. Nor did the defendants voluntarily undertake to provide security measures to protect
the plaintiff from criminal acts of third persons. The defendants nevertheless exercised
reasonable care because the building hallway was “well-lit” and plaintiff testified that he had to
use his key to gain entry into the building on the night in question.
E-12
The Court further held that the criminal attack was not reasonably foreseeable because the
vacant apartments were routinely locked, no similar criminal attacks had occurred, and a third
party had not been found in one of the apartments on a prior occasion. Similarly, the promise to
maintain door locks in working condition does not rise to a voluntary undertaking to protect
tenants from criminal activity. Accordingly, the Fourth District held that the trial court did not err
when it granted the defendants’ motion for summary judgment.
E.
Recreational Use Doctrine and Act – Recreation Association and Coach
Immune From Premises Liability After Spectator Hit with Ball at Baseball
Game
Vaughn v. Barton, 402 Ill. App. 3d 1135, 933 N.E.2d 355, 342 Ill. Dec. 769 (5th Dist. 2010) –
Plaintiff, Debbie Vaughn, was sitting in the bleachers watching her young son play in a baseball
game organized by defendant recreation association when she was struck in the eye by a
baseball thrown by an 11-year-old boy who was warming up for the next game. Plaintiff filed
suit against the recreation association and unpaid coach, whose son threw the ball that struck
the plaintiff. The trial court granted directed verdict for the defendants holding that the
Recreational Use Act, 745 ILCS 65/1 et seq. (West 2002), gave immunity to the defendants.
The purpose of the Recreational Use Act is to “encourage owners of land to make land and
water areas available to the public for recreational or conservation purposes by limiting their
liability toward persons entering thereon for such purposes.” The Act immunizes landowners
from negligence liability with respect to any person who enters the landowner’s property for,
among other things, ”exercise, education, relaxation, or pleasure.” See, Hall v. Henn, 208 Ill. 2d
325, 331, 802 N.E.2d 797, 280 Ill. Dec. 546 (2003). Under the Act, owners are only liable under
two circumstances: “for willful and wanton failure to guard or warn against a dangerous
condition, use, structure or activity” or for any injury “where the owner of the land charges the
person or persons who enter or go on the land for” recreational use. “Charge” means an
admission fee for permission to go upon the land, but it does not include, inter alia, “benefits to
or arising from the recreational use” or “contributions in kind, services or cash made for the
purpose of properly conserving the land.” 745 ILCS 65/1 et seq. (West 2002). It was undisputed
that no admission fees were charged to watch the games in this case. However, each child was
charged a $35 fee to play in the league to defray costs associated with running the league.
The Fifth District affirmed the directed verdicts for the defendants. The Court reasoned that the
$35 fee did not remove the immunity provided to the defendants by the Recreational Use Act.
Further, the fact that the 11-year-old boy was warming up in an unsafe location (i.e. he was not
warming up within the physical confines of the baseball diamond), did not amount to willful and
wanton activity by the defendants that could jeopardize their immunity under the Act.
E-13
V.
SLIP & FALL CASES
A.
The Open and Obvious Exception and the Exceptions to the Exception –
Summary Judgment for Premises Owner Despite Plaintiff Tripping on Empty
Pallet Because Risk Was “Open and Obvious.” Further, the “Distraction
Exception” and “Deliberate Encounter Exception” Did Not Apply.
Klieber v. Freeport Farm and Fleet, Inc., 406 Ill. App. 3d 249, 942 N.E.2d 640, 347 Ill. Dec. 437 (3d
Dist. 2010) – On May 2, 2008, plaintiff and her husband were shopping at the Farm and Fleet
store in Morton, Illinois, and were starting to load bags of topsoil into their vehicle from a pallet
located outside the front of the store. To obtain the bags of topsoil, plaintiff and her husband
walked across an empty wooden pallet that was lying on the ground. After plaintiff picked up a
bag of topsoil and turned to go back across the pallet to the vehicle, her foot went through one
of the slats in the pallet. As a result, plaintiff twisted her leg, fell, and was injured. She filed suit.
Under the Premises Liability Act, “the owner or lessee of premises owes a duty of ‘reasonable
care under the circumstances' to those lawfully on the premises.” Simmons v. American Drug
Stores, Inc., 329 Ill. App. 3d 38, 43, 768 N.E.2d 46, 51, 263 Ill. Dec. 286 (1st Dist. 2002), quoting
740 ILCS 130/2 (West 2000). In a situation where a plaintiff alleges that an injury was caused by a
condition on the defendant's property, and the plaintiff was an invitee on the property, whether
the injury is reasonably foreseeable is determined pursuant to section 343A of the Restatement
(Second) of Torts. Section 343 of the Restatement provides:
A possessor of land is subject to liability for physical harm caused to his invitees
by a condition on the land if, but only if, he
(a) knows or by the exercise of reasonable care would discover the condition,
and should realize that it involves an unreasonable risk of harm to such
invitees, and
(b) should expect that they will not discover or realize the danger, or will fail
to protect themselves against it, and
(c) fails to exercise reasonable care to protect them against the danger.
Restatement (Second) of Torts § 343 (1965). An exception to this general rule, known as the
“open and obvious danger rule,” is set forth in section 343A of the Restatement. It provides:
A possessor of land is not liable to his invitees for physical harm caused to them
by any activity or condition on the land whose danger is known or obvious to
them, unless the possessor should anticipate the harm despite such knowledge
or obviousness.
Restatement (Second) of Torts § 343A(1).
The open and obvious danger rule recognizes that it is not foreseeable to a possessor of land
that an invitee will be injured when the condition or danger is open and obvious. See, Buerkett,
E-14
384 Ill. App. 3d 418, 422, 893 N.E.2d 702, 323 Ill. Dec. 430 (4th Dist. (2008). The rule nevertheless
has two limited exceptions that may apply under certain circumstances when the possessor of
land has reason to anticipate that an injury will occur to an invitee, despite the open and
obvious nature of the danger.
The first exception is the distraction exception. Restatement (Second) Torts § 343A, Comment f
(1965); Ward v. K Mart, 136 Ill. 2d 132, 554 N.E.2d 223, 143 Ill. Dec. 288 (1990). “Foreseeability
will be found where a landowner knows or should know an entrant may be distracted.” Buerkett,
384 Ill. App. 3d at 423. Under the distraction exception, the open and obvious danger rule will
not apply if the possessor of land has reason to anticipate or expect that his invitees' attention
will be distracted such that the invitee will fail to discover the open and obvious danger or will
forget about the danger or will fail to protect himself from the danger. Restatement (Second)
Torts § 343A, Comment f (1965); Ward, 136 Ill. 2d at 148-57, 554 N.E.2d at 230-34, 143 Ill. Dec.
288 (1990). A determination of whether the distraction exception applies requires a court to look
beyond whether a condition is open and obvious and to examine whether a defendant should
have foreseen that a plaintiff was or could be distracted or forgetful. Buerkett, 384 Ill. App. 3d at
424.
The second exception to the open and obvious danger rule is the deliberate-encounter
exception. Restatement (Second) Torts § 343A, Comment f (1965); LaFever v. Kemlite, 185 Ill. 2d
380, 391, 706 N.E.2d 441, 448, 235 Ill. Dec. 886 (1998). Under the deliberate-encounter
exception, the open and obvious danger rule will not apply if the possessor of land has reason
to expect that the invitee will proceed to encounter an open and obvious danger because to a
reasonable person in the invitee's position the advantages of doing so outweigh the apparent
risk. Restatement (Second) Torts § 343A, Comment f (1965); LaFever, 185 Ill. 2d at 391. The
deliberate-encounter exception recognizes that individuals will make deliberate choices to
encounter hazards when faced with employment concerns and that those encounters are
reasonably foreseeable by possessors of property. See, LaFever, 185 Ill. 2d at 394. “As with the
distraction exception, the focus with the deliberate-encounter analysis is on what the landowner
anticipates or should anticipate the entrant will do.” Buerkett, 384 Ill. App. 3d at 424.
Although the focus with both the distraction exception and the deliberate-encounter exception
is on what the landowner anticipates or should anticipate the entrant will do, that is not to say
that the burden of proof shifts to the landowner defendant. Plaintiff retains the burden of proof.
See, Illinois Pattern Jury Instructions, Civil, Nos. 120.08, 120.09 (2006).
In the present case, as noted above, there is no question that the danger posed by the empty
pallet was an open and obvious danger. The primary question before the Court was whether, as
a matter of law for summary judgment purposes, it was clear that neither of the two exceptions
to the open and obvious danger rule applied in the present case. Having reviewed the record
that was before the trial court, the Court concluded that there was no genuine issue of material
fact as to either exception and that, as a matter of law, it was clear that neither exception
applied in the instant case.
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B.
How Is the Open and Obvious Exception Applied to a Minor Who Falls on
Home Exercise Equipment?
Qureshi v. Ahmed, 394 Ill. App. 3d 883, 916 N.E.2d 1153, 334 Ill. Dec. 265 (1st Dist. 2009) –
Plaintiff, the father of a 10-year-old girl, brought a premises liability action against the
defendant homeowner, after his daughter slipped and fell on a treadmill at defendant’s home.
Plaintiff’s daughter tried to break her fall, and her right hand got caught in between the base of
the treadmill and the moving belt. The treadmill did not stop running and her hand was “degloved.” Her hand required surgery including skin grafts, multiple stitches, and ongoing physical
therapy.
The issue presented a case of first impression: whether a piece of home exercise equipment
poses an open and obvious danger to a child. Injury by fire, water, and falling from heights are
considered open and obvious dangers, appreciable by very young children, as a matter of law.
Mount Zion State Bank & Trust v. Consolidated Communications, Inc., 169 Ill. 2d 110, 118, 660
N.E.2d 863, 214 Ill. Dec. 156 (1995).
Since the 1955 Illinois Supreme Court decision in Kahn v. James Burton Co., 5 Ill. 2d 614, 126
N.E.2d 836 (1955), a duty, which would not be imposed in ordinary negligence, will be imposed
upon the owner or occupier of land if such a person knows or should know that children
frequent the premises and if the cause of the child's injury was a dangerous condition on the
premises. See also Mount Zion, 169 Ill. 2d at 116-17, Corcoran v. Village of Libertyville, 73 Ill. 2d
316, 326, 383 N.E.2d 177, 22 Ill. Dec. 701 (1978).
The line of reasoning following Kahn, however, does not mean that the law imposes a duty on
owners and occupiers of land to remedy conditions that pose obvious risks that children
generally would be expected to appreciate and avoid. Mount Zion, 169 Ill. 2d at 117, Corcoran,
73 Ill. 2d at 326. It is the reasonable foreseeability of harm that determines liability in negligence
actions involving children. Cope v. Doe, 102 Ill. 2d 278, 286, 464 N.E.2d 1023, 80 Ill. Dec. 40
(1984). “While certainly there are latent dangers that a child would not appreciate due to his
minority, a possessor of land is free to rely upon the assumption that any child old enough to be
allowed at large by his parents will appreciate certain obvious dangers or at least make his own
intelligent and responsible choice concerning them.” Mount Zion, 169 Ill. 2d at 117; citing W.
Keeton, Prosser & Keeton on Torts, § 59, at 407 (5th ed. 1984). A danger is considered “obvious”
if the condition and the attendant risk of harm are apparent to and would be recognized by a
reasonable person or child exercising ordinary perception, intelligence, and judgment.
Restatement (Second) of Torts § 343A, Comment b (1965).
“When a child is injured, however, courts recognize that it may be foreseeable that the child, due
to immaturity, will not fully appreciate the risk involved in encountering what to an adult is an
open and obvious danger. The test is whether a typical child who is old enough to be at large
would lack the maturity to understand and appreciate the risk involved, therefore making it
foreseeable that a typical child might be injured.” Grant v. South Roxana Dad's Club, 381 Ill. App.
3d 665, 670, 886 N.E.2d 543, 319 Ill. Dec. 780 (5th Dist. 2008). “The issue in cases involving
E-16
obvious dangers, like fire, water or height, is not whether the child does in fact understand, but
rather what the possessor may reasonably expect of him.” Mount Zion, 169 Ill. 2d at 120, citing
W. Keeton, Prosser & Keeton on Torts, § 59, at 407 (5th ed. 1984); M. Polelle & B. Ottley, Illinois
Tort Law § 16.11 (2d. 1994). The test is an objective one based in part on the idea that parents
bear the primary responsibility for safeguarding their children and it is reasonable to expect that
a child who is permitted to be at large, beyond the watchful eye of his parents, can appreciate
certain particular dangers. Mount Zion, 169 Ill. 2d at 126-27.
The ability of children to appreciate the danger is not the only issue in determining whether a
duty exists. “In order to find that a landholder owes a duty to a child injured on its premises, a
court must also find that (1) a dangerous condition exists on the property, (2) it is reasonably
foreseeable that children would be present on the premises, and (3) the risk of harm to children
outweighs the burden of removing the danger.” Grant, 381 Ill. App. 3d at 670, citing Mt. Zion,
169 Ill. 2d at 116-17, citing Kahn, 5 Ill. 2d at 625.
The First District Appellate Court in this case held that summary judgment should not have been
granted for the homeowners because it was reasonably foreseeable that children would play on
the treadmill and the burden of imposing a duty on the defendants to guard against this
foreseeable injury was slight. Further, public policy dictates that with the proliferation of home
exercise equipment that proper instruction and supervision will become even more important to
protect the safety of children. The Court relied heavily on the fact that the homeowners could
have removed the key that operated the treadmill so that the injury could have been avoided.
C.
Snow and Ice Removal Act – Immunity Provided by the Act Does Not Apply
to Driveways Even If Primary Ingress and Egress to Premises
Gallagher v. Union Square Condominium Homeowner’s Ass’n, 397 Ill. App. 3d 1037, 922 N.E.2d
1201, 337 Ill. Dec. 624 (2d Dist. 2010) – A condominium owner brought a negligence action
against the condominium association and a snow removal services company for damages
arising out of injuries allegedly sustained when the owner slipped and fell on an icy driveway at
the condominium complex. The circuit court granted the defendant’s motion to dismiss
pursuant to the Snow and Ice Removal Act, 745 ILCS 75/1, and the plaintiff appealed.
Section 2 of the Snow and Ice Removal Act provides:
Any owner, lessor, occupant or other person in charge of any residential property,
or any agent of or other person engaged by any such party, who removes or
attempts to remove snow or ice from sidewalks abutting the property shall not
be liable for any personal injuries allegedly caused by the snowy or icy condition
of the sidewalk resulting from his or her acts or omissions unless the alleged
misconduct was willful or wanton.
745 ILCS 75/2 (West 2008). This immunity from liability is intended to further the public policy
articulated in section 1 of the Act:
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It is declared to be the public policy of this State that owners and others residing
in residential units be encouraged to clean the sidewalks abutting their
residences of snow and ice. The General Assembly, therefore, determines that it is
undesirable for any person to be found liable for damages due to his or her
efforts in the removal of snow or ice from such sidewalks, except for acts which
amount to clear wrongdoing, as described in Section 2 of this Act.
745 ILCS 75/1 (West 2008).
Plaintiff argued that the Act does not apply to his claims, because it only immunizes against
those injuries sustained on sidewalks and not those sustained on driveways. Defendants
countered that, because plaintiff was walking on the driveway at the time he fell and because
the driveway was the primary means of ingress and egress to and from plaintiff's unit, the
driveway was sufficiently akin to a sidewalk to come within the scope of the Act. Accordingly, the
question before the Court was whether the use of the word “sidewalk” in section 2 of the Act
includes driveways.
The Appellate Court ultimately held that the condominium driveway was not a “sidewalk” within
the meaning of the Act. The trial court was reversed and the matter was remanded.
D.
Slip and Fall – The Distraction Exception to the Open and Obvious Exception
1.
Fall on Sidewalk of Apartment Complex While Carrying Groceries –
Distraction Exception Does Not Apply Because Distraction Solely
Caused by Plaintiff
Lake v. Related Management Co., L.P., 403 Ill. App. 3d 409, 936 N.E.2d 704, 344 Ill. Dec. 175 (4th
Dist. 2010) – Plaintiff filed a negligence action against the owners and property management
group for her apartment complex when she tripped and fell when the heel of her boot got
caught in a gap in the sidewalk in the front entry of her apartment complex. She testified that
she had been aware of the defect in the sidewalk for the past three years and had complained
about its existence. Plaintiff was carrying two bags of groceries at the time and claimed that she
was distracted.
Defendant filed a motion for summary judgment which the trial court granted because plaintiff
did not dispute that the defect in the sidewalk was open and obvious. However, plaintiff
appealed because she claimed that the “distraction exception” applied and that “defendants
cannot be relieved of liability when she was injured by the dangerous condition while distracted
by the act of carrying groceries.” Lake, 403 Ill. App. 3d at 411.
The Fourth District affirmed, explaining that the “distraction exception would apply and sustain a
property owner’s duty of due care if there is a reason to expect that the invitee’s attention may
be distracted so that he or she would not discover what is obvious, or would forget what he or
E-18
she has discovered, or would fail to protect himself or herself against it.” Id. at 412-413, citing
Rexroad v. City of Springfield, 207 Ill. 2d 33, 44-45, 796 N.E.2d 1040, 277 Ill. Dec. 674 (2003). In
order for the distraction to be foreseeable to the defendant so that the defendant can take
reasonable steps to prevent injuries to invitees, the distraction must not be solely within the
plaintiff’s own creation. Whittleman v. Olin Corp. 358 Ill. App. 3d 813, 817-818, 832 N.E.2d 932,
295 Ill. Dec. 482 (5th Dist. 2005). Here, the plaintiff’s carrying of groceries was a distraction
exclusively of her own creation. Defendant could not be held liable for plaintiff’s choice when it
cannot be said that the defendant “created, contributed to, or [was] responsible in some way for
the distraction which diverted the plaintiff’s attention from the open and obvious condition.”
Lake, 403 Ill. App. 3d at 413.
2.
Fall On Parent’s Front Steps After “Eating, Studying, Watching
Television and Napping” – Distraction Exception Does Not Apply
Hope v. Hope, 398 Ill. App. 3d 216, 924 N.E.2d 581, 338 Ill. Dec. 375 (4th Dist. 2010) – Here, the
adult daughter of the defendants brought a premises liability action against her parents when
she slipped and fell on some mud that had accumulated on the porch steps to her parents’
house. She had been warned by both her mother and father about the mud on the steps;
however, defendants had failed to remove the mud. Plaintiff then fell as she descended the
steps and claimed that she was distracted because she had been eating, studying, watching
television and sleeping between the time of the warnings and the time that she slipped and fell.
The trial court and Fourth District both affirmed summary judgment for the parents and held
that the “distraction exception” did not apply to the “open and obvious doctrine” in this case. Of
significance, the issue to the Court was not whether the plaintiff was distracted at the time of the
fall but whether a defendant would have reason to expect that the plaintiff would be distracted.
The Court held that the defendants could not have reasonably foreseen that eating, studying,
watching television and sleeping would create a distraction leading to the plaintiff’s injury. If
such mundane activities, undertaken at a different location than the place of the injury, were
sufficient to invoke the “distraction exception,” then the exception would swallow the rule.
E.
Slip and Fall at Construction Site – Distraction and Deliberate Encounter
Exceptions Do Not Apply to Construction Worker Who Fell While Talking on
His Cell Phone as He Was Familiar with Ruts at Construction Site
Wilfong v. L.J. Dodd Const., 401 Ill. App. 3d 1044, 930 N.E.2d 511, 341 Ill. Dec. 301 (2d Dist. 2010)
– Plaintiff had worked on construction sites for over 20 years. He fell on the defendant’s
construction site while employed by a subcontractor, claiming that there was an excessive
number of ruts made by construction vehicles. Plaintiff was talking on his cell phone at the time
of the fall. The trial court granted summary judgment for the defendants holding that, generally,
defendants had a duty to plaintiff to protect against the harm caused by unreasonably
dangerous conditions caused by ruts, mud and water on the construction site, although the
exception to such duty exists where the danger was open and obvious.
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The Second District affirmed summary judgment holding that plaintiff’s experience and the fact
that he had worked on the site for some time established that he was familiar with the
conditions on the site and the ruts were open and obvious. The Court also held that the
distraction exception did not apply because the plaintiff was talking on his cell phone while
walking over the ruts and the distraction was thus not something created by the defendants and
was not reasonably foreseeable to the defendants.
Plaintiff contended that the “deliberate encounter exception” also applied. This exception
applies when the landowner “has reason to expect that the invitee will proceed to encounter the
known or obvious danger because to a reasonable man in his position the advantages of doing
so would outweigh the apparent risk.” Wilfong, 401 Ill. App. 3d at 1054, citing LaFever v. Kemlite
Co., 185 Ill. 2d 380, 392, 706 N.E.2d 441, 235 Ill. Dec 886 (1998). Again, the Second District
affirmed that this exception did not apply because there was an alternative gravel path which
plaintiff chose not to use – instead he chose to walk in the ruts at the construction site.
F.
Slip and Fall on Municipal Property
1.
Fall on Sidewalk Owned by City but Allegedly Appropriated by
Adjacent Property Owner. Homeowner’s Acts of Raking Leaves,
Mowing Around and Salting During Winter Do Not Give Rise to a
Duty to Ensure the Safe Condition of a Public Sidewalk.
Gilmore v. Powers, 403 Ill. App. 3d 930, 934 N.E.2d 564, 343 Ill. Dec. 240 (1st Dist. 2010) – The
plaintiff fell on a walkway that straddled a city-owned parkway in front of the defendants’ home.
Plaintiff contended that the defendants owed her a duty to maintain the walkway which
traverses the city owned parkway in front of their home in a safe condition. Although plaintiff
conceded that the walkway was located on a parkway owned by the city, she nevertheless
argued that defendants, as adjacent property owners, owed such a duty of care because she
claims defendants appropriated the parkway for their own use by mowing the grass growing
upon it, raking leaves from it, and crossing it daily in order to get from the sidewalk to the street.
Plaintiff also claimed that defendants were obligated to maintain the walkway in a safe condition
because it provided a means of ingress and egress from the property.
Although a private landowner owes a duty of care to provide a reasonably safe means of ingress
and egress from his property (Burke v. Grillo, 227 Ill. App. 3d 9, 16, 590 N.E.2d 964, 169 Ill. Dec.
45 (2d Dist. 1992); Dodd v. Cavett Rexall Drugs, Inc., 178 Ill. App. 3d 424, 432, 533 N.E.2d 486, 127
Ill. Dec. 614 (1st Dist. 1988)), he generally owes no duty to ensure the safe condition of a public
sidewalk or parkway abutting that property. Burke, 227 Ill. App. 3d at 16; Evans v. Koshgarian,
234 Ill. App. 3d 922, 925, 602 N.E.2d 27, 176 Ill. Dec. 720 (1st Dist. 1992); Thiede v. Tambone, 196
Ill. App. 3d 253, 260, 553 N.E.2d 817, 143 Ill. Dec. 110 (2d Dist. 1990).
Plaintiff contends that this foregoing general rule does not apply in this case because the
defendants assumed control over the parkway at issue. The Court agreed with the proposition
that an abutting landowner may be held responsible for the condition of a public sidewalk or
E-20
parkway if he assumes control of it for his own purposes. However, an assumption of control for
purposes of determining a duty of care must consist of affirmative conduct which prevents the
public from using the property in an ordinary manner, such as blocking the land, parking on it,
or using it to display goods. No duty to maintain city-owned property arises when a landowner
merely maintains the property by mowing grass or shoveling and salting it in the winter. Burke,
227 Ill. App. 3d at 15-16; Evans, 234 Ill. App. 3d at 926; Dodd, 178 Ill. App. 3d at 433.
Thus, defendants did not appropriate the city-owned sidewalk for their own use and the city
ordinances did not give rise to a duty on the part of the owners of sidewalk. Therefore,
defendants were entitled to summary judgment.
2.
Municipality Maintained Alley – Tort Immunity Act Did Not Apply
Because Plaintiff Was a Permitted and Intended User of Alley
Gutstein v. City of Evanston, 402 Ill. App. 3d 610, 929 N.E.2d 680, 341 Ill. Dec. 26 (1st Dist. 2010) –
Plaintiff decided to dispose of a weed in the yard waste disposal bin provided to her by the City
of Evanston. Plaintiff's yard waste bin, along with disposal containers for recycling and trash, sit
outside plaintiff's property along a city-owned alley. Plaintiff proceeded down a path through
her backyard to the gate to enter the alley. When she reached the gate, plaintiff scanned the
area to make sure there were no depressions or other impediments in the alley. Prior to
stepping out into the alley, plaintiff heard an ice cream truck driving along the alley and turned
to locate the vehicle. She then stepped out into the alley and tripped in a “softball-sized”
depression in the unimproved alley, causing her to fall and suffer injuries to her elbow. Plaintiff's
partner testified at trial that she had unsuccessfully complained to the City about the condition
of the alley for years.
Plaintiff prevailed at trial and the City appealed.
The Local Governmental and Governmental Employees Tort Immunity Act, 745 ILCS 10/1-101 et
seq., limits the common law duties of municipalities. Marshall v. City of Centralia, 143 Ill. 2d 1,5,
570 N.E.2d 315, 155 Ill. Dec. 802 (1991); Curatola v. Village of Niles, 154 Ill. 2d 201, 208, 608
N.E.2d 882, 181 Ill. Dec. 631 (1993). Section 3-102(a) of the Act provides in pertinent part:
[A] local public entity has the duty to exercise ordinary care to maintain its
property in a reasonably safe condition for the use in the exercise of ordinary
care of people whom the entity intended and permitted to use the property in a
manner in which and at such times as it was reasonably foreseeable that it would
be used.
745 ILCS 10/3-102(a) (West 2008). A municipality thus owes a duty of ordinary care only to those
who are both intended and permitted users of municipal property. 745 ILCS 10/3-102(a) (West
2008). “[A]n intended user of property is, by definition, also a permitted user; a permitted user of
property, however, is not necessarily an intended user.” Boub v. Township of Wayne, 183 Ill. 2d
520, 525, 702 N.E.2d 535, 234 Ill. Dec. 195 (1998).
E-21
A municipality’s duty in these circumstances depends on whether the use of the property was a
permitted and intended one. Whether a particular use of property was permitted and intended
is determined by examining the nature of the property itself. Vaughn v. City of West Frankfort,
166 Ill. 2d 155, 162-63, 651 N.E.2d 1115, 209 Ill. Dec. 667 (1995). In this case, both parties agreed
that plaintiff was a “permitted” user of the alley; the only issue for the Court to decide was
whether plaintiff was also an “intended” user.
The Court found that the City established a policy that required its residents to place their trash,
recycling, and yard waste containers in the alley, which is municipal property. The policy
expressly stated that the City will not pick up the refuse from private property; residents must
use the City property. As such, the First District found the plaintiff to be a permitted and
intended user of the alley and affirmed the trial court’s judgment against the City because it
owed a duty to the plaintiff to maintain its property in a reasonably safe condition.
3.
Municipality Maintained Sidewalk –Tort Immunity Act Applied
Because Sidewalk Increased the Usefulness of Public Property
Intended to Be Used for Recreation
Callaghan v. Village of Clarendon Hills, 401 Ill. App. 3d 287, 929 N.E.2d 61, 340 Ill. Dec. 757 (2d
Dist. 2010) – Plaintiff filed suit against the Village of Clarendon Hills because she slipped and fell
on ice and snow while walking on a public sidewalk near a public park. The Village filed a
Motion to Dismiss claiming immunity under section 3-106 of the Local Governmental and
Governmental Employees Tort Immunity Act. 745 ILCS 10/3-102(a) (West 2008). The trial court
granted the Village’s Motion to Dismiss and the Second District affirmed. Section 3-106 of the
Act provides immunity for local public entities under the following circumstances:
Neither a local public entity nor a public employee is liable for an injury where
the liability is based on the existence of a condition of any public property
intended or permitted to be used for recreational purposes, including but not
limited to parks, playgrounds, open areas, buildings or other enclosed
recreational facilities, unless such local entity or public employee is guilty of
willful and wanton conduct proximately causing such injury.
745 ILCS 10/3-106 (West 2008) (Emphasis added).
The question for the Appellate Court was whether the sidewalk where the plaintiff fell was
“intended or permitted to be used for recreational purposes” within the meaning of section 3106. The Court held that it was because the sidewalk increased the usefulness of the public
property intended or permitted to be used for recreational purposes (the park). As such, the
Second District affirmed the Village’s immunity under the Act.
E-22
Jeffrey T. Bash
- Associate
Significant Cases
 Ratermann v. Tri-County Elec. Co-op., Inc., 229
Ill. 2d 658, 897 N.E.2d 263, 325 Ill. Dec. 15 (Jury
Trial, Marion County, 2009) - Not guilty verdict
for electric utility where plaintiffs claimed a
power surge resulted in a home fire. Plaintiffs
relied upon res ipsa loquitor and plaintiffs'
cause and origin expert maintained there was
physical evidence of a massive high voltage
surge of electricity causing simultaneous fires
in two breaker panels.
Jeff began his career at Heyl Royster by clerking in the
Urbana and Edwardsville offices. While in law school,
Jeff clerked for Saint Louis University's Office of the
General Counsel - Health Services and was a legal
intern for the General Counsel of Charter
Communications. Following graduation in 2003, he
joined the firm in the Edwardsville office. Jeff is a
native of Peoria, Illinois.
Jeff concentrates his practice in the defense of
asbestos litigation in Illinois and Missouri. He has
taken a lead role in coordinating the defense of a
large number of claims filed against a fiber-supplier
defendant, among others. Jeff is responsible for the
analysis of potential liability based upon product
supply and alleged usage of materials in which the
asbestos fiber is used. In addition, he has taken the
lead in pressing defense issues such as forum non
conveniens, products liability statutes of repose and
medical causation. Jeff has drafted and argued
numerous dispositive motions including motions to
dismiss and motions for summary judgment. In
addition, Jeff has defended the firm's clients in
numerous depositions of plaintiffs, co-workers,
medical providers and experts.
 Madison County Bar Association
 St. Clair County Bar Association
 Bar Association of Metropolitan St. Louis
 The Missouri Bar
Court Admissions
 United States District Court, Southern District
of Illinois
 United States District Court, Eastern District of
Missouri
He also has extensive experience defending the firm's
clients in benzene exposure claims, including taking
depositions of fact and expert witnesses, developing
defense strategies, arguing dispositive motions, and
negotiating settlements.
Education
 Juris Doctor - Health Law Certificate, Saint
Louis University School of Law, 2003
 Bachelor of Arts-Sociology, University of
Illinois, 2000
Jeff further concentrates his practice in professional
liability matters including defending physicians, nurses
and health care entities.
Jeff is a member of the Madison County, Illinois State,
Missouri State and American Bar Associations.
E-23
PROPERTY INSURANCE CASE LAW UPDATE Presented and Prepared by:
David A. Perkins
[email protected]
Brad W. Keller
[email protected]
F-1
PROPERTY INSURANCE CASE LAW UPDATE
I.
EXCLUSIONS .................................................................................................................................................. F-3
A.
B.
C.
II.
Pollution............................................................................................................................................ F-3
Increase in Hazard – Vacancy ................................................................................................... F-4
Damage Resulting from Theft .................................................................................................. F-4
FLOOD/SEVERE WEATHER ........................................................................................................................ F-5
A.
B.
C.
Meaning of “Flood” ...................................................................................................................... F-5
Business Interruption by Flood ................................................................................................ F-6
Hurricane Katrina .......................................................................................................................... F-7
III.
SUBROGATION.............................................................................................................................................. F-8
IV.
INSURED’S DUTY TO COOPERATE.......................................................................................................F-10
V.
MISREPRESENTATION AS PROPERTY DAMAGE .............................................................................F-11
VI.
CHINESE DRYWALL CASES .....................................................................................................................F-11
F-2
PROPERTY INSURANCE CASE LAW UPDATE
I.
EXCLUSIONS
A.
Pollution
Gerdes v. American Family Mut. Ins. Co., 713 F. Supp. 2d 1290 (D. Kan. 2010) – The insured
owned a home in Mission Hills, Kansas that was damaged by a fire in 2008. The fire was
contained in the basement, but caused smoke and soot damage to the other floors. The insured,
a former dentist, had two tablespoons of mercury stored in his basement. The insurer concluded
that the fire was accidental but that the mercury spread throughout the house as a result of the
fire. Coverage was denied and the insured then brought suit.
The Court considered whether the loss was excluded by the policy’s pollution exclusion. Under
this exclusion, loss caused directly or indirectly by “pollution, meaning any actual, alleged or
threatened discharge, dispersal, release, escape, seepage, trespass, wrongful entry or migration
of pollutants from any source” was excluded from coverage. Pollutant was defined as “any solid,
liquid, gaseous or thermal irritant or contaminant, in any form, including, but not limited to lead,
asbestos, formaldehyde, radon, any controlled chemical substance or any other substance listed
as a hazardous substance by any governmental agency” and also included smoke, vapor, soot,
fumes, alkalis, chemicals, garbage, refuse and waste.
The insured first argued that the term pollutant was ambiguous. The court rejected this
argument, explaining that the policy clearly identified a pollutant as any hazardous substance
identified by a governmental agency. Because mercury had been identified as a hazardous
substance by the EPA, the court held mercury was clearly a pollutant under the policy.
The insured then argued that the insurer had been inconsistent and ambiguous in that it
provided coverage for the damage caused by smoke and soot but not for the damage caused
by mercury contamination. The insured argued that the insurer had relied on the pollution
exclusion to deny payment for damages caused by mercury contamination, but paid for
damages caused by smoke and soot when they could have been denied under the pollution
exclusion. The court rejected this argument as well, holding that the damages caused by smoke
and soot did not fall under the pollution exclusion. The court appeared to believe the insured
was straining to find an ambiguity. It explained that a reading of the entire policy made it
apparent that the parties did not intend to exclude smoke and soot damages. The court largely
relied on common sense in interpreting the policy, reasoning that it was hard to imagine an
insured who would be willing to pay for a policy covering damages from a fire, but not the
damages from smoke and soot from the fire.
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B.
Increase in Hazard – Vacancy
Estate of Luster v. Allstate Ins. Co., 598 F.3d 903 (7th Cir. 2010) – Decedent Luster owned a home
insured by Allstate. Four and a half years before her death, she moved from the home to an
extended-care facility, leaving the house vacant. She executed a power of attorney naming her
attorney. The attorney then notified the insurer of the power of attorney and had the insurer bill
the attorney’s office for her policy. Three months after Luster’s death, the house was damaged in
a fire possibly started by burglars. When her estate submitted a claim for the loss, the insurer
denied the claim.
The insurer argued that coverage was barred by the policy exclusion for damage caused by any
substantial change or increase in hazard, if changed or increased by any means within the
control or knowledge of an insured person. The insurer argued that the vacancy of the home for
more than four and a half years was a substantial change or increase in hazard. The Seventh
Circuit rejected this argument. The Court was particularly worried about the implications such a
rule may have, explaining that homes are vacant for extended periods of time on many
occasions, such as long vacations or when the residence is used only as a vacation home.
Therefore, the Seventh Circuit rejected the trial court’s decision upholding the exclusion.
C.
Damage Resulting from Theft
Essex Ins. Co. v. Eldridge Land, L.L.C., No. 14-09-00619-CV, 2010 WL 1992833 (Tex. App. 14th Dist.
May 20, 2010) – The insured business owned a vacant building insured by a commercial
property policy. The policy expressly provided coverage for “vandalism, meaning willful and
malicious damage to, or destruction of the described property.” Within the section providing
coverage for vandalism, the policy excluded loss “caused by or resulting from theft, except for
building damage caused by the breaking in or exiting of burglars.”
On March 28, 2006, several intruders broke into the vacant building and stole copper wiring and
pipe. In the process of getting to the wiring and pipe, the intruders damaged sheetrock, ceiling
tiles, electrical conduit boxes, and wall coverings inside the building. Coverage was denied based
on the exclusion for loss caused by or resulting from theft. As a result, the insured filed a
complaint, arguing both that the damage was caused by vandalism and by the intruders
“breaking in.” The insurer argued that the damage was caused by theft and was thus clearly
excluded.
The Court found the policy language unambiguous and enforceable. It explained that the
location of the theft exclusion in the policy clearly indicated it was intended to be an exclusion
or exception to the vandalism coverage. The Court further stated that there is no coverage
under the general coverage provision if the more specific exclusion applies. In this instance, the
evidence established that the damage was caused by theft. Therefore, coverage was properly
denied.
F-4
The Court then interpreted the “breaking in” exception to the theft exclusion, holding that the
act of breaking into fixtures, ceilings, walls, or floors was not intended to fall within the
exception. The Court explained that the common understanding of “breaking in” contemplates
the physical entry into a building, rather than knocking down walls once inside the building. It
reasoned that the policy language supported its holding in that it paired “breaking in” with
“exiting” in such a way that they can be considered opposites. The Court explained that no one
would speak of “exiting” a fixture, wall, ceiling, or floor. Therefore, the Texas Appellate Court
held that a logical reading of the exception limited its application to the physical entry or exit
into a building. Coverage had been properly denied.
II.
FLOOD/SEVERE WEATHER
A.
Meaning of “Flood”
North Carolina Concrete Finishers, Inc. v. North Carolina Farm Bureau Mut. Ins. Co., Inc., 688
S.E.2d 534 (N.C. App. 2010) – The insured business owned a 2006 Bobcat Track Loader that was
insured by an inland marine policy. Coverage was expressly provided for direct physical loss
caused by flood. The policy defined flood as the overflow of a river, stream or other body of
water. While the policy was in effect, the Bobcat suffered water damage. After coverage was
denied, the insured brought suit, alleging breach of contract.
The insured’s complaint alleged that the Bobcat had become mired in mud and sunk down to
where it could not be readily removed. Water from a retention pond then seeped around the
equipment while the insured attempted to extricate the Bobcat. The seeping water allegedly
caused damage to the engine and equipment.
The Appellate Court affirmed the trial court’s ruling that the insured had not proven the Bobcat
was damaged by a flood. The Court held that the complaint did not allege an event that
constituted a flood, as defined in the policy. The Court also rejected the insured’s argument that
the Black’s Law Dictionary definition of flood, “an inundation of water over land not usually
covered by it,” should govern over the policy’s definition of flood. The Court articulated that
there had been no authority cited for why the definition in the policy should not apply.
Moreover, even if the alternate definition was used, the Court held that the complaint failed to
allege an inundation of water over land not usually covered by it.
Northwest Bedding Co. v. Nat’l Fire Ins. Co. of Hartford, 154 Wash. App. 787, 225 P.3d 484 (Wash.
App. 2010) – The insured, a business in Spokane, was covered by an all-risk commercial property
policy and commercial general liability policy. The policy covered direct physical loss of or
damage to covered property caused by or resulting from any covered cause of loss. The policy
specifically excluded loss resulting from surface water or flooding, but did not define those
terms.
F-5
As a result of abnormally heavy snowfall in the winter months of 2007-2008, the State
Department of Transportation purposely diverted water from melting snow through the
trenches near the insured’s property. The water ultimately overflowed the trenches onto the
insured’s property and caused damage. The insurer denied coverage, claiming that the damage
was a result of surface water.
The Court first determined that coverage was barred because the damage had been caused by
surface water. Because “surface water” was undefined, the Court interpreted its meaning in
accord with the understanding of the average purchaser, explaining that the chief characteristic
of surface water was its inability to maintain its identity and existence as a body of water. Here,
the melted snow had overwhelmed the drainage ditches near the insured’s property and forced
water onto land not usually covered and not readily able to absorb the water. Therefore, the
Court held that the water overflowing from the ditch onto normal land had become surface
water as defined in the policy and the resulting loss was excluded.
Next, the Court determined that the loss was also excluded under the flood provision. Because
the policy did not define the word flood, the Court interpreted the word by reviewing several of
its dictionary meanings. The water that damaged the insured’s property was delivered to
normally dry land by an overflowing ditch. Therefore, the Court held that it could be considered
a flood and loss was properly excluded.
Finally, the Court considered whether its holdings and interpretation of the exclusions were
consistent with a typical insured’s expectations of the policy. It reasoned that an average insured
interprets the words flood and surface water to encompass the diversion of water flowing in a
large area, whether from the melting of snow or something else. Therefore, its holdings were
consistent with an insured’s typical expectations of the exclusions.
B.
Business Interruption by Flood
CIMCO Communications, Inc. v. Nat’l Fire Ins. Co. of Hartford, ___ Ill. App. 3d ___, 943 N.E.2d 276,
347 Ill. Dec. 986 (1st Dist. 2011) – The insureds, phone and internet service providers, had a
facility damaged by a flood. The equipment inside was damaged and was not repaired or
replaced until three months later. The insureds submitted a claim for loss of business income
from the date of the flood, June 6, 2004, to December 2005. The insurer willingly paid the
claimed losses for the three-month period between the flood and the repair/replacement of the
equipment, but refused to pay for claimed damages thereafter. The insureds then filed suit.
The flood policy’s business income provision covered actual loss of business income sustained
due to the necessary suspension of operations during the period of restoration. The provision
expressly stated that coverage was limited to the loss of business income which occurred within
12 consecutive months after the date of direct physical loss or damage. The policy also
contained an extended business income provision which covered losses until the earlier of 30
days after the end of the period of restoration or the date that operations were restored to the
pre-damage level.
F-6
The insureds argued that the policy covered any business loss during the 12-month period
following the date of direct physical loss as long as the cause of those losses was the necessary
suspension of operations during the period of restoration. The insurers argued that only losses
stemming from the necessary suspension of operations which occurred during the three-month
period of restoration were covered.
The Appellate Court, First District held that the business income provision of the policy limited
recovery to only those losses sustained as a result of the necessary suspension of operations
during the three-month period of restoration. It reasoned that the business income provision of
policy would cover any losses during the three-month period of restoration following a flood,
and the extended provision would cover any additional losses for up to 30 days between the
end of the period of restoration and the resumption of business operations at preflood levels.
Moreover, the Court held that the insureds could not offer a reasonable counter-interpretation
so the business income provision was not ambiguous.
C.
Hurricane Katrina
Spansel v. State Farm Fire and Cas. Co., 683 F. Supp. 2d 444 (S.D. Miss. 2010) – The insured
owned a vacation home in Mississippi that was severely damaged in Hurricane Katrina. The
home was insured under both a homeowner’s and flood policy. The insurer paid the policy limits
on the flood policy, but offered an amount much lower than the policy limits on the
homeowner’s policy. The insured then filed suit, seeking a declaratory judgment that the loss
was covered. He argued that the water exclusion, anti-concurrent clause, and hurricane
deductible did not preclude coverage of his claim.
The policy provided:
We do not insure under any coverage for any loss which would not have occurred
in the absence of one or more of the following excluded events. We do not insure
for such loss regardless of: (a) the cause of the excluded event; or (b) other
causes of the loss; or (c) whether other causes acted concurrently or in any
sequence with the excluded event to produce the loss.
Spansel, 683 F. Supp. at 450. The policy also excluded loss due to water damage, which was
defined as “flood, surface water, waves, tidal water, tsunami, seiche, overflow of a body of water,
or spray from any of these, all whether driven by wind or not.”
The insured first argued that the water damage exclusion did not exclude claims for loss due to
storm surge because storm surge is caused by wind. The Court rejected the insured’s argument,
holding that the exclusion unambiguously included storm surge. It explained that storm surge is
plainly encompassed within the common understanding of the “flood” or “overflow of a body of
water” portions of the definition and that no other logical interpretation existed.
F-7
The insured next argued that the anti-concurrent clause, which excludes coverage when other
causes acted concurrently or in any sequence with the excluded event, was ambiguous and
unenforceable. The Court agreed, relating it to similar clauses that other courts held to be
ambiguous and unenforceable to the extent that they purported to exclude any wind loss if it
occurred separately from and in sequence to excluded water loss. The Court therefore denied
summary judgment on this portion of the insurer’s declaratory judgment claim.
Finally, the insured argued that the hurricane deductible in the policy entitled them to recovery
for storm surge loss that occurred during a hurricane. The policy at issue had included an
endorsement applying an additional deductible in the event of hurricane loss. The insured
argued that this extended coverage, but the insurer argued that it merely applied to the
deductible. The Court agreed with the insurer, holding that the hurricane deductible did not
create coverage for storm surge. Instead, the deductible endorsement merely created an
additional deductible in the event of a hurricane.
III.
SUBROGATION
American Family Mut. Ins. Co. v. Guzik, 406 Ill. App. 3d 245, 941 N.E.2d 936, 347 Ill. Dec. 67 (3d
Dist. 2010) – The insured’s home in Lockport was destroyed by a fire in 2006. The fire also
injured the insured and damaged four surrounding homes insured by State Farm. The fire and
explosion expert determined that the insured had deliberately started the fire. Both the insured
and State Farm made claims under the insured’s policy. The insurer denied coverage based on
the policy’s exclusion for “bodily injury or property damage caused intentionally by or at the
direction of any insured even if the actual bodily injury or property damage is different than that
which was expected or intended from the standpoint of any insured.”
The Court upheld the exclusion and determined that no coverage existed. In doing so, it rejected
State Farm’s argument that the policy insured against this harm since it was entirely controlled
by the insured. The Court explained that the exclusion was unambiguous in articulating that
coverage is only applicable to accidents.
The Court also held that the provision foreclosed any coverage for damage to the other homes
even though the spread of the fire to the neighboring homes may not have been specifically
expected or intended. The Court explained that the spread of the fire could be considered
expected because it was a rational and probable consequence of setting the fire.
Allstate Ins. Co. v. Palumbo, 296 Conn. 253, 994 A.2d 174 (Conn. S. 2010) – Ms. Palumbo and her
fiancé lived together in her home. Her home was insured, but she was listed as the sole named
insured. The home was damaged by fire that was caused by a water heater that had been
improperly installed by the fiancé. Her insurer paid over $62,000 to cover damages. The insurer
then sued Ms. Palumbo’s fiancé for equitable subrogation.
F-8
The fiancé admitted that he had negligently installed the water heater, but the Court held that
subrogation was not equitable based on the relationship of the engaged couple. The Court
looked to the parties’ expectations and found that the parties justifiably expected the fiancé to
be covered by the homeowner’s policy. The Court admitted that the decision caused some
injustice to the insurer, especially because the insured had not informed the insurer that the
fiancée was a permanent resident before the fire. However, the Court held that the equities
clearly favored no subrogation.
The Court also supported its holding that subrogation was not equitable by examining the
insurer’s action. Specifically, the policy allowed the insurer to adjust the premium or coverage if
the insured failed to inform the insurer of any change in use, title or possession of the property.
The insurer could also void the policy if the insured intentionally concealed or misrepresented
any material fact or circumstance before or after a loss. However, the Court explained that the
insurer had paid the insured even after realizing that the fiancé also lived in the home. Because
the insurer had paid, the Court presumed that the fiancé’s residency was not deemed a
misrepresentation or intentional concealment. Therefore, it supported the holding that
subrogation was not equitable.
American Family Mut. Ins. Co. v. Northern Heritage Builders, LLC, 404 Ill. App. 3d 584, 937 N.E.2d
323, 344 Ill. Dec. 617 (1st Dist. 2010) – The insured owned a three-story home in Chicago that
was damaged when rain and moisture penetrated the home’s exterior due to alleged faulty
construction. The insured filed a complaint against the insurer for denying coverage and filed
one against the designer and builders of the home for faulty construction.
The insured received a verdict in his favor in the action against the insurer. The insured and
insurer subsequently settled in an agreement that did not include an assignment of the insured’s
rights of recovery against any party by reason of the damage to his house. After reaching that
settlement, the insurer brought this action seeking equitable subrogation against the designer
and builders by reason of the payment they made to the insured for construction defects which
resulted in the damage to the home.
The insured’s policy contained a subrogation provision, which provided:
Subrogation. An insured may waive in writing before a loss all rights of recovery
against any person. If not waived, we may require an assignment of rights of
recovery for a loss to the extent that payment is made by us.
If an assignment is sought, an insured must sign and deliver all related papers
and cooperate with us.
American Family, 404 Ill. App. 3d 586.
The Court explained that where an insurer’s right to subrogation is expressly provided for in the
policy, the policy terms control rather than any common law or equitable principles. Under the
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policy, there was a right to subrogation only if the insured had waived or assigned his rights of
recovery against any person. Because there had been no waiver or assignment by the insured,
the Court held that the insurer did not have the right to subrogation and dismissed its action.
IV.
INSURED’S DUTY TO COOPERATE
Piser v. State Farm Mut. Auto. Ins. Co., 405 Ill. App. 3d 341, 938 N.E.2d 640, 345 Ill. Dec. 201 (1st
Dist. 2010) – The insured owned a 2003 Harley Davidson, which he had spent over $60,000
customizing. The Harley was stolen on September 23, 2006. Shortly afterwards, the insured
notified the insurer and an investigation began. The insured initially complied with the
investigation, participating in a three hour unsworn interview. However, after that interview, the
insured repeatedly failed to comply with the insurer’s reasonable requests for information
necessary to investigate the claim. Specifically, the insurer asked the insured to execute a
financial authorization so the insurer could obtain the insured’s credit report. The insurer also
requested information about the insured’s financial status, including recent tax returns, business
bank account statements, and a list of all credit and charge accounts. On both occasions, the
insured failed to produce this information despite the insurer’s repeated requests for
compliance.
Due to the insured’s actions, the insurer terminated its investigation and denied the claim. The
insured then filed suit for breach of contract. In response, the insurer filed a motion to dismiss,
arguing the claim was barred based on his breach of the policy’s cooperation clause.
The insured’s policy required him to cooperate in securing and giving evidence, to “provide all
records, receipts and invoices” and to “answer questions under oath when asked by anyone we
name, as often as we reasonably ask.” The policy also expressly stated that there was no cause of
action against the insurer unless the terms of the policy had been met.
The Appellate Court, First District explained that the breach of a policy’s cooperation clause is
not a defense in Illinois unless the breach substantially prejudices the insurer in defending the
action. To establish substantial prejudice, the insurer must show that the noncooperation
actually hampered the insurer’s defense of the action.
The Court held that where an insurer relies on the breach of a cooperation clause to deny
coverage, the insurer is entitled to judgment when the insured makes virtually no effort to
produce relevant information. The Court explained that the insured’s efforts to cooperate with
the investigation were negligible. Moreover, it held that all information sought was clearly
encompassed within the policy’s terms. Therefore, the Court held that the action was properly
dismissed because the insured had failed to comply with the policy’s cooperation clause.
Abdelhamid v. Fire Ins. Exchange, 182 Cal. App. 4th 990, 106 Cal. Rptr. 3d 26 (3d Dist. 2010) – The
insured brought several claims against his insurer after it denied coverage for his fire loss.
Several facts suggested that the fire was intentionally started, so the insurer began an
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investigation of the fire. During the investigation, the insured repeatedly failed to comply with
the insurer’s requests for information. Coverage was denied based on the insured’s failure to
cooperate.
The California Appellate Court upheld the insurer’s denial of coverage for several reasons. First,
it found that the insured failed to provide a proof of loss, as required by the contract. The Court
concluded that the proof of loss submitted did not comply because it was incomplete in that it
left many items blank.
Second, it rejected the insured’s excuse for his failure to fully participate in a sworn statement
and in producing documents. The Court held that the insured’s failure to cooperate was not
excused simply because the insured was following the advice of his attorney. The Court was
concerned about the future implications of allowing noncompliance.
Finally, the Court held that the insured’s delayed attempts to comply with the contract were not
enough to excuse the previous failure to comply. Therefore, the insured had breached the
cooperation provision of the contract and coverage was properly denied.
V.
MISREPRESENTATION AS PROPERTY DAMAGE
Rock v. State Farm Fire and Cas. Co., 395 Ill. App. 3d 145, 917 N.E.2d 610, 334 Ill. Dec. 784 (3d
Dist. 2009) – In 2004, the insureds sold their home to the Kosses. As part of that sale, the
insureds had indicated on a real estate disclosure form that there were no water or moisture
problems in their home. The form also represented that their home did not have any damage
from flooding, hazardous conditions, or foundation problems. Once the Kosses moved into the
home, they quickly found these disclosures to be false. In 2005, the Kosses sued the insureds for
misrepresentation, alleging that false statements were made to induce them to buy the home.
When the insurer declined coverage, the insureds filed suit.
The key issue was whether the insured’s misrepresentations caused property damage. The policy
defined property damage as “physical damage to or destruction of tangible property, including
loss of use of this property.” Under this definition, the Court held that there was no property
damage alleged in the suit. There were no allegations in the complaint regarding physical
damage to the house incurred after the misrepresentations had been made. Rather, the
complaint alleged that the Kosses had suffered economic loss as a result of the insured’s
misrepresentations. The Court explained that the insureds were sued for making false
disclosures, not for causing property damage.
VI.
CHINESE DRYWALL CASES
TRAVCO Ins. Co. v. Ward, 715 F. Supp. 2d 699 (E.D. Va. 2010) – The insured owned a home that
contained sheets of drywall manufactured in China. The Chinese drywall allegedly emitted
F-11
sulfuric gas into the residence, causing noxious odors, damage and corrosion. The insured
brought a claim under his homeowner’s policy. The policy covered direct physical loss to the
property, but contained exclusions for latent defects, faulty materials, corrosion and pollution.
The insurer denied coverage.
The first issue considered by the Court was whether direct physical loss had been suffered. The
insurer argued that there had to be some physical alteration or injury to the property’s structure
to have direct physical loss. In this case, the home did not have noticeable physical damage, but
had been rendered unlivable by the gas and odors emitted from the drywall. The Court rejected
the insurer’s argument, holding that physical damage is not necessary when there is a total loss
of the use of the property. The Court supported its holding by noting that the policy defined
property damage to include the “loss of use of tangible property.” Because there was a total loss
of the use of the property, the Court held that there was direct physical loss, so the damage was
covered unless excluded.
The Court then determined that several exclusions applied to bar coverage for the damage
caused by the drywall. First, the Court held that the damage was excluded by the latent defect
exclusion because the drywall defect was latent in that it was hard to detect and was integral to
the house’s construction. Coverage was also excluded by the faulty materials exclusion. The
Court reasoned that the insured had himself described the drywall as defective in his complaint
and had thus admitted that faulty materials had caused the damage.
The corrosion exclusion applied as well because the drywall had caused corrosion. The Court
articulated that corrosion exclusions preclude recovery regardless of what caused the corrosion
or how suddenly it occurred. The Court explained that corrosion exclusions are to apply whether
the corrosion was the cause of the loss or whether it was the loss itself, as in this case.
Coverage was also excluded by the pollution exclusion because the damage was caused by the
release of pollutant gases from the drywall. The Court rejected the insured’s argument that
pollution exclusions are limited to traditional environmental pollution.
Finally, the insured argued that his loss was covered under the policy provision that stated “any
ensuing loss to property described in Coverages A and B not excluded by any other provision in
this policy is covered.” The Court rejected this argument, holding that the ensuing loss provision
did not provide coverage for two reasons. The Court first explained that there were no ensuing
losses because only a single claimed loss occurred. While the damage occurred over time, it
represented a single discrete loss from a single discrete injury. Second, even if the losses could
be characterized as ensuing, the Court noted that they were still losses excluded by other
provisions in the policy.
In re Chinese Manufactured Drywall Products Liability Litigation, MDL No. 2047, 2010 WL
5288032 (E.D. La. Dec. 16, 2010) – In this class action suit, the insureds all owned homes that
contained Chinese drywall. In each case, the drywall emitted foul odors and damaged metal and
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electronic elements and devices in their homes. All sought coverage from their insurers under
homeowner’s policies, but were denied.
As in Travco, the Court first determined whether the policy provided coverage. The key question
for this determination was whether there had been direct physical loss. The Court determined
that there was direct physical loss even though there had not been any physical damage
because the release of sulfuric gases from the drywall had rendered the home uninhabitable.
The Court held that physical damage is not necessary where the property is unuseable because
of physical forces. It also noted that each property damage definition in the various policies
included the loss of use of tangible property. The Court then held that this loss was direct
because it was caused solely by the drywall and was accidental or sudden in that it was caused
by an abrupt or unexpected event stemming from an unknown or unusual cause.
Because the loss was covered as direct physical loss, the Court then examined whether any of
the policies’ exclusions applied. First, the Court determined that coverage was not excluded by
the latent defect exclusion because the drywall boards could be viewed easily from the attic or
other unfurnished areas of the home. Moreover, the damage caused was easily detectable
through smell and sight. The Court also explained that electricians would have easily recognized
the damage to electrical wiring, devices, and appliances.
The Court then determined that the pollution exclusion did not apply because the insureds were
not polluters and the drywall did not cause environmental pollution by its presence in their
homes. The Court felt that the pollution contemplated under the policy exclusion did not
encompass the emission of foul odors, as alleged in the complaint.
The loss was excluded under the faulty materials exclusion. The Court felt this was obvious,
explaining that the whole basis of the claim was that the drywall was faulty and rendered the
homes unlivable. While the drywall served its purpose as a room divider and wall anchor, it was
defective and faulty in that it emitted odors and released gases.
Lastly, the Court held that the corrosion exclusion applied. The Court rejected the argument that
there was a distinction between corrosion as the harm, which was the case here, and corrosion
as the cause of the harm. It also declined to find a distinction between the chemically-created
corrosion in the drywall cases and the corrosion that occurs in nature. Because the drywall had
caused corrosion damage, the loss was properly excluded under the corrosion exclusion.
Finally, the Court determined that there was no ensuing loss in this case so the ensuing loss
provisions did not provide coverage. The Court was careful to explain that there could possibly
be a subsequent ensuing loss that would be covered under the policy, but that there had not yet
been an ensuing loss under the facts of any of these cases.
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David A. Perkins
- Partner
court denied the entry of summary judgment
with respect to a count alleging false arrest. We
filed an appeal to the Seventh Circuit Appellate
Court which reversed the trial court thereby
disposing of all claims directed against Chief
Bernabei and The City of Spring Valley.
Prior to joining Heyl Royster, Dave served as a law
enforcement officer for seven years. During that time,
he attended the Police Training Institute at the
University of Illinois as well as the Traffic Institute at
Northwestern University. He has also chaired the
Washington (IL) Police Commission. Following
graduation from law school in 1987, Dave joined Heyl
Royster in the Peoria office. He became a partner with
the firm in 1998.
Publications
 Co-author, "Civil Rights Update: Student
Speech Can Be Restricted," Illinois Association
of Defense Trial Counsel Quarterly (2007)
 Co-author, "Civil Rights Update: Supreme Court
Adds Absence of Probable Cause to Prima
Facie Case for Bivens Retaliatory-Prosecution
Action in Hartman v. Moore, Illinois Association
of Defense Trial Counsel Quarterly (2006)
Dave concentrates his practice in the areas of civil
rights, municipal liability, employment discrimination,
first-party property claims, and general tort litigation.
He has successfully tried a number of cases, with
settlement demands in excess of $1,000,000.
Dave authors a quarterly column for the Illinois
Defense Counsel Quarterly, the official journal of the
Illinois Association of Defense Trial Counsel. He has
also coauthored a chapter in the Property Insurance
Handbook for the Illinois Institute of Continuing Legal
Education. Dave has also spoken on a wide variety of
subjects, including civil rights liability, municipal
liability, employment discrimination, the investigation
of fire losses, and first-party property claims.
Public Speaking
 “The Relationship Between Immunity
For Failure To Provide Police Protection and the
Illinois Domestic Violence Act”
PCBA Civil Practice: Substantive Law Seminar (2010)
Significant Cases
 Purvis v. The City of Spring Valley, Illinois and
Douglas Bernabei - This civil rights lawsuit was
filed in the United States District Court, Central
District of Illinois. Gina Purvis, a high school
teacher, was accused of engaging in sexual
relations with a male student. Chief Bernabei
conducted an investigation which resulted in
Purvis being charged with various criminal
offenses. The school terminated Purvis’
employment and she incurred approximately
$300,000 in expenses defending against the
criminal charges. Purvis was found not guilty in
the criminal trial. Thereafter, Purvis filed a civil
rights suit against our clients, Chief Bernabei
and The City of Spring Valley. The civil rights
Complaint requested $40,000 in compensatory
damages and $10,000,000 in punitive damages.
During discovery, plaintiff made a settlement
demand of $9,500,000. We obtained summary
judgment in 6 of the 7 counts but the trial
Court Admissions
Southern Districts of Illinois
 United States Court of Appeals, Seventh Circuit
Education
 Juris Doctor, University of Iowa College of Law,
1987
 Bachelor of Arts-Social Justice, University of
Illinois at Springfield, 1985
F-14
RECENT DEVELOPMENTS: PAIN DOCTORS & INJECTIONS Presented and Prepared by:
Matthew S. Hefflefinger
[email protected]
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RECENT DEVELOPMENTS: PAIN DOCTORS & INJECTIONS
I.
THOROUGH INVESTIGATION IS KEY TO DETECTING FALSE AND/OR
EXAGGERATED CLAIMS OF PAIN AND INJURIES ............................................................................ G-3
A.
B.
C.
II.
Determine Specific Injuries ....................................................................................................... G-3
Determine Effects of Alleged Injuries ................................................................................... G-4
The Use of Injections in Treatment of Pain Management ............................................ G-4
DEFEATING FALSE CLAIMS OF INJURY AT TRIAL ............................................................................ G-6
A.
B.
C.
Plaintiff Has the Burden of Proving Both an Injury and That
Such Injury Is Related to the Accident in Question ......................................................... G-6
The Jury Can Determine That the Plaintiff Is Entitled to Recovery of Medical
Expenses but Not for Pain and Suffering or Loss of a Normal Life ........................... G-7
Evidence of Pain or Conditions Related to Prior/Subsequent Injuries
May Require Expert Testimony to Be Admitted at Trial ................................................ G-9
1.
2.
3.
4.
III.
GATHERING EVIDENCE OF DECEPTION ...........................................................................................G-14
A.
IV.
The Abolishment of the Same Part of the Body Rule ...................................... G-9
New Rule – Voykin v. Estate of DeBoer: Expert Testimony Relating
Either to Prior or Subsequent Injuries Is Usually Necessary .......................G-10
Application of Voykin ................................................................................................G-11
Exceptions to the Voykin Rule ................................................................................G-13
Admission of Photographs as Evidence Tending to Show
Nature and Extent of Injury ....................................................................................................G-16
EVALUATING CLAIMS ..............................................................................................................................G-17
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RECENT DEVELOPMENTS: PAIN DOCTORS & INJECTIONS
I.
THOROUGH INVESTIGATION IS KEY TO DETECTING FALSE AND/OR EXAGGERATED
CLAIMS OF PAIN AND INJURIES
A.
Determine Specific Injuries
Each plaintiff who files a lawsuit obviously will have varied complaints. However, a thread of
similarity runs through those claims filed by plaintiffs who suffer from pain and conditions that
produce chronic complaints of pain. More often than not, these plaintiffs will suffer from
soreness and stiffness in their backs, necks, and shoulders. Other common conditions include
fibromyalgia and chronic fatigue syndrome. These complaints and conditions most often cannot
be verified or attributed to any objective finding.
In some instances, however, these plaintiffs’ complaints of pain relate to disc herniations, disc
bulges, and radiculopathies found by the plaintiffs’ treating physicians. When these findings
follow an accident or injury and become the subject of a lawsuit, it is important to determine
whether or not similar complaints of pain existed prior to the accident. When there is evidence
of a prior or subsequent injury, it also is important to determine the answers to the following
questions:
•
•
•
•
•
•
•
•
•
•
•
•
•
When was the other injury sustained?
What was the nature of the prior injury?
What were the prior complaints? What are the current complaints?
Who treated the plaintiff for the prior injuries?
Does the physician have a relationship with the plaintiff’s attorney?
Did the treatment for the prior injury stop?
If so, when and why did it stop?
What was the prognosis at the time the treatment stopped?
Were diagnostic tests taken prior to this incident?
Did the plaintiff go back to work after the prior injuries?
What were his or her limitations?
Was the plaintiff disabled at the time of the accident in question?
Does this case possibly involve the aggravation of a pre-existing injury?
All of this information is relevant to determine how and to what extent the plaintiff’s condition
following the accident was different from his or her condition prior to the accident.
Not only are the complaints made by the chronic pain plaintiffs similar, but the type of therapies
ordered and received are similar as well. Many of these individuals may be seen initially in the
emergency room with minimal complaints and a suggestion to follow up with their family
physicians. Others may not visit the emergency room and seek treatment several days, weeks, or
months after the accident occurred. Usually, however, there will be complaints made to a family
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physician once litigation has been considered. The physician may refer the patient to a
chiropractor or approve visits that already have taken place. The family physician also may make
referrals for physical therapy and to local pain clinics. Once affiliated with a pain clinic, records
normally will reflect that injections have been offered or administered. There is usually ongoing
treatment with recommendations for pain medication and alternative pain therapies.
B.
Determine Effects of Alleged Injuries
In order to determine the effects of the alleged injury from the particular accident, first assess
the plaintiff’s condition immediately prior to the accident in question. In order to make this
determination properly, obtain all of the plaintiff’s medical records. These records should include
not only the record subsequent to the accident in question, but also records relating to
conditions and injuries that occurred within the last five to 10 years. These records should
provide a basis for complaints of pain and injuries the plaintiff sustained both prior to and
subsequent to the injury in question.
The records also will serve as a baseline to compare to the plaintiff’s answers to interrogatories
and deposition testimony. Should these records reveal the plaintiff has suffered from a prior or
subsequent injury, deposing and obtaining testimony from treating physicians and chiropractors
may be necessary to fully evaluate the nature of the prior or subsequent problem. Testimony
from the physicians should establish not only the nature of the injury and complaints, but also
the level of activity and abilities that have been eliminated or significantly affected by the
complained-of occurrence. Test the plaintiff’s accuracy and validity by interviewing neighbors
and co-workers, and by using surveillance to verify the plaintiff’s claim of limitations and inability
either to work or perform daily living activities.
An independent medical examination and/or a records review by a third-party physician also
may be of assistance. Plaintiff’s counsel will attack an independent medical examiner or record
reviewer due to limited contact with the plaintiff, which limits his or her ability to determine any
changes occurring between the date of the accident and the date of the examination.
Nevertheless, this type of testimony may be essential to allow evidence of prior or subsequent
injuries can be admitted as evidence at trial. In addition, the jury will then receive a picture of
plaintiff’s entire medical treatment history, rather than bits and pieces testified to by multiple
doctors who provided plaintiff with treatment over limited periods of time.
C.
The Use of Injections in Treatment of Pain Management
In addition to physical therapy and chiropractic treatment, the use of injections has become
common practice in the typical chronic pain case. Many times there are simply no objective
findings discovered either by way of examination or diagnostic tests. The ongoing subjective
complaints of pain ultimately may lead to injections being performed. When the cost of the
injections is added to those costs associated with diagnostic tests, physical therapy and/or
chiropractic treatment, the medical bills accumulate rather quickly, despite the fact that plaintiffs
have not objective evidence of anything wrong with them.
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The common types of injections encountered in the chronic pain case are as follows:
1. Epidural steroid injection: A local anesthetic and anti-inflammatory steroid medications are
injected into the spinal area on the surface of the spinal column. The goal of the injection is
pain relief, by delivering medication directly or very near the alleged source of pain
generation. It is noteworthy that most epidural steroid injections only provide temporary
relief, and it is quite common to see as many as three-four injections performed during the
course of a year.
2. Facet Joint Injection: This injection is performed when the physician identifies the source of
irritation in the small joints in each segment of the spine (joints that provide stability and
help guide motion of the spine). The physician injects a steroid into the facet joints to help
block the pain. Typically, the procedure is performed under fluoroscopy. The beneficial
effects are usually not permanent, and the physician may perform up to three-four injections
a year.
3. Nerve Root Block: A nerve root block is an injection into the sheath surrounding a nerve root
in the spine to decrease pain. A therapeutic steroid and local anesthetic are used to help
decrease pain and inflammation. Like a facet block, it is performed under fluoroscopy. The
relief of symptoms experienced is typically not long term. It is conceivable that multiple
injections will be performed over the course of a year.
4. Radio Frequency Rhizotomy: If facet joint injections have not provided relief, this is a
procedure that may be performed to decrease or eliminate pain arising from the facet joints.
The procedure involves destroying the nerves that innervate the facet joints with highly
localized heat generated with radio frequency. By destroying the nerves, the goal is to break
the communication link that signals pain from the spine.
5. Sacroiliac Joint Injection: This injection places some pain relieving medication in the
sacroiliac joint. Typically, the extent of immediate relief experienced during the injection
helps confirm or deny the sacroiliac joint as a source of pain. The steroid injection may also
help reduce any inflammation that may exist within the joint.
6. Stellate Ganglion Block: This is an injection used to block or decrease pain located in the
head, neck, chest or arm. The stellate ganglion is located in the neck and is part of the
sympathetic nervous system. Stellate ganglion block may be performed if the plaintiff’s facial
or arm pain is thought to be sympathetically mediated. In addition to helping determine the
cause of the pain, the block may also treat the pain problem as well. It is typically used to
treat Complex Regional Pain Syndrome, which is also known as Reflex Sympathetic
Dystrophy.
7. Trigger Point Injection: Trigger point injections are used where the practitioner determines
that the plaintiff has tight knots in a muscle that fail to relax. The trigger point is injected
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with a local anesthetic and possibly an anti-inflammatory with the hope that the trigger
point will not be an ongoing source of pain. Like virtually all injection therapy, there is some
debate over the effectiveness and success of trigger point injections.
II.
DEFEATING FALSE CLAIMS OF INJURY AT TRIAL
A.
Plaintiff Has the Burden of Proving Both an Injury and That Such Injury Is
Related to the Accident in Question
Even in cases where the liability of the defendant has been determined previously either by
admission, motion for summary judgment, or a previous trial, the plaintiff still must prove both
an injury and proximate cause. Cancio v. White, 297 Ill. App. 3d 422, 425-426, 697 N.E.2d 749,
232 Ill. Dec. 7 (1st Dist. 1998). Plaintiff has the burden of proving causation, and the nature and
extent of any alleged injuries, even though liability has been established as a matter of law. Id. at
427, citing, Nicholl v. Scaletta, 104 Ill. App. 3d 642, 432 N.E.2d 1267, 60 Ill. Dec. 368 (1st Dist.
1982), citing, Jeffrey v. Chicago Transit Authority, 37 Ill. App. 2d 327, 185 N.E.2d 384 (1st Dist.
1962). The Court has held that the mere fact an accident has occurred as a result of a
defendant’s negligence does not in any way establish the plaintiff sustained physical injury.
Jeffrey, 37 Ill. App. 2d at 327. The Court in Cancio held that:
[A] jury cannot determine the nature, extent, and duration of an alleged injury,
without first assessing what, if any, injury the plaintiffs suffered as a result of the
accident and the extent and duration of any alleged injury.
297 Ill. App. 3d at 428.
The courts have established that a jury is to determine the injuries suffered as a result of an
accident, and also the nature and extent of those injuries in determining what damages to
award following an accident. However, this jury responsibility does not guarantee prior injuries
will always be admitted into evidence at trial.
In Cancio, the plaintiff moved to exclude evidence that the plaintiff suffered from arthritis at the
time of the accident. Plaintiff’s treating orthopedic physician testified that plaintiff’s MRI showed
the patient had a disc herniation with some degenerative changes, and also had pre-existing
disc degeneration at various levels of his cervical spine. The physician further testified that some
of the pressure on the disc was due to the pre-existing arthritis. Cancio, 297 Ill. App. 3d at 428. In
this case, the Court held that although the plaintiff may have suffered from arthritis that preexisted the incident in question, absent competent and relevant evidence of a connection
between the arthritis and the herniated disc purported to cause plaintiff’s pain, the arthritic
condition was inadmissible. Cancio, 297 Ill. App. 3d at 430. When a prior injury has long since
healed and shows no recurring symptoms, the defendant would not be permitted to introduce
evidence of the prior injury without establishing causation. Id. at 430.
G-6
B.
The Jury Can Determine That the Plaintiff Is Entitled to Recovery of Medical
Expenses but Not for Pain and Suffering or Loss of a Normal Life
In Snover v. McGraw, 172 Ill. 2d 438, 667 N.E.2d 1310, 217 Ill. Dec. 734 (1996), plaintiffs, a mother
and daughter, were awarded medical expenses incurred in the diagnosis and treatment of the
daughter after an automobile accident. The daughter had been a passenger in one of the
vehicles. After the accident, the daughter complained of abdominal, head, and neck pain. She
incurred around $2,000.00 in medical expenses. Few, if any, objective findings were made to
support her subjective complaints. At trial, the jury awarded the daughter and her mother
medical expenses, but did not award any amount for the daughter’s pain and suffering. The
daughter and mother appealed, arguing that the awards were inconsistent and that any award
of medical expenses without a corresponding award for pain and suffering was per se reversible.
The Illinois Supreme Court rejected plaintiffs’ contention that the verdict was so inconsistent
that it required reversal. It explained that a court will not upset a jury’s award of damages
“unless a proven element of damages was ignored, the verdict resulted from passion or
prejudice, or the award bears no reasonable relationship to the loss suffered.” Id. at 447. The
Court held that a jury may award pain-related medical expenses and also determine that the
evidence of pain and suffering was insufficient to support such an award. The Court reasoned
that an award for pain and suffering is especially difficult to quantify because it is not as readily
calculable and requires the jurors to rely on their experiences in making such an award.
The Court explained that the daughter had few, if any, objective symptoms of injury. It noted
that the defense expert had strongly disputed the nature and extent of the injuries and of any
pain and suffering. Moreover, there were credibility issues with the daughter based on her delay
in seeking treatment and her ability to continue participating in everyday activities. Therefore,
the Court affirmed the jury’s verdict.
The Court emphasized that there are cases where an award of medical expenses without an
award for pain and suffering may be inappropriate, especially when the evidence indicates that
the plaintiff suffered serious injury. However, in cases in which a plaintiff’s evidence of injury is
primarily subjective and not accompanied by objective symptoms, the Court stated that the jury
may find plaintiff’s evidence of pain and suffering unconvincing.
In Poliszczuk v. Winkler, 387 Ill. App. 3d 474, 899 N.E.2d 1115, 326 Ill. Dec. 464 (1st Dist. 2008),
plaintiffs, a brother and sister, were injured when the vehicle they were in was struck by the
defendant’s vehicle. Both plaintiffs suffered back injuries in the accident. These alleged injuries
and corresponding complaints of pain lasted for years after the accident and continued to the
time of trial. The sister was a dancer at the time of the accident and testified that her injuries
prevented her from dancing at the level she could have achieved if she had never been in the
accident. She was treated over a span of numerous years and underwent physical therapy and
several procedures. At trial, several doctors testified about the plaintiffs’ injuries. The testimony
conflicted on several points. After trial, the jury awarded both plaintiffs damages for medical
G-7
expenses and pain and suffering but did not award damages for disability or loss of a normal life
experienced or reasonably expected to be experienced in the future. Plaintiffs appealed.
The Court held that the jury’s verdict was not so inconsistent that it could be considered against
the manifest weight of the evidence. A jury’s award of damages is not to be disturbed unless the
jury ignored a proven element of damages, acted out of passion or prejudice, or produced a
verdict that bore no reasonable relationship to the loss suffered. Because there was no evidence
that the jury had ignored an element of damages or acted out of passion or prejudice, the
Court’s inquiry was focused on whether the damages bore any reasonable relationship to the
loss suffered. The Court examined the testimony from trial and explained that much of the
testimony related to disability or loss of a normal life was contradictory. It reiterated that where
evidence is contradicted or based merely on subjective complaints, the jury is free to disbelieve
it. The Court held that the jury was entitled to make reasonable inferences about the disability
and loss of a normal life suffered by plaintiffs. Because much of the evidence offered was
contradicted and based on subjective complaints, the Court held that the jury’s award of
damages was proper.
In Stift v. Lizzadro, 362 Ill. App. 3d 1019, 841 N.E.2d 126, 298 Ill. Dec. 983 (1st Dist. 2005), plaintiff
was injured when the defendant’s vehicle struck her vehicle. Plaintiff immediately felt pain in her
neck and left shoulder. She tried several treatments without success, including muscle relaxants
and physical therapy. She then underwent surgery on a muscle in her neck. According to the
plaintiff, the surgery relieved her shoulder pain, but she continued to suffer from neck pain and
migraines at the time of trial. Plaintiff claimed she was forced to quit sports and other activities
because of the injuries but at the same time admitted that she had worked as a pool attendant
during the time between the accident and surgery. At trial, the jury found for plaintiff and
awarded over $26,000.00 in medical expenses and $40,000.00 in pain and suffering. However,
the jury awarded $0 for loss of a normal life experienced and reasonably to be experienced in
the future. Plaintiff filed a post-trial motion challenging the damage awards based on the
alleged inconsistency, but her motion was not granted. Plaintiff then appealed, claiming the trial
court erred because the jury’s damage award was against the manifest weight of the evidence.
The First District held that the jury’s refusal to award damages for loss of a normal life was not
against the manifest weight of the evidence and that the trial court did not err. The Court
explained that “where evidence is contradicted, or where it is merely based on the subjective
testimony of the plaintiff, a jury is free to disbelieve it.” Id. at 1029. It then emphasized that the
evidence relied on by plaintiff to establish the loss of a normal life was unclear and contradicted.
The only evidence of continuing pain was the plaintiff’s subjective testimony. Moreover, her
doctor had explained that she had not complained of pain at her first two post-surgery visits.
Finally, she had only missed one day of work and was unable to work as a pool attendant prior
to the surgery. These facts all led the First District to conclude that the jury’s refusal to award
damages for past and future loss of normal life was not unreasonable.
Lastly, in Orava v. Plunkett Furniture Co., 297 Ill. App. 3d 635, 697 N.E.2d 1251, 232 Ill. Dec. 321
(2d Dist. 1998), plaintiff was injured when a truck driver backed his truck into plaintiff’s vehicle.
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Plaintiff incurred medical expenses as a result of the alleged injuries. However, plaintiff’s treating
doctors found no objective signs of injury that correlated with plaintiff’s complaints of pain. At
trial, the jury awarded plaintiff damages for medical expenses and the aggravation of a preexiting condition but did not award plaintiff money for pain and suffering. Plaintiff then moved
for a new trial because of the inconsistency in the jury’s verdict and the motion was granted.
On appeal, the Second District reversed. The Court held that there was no inherent inconsistency
between the award of medical expenses and the refusal to award damages for pain and
suffering because the jury had ample reason to discount the plaintiff’s testimony about his pain
and suffering. The Court noted that the testimony was such that the jury could have reasonably
believed that the impact of the accident was relatively slight. Additionally, the Court emphasized
that the jury could have given credit to the defendant’s medical expert who concluded that the
treating doctors had not found objective symptoms, the symptoms were a continuation of a
pre-existing myofascial pain syndrome, and that the accident did no more than cause a shortterm cervical strain. The Court also explained that the jury had awarded damages for the
aggravation of the pre-existing condition and that in doing so, the jury was effectively
compensating the plaintiff for the pain and suffering that the accident increased or revived. It
reasoned that the jury may have well thought that a separate award for pain and suffering was
not appropriate because the plaintiff suffered only minimal pain apart from the pain associated
with the pre-existing condition.
C.
Evidence of Pain or Conditions Related to Prior/Subsequent Injuries May
Require Expert Testimony to Be Admitted at Trial
1.
The Abolishment of the Same Part of the Body Rule
A defendant has the right not only to rebut evidence showing the defendant’s acts are negligent
and the proximate cause of plaintiff’s claimed injuries, but also to establish by competent
evidence the conduct of a third person, or some other causative factor, is the sole proximate
cause of plaintiff’s injuries. Thomas v. Johnson Controls, Inc., 344 Ill. App. 3d 1026, 801 N.E.2d 90,
279 Ill. Dec. 798 (1st Dist. 2003), citing, Leonardi v. Loyola University of Chicago, 168 Ill. 2d 83,
101, 658 N.E.2d 450, 212 Ill. Dec. 968 (1995).
Illinois law previously allowed a defendant to introduce evidence that a plaintiff had previously
suffered injury similar to those at issue. Under the “Same Part of the Body Rule,” evidence of a
prior injury was admissible without further showing it was causally related to the present injury,
as long as both the past and present injuries affected the same part of the body. Voykin v. Estate
of DeBoer, 192 Ill. 2d 49, 53, 733 N.E.2d 1275, 248 Ill. Dec. 277 (2000). If the injury was not to the
same part of the body, the defendant then was required to demonstrate a causal connection
between the current injury and the prior injury. Id.
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2.
New Rule – Voykin v. Estate of DeBoer: Expert Testimony Relating
Either to Prior or Subsequent Injuries Is Usually Necessary
As discussed above, the First District in Cancio followed the Fifth District case of Brown v. Baker,
284 Ill. App. 3d 401, 672 N.E.2d 69, 219 Ill. Dec. 754 (5th Dist. 1996), which required evidence
suggesting a causal connection between the pre-existing condition and the injury complained
of, regardless of whether the condition was related to a similar injury or same part of the body.
The First District followed the Fifth District opinions in Cancio and Lagestee v. Days Inn
Management Co., 303 Ill. App. 3d 935, 945-947, 709 N.E.2d 270, 237 Ill. Dec. 284 (1st Dist. 1999).
Other districts, however, continued to follow the Same Part of the Body Rule. The Illinois
Supreme Court tackled this issue in Voykin, 192 Ill. 2d 49 (2000). The Court held that
determining whether or not to admit evidence of prior injuries was an issue of relevancy. Under
the prior rule, any injury to the same part of the body is automatically deemed relevant simply
because it affected that same part of the body. The Court in Voykin disagreed. Id. at 57.
Relevant evidence is that which has “any tendency to make the existence of any fact that is of
consequence to the determination of the action more probable or less probable than it would
be without the evidence.” Fed. R. Evid. 401. Id. at 57. In order for evidence of a prior injury to be
admissible at trial, that evidence must first be relevant. To do so, the evidence of the prior injury
must make the existence of a fact that is of consequence either more or less probable. In Voykin,
the defendant sought to introduce evidence of a prior injury for one of three purposes: (1) to
negate causation, (2) to negate or reduce damages, or (3) as impeachment. Id. The Court
assessed the evidence as follows:
With respect to causation, evidence of a previous injury is relevant only if it tends
to negate causation or injuries. It is well settled that a defendant need not be the
only cause to be held liable for an injury; rather, it is sufficient that the defendant
is a cause. (Citations omitted). Moreover, a defendant is not relieved of liability
simply because the only injury suffered by a plaintiff is an aggravation of a
previous injury. (Citations omitted). Thus, for a prior injury to be relevant to
causation, the injury must make it less likely that the defendant’s actions caused
any of the plaintiff’s injuries or an identifiable portion thereof.
Id. at 57-58.
Even if the prior injury does not negate causation, it may still be relevant to the question of
damages. For example, the prior injury may be relevant to establish the plaintiff had a preexisting condition for which the defendant is not liable, and the defendant is liable only for the
portion of the damages that aggravated or increased the plaintiff’s injury.
Additionally, a prior injury may be relevant as impeachment. For example, a plaintiff may be
examined with respect to his failure to disclose to the physician that he or she had previously
suffered an injury to the same part of the body. Similarly, an expert may be examined about
whether his or her opinion would change if the expert was aware of the plaintiff’s prior injury.
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However, not every undisclosed prior injury to the same part of the body is grounds for
impeachment. Just as with a substantive admission of evidence, the trial court should not permit
inquiry into this area unless the prior injury is relevant to a fact and consequence (i.e., whether
the injury negates causation or negates or reduces the defendant’s damages). Id.
The Voykin Court also considered whether or not expert testimony was necessary to determine
whether prior injuries were relevant to the current injury. The Court held that in most cases, a
connection between the parts of the body and past and current injuries was a subject beyond
the ken of an average juror. Accordingly, in general, a lay juror was not believed to be able to
assess effectively or accurately the relationship between a prior injury and a current injury
without expert assistance. The Court, therefore, concluded that if a defendant wishes to
introduce evidence that a plaintiff has suffered a prior injury, whether or not it was to the same
part of the body, the defendant also must introduce expert evidence demonstrating why the
prior injury is relevant to causation, damages, or some other issue of consequence. Id. at 59.
Please note that the Court further held:
This rule applies unless the trial court, in its discretion, determines that the natures of the prior
and current injuries are such that a lay person can readily appraise the relationship, if any,
between those injuries without expert assistance. Id.
3.
Application of Voykin
In Maffett v. Bliss, 329 Ill. App. 3d 562, 771 N.E.2d 445, 264 Ill. Dec. 741 (4th Dist. 2002), the
defendant sought to admit evidence of a plaintiff’s prior vision problems. The liability issues in
the case required testimony from the plaintiff regarding her observations on the night of the
accident. During discovery, defendants had learned plaintiff had suffered from a vision problem
that consisted of a loss of peripheral vision – a blind spot in the plaintiff’s left eye. The
testimony, however, did not demonstrate when the plaintiff had suffered those problems, the
exact nature and extent of her problems, or how the conditions affected her vision. The
defendant failed to provide expert testimony to address how plaintiff’s eye problems specifically
affected her vision or her ability to see the other vehicle on the morning of the accident. The
Court, therefore, found that the admission of such evidence relating to the plaintiff’s eye
conditions was improper. Maffett, 329 Ill. App. 3d at 576.
The Appellate Court, Third District similarly found that a new trial was warranted where
defendants were allowed to admit evidence of prior accidents and subsequent injuries. In
Caliban v. Patel, 322 Ill. App. 3d 251, 750 N.E.2d 734, 255 Ill. Dec. 817 (3d Dist. 2001), plaintiff
filed suit alleging he was injured as a result of defendant’s negligent operation of his automobile
in June of 1992. Plaintiff did not seek medical attention until four days after the accident. As a
result of the collision, the plaintiff was treated for facet joint syndrome in the cervical and
lumbar spine and for temporomandibular joint dysfunction. Plaintiff received treatment from a
number of medical providers during an approximate eight-year period between the date of the
accident and the time of the trial. Caliban, 322 Ill. App. 3d at 253. The Court emphasized the
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purpose of the Voykin rule is to exclude irrelevant evidence. Caliban, 322 Ill. App. 3d at 255.
While the Court found evidence relating to a 1993 fall was admissible since plaintiff’s physician
testified that said fall exacerbated the plaintiff’s physical problems arising from the 1992
automobile accident, evidence regarding falls that occurred in 1990 and 1992 were not proper.
Id. at 256. The Court reversed and remanded the case for a new trial, finding that the testimony
from plaintiff’s physician regarding these falls established that the symptoms reported by the
plaintiff in 1992 were distinctly different from his prior symptoms. Such testimony contradicts
defendant’s claim of a causal connection between the prior accident and the 1992 accident,
which was the subject of this suit, as defendant offered no expert testimony regarding the
admission of the 1990 accident or the 1992 fall. Id.
The Fifth Appellate District of Illinois remains the most strenuous in its requirements for
admitting evidence of prior injuries, which is demonstrated in Hawkes v. Casino Queen, Inc., 336
Ill. App. 3d 994, 785 N.E.2d 507, 271 Ill. Dec. 575 (5th Dist. 2003). In Hawkes, plaintiff sued the
defendant’s casino after he tripped and fell in the men’s restroom, allegedly sustaining injuries
to his head, neck, and back. Plaintiff received medical care for his head, neck, and shoulder pain,
as well as for weakness in his arms and inability to grip. His physician referred him to Dr.
Schoedinger, an orthopedic surgeon, who diagnosed the plaintiff as suffering from a ruptured
disc and later performed surgery -- a discectomy and fusion -- on the patient. Dr. Schoedinger
related the ruptured disc and symptoms experienced by the plaintiff to the 1994 fall at the
casino. Hawkes, 336 Ill. App. 3d at 997-998. At the time of trial, the plaintiff filed a motion in
limine to bar the defendant from mentioning plaintiff’s prior neck injuries and treatment as well
as any opinions or cross-examination concerning whether plaintiff had a prior bulging disc in his
cervical area. The court allowed plaintiff’s motion to bar. The Fifth District affirmed the court’s
ruling to keep out the evidence from the physicians indicating prior injuries could have caused
similar subsequent findings such as a disc bulge and pain in the neck. As an offer of proof, the
defendant submitted the evidence deposition of the plaintiff’s former chiropractor and crossexamination of the plaintiff’s orthopedic surgeon. However, the defendant’s counsel did not
actually get the physician to say the current pain was the cause of the prior injury. Id. at 1007.
In Ford v. Grizzle, 398 Ill. App. 3d 639, 646, 924 N.E.2d 531, 338 Ill. Dec. 325 (5th Dist. 2010), the
Court restated the rules from Voykin without modification. The Court then held that evidence of
a prior neck injury was admissible where five different doctors all testified to some degree that
the prior injury was relevant to the current injury claimed from a rear end accident. Id. at 647.
Bianco v. Hulsteg, No. 05-C-0538, 2009 WL 347002, at *7 (N.D. Ill. Feb. 5, 2009) involved a
products liability suit against a ladder manufacturer and distributor after the plaintiff fell off the
ladder resulting in injuries. One of the defendants wanted to admit evidence of the plaintiff’s
pre-existing health conditions of vertigo, diabetes, ear issues, and neuropathies in order to
prove the plaintiff fell off the ladder for reasons other than a design defect. Id. at *7. The
defendant failed, however, to disclose any witnesses who would testify as to the pre-existing
conditions. Id. In ruling on the plaintiff’s motion in limine, the Northern District of Illinois pointed
out that Voykin was substantially the same as the federal law. Id. Therefore, although federal law
applied, the defendant was still required to advise the court who would give testimony as to the
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relevance of the pre-existing conditions which defendant sought to be admitted and provide
authority on whether any of those conditions were such that expert testimony was not necessary
to aid the jury. Id. at *8.
4.
Exceptions to the Voykin Rule
As the Voykin Court indicated, there may be situations in which the court, in its discretion, may
determine expert testimony is not necessary to establish a prior injury or condition may or may
not be the cause of plaintiff’s complained-of problems. Felber v. London, 346 Ill. App. 3d 188,
803 N.E.2d 1103, 281 Ill. Dec. 482 (2d Dist. 2004) is one such case. In Felber, the Court found that
expert testimony was not necessary where the nature of the prior and current injuries were such
that a layperson could readily appraise the relationship without expert assistance. Plaintiff
alleged the defendant, London, negligently caused her to suffer personal injury and pecuniary
loss resulting from a rear-end collision. Id. at 189. The court allowed defendant to inquire at trial
about the plaintiff’s prior injuries she had suffered to her back and neck. Id.
The accident involving the defendant occurred in February of 1999. At trial, the plaintiff testified
she had sought treatment from a chiropractor for shoulder and neck pain from February
through September of 1998. She further indicated she had begun treatment with Dr. Feeley
(another chiropractor) in November of 1998. At that time, she continued to complain of some
neck problems. By the end of 1998, the plaintiff’s neck problem had improved, but she was still
having problems with her neck during the first six weeks of 1999. Plaintiff was seen by Dr. Feeley
on February 18, 1999, at which time her neck was “feeling pretty good.” Id. at 190. The incident
in question occurred on February 20, 1999, just two days later. The plaintiff actually was wearing
a neck brace at the time of the collision. Dr. Feeley had prescribed the brace for use when the
plaintiff was a passenger, but she decided to wear it when she drove her car. Plaintiff was
treated in the emergency room, where she complained of pain in the back of her head, neck,
between her shoulder blades, and in her lower back. She had not experienced the back pain
before the collision. Plaintiff saw Dr. Feeley again on February 22, 1999, who suggested she
continue her treatments. He then prescribed physical therapy. Id. At trial, Dr. Feeley testified that
in his opinion, on February 22, 1999, Felber’s condition was different than it had been before,
and that it was consistent with the history of the collision Felber had given him. Under crossexamination, Feeley testified that the plaintiff’s x-rays from 1998 (a date prior to the accident)
showed degeneration and early signs of osteoarthritis, which he characterized as minimal disc
disease. He further indicated that the degeneration and arthritis would be accelerated and had
been accelerated by the collision. He also indicated the arthritis probably would have
progressed even if Felber had not been involved in the collision; however, the arthritis had been
accelerated by the trauma received in the collision. Id. at 192.
The Appellate Court, Second District affirmed a verdict in favor of the defendant despite
objections to the introduction of evidence regarding prior injuries. The Court held that the
record suggested the evidence in the case was such that jurors could readily appraise the
relationship between the injuries Felber complained about after the collision and the preexisting injuries without additional expert assistance. Thus, the trial court properly used its
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discretion in allowing defendant to introduce evidence of Felber’s pre-existing injuries. In
distinguishing Voykin, the Court found there was specific testimony from both the plaintiff and
Dr. Feeley regarding the extent of plaintiff’s pre-existing injury, symptoms, and the treatments
she received in the months, even days, before the collision. The Court held:
[t]his is precisely the type of testimony that obviates the need for additional
expert testimony. Unlike the evidence in Voykin, the nature of Felber’s prior
condition and its possible relationship to her current claim were clearly
established. The jury was free to make its own determination, in light of both
parties’ description of the collision, whether the collision caused, or contributed
to, Felber’s current condition. We find no abuse of discretion in the trial court’s
admission of testimony regarding Felber’s prior injuries.
Id. at 193.
III.
GATHERING EVIDENCE OF DECEPTION
In attempting to defeat the false claims of plaintiffs at trial, a significant amount of discovery
and investigation may be necessary. One case that demonstrates the effective use of extensive
investigation is Moran v. Erickson, 297 Ill. App. 3d 342, 696 N.E.2d 780, 231 Ill. Dec. 484 (1st Dist.
1998). In Moran, the plaintiff testified that on November 30, 1989, she was involved in a motor
vehicle accident that caused her knees to hit the dashboard. The x-rays taken at the hospital
where she was treated did not disclose any fractures or hard tissue injuries. Plaintiff was not
hospitalized at that time. The next day, the plaintiff claimed she awoke to pain from head to toe.
She went to her family physician, who sent her for additional x-rays and prescribed medication
for whiplash. A couple of months later, the plaintiff’s physician sent her to physical therapy for
her neck and her knees that lasted until approximately January of 1991. At the same time,
plaintiff had been referred to an orthopedic surgeon in April of 1990 for swollen knees. The
plaintiff testified she had been treated by orthopedic surgeons, a physical therapist, a
neurologist, and a psychologist. Two of her several orthopedic surgeons testified that the
plaintiff needed arthroscopic surgery, which was performed in 1992. The plaintiff then testified
she needed braces for long-distance walking, and a neck brace for long automobile trips and
while she sat for extended periods of time. She also testified she needed crutches after her
surgery, and that she suffered from pain as a result of the accident that limited her ability to
interact with her children and to maintain her home. She described incidents of falling when her
knees would lock, and said her pain was not as severe since the arthroscopic surgery. She
continued to have physical therapy on her own subsequent to the surgery. Moran, 297 Ill. App.
3d at 345.
On cross-examination, the plaintiff testified she did not see any medical providers from
December 1, 1989, through February 4, 1990, and during that time, she vacationed in Disney
World and Galena, Illinois. She admitted the Disney World trip began two days after the
accident. She further admitted that she may have ridden horses in Galena and denied telling Dr.
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Cary that she had played five games of tennis on June 10, 1990. Id. at 346. Plaintiff’s treating
physicians testified that they assumed the automobile accident was the cause of her symptoms
because of the close timing between her symptoms and that accident, and nothing else in her
history seemed attributable to the problems. Id. at 347. Plaintiff’s chiropractor testified he
believed the plaintiff suffered from fibromyalgia, a syndrome of diffused musculoskeletal pain,
throughout the body with post-traumatic cervical sprain (whiplash) and disc syndrome in the
lower back. The chiropractor admitted on cross-examination that his diagnoses of the plaintiff
was based on his examination of her and her corresponding indications of pain, her history of
pain, and her disclosures regarding physical activity. He admitted his opinions were based on
what the plaintiff told him she felt in terms of pain and what she told him she could do
physically. He could not say the plaintiff’s pain was caused by the accident. Id. at 347.
There were inconsistencies noted in the plaintiff’s medical records regarding her abilities while
under observation. One therapist noted the patient first complained of some knee soreness
when riding the stationary bike, but then was able to ride without complaint for 10 minutes
while watching television and conversing with the therapist. Neighbors testified regarding their
observations of the plaintiff following this accident. A husband and wife testified they had met
the plaintiff on several occasions. On most of those occasions, the plaintiff was able to walk
around without crutches, was not wearing a brace, and had no trouble getting up and down
stairs. On other occasions, the plaintiff would come outside carrying her crutches. The crutches
would be tucked under her arm, and she was dragging them on one side. The neighbors
testified they observed a difference in the plaintiff’s behavior when she was inside her home and
when she was out in public. She appeared to have no difficulty in her house, but a short time
later, the plaintiff wore her neck brace and used crutches while in a parking lot. The neighbors
also had seen the plaintiff play on the floor with her children and pick her son up over her head.
They also noted they had seen her up on a ladder when a roofer came to her house. Id. at 351352.
At the conclusion of the trial, the jury returned a verdict in favor of the defendant. The plaintiff
appealed. The Court affirmed the jury’s verdict and found that while the medical professionals
could reasonably rely on information made known to them by their patients, medical records, or
other data reasonably of the type relied on by experts in their field, the medical professionals’
determination of the patient’s credibility and acceptance of the patient’s history and subjective
expressions of pain for purposes of making a medical diagnosis and rendering medical
treatment was not binding on the jury. The jury is empowered to make a credibility
determination. Moreover, the jury must make its own assessment of the patient’s veracity, not
merely with respect to the person’s in-court testimony, but also with respect to that person’s
general credibility, to the extent credibility was relevant to the ultimate determination of the
case. Id. at 354.
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A.
Admission of Photographs as Evidence Tending to Show Nature and Extent
of Injury
While the First District in Cancio anticipated the ruling in Voykin regarding introduction of preexisting medical conditions, that same Court did find that photographs of the plaintiff’s vehicle
were relevant to the nature and extent of a plaintiff’s damages. In Cancio, the photographs were
relevant because they showed little or no damage, which was something the jury could consider
in determining what, if any, injuries the plaintiff sustained as a result of the accident. The Court
found that the admission of such photos was proper for that particular reason. Cancio, 297 Ill.
App. 3d at 433.
In contrast to its ruling in 1998, the First District modified its opinion in DiCosola v. Bowman, 342
Ill. App. 3d 530, 794 N.E.2d 875, 276 Ill. Dec. 625 (1st Dist. 2003). In DiCosola, the plaintiff
prevailed in an underlying personal injury action against the defendant resulting from an impact
occurring at a parking lot. 342 Ill. App. 3d at 532. One of the issues raised on appeal concerned
the testimony or photographs regarding the damage to the plaintiff’s vehicle. The trial court
agreed with the plaintiff that any evidence depicting the apparent minimal damage to plaintiff’s
vehicle after the collision was irrelevant to any issues before the court. The court determined
that absent expert testimony, the evidence was inadmissible to show a correlation existed
between the amount of damage to plaintiff’s vehicle and the extent of plaintiff’s injuries. Id. at
543. The Court in DiCosola specifically referenced the Court’s prior ruling in Cancio regarding
the admission of photographs as some evidence regarding the nature and extent of the
plaintiff’s damages. The Court distinguished Cancio by indicating that case did not create a
bright-line relevancy standard. Id. at 534. The DiCosola Court further indicated there was no
Illinois case standing for the proposition that photographs showing minimal damage to a
vehicle are automatically relevant and must be admitted to show the nature and extent of
plaintiff’s injuries. As the trial court was not required to admit the photographic evidence
automatically, the Appellate Court rejected the defendant’s argument that prohibiting such
evidence was an abuse of discretion. Id. at 535. Fortunately, the Court indicated it was not
creating a bright-line rule, but was rejecting one. The decision as to whether or not such
photographs are admissible should be left to the discretion of the Court. Id. at 537. The Court
further held:
We do not hold that expert testimony must always be required for such
photographic evidence to be admissible. We hold that the trial court in this case
did not abuse its discretion in requiring expert testimony to show a correlation
between the extent of the vehicular damage and the extent of plaintiff’s injuries.
(Emphasis provided by the court.)
Id. at 537.
In Ford v. Grizzle, 398 Ill. App. 3d 639, 648, 924 N.E.2d 531, 338 Ill. Dec. 325 (5th Dist. 2010), the
Court explained that “[t]he critical question in admitting those photographs into evidence is
whether the jury can properly relate the vehicular damage depicted in the photos to the injury
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without the aid of an expert.” There, the court admitted the photographic evidence depicting no
damage to the plaintiff’s vehicle where two doctors testified that the plaintiff’s neck injury was
pre-existing, and therefore the plaintiff’s post-accident surgery was likely not caused by the
accident. Id. Consequently, the Court stated that the photos could have properly been found
relevant “to prove that the plaintiff’s injury was more or less probable.” Id.
One scenario in which courts have held expert testimony is not required is when the plaintiff
seemingly exaggerates the degree of the impact or speed at which the impact occurred. See
Jackson v. Seib, 372 Ill. App. 3d 1061, 866 N.E.2d 663, 310 Ill. Dec. 502 (5th Dist. 2007); Ferro v.
Griffiths, 361 Ill. App. 3d 738, 836 N.E.2d 925, 297 Ill. Dec. 194 (3d Dist. 2005). In Jackson, the
plaintiff claimed during an emergency room visit that the defendant rear ended him going
approximately 50 mph. 372 Ill. App. 3d 1061. The court then allowed photos of the minimal
damage to the plaintiff’s vehicle to be admitted regardless of any expert testimony because the
photos showed “it was clear that the plaintiff was not rear-ended at anywhere near the speed he
suggested.” Id. at 1071.
Similarly, in Ferro, the plaintiff was the passenger in a van that was rear ended. 361 Ill. App. 3d
738, 739. He claimed the impact was “very heavy, causing his body to move back and forth and
hit the oxygen tank” sitting between his legs. Id. at 743. The Court upheld the admission of
vehicle photos showing very little damage to either car without requiring expert testimony
where the plaintiff claimed a chest injury from the impact with the oxygen tank. Id.
IV.
EVALUATING CLAIMS
A chronic pain case is typically a more expensive case to defend, given that there are a number
of treating physicians that may have played a role in the plaintiff’s care over time. You have to
make sure you obtain complete medical records of the plaintiff, both pre and post accident. In
determining how to proceed with claims involving chronic pain plaintiffs, consider the possible
stumbling blocks in defending such a case. Relevant questions to ask include: (1) Is liability at
issue? (2) What is the value of the claim? (3) Are plaintiff’s complaints truly chronic? (4) What are
plaintiff’s complaints with respect to past and future medical, including complaints of pain,
treatment, and bills? (5) Is the plaintiff credible?
Plaintiffs will find a doctor who will be inclined to treat subjective complaints of pain.
Accordingly, the typical chronic pain plaintiff has received treatment from numerous physicians
over time, none of which want to convey to the plaintiff that their treatment is either
unnecessary or that plaintiff simply does not need any additional treatment. Instead, one
physician’s care will run its course, and the chronic pain plaintiff will then be referred to another
physician.
When handling the chronic pain case, it is necessary to carefully document plaintiff’s history. If
the plaintiff’s treating physicians will not correlate prior injuries with the current complaints, a
medical expert will likely be necessary to testify at trial to provide the necessary causal
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connection to allow for the admissibility of the prior injuries and/or complaints. Similar
testimony may be needed to admit photographs. Many times the chronic pain case has medical
specials that are disproportionate to the injuries sustained, and it is the goal of the claims
professional and outside counsel to work closely together to develop a strategy designed to
develop favorable facts so that an attempt at a reasonable resolution can be reached as early as
possible.
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Matthew S. Hefflefinger
- Partner
Born in Pennsylvania, Matt began his legal career with
Heyl Royster while he was still in law school by
clerking with the firm during the summer. Following
graduation, he joined the firm in the Peoria office in
1989 and became a partner in 1997. He is the co-chair
of the firm's Truck/Motor Carrier Litigation Practice
Group.

Matt is an aggressive advocate who has tried many
cases to verdict and enjoys the challenges of complex
litigation. He handles the defense of personal injury
cases primarily focusing upon the trucking and
construction industries. Matt is frequently contacted
immediately after a catastrophic loss to visit an
accident scene and help develop the facts and case
strategy with an eye toward a successful result once
litigation is filed. Beyond his expertise in trucking and
construction matters, he also handles cases touching
upon a wide variety of areas including construction
delay claims, covenants not to compete, breach of
contract, aviation accidents, premises liability, auto
accidents and product liability.
National City Bank of Michigan/Illinois f/k/a
N.C. Illinois Trust Company, as Executor of the
Estate, 01 L 138, 01 L 171 - Florida airplane
crash occurred just after take-off due to a
faulty throttle linkage assembly installed just
1.7 flight hours before the accident. The pilot
and his wife, along with another couple, all
perished in the accident. The maintenance
facility settled before suit. The issue was
whether the pilot engaged in appropriate
measures after the power failure occurred.
Complex case with multi-million dollar demand
settled favorably through mediation.
 Martindale-Hubbell AV rated
as Leading Lawyers
 40 Leaders Under 40 - Peoria, 2000
(President 2005-2006)
Matt has taught a Masters level course in the
graduate business program at Bradley University and
is a frequent speaker at continuing legal education
seminars held across the state addressing a variety of
different legal topics.
 Abraham Lincoln American Inn of Court (Past
President)
Matt is a Martindale-Hubbell AV rated lawyer who has
remained extensively involved in the community
serving on a number of boards of community
organizations. He has also been instrumental in
founding two local charitable organizations dedicated
to, among other things, awarding college scholarships
to local high school seniors. Matt has also been
recognized as one of Peoria's "40 Leaders Under 40."
Court Admissions
Illinois
Education
 Juris Doctor, Southern Illinois University School
of Law, 1989
 Master of Business Administration, Southern
Illinois University, 1989
 Bachelor of Science (Magna Cum Laude),
Bradley University, 1984
Significant Cases
 Morton Community Bank v. Nash-Hasty
Investments, Tazewell County, 98 L 133, and
NASD Arbitration No. 98-03671 - Represented
two stockbrokers against a bank in the
successful arbitration of a covenant not to
compete before the National Association of
Securities Dealers.
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WHAT’S ON THE HORIZON? CASES PENDING IN THE ILLINOIS SUPREME COURT Presented and Prepared by:
Craig L. Unrath
[email protected]
H-1
WHAT’S ON THE HORIZON?
CASES PENDING IN THE ILLINOIS SUPREME COURT
Justice Mary Jane Theis Appointed to the Illinois Supreme Court .......................................................... H-3
Illinois Supreme Court Petitions for Leave to Appeal Allowed
March 2011 Term ....................................................................................................................................................... H-3
January 2011 Term .................................................................................................................................................... H-5
November 2010 Term .............................................................................................................................................. H-8
September 2010 Term ........................................................................................................................................... H-12
May 2010 Term ........................................................................................................................................................ H-17
H-2
WHAT’S ON THE HORIZON?
CASES PENDING IN THE ILLINOIS SUPREME COURT
JUSTICE MARY JANE THEIS APPOINTED TO THE ILLINOIS SUPREME COURT
Justice Mary Jane Theis was appointed to fill the vacancy of Justice Fitzgerald
following his retirement. Justice Theis was born in 1949 in Chicago. She received
her bachelor’s degree from Loyola University Chicago in 1971 and her law
degree from the University of San Francisco School of Law in 1974.
From 1974-83, she was an Assistant Public Defender in Cook County. She was
appointed an Associate Judge in the circuit court of Cook County in 1983 and was later elected
to the circuit court in 1988. In 1993, she was appointed to the Appellate Court, First District and
elected in 1994.
Justice Theis served on the Appellate Court, First District, for 17 years, and was widely
considered one of the finest judges on the court. She also served as President of both the
Appellate Lawyers Association and the Illinois Judges Association.
She has received numerous awards, including the Lifetime Achievement Award from the Illinois
Judges Association and the Access to Justice Award from the ISBA. In her last re-election to the
Appellate Court, one evaluation of Justice Theis noted that she is described “by virtually
everyone who appears before her as very well prepared, fair, diligent, with very good legal ability
and excellent demeanor.”
ILLINOIS SUPREME COURT PETITIONS FOR LEAVE TO APPEAL ALLOWED
MARCH 2011 TERM
Crossroads Ford Truck Sales, Inc. v. Sterling Truck Corp.
406 Ill. App. 3d 325, 943 N.E.2d 646, 348 Ill. Dec. 38 (4th Dist. 2010)
S. Ct. Docket No. 111611
Issue: Motor Vehicle Franchise Act
Whether the circuit court had jurisdiction to hear claims under section 4 of the Motor Vehicle
Franchise Act, or whether the claims must first be submitted to arbitration.
Synopsis
Crossroads, a heavy-duty truck dealer, filed suit against a manufacturer after it terminated a
product line claiming a number of violations under the Motor Vehicle Franchise Act. 815 ILCS
710 et seq. Crossroads alleged, among other things, that the manufacturer violated the Franchise
Act because it terminated the product line without good cause in violation of section 4 of the
H-3
Act. The trial court granted the manufacturer’s motion to dismiss finding that the manufacturer
had acted with good cause. The Appellate Court affirmed.
Appellate Court Decision
One month after the trial court granted Sterling’s motion to dismiss, the Appellate Court, Third
District, issued a ruling in another case involving the Motor Vehicle Franchise Act, Clark
Investments Inc. v. Airstream, Inc., 399 Ill. App. 3d 209, 926 N.E.2d 408, 339 Ill. Dec. 176 (3d Dist.
2010). Justice Holdridge filed a dissent in that case, arguing that the circuit court lacked subject
matter jurisdiction over the case. The Appellate Court, Fourth District, agreed with Justice
Holdridge’s dissent and held that all issues as to whether good cause exists to terminate a
franchise are matters best left to the arbitrator or the Review Board. The Illinois Supreme Court
likely accepted the case for review in order to resolve the conflict between the Third and Fourth
Districts of the Appellate Court.
Nowak v. City of Country Club Hills
406 Ill. App. 3d 837, 941 N.E.2d 412, 346 Ill. Dec. 854 (1st Dist. 2010)
Issue: Employment – Benefits
Whether entitlement to a health insurance benefit provided under section 10(a) of the Public
Safety Employee Benefits Act is triggered at the time of injury, or at the time a disability pension
is awarded.
Synopsis
Police officer was injured in the line of duty in August 2005 and never returned to work. For the
12-month period following his injury, he received his full salary minus the usual 20 percent
health insurance premium. When the one-year full salary period expired, he continued to pay his
20 percent contribution to the city on a monthly basis. He paid a total of approximately $8000 in
health care premiums. In 2008, the police pension board awarded him a line-of-duty disability
pension, at which point the city began paying 100 percent of his health insurance premium
costs. The police officer filed suit, seeking reimbursement for the health benefit premiums he
paid from the date of his injury to the date he was awarded his disability pension. The trial court
granted summary judgment in favor of the city. The Appellate Court reversed.
In a case of first impression, the Appellate Court found that benefits under the Public Safety
Employee Benefits Act and the Public Employee Disability Act (PEDA) may be granted
simultaneously without offending the purpose of either statute. The Appellate Court explained
that, under PEDA, an injured police officer is entitled to collect his full salary for a period of one
year, and under section 10(a) of PSEBA, such officer is entitled to the additional benefit of having
his employer pay the entire premium for the health care plan for the officer and his family. The
Appellate Court found nothing in the language of either statute that would preclude an injured
officer from receiving benefits under both statutes at that same time.
H-4
Santiago v. E.W. Bliss Co.
Issue: Sanctions/Relation Back Doctrine
When a plaintiff intentionally files a complaint using a fictitious name and then, after the statute
of limitations expires, files an amended complaint using his correct name, should the court
dismiss the cause with prejudice as a sanction? Or should it dismiss the case because the
limitations period has expired and the amended complaint does not relate back to the initial
filing?
Synopsis
Plaintiff filed a products liability complaint identifying himself as Juan Ortiz and answered
interrogatories from various defendants asking him to disclose personal identification
information such as his name and social security number. Plaintiff verified his answers with the
signature “Juan Ortiz.” And yet, when asked to identify himself at his deposition, he admitted
that his name was actually Rogasciano Santiago. Plaintiff immediately filed a second amended
complaint reflecting his true name and defendants moved to dismiss. Defendants argued that
plaintiff had committed a fraud on the court and the case should be dismissed as a sanction. In
the alternative, they argued that his amended complaint did not relate back and was timebarred. The trial court denied the motions to dismiss and certified the case for interlocutory
appeal.
The Appellate Court held that dismissal of the complaint as a sanction for plaintiff’s use of a
fictitious name was permissible, but not mandatory. The court found, however, that the second
amended complaint filed under plaintiff’s real name – and filed after the limitations period had
expired – did not relate back to the original complaint. Accordingly, the second amended
complaint filed under plaintiff’s real name was time-barred.
JANUARY 2011 TERM
Sandholm v. Kuecker
405 Ill. App. 3d 835, 942 N.E.2d 544, 347 Ill. Dec. 341 (2d Dist. 2010)
Issue: Constitutionality of Citizen Participation Act
Whether a defamation action filed by a former high school basketball coach against various
individuals is properly barred under The Citizen Participation Act. 735 ILCS 110/1 et seq.
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Synopsis
The Citizen Participation Act is Illinois’ anti-SLAPP statute. 735 ILCS 110/1 et seq. (“SLAPP” refers
to Strategic Lawsuit Against Public Participation). In the typical SLAPP case, citizens petition their
local government to stop a developer in some way. The developer then sues the citizens for
intentional interference with prospective business. Eventually the developer’s lawsuit is thrown
out, but in the process, the citizens are financially strained. In this case, a former high school
basketball coach brought an action for defamation based on defendants’ criticism of his
conduct. The trial court granted defendants' motion to dismiss finding that the Citizen
Participation Act provided them with immunity. Plaintiff appealed, claiming that the Act was
unconstitutional. The defendants cross-appealed, claiming the trial court improperly limited the
award of attorney fees.
The Appellate Court affirmed the dismissal of the case, rejecting plaintiff’s claim that the Act
provided blanket immunity to defame others. The Appellate Court explained that the Act
provides a qualified privilege and only protected those statements made in furtherance of the
moving parties’ right of petition, speech, association, or to otherwise participate in government.
Wisnasky-Bettorf v. Pierce
Issue: Election Law
Whether an established political party must file a resolution pursuant to section 7-61 of the
Illinois Election Code (10 ILCS 5/7-61) in order to fill a vacancy in a nomination when no
candidate appeared on the primary ballot for that party and no write-in candidate was
nominated.
Synopsis
Following a primary election, the petitioner, Wisnasky-Bettorf, was nominated by the Republican
Party for the office of board of review member. No Republican Party candidate’s name was
printed on the ballot and no candidate was nominated as a write-in for that office. An objection
was made to the timeliness of the petitioner’s candidacy. The respondent requested that
Wisnasky-Bettorf’s name not appear on the ballot because the resolution was not filed within
three days of the primary election as required under section 7-61 of the Election Code. The St.
Clair County Electoral Board sustained the objection and removed the petitioner’s name from
the ballot for the general election. The circuit court upheld that ruling, and the Appellate Court
affirmed.
Appellate Court’s Decision
On appeal, the respondent argued that the 2010 amendment to section 7-61 of the Code
demonstrated that the legislature intended to remove the three-day requirement. The Appellate
H-6
Court disagreed, finding that, had the legislature intended to remove the three-day requirement
it would have stated so in the amendment, but did not.
Township of Jubilee v. State of Illinois
Issue: Sovereign Immunity
Where the State argues that the trial court lacks jurisdiction to hear a case, but upon losing on
its motion to dismiss, decides to file an offensive counterclaim instead of filing an interlocutory
appeal, is the trial court vested with discretion over the case?
Synopsis
Township brought a quiet title action alleging ownership of parcel of property designated as a
public square in plat recorded by the prior owners of the property. The State filed a motion to
dismiss arguing that the State Lawsuit Immunity Act required that the lawsuit be brought in the
court of claims, not the trial court. The trial court denied the motion, and the State responded by
filing a counterclaim against the Township claiming that it was the owner of the land. The trial
court granted summary judgment in favor of the Township and the State appealed.
The Appellate Court held that, even if it concluded that the trial court lacked jurisdiction over
the claim against the State, the State’s counterclaim constituted an offensive action which
vested the trial court with jurisdiction to determine the parties’ property rights as to the public
square.
Citizens Opposing Pollution v. ExxonMobil Coal U.S.A.
S. Ct. Docket Nos. 111286 and 111304
Issue: Statutory Interpretation – Surface Coal Mining Land Conservation and Reclamation Act
Whether the trial court erred in dismissing enforcement action under the Act.
Synopsis
Plaintiff, a not-for-profit citizens group, filed a six-count complaint against ExxonMobil Coal
U.S.A. and the Illinois Environmental Protection Agency, seeking injunctive relief in the form of
an order to cause Exxon to remove and properly dispose of slurried coal production waste
allegedly leaching into the community drinking water supply. Plaintiff claimed that Exxon
violated various provisions of the Surface Coal Mining Land Conservation and Reclamation Act
and the Water Use Act of 1983. The trial court granted defendants’ motions to dismiss, ruling
that plaintiff could not challenge the issuance of a permit under section 8.05 of the Act.
H-7
The Appellate Court affirmed in part and reversed in part, finding that the plaintiff was
challenging Exxon’s compliance with the permits, not the issuance of those permits. The
Appellate Court noted that Exxon “wants us to ignore continued environmental violations simply
because permits have been issued.” The Appellate Court concluded that the trial court erred in
dismissing the plaintiff’s enforcement actions. The court also disagreed that this is a matter that
must be handled through the administrative process. The court also found that the trial court
erred in dismissing the claim under the Water Use Act, finding that the Act specifically allows
such enforcement actions.
NOVEMBER 2010 TERM
Forest Preserve Dist. of Du Page County v. First Nat. Bank of Franklin Park
S. Ct. Docket Nos. 110759 and 110760
Issue: Eminent Domain
(1) Whether the owner of condemned property is entitled to the fair market value of the
property on the date the condemnation action was filed or on the date of payment, which in this
case occurred eight years later, and (2) whether a valuation based on the date the
condemnation action was filed violates the just compensation clause of the Constitution.
Synopsis
County forest preserve made a purchase offer regarding property which included a golf course
and a parcel of undeveloped land. Landowners rejected the offer and the forest preserve filed a
condemnation action. Eight years later, the case proceeded to jury trial and, at the close of
evidence, the landowners made an offer of proof to the effect that, if they had been permitted
to present evidence regarding the value of the property if the golf course was developed with
residential units, the fair market value would have been up to $20 million. The jury determined
the value at $10.7 million, and the landowners appealed.
The Appellate Court vacated the jury’s verdict and held that the trial court erred in refusing to
allow a post-trial Kirby hearing; that the delay of eight years between filing of the action and
payment of judgment constituted substantial delay entitling landowners to have just
compensation issues addressed; that the landowners did not engage in deliberate obstruction of
the condemnation action; and that the district could abandon the taking if it wished. The Illinois
Attorney General filed a petition as an intervener-petitioner as a matter of right based on the
Appellate Court’s declaration that section 7-121 of the Eminent Domain Act is unconstitutional.
H-8
Sierra Club v. Illinois Pollution Control Bd.
Issue: Environmental Law
Whether a citizens group has standing to challenge an order of the Illinois Pollution Control
Board involving enforcement of the Illinois Environmental Protection Act.
Synopsis
Peoria Disposal Company, a waste stabilization facility, filed a petition with the Illinois Pollution
Control Board asking that residue resulting from the treatment of electric arc furnace dust
(EAFD) be delisted as a hazardous substance for disposal purposes. The Illinois Pollution Control
Board granted the petition, and a citizens group filed a petition for review. On appeal, the IEPA
argued that the citizens group lacked standing to challenge the Board’s order because they did
not fall within any of the groups identified in section 41(a) of the Illinois Environmental
Protection Act. 415 ILCS 5/27(a). The citizens group argued that the Pollution Board failed to
fully consider the factors set forth in section 27(a) of the Act when it granted the petition.
The Appellate Court split three ways with two of the three panel members agreeing to affirm the
Pollution Board’s decision, but for different reasons. Justice Lytton found that the citizens group
had standing to file its petition, and also found that the Board’s ruling was not against the
manifest weight of the evidence. Justice Carter upheld the Board’s decision because the citizens
groups did not have standing. Justice Wright agreed with Justice Lytton’s ruling that the citizens
groups had standing, but dissented, believing that the Board’s ruling was against the manifest
weight of the evidence.
Petersen v. Petersen
Issue: Family Law
Whether an ex-husband should be required to pay retroactive college expenses.
Synopsis
The original divorce decree reserved the issue of the party’s obligation to contribute to
education expenses for the children. Eight years later, the mother filed a petition asking for
allocation of college expenses. The trial court ordered the ex-husband to pay 75 percent of all
education expenses, past, present and future. He appealed, claiming the trial court erred in
ordering him to pay expenses that pre-dated the filing of the petition for allocation of college
expenses.
H-9
The Appellate Court held that the petition for allocation of college expenses, filed eight years
after dissolution, was in the nature of a modification of child support under section 510 of the
Marriage and Dissolution of Marriage Act 750 ILCS 5/510(a). Accordingly, the trial court erred
when it ordered payment of college expenses that predated the notice of filing under the
section 510(a) of the Act. The Appellate Court affirmed the trial court’s ruling allocating
75 percent of the expenses to the father.
Simpkins v. CSX Corp.
Issue: Asbestos
Whether an employer has a duty to prevent harm from take-home asbestos exposure if the
injury is foreseeable.
Synopsis
Railroad worker's wife claimed she was exposed to asbestos fibers brought home on the work
clothes of her husband while working for various employers, including the defendant’s
predecessor, the B&O Railroad. The trial court granted the railroad’s motion to dismiss on the
grounds that an employer has no duty to protect the family of its employee from the dangers of
asbestos.
In a case of first impression in Illinois, the Appellate Court reversed, finding that the defendant
railroad did have a duty to protect the families of its employees. Relying on two out-of-state
decisions, the Appellate Court concluded that an employer has a duty to prevent harm from
take-home asbestos exposure even in the absence of any special relationship if the injury is
foreseeable. The decision lies in direct conflict with a decision of the Appellate Court, Second
District, in Nelson v. Aurora Equipment Co., 391 Ill. App. 3d 1036, 909 N.E.2d 931, 330 Ill. Dec. 909
(2d Dist. 2009).
Bell v. Hutsell
Issue: Negligence – Social Host Liability
Whether parents, who had undertaken a duty to monitor their son’s party to prevent underage
drinking on their premises, are liable for the death of an 18-year-old high school student who
became intoxicated at the party and crashed his car after leaving the party.
H-10
Synopsis
Defendant’s son, an 18-year-old high school student, held a party. His parents said that no
alcohol would be allowed and that they would be present to confirm that no alcohol was
consumed. Nevertheless, partygoers consumed alcohol throughout the evening while the
parents were present. Plaintiff’s son became intoxicated at the party and died in a car wreck. The
trial court dismissed the common law claims against the parents for voluntary undertaking,
holding that the issue of social host liability for consumption of alcohol had been preempted.
The Appellate Court reversed, finding that the claims based on voluntary undertaking should not
have been dismissed. The defendants argued that the complaint failed because there is no social
host liability in Illinois and the voluntary undertaking theory was merely an attempt to
circumvent the rule against social host liability. The Appellate Court rejected that argument,
finding that the claim for voluntary undertaking could be separated from defendant’s actions as
a social host. The fact that defendants may have negligently failed to prevent the consumption
of alcohol on the premises did not convert them into social hosts.
Snyder v. Heidelberger
Issue: Limitations – Attorney Malpractice
Whether the six-year statute of limitations period, or the two-year limitations period applied
where the plaintiff’s injury occurred after her husband’s death.
Synopsis
Plaintiff sued her attorney for malpractice in the drafting of a deed to real property that her late
husband allegedly intended to convey to her as his joint tenant. In drafting the quitclaim deed,
the attorney failed to realize that the husband merely held a beneficial interest in a land trust.
Accordingly, the quitclaim deed he prepared changing the legal title to a joint tenancy was
meaningless. The trial court ruled that the claim was barred under the six-year statute of repose
and dismissed the case.
Claims for legal malpractice must be filed no later than six years from the date on which the
action or omission occurred. However, if the injury caused by the act or omission does not occur
until the death of the person for whom professional services were rendered, the action may be
commenced within two years after the date of death. The defendant attorney argued that the
injury occurred when he failed to change the title into joint tenancy. Plaintiff argued that the
injury did not occur until her husband died, and the property was inherited by her late
husband’s son. The Appellate Court found that the complaint alleged two injuries, one when the
attorney failed to presently transfer the initial interest in the property. The second injury
occurred when the widow was deprived of the entire interest in the property following her
H-11
husbands’ death. The Appellate Court reversed, finding that the two-year limitation period
applied.
General Motors Corp. v. Pappas
Oral Argument Date: Jan. 19, 2011
Issue: Taxation – Property Tax
These consolidated cases address the issue of the correct interest to be paid on property tax
refunds pursuant to section 23-20 of the Property Tax Code after the issuance of a judgment
and a notice of appeal has been filed. 35 ILCS 200/23-20.
Synopsis:
The Property Tax Code was amended, effective January 1, 2006, to change the interest rate on
tax refunds from a flat 5 percent rate to a rate based on the consumer price index (CPI). In each
of the cases, the trial court entered judgment orders granting plaintiffs 5 percent interest from
the time the taxes were paid until January 1, 2006, and the lower rate based on the CPI for the
time after January 1, 2006. The Treasurer filed these appeals arguing that the terms of the Code
require payment of refunds made after January 1, 2006, at the lower interest rate.
The Appellate Court affirmed the trial court, holding that the 2006 amendment to the Property
Tax Code required the Treasurer to pay 5 percent interest on the refunds from the date of the
final payment through December 31, 2005 and to calculate interest according to the Consumer
Price Index from that point forward through the date of the refund. The Appellate Court rejected
the Treasurer’s argument that the trial court lacked jurisdiction to award interest after a notice of
appeal was filed. That ruling lies in direct conflict with the Appellate Court’s decision in Sears
Holding Corp. v. Pappas, 391 Ill. App. 3d 147, 908 N.E.2d 556, ___ Ill. Dec. ___ (1st Dist. 2009).
SEPTEMBER 2010 TERM
Palm v. 2800 Lake Shore Drive Condominium Ass'n
Issue: Chicago Condominium Property Act
Whether a condominium association must divulge financial records pursuant to city
condominium ordinance.
H-12
Synopsis
Condominium unit owner brought suit against condominium association seeking production of
financial records pursuant to the City of Chicago Condominium Ordinance. (Municipal Code of
Chicago, Ill. § 13-72-080). The Association claimed it need not comply with the Ordinance
because it conflicted with existing Illinois law and was, therefore, invalid. The City of Chicago
intervened, alleging that the Ordinance was validly enacted. The trial court granted Palm’s and
the city’s motion for summary judgment, concluding that the Ordinance was valid and granting
Palm’s request for documents. The Appellate Court affirmed.
The Appellate Court upheld the trial court’s ruling, finding that neither the Illinois Condominium
Property Act nor the General Not for Profit Corporation Act specifically excludes home rule units
from governing the manner in which a unit owner can gain access to a condominium
association’s financial books and records. Accordingly, the city’s Ordinance’s provisions
regarding that subject are valid.
A.B.A.T.E. of Illinois, Inc. v. Giannoulias
Oral Argument Date: March 22, 2011
Issue: Constitutional Law
Whether legislation authorizing the transfer of funds from the Cycle Rider Safety Training Fund
(CRST) to Illinois’ General Revenue Fund violated the Constitution.
Synopsis
In 1982, the legislature enacted the Cycle Rider Safety Training Fund (CRST), which required the
Secretary of State to deposit a portion of every motorcycle registration fee into the CRST. In
1992, the legislature amended the Act to allow funds in the CRST to be transferred to Illinois’
General Revenue Fund. A not-for-profit motorcycle group filed class-action suit against the
Treasurer and Governor for declaratory judgment, mandamus, injunctive relief seeking to bar the
transfer of money from the Cycle Rider Safety Training (CRST) Fund to the state General
Revenue Fund. The trial court denied the motion for preliminary injunction and granted
summary judgment in favor of defendants.
The Appellate Court affirmed, finding that the transfer of funds did not violate the takings clause
of the Illinois and United States Constitutions. The Court found that the funds were public fees
charged for the privilege of operating a motorcycle, not private funds. Accordingly, plaintiffs
were incapable of showing that any private money had been taken, an essential element of a
claim for violation of the takings clause.
H-13
Sheffler v. Commonwealth Edison Co.
Issue: Public Utilities Act
Whether claims for injunctive relief and damages against a utility are within the exclusive
jurisdiction of the Illinois Commerce Commission under the Illinois Public Utilities Act. 220 ILCS
5/1-101 et seq.
Synopsis
Consumers of electrical power brought class action against power company, seeking legal and
equitable relief following power outages caused by severe storm systems. Plaintiffs claimed
ComEd negligently failed to provide adequate warning of power outages and failed to timely
restore power. The trial court dismissed the action, finding that the law does not provide relief
for claims involving the way ComEd provides services.
The Appellate Court affirmed, holding that the claim for injunctive relief was within the
jurisdiction of the Illinois Commerce Commission. The Court also found that the claim for money
damages pertained to rates and was, therefore, also under the purview of the Commerce
Commission. This portion of its ruling conflicted with another Appellate Court decision in Village
of Deerfield v. Commonwealth Edison Co., 399 Ill. App. 3d 84, 929 N.E.2d 1 (2d Dist. 2009), which
remanded a similar case with instructions to stay proceedings pending referral to the Commerce
Commission under the doctrine of primary jurisdiction.
Genius v. County of Cook
Issue: Jurisdiction
Whether the Cook County Employee Appeals Board had jurisdiction to hear cases originally filed
in the now abolished Cook County Civil Service Commission.
Synopsis
The Cook County Employee Appeals Board terminated the employment of a forest preserve
police officer and denied backpay during his period of suspension. The police officer appealed
to the circuit court, which upheld the board’s ruling. The police officer then appealed the circuit
court’s ruling. On appeal, the officer argued that the Board erred in denying his motion to
dismiss on the doctrine of laches; that the Board’s decision was against the manifest weight of
the evidence; and that the Board erred in denying him backpay.
H-14
In a decision authored by Justice Theis, the Appellate Court reversed, finding sua sponte that the
Board lacked jurisdiction to render its decision. The case began when the forest preserve filed
written charges with the Civil Service Commission seeking to discharge plaintiff as an employee.
At the time the charges were filed, however, the Civil Service Commission had been abolished by
ordinance. As such, the Commission had no authority to exercise any jurisdiction over the
charges filed by the Forest Preserve District. The Appellate Court reversed the circuit court
judgment and vacated the decision of the Employee Appeals Board.
Board of Educ. of Auburn Community Unit School Dist. No. 10 v. Illinois Dept. of Revenue
S. Ct. Docket Nos. 110395 and 110422 (cons.)
Issue: Taxation
Whether a school district is subject to the Property Tax Extension Limitation Law (PTELL) where
the district encompasses portions of two counties, one of which has held a referendum under
PTELL, and another that has not.
Synopsis
The Auburn School District was originally located entirely within Sangamon County. In 2007, the
Sangamon Regional School Board reconstituted the district, resulting in a small amount of
territory in Montgomery County falling within the Auburn District. Unlike Sangamon County,
Montgomery had never had a referendum on the Property Tax Extension Limitation Law (PTELL).
35 ILCS 200/18-185 et seq. (PTELL limits the ability of units of local government to raise property
taxes). In 2008, the Sangamon County clerk's office sent correspondence to the Auburn District
stating that the reconstituted Auburn District was exempt from PTELL. The Illinois Department of
Revenue disagreed, so Auburn filed a complaint for declaratory judgment against the Illinois
Department of Revenue seeking a ruling that PTELL no longer applied to it. The trial court
granted Auburn’s motion for summary judgment and the Department of Revenue appealed.
Appellate Court Ruling
The Appellate Court reversed holding that Auburn was subject to the Property Tax Extension
Limitation Law (PTELL) with respect to the county that had voted to implement PTELL, but was
not subject to PTELL with respect to the portion of the district located in Montgomery County
that had never had a referendum on PTELL.
Italia Foods, Inc. v. Sun Tours, Inc.
H-15
Issues: Telephone Consumer Protection Act
Whether the Telephone Consumer Protection Act requires that the Illinois General Assembly
enact enabling legislation before private TCPA claims can be brought and enforced in Illinois
state courts? And, whether TCPA claims are considered statutory penalties under Illinois law?
Synopsis
A recipient of unsolicited fax advertisements brought a class action suit against the advertiser
pursuant to the Telephone Consumer Protection Act (TCPA). The recipient's president and sole
shareholder was subsequently substituted as the plaintiff, based on recipient's purported
assignment of its claims to him. After a different recipient of unsolicited advertisements from the
same advertiser was substituted as class representative and filed an amended complaint, the
trial court denied the advertiser's motion to dismiss, and certified the following questions for
interlocutory appeal:
(1) Does the language and purpose of the federal Telephone Consumer
Protection Act [ (TCPA) (47 U.S.C. § 227 (2000)) ] require that the Illinois General
Assembly enact enabling legislation before private TCPA claims can be brought
and enforced in Illinois state courts?
(2) Are the TCPA claims alleged in this case ‘statutory penalties' under Illinois law?
And if so:
(a) Are those claims assignable under Illinois law?
(b) Does Illinois' two[-]year statutory penalty limitations period apply to such
claims, as opposed to [the federal four-year limitations period for civil
actions]?
Italia Foods, 399 Ill. App. 3d at 1040.
The Appellate Court held that (1) the TCPA provision granting a private right of action “if
otherwise provided by the laws or rules of court of a State” was ambiguous; (2) the provision
allowed a private cause of action in state court unless barred by neutral general jurisdictional
and procedural laws and rules; (3) the TCPA was a remedial statute, rather than a penal statute,
for purposes of assignability of claims; and (4) the claims were not personal injury claims and,
thus, could not be assigned.
Clark v. Children's Memorial Hosp.
Issue: Tort – Wrongful Birth
H-16
Whether a plaintiff in a wrongful birth claim may recover the extraordinary costs of caring for
the child after it attains majority?
Synopsis
Plaintiffs' first son, Brandon, was born 1997. At about 15 months of age, Brandon began to
demonstrate certain developmental problems. Plaintiff sought genetic testing and counseling to
determine whether Brandon suffered from a genetic disorder known as Angelman Syndrome.
Siblings of a child with Angelman Syndrome have a 50 percent risk of being born with the
condition. In 2001, plaintiff was informed that Angelman Syndrome in Brandon had been ruled
out, information which turned out to be incorrect. A study performed the previous year by
Baylor College of Medicine confirmed that Brandon did, in fact, suffer from Angelman
Syndrome. Based on the assurance that Brandon did not have Angelman Syndrome, plaintiff
conceived another child, who it was later found suffered from Angelman Syndrome. Plaintiff
filed an action for wrongful birth and negligent infliction of emotional distress. The trial court
determined that the parents could only recover damages for the extraordinary costs of caring
for the child during his minority, but not for the costs of his care during his majority. The trial
court dismissed the claims for negligent infliction of emotional distress.
The Appellate Court reversed, finding that wrongful birth plaintiffs may recover damages for the
cost of extraordinary care beyond the child’s minority and that plaintiffs may recover for
emotional distress. On appeal to the Illinois Supreme Court, defendant contends that the
Appellate Court’s ruling conflicts with decisions holding that parents cannot recover
extraordinary costs beyond the age of minority because they have no legal obligation to
support a disabled adult child. See, Pfeil v. Weerde, 152 Ill. App. 3d 759, 504 N.E.2d 988, 105 Ill.
Dec. 703 (2d Dist. 1987). Defendant also argues that the Appellate Court erred in refusing to
address its argument involving the statute of limitations.
MAY 2010 TERM
Gaffney v. Board of Trustees of Orland Fire Protection Dist.
Lemmenes v. Orland Fire Protection Dist.
S. Ct. Docket Nos. 110012 and 110198 (cons.)
Issue: Employment – Benefits
Whether firefighters are entitled to lifetime health benefits coverage for themselves and their
families when they are injured in a live-fire training exercise.
H-17
Appellate Court Decisions
Under section 10 of the Public Safety Employee Benefits Act a full-time law enforcement,
correctional, or probation officer or firefighter, who suffers a catastrophic injury or is killed in the
line of duty is entitled, along with his dependents, to lifetime health coverage benefits. But this
lifetime benefit is only awarded if the injury or death occurred as the result of the officer or
firefighter's response to what is reasonably believed to be an emergency. 820 ILCS 320/10 (West
2006). In these consolidated cases, the firefighters were injured during live-fire training
accidents. In Lemmenes, the Appellate Court held in favor of the firefighter, explaining that the
training exercise required the plaintiff to be engaged as if he was responding to an emergency
situation. In Gaffney, the Appellate Court arrived at the opposite conclusion, holding that the
firefighter could not have reasonably believed he was responding to an emergency because he
knew it was a training exercise.
Studt v. Sherman Health Systems
Issue: Professional Negligence – Juror Instructions
Whether Illinois Pattern Jury Instruction No. 105.01 accurately states the law in regard to the
standard of care in cases alleging claims for professional negligence.
Synopsis
Patient brought claims against hospital for institutional negligence and vicarious liability for the
hospital's doctors in failing to diagnose his appendicitis. The jury found in plaintiff’s favor and
the hospital appealed, arguing that the trial court erred in tendering a jury instruction regarding
the standard of care for professional negligence.
The Hospital argued that Illinois Pattern Jury Instruction No. 105.01, amended in 2006, is unclear.
The instruction provides that “‘Professional negligence’ by a doctor is the failure to do
something that a reasonably careful doctor would do, or the doing of something that a
reasonably careful doctor would not do.” The instruction further provides that in making its
decision, jurors are to rely on the testimony of qualified witnesses and “must not attempt to
determine this question from any personal knowledge.” IPI (Civil) No. 105.01 (2006). An earlier
Appellate Court decision held that the instruction was confusing because it initially tells jurors
not to determine the standard of care from their personal knowledge, but then seems to
contradict itself by adding that:
The law does not say how a reasonably careful [professional] would act under
these circumstances. That is for you to decide. IPI (Civil) No. 105.01 (2006).
H-18
The Appellate Court found that the instruction “leaves no question” that jurors should determine
the standard of care based on the evidence, and not on their personal knowledge. The Illinois
Supreme Court accepted the case in order to resolve the conflict in the Appellate Court.
Jablonski v. Ford Motor Co.
Issue: Product Liability – Duty to Warn
Whether an automobile manufacturer has a duty to warn of the potential that contents of the
trunk might puncture the fuel tank.
Synopsis
Plaintiffs alleged a claim for strict product liability and negligent design involving their 1993
Lincoln Town Car following a rear-end collision that caused a wrench in the trunk to pierce the
steel wall of the trunk and rupture the fuel tank. Plaintiffs voluntarily dismissed their strict
liability claims at the close of evidence and the case was submitted to the jury on the claims for
negligent design and willful and wanton conduct. The jury returned a verdict against Ford in
excess of $43 million, including $15 million in punitive damages.
The Appellate Court affirmed, rejecting Ford’s numerous claims of trial error, and issues of law
involving a manufacturer’s duty to give post-sale warnings whenever changes are made to
improve the safety of future products. Ford argues that there is no duty to warn of every
potential hazard but only those hazards where it is objectively reasonable to expect the user of
the product to be injured in the manner in which the injury actually occurred. Ford also contends
that a manufacturer cannot be held liable for negligent design when the evidence shows that it
is impossible to design out or guard against the hazard.
H-19
Craig L. Unrath
- Partner
Public Speaking
 “Petitions for Rehearing and Petitions for Leave
to Appeal”
Appellate Practice Seminar sponsored by the
Appellate Lawyers Association (2010)
 “Examination of Post-Judgment Issues”
Claims & Defense Tactics Symposium (2010)
Craig is a partner in Heyl Royster's Appellate Practice
Group. He began his legal career with Heyl Royster in
1994 after serving for two years as law clerk to Justice
Carl A. Lund of the Illinois Appellate Court, Fourth
District.
Craig concentrates his practice in appellate advocacy,
handling appeals in a wide variety of areas ranging
from medical malpractice, insurance coverage, civil
rights, contract, and tort law in both state and federal
courts of review. Craig has extensive experience in
both the Illinois Appellate and Supreme Court. He has
argued 11 cases before the Illinois Supreme Court, 8
of which were the result of successful Petitions for
Leave to Appeal. Craig has prevailed in 8 of the 11
cases he has argued in the Illinois Supreme Court.
Craig is also responsible for almost all of the firm's
cases before the Seventh Circuit Court of Appeals. He
has argued 24 cases before the Seventh Circuit and
had dozens of appeals decided without oral
argument.
as Leading Lawyers
 Chicago Daily Law Bulletin article on successful
appeal in Cripe v. Leiter before the Illinois
Supreme Court
 Illinois Appellate Lawyers Association (Past
President 2007-2008)
 Defense Research Institute (DRI)
 Seventh Circuit Bar Association
Craig also regularly represents professionals on
licensure issues before the Illinois Department of
Financial and Professional Regulation.
Craig served as President of the Appellate Lawyers
Association from 2006 to 2007.
Significant Cases
 Cookson v. Price, 2009 WL 2525123 - A medical
malpractice plaintiff may be granted leave to
amend a complaint to correct defects resulting
from a failure to comply with statute requiring
a section 2-622 affidavit of merit where the
complaint does not appear to be frivolous,
even where the new report is substantially
different than the original report.
Court Admissions
 United States District Court, Central, Southern
and Northern Districts of Illinois
 United States Court of Appeals, Seventh and
Eighth Circuits
 United States Court of Appeals, Federal Circuit
Publications
 Return of the Verdict and Entry
of Judgment, Illinois Civil Practice: Trying the
Case, Ch. 13, (IICLE 2009).
 "Privileges" Illinois Civil Trial Practice, Ch. 7
(IICLE 2009)
Education
 Juris Doctor, University of Illinois, 1991
 Bachelor of Arts-Humanities, Shimer College,
1978
H-20
MEDICARE SET‐ASIDE TRUSTS
Presented and Prepared by:
Bradford J. Peterson
[email protected]
Urbana, Illinois • 217.344.0060
I-1
MEDICARE SET-ASIDE TRUSTS
I.
MEDICARE’S REFUSAL TO COMPROMISE CONDITIONAL
PAYMENTS RUNS CONTRARY TO THE PUBLIC POLICY IN
FAVOR OF SETTLEMENTS .......................................................................................................................... I-3
II.
U.S. DISTRICT COURT FAILS TO APPLY COMPARATIVE
FAULT PRINCIPLES TO CMS’ CONDITIONAL PAYMENTS CLAIM ............................................... I-4
III.
NO ALLOCATION FOR FUTURE MEDICAL EXPENSES
NECESSARY UNDER MSPA WHERE PLAINTIFF COVERED
BY GROUP HEALTH INSURANCE ............................................................................................................. I-5
IV.
COURT ESTABLISHES STATUTE OF LIMITATIONS UNDER
MEDICARE SECONDARY PAYER ACT OF THREE YEARS
FOR ACTIONS ARISING OUT OF TORT AND SIX YEARS
FOR ACTIONS ARISING OUT OF CONTRACT ..................................................................................... I-6
V.
FEDERAL DISTRICT COURT APPROVES MEDICARE
SET-ASIDE AND LIABILITY SETTLEMENT .............................................................................................. I-7
VI.
CMS GIVEN A PRIORITY RIGHT OF RECOVERY IN UNDER
INSURED MOTORIST CLAIM ..................................................................................................................... I-8
VII.
MSPA/SCHIP LEGISLATIVE UPDATE – H.R. 4796 ............................................................................... I-8
A.
B.
C.
D.
E.
F.
G.
H.
Voluntary Reimbursement Payment ....................................................................................... I-8
Deadline for Final Demand Letter ............................................................................................ I-9
Right to Appeal ............................................................................................................................... I-9
MSP Thresholds .............................................................................................................................. I-9
Section 111 Privacy Provision .................................................................................................... I-9
Section 111 Statute of Limitations........................................................................................... I-9
Section 111 Penalties .................................................................................................................... I-9
Safe Harbor.....................................................................................................................................I-10
I-2
MEDICARE SET-ASIDE TRUSTS
I.
MEDICARE’S REFUSAL TO COMPROMISE CONDITIONAL PAYMENTS RUNS
CONTRARY TO THE PUBLIC POLICY IN FAVOR OF SETTLEMENTS
Bradley v. Sebelius, 621 F.3d 1330 (11th Cir. 2010) – A potentially important decision concerning
Medicare conditional payments (liens) was handed down on September 29, 2010 by the United
States Court of Appeals for the Eleventh Circuit (California). Medicare (CMS) occasionally takes
the position that it will not compromise its conditional payments – even if the end result would
be Medicare taking all of the settlement (minus attorney’s fees). In Bradley v. Sebelius, 621 F.3d
1330 (11th Cir. 2010), CMS took just such a position. The court of appeals, however, took
exception and affirmed a substantial reduction in the conditional payments lien.
In Bradley, the probate court was asked to apportion the settlement amount between Medicare
and non-Medicare beneficiaries. The settlement amount was substantially less than the potential
full value of the claim. The probate court effectively reduced the Medicare lien from $38,875.08
to $787.50. Medicare refused to accept the probate court’s ruling. After the estate exhausted
administrative remedies, the decision was appealed to the federal district court. The district
court reversed, relying, in part, upon arguments by Medicare that pursuant to the Medicare Field
Manual, its conditional payment lien was not subject to compromise based on allocation of
fault.
On appeal, the Eleventh Circuit reversed the district court, noting “[h]istorically, there is a strong
public interest in the expeditious resolution of lawsuits through settlement.” Bradley, 621 F.3d at
1339. The court stated:
The Secretary’s position would have a chilling effect on settlement. The
Secretary’s position compels plaintiffs to force their tort claims to trial, burdening
the court system. It is a financial disincentive to accept otherwise reasonable
settlement offers. It would allow tortfeasors to escape responsibility.
Id.
The court further found that Medicare’s reliance on its field manual was unpersuasive, pointing
out that Medicare policies and manuals are not “law” and would not be given deference under
the Chevron Doctrine.
The Bradley case is particularly noteworthy because the Eleventh Circuit stated that Medicare
cannot take an unreasonable position with regard to their liens that would thwart the public
policy in favor of settlements. This case will likely be widely cited in future efforts seeking
compromise of Medicare conditional payments.
I-3
The public policy analysis used by the court in Bradley could also be extended to civil cases
where the parties choose to use a Medicare Set-Aside for future medical care. If a defendant
wants to use a Medicare Set-Aside to protect itself from further claims by Medicare under the
Medicare Secondary Payer Act, this case could provide a basis upon which to formulate a
compromise value of the MSA. If, for example, the plaintiff reasonably appears to be 30 percent
at-fault and the case is settled for 70 cents on the dollar with an MSA for future medical
expense, the MSA could reasonably be reduced by 30 percent under the analysis employed in
Bradley. Under that scenario, a good faith hearing should be held requesting the court to enter
an order apportioning/compromising the MSA to a reasonable amount given the facts and
circumstances of the case.
While we are in uncharted territory with regard to use of Medicare Set-Aside accounts in civil
cases, the Bradley decision suggests that the judiciary will not hesitate to impose practical
solutions to facilitate equitable settlements. In other words, this holding is a very positive
development since it may result in more prompt resolution of compromised claims.
II.
U.S. DISTRICT COURT FAILS TO APPLY COMPARATIVE FAULT PRINCIPLES TO CMS’
CONDITIONAL PAYMENTS CLAIM
Hadden v. United States, No. 1:08-CV-10, 2009 WL 2423114 (W.D. Ky. Aug. 6, 2009) – In this case
the plaintiff, Vernon Hadden, was struck by a utility vehicle belonging to Pennyrile Rural Electric
Cooperative that swerved to avoid a vehicle that ran a stop sign. The driver of the vehicle that
ran the stop sign was never identified. Hadden brought suit against Pennyrile for bodily injury.
Ultimately, Hadden and Pennyrile settled the case for $125,000. Hadden’s counsel asserted that
the settlement amount was approximately 10 percent of the total value of the claim and that the
missing driver of the vehicle that ran the stop sign was 90 percent negligent.
The Center for Medicare and Medicaid Services asserted a conditional payments claim for
$62,338.07. Hadden’s counsel sought a compromise and waiver or reduction of the conditional
payments amount from CMS. CMS refused to compromise the amount of its claim. Plaintiff’s
counsel argued that Hadden’s recovery was reduced under applicable comparative fault
principles and that CMS’ claim for conditional payments should be similarly reduced. CMS and
the Department of Health and Human Services rejected the request for compromise and waiver.
CMS pointed out that recoveries under the Medicare Secondary Payer Act did not account for
state tort law. Hadden’s counsel exhausted administrative appeals and ultimately filed suit in the
federal district court for the Western Division of Kentucky.
The district court rejected Hadden’s arguments and noted that the underlying personal injury
claim against Pennyrile Rural Electric had not proceeded to trial and accordingly the allocation
of fault was purely speculative. In dismissing the suit, the district court noted:
The primary payer in this case is the insurer who paid [the settlement] . . .
between plaintiff and [defendant.] ’More importantly, the underlying claim in this
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case was not adjudicated on the merits; it was settled. In other words, had
Plaintiff wanted equitable allocation and subrogation principles to apply in this
case, then he should have proceeded to trial on the merits of his tort claim in
state court . . . [as the] allocation of liability proposed by Plaintiff would be purely
speculative.’
Hadden, 2009 WL 2423114 at *6-7.
The Hadden case is seen as a test of the legal question of whether CMS must consider state law
comparative fault principles in compromise requests of its conditional payments claim. The
Medicare Advocacy Recovery Coalition has underwritten the appeal of the district court decision
to the Sixth Circuit. Arguments were held in the Sixth Circuit on October 13, 2010. If the Sixth
Circuit reverses the district court and applies comparative fault principles to the conditional
payments claim, this will provide considerable benefit to litigants who seek compromise or
waiver of conditional payments claims. As set forth in the Bradley case, the public policy in favor
of settlement certainly supports requiring CMS to apply comparative fault principles in the
compromise of its conditional payments claims.
III.
NO ALLOCATION FOR FUTURE MEDICAL EXPENSES NECESSARY UNDER MSPA
WHERE PLAINTIFF COVERED BY GROUP HEALTH INSURANCE
Finke v. Hunter’s View, Ltd., No. 07:4267, 2009 WL 6326944 (D. Minn. 2009) – The United States
District Court for Minnesota was asked to approve a personal injury suit and specifically address
whether the settlement adequately protected Medicare’s interests with regard to future medical
expenses. Plaintiff Darius Finke was paralyzed from the chest down after falling from a deer
stand manufactured by Hunter’s View and sold at Wal-Mart. The plaintiff brought suit against
both Hunter’s View and Wal-Mart. The case was settled for $1.5 million. The district court
approved the settlement and did not require any form of allocation of settlement proceeds to
cover future medical expenses. The court specifically found that the parties had adequately
considered Medicare’s interests, and it was not reasonably foreseeable that Medicare would be
responsible for such future expenses. The court reasoned that the plaintiff was covered under
group health insurance and that benefits available through the group policy were more than
adequate to cover all reasonably anticipated medical expenses for the foreseeable future. The
court pointed out that the group policy would continue to be primary to Medicare. The court
approved the settlement and did not require any form of Set-Aside. In its order the court
provided that:
The parties have reasonably and adequately considered the interest of Medicare
in this settlement, and Plaintiffs Darius Finke and Shea Finke and Defendants WalMart and Hunter’s View will not be subject to any claim, demand or penalty from
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Medicare, Medicaid, or any other party, as a result of its settlement payments in
this matter.
Finke, 2009 WL 6326944 at *4.
IV.
COURT ESTABLISHES STATUTE OF LIMITATIONS UNDER MEDICARE SECONDARY
PAYER ACT OF THREE YEARS FOR ACTIONS ARISING OUT OF TORT AND SIX YEARS
FOR ACTIONS ARISING OUT OF CONTRACT
U.S. v. Stricker, CV-09-BE-2423-E, slip op. (N.D. Ala. Sep. 30, 2010) – On September 30, 2010, the
United States District Court for the Northern Division of Alabama, Eastern Division, clarified the
applicable statute of limitations with regard to government actions for violations of the
Medicare Secondary Payer Act. In December 2009, the United States sued numerous defendants,
including plaintiff’s lawyers, law firms, corporations and insurance carriers alleging a violation of
the Medicare Secondary Payer Act with regard to conditional payments to Medicare
beneficiaries for treatment related to PCB chemical contamination. In 2003 the Medicare
beneficiaries, among others, reached a global settlement for $300 million with the defendants,
including Monsanto, Pharmacia and Solutia. In what is commonly known as the Abernathy
settlement, the defendants initially funded the settlement with a payment of $75 million in 2003.
Future payments were also required as a part of funding the settlement, including $2.5 million
annual installments from 2004 to 2013.
In December 2009 the United States brought suit claiming that conditional payments were
made subsequent to the initial 2003 global settlement and were not reimbursed upon funding
of the future periodic payments. The corporate defendants argued that the government’s action
to recover conditional payments was based in tort and subject to a three-year statute of
limitations under the Federal Claims Collection Act, 28 U.S.C. § 2415 (2008). In its decision, the
court distinguished between the corporate defendants (manufacturers and insurers) and the
attorney/law firm defendants. The court held that the three-year statute of limitations for claims
founded upon tort applied to the corporate defendants and, therefore, the government’s action
was time barred.
As to the attorney/law firm defendants, the court concluded that the six-year statute of
limitations applied, since an attorney’s responsibility for reimbursement of conditional payments
is founded upon the contractual relationship between attorney and client. The court
nevertheless ruled that the government’s action against the attorney defendants was also time
barred because the limitations period began running no later than October 29, 2003, when the
initial $275 million settlement payment was made. The court rejected the government’s
argument that the statute would not begin to run until the settlement funds were distributed to
the plaintiffs. The court further rejected the government’s argument that the limitation had been
tolled.
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V.
FEDERAL DISTRICT COURT APPROVES MEDICARE SET-ASIDE AND LIABILITY
SETTLEMENT
The question of whether Medicare Set-Aside accounts for future medical expense need to be
established in liability cases under the Medicare Secondary Payer Act is subject to debate. A
recent Federal District Court Order from the Western District of Louisiana has been frequently
cited (and often mis-cited) with regard to this very issue.
In Big R Towing v. Benoit, No. 10-538, 2011 WL 43219 (W.D. La. Jan. 5, 2011), David Benoit was
injured while working as the captain of a towboat owned by Big R Towing, Inc. He was paid
maintenance and cure benefits pursuant to general maritime law. When a dispute arose as to
additional medical treatment, Big R filed a declaratory judgment action as to whether
maintenance and cure benefits were owed for the procedure. Benoit filed a counter-claim
seeking damages under the Jones Act as well as under general maritime principles. Ultimately,
pursuant to a settlement conference with the federal court, a settlement was reached in the
amount of $150,000. Consideration for that settlement included Benoit agreeing to be
responsible to protect Medicare’s interests under the Medicare Secondary Payer Act, 42 U.S.C.
§ 1395(y). The parties consented to allow a U.S. Magistrate Judge to decide the issue of future
medical expenses under the Medicare Secondary Payer Act. The magistrate’s order pointed out
that Medicare does not currently have a policy or procedure in effect for reviewing or providing
an opinion regarding the adequacy of future medical expenses of liability settlements. After a
hearing on the merits, the magistrate ordered that $52,500 be set aside to protect Medicare
under the Medicare Secondary Payer Act. The sum reflected the cost associated with a future
back surgery and left hip replacement. No consideration was made for the ancillary expenses
one would anticipate with such surgical procedures, such as post-operative follow-up and
therapy.
The court specifically found that the amount was sufficient to protect Medicare’s interests under
the Medicare Secondary Payer Act. The court’s order will effectively preclude CMS from later
claiming that its interests are not protected.
Some vendors of Medicare Set-Aside allocation services are promoting this decision as a federal
court ruling ‘recognizing’ the need for a Medicare Set-Aside in liability cases in order to protect
Medicare’s interests under the Medicare Secondary Payer Act. Such representations are
misleading. First of all, it is unclear whether the U.S. Department of Health & Human Services
was provided notice of the settlement terms and provided an opportunity to object. Secondly,
the court simply adopted the terms of settlement proposed by the parties during a settlement
conference with the court. Practically speaking, the Big R Towing case simply represents an
example of a liability case in which the parties, by mutual agreement, agreed to use a Medicare
Set-Aside and the court acquiesced to their proposed allocation.
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VI.
CMS GIVEN A PRIORITY RIGHT OF RECOVERY IN UNDER-INSURED MOTORIST
CLAIM
Farmers Ins. Exchange v. Forkey, No. 2:09-CV-00462, 2010 WL 5804529 (D. Nev. Dec. 29, 2010) –
The United States District Court for the District of Nevada granted summary judgment in favor
of CMS with regard to the government’s claim of entitlement to a portion of underinsured
motorist benefits. CMS claimed $10,070.22 of a $35,000 underinsured motorist policy. The policy
holder was deceased; however, his spouse claimed entitlement to the underinsured benefits
under the Nevada wrongful death statute. She argued that her claim had a value of $500,000
and that Medicare’s claim of $10,070.22 merely represented about two percent of all potential
claims and, therefore, should be limited in recovery to approximately $200 (two percent). The
court indeed ruled that CMS was entitled to the full $10,070.22. The court held that the
government’s direct right of reimbursement from proceeds of the liability insurance payment
took precedence over all other claims, including the state law of wrongful death claim.
The decision in Farmers Ins. Exchange v. Forkey illustrates that a split remains with regard to
apportionment of settlement proceeds. The Farmers case appears to be contrary to the Eleventh
Circuit Court of Appeals decision in Bradley v. Sebelius, 2010 WL 3769132 (11th Circuit) in which
the court applied principles of apportionment to reduce the CMS claim based upon public
policy favoring settlements.
VII.
MSPA/SCHIP LEGISLATIVE UPDATE – H.R. 4796
On March 9, 2010, the Medicare Secondary Payer Enhancement Act of 2010 was introduced as
H.R. 4796. The bill seeks to address several problems that exist with regard to Medicare’s
reimbursement of conditional payments as well as difficulties with SCHIP § 111 reporting.
Oftentimes settlements are held up indefinitely while parties await a conditional payments
determination from the Center for Medicare and Medicaid Services. Furthermore, the
conditional payments calculation provided by CMS is often inaccurate and contains claims for
reimbursement for disputed or otherwise unrelated medical treatment which are not at issue in
the underlying litigation. H.R. 4796 is intended to remedy some of these difficulties.
Provisions of H.R. 4796 include the following:
A.
Voluntary Reimbursement Payment
H.R. 4796 provides that claimants or the applicable plan will be able to voluntarily submit a
proposal of conditional payment calculations to the Center for Medicare/Medicaid Services at
least 90 days prior to settlement, judgment or award. The voluntary submission will contain an
estimate of the amount of Medicare payments for the injury/claim for CMS’ review. CMS will be
entitled to contest the submission, but only within 90 days. If CMS fails to respond within 90
days, the voluntary payment proposal will be deemed the proper MSP conditional payment
amount.
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B.
Deadline for Final Demand Letter
Applicable insurance plans, as well as claimants, will have the option of requesting a final
demand letter from CMS for conditional payments within 120 days of settlement, judgment or
award or other payment. The bill will impose a deadline on CMS of 60 days to respond to such
requests. Where the claimant or applicable plan reimburses CMS within 60 days of the CMS final
demand letter, the reimbursement is deemed total satisfaction of the obligations of the claimant
and applicable plan for conditional payments.
C.
Right to Appeal
H.R. 4796 provides a right to appeal for liability, self insurance, workers’ compensation and nofault insurance plans. The appellate rights and procedure will be similar to those currently
provided to group health plans.
D.
MSP Thresholds
H.R. 4796 also sets a minimum settlement threshold of $5,000 for Medicare Secondary Payer Act
recovery. Settlements, judgments, awards or other payments below $5,000 will be exempt from
the Medicare Secondary Payer Act and, thus, not subject to conditional payment claims.
E.
Section 111 Privacy Provision
The bill proposes implementation of a section 111 reporting process that would exclude the
reporting of health insurance claim numbers and Social Security numbers.
F.
Section 111 Statute of Limitations
The proposal would set forth a statute of limitations on Medicare Secondary Payer Act recovery
actions to three years following the submission of the section 111 report.
G.
Section 111 Penalties
Concern exists with regard to penalty provisions for non-compliance with section 111. The
current version of 42 U.S.C. § 1395y(b)(8)(E) provides that if the RRE fails to properly comply with
section 111, the RRE “shall be subject to a civil monetary penalty of $1,000 for each day of noncompliance with respect to each claimant.” Use of the term ‘shall’ implies that the penalty will be
applied regardless of surrounding facts, circumstances or mitigating details. H.R. 4796 proposes
to amend the penalty provision by replacing the term ‘shall’ with the term ‘may.’ If enacted,
H.R. 4796 will thus provide some degree of discretion with regard to application of the penalty
provision.
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H.
Safe Harbor
Finally, H.R. 4796 proposes that the Center for Medicare and Medicaid Services be required to
prepare safe harbor provisions with regard to section 111 compliance. Although specific
provisions are not identified, the bill requires CMS to solicit proposals from the industry and
initiate a process for establishing such safe harbor provisions.
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Bradford J. Peterson
- Partner
Publications
 "Medicare and Future Medical Expenses; Does
the Super Lien Apply?" Illinois Bar Journal
(2010)
 "Illinois Workers' Compensation and the
Medicare Secondary Payer Act," Illinois
Workers' Compensation Law, Chapter 27 (20092010 Edition)
 "The Workers' Compensation Experience; The
Medicare Secondary Payer Act and Medicare
Set-Aside Issues; Medicare and Medicaid
Awarding Post-Judgment and Post-Settlement
Litigation," Illinois Defense Counsel Quarterly
(2009)
After passing the Bar in 1987, Brad joined the Urbana
office of Heyl Royster and has spent his entire career
there. His practice focus is divided between workers’
compensation and civil litigation, where he is
experienced in the defense of products liability,
construction and insurance coverage. In recent years,
Brad has taken a special interest in Medicare SetAside Trusts and the Medicare Secondary Payer Act,
and has written and spoken extensively on those
issues. In fact, Brad was one of the first attorneys in
the State of Illinois to author a published article
regarding the application of the Medicare Secondary
Payer Act to workers' compensation claims:
"Medicare, Workers' Compensation and Set-Aside
Trusts," Southern Illinois Law Journal (2002).
Public Speaking
 “Mock Trial Participant”
ISBA Workers’ Compensation Section Council
(2010)
 “What You Need to Know about Medicare Liens,
Conditional Payments and Set-Aside Trusts;
Winning Strategies for Difficult Times”
Heyl Royster 24th Annual Claims Handling
Seminar (2009)
Brad is a member of the Champaign County, Illinois
State, and American Bar Associations. He served a
number of terms in the Illinois State Bar Association
Assembly. Brad has also been a member of the ISBA
Bench and Bar Section Council and served as its Chair
in 2000-2001. Currently, he serves as an officer of the
ISBA Workers' Compensation Council and is a past
editor of the Workers' Compensation Section
Newsletter. Brad currently serves as the contributing
editor of the Workers' Compensation Report for the
Illinois Defense Counsel Quarterly.
 Champaign County Bar Association
 The National Association of Medicare Set-Aside
Professionals
Significant Cases
 Johnson v. Daimler Chrysler Corporation, Blane
Warren and Aladdin Electric - Obtained
favorable settlement (structured settlement
with cost in low seven figures) in negligent
entrustment and product liability action
involving death of an accountant with wife and
two children.
 Tracy Green v. Freitag-Weinhardt - Obtained
favorable settlement of workers' compensation
claim and third-party liability claim against
petitioner/plaintiff's employer. Plaintiff suffered
from fractures to the T11-T12 vertebra with
resulting paraplegia. Seven figure settlement
reached with primary defendants and thirdparty liability claim as well as workers'
compensation claim resolved through workers'
compensation lien waiver and partial
satisfaction of future medical expense.
Court Admissions
Illinois
Education
 Juris Doctor, Southern Illinois University, 1987
 Bachelor of Science (with honors), Illinois State
University, 1984
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SETTLEMENT PITFALLS Presented and Prepared by:
Maura Yusof
[email protected]
Chicago, Illinois • 312.762.9235
J-1
SETTLEMENT PITFALLS
I.
INTRODUCTION.............................................................................................................................................J-3
A.
B.
II.
What Is a Lien? ................................................................................................................................J-3
What Is Subrogation? ...................................................................................................................J-4
COMMON LIENS DEALING WITH MEDICAL BILLS ...........................................................................J-4
A.
Health Care Services Lien Act, 770 ILCS 23/1 ......................................................................J-4
1.
2.
B.
C.
III.
Workers’ Compensation Lien.....................................................................................................J-5
Illinois Department of Public Aid Lien, 305 ILCS 5/11-22 ...............................................J-5
THE MEDICARE “SUPER LIEN” ..................................................................................................................J-6
A.
B.
IV.
When Does It Apply? .....................................................................................................J-4
Limitations .........................................................................................................................J-4
What Is a Super Lien? ...................................................................................................................J-6
Avoid the Pitfalls of the Medicare “Super Lien”..................................................................J-7
THE COMMON FUND DOCTRINE – RECOVERY OF ATTORNEY’S FEES ....................................J-7
A.
B.
When Does the Doctrine Apply? ..............................................................................................J-8
Avoid the Pitfalls of the Common Fund Doctrine..............................................................J-8
1.
2.
3.
4.
Send a Tenney Letter .....................................................................................................J-8
“Meaningful Participation” in Creation of Common Fund ..............................J-9
Additional Selected Cases......................................................................................... J-10
Steps to Avoid Paying Plaintiff’s Attorney’s Fees
and Costs Under the Common Fund Doctrine ................................................. J-11
J-2
SETTLEMENT PITFALLS
I.
INTRODUCTION
Settlement of personal injury cases necessitates close attention to avoid application of
outstanding liens that may exist from health care providers, state and federal agencies, as well
as other insurers that have already made payments. These materials provide an overview of the
most frequently encountered potential outstanding lien problems. In addition, these materials
advise insurers on what they need to know and what they should do to avoid paying out
unnecessary plaintiff’s attorney’s fees under the common fund doctrine.
A.
What Is a Lien?
The most important issue concerning liens a claims handler will face relates to the additional
exposure that can arise from a failure to adequately protect a valid lien. A lien is a claim of
entitlement to all or a portion of certain property or the proceeds from that property. If a lien is
not adequately protected in a settlement, the lien holder may have its choice as to who it will
pursue to satisfy the lien. As a result, a defendant and its insurer could be required to pay the
value of the lien to the lien holder even though the settlement required the plaintiff to satisfy all
liens.
The Illinois Supreme Court defines a lien as follows:
A charge upon property, either real or personal, for the payment or discharge of a particular
debt or duty in priority to the general debts or duties of the owner. Eastman v. Messner, 188 Ill.
2d 404, 721 N.E.2d 1154, 242 Ill. Dec. 623 (1999).
In the context of personal injury cases, health care providers and other public and private
entities that pay for medical services have statutory and/or contractual liens on the claimant for
reimbursement for service or payment provided.
Just because settlement release documents require the plaintiff and the plaintiff’s attorney to
satisfy all liens, this does not prohibit the lien holder from filing a claim directly against the
defendant for the lien amount. While the defendant has the right to recover the amounts paid
to the lien holder from the plaintiff pursuant to the release and settlement agreement, the
ensuing litigation would be, at the very least, time consuming. Even if the settlement agreement
provides that the plaintiff and plaintiff’s attorney are to pay the costs of any such proceeding,
there is always the possibility that they will have spent the money by the time you obtain a
judgment on your claim for breach of the settlement agreement.
A plaintiff’s willingness to settle is largely dependent upon the liens he will have to pay back
from his settlement proceeds. To better understand their “bottom line,” a good understanding
of the rules applying to the various liens will allow the claims handler to assess what the plaintiff
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will ultimately receive. The Common Fund Doctrine requires the lien holder who benefits from
the plaintiff’s attorney’s work in pursuing the claim to pay a portion of the amount they are
reimbursed on their lien to the attorney for the plaintiff for the attorney’s fees and costs
associated with the litigation.
B.
What Is Subrogation?
Providers and payers of health care services can recover from a claimant who receives payment
from another source. A party who has provided health services or made payments is a lien
holder or “subrogee” for purposes of subrogation.
Black’s Law Dictionary, 7th Edition, defines subrogation as “[t]he substitution of one party for
another whose debt the party pays, entitling the paying party to rights, remedies, or securities
that would otherwise belong to the debtor.” Through the process of subrogation, the insurer
becomes substituted to the claimant’s right of recovery for medical bills from other sources as a
way to reimburse the insurer.
II.
COMMON LIENS DEALING WITH MEDICAL BILLS
A.
Health Care Services Lien Act, 770 ILCS 23/1
The Health Care Services Lien Act (“HCSA”) became effective on July 1, 2003. It created two
classes of liens, one for “health care professional” and another for “health care provider.” 770
ILCS 23/5.
1.
When Does It Apply?

Applies to the rendering of health services in the treatment, care, or maintenance of an
injured person, except under the Workers’ Compensation Act or the Workers’ Occupational
Disease Act. 770 ILCS 23/10(a).

Attaches to any verdict, judgment, award, settlement, or compromise, secured by or on
behalf of an injured person. 770 ILCS 23/20.

Applies to the health care professional’s or health care provider’s reasonable charges up to
the date of payment of damages. 770 ILCS 23/10(a).

The injured person must give written notice to the health care professional or health care
provider that holds a lien. 770 ILCS 23/15.
2.

Limitations
Limits the total amount of all liens to 40 percent of the damages paid to the injured person.
770 ILCS 23/10(a).
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
The lien holder must provide notice to the injured person and to the party against whom the
claim or right of action exists. 770 ILCS 23/10(b).

Proportionate recovery for multiple liens in same class (professionals or providers) and no
one class can receive more than one-third of the recovery. 770 ILCS 23/10(c).

Special rules apply when total amount of lien is equal to or greater than 40 percent of the
recovery:
–
–
–
All liens of professionals shall not exceed 20 percent.
All liens of providers shall not exceed 20 percent.
Attorney’s liens limited to 30 percent, but if the case is appealed, HSCA does not apply.
770 ILCS 23/10(c).
B.
Workers’ Compensation Lien
The Workers’ Compensation Lien is a statutory lien created under section 5(b) of the Illinois
Workers’ Compensation Act. 820 ILCS 305/5(b). If an employer pays related medical bills to an
injured worker, the employer has a lien against the injured worker’s third-party recovery. The
employer may sue to enforce the lien if the worker does not. If the worker sues a third party, the
worker must give notice to the employer and the employer may intervene in the lawsuit to
protect its lien.
In such cases where the employer holds a lien as to the worker’s attempt to recover from a third
party, the worker cannot enter into a settlement and release with the liable party without the
employer’s written consent. If the injured worker recovers from a third party, the employer is
entitled to full reimbursement of its lien, even if the amount recovered from the third party is
less than the lien. However, the employer has to pay 25 percent of the plaintiff’s attorney’s fees
plus a pro rata share of expenses.
C.
Illinois Department of Public Aid Lien, 305 ILCS 5/11-22
1. The Illinois Department of Public Aid (“IDPA”) has a “charge” upon all claims and causes of
actions for the total amount of medical assistance provided to an injured recipient from the time
of injury to the date of recovery on the claim. 305 ILCS 5/11-22.
2. The IDPA has to provide notice by certified or registered mail on the party or parties against
whom the injured person has a claim. The “charge” attaches to any verdict or judgment entered,
and to any money or property recovered from the suit. 305 ILCS 5/11-22.
3. The IDPA has to pay its pro rata share of attorney’s fees based on its lien as it compares to the
total settlement agreement.
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4. The IDPA lien has priority over other liens, except for a lien under the Attorneys Lien Act and
the Medicare “Super Lien,” which is discussed below. The IDPA lien does not apply to any claim
under the Workers’ Compensation Act, the Workers’ Occupational Diseases Act, or the Wrongful
Death Act.
5. The IDPA has the right of subrogation to any recovery that a public aid recipient may have
from any private or public health care coverage or casualty coverage, including coverage under
the Workers’ Compensation Act and the Workers’ Occupational Diseases Act. 305 ILCS 5/11-22a.
6. In order to enforce its subrogation right, the IDPA can intervene in a pending lawsuit brought
by the recipient against any party that may be liable or bring its own lawsuit against a liable
party. The IDPA can also bring its own action against an insurance carrier that may be liable to
pay for the medical benefits of the injured recipient, but has to provide the recipient written
notice of the suit advising him of his right to intervene. 305 ILCS 5/11-22b(b)(1),(d)(2).
7. No judgment, award, or settlement in any action or claim by a beneficiary to recover damages
for injuries, when IDPA has an interest, can be satisfied without first giving IDPA notice and a
reasonable opportunity to perfect and satisfy its lien. 305 ILCS 5/11-22b(g).
8. The entire amount of any settlement of the injured recipient’s claim is subject to the IDPA’s
claim for reimbursement of its lien. 305 ILCS 5/11-22b(i).
III.
THE MEDICARE “SUPER LIEN”
A.
What Is a Super Lien?
Insurers must pay special attention to whether Medicare has paid any portion of the claimant’s
medical bills. The Medicare Secondary Payer (“MSP”) statute places the responsibility on insurers
to reimburse the government when it has paid conditional Medicare benefits to an injured party.
42 U.S.C. § 1395y(b)(2)(B)(ii). Medicare’s lien is “super” because Medicare has the right to recover
even when the insurer has not received formal notice of Medicare’s lien. Further, Medicare’s lien
is “super” because it takes priority over any other liens.
Medicare is the secondary, as opposed to the primary, payer for insureds. As a result, Medicare
can recoup from the rightful primary payer or from the recipient of such payment, if Medicare
paid for a service that should have been covered by the primary insurer. United States v. Baxter
Intern., Inc., 345 F.3d 866, 875 (11th Cir. 2003), cert. denied, 124 S. Ct. 2907 (2004).
An insurer may be required to reimburse Medicare if it paid a provider or a claimant when it
knew, or should have known, that Medicare had made a conditional primary payment under the
MSP. 42 C.F.R. § 411.24(i)(1-2); see also, Baxter Int’l, Inc., 345 F.3d at 879. Section 411.24(i)(1-2) of
the federal regulations governing Medicare’s right of reimbursement of conditional payments
reads as follows:
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(i) Special rules.
(1) In the case of liability insurance settlements and disputed claims under
employer group health plans, workers’ compensation insurance or plan, and nofault insurance, the following rule applies: If Medicare is not reimbursed as
required by paragraph (h) of this section, the primary payer must reimburse
Medicare even though it has already reimbursed the beneficiary or other party.
(2) The provisions of paragraph (i)(1) of this section also apply if a primary payer
makes its payment to an entity other than Medicare when it is, or should be, aware
that Medicare has made a conditional primary payment. (Emphasis added).
42 C.F.R. § 411.24(i)(1-2).
In other words, even if an insurer does not have actual knowledge that Medicare has made
payments to a claimant, the insurer may still be liable for reimbursing Medicare, even if it has
already made payments to the claimant. Medicare is subrograted to any right of an individual or
entity to recover payment from an insurer for medical bills. 42 U.S.C. § 1395y(b)(2)(B)(iv).
Medicare has the right to sue an insurer in order to recover benefits it paid out that the primary
insurer should have covered. In such an action, not only is Medicare entitled to reimbursement,
but they may collect double damages against the insurer. 42 U.S.C. § 1395y(b)(2)(B)(iii).
B.
Avoid the Pitfalls of the Medicare “Super Lien”
1. Upon receipt of a personal injury claim, make a diligent effort to determine the claimant’s
medical bills, the extent of payment, and the identities of the paying parties. Clearly document
these items in the file for future reference.
2. Obtain, in writing, a figure from Medicare that will satisfy its lien.
3. Upon payment of settlement or judgment, ensure that a separate payment is made to
Medicare to reimburse Medicare in full.
4. Incorporate in your settlement and release language, provisions that (1) specify that all liens
have been satisfied; and (2) include an indemnification clause.
IV.
THE COMMON FUND DOCTRINE – RECOVERY OF ATTORNEY’S FEES
In Illinois, courts recognize the equitable principle of the Common Fund Doctrine. The Illinois
Supreme Court in Baier v. State Farm Ins. Co., 66 Ill. 2d 119, 361 N.E.2d 1100, 5 Ill. Dec. 572
(1977), adopted this doctrine as a way to protect the recovery of attorney’s fees in insurance
subrogation cases. Most insurance policies include subrogation agreements for medical
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payments with its insured, which requires the insured to reimburse the insurer for monies
recovered from the responsible party. In the process of recovering money for an injured client,
whether by settlement or judgment, the plaintiff’s attorney creates a fund for their client.
The doctrine guarantees the plaintiff’s attorney compensation for creating the fund from which
the client receives settlements or judgments. Because the client may be required to reimburse
his insurer for prior medical payments, the doctrine also insures that the plaintiff’s attorney is
paid his fees and costs in creating the fund and recovering monies in favor of the plaintiff’s
insurance company.
A.
When Does the Doctrine Apply?
The Common Fund Doctrine applies when an insurance company does not participate in the
creation of the fund. The plaintiff’s attorney that creates the common fund, in which the plaintiff
recovers and reimburses his insurer, is entitled to compensation from the monies recovered in
favor of the passive insurance company. In other words, when an insurer receives
reimbursement for medical payments it paid for the injured insured, that recovery is offset by
the plaintiff’s attorney’s fees and costs in creating the common fund.
The following three requirements must be present for the Common Fund Doctrine to apply:
1. The fund must be created as the result of legal services performed by an attorney.
2. The subrogee or the insurance company must not participate in the creation of the fund.
3. The subrogee must benefit from the fund.
B.
Avoid the Pitfalls of the Common Fund Doctrine
1.
Send a Tenney Letter
In the often-cited case of Tenney v. American Family Mut. Ins. Co., 128 Ill. App. 3d 121, 470
N.E.2d 6, 83 Ill. Dec. 251 (4th Dist. 1984), the Appellate Court, Fourth District held that a
plaintiff’s attorney is not entitled to recovery of his attorney’s fees under the Common Fund
Doctrine for services that have been knowingly rendered for unwilling recipients. Based on this
case, an insurance company could become an “unwilling recipient” by sending what is
commonly known as a “Tenney letter.”
In Tenney, the plaintiff’s insurer, American Family, promptly sent a letter to the plaintiff that
informed the plaintiff of its subrogation lien on medical payments. The letter, most importantly,
expressed the insurer’s intention of dealing with the defendant’s insurance company regarding
this claim. The insurer promptly sent this letter to the plaintiff’s attorney, who did not file suit on
behalf of the plaintiff until nine months after receiving the Tenney letter.
The Appellate Court, Fourth District held that American Family had immediately and
unequivocally informed the attorney of its intention to be an “unwilling participant” in the
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plaintiff’s lawsuit. Because of this prompt notification, the plaintiff’s attorney could not recover
his fees and costs under the Common Fund Doctrine.
Since the decision in Tenney, insurers have often thought that sending the letter to its insured or
his attorney was enough to protect its subrogation interest. However, recent case law has clearly
indicated that the letter might not be enough. Without overruling Tenney, Illinois Appellate
Courts have held that in addition to sending the Tenney letter, insurers must follow-up and
participate in creating the fund.
2.
“Meaningful Participation” in Creation of Common Fund
The Tenney letter is the first step in avoiding the application of the Common Fund Doctrine.
However, subsequent case law has upheld Tenney, but narrowed its application by requiring
insurers to be more proactive in establishing their status as an “unwilling participant.” Today,
sending the Tenney letter is not enough to avoid the application of the Common Fund Doctrine.
For example, in Taylor v. American Family Ins. Group, 311 Ill. App. 3d 1034, 725 N.E.2d 816, 244
Ill. Dec. 343 (5th Dist. 2000), American Family sent its insured’s attorney a Tenney letter within a
month of the underlying accident. The letter advised the insured’s attorney of American Family’s
intent to represent its own subrogation interests as to the medical payments, indicated
American Family’s interest that the insured’s attorney not represent its subrogation interest, and
stated American Family would not recognize “any lien upon the subrogation amount claimed
under the ‘Fund Doctrine’ for services gratuitously given.” Tenney, 311 Ill. App. 3d 1036. A month
later, American Family sent a follow-up letter to the insured’s attorney, which was identical to
the initial Tenney letter. American Family also sent a copy of this letter to the tortfeasor’s insurer,
State Farm, expressing its intent to represent its own subrogation interests. American Family also
filed a petition for arbitration of its subrogation interest and notified the insured’s attorney.
American Family sent a third follow-up Tenney letter to the insured’s attorney restating its
position as an unwilling recipient of the attorney’s services. Up to this point, it appeared that
American Family had gone above and beyond the requirements of Tenney, but the Appellate
Court, Fifth District still held that the Common Fund Doctrine applied.
After American Family sent its second Tenney letter, the insured settled her claim with State
Farm. State Farm issued two checks – one for the amount of medical payments paid by
American Family, and the other for the amount of the underlying settlement.
With respect to the medical payments, State Farm addressed the check to the insured, the
insured’s attorney, and American Family. When the insured’s attorney notified American Family
of the check and requested one-third for attorney’s fees, American Family responded that it was
in a pending arbitration with State Farm and that the attorney should return the check to State
Farm. The insured’s attorney responded by noting that she included American Family’s
subrogation interest in the settlement because American Family would not release its lien
against the insured with State Farm. The trial court awarded the insured’s attorney her share of
attorney’s fees, and the Appellate Court, Fifth District affirmed holding that merely writing to the
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insured’s attorney and expressing a desire to represent one’s own interest, without more, was
not enough to overcome the Common Fund Doctrine. The Appellate Court, Fifth District noted
that the insurer’s conduct must reflect “meaningful participation” in creating the fund or
reaching the settlement, which may involve filing a timely petition to intervene in the underlying
personal injury action.
Courts look for “meaningful participation” by the insurer in the creation of the common fund
that reflects more than just the insurer’s intention or desire to have its interests protected. While
the courts have repeatedly used the phrase “meaningful participation,” courts have offered little
guidance by clearly defining what is sufficient to amount to “meaningful participation” to avoid
the Common Fund Doctrine. A recent case held that the insurer “meaningfully participated”
where it sent a Tenney letter to the plaintiff’s attorney three weeks after the accident and
attempted to intervene in the plaintiff’s lawsuit over the insured’s vigorous opposition. Ritter v.
Hachmeister, 356 Ill. App. 3d 926, 827 N.E.2d 504, 292 Ill. Dec. 975 (2d Dist. 2005).
3.
Additional Selected Cases
Perez v. Kujawa, 234 Ill. App. 3d 957, 602 N.E.2d 38, 176 Ill. Dec. 731 (1st Dist. 1992) – The
equitable “fund doctrine” did not justify an award of attorney fees to insured and other plaintiff
represented by the same attorney, out of automobile insurer’s medical payments subrogation
lien. The insurer had promptly and unequivocally informed plaintiffs’ previous attorney of its
subrogation lien and disclaimed any intention to employ insured’s attorney for that purpose,
and that notice was chargeable to the attorney to whom the notified attorney referred the case.
Brase v. Loempker, 267 Ill. App. 3d 415, 642 N.E.2d 202, 204 Ill. Dec. 740 (5th Dist. 1994) −
Plaintiff's attorney was entitled to one-third of total medical subrogation claim paid to plaintiff's
insurer, as a result of an automobile accident, despite fact that plaintiff's insurer notified
plaintiff's attorney prior to plaintiff's attorney filing suit that insurer did not want attorney's
assistance but wanted to deal directly with defendant's insurer on its medical subrogation claim,
and where plaintiff's insurer asked defendant's carrier to keep subrogation rights of plaintiff's
insurer in mind when settling claim with plaintiff's attorney.
Country Mut. Ins. Co. v. Birner, 293 Ill. App. 3d 452, 688 N.E.2d 859, 228 Ill. Dec. 161 (3d Dist.
1997) − Insured's attorney filed action against automobile insurer to recover payment from
settlement with liability insurer. The Appellate Court held that: (1) attorney was entitled to
payment under Common Fund Doctrine, and (2) insurer was estopped from pursuing arbitration
award noting that, under the “Common Fund Doctrine,” a lawyer who recovers common fund for
benefit of persons other than client is entitled to reasonable attorney fees from fund as whole.
Blackburn v. Sundstrand Corp., 115 F.3d 493 (7th Cir. 1997) – Common Fund Doctrine not
preempted by provisions of Employee Retirement Income Security Act (ERISA); See also, Bishop
v. Burgard, 198 Ill. 2d 495, 764 N.E.2d 24, 261 Ill. Dec. 733 (2002).
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Young v. Mory, 294 Ill. App. 3d 839, 690 N.E.2d 1040, 228 Ill. Dec. 965 (5th Dist. 1998) – State
Employees Retirement System (SERS) does not preempt Common Fund Doctrine.
Share Health Plan of Illinois, Inc. v. Alderson, 285 Ill. App. 3d 489, 674 N.E.2d 69, 220 Ill. Dec. 798
(1st Dist. 1996) – Health Maintenance Organization subject to application of the Common Fund
Doctrine.
Kim v. Alvey, Inc., 322 Ill. App. 3d 657, 749 N.E.2d 368, 255 Ill. Dec. 267 (1st Dist. 2001) – Where
parties agree to settlement figure and workers’ compensation lien is not addressed, the payer is
not entitled to a set-off for the amount of the workers’ compensation lien.
Johnson v. State Farm Mut. Auto. Ins. Co., 323 Ill. App. 3d 376, 752 N.E.2d 449, 256 Ill. Dec. 569
(5th Dist. 2001) – Plaintiff’s attorney was not entitled to fees under Common Fund Doctrine for
arbitration award in uninsured motorist action as no fund was created that benefitted the lien
holder.
Eddy v. Sybert, 335 Ill. App. 3d 1136, 783 N.E.2d 106, 270 Ill. Dec. 531 (5th Dist. 2003) – An
insured filed a motion in personal injury action to adjudicate a lien concerning insurer's
subrogation claim regarding payment of insured's medical expenses under automobile
insurance policy. The Appellate Court held that: (1) language of policy controlled in determining
whether insurer had right to subrogation; (2) insurer's right to subrogation did not depend on
whether insured was made whole by settlement with tortfeasor; and (3) insurer was obligated to
pay medical bill, but insurer was entitled to subrogate that claim.
TM Ryan Co. v. 5350 South Shore, L.L.C., 361 Ill. App. 3d 352, 836 N.E.2d 803, 297 Ill. Dec. 72 (1st
Dist. 2005) − A judgment creditor filed a petition for relief, alleging it was entitled to judgment
debtor’s insurance proceeds deposited in client funds account of judgment debtor’s law firm.
The law firm filed its own petition asserting an interest in the insurance proceeds. The Appellate
Court held that the insurance proceeds were not a common fund out of which the law firm was
entitled to its fees and noted that the Common Fund Doctrine does not apply where the debt
paid from the fund existed independently of the creation of the fund.
4.
Steps to Avoid Paying Plaintiff’s Attorney’s Fees and Costs Under the
Common Fund Doctrine
●
Promptly send a Tenney letter to your insured. As soon as you learn of an insured’s accident
and claim, send a letter to the insured unequivocally informing them of your subrogation
lien for medical payments and your intention of representing your own interests with the
tortfeasor’s insurance company.

Promptly send a Tenney letter to the tortfeasor’s insurance company. This letter must clearly
indicate that you plan on representing your own subrogation interests. The letter should also
request that the tortfeasor’s insurance company not include any medical payments in any
settlement offer to the injured insured.
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
If your insured retained his own attorney, promptly send a Tenney letter to the attorney. The
letter must state that you plan to represent your own subrogation interests and that you are
unwilling to pay for his services under the Common Fund Doctrine.

Arbitrate or intervene. If your company and the tortfeasor’s insurance company participate in
an arbitration program, file a petition for arbitration as soon as you can determine the
amount of medical expenses paid to the insured. If arbitration is not available, consider filing
your own lawsuit to protect your subrogation lien on the medical payments. If the insured
has already filed his own suit, then file a petition to intervene in that action. Your suit can
ultimately be consolidated with the personal injury case.

Communicate. Instruct your retained attorney to communicate with the insured’s attorney on
issues related to the medical payments from settlement negotiations to trial preparation. If
the insured’s personal injury suit goes to trial and you have successfully intervened in the
suit, be active in that portion of the trial related to medical expenses.
While this is not an exhaustive list, taking the aforementioned actions demonstrates the insurer’s
genuine interest to be an “unwilling participant,” as well as “meaningful participation” in the
creation of a common fund that should enable the insurer to avoid paying attorney’s fees to the
insured’s attorney. The insurer should still send the Tenney letter promptly, but that alone is no
longer enough to protect subrogation interest in medical expenses. Given the undefined
requirements of “meaningful participation,” insurers should retain experienced defense counsel,
where necessary, to protect its subrogation lien in order to recover medical payments and to
avoid paying unnecessary attorney’s fees.
Given the ever increasing costs of medical care, it is imperative to recognize the various liens
that may exist. Insurance companies must be aware of the interests of various medical providers
and government agencies, not only for its own insureds, but also in settling claims brought
against its insureds. Accordingly, in settling a claim, it is important to be proactive in identifying
the sources of medical payments and insure that those providers and government agencies are
paid in order to avoid any future liability. In addition to considering third-party liens, claims
professionals must be proactive in protecting their own company’s subrogation liens for medical
payments to insureds. If the insurer does not take prompt and meaningful steps to protect its
own interests, then the insurer may find its recovery offset by unnecessary attorney’s fees and
costs.
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Maura Yusof
- Of Counsel
Publications
 Law Review: Articles and Notes Editor,
Washington University Journal of Law and
Policy
Maura began her legal career as an associate with
Heyl Royster in 2002. From 2002 until 2004, she
worked at the firm's Edwardsville, Illinois office
practicing civil defense litigation. A significant portion
of her practice focused on representing corporate
defendants in asbestos toxic tort litigation for serious
injury cases pending in Madison County, Illinois,
including products liability and premises liability
claims arising from occupational exposure.
 Martindale-Hubbell AV-Rated
 Chicago Bar Association
 National Association of Subrogation
Professionals
 International Centre for Dispute Resolution
Young & International Group
 Risk and Insurance Management Society, Inc.
(RIMS)
In 2004, Maura moved to Chicago, Illinois where she
expanded her litigation practice to large loss property
subrogation matters throughout the United States
and internationally including a three week arbitration
in Tokyo, Japan, that resulted in a multi-million dollar
recovery affirmed by the Japanese courts. Maura’s
experience includes construction defects, product
defects, fires, explosions, and boiler and turbine
failures. She is familiar with exculpatory provisions and
limitation of liability clauses in contract documents,
including whether exculpatory provisions and
limitations of liability are enforceable based on the
applicable state law.
Court Admissions
 United States District Courts, Northern District
of Illinois and Eastern District of Wisconsin
 Pro hac vice admittance in State Courts of
Indiana, New York, Oregon, Arizona, California,
Florida, Ohio, Massachusetts, Maryland, and
internationally in Japan and Taiwan
Maura returned to Heyl Royster as an Of Counsel
attorney in 2010 and now works full time from our
Chicago office space located near the Daley Center
Courthouse. At Heyl Royster, Maura continues to work
with our asbestos clients as well as handling other
matters pending in Chicago.
Education
 Juris Doctor, Washington University School of
Law, 2002
 Bachelor of Science in Language ArtsGovernment (International Affairs) and Spanish,
Georgetown University, 1998
Maura was born in Kabul, Afghanistan and speaks
fluent Dari, a dialect of Persian.
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UNINSURED AND UNDERINSURED MOTORIST UPDATE Presented and Prepared by:
Mark J. McClenathan
[email protected]
Dana J. Hughes
[email protected]
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UNINSURED AND UNDERINSURED MOTORIST UPDATE
I.
SET-OFFS .........................................................................................................................................................K-3
II.
ARBITRATION ................................................................................................................................................K-6
A.
B.
Arbitration Awards and “Trial De Novo” Provisions .........................................................K-6
Arbitration Hearings and Coverage Issues ..........................................................................K-9
III.
STACKING .................................................................................................................................................... K-12
IV.
MISCELLANEOUS ISSUES ....................................................................................................................... K-13
A.
B.
Wrongful Death Act .................................................................................................................. K-13
Unreasonable and Vexatious Behavior .............................................................................. K-14
K-2
UNINSURED AND UNDERINSURED MOTORIST UPDATE
I.
SET-OFFS
Farmers Auto. Ins. Ass’n v. Coulson, 402 Ill. App. 3d 779, 931 N.E.2d 1257, 342 Ill. Dec. 74 (5th
Dist. 2010) – The defendant, Kassandra Coulson, was seriously injured when a vehicle owned and
operated by Robert Roy drove through the window of a Subway restaurant, striking Coulson and
two other customers inside. The driver, Roy, was insured by State Farm with a bodily injury
liability limit of $50,000. State Farm paid Coulson $24,000 to settle her claim (and the other
$26,000 to settle other injured persons’ claims). Coulson settled with the property owner and
franchisee for $410,000.
At the time of the accident, Coulson was covered as a family member under her stepfather’s
automobile insurance policy issued by Farmers. The policy contained underinsured (“UIM”)
coverage of $300,000 per person and $500,000 per occurrence. Coulson made a demand for the
UIM per person limits under the policy.
Farmers declined to pay benefits arguing that the policy contained a set-off provision which
obligated Farmers to pay at the most $300,000 minus “any amounts paid by others who may be
legally responsible for (insured’s) bodily injuries.” Thus, Farmers argued that it owed Coulson
nothing under this provision because it was entitled to a set-off in the amount of the payments
Coulson already received from the at-fault driver, property owner, and franchisee, which totaled
$434,000.
Farmers filed a declaratory judgment action. The set-off provision in the UIM policy provided the
following: “The limit of liability for this coverage should be reduced by all sums paid because of
the ’bodily injury’ by or on behalf of persons or organizations who may be legally responsible.”
The trial court found that the language of the policy was clearly a set-off provision allowing
Farmers to reduce the amount payable under the policy’s UIM provision by all the sums paid on
or on behalf of persons or organizations who may be legally responsible, which in that case was
$434,000. Thus, the court granted Farmers’ Motion for Summary Judgment. Coulson appealed.
On appeal, Coulson argued that the set-off provision in her insurance policy with Farmers was
ambiguous. Generally, an ambiguous term in an insurance policy will be construed against the
insurer and in favor of the insured. However, the Appellate Court declined to address this
argument because it found that the set-off provision allowing Farmers to set-off the amounts
paid by the property owner and franchisee would violate Illinois public policy and was, therefore,
void.
The Appellate Court, Fifth District, initially examined the Hoglund decision, an Illinois Supreme
Court decision rendered in 1992, which examined a nearly identical set-off provision in an
uninsured policy written by State Farm. In Hoglund v. State Farm Mut. Auto Ins. Co., 148 Ill. 2d
272, 592 N.E.2d 1031, 170 Ill. Dec. 351 (1992) (a decision involving two cases consolidated on
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appeal), the plaintiffs were both injured while they were passengers in an uninsured vehicle
whose driver collided with another insured vehicle. The drivers of the other insured vehicles each
had bodily injury policy limits of $100,000 and paid this amount to each of the plaintiffs. The
plaintiffs, each alleging they suffered damages in excess of the $100,000 filed claims against
their seeking the policy limits under the uninsured provisions. The State Farm policy, like the
applicable Farmers policy in the case at bar included the following set-off provision: “Any
amount payable under this coverage shall be reduced by any amount paid or payable to or for the
insured: a. by or for any person or organization who is or may be held legally liable for the bodily
injury to the insured.” State Farm argued that this language supported a set-off in each case due
to the $100,000 bodily-injury limits recovered by the plaintiffs from each of the insured drivers.
The Court disagreed, finding that a literal interpretation would allow for a reduction by any
amount paid to the insured by any party. The Court held that applying a literal interpretation of
this set-off provision would frustrate the public policy of placing the injured party in the same
position as if the uninsured driver had been insured pursuant to the Uninsured Motorist Statute.
The Hoglund Court went on to say that uninsured motorist policies are intended to provide
coverage for damages caused by uninsured motorists. To apply the set-off literally would
deprive the insured of the benefit of the uninsured coverage for which she paid premiums to
State Farm. The Hoglund Court noted that the purpose of a set-off is to prevent a double
recovery by the insured. Hence, State Farm was allowed a set-off only to the extent necessary to
prevent a double recovery.
Relying on the Hoglund Court’s analysis, the Farmers Court found that to allow Farmers to set off
the amounts that are unrelated to the underinsured motorist coverage would deny Coulson the
very protection against an underinsured motorist for which her stepfather had paid premiums.
Coulson’s stepfather paid premiums for $300,000 in underinsured motorist coverage. The atfault driver, Roy, was an underinsured motorist who paid only $24,000 to Coulson. The property
owner and the franchisee were not underinsured motorists, and their payments to Coulson to
resolve their alleged liability for her injuries are irrelevant to the amount Coulson can recover
under the applicable UIM provision in the Farmers policy. If Farmers were allowed to deduct the
amounts paid to Coulson by the property owner and the franchisee, this would frustrate the
public policy of placing Coulson in the same position as if Roy had been fully insured. Because
Coulson’s claim would not result in a double recovery in contravention to public policy, the
Court found that Coulson could recover up to $276,000 under her stepfather’s UIM policy with
Farmers.
Zdeb v. Allstate Ins. Co., 404 Ill. App. 3d 113, 935 N.E.2d 706, 343 Ill. Dec. 698 (1st Dist. 2010) –
While walking on a sidewalk, Elizabeth Zdeb was struck by a car driven by Kamil Scislowicz. Zdeb
claimed serious injuries following the accident, claiming over $200,000 in damages. Scislowicz’s
insurance company, State Farm, paid Zdeb its bodily injury liability limits of $50,000. Zdeb
asserted a claim under the UIM provision of her policy with her insurer, Allstate, for $50,000, the
difference between her UIM limits and the amount she received from State Farm.
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The Allstate policy provided UIM coverage with a $100,000 limit for bodily injury and medical
payment coverage of $50,000. Zdeb paid separate premiums for the UIM and medical payment
coverages, as is typically done in an automobile policy. The limits of liability section of the policy
declaration included the following set-off provision:
Damages payable will be reduced by:
1. all amounts paid by or on behalf of the owner or operator of the uninsured
auto or anyone else responsible. This includes all sums paid under the bodily
injury or property damage liability coverage of this or any other auto insurance
policy.
2. all amounts payable under any workers’ compensation law, disability benefits
law, or any similar automobile medical payments coverage. (Emphasis added.)
Zdeb, 404 Ill. App. 3d at 115.
Since Allstate had paid Zdeb $38,952.53 pursuant to the med pay provision, and since Zdeb had
received $50,000 from State Farm, Allstate claimed a total set-off of $88,952.53. Allstate then
tendered $11,047.47 to Zdeb to resolve her UIM claim.
Zdeb sought a declaration in circuit court that she was entitled to $50,000 in UIM benefits. She
argued that the med pay coverage was a separate and distinct portion of the policy for which
she had paid a premium. She claimed that as a general rule, a set-off is only allowed to prevent
double recovery. Allstate filed a motion for summary judgment, claiming the applicable set-off
provision in the policy unambiguously allowed Allstate to set-off the medical payments made to
Zdeb. The trial court agreed with Allstate, and further found that after the set-off, Zdeb was
placed in the same position had she recovered $100,000 in liability coverage from the at-fault
driver’s insurer, which is consistent with the purpose of UIM coverage. Zdeb filed an appeal.
On appeal, Zdeb did not argue that the set-off provision was ambiguous, but rather, argued that
Allstate violated public policy when it set-off the medical payments. The Court examined the
Illinois Supreme Court case of Sulser, which construed the legislative intent for providing
underinsured motorist coverage. Sulser v. Country Mut. Ins. Co., 147 Ill. 2d 548, 591 N.E.2d 427,
169 Ill. Dec. 254 (1992). The Sulser Court articulated the public policy behind the statute: “to
place the insured in the same position he would have occupied if injured by a motorist who
carried liability insurance in the same amount as the policyholder.” The Court held that under
Sulser, Allstate’s set-off provision did not violate public policy.
The Court then examined Adolphson v. Country Mut. Ins. Co., 187 Ill. App. 3d 718, 543 N.E.2d 965,
135 Ill. Dec. 397 (3d Dist. 1989). In Adolphson, the Court addressed whether the insurer could
set-off medical payments coverage from its UIM coverage. The Adolphson Court found
“[n]othing in the (underinsured motorists) statute prevents the insurer from reducing its liability
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by amounts paid under other coverages in the same policy.” The Court further found the
applicable set-off provision was unambiguous, and thus, the insurer was entitled to the set-off.
In Zdeb, the Appellate Court found nothing in the statute to prevent Allstate from claiming the
set-off of medical payments since the policy expressly authorized the set-off. The set-off did not
prevent plaintiff from recovering $100,000, the amount she would have been entitled to if the
at-fault driver would have had $100,000 bodily injury liability limits. Therefore, the Appellate
Court upheld the trial court’s judgment in favor of Allstate, holding that the Allstate policy was
consistent with public policy and therefore valid.
II.
ARBITRATION
A.
Arbitration Awards and “Trial De Novo” Provisions
Phoenix Ins. Co. v. Rosen, No. 110679, 2011 WL 1500013 (April 21, 2011) – Martha Rosen was
injured in an auto accident involving another driver who was insured for a maximum limit of
$25,000, while Rosen’s policy (with Phoenix Insurance) included UIM coverage of $500,000.
Because Rosen wanted substantially more than $25,000 for her injuries, she made a claim
against Phoenix requesting coverage under her UIM provisions of her policy.
Following the UIM arbitration, Rosen was awarded $382,500 less set-offs. Phoenix filed a
complaint with the Cook County circuit court rejecting the arbitration award and demanding a
jury trial, citing the so-called “trial de novo” provision of paragraph (C)(2) of the arbitration
agreement, which states:
C. Unless both parties agree otherwise, arbitration will take place in the county in
which the ‘insured’ lives. Local rules of law as to procedure and evidence will
apply. A decision agreed to by two of the arbitrators will be binding as to:
1. Whether the ‘insured’ is legally entitled to recover damages; and
2. The amount of damages. This applies only if the amount does not exceed the
minimum limit for bodily injury liability specified by the Illinois Safety
Responsibility Law. If the amount exceeds that limit, either party may demand the
right to a trial. This demand must be made within 60 days of the arbitrators’
decision. If the demand is not made, the amount of damages agreed to by the
arbitrators will be binding.
Phoenix Ins. Co., 2011 WL 1500013 at *1.
Rosen answered and asserted as an affirmative defense that the trial de novo provision was
“invalid and unenforceable as against the public policy of the State of Illinois.” Id. She also filed a
counterclaim asking the court to enforce the arbitration award in her favor. The trial court struck
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Rosen’s affirmative defense and dismissed her counterclaim. Rosen immediately appealed to the
Appellate Court, First District, which reversed that decision, holding that trial de novo provision
“unfairly and unequivocally favors the insurer over the insured because an insurance company is
unlikely to appeal a low binding arbitration award while very likely to appeal a high award.” Id. at
*2. The Court also found that such provisions violate “the public policy considerations in support
of arbitration” by increasing the time and costs required to settle the dispute. The Court
therefore found that “trial de novo provisions in underinsured clauses are against public policy in
Illinois.” Id.
Phoenix appealed to the Illinois Supreme Court, and even allowed the Illinois Trial Lawyers
Association (ITLA) leave to submit an amicus curiae brief in support of Rosen.
The Illinois Supreme Court reversed the Appellate Court’s decision, and ruled in favor of
Phoenix.
The Court held that the provision in Rosen’s underinsured-motorist policy allowing either party
to reject an award over the statutory minimum for liability coverage does not violate public
policy and is not unconscionable. Based on their holding, the Illinois Supreme Court found that
the circuit court’s granting of Phoenix’s motion to dismiss Rosen’s counterclaim was appropriate.
Therefore, the judgment of the Appellate Court was reversed, and the judgment of the circuit
court was affirmed.
In making this ruling, the Court found that:
(1)
(2)
(3)
(4)
Illinois public policy favors arbitration as a means for resolving disputes;
Illinois public policy does not require arbitration to be binding;
Trial de novo provisions do not violate public policy;
Uninsured-motorist and underinsured-motorist policies serve the same legislative
purpose, and the state law specifically requires the use of trial de novo provisions
in UM cases.
Id. at *7.
As to the last point, the Court determined that trial de novo provisions are consistent with the
public policy of Illinois when they appear in uninsured motorist policies. Importantly, the
legislature did more than simply condone the use of such provisions in the uninsured-motorist
context; it explicitly required their use. And if it is good enough for UM cases, it is good enough
for UIM cases. The Court held:
Correspondingly, the public policy of Illinois does not merely condone the use of
trial de novo provisions in uninsured-motorist policies. It is the public policy of
Illinois that such provisions must be included.
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As we have repeatedly emphasized, the legislative considerations behind the
underinsured-motorist statute are the same as those underlying the uninsuredmotorist statute. Both statutes ensure that an injured policyholder will be
compensated for her damages up to the limits of coverage she has paid for,
regardless of the coverage carried by the at-fault driver. . . . This common
purpose is underscored by the underinsured-motorist statute’s requirement that
coverage limits under that provision must equal the insured’s uninsured-motorist
coverage limit. . . . We acknowledge, of course, that the legislature has declined
to enact a trial de novo requirement in the underinsured-motorist context. Thus,
Rosen is correct that the legislature has not clearly defined Illinois’ public policy
with respect to trial de novo provisions in underinsured-motorist policies.
However, the legislature’s requirement of the provisions in uninsured-motorist
policies is certainly evidence of the legislature’s view of trial de novo agreements.
Where the public policy as expressed by the legislature affirmatively requires a
contractual provision in one context, it would be inconsistent to say that an
identical provision in a highly related context is so against public policy that we
must refuse to enforce it, unless some distinction between the two contexts
supports such a result. [citations omitted.]
Id at *8.
In addition to rejecting Rosen’s argument that the trial de novo provision is unenforceable as
against public policy, the Illinois Supreme Court also rejected her related argument that the
provisions are unenforceable because they are unconscionable. The Court handily dismissed
Rosen arguments that the provision in question lacked “mutuality” and unequivocally favored
the insurer over the insured. Rosen could not convince the Court that insurance contracts bear
the earmarks of adhesive contracts, and the trial de novo policy is so one-sided and oppressive
that no rational insured would voluntarily agree to such a provision.
Simply put, the Illinois Supreme Court found:
the structure of the arbitration provision in Rosen’s insurance policy taken as a
whole helps ensure some measure of fairness between the parties. When a
conflict arises between the insurer and the insured under the underinsuredmotorist provision, as occurred in this case, both parties are entitled to choose an
arbitrator, and those two arbitrators together select the third arbitrator. Then the
parties may present evidence regarding the insured’s damages and the insurer’s
liability. After hearing this evidence, the arbitrators reach a decision as to the
amount of damages, if any, to which the insured is entitled under her insurance
contract. Thus, when an insured is bound to an award less than $20,000, it is not
an award crafted by the insurance company for its own benefit. Rather, the
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arbitration agreement is designed to result in an award that is the product of the
informed and reasoned judgments of an impartial panel of arbitrators.
Id. at *12.
Thus, based on Phoenix, trial de novo provisions contained in UIM provisions are enforceable.
B.
Arbitration Hearings and Coverage Issues
United Auto. Ins. Co. v. Wilson, ___ Ill. App. 3d ____, 942 N.E.2d 717, 347 Ill. Dec. 514 (1st Dist.
2011) – The Wilsons were involved in a hit-and-run accident with an uninsured driver, and
subsequently filed an uninsured (“UM”) claim with their insurer, United Automobile Insurance
Company (hereinafter “United Auto”). The Wilsons’ vehicle was stolen, then recovered and
junked, prior to United Auto’s inspection. United Auto filed a declaratory judgment action
seeking a finding of no coverage due to the Wilsons’ alleged spoliation of evidence. The
applicable insurance policy contained an arbitration provision. The trial court denied United
Auto’s motion to stay arbitration pending resolution of the coverage issue, and ordered the
parties to proceed to arbitration on all issues, including coverage.
United Auto appealed the trial court’s ruling on its motion to stay, and the Appellate Court
reversed, relying on the Illinois Supreme Court case, State Farm Fire & Cas. Co. v. Yapejian, 152
Ill. 2d 533, 605 N.E.2d 539, 178 Ill. Dec. 745 (1992) which held that arbitration pursuant to the
Illinois Insurance Code is limited to disputes concerning covered claims, once coverage had
been established. Under Yapejian, coverage is an issue for the trial court to determine. Thus, the
Appellate Court remanded with instructions to the trial court to stay arbitration pending
resolution of the coverage issue.
United Auto, however, had not moved to stay arbitration during the pendency of the appeal,
and thus, the arbitration proceeding commenced during the appeal. After the parties presented
evidence on all issues, the trial court received the Appellate Court’s mandate, and once again
stayed arbitration proceedings. The parties then proceeded to trial on the coverage issue, and
the court found there was coverage. United Auto appealed the ruling, but again, did not move
to stay the arbitration proceedings during the appeal. The trial court ordered arbitration on the
Wilsons’ UM claim. The arbitrator awarded $11,000 to Woodrow Wilson and $9,000 to Sidney
Wilson. United Auto then filed a declaratory judgment action seeking to vacate the arbitration
award. The trial court dismissed the declaratory judgment action, and confirmed the arbitration
award. United Auto appealed.
On appeal, the issue was whether the arbitration award is void because arbitration proceedings
commenced before the circuit court determined the issue of coverage. Initially, the Appellate
Court noted that the Court will take a limited review of an arbitration award, and construe it so
as to uphold it whenever possible. The Court will vacate the award only when one of the
following elements are found:
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1. The award was procured by corruption, fraud or other undue means;
2. There was evident partiality by an arbitrator appointed as a neutral or
corruption in any one of the arbitrators or misconduct prejudicing the rights of
any party;
3. The arbitrators exceeded their powers;
4. The arbitrators refused to postpone the hearing upon sufficient cause being
shown therefor or refused to hear evidence material to the controversy or
otherwise so conducted the hearing, contrary to the provisions of Section 5 (710
ILCS 5/5 West (2008)) as to prejudice substantially the rights of a party; or
5. There was no arbitration agreement and the issue was not adversely
determined in proceedings under Section 2 (710 ILCS 5/2 (West 2008)) and the
party did not participate in the arbitration hearing without raising the objection;
[b]ut the fact that the relief was such that it could not or would not be granted by
the circuit court is not ground for vacating or refusing to confirm the award.
710 ILCS 5/12 (West 2008).
United Auto appeared to argue that the arbitrator exceeded her powers by hearing evidence
before coverage was determined by the trial court. (The Court describes it this way because
United Auto’s appellate brief did not clearly spell out this argument.) The Court noted that an
arbitrator’s authority is expressed in the arbitration agreement. However, because United Auto
did not include the arbitration agreement in its brief, and because the Court presumes an
arbitrator will act within the scope of her authority, the Court presumed the arbitrator’s award
was within the scope of her authority.
The Appellate Court also addressed its prior reversal of the trial court’s arbitration order. The
Appellate Court’s mandate did not vacate any portions of prior arbitration proceedings, but
rather only stayed – temporarily postponed – further arbitration proceedings until the trial court
had decided the coverage issue. Moreover, the Appellate Court found United Auto’s reliance on
Yapejian was misplaced because Yapejian stands only for the rule that an arbitrator may not
decide the issue of coverage. The Court noted that Yapejian does not preclude the
commencement of arbitration proceedings prior to the resolution of coverage. The Appellate
Court here found that Yapejian did not support United Auto’s argument and that the arbitrator
presumably acted within her authority. Accordingly, the Court held that that United Auto’s
argument failed. The Appellate Court affirmed the trial court’s order dismissing United Auto’s
declaratory judgment action and confirming the arbitration award in the Wilsons’ favor.
Rein v. State Farm Auto. Ins. Co., No. 1-10-0764, 2011 WL 855652 (1st Dist. March 4, 2011) – On
April 5, 2007, Lauren Rein was injured in a hit-and-run accident. The other driver was never
identified. Rein was insured by State Farm for bodily injury caused by an uninsured driver or
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unknown driver in a hit-and-run situation. The applicable policy had the following mandatory
arbitration provision: “Under the uninsured motor vehicle coverages, any arbitration or suit
against us will be barred unless commenced within two years after the date of the accident.” On
April 2, 2009, State Farm received a letter from an attorney on Rein’s behalf, notifying State Farm
of Rein’s intention to pursue an uninsured claim as a result of the April 5, 2007 accident. The
letter did not mention arbitration. State Farm denied Rein’s claim, and Rein sought a declaratory
judgment compelling State Farm to arbitration for her uninsured claim.
State Farm moved for summary judgment on the grounds that Rein failed to comply with the
specific limitations provision cited above. In support of its position, State Farm relied on two
earlier First District cases that interpreted similar limitations provisions and concluded that the
insured had not expressly requested arbitration or disclosed an arbitrator on the insured’s behalf
within two years of the accident, as required by the arbitration provision. See, Buchalo v. Country
Mut. Ins. Co., 83 Ill. App. 3d 1040, 404 N.E.2d 473, 39 Ill. Dec. 89 (1st Dist. 1980); Shelton v.
Country Mut. Ins. Co., 161 Ill. App. 3d 652, 515 N.E.2d 235, 113 Ill. Dec. 426 (1st Dist. 1987). In
response, Rein argued that the newer Fifth District case of Hale controlled, which interpreted a
similar provision, but held that an implied intent to commence arbitration was sufficient to
satisfy the arbitration provision. Hale v. Country Mut. Ins. Co., 334 Ill. App. 3d 751, 778 N.E.2d
721, 268 Ill. Dec. 455 (5th Dist. 2002). State Farm urged the trial court to disregard the broader
interpretation articulated in Hale that conflicted with the earlier First District cases. The trial
court granted summary judgment in favor of State Farm.
On appeal, Rein raised three arguments as follows: (1) that no conflict exists in First and Fifth
District cases: Buchalo and Shelton are distinguishable and Hale is controlling; (2) that Rein’s
attorney’s letter constituted the first step to commence arbitration; and (3) that the policy
provision is against public policy. In response, State Farm argued, respectively (1) that the circuit
court correctly followed the older First District cases which conflict with the newer Fifth District
case; (2) that Rein’s letter cannot reasonably read as commencing arbitration; and (3) that the
policy limitation does not contravene public policy and is valid.
The Court addressed the public policy argument first. It examined the Hale decision cited by
Rein which directly addressed this issue. The Hale Court found that an insurance policy’s twoyear limitations provision is not contrary to public policy. The Court rejected Rein’s public policy
argument.
The Appellate Court next addressed the applicable First and Fifth District cases. The parties
agreed that if Buchalo and Shelton cannot be distinguished, then they conflict with Hale. The
Appellate Court found the distinctions in Buchalo and Shelton minimal, and focused on the
alleged conflict with the Hale decision.
In Hale, the applicable policy provided, “Arbitration proceedings will not commence until we
receive your written demand for arbitration.” Within two years, the insured’s attorney sent a
letter stating, “. . . [i]t appears that we have an underinsured claim.” When the attorney sent this
letter, litigation against the at-fault driver was pending. The insurer denied the claim, and the
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decision was upheld by the trial court. The Fifth District reversed, finding the language imperfect
but satisfactory to serve the purpose of notifying the insurer of the claim. The Court reasoned
that the insured could not have known within the two-year period whether he would certainly
have a claim due to the pendency of the litigation against the at-fault driver. Furthermore, the
Court reasoned that the insurance industry could not have intended its insureds to formally
request arbitration in every minor claim, for that would result in the industry being inundated
with premature demands for arbitration.
The Appellate Court in the instant case disagreed with the Hale Court’s reasoning for two
reasons. First, the Court disagreed with the Hale’s Court’s holding that “notice” could serve as a
“demand” under the limitations provision. The Court found this holding was without authority,
and disregarded the limitations provision’s specific and unambiguous requirement for express
action. Secondly, the Court saw no reason to concern itself with the burden an insurance
company contracts to impose upon itself. The Court thought that burden is best addressed by
the insurance company that is free to modify its provision or take other affirmative steps to
address it.
Finally, the Appellate Court turned to Rein’s letter. It noted that the letter did not even mention
arbitration, let alone indicate her selection for an arbitrator. The Appellate Court found Rein’s
letter did not comply with the explicit requirement in State Farm’s provision requiring Rein to
take specific, affirmative steps to commence arbitration. Therefore, the Appellate Court affirmed
the trial court’s judgment in State Farm’s favor.
III.
STACKING
Hanson v. Lumley Trucking, LLC, 403 Ill. App. 3d 445, 932 N.E.2d 1179, 342 Ill. Dec. 718 (5th Dist.
2010) – Brian Waters, an employee of Lumley Trucking, LLC, was driving one of Lumley’s vehicles
when it collided with a vehicle insured by Progressive with liability limits of $50,000/$100,000.
Waters’ injuries were fatal. Progressive paid Waters’ estate $50,000 to settle the claim against
Progressive’s driver. Lumley’s vehicle carried UIM coverage in a policy issued by General
Casualty Company.
The estate sought UIM benefits pursuant to the UIM provision of the General Casualty policy. In
a declaratory judgment action, the estate sought to stack the available UIM coverage, which
would amount to $1 million in available UIM coverage to the estate. The estate argued that the
applicable policy provided a $40,000 limit for each of the 25 vehicles it insured under the policy,
but did not prevent stacking of the limits. General Casualty counterclaimed, arguing that the
policy did not allow its UIM coverage to be stacked. Furthermore, because the estate had
received $50,000 from Progressive, General Casualty argued it owed nothing to the estate.
At issue before the trial court, and ultimately the Appellate Court, was whether the UIM
coverage for the 25 insured vehicles could be stacked to allow the estate to recover up to
$1 million in UIM benefits under the policy. The trial court focused on the declarations page,
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finding that the declaration page of the policy contained a single line setting forth a shorthand
identification of “46,” which cross-referenced a set of 25 vehicles, with a single identification of a
single amount of UIM coverage. The court found the declarations page unambiguous and
specifically prohibited stacking. The court ruled in General Casualty’s favor on the pleadings. The
estate appealed.
The only issue before the Appellate Court was whether the policy allowed stacking of the UIM
coverage. The estate argued that the “46” shorthand reference to 25 vehicles created an
ambiguity in the policy, in favor of coverage. An ambiguity exists if the relevant portion is
subject to more than one reasonable interpretation, not whether creative possibilities can be
suggested. Here, the estate concluded that by using the number “46” to reference the 25
vehicles, it should be allowed to stack coverage for 25 vehicles. The Appellate Court found the
argument confusing because it is not a reasonable interpretation of the policy language.
The Appellate Court turned to the pertinent policy provisions. The Court noted that the manner
in which the insurance company lists the coverage on its declaration sheet provides important
information that is specific to the policyholder. In the case at bar, the declarations page listed
the UIM coverage once. Further, it specifically included a clear and unambiguous stacking clause
as follows: “Regardless of the number of covered ‘autos,’ ‘insureds,’ premiums paid, claims
made[,] or vehicles involved in the ‘accident,’ the most we will pay for all damages resulting from
any one ‘accident’ is the Limit of insurance for Underinsured Motorist Coverage shown in this
endorsement.” Since the UIM limit of $40,000 was listed one time, there is no reasonable way to
interpret the policy so as to allow stacking the coverage for all 25 insured vehicles.
IV.
MISCELLANEOUS ISSUES
A.
Wrongful Death Act
In re Estate of Anderson, No. 1-10-1240, 2011 WL 947126 (1st Dist. March 15, 2011) – Frederick
Anderson’s vehicle was rear-ended by an underinsured driver, killing Frederick. In her
representative capacity as the administrator of his estate, Frederick’s wife, Marion, filed a
wrongful death action against the underinsured driver, and a claim for benefits under Frederick’s
UIM policy with State Farm. In addition to his wife Marion, Frederick left two surviving adult
sons. The underinsured driver’s insurer tendered its $20,000 limits to settle the suit filed against
it. State Farm tendered $230,000 in settlement of the UIM claim to Marion, as administrator of
the estate.
Marion filed a petition to approve the distribution of the $230,000 solely to her, individually, as
the only insured per the insurance policy. Marion argued that Frederick’s sons were not insureds
under the policy and thus, were not entitled to any of the proceeds of the UIM settlement. The
sons objected to the petition, arguing that the proceeds should be distributed pursuant to the
Wrongful Death Act, or alternatively, they should be considered insureds under the policy.
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The trial court certified the following specific question to the Appellate Court, which was an
issue of first impression in Illinois – whether benefits paid pursuant to a policy of underinsurance
should be disbursed pursuant to the Illinois Wrongful Death Act and not according to the policy
of underinsurance? The Court examined the language of the insurance policy and of the
Wrongful Death Act, to discern the intent and purpose of them both, taking them each in turn.
The applicable insurance policy contained the following language:
We will pay damages for bodily injury an insured is legally entitled to collect from
the owner or driver of an underinsured motor vehicle. The bodily injury must be
sustained by an insured and caused by an accident arising out of an operation,
maintenance or use of an underinsured motor vehicle.” (Emphasis added.)
In re Estate of Anderson, 2011 WL 947126 at *2.
In this case, the legal entitlement to collect damages from the underinsured driver comes from
the Wrongful Death Act, which put simply, permits recovery for a death caused by a wrongful
act of another. The Act identifies those individuals who, by law, are entitled to pursue recovery
under the Act, as follows:
Every such action shall be brought by and in the names of the personal
representatives of such deceased person, and, except as otherwise hereinafter
provided, the amount recovered in every such action shall be for the exclusive
benefit of the surviving spouse and next of kin of such deceased person.
Id.
The underinsured motorist provisions of the policy define “insured” as “any person entitled to
recover damages because of bodily injury to an insured.” Based on the language of the policy
and the Wrongful Death Act, the only basis for payment of UIM benefits in this case is the
wrongful death action, which is statutorily brought for the benefit of the spouse and next of kin.
Thus, the proceeds of the settlement with State Farm represent wrongful death damages,
distributable to Marion and Frederick’s two sons. The Court answered the certified question in
the affirmative.
B.
Unreasonable and Vexatious Behavior
West Bend Mut. Ins. v. Norton, ___ Ill. App. 3d ___, 940 N.E.2d 1176, 346 Ill. Dec. 572 (3d Dist.
2010) – Wanda Norton was driving her car when a vehicle driven by Karyn Patterson struck her.
Norton was insured by West Bend Mutual Insurance; Patterson was insured by American Family
Insurance. Norton filed a claim with West Bend, which paid $2,852.50 pursuant to medical
payments coverage, and $4,232.26 for property loss and rental vehicle expenses. West Bend
sought reimbursement from American Family, and recovered the property damage expenses.
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Norton notified American Family of her special damages of $18,307.87, and when her claim with
American Family did not settle, she filed suit against Patterson without notifying American
Family or West Bend. A default judgment was subsequently entered against Patterson. Norton
did not notify American Family of the judgment until 90 days after entry of the judgment.
American Family denied coverage for the loss due to lack of notice. Norton then asserted an
uninsured claim against West Bend, which West Bend denied. West Bend urged Norton to move
to vacate the judgment against Patterson so West Bend could pursue subrogation against
American Family, pointing out Norton’s contractual obligation to cooperate with West Bend’s
subrogation efforts.
Norton refused to vacate the judgment against Patterson and filed suit against West Bend
seeking UIM benefits pursuant to her policy. West Bend moved to dismiss, arguing that the
claim must be submitted to arbitration. The trial court dismissed the suit and ordered the claim
proceed to arbitration. Meanwhile, West Bend sought a declaration of its obligations under the
policy, which was stayed by agreement pending arbitration.
At arbitration, one and one-half years later, the panel awarded $7,113.61 to Norton, which was
promptly offered by West Bend. Norton refused to accept West Bend’s offer, and filed a
counterclaim to West Bend’s declaratory judgment claim, alleging unreasonable and vexatious
delay pursuant to section 155 of the Illinois Insurance Code. Section 155 provides, in relevant
part:
In any action by or against a company wherein there is in issue the liability of a
company on a policy or policies of insurance or the amount of the loss payable
thereunder, or for an unreasonable delay in settling a claim, and it appears to the
court that such action or delay is vexatious and unreasonable, the court may
allow as part of the taxable costs in the action reasonable attorney fees. 215 ILCS
5/155 (West 2004).
West Bend, 940 N.E.2d at 1179.
The trial court stated that the relevant inquiry is whether West Bend had a good faith basis for
contesting the UM claim. In finding West Bend acted in good faith, the trial court stated that
West Bend had consistently disputed its obligation to provide coverage in this instance, and
further, the parties had agreed to the arbitration date, which was approximately four and onehalf years after Norton filed suit against West Bend seeking payment under the UIM provision of
the policy. Therefore, the trial court dismissed Norton’s claim against West Bend. Norton
appealed.
The issue before the Appellate Court was whether West Bend’s conduct was unreasonable and
vexatious pursuant to section 155. The Appellate Court noted that the test is whether the
insurance company had a bona fide defense to the claim. West Bend claims it had a bona fide
dispute due for two reasons:
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1.
Norton’s failure to timely notify American Family of the suit and judgment against
Patterson, thereby resulting in Norton’s “uninsured” status; and
2.
Norton’s failure to cooperate with West Bend’s subrogation efforts, as required
by the insurance policy.
According to the Appellate Court, West Bend did not delay the claim due to inaction, but
instead responded immediately that the claim should be submitted to arbitration. West Bend
disputed its obligation to pay, and timely sought declaratory relief. The parties agreed to
proceed to arbitration pending the coverage issue, and agreed on the arbitration date. After
arbitration, Norton refused to settle her claim, and only then – approximately five years later –
did she raise an unreasonable and vexatious claim.
The Appellate Court agreed with the trial court that West Bend was entitled to defend Norton’s
claim, and was not unreasonable and vexatious in its denial. To the contrary, the Appellate Court
found that any delay in resolving the claim was attributable to Norton’s rejection of the award,
rather than any action or inaction on West Bend’s part. The Appellate Court affirmed the trial
court’s judgment in West Bend’s favor.
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Mark J. McClenathan
- Partner
Mark joined Heyl Royster in 1989, and became a
partner with the firm in 1998.

Mark concentrates his practice in commercial and civil
litigation. He has extensively defended product
liability, professional liability, construction liability, and
agriculture liability cases.


In addition, Mark has represented clients in the areas
of business and corporate law, construction law, and
real estate. Also, he has represented municipalities
and clients before various governmental bodies, and
has extensive experience in annexations, subdivisions
and developments, zoning, and intergovernmental
agreements.
negotiating and drafting border agreements
and annexation agreements.
Represented municipalities in court on border
disputes.
Represented municipalities before
administrative boards on disciplinary
proceedings (including police issues).
Represented Ken Rock Community Center on
sale of commercial/school property.
Public Speaking
 “Evidentiary Issues for the Claims Professional”
Heyl Royster (2008)
 “Premises Liability Update”
Heyl Royster (2007)
 “Mediation and Arbitration: When, Why &
How?”
Heyl Royster (2001)
 Various presentations to local realtor company
meetings on professional liability issues
Prior to joining Heyl Royster, Mark worked for the
legal department of the Defense Logistics Agency
(Defense Contract Services) of the Department of
Defense in Chicago; the legal departments of two
Fortune 500 companies headquartered in the Twin
Cities, Minnesota including Land O'Lakes, Inc. in St.
Paul and 3M Corporation in Minneapolis; and then
was in private practice with a firm in Rockford, where
he practiced in the areas of business and corporate
law, commercial and civil defense litigation, and
bankruptcy (creditors' rights).
as Leading Lawyers
 Winnebago County Pro Bono Volunteer of the
Year (1990)
 Court certified mediator, Winnebago County
Significant Cases
 Fox Controls, Inc. v. Honeywell, Inc,. 2004 WL
906114 (N.D. Ill. 2004) - Dismissal of case
alleging misappropriation of trade secrets.
 Zimmerman v. Fasco Mills Co,. 302 Ill. App. 3d
308 (2d Dist. 1998) - Dismissal of case involving
"Fireman's Rule."
 Donovan v. Beloit Corp., 275 Ill. App. 3d 25 (2d
Dist. 1995) - Structural Work Act versus preemption of OSHA issue.
 Jansen v. Aaron Equipment, (N.D. Ill. 1995) Product liability case involving joint and several
rule.
 Winnebago County Bar Association
Court Admissions
of Illinois
Education
 Juris Doctor, Hamline University School of Law,
1987
 Bachelor of Arts (Magna Cum Laude),
University of Wisconsin - Eau Claire, 1984
 Porter Scholar, Beloit College, 1979-1980
Transactions
 Assisted various municipalities on
incorporations; drafting new or amending
existing zoning, subdivision, and general
ordinances; drafting comprehensive plans;
K-17
BUILDING A SOLID FOUNDATION FOR DEFENSE: STATEMENT TAKING TECHNIQUES Presented and Prepared by:
Heidi E. Ruckman
[email protected]
L-1
BUILDING A SOLID FOUNDATION FOR DEFENSE:
STATEMENT TAKING TECHNIQUES
I.
THE FIRST BATTLE ........................................................................................................................................ L-3
A.
B.
II.
Introduction..................................................................................................................................... L-3
What Kind of Statement to Take ............................................................................................. L-3
THE TACTICAL DECISIONS ........................................................................................................................ L-4
A.
Why Take a Statement ................................................................................................................ L-4
1.
2.
3.
B.
Whose Statement Should Be Taken ....................................................................................... L-5
1.
2.
3.
C.
D.
Fact Finding Mission ..................................................................................................... L-4
Lock in Parties’ and Witnesses’ Version of the Incident .................................. L-4
Assist With Initial Case Assessment ........................................................................ L-4
Plaintiff/Claimant ............................................................................................................ L-6
Defendant/Insured ........................................................................................................ L-6
Witness ............................................................................................................................... L-6
When to Take the Statement .................................................................................................... L-6
How to Take the Statement ...................................................................................................... L-7
1.
2.
3.
4.
Prepare an Outline, But Do Not Feel Like You
Can’t Deviate From It .................................................................................................... L-7
Medical Treatment/Injuries ........................................................................................ L-8
Determine the Current Status ................................................................................... L-9
Closing Out the Statement ......................................................................................... L-9
L-2
STATEMENT TAKING TECHNIQUES
I.
THE FIRST BATTLE
A.
Introduction
Many plaintiffs’ firms warn their potential clients about providing a recorded statement to
insurance companies. One firm wrote on its website, "never give an adjuster a recorded
statement.” “They will use it against you." It went on to inform would-be clients that insurance
companies will not even give them a copy of their own statement until they litigate against
them.
Another website called settlementcentral.com, informed readers that an insurance company will
try to get their statements “under the ruse” that it needs their version of the accident for its
records to confirm liability against their insured and that the insurance company will claim it
needs their medical information and records to make the injured a fair settlement offer.
However, it warned people not to give a recorded statement to anyone. It explained on the
website that this is because “most people” do not "think very well on their feet" and "tense up
under the pressure of answering questions for a recording." It warned individuals that they may
forget important things that should be included in the statement. Likewise, it warned them that
“the adjuster is your adversary" and should always be treated as such.
Furthermore, there are advertisements which coach people on how to provide written
statements to insurance companies. At ehow.com, the site informs the injured party that he/she
should always talk to an attorney first, never admit guilt, do not apologize as it may be used
against them, do not give specifics about their injuries, and do not inform insurance companies
about their doctor's name or location. It advises the person to present factual, but general
information as "going into detail could give the insurance company ammunition to use against
you."
B.
What Kind of Statement to Take
An adjuster can obtain a written statement or a recorded statement. Although there are benefits
and drawbacks of both, a recorded, transcribed statement is preferred. First, you have more
control over the statement being provided. You can ask the questions and follow up on matters
which are not clear or you feel may need further explanation. Second, you are ensuring the
statement will be completed. Many times when an individual is asked to provide a written
statement, even if it consists of answering questions about the incident, they will fail to
complete all of the questions, may not return it, or may be getting "assistance" or coaching from
others, including an attorney. Therefore, a recorded statement will allow you to obtain
information about the accident, potential witnesses and alleged injuries within a relatively short
period of time.
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II.
THE TACTICAL DECISIONS
A.
Why Take a Statement
When a new file is assigned to an attorney, many times the key documents used to assist with
the initial development of a defense strategy includes the transcribed statements of the parties
and witnesses. This is especially true when a police report has not been generated, no medical
records have been obtained, or the alleged damages consist of property damage.
1.
Fact Finding Mission
A statement allows the defense to gather information about the claim. Many times statements
are taken close in time to the accident itself when the facts and/or memory of the accident is the
clearest. Of equal importance, if the claimant has not consulted with an attorney, he or she may
be more willing to speak freely about the accident and his/her injuries. This is an opportunity to
obtain information about the claimant’s background, events leading up to the accident, the
accident itself, property damages, whether any photographs exist, physical injuries, medical
treatment the claimant has received, whether the claimant is unable to work as a result of the
injuries, and whether there are any witnesses who could be contacted.
2.
Lock in Parties’ and Witnesses’ Version of the Incident
Although these statements are not provided under oath, they help "lock in" party or witness
testimony. They can be used to challenge a party's recollection at a later date during the
discovery deposition when testimony conflicts with information he/she provided in the
statement. For example, during a deposition, if a plaintiff suddenly remembers that the
defendant was driving 25 miles per hour at the time of the impact, but advised in his earlier
statement that he did not know or did not see the defendant prior to impact, the statement can
be used to press him on cross examination. Examination during the deposition can establish that
the plaintiff did not know the speed when he first gave a statement at a time which was closer
to the accident when his memory would be more clear. Likewise, if a plaintiff provides a
statement that he was not injured or only injured a particular area of his body, but then claims
additional injuries once suit is filed, the statement can be used to challenge these allegations.
3.
Assist With Initial Case Assessment
A statement also assists with formulating the initial assessments of the plaintiff's claim. You, as
the adjuster, have the first opportunity to speak with the claimant and begin to assess his/her
credibility. Is he/she an articulate individual who will make a good witness? What is his/her
background? Is this person now unable to work due to his/her injuries or a parent who is now
injured and unable to care for his/her children, etc. Based on the person's description of their
injuries, one can evaluate if the injuries consist of soft tissue injury that may require conservative
treatment and be resolved in four to six weeks or whether it is a cervical fracture which may
require surgical intervention. The foundation for these initial determinations begins with the
gathering of essential information during the statement taking.
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Conflicting statements offered by witnesses and parties as to who had a green light or whether
the pedestrian darted out in traffic, outside of the cross walk, while wearing dark clothes at night
will assist with evaluating whether liability rests with the insured. These witnesses may be listed
on the police report, but it is not until they are asked specific questions regarding their
recollection of the accident or the speed of the vehicles that one will really be able to assess the
potential issues pertaining to the insured's liability. Of equal importance, when obtaining a
statement from the insured it is important to determine whether the insured was issued a
citation as a result of the accident and whether he/she pled guilty. Although a guilty plea can
sometimes be explained away, many times certified copies of the convictions are used by a
plaintiff at trial as evidence of negligence. Again, all of this information provided prior to
commencing with formal discovery can be used to determine liability.
The information obtained in a statement will allow both an adjuster, and if suit is filed, an
attorney, to assess the strengths and weaknesses of a claim. It will also help with determining a
defense strategy. Is this a case which will be settled or litigated? Are there affirmative defenses
which can be alleged with the answer? Affirmative defenses can be pled without leave of court
when filed with the answer. Many times the information contained in a statement provides the
initial basis for those affirmative defenses. The information contained in the statement also
highlights to an attorney issues which should be further explored during discovery depositions
so that testimony and/or admissions can be obtained in order to support potential
counterclaims against co-defendants, possible third party complaints, or dispositive motions.
B.
Whose Statement Should Be Taken
There are no hard and fast rules which dictate whose statements should be taken. An adjuster
can use the information reported with the claim, the police report or the information provided
by the insured to determine whose statement should be taken. A witness’ statement should be
taken for several reasons. First, it allows the defense to learn what these witnesses will most
likely testify about. This information can be used to assist the attorney in determining whether
or not the discovery deposition of these individuals should be taken. Although this decision to
take a discovery deposition typically does not apply to the parties, it is very important when it
comes to deciding whether or not to take the deposition of a witness when there is a cost
associated with doing so (i.e. attorney's fees, court reporter, etc.), when you have no reason to
believe the witness' testimony will be any different from what was provided in the statement, or
the statements will be harmful to the insured's position. As such, an attorney may decide the
drawbacks of taking the deposition will outweigh any positive ground that may be gained and
decide not to take the deposition. Therefore, the information contained in the statements
provide an attorney with a "snap shot" of what to expect and as such, will assist with framing
issues and determining what information should be obtained from a witness or a party.
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1.
Plaintiff/Claimant
No matter what type of claim, the plaintiff's/claimant’s statement is extremely important. This is
an opportunity to speak directly with the plaintiff/claimant shortly after the incident. You can
obtain information regarding the alleged injuries and medical treatment plaintiff/claimant has
received. Furthermore, it is an opportunity to begin to assess the plaintiff/claimant’s credibility
and demeanor.
2.
Defendant/Insured
Although the defendant/insured is more accessible, it is still helpful to obtain a statement of
his/her version of events when it is relatively close in time to the accident/incident. These
statements can be used to refresh the insured's memory at a later time, possibly a few years
later if the suit has been filed. Furthermore, if the insured provides information in the statement
that he did not see the plaintiff before the impact, that he was exceeding the speed limit or
looked away from the road for whatever reason, this information will help with evaluating the
case.
The insured's statements given to his insurance company are privileged from production. Monier
v. Chamberlain, 66 Ill. App. 2d 472, 213 N.E.2d 425 (3d Dist. 1966) held that the statement given
by an insured to his insurance company for the purpose of allowing the company to defend him
under the terms of its policy is considered to be a privileged communication in the hands of the
insurance company. It is clothed with the same exception from disclosure as if the statement
was given directly to the attorney. Likewise, the First District determined that an insurer-insured
extension of the attorney client privilege applies to a communication which is made by the
insured to his insurance company for the predominate purpose of protecting the interests of the
insured. Pietro v. Marriott Senior Living Services, Inc., 348 Ill. App. 3d 541, 810 N.E.2d 217, 284 Ill.
Dec. 564 (1st Dist. 2004).
3.
Witness
Witnesses tend to disappear, move, or later on decide they do not want to be involved in the
litigation. While taking a statement, the adjuster has the opportunity to confirm the witness’
address and telephone number and can also inquire as to where the individual is employed or if
there are plans to move. All of this information is very helpful later when the phone number has
been disconnected or the mail is returned with no forwarding address. This is particularly true
when the witness’ version of the accident, as provided in the statement, bolsters the defendant’s
version. As such, a witness can be the key to defending a case because they are independent
third parties who typically do not have a bias.
C.
When to Take the Statement
The earlier the statement can be taken the better. As mentioned above, an individual's
recollection of the event may be the clearest when it is only a few days after the accident.
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Likewise, witnesses may later move, or a claimant may decide to retain an attorney who will
prohibit his client from providing a statement.
D.
How to Take the Statement
1.
Prepare an Outline, But Do Not Feel Like You Can’t Deviate From It
An outline assists with ensuring that the areas which should be addressed will be covered.
However, this should be used only as a guide. For example, often times an individual will provide
a response to a question, but once it is reviewed one can see that it was not actually an answer
to the question asked. Furthermore, many times the responses will lead to follow up questions
which will provide more important information. However, that opportunity will be missed if the
follow up questions are not asked. Many times it is easy to spot an experienced adjuster who
uses the individual’s answers to guide the next area of inquiry. In addition, one should not be
afraid to ask a "dumb" question. For example, if the witness provides an answer that you do not
understand or uses a term you are not familiar with, you should inquire further. Once those
follow up questions are explored, having an outline allows you to come back to the issues which
must be addressed and ensure that all of the key topics are covered. The key to taking a good
statement is working to obtain as much information as possible about the witness' knowledge,
closing as many doors as possible by getting the witness to commit to a version of events
and/or the extent of his/her injuries, and obtain as many admissions as possible.
(a)
Start the Statement
It is helpful to start the statement by explaining the process to the individual providing the
statement. Many times the individual does not know what they will need to do or what to
expect. This also provides an opportunity to establish some ground rules. For example, advise
the individual that if for any reason he does not understand a question, to let you know and that
you will rephrase it. Likewise, if for any reason they do not hear your question they should let
you know. This makes it more difficult for the claimant to attempt to change his answer at a later
date during a deposition by claiming he did not understand the question. In addition, this is an
opportunity to establish a courteous demeanor, which will provide you with the best
opportunity for obtaining information. Also, take this time to explain that the conversation is
being recorded. As such, ask the witness to allow you to finish your questions before he
responds with an answer. This will ensure that the statement is clear. Many times a statement,
when transcribed, consists of unfinished questions and vague answers. Likewise, try to ask
simple questions that are open ended. This will give the claimant an opportunity to give answers
based on what he believes is important and relevant.
(b)
Obtain Background Information
During the statement taking process, ask questions which obtain identifying information such as
a person's full name, date of birth, address, social security number, driver's license number, and
telephone number (including a cell phone). Furthermore, it is important to ask if the individual
has any plans on moving in the next few years and if so, where they may be moving to. If they
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will tell you, it is helpful to find out whether they are married, the name of their spouse, and
whether they have any children. Try to establish if they are employed, and if so, where they
work, how long they have worked there and what job duties they may have. This not only assists
in attempting to locate potential witnesses in the future, but it also helps with assessing a
witness’ credibility or, in terms of the claimant, determining if he will attempt to allege a wage
loss claim.
(c)
Information Re: the Accident/Incident
During the statement, try to obtain as much information as possible regarding a description of
the accident or a premises injury, etc. The following lists are to be used as suggestions for
possible areas of inquiry. However, they are not to be considered exhaustive.
(1)
Auto
Areas of Inquiry: the events leading up to the accident, who the claimant may have been with,
what the plaintiff or witness had been doing prior to the accident, the date, the time of day, the
weather conditions, traffic conditions (light or heavy traffic), what lanes the vehicles were
traveling in, the sequencing of traffic control devices, where the person had been traveling to
and from, all of the occupants in each vehicle, a description of the accident itself, speeds,
distances, where the vehicles impacted, the damage done to the vehicles, whether the vehicles
were drivable, whether the parties were able to get out of the vehicles and walk around at the
scene, were there any discussions at the scene (including with police officers and witnesses),
names and addresses of any witnesses, whether claimant experienced any pain in any part of
his/her body at the scene, whether anyone was transported by ambulance from the scene and
whether they know if any photos exist.
(2)
Premises
Areas of Inquiry: who was present at the premises when the incident occurred, activities leading
up to the incident, description of the scene and specifically where the incident took place, how
the incident occurred, the exact position of the claimant, did the claimant trip, stumble, miss a
step, any other witnesses, was claimant carrying any objects, was he/she distracted (watching
something, talking, looking somewhere else), who owned the premises, type of premises (one
family-apartment), age of the premises, was the claimant there by invitation, any prior visits to
the premises, physical condition of the claimant, the type of clothing claimant was wearing, the
weather conditions, the lighting conditions, any conversations at the scene, any reports made,
whether claimant experienced any pain in any part of his/her body at the scene, whether anyone
was transported via ambulance for any treatment, and whether they know if any photos exist.
2.
Medical Treatment/Injuries
Use the statement to establish what injuries the claimant alleges he sustained as a result of the
incident. Inquire as to when the claimant first realized he was hurt. It is important to inquire as
to the claimant’s doctors, when the claimant first went to see the doctors, how many times the
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claimant has been seen and whether they have any appointments currently scheduled. If
possible, in addition to the doctor’s names, attempt to obtain information regarding the facility
each doctor is associated with so that medical records and bills can be requested. Information
received during the statement from a claimant also assists with determining if there was a gap in
treatment, i.e. the claimant waited three weeks after the accident before seeing his doctor for
the first time.
3.
Determine the Current Status
While taking the statement, it is helpful to inquire as to whether or not the claimant is
employed, if he/she has been able to work since the accident, if a doctor has placed any work
restrictions on them, when the claimant plans to return to work, what hours/shifts the claimant
worked prior to the accident, and how much money the claimant was making at the time of the
accident. In addition, inquire as to any current pain complaints the claimant may have, a detailed
description of the pain the claimant is experiencing, whether they are not able to participate in
certain activities, and whether the claimant is taking any medications.
4.
Closing Out the Statement
Once you feel that you have completed the statement, it is helpful to confirm with the claimant
that he heard your questions and understood them. Likewise, at this juncture, you can give the
claimant the opportunity to offer any other information about the incident that he may not have
been asked about, but he thinks may be relevant.
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Heidi E. Ruckman
- Of Counsel
 Winnebago County Bar Association (Trial
Section)
 Winnebago County Arbitrator
Prior to joining Heyl Royster, Heidi was in private
practice and concentrated in the areas of personal
injury defense and related insurance matters. She
represented corporate clients in contract and business
related disputes. These clients included mortgage
companies, construction companies, excavation
companies, gas station owners, disposal companies,
farm chemical companies, automobile dealerships,
and real estate companies. Heidi also represented
municipalities in various litigation matters and zoning
issues. Heidi has tried a number of these cases to
verdict.
Court Admissions
of Illinois
Education
 Juris Doctor, The John Marshall School of Law,
2000
 Bachelor of Arts-Political Science with an
emphasis on public law (Summa Cum Laude),
Northern Illinois University, 1997
She joined the firm's Rockford office as an Of Counsel
Attorney in September 2006. Since joining the firm,
Heidi concentrates her practice in the defense of
corporations in contract and business related
disputes, the defense of health professionals who
offer care in prison settings, and agricultural law
litigation matters.
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BUILDING A SOLID FOUNDATION FOR DEFENSE: GATHERING AND PRESERVATION OF EVIDENCE Presented and Prepared by:
Douglas R. Heise
[email protected]
Gregory C. Flatt
[email protected]
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GATHERING AND PRESERVATION OF EVIDENCE
I.
THE LAW OF SPOLIATION IN ILLINOIS .............................................................................................. M-3
A.
B.
C.
II.
THE LAW OF SPOLIATION IN WISCONSIN ....................................................................................M-10
A.
B.
C.
III.
Negligent Spoliation .................................................................................................................. M-3
Intentional Spoliation ................................................................................................................ M-5
Discovery Sanctions Under Illinois Supreme Court Rule 219(c) ................................ M-6
Tort of Spoliation ......................................................................................................................M-10
Adverse Inference .....................................................................................................................M-10
Sanctions ......................................................................................................................................M-10
THE LAW OF SPOLIATION IN MISSOURI ........................................................................................M-11
The cases and materials presented here are in summary and outline form. To be certain of their applicability and use for
specific claims, we recommend the entire opinions and statutes be read and counsel consulted.
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GATHERING AND PRESERVATION OF EVIDENCE
Spoliation of evidence is the loss, destruction or alteration of evidence. Examples of spoliation
include the failure to preserve the scene of a train derailment, the accidental destruction of
evidence on the desk of a lawyer by a janitor, the loss of a heater that exploded, the removal of
wires from a car that caught fire, and the intentional erasing of a computer image relevant to a
copyright lawsuit. Illinois treats spoliation differently from Wisconsin and Missouri. A discussion of
those differences follows.
I.
THE LAW OF SPOLIATION IN ILLINOIS
Spoliation of evidence claims in Illinois may be pursued in two ways. The first is under a negligence
theory arising out of duty to preserve created by agreement, contract, or statute. Boyd v. Travelers
Ins. Co., 166 Ill. 2d 188, 652 N.E.2d 267, 270, 209 Ill. Dec. 727 (1995). The second is a discovery
sanction under Illinois Supreme Court Rule 219(c) arising out of a duty to take reasonable
measures to preserve the integrity of relevant and material evidence. Shimanovsky v. General
Motors Corp., 181 Ill. 2d 112, 121, 692 N.E.2d 286, 229 Ill. Dec. 513 (1998).
A.
Negligent Spoliation
In Boyd v. Travelers Ins. Co., 166 Ill. 2d 188, 652 N.E.2d 267, 209 Ill. Dec. 727 (1995), the Illinois
Supreme Court made a watershed pronouncement regarding spoliation of evidence. Tommy Boyd
was using a propane catalytic heater to keep his employer’s van warm. The heater exploded
leading to severe injuries to Mr. Boyd. He sued the manufacturer of the heater. Two days after
the accident two claims adjusters from Travelers Insurance, his employer’s workers’ compensation
carrier, took possession of the heater for investigation and inspection. Prior to any tests being
performed, Travelers lost the heater. When Boyd requested the return of the heater, Travelers
refused claiming that it had inadvertently misplaced the heater. Boyd brought suit seeking to
compel Travelers to return the heater. Travelers responded that it had in fact lost the heater and
that it had not had the opportunity to test the heater prior to its loss.
Boyd’s lawsuit against Travelers alleged that he suffered injury and irrevocable prejudice arising
from the loss of the heater since no expert could testify with any certainty as to whether the heater
was defective or dangerously designed. Boyd alleged both negligent, and willful and wanton,
spoliation of evidence. Travelers filed a motion to dismiss the spoliation allegations. The trial court
granted the motion. The court reasoned that even though Illinois would recognize an independent
case of action for spoliation “given the right facts,” Boyd’s claims were “premature unless and until
they lost the underlying suit against [the manufacturer].” Boyd, 166 Ill. 2d at 192. The Illinois
Supreme Court disagreed. It ruled that “like a majority of jurisdictions,” Illinois had not recognized
spoliation of evidence as an independent cause of action. It reasoned that “[c]ourts have long
afforded redress for the destruction of evidence and, in our opinion, traditional remedies
adequately address the problem presented in this case.” Boyd, 166 Ill. 2d at 194. The Court held
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that Boyd could state a claim for spoliation under existing negligence law, but reserved judgment
on whether intentional spoliation was actionable under Illinois law. To state a claim for negligent
spoliation, a party must plead the four traditional elements of negligence: (1) the existence of a
duty; (2) a breach of that duty; (3) proximate causation; and (4) damages. Boyd, 166 Ill. 2d at 194195. The Court then tailored the duty element to spoliation claims:
The general rule is that there is no duty to preserve evidence; however, a duty to
preserve evidence may arise through an agreement, a contract, a statute [citation] or
another special circumstance. Moreover, a defendant may voluntarily assume a duty
by affirmative conduct. [Citation.] In any of the foregoing instances, a defendant
owes a duty of due care to preserve evidence if a reasonable person in the
defendant’s position should have foreseen that the evidence was material to a
potential civil action.
Boyd, 166 Ill. 2d at 195 (emphasis added). The Court determined that there was no automatic duty
to preserve evidence, though it may arise out of agreement, contract, statute or special
circumstance or by voluntary assumption of the duty. Id. at 195.
Boyd had pleaded that Travelers’ representatives visited his home and said they needed to take the
heater to investigate his workers’ compensation claim knowing it was evidence relevant to future
litigation, and subsequently lost it. Boyd had alleged a duty on the part of Travelers by its voluntary
undertaking and a breach of that duty. As to causation, Boyd had alleged that the spoliation
caused him to be unable to prove the underlying lawsuit. “A plaintiff need not show that, but for
the loss or destruction of the evidence, the plaintiff would have prevailed in the underlying action.”
Id. at 196 n.2. It is enough to have been deprived of a key piece of evidence which precluded
expert testimony about the potentially defective/dangerous design of the heater. Id. at 197.
The Boyd Court articulated a two-prong test for determining when there is a duty to preserve
evidence. As a threshold matter, first determine whether such a duty arises by agreement, contract,
statute, special circumstance, or voluntary undertaking. See, Id. at 195. If so, then determine
whether that duty extends to the evidence at issue – i.e., whether a reasonable person should have
foreseen that the evidence was material to a potential civil action. See, Id. at 195. If the plaintiff
does not satisfy both prongs, there is no duty to preserve the evidence at issue.
The Illinois Supreme Court revisited spoliation in Dardeen v. Kuehling, 213 Ill. 2d 329, 821 N.E.2d
227, 290 Ill. Dec. 176 (2004). In Dardeen, plaintiff fell in a hole in the sidewalk at defendant
Kuehling’s residence while delivering newspapers. [The bricks in the sidewalk had “cocked up”
creating a hole.] Kuehling called his insurance agent at State Farm to ask if she could/should
remove the bricks. The agent said yes. Shortly after the accident, plaintiff returned to the Kuehling
residence to see the hole and speak with Kuehling. Neither plaintiff nor Kuehling took any
photographs of the hole. A few days after the visit, Kuehling removed 25-50 bricks from the area,
so that “nobody else would get hurt.”
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Plaintiff filed a premises liability complaint against Kuehling. After plaintiff learned that the bricks
had been removed, he amended the complaint to add negligent spoliation claim against Kuehling
and State Farm. Kuehling and State Farm moved for and were granted summary judgment. The
Appellate Court reversed, finding that State Farm’s contract with Kuehling imposed a duty, State
Farm knew the hole was material to potential civil litigation, and as a result of the brick removal a
crucial piece of evidence was missing.
The Supreme Court disagreed. Calling Boyd its “watershed pronouncement on spoliation of
evidence,” it clarified its duty analysis stating:
When we said, in Boyd, that a duty to preserve evidence could arise by an
agreement or contract, we meant an agreement or contract between the parties to
the spoliation claim. Kuehling and State Farm had an insurance contract, to which
Dardeen was not a privy. The record does not contain the contract, but Dardeen
does not argue that it contained a provision under which State Farm owed Kuehling
a duty to preserve evidence from being destroyed by Kuehling herself, much less a
provision under which Dardeen would be a third-party beneficiary of such a duty.
Id. at 337-338. The Court further reasoned that Dardeen never contacted the defendant to ask it to
preserve evidence. Dardeen never requested evidence from State Farm, and he never requested
that State Farm preserve the sidewalk or even document its condition. And though he visited the
accident site hours after he was injured, he did not photograph the sidewalk. Additionally, State
Farm never possessed the evidence at issue and, thus, never segregated it for the plaintiff's benefit.
Id. at 338. State Farm argued, and the Court agreed, that “no Illinois court has held that a mere
opportunity to exercise control over the evidence at issue is sufficient to meet the relationship
prong.” Id. at 339.
In order to avoid summary judgment, Dardeen needed to show something more than State Farm’s
agent answering affirmatively to Kuehling’s question whether she could remove the raised bricks.
Without evidence of possession or control by State Farm of the sidewalk, the Court found State
Farm owed no duty to Dardeen to preserve it. Id. at 339.
B.
Intentional Spoliation
Whether Illinois recognizes an independent cause of action for intentional spoliation is an open
question. Courts have used the Illinois Supreme Court’s failure in Boyd to create a cause of action
for intentional spoliation as a bar to such claims. In Borsellino v. Goldman Sachs Group, Inc., 477
F.3d 502 (7th Cir. 2007) the Court, applying Illinois law, construed a claim for intentional spoliation
as a claim for negligent spoliation reasoning that Illinois does not recognize the claims for
intentional spoliation. Id. at 510. In Cangemi v. Advocate South Suburban Hospital, 364 Ill. App. 3d
446, 845 N.E.2d 792, 300 Ill. Dec. 903 (1st Dist. 2006), the Appellate Court, First District dismissed an
intentional spoliation claim holding that “[p]laintiffs cite to no case that specifically recognizes
intentional spoliation of evidence as a tort in Illinois.” Id. at 815.
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On the other hand, in Williams v. General Motors Corp., No. 93 C 6661, 1996 WL 420273 (N.D. Ill.
July 25, 1996), a federal district court determined that “As the Boyd decision implies, in cases like
this where intentional conduct has been alleged, it is likely that the Illinois Supreme Court would
recognize a cause of action for intentional spoliation of evidence. It would make no sense, after all,
for the court to hold a defendant liable for its merely negligent conduct but not for intentional
conduct that resulted in the same harm.” Id. at *3.
If Illinois were to recognize a claim for intentional spoliation, the elements of the claim were set
forth in a pre-Boyd case, Mohawk Mfg. & Supply Co. v. Lakes Tool Die & Engineering, Inc., No. 92 C
1315, 1994 WL 85979 (N.D. Ill. March 14, 1994). In Mohawk, the plaintiff alleged that the defendant
intentionally erased material from defendant’s copyrighted computer. The Court set forth the
elements of an intentional spoliation claim as: (1) the existence of a potential civil action; (2)
defendant’s knowledge of the action; (3) destruction of relevant evidence; (4) intent; (5) a causal
connection between the destruction and the plaintiff’s inability to prove the claim; and (6)
damages. Id. at *1.
C.
Discovery Sanctions Under Illinois Supreme Court Rule 219(c)
In Shimanovsky v. General Motors Corp., 181 Ill. 2d 112, 692 N.E.2d 286, 229 Ill. Dec. 513 (1998), a
products liability action was commenced against General Motors claiming that its power-steering
mechanism was defective causing plaintiff to lose control of her car and crash on July 7, 1985. Soon
after the accident, plaintiffs’ counsel retained John Stilson, a mechanical engineer, to investigate
whether the automobile possessed a defect which may have caused the crash. Stilson's initial
inspection of the automobile did not reveal any defect which would result in a loss of powersteering control. Thus, Stilson determined that an internal inspection of the automobile's powersteering mechanism was necessary. On September 20, 1985, Stilson removed the power-steering
mechanism from the automobile and disassembled it. The internal inspection revealed that various
components of the power-steering mechanism were damaged by the crash. In addition, grooves
were discovered in one of the power-steering components. Stilson recommended to plaintiffs’
counsel that a metallurgist be retained to determine whether the grooves were a result of the crash
or whether they indicated a possible defect. Consequently, plaintiffs' counsel hired a metallurgist,
Lyle Jacobs. In October 1985, Jacobs examined the power-steering mechanism and concluded that
it was necessary to section some of the components in order to determine the cause of the
grooves. Accordingly, Jacobs sectioned the components and performed various tests on the
sectioned pieces. As a result of these tests, Jacobs concluded that the grooves were not damaged
from the crash, but rather were the result of long-term wear. Plaintiffs filed suit on June 16, 1986.
General Motors’ experts first viewed the automobile and its parts on September 28, 1989 while the
evidence was still in plaintiffs' possession. However, GM did not seek production of the actual
power-steering components until December 23, 1991, when it moved to compel Stilson to produce
the automobile parts at his deposition. The court granted defendant's motion to compel and,
accordingly, Stilson produced the power-steering components at his deposition on January 8,
1992. GM’s experts examined the power-steering components sometime in January 1992. The
experts opined that the plaintiffs' automobile contained no defect or unreasonably dangerous
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condition which caused or contributed to the crash. In addition, the experts concluded that the
sectioning of the power-steering components by plaintiffs' expert deprived GM of the opportunity
to show the jury further evidence of the proper manufacture and operation of the mechanism.
On the eve of trial, plaintiffs filed a motion in limine, seeking to bar GM from cross-examining
plaintiffs' experts regarding their methods of testing the power-steering components. GM
responded with its motion to dismiss the case or, in the alternative, bar any evidence of the
condition of the power-steering mechanism. GM argued that it was entitled to such relief pursuant
to Supreme Court Rule 219(c), as a sanction for the destruction of the power-steering components
without notice by plaintiffs' expert witness. The circuit court denied plaintiffs' motion in limine and
granted GM’s motion to dismiss plaintiffs' complaint with prejudice. On appeal, the Appellate Court
determined that the circuit court did not err in imposing a sanction on plaintiffs for the destructive
testing of the power-steering components. However, the Appellate Court did determine that the
circuit court abused its discretion by dismissing plaintiffs' case without first considering the degree
of prejudice suffered by defendant. Accordingly, the Appellate Court reversed the trial court's
dismissal order and remanded the cause for a hearing to determine whether the degree of
prejudice suffered by defendant warranted dismissal of plaintiffs' cause of action. Shimanovsky, 181
Ill. 2d at 118.
GM appealed. It argued that a defendant in a products liability action is entitled to dismissal
whenever a plaintiff has spoliated the allegedly defective product and such spoliation gives the
plaintiff an unfair advantage in the litigation. GM further argued that the Appellate Court erred in
remanding the cause for a hearing to determine the level of prejudice it suffered from the
destructive testing. GM argued that when a defendant is precluded from testing an allegedly
defective product in its post-accident condition, the prejudice suffered by the defendant is
manifest. Id. at 118-119. In response, plaintiffs contended that the circuit court lacked authority to
impose any sanction upon them because Rule 219(c) provides sanctions only for violations of
discovery rules and pretrial orders. Plaintiffs argued that, because their expert's testing of the
power-steering components did not violate any discovery rule or court order, the circuit court was
without authority to sanction them for the destructive testing. Plaintiffs argued in the alternative
that, if the circuit court was empowered to impose any sanction under these circumstances, they
were entitled to a full evidentiary hearing to determine in what manner and to what extent the
destructive testing prejudiced defendant. Id. at 119.
The Illinois Supreme Court reviewed Rule 219(c), which authorizes a trial court to impose a
sanction, including dismissal of the cause of action, upon any party who unreasonably refuses to
comply with any provisions of the court's discovery rules or any order entered pursuant to these
rules. The decision to impose a particular sanction under Rule 219(c) is within the discretion of the
trial court and, thus, only a clear abuse of discretion justifies reversal. Id. at 120. The Court initially
observed that the testing of the power-steering components was performed by plaintiffs' experts
approximately eight months prior to the date plaintiffs filed their complaint. Therefore, the trial
court had not entered any order prohibiting such testing. The Court noted that some Illinois courts
had held that it is unreasonable noncompliance, and thus sanctionable, for a party to fail to
produce relevant evidence because it was destroyed prior to the filing of a lawsuit and, thus, before
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any protective order can be entered by the court. Id. at 121. The Court noted that while it had
previously recognized the value of destructive testing as a discovery tool, it had also held that such
testing must be authorized in the sound discretion of the trial court and be permitted only when
“the rights of the opposing litigant are not unduly prejudiced.” Id. at 122. The Court concluded that
either party may seek production of evidence for testing whenever the condition of such item is
relevant. Id. Thus, GM had a right to perform tests on the power-steering components in order to
formulate its defense to the products liability action. However, plaintiffs' destructive testing
interfered with GM’s right to such discovery. Under the specific circumstances of this case, the
Court could not say that the trial court abused its discretion in determining that plaintiffs' actions
were an unreasonable noncompliance with discovery rules. Id. at 123
The Court then had to determine if dismissal of the suit was the proper sanction. The factors a trial
court is to use in determining what sanction, if any, to apply are: (1) the surprise to the adverse
party; (2) the prejudicial effect of the proffered testimony or evidence; (3) the nature of the
testimony or evidence; (4) the diligence of the adverse party in seeking discovery; (5) the timeliness
of the adverse party's objection to the testimony or evidence; and (6) the good faith of the party
offering the testimony or evidence. Id. at 124. Applying these factors to the instant case, the Court
found the majority of factors weighed in favor of plaintiffs. On remand the circuit court was
ordered to enter a sanction other than dismissal.
Sanctions were also discussed in Adams v. Bath and Body Works, Inc., 358 Ill. App. 3d 387, 830
N.E.2d 645, 294 Ill. Dec. 233 (1st Dist. 2005). In Adams, a tenant whose wife died in house fire
brought a products liability action against the manufacturer and distributor of a candle, the alleged
cause of fire, and a Smoke Detector Act claim against the landlord, Ms. Kubasak. The manufacturer
and distributor of the candle filed a third-party action against State Farm, Kubasak’s insurer, for
negligent spoliation of evidence.
Six days after the fire, plaintiff retained counsel. Though both state and city fire inspectors were
unable to pin down the cause of the fire, they were able to determine that the fire began near a
couch located in the living room. Based upon comments he overheard from one of these
inspectors, plaintiff's counsel removed two lamps that he believed were the potential cause of the
fire. After it was determined that these lamps were not the cause, plaintiff's focus shifted to a
“Garden Lavender Botanical Candle” that he said was located on an end table near the couch in the
living room.
Following the fire, Kubasak hired a fire restoration company to clean up debris. Unbeknownst to
plaintiff, the fire restoration company removed and destroyed an end table, the couch, and some
carpeting among other items that belonged to plaintiff.
Also shortly after the fire, State Farm retained Crawford & Company (Crawford) to examine the
house and determine the extent of the damage. Crawford, in turn, hired Joe Mazzone to investigate
the cause of the fire. In his deposition, Mazzone stated that, after ruling out the home's wiring,
appliances, and fixtures, he believed one possible cause of the fire was a candle placed on the end
table. Mazzone based this belief on the fact that the area in which these items were located
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contained the heaviest “char or burn marks,” as well as plaintiff's statement to fire inspectors that
he blew out a candle on the end table before going to bed on the night of the fire. Mazzone stated
that both he and Donald Hitchcock, a fire investigator with the Illinois State Fire Marshall's office,
“agreed that the place where the fire started was the table.” Because the end table, couch, and
carpet had been destroyed, however, there was no physical evidence that would either support or
refute plaintiff's statement as to the candle's location. Plaintiff was not privy to Mazzone's report
until December 1997, well after the end table, couch and carpet were destroyed.
The circuit court granted a motion filed by the candle manufacturer and distributor dismissing
plaintiff's claims as a discovery sanction pursuant to Supreme Court Rule 219(c) for failing to
preserve evidence. On appeal, plaintiff contended that the circuit court abused its discretion in
dismissing his complaint as a discovery sanction.
The Appellate Court discussed the potential conflict between the Supreme Court’s decisions in
Boyd and Shimanovsky and the recent treatment of those decisions in Dardeen. It noted that in an
amicus brief, the Illinois Trial Lawyers Association asked the court to “harmonize Boyd, where [it]
held that, generally, there is no duty to preserve evidence,” with its holding in Shimanovsky “that a
potential litigant owes a duty to potential adversaries to take reasonable measures to preserve the
integrity of relevant, material evidence.” Dardeen, 213 Ill. 2d at 337. Instead of harmonizing the two,
the Court had previously simply found Shimanovsky “inapposite.” See, Dardeen, 213 Ill. 2d at 339.
The Court had noted in the Dardeen case that in Shimanovsky, it had “never mentioned Boyd, or
spoliation,” because “the central issue in Shimanovsky was whether the trial court could dismiss the
plaintiff's complaint as a discovery sanction for the plaintiff's presuit destruction of evidence.” Id. at
340. The Appellate Court, First District held:
The lesson to be taken from this, we believe, is that the two remedies discussed in
those cases, i.e., a claim for negligent spoliation of evidence in Boyd and dismissal as
a sanction under Rule 219(c) in Shimanovsky, are separate and distinct. See Dardeen,
213 Ill.2d at 339-40. In other words, Shimanovsky and Boyd present a party
confronted with the loss or destruction of relevant, material evidence at the hands
of an opponent with “two roads diverged in a wood.” He may either (1) seek
dismissal of his opponent's complaint under Rule 219(c) or (2) bring a claim for
negligent spoliation of evidence. The mode of relief most appropriate will depend
upon the opponent's culpability in the destruction of the evidence. The former
requires conduct that is “deliberate [or] contumacious or [evidences an]
unwarranted disregard of the court's authority” and should be employed only “as a
last resort and after all the court's other enforcement powers have failed to advance
the litigation.” Shimanovsky, 181 Ill.2d at 123, 229 Ill.Dec. 513, 692 N.E.2d 286. The
latter requires mere negligence, the failure to foresee “‘that the [destroyed] evidence
was material to a potential civil action.’” Dardeen, 213 Ill.2d at 336 quoting Boyd, 166
Ill.2d at 195. Because [the candle manufacturer and distributor] chose to take the
Rule 219(c) road, any reliance upon Boyd or its progeny to support the circuit court's
sanction is inappropriate.
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Adams, 358 Ill. App. 3d at 393-94. The Appellate Court reversed the sanction holding. It determined
that first, plaintiff did not engage in any “knowing and willful defiance of the discovery rules or the
trial court's authority.” Shimanovsky, 181 Ill. 2d at 129. The destruction of the end table, couch and
carpet occurred long before plaintiff filed his lawsuit. Second, the carpet belonged to Kubasak, and
it is questionable whether he could have compelled her to preserve it. Third, even if he could have
preserved this evidence, plaintiff had no knowledge that it might have been relevant and material;
his initial theory was that two lamps, recovered by his attorney shortly after the fire, had been the
cause. Finally, and perhaps most importantly, plaintiff played no role in, nor had any notice of, the
destruction of the evidence which defendants claim was essential to their defense. Though a
potential litigant owes a duty to take reasonable measures to preserve the integrity of relevant and
material evidence defendants have offered no “reasonable measures” that plaintiff could have, but
failed, to undertake to protect this evidence, short of treating the second floor of the house owned
by Kubasak like a crime scene. Adams, 358 Ill. App. 3d at 398.
II.
THE LAW OF SPOLIATION IN WISCONSIN
A.
Tort of Spoliation
Wisconsin has not recognized independent tort actions for the intentional and negligent spoliation
of evidence. Estate of Neumann v. Neumann, 242 Wis. 2d 205, 244-249, 626 N.W.2d 821 (Wis. App.
2001).
B.
Adverse Inference
The trier of fact can draw an adverse inference from intentional spoliation of evidence. Jagmin v.
Simonds Abrasive Co., 61 Wis. 2d 60, 80-81, 211 N.W.2d 810 (1973). The Supreme Court affirmed
the trial court’s refusal to give an adverse inference instruction in the absence of clear, satisfactory
and convincing evidence that the defendant had intentionally destroyed or fabricated evidence.
Jagmin, 61 Wis. 2d at 80-81.
C.
Sanctions
Wisconsin trial courts have discretion in imposing sanctions for spoliation of evidence. See, State v.
McGrew, 255 Wis. 2d 835, 646 N.W.2d 856 (Wis. App. 2002). However, sanctions cannot “be
considered unless there is clear and convincing proof that evidence was deliberately destroyed or
withheld.” Hoskins v. Dodge County, 251 Wis. 2d 276, 642 N.W.2d 213, 228 (Wis. App. 2002). When
deciding whether and how to sanction a party who has destroyed evidence, Wisconsin courts
consider the circumstances, including whether the destruction was intentional or negligent,
whether comparable evidence is available, and whether at the time of destruction the responsible
party knew or should have known that a lawsuit was a possibility. Farr v. Evenflo Co., Inc., No.
2004AP1149, 2005 WL 1830908, at *2 (Wis. App. Aug. 4, 2005). In Garfoot v. Fireman’s Fund Ins. Co.,
228 Wis. 2d 707, 724, 599 N.W.2d 411 (Wis. App. 1999), the Court held that dismissal as sanction
for destruction of evidence requires a finding of egregious conduct, “which, in this context, consists
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of a conscious attempt to affect the outcome of litigation or a flagrant knowing disregard of the
judicial process.”
The spoliation rule does not apply in administrative proceedings. Yao v. Board of Regents of Univ. of
Wis. System, 256 Wis. 2d 941, 649 N.W.2d 356, 362 (Wis. App. W.D. 2002).
III.
THE LAW OF SPOLIATION IN MISSOURI
A party who intentionally destroys or significantly alters evidence is subject to an adverse
evidentiary inference under the spoliation of evidence doctrine. Baldridge v. Director of Revenue,
State of Mo., 2 S.W.3d 212, 222 (Mo. App. W.D. 2002), “[T]he destruction of written evidence
without a satisfactory explanation gives rise to an inference unfavorable to the spoliator.” Garrett v.
Terminal R. Ass’n of St. Louis, 259 S.W.2d 807, 812 (Mo. 1953). “Similarly, where one party has
obtained possession of physical evidence which [the party] fails to produce or account for at the
trial, an inference is warranted against that party.” St. Louis County Transit Co. v. Walsh, 327 S.W.2d
713, 717 (Mo. App. 1959). “[W]here one conceals or suppresses evidence such action warrants an
unfavorable inference.” Id. at 717-718.
When one argues an adverse inference should be made, it is necessary that there be evidence
showing intentional destruction of the item, and also such destruction must occur under
circumstances which give rise to an inference of fraud and a desire to suppress the truth. In such
cases, it may be shown by the proponent that the alleged spoliator had a duty, or should have
recognized a duty, to preserve the evidence. Morris v. J.C. Penney Life Ins. Co., 895 S.W.2d 73, 77-78
(Mo. App. W.D. 1995).
“Since the doctrine of spoliation is a ‘harsh rule of evidence, prior to applying it in any given case it
should be the burden of the party seeking its benefit to make a prima facie showing that the
opponent destroyed the missing [evidence] under circumstances manifesting fraud, deceit or bad
faith.’” Baldridge v. Director of Revenue, State of Mo., 82 S.W.3d 212, 224 (Mo. App. W.D. 2002).
Simple negligence, however, is not sufficient to apply the adverse inference rule. Brissette v. Milner
Chevrolet Co., 479 S.W.2d 176, 182 (Mo. App. 1972).
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Douglas R. Heise
- Partner
Doug joined the Edwardsville office of Heyl Royster in
2004 and became a partner in 2008. With more than
25 years of litigation experience, Doug has defended a
broad range of clients from individuals involved in
auto accidents to major corporations in product
liability claims.
At Heyl Royster, Doug has an active practice
defending healthcare professionals who provide
medical services to the prison population in Illinois.
These professionals are often sued by prisoners for
alleged civil rights violations in state and federal
courts. His representation of professionals also
includes veterinarians who have been sued for
malpractice.
In addition to defending professionals, he also
defends municipalities in civil rights claims and
employers defending their employment decisions in
federal court. His employment practice includes
charges brought before the Illinois Human Rights
Commission and the Equal Employment Opportunity
Commission. This variety of experience assists Doug in
understanding our clients' needs and helping them to
understand the litigation process.
Significant Cases
 City of Belleville v. Doe by Doe, 523 U.S. 1001
(1998) - Whether same sex harassment is
actionable under Title 7.
 Longstreet v. Cottrell, 374 Ill. App. 3d 549 (5th
Dist. 2007) - The estate of a deceased party
cannot introduce the discovery deposition of
the deceased party at trial as an exception to
the hearsay rule.
 Steelman v. City of Collinsville, 319 Ill. App. 3d
1131 (5th Dist. 2001) - The IRS's seizure of
funds being held by a municipal police
department did not constitute a conversion of
those funds by the department.
 T.H.E. Insurance v. City of Alton, 277 F.3d 802
(7th Cir. 2000) - Whether a certificate of
insurance can modify the language contained
in the policy of insurance.

City of East St. Louis v. Circuit Court for the 20th
Judicial Circuit, St. Clair County, IL, 986 F.2d
1142 (7th Cir. 1998) - The federal district court
properly entered Rule 11 sanctions against
plaintiff's counsel for bringing suit against a
judicial circuit.
Public Speaking
 “Casualty and Property Seminar - Premises
Liability Update”
Heyl Royster (2008)
 “Current Issues in Illinois Law”
United States Arbitration and Mediation,
Midwest, Inc. (2007)
 “Claims Against Governmental Agencies / Tort
Immunity”
Illinois State Bar Association (2006)
 St. Clair County Bar Association
 Bar Association for the Central and Southern
Federal Districts of Illinois
 East St. Louis Bar Association
Court Admissions
 United States District Court, Southern and
Central Districts of Illinois (Trial Bar)
Education
 Juris Doctor, John Marshall Law School, 1983
 Bachelor of Science-Political Science, Eastern
Illinois University, 1980
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CASE LAW UPDATE Presented and Prepared by:
Matthew R. Booker
[email protected]
Springfield, Illinois • 217.522.8822
Jeffrey G. Cox
[email protected]
Springfield, Illinois • 217.522.8822
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CASE LAW UPDATE
I.
CASE BRIEFS .................................................................................................................................................. N-3
A.
B.
C.
D.
E.
F.
G.
H.
I.
Slip, Trip and Fall – Open and Obvious Doctrine ............................................................. N-3
Natural Accumulation................................................................................................................. N-5
Act of God Defense ..................................................................................................................... N-5
Recreational Immunity ............................................................................................................... N-6
Governmental Immunity............................................................................................................ N-7
Jury Instructions ............................................................................................................................ N-7
Voluntary Undertaking of Duty............................................................................................... N-8
Medical Testimony....................................................................................................................... N-9
Asbestos ....................................................................................................................................... N-10
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CASE LAW UPDATE
I.
CASE BRIEFS
A.
Slip, Trip and Fall – Open and Obvious Doctrine
Rusch v. Leonard, 399 Ill. App. 3d 1026, 927 N.E.2d 316, 339 Ill. Dec. 775 (2d Dist. 2010) – Rusch,
a firemedic, filed an action against the premises owners for personal injuries he sustained while
carrying victims from a burning building. Plaintiff claims that the property owners negligently
maintained the stairwell by failing to provide a handrail. The defendants filed for summary
judgment claiming that the “Fireman’s Rule,” barred liability. The “Fireman’s Rule” limits the
extent to which firefighters or other public officers may be allowed to recover for injuries
incurred when, in an emergency, they enter onto privately owned property in discharge of their
duty. The trial court granted summary judgment in favor of the defendants holding not only that
the “Fireman’s Rule” was applicable, but also that the open and obvious doctrine applied.
The Second District reversed. The Court first looked to the “Fireman’s Rule.” According to the
“Fireman’s Rule,” an owner of land must exercise reasonable care to prevent injury to the
fireman that might result from a cause independent of the fire. An owner does not have a duty
to prevent injury resulting from the fire itself. The “Fireman’s Rule” did not apply in this case
because the injuries were not caused by the fire, but rather the poorly maintained staircase.
The Court next examined the applicability of the open and obvious doctrine. A landowner owes
no duty when a condition is open and obvious and a reasonable person would appreciate the
risk. While the stairwell’s deficiencies may have been open and obvious, the “deliberate
encounter” exception applied. The deliberate encounter exception states that a landowner may
be liable if he should anticipate known or obvious dangers because the advantages gained
would outweigh the apparent risk. The Court found that because this stairway was the only
means to travel between the first and second floors, the landowner should have anticipated that
a person would deliberately encounter the danger of the stairwell.
Kleiber v. Freeport Farm and Fleet, Inc., 406 Ill. App. 3d 249, 942 N.E.2d 640, 347 Ill. Dec. 437 (3d
Dist. 2010) – Plaintiff brought suit against the store for injuries she sustained when she fell and
broke her leg. Plaintiff had purchased topsoil which was stored outside the entrance of the store
on wooden pallets. When plaintiff tried to retrieve her bags of topsoil, there were empty pallets
between herself and the remaining products. In order to get to the bags of topsoil, plaintiff
deliberately walked across the wooden pallets, which resulted in her injuries. Plaintiff claimed the
store was negligent in leaving the empty pallets directly in her path to the topsoil. Defendants
filed a Motion for Summary Judgment claiming that the dangers were open and obvious and a
reasonable plaintiff would have appreciated the risk. The trial court granted that Motion for
Summary Judgment and plaintiff appealed.
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Plaintiff argued that while the danger may have been open and obvious, the distraction, or
deliberate encounter exception applied. In affirming the summary judgment, the Third District
found that there was no evidence that the plaintiff could have been distracted when traversing
the empty pallet. Furthermore, the Court held that the deliberate encounter exception did not
apply because the plaintiff could have easily gone into the store and asked for assistance. The
deliberate encounter exception generally has been applied when the plaintiff has an economic
reason for choosing to encounter the danger, such as a job requirement.
The dissent, however, held that the deliberate encounter exception should apply. The dissenting
Justice stated that there does not have to be an economic reason for encountering the danger.
The Judge reasoned that because the store was encouraging self-service by patrons, it would be
reasonable to expect patrons to walk across the empty pallets.
Hope v. Hope, 398 Ill. App. 3d 216, 924 N.E.2d 581, 338 Ill. Dec. 375 (4th Dist. 2010) – Plaintiff,
Amanda Hope, brought a premises liability action against her parents, Jim and Karen Hope,
alleging negligence for failure to remove mud from the front porch steps which in turn caused
Amanda to fall and sustain injuries. Jim and Karen’s home was constructed with four concrete
steps up to the front porch. On the day of the incident, Karen had been doing yard work in the
front yard. As her shoes would accumulate mud, she would scrape the mud onto the front porch
steps. Later in the morning, when their daughter came to visit, she slipped on the mud which her
mother had scraped onto the stairs. The defendants moved for summary judgment, which was
granted, arguing that the mud on the steps was open and obvious. On appeal, plaintiff argued
that the distraction exception should apply. Amanda claimed even though she had been warned
about the mud on the steps when she entered their residence, the activities of eating, studying,
watching television, and sleeping caused her to forget about the mud on the steps, and
therefore, the distraction exception should apply. The Court held that there was no reason for
the defendants to anticipate the plaintiff being distracted. The distraction must be occurring at
the same time as the injury. In this case, the plaintiff was not eating, studying, watching
television, or sleeping at the time she fell on the steps.
Lake v. Related Management Company, L.P., 403 Ill. App. 3d 409, 936 N.E.2d 704, 344 Ill. Dec. 175
(4th Dist. 2010) – Plaintiff’s complaint alleged that while she was carrying bags of groceries from
her car to her apartment her heel caught in a one inch gap between the concrete slabs of the
sidewalk. She fell and sustained injuries as a result of this fall. Evidence showed that she knew
the gap existed and that she knew that it was dangerous. Defendants filed a Motion for
Summary Judgment, which was granted, claiming the property owner did not owe a duty to the
plaintiff to warn or protect her from an open and obvious condition. The Appellate Court
affirmed the trial court’s ruling, that summary judgment was appropriate because the defect was
open and obvious and the distraction exception did not apply. The distraction exception would
apply if there is reason to expect that the plaintiff’s attention may be distracted, which would
result in injuries. The Court stated, however, the distraction should not be solely the plaintiff’s
own creation. Because the plaintiff knew of the gap in the sidewalk, she created her own
distraction by blocking her view with the grocery bags.
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B.
Natural Accumulation
Krywin v. Chicago Transit Authority, 238 Ill. 2d 215, 938 N.E.2d 440, 345 Ill. Dec. 1 (2010) –
Plaintiff filed a negligence action against Chicago Transit Authority (CTA) alleging that CTA
breached its duty by failing to remove snow and ice from the platform at a train station.
Through discovery it was learned that there had been snow and ice on the platform for at least
three days prior to this incident. On the day of plaintiff’s alleged injuries, the weather was
reported as foggy with sleet. CTA moved for summary judgment and argued that they had no
duty to remove natural accumulations of snow and ice. Plaintiff, on the other hand, argued that
CTA had a duty to provide its passengers a safe and reasonable place to exit the trains. The trial
court denied CTA’s summary judgment motion and the case proceeded to trial, wherein a
verdict in the amount of $372,141 was returned in plaintiff’s favor.
CTA appealed and the Appellate Court reversed. The Supreme Court of Illinois affirmed the
Appellate Court’s ruling and held that the CTA was not responsible for removing natural
accumulations of snow and ice. Plaintiff argued that the rationale behind the natural
accumulation rule was to take the burden off the city to maintain perfectly clean sidewalks
during an ongoing foul weather storm. Plaintiff said that since the snow and ice had been on the
sidewalk for at least three days, the city had ample opportunity to remove any dangers. The
Court, however, held that there is no time requirement for natural accumulation. The Court
noted that there was no evidence that the snow and ice was anything but natural accumulation,
therefore, the CTA did not owe a duty to remove the snow. The plaintiffs next argued that the
CTA breached its duty by failing to provide a safe place for passengers to exit the train. The
Court held that it would be an undue burden on the CTA to be required to check the platform
each and every time a train stopped at the station. Evidence revealed that at the time the
incident occurred, the train in question was running 24 hours a day, 7 days a week. The Court
stated that the burden put on the CTA would be overwhelmingly detrimental to the efficient
performance of the transit system.
C.
Act of God Defense
Evans v. Brown, 399 Ill. App. 3d 238, 925 N.E.2d 1265, 339 Ill. Dec. 144 (4th Dist. 2010) – An
injured motorist sued the special administrator for a deceased driver’s estate and the driver’s
employer, alleging that the driver negligently operated his company car, and thereby caused her
serious injuries. In February of 2006, defendant driver was operating a vehicle owned by his
employer for personal use. As plaintiff was traveling eastbound, the defendant was traveling
westbound and suddenly went into the eastbound lanes causing an accident. This accident
resulted in serious injuries to plaintiff. Defendant was transported home and claimed that he had
blacked out or fallen asleep while driving, which is what caused the accident. Later that evening
when friends tried to check on defendant, they found him deceased. Defendant’s cause of death
was blamed on a heart attack he suffered about one week before his death. Because the heart
attack went untreated, there was gradual degradation of the heart muscle wall which resulted in
a rupture and the instantaneous death of the defendant. Defendants moved for summary
judgment arguing that the heart attack went undetected and, therefore, the blackout which
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caused the accident was unforeseeable and an Act of God. The trial court granted defendants’
Motion for Summary Judgment and stated that the plaintiff was putting a duty on the defendant
of “self-diagnosis.”
On appeal, plaintiff contended that summary judgment was not appropriate because she had
established a prima facie case of negligence. Plaintiff argued that there was a genuine issue of
material fact as to whether the injuries were caused by the defendant’s negligence or by an Act
of God. The Court agreed with plaintiffs and stated that there were genuine issues of material
fact. Specifically, the Court stated that defendant’s statement that he fell asleep was in
contradiction to the Act of God premise defendants were claiming.
D.
Recreational Immunity
Vaughn v. Barton, 402 Ill. App. 3d 1135, 933 N.E.2d 355, 342 Ill. Dec. 769 (5th Dist. 2010) – A
sport spectator plaintiff brought an action against a recreation association and an unpaid little
league baseball coach to recover damages from being hit by a baseball. The ball was thrown by
the coach’s 11-year-old son while he was warming up for his baseball game. The association was
a not-for-profit Illinois corporation that organized 12 little league baseball leagues involving
approximately 650 youth. Defendant, Jarrod Barton, was a volunteer coach and his son, Cody,
was a participant. While waiting for a game to start, Cody threw a ball to a friend which bounced
out of the friend’s glove and struck plaintiff on the head causing injury. The trial court granted a
directed verdict in favor of the defendants holding that the Recreational Use Act applied and
liability could not be found for Jarrod or the association. The trial court found that immunity
applied under the Recreational Use of Land and Water Areas Act (the Recreational Use Act).
On appeal, the plaintiff contended that the fee paid by Cody to participate was sufficient to
remove the immunity of the Recreational Use Act. The purpose of the Recreational Use Act was
to encourage owners of land to allow people to enter that land for recreation, relaxation, which
limited their liability. Owners can only be held liable in two circumstances:
1.
For wilful and wanton failure to guard against a dangerous condition, use, structure, or
activity;
2.
For any injury where the owner of land charges the person or persons who enter or go
on the land for recreational use.
Plaintiff contended that because Cody paid a $35 fee to be in a summer ball league, the owners
of the land could be held liable. The Court looked to the wording in the statute and to the
legislature’s intent to determine the outcome of the case. The Recreational Use Act is very broad
and immunizes landowners from negligence liability for persons on the land for “exercise,
education, relaxation, or pleasure.” The Court held that attending a little league baseball game,
or playing in a baseball game, was a form of relaxation or pleasure, therefore, neither the
association nor Jarrod Barton could be held liable for allegedly negligent conduct.
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E.
Governmental Immunity
Ries v. City of Chicago, No. 109541, 2011 WL 681614 (Feb. 25, 2011) – Plaintiff filed suit against
the City of Chicago for wilful and wanton misconduct when a police car collided with plaintiff’s
vehicle. During an unrelated investigation, a City of Chicago police officer placed a suspect in
the back seat of a CPD squad car. The squad car was not equipped with a screen between the
back seat and the front seat, the police officer left the keys in the ignition, and the suspect was
not handcuffed. Seizing the opportunity, the suspect then stole the vehicle, a chase ensued, and
the suspect collided with the plaintiffs in this case. The case ultimately went to a jury trial against
the city only and the jury entered a verdict for the plaintiffs.
The Appellate Court reversed and held that the city and the officer were immune from liability
pursuant to section 4-106(b) of the Local Government and Governmental Employees Tort
Immunity Act. Plaintiffs argued that because they alleged wilful and wanton conduct, the Tort
Immunity Act did not apply. On appeal to the Supreme Court, the Appellate Court was affirmed.
The Court held that the suspect was considered an “escaping prisoner” within the meaning of
the provision in the Tort Immunity Act. This immunity prevails over the more general immunity
provision, which has an exception for wilful and wanton misconduct.
F.
Jury Instructions
Ready v. United/Goedecke Services, Inc., 238 Ill. 2d 582, 939 N.E.2d 417, 345 Ill. Dec. 574 (2010) –
This wrongful death action was brought on behalf of a construction worker who was killed when
a beam from scaffolding fell on him. Plaintiffs filed suit against the general contractor, BMW,
and the sub-contractor, Goedecke. The two defendants then filed a third-party complaint
against the factory owner. Before trial, the factory owner and Goedecke settled, however, BMW
did not. At the original trial, the trial court did not allow evidence to show fault of the settling
parties. The Supreme Court heard the first appeal in this case in 2008 and held that an
apportionment of fault of the settling parties was not permitted.
The issue before the Supreme Court in this case was whether the trial court erred by refusing to
give a sole proximate cause jury instruction during the trial. Plaintiffs contended that defendant,
Goedecke, was the sole proximate cause of the injuries because Goedecke failed to order a
crane which would have prevented the deceased from being injured. Goedecke, on the other
hand, contended that it was BMW’s duty to supply the crane. According to the contract, BMW
was to supply a crane upon the request of Goedecke.
The Supreme Court held that there must be some evidence in the record to justify the jury
instruction in question. Because there was some evidence that BMW could have been the sole
proximate cause of the injuries to the plaintiff, the trial court should have given a sole proximate
cause jury instruction. During the trial, however, it was revealed that Goedeke never requested a
crane from BMW. For that reason, the Supreme Court stated that there was no way a jury would
have found that BMW was the sole proximate cause, therefore, the error by the trial court was
harmless.
N-7
Jablonski v. Ford Motor Co., 398 Ill. App. 3d 222, 923 N.E.2d 347, 337 Ill. Dec. 788 (5th Dist. 2010)
– Dora Jablonski filed a products liability suit on behalf of herself and her deceased husband,
John, following a car accident. The Jablonskis were stopped at a construction site on Interstate
270 in Madison County, Illinois. A co-defendant crashed into the back of the Jablonskis’ vehicle
going at least 56 mph. She struck the plaintiffs’ vehicle dead center and there were no skid
marks. A pipe wrench in the back of the plaintiffs’ vehicle pierced the gas tank and caused a
large fire. Both were severely burned and one later died.
The plaintiffs’ negligence claims were focused on the design of the fuel tank system in their
specific vehicle. During trial both sides presented massive amounts of evidence from experts
and lay witnesses. Plaintiffs presented evidence that showed the defendants knew of the design
flaws in the gas tank and failed to warn customers of these dangers after the sale of the vehicles.
The trial court also allowed a list of 416 similar accidents into evidence. Plaintiffs presented
evidence that the manufacturer of the vehicle, upon learning of dangers, made a special effort
to warn police agencies that used the vehicles in question.
After a jury verdict for the plaintiffs, Ford Motor Company appealed and the Appellate Court
reviewed several issues. The defendants argued that a jury instruction on whether the
manufacturer breached a continuing post-sale duty to warn of risks of the trunk contents
puncturing the fuel tank was not warranted. The Court, however, found for the plaintiffs and
held that a manufacturer has a continuing duty to warn of a hazard of which it had a duty to
warn of at the time the product was manufactured.
Next the Court examined whether the trial court erred by admitting evidence that showed the
manufacturer warned police users of the dangers associated with the fuel tanks but did not warn
civilian owners. The defendants argued that this evidence violated the rule of subsequent
remedial measures. The Court however, held that the manufacturer knew of the dangers after
the vehicle was sold to the plaintiffs, but before the accident occurred. The Court held the
evidence was admissible to at least show that an alternative feasible design was available which
could have prevented the plaintiffs’ injuries.
Finally, the Appellate Court reviewed whether the trial court erred by admitting a list of 416
similar prior accidents. The Appellate Court held that because the list included only similar type
crashes (rear end accidents with a punctured fuel tank), and these accidents occurred before the
manufacturer sold the vehicle to plaintiffs, the evidence was admissible.
G.
Voluntary Undertaking of Duty
Bell v. Hutsell, 402 Ill. App. 3d 654, 931 N.E.2d 299, 341 Ill. Dec. 691 (2d Dist. 2010) – Plaintiffs
filed suit on behalf of their deceased son who died after leaving a party at the defendants’
home. Defendants’ son, Jonathan, threw a party at defendants’ home wherein numerous high
school and underage guests were illegally consuming alcohol. Before the party began,
defendant told his son that there would be no underage drinking and that he would be
N-8
checking on the partygoers. The guests of the party brought alcohol without permission and
consumed that alcohol without the defendants’ knowledge. After the party, one of the guests,
Daniel Bell, and a passenger were in a car accident and both were killed.
Plaintiffs claimed that defendants voluntarily undertook the duty to monitor the party guests
and prevent injury. Plaintiffs also alleged civil violations of Liquor Control Act stating that it was
unlawful for a parent to permit their children’s guests from consuming alcohol if under 21. The
trial court dismissed the complaint stating that there was no duty on behalf of the defendants
because there is no social host liability in Illinois. The voluntary undertaking theory was simply a
way of trying to circumvent the rule against social host liability.
On appeal, plaintiffs contended that the defendants voluntarily undertook a duty to prevent
consumption of the alcohol. This was evidenced by the statements to their son that they would
not allow alcohol at the party. Furthermore, the defendants monitored the party and made an
effort to prevent the consumption of alcohol. Defendants claimed there was no duty because
they were acting as social hosts and no liability exists for social hosts in Illinois. The Court held
that because the defendants did not supply the alcohol, they were not considered social hosts. A
duty arose on behalf of the defendants when they voluntarily took the responsibility to prevent
consumption of alcohol by the partygoers.
The Court affirmed the dismissal of the counts of the complaint which asserted a private cause
of action under the Liquor Control Act. The plaintiffs alleged that the defendants knowingly
authorized or enabled the partygoers to distribute and consume alcoholic beverages. The Court
held that these allegations would place the defendants in a position of a social host. The
legislature has refused to impose social host liability upon adults who provide alcoholic
beverages to underage persons.
H.
Medical Testimony
Anderson v. Zamir, 402 Ill. App. 3d 362, 931 N.E.2d 697, 341 Ill. Dec. 800 (5th Dist. 2010) – In
September, 2005, plaintiff, Tiffany Anderson, was in a car accident in which the defendant rear
ended her vehicle. During trial, plaintiff presented evidence of medical bills totaling $28,804. The
jury returned a verdict in the amount of $12,500. Plaintiff appealed.
The Appellate Court held that a jury’s verdict must be supported by the evidence. In particular, a
monetary award should consider factors such as the extent of the injury suffered and the degree
of the permanency of those injuries, the plaintiff’s age, the possibility of future difficulties, the
amount of medical expenses involved, and the restrictions upon the plaintiff’s life as a result of
the injuries suffered. During trial, the only medical testimony that was presented was on behalf
of the plaintiff by the plaintiff’s doctors. The defendant cross examined both of the doctors but
did not impeach them. The defendant argued that the injuries reported by plaintiff to her
shoulder were not causally related to the accident because they were not reported until July
2006. Both plaintiff’s doctors, however, testified during trial that the injuries to her shoulder
were caused by the accident.
N-9
The Court held that the jury is not allowed to arbitrarily reject un-impeached testimony. Because
the only medical testimony introduced at trial regarding the injuries to her shoulder stated that
the car accident was the cause of those injuries, the jury must use that information in
determining damages. Because the jury’s verdict did not bear a reasonable relationship to the
injuries established by the plaintiff at trial, a new trial was warranted.
I.
Asbestos
Simpkins v. CSX Corp., 401 Ill. App. 3d 1109, 929 N.E.2d 1257, 341 Ill. Dec. 178 (5th Dist. 2010) –
Plaintiff, a railroad worker’s wife, filed suit against the defendant, CSX, alleging that the
employer negligently failed to take precautions to protect the worker’s family from take-home
asbestos exposure. In her complaint, plaintiff alleged that her mesothelioma was caused by
asbestos fibers in her husband’s clothes. CSX filed a Motion to Dismiss for failure to state a claim
and it was granted.
On appeal, plaintiff claimed that there is a duty for an employer to protect a worker’s family
from asbestos exposure. The Court notes that this is a case of first impression in the State of
Illinois. Defendant argued that the dismissal is appropriate because no Illinois court had
previously held that employers owe a duty to the family of employees who are exposed to
asbestos. Defendant argued that allowing the plaintiff’s case to go forward against CSX would
be creating a new cause of action. Plaintiffs argued that asking the courts to recognize a duty
where there was no case directly on point was not the same as asking the court to find a new
cause of action. The Illinois Supreme Court has expressed a broad view of what can be a duty. In
determining the issue in this case, whether an employer owes a duty to family members of
employees to prevent an asbestos exposure, the Appellate Court looked to the states of
Tennessee and New Jersey for direction. Both of those states have held that a duty to prevent
harm from take-home exposure can arise even in the absence of a special relationship. The
Court next looked to the foreseeability of the injury. Again, the Court looked to a New Jersey
case which stated that it is foreseeable that soiled work clothing would need to be laundered. It
is also foreseeable that it would be a family member of an employee that would do that laundry.
Defendants argued that they did not know of the dangers of take-home asbestos at the time
plaintiff’s husband worked for defendants. The Court held that the defendants should have
foreseen the risk. The Court reversed and remanded back to the trial court.
N-10
Matthew R. Booker
- Partner
Matt has spent his entire legal career with Heyl
Royster, beginning in 2000 in the Springfield office.
His practice focuses on healthcare law, representing
physicians, hospitals, long-term care facilities, and
other similar healthcare organizations. His defense of
these entities involves a range of issues including
licensure, discipline, fraud and abuse, risk
management, staff concerns, and defense of
malpractice and other civil litigation.


With his extensive litigation experience, Matt has
personally defended a variety of civil cases,
taking more than 25 to verdict. In recent years, he has
developed a special focus on long term care and
nursing home litigation. Many of his cases are against
top Chicago and national counsel with settlement
demands often in the millions of dollars.


Matt's experience in the healthcare arena is extensive.
He began working in a hospital at the age of 15. After
graduating from college, he began work as a
registered nurse in a Central Illinois emergency room.
While there, his responsibilities included charge nurse
positions as well as house supervisor. Working as a
nurse, he obtained trauma nurse specialist
certification, was an advanced cardiac life support
instructor and achieved certification in pediatric
advanced life support. He also was directly involved in
the training of paramedics at several level one trauma
centers.
defendant long term care facility negligently
transferred resident. Jury verdict for defendant.
Howarter v. Petersen Health Care III, LLC, 235 Ill.
2d 587 (2010) - Plaintiff alleged negligent
treatment of long-term care resident, including
development of multiple Stage IV pressure
ulcers. Jury verdict for defendant.
Miller v. Rinker Boat Co., Inc., 215 Ill. 2d 599
(2005) - Wrongful death case filed by widow.
Plaintiff brought products liability case against
boat manufacturer alleging improper design
and manufacture. Summary judgment for
defendant, reversed on appeal.
Schwalbach v. Millikin Kappa Sigma Corp., 207
Ill. 2d 627 (2004) - Wrongful death case filed by
family of college student killed in a fraternity
fire.
Rice v. White, 374 Ill. App. 3d 870 (4th Dist.
2007) - Wrongful death case filed by family of
teenage girl shot and killed at a party.
Homeowner accused of negligent supervision.
Verdict for plaintiff in amount of $700,000; on
appeal, verdict reversed, judgment entered for
defendant.
 Sangamon County Bar Association
 Adjuster's Association of Central Illinois
(President 2010)
 Association of Defense Trial Attorneys
Matt has also presented and lectured to various
healthcare groups and other educational entities
involving medical record privacy, nursing practice, and
long term care litigation. He has also presented
courses on evidence and evidence presentation. He
has co-authored Smart Evidence, Medical Malpractice,
and an evidentiary guide for medical malpractice
cases. Recently he has been involved in presenting
information to insurers and fellow litigators on the use
of evidence in the courtroom obtained from social
networking websites.
Court Admissions
Southern Districts of Illinois
Education
 Juris Doctor (Magna Cum Laude), Southern
Illinois University School of Law, 1999
 Bachelor of Science-Nursing, Illinois Wesleyan
University, 1995
Significant Cases
 Myers v. Heritage Enterprises, Inc., 354 Ill. App.
3d 241 (4th Dist. 2004) - Plaintiff claimed
N-11

Entire Book - Heyl Royster

Transcription

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