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Indiana Insurance Co. v. Machon & Machon, Inc.

Case Date: 06/29/2001
Court: 1st District Appellate
Docket No: 1-99-1034 Rel

FIRST DIVISION

JUNE 29, 2001



No. 1-99-1034


INDIANA INSURANCE COMPANY,

         Plaintiff-Appellant,

 

MACHON & MACHON, INC.,

          Defendant-Appellee.

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)		 Appeal from the
Circuit Court of
Cook County.

No. 98 L. 4220

Honorable
David Lichtenstein,
Judge Presiding.


JUSTICE TULLY delivered the opinion of the court:

Plaintiff, Indiana Insurance Company (Indiana), appeals fromthe trial court's grant of defendant, Machon & Machon, Inc.'s(Mahon), motion to dismiss plaintiff's complaint pursuant tosection 2-619 of the Code of Civil Procedure (Code)(735 ILCS 5/2-619 (West 1996)), as well as the trial court's denial ofplaintiff's motion to vacate the order of dismissal and forrehearing. A timely notice of appeal was filed vesting this courtwith proper jurisdiction under Supreme Court Rule 301. 155 Ill.2d R. 301. The issue presented for our consideration is whethersection 13-2214.4 of the Code (735 ILCS 5/13-214.4)(West 1996)),which sets forth a two year statute of limitations for claims against insurance producers, encompasses claims by an insureragainst its agent. For the reasons which follow, we respond inthe affirmative.

In April 1998, Indiana filed suit against its agent, Machon,seeking reimbursement for a claim paid to an insured, KishorBhatt (Bhatt), as a result of a fire loss at his building. In itscomplaint, Indiana alleged it had issued a policy of insurance toBhatt which provided for "actual cash value" coverage in theinstance of a fire loss and specifically excluded "replacementcost" benefits. The complaint further alleged that at some pointafter Indiana issued that policy and without authority to so act,Machon transmitted a document to the Bhatt which indicated hisbuilding was covered at "replacement cost." As a direct resultof Machon's conduct, Indiana asserted it became liable to Bhatt for the payment of the replacement cost of the building in spiteof the provisions in the policy of insurance to the contrary. Indiana finally alleged it suffered damages in the amount of$31,281.18, the difference between the "replacement cost" and the"actual cash value" it would have been obligated to pay under thepolicy alone.

The corrected second amended complaint, the subject of thetrial court's final orders, contained three separate countsalleging three theories of recovery: negligence, breach ofimplied warranty and breach of contract. As to count I, Indianaalleged Machon was negligent in transmitting the subject documentto Bhatt and that as a direct and proximate result of that act,Indiana was obliged to pay "replacement cost" benefits. In countII, Indiana alleged that, "At the time of delivering theaforementioned evidence of property coverage, MACHON & MACHON,INC. was cloaked with the indicia of authority and impliedlywarranted it had authority to deliver such evidence of propertycoverage, when, in fact, it did not." Further, "MACHON & MACHON,INC., had a duty to the Plaintiff to exercise ordinary care notto warrant by implication that which it was without authority todo on behalf of the principal." Finally, Count III alleged thatMachon's conduct in delivering said document to Bhatt was abreach of the Agent-Company Agreement.

Defendant moved to dismiss the complaint pursuant to section2-619 of the Code arguing the entire action was barred by the twoyear statute of limitations set forth in section 13-214.4, andfurther, count II should be dismissed pursuant to section 2-615of the Code as plaintiff lacked standing to sue for breach of warranty.

The trial court agreed with defendant and entered an order,stating: "For the reasons stated in defendant's motion and brief,this matter is dismissed pursuant to the statute of limitationsand