Find Legal Information

No. 2--03--0867

IN THE

APPELLATE COURT OF ILLINOIS

SECOND DISTRICT

I. INTRODUCTION

After a fire destroyed his garage and its contents, plaintiff, Martin Wasik, made a claim undera homeowners insurance policy that defendant, Allstate Insurance Company, had issued to him. Claiming that plaintiff's stepson intentionally started the fire, defendant denied coverage. Plaintiffcommenced this breach-of-contract action. The trial court denied plaintiff's motion for summaryjudgment and granted defendant's motion for summary judgment. On appeal, plaintiff argues that,because he is an innocent insured, the acts of his stepson cannot be imputed to him to deny coverage. We reverse.

II. BACKGROUND

In his complaint, plaintiff alleged that he complied with his obligations under the policy andthat defendant breached the policy by failing to pay plaintiff's claim. Defendant raised as affirmativedefenses that (1) the fire was the result of the intentional act of an insured, William Fort, and (2)insureds William and his wife, Kathleen Fort, made material misrepresentations regarding thecircumstances of the loss. Each party moved for summary judgment. See 735 ILCS 5/2--1005 (West2002). The materials submitted in connection with the motions reveal the following.

Plaintiff submitted a claim for $8,082, and William and Kathleen submitted a $55,000 claimfor loss of personal property they stored in plaintiff's garage. William and Kathleen are not partiesto this litigation, and their claim is not at issue here.

During his examination under oath, plaintiff testified that he lived in a single-family home witha detached garage. His wife, Nancy, lived with him until her death in May 2001. When plaintiff andNancy married in 1976, Nancy had two children from a previous relationship, including William Fort. In June 2001, William, Kathleen, and their son were living in plaintiff's home. William and Kathleendid not pay plaintiff rent and did not contribute toward household expenses. They stored theirbelongings in plaintiff's garage.

Plaintiff was out with his biological daughter when the fire occurred on June 17, 2001. William called plaintiff to inform him of the fire and said that he was working in the yard when thefire occurred. William said that, before the fire, he was in the garage looking for charcoal lighterfluid. About 30 minutes later, William smelled smoke and then discovered the fire. Plaintiff had noindependent knowledge of the circumstances surrounding the fire.

During his examination under oath, William Fort testified that he and his wife moved intoplaintiff's home in May 2001 because their unemployment benefits were about to expire and they hadbeen evicted from their home in McHenry. Shortly thereafter, William's and Kathleen's teenage sonmoved into plaintiff's home. At the time of his testimony, William was still paying overdue electric,gas, and telephone bills for the McHenry home. Although he could not remember for certain, Williambelieved that he had returned to work shortly before the fire.

Between 1 and 1:30 p.m. on June 17, 2001, William and his son went out to the garage tolook for a pair of shorts for Kathleen. While William looked for the shorts, William's son found somecharcoal for a barbecue. William and his son left the garage after about five minutes. William wentnext door to borrow lighter fluid from a neighbor. William used the lighter fluid and returned it. Helit the grill, and he and his son started cleaning gutters. Shortly thereafter, William smelled smokeand then saw smoke and fire coming from the garage. William opened the garage doors and used agarden hose to spray water on the fire. Also, he unsuccessfully attempted to remove the automobilethat was parked in the garage. After several minutes, the fire department arrived and extinguishedthe fire. William called plaintiff to inform him about the fire. William testified that he was not surewhat caused the fire and denied starting it. He and his family moved out of plaintiff's home in eitherJuly or August 2001.

Kathleen testified that she and William moved into plaintiff's home in February 2001. Shelikewise recalled that William had returned to work shortly before the fire. At the time of the fire,Kathleen was inside cooking vegetables. She saw William and her son go out to the garage to lookfor lighter fluid. She learned about the fire when her son came inside looking for an extinguisher. Her son dialed 9-1-1, and she stayed on the telephone with the operator. William came inside to getthe keys to the car parked in the garage. From inside the house, Kathleen saw William using a gardenhose to water down the car. Kathleen did not believe that the fire was set intentionally.

According to the fire department report, when firefighters arrived on the scene, William wasattempting to extinguish the fire with a garden hose. There was heavy damage to the structure andto furniture and clothes stored in the garage. A strong odor of flammable liquid was present near amattress. William told the fire department investigator that he and his family were evicted from theirhome in February 2001 and had been living with plaintiff since that time. William and his familystored their belongings in the garage. On the day of the fire, William and his son entered the garageto find some clothes and left when they did not find what they were looking for. William's sonreported that William borrowed charcoal lighter fluid from a neighbor. William told the investigatorthat he lit the grill and then began working in the yard. He smelled smoke and then saw smokecoming from the garage. The report concluded that the fire was suspicious.

At defendant's request, a fire investigator examined the scene. According to his report, theinvestigator observed low burn patterns at or near floor level. Tests of a sample of stacked cardboardfound at the center of the garage revealed the presence of a medium petroleum distillate. William toldthe investigator that, about five minutes before the fire, he and his son were in the garage looking forclothing. William did not notice anything unusual. About five minutes after leaving the garage,William smelled and saw smoke coming from the garage. Patty Seebock, a neighbor, reported thatshe saw William and his son leaving the garage. About five minutes later, she heard someone yell"fire." Another neighbor, Sam Gattuso, reported that William asked to borrow lighter fluid. Gattusogave William lantern fuel, and William returned it about 15 minutes later. Shortly thereafter, Gattusoheard people yelling "fire." The investigator concluded that the fire originated at or near floor level,was incendiary, and was caused by the ignition of a flammable liquid by an open flame.

The trial court granted defendant's motion for summary judgment and denied plaintiff'smotion. The court found that (1) William Fort was an insured under plaintiff's policy, (2) there wasno evidence to suggest that William was not responsible for the fire, (3) the policy clearly andunambiguously precluded recovery by plaintiff, (4) William made material misrepresentations todefendant, and (5) plaintiff was an innocent insured. Plaintiff timely appealed.

III. DISCUSSION

A. Standard of Review

On appeal, plaintiff argues that, as an innocent insured, he is entitled to recover under thepolicy despite the alleged wrongdoing of his stepson. A summary judgment is appropriate where,when viewed in the light most favorable to the nonmovant, the pleadings, depositions, admissions,affidavits, and exhibits on file reveal that there is no genuine issue of material fact and the movant isentitled to a judgment as a matter of law. 735 ILCS 5/2--1005(c) (West 2002); West Bend MutualInsurance Co. v. Mulligan Masonry Co., 337 Ill. App. 3d 698, 701-02 (2003). Although thenonmovant need not prove his or her case at the summary judgment stage, he or she must comeforward with evidence that establishes a genuine issue of material fact. Mulligan Masonry, 337 Ill.App. 3d at 702. We review the trial court's decision de novo. Westfield National Insurance Co. v.Continental Community Bank & Trust Co., 346 Ill. App. 3d 113, 116 (2003). We note that, althoughhe raised the argument below, plaintiff does not argue on appeal that there is a question of fact aboutwhether William intentionally started the fire.

B. Relevant Policy Language

Plaintiff's homeowner's policy contains the following relevant definitions:

"1. 'You' or 'your' -- means the person named on the Policy Declarations as the insuredand that person's resident spouse.

2. 'Allstate,' 'we,' 'us,' or 'our' -- means the company named on the Policy Declarations.

3. 'Insured person(s)' -- means you and, if a resident of your household:

a) any relative; and

b) any dependent person in your care." (Emphasis in original.)

Plaintiff does not dispute that William and Kathleen Fort were insureds at the time of the loss.

According to the "joint obligations" clause found among the general policy declarations:

"The terms of this policy impose joint obligations on persons defined as an insuredperson. This means that the responsibilities, acts and failures to act of a person defined as aninsured person will be binding upon another person defined as an insured person." (Emphasisin original.)

The general policy declarations section also states:

"We do not cover any loss or occurrence in which any insured person has concealedor misrepresented any material fact or circumstance." (Emphasis in original.)

The following exclusions apply to all of the property coverages:

"We do not cover loss to the property described in Coverage A -- DwellingProtection[,] *** Coverage B -- Other Structures Protection [or Coverage C -- PersonalProperty Protection] consisting of or caused by:

* * *

7. The failure by any insured person to take all reasonable steps to preserveproperty when the property is endangered by a cause of loss we cover.

8. Any substantial change or increase in hazard, if changed or increased by anymeans within the control or knowledge of an insured person.

9. Intentional or criminal acts of or at the direction of any insured person, if theloss that occurs:

a) may be reasonably expected to result from such acts; or

b) is the intended result of such acts.

This exclusion applies regardless of whether or not the insured person is actuallycharged with, or convicted of a crime." (Emphasis in original.)

C. Innocent Insured Doctrine

When construing an insurance policy, the court must ascertain the parties' intent. Konami(America), Inc. v. Hartford Insurance Co. of Illinois, 326 Ill. App. 3d 874, 879 (2002). If the policyterms are unambiguous, the court will afford them their plain, ordinary, and popular meaning. Konami, 326 Ill. App. 3d at 879. If, however, the terms are susceptible to more than oneinterpretation, they are ambiguous and will be construed in favor of the insured and against the insurerthat drafted the policy. Konami, 326 Ill. App. 3d at 879.

The leading Illinois decision applying the innocent insured doctrine is Economy Fire &Casualty Co. v. Warren, 71 Ill. App. 3d 625 (1979). In Economy, the trial court found that a womanintentionally set fire to her and her husband's home. On appeal, the husband argued that, because hewas innocent of any wrongdoing, he was entitled half of the insurance proceeds. The reviewing courtagreed and reasoned that "[w]e do not think the reasonable person in the position of William Warrenwould have supposed that the wrongdoing of his co-insured would be imputed to him. If the [insurer]intended such a result, it should have made the terms of the policy more express in this regard." Economy, 71 Ill. App. 3d at 629; see also Fittje v. Calhoun County Mutual County Fire InsuranceCo., 195 Ill. App. 3d 340, 346 (1990) (following Economy).

The Economy court did not cite the insurance policy provision it was interpreting. The policyin West Bend Mutual Insurance Co. v. Salemi, 158 Ill. App. 3d 241 (1987), however, provided thatit was " 'void if any insured has intentionally concealed or misrepresented any material fact orcircumstances relating to this insurance. ' " Salemi, 158 Ill. App. 3d at 247. In Salemi, each partyto a real estate sale contract was an insured under a policy covering the property that was the subjectof the agreement. A fire partially destroyed the property, and the buyer was suspected of intentionallystarting the fire. The reviewing court rejected the insurer's claim that the provision rendered thepolicy void as to all insureds as a result of the wrongdoing of any insured. Salemi, 158 Ill. App. 3dat 247-48. According to the court, the clause stated neither that the policy was void as to all insuredsnor that it was void only as to the guilty insured in the event of some improper behavior. Salemi, 158Ill. App. 3d at 248. Absent a clear statement that the policy was void as to all insureds, Economycontrolled. Salemi, 158 Ill. App. 3d at 249. If the insurer intended both the buyer and the seller tobe barred from recovery in the event of wrongdoing by either one of them, then it should haveemployed policy language that expressly and clearly stated its intent. Salemi, 158 Ill. App. 3d at 249.

In State Farm Fire & Casualty Insurance Co. v. Miceli, 164 Ill. App. 3d 874 (1987), the courtapplied the same reasoning to hold that policy language essentially identical to that in Salemi did notpreclude a husband and wife from recovering after their son vandalized property in the family's home. According to the court, it was reasonable for the husband and wife to have assumed that their rightswere not dependent upon those of their children. Miceli, 164 Ill. App. 3d at 881.

The exclusionary clauses in plaintiff's policy are essentially the same as those in Salemi andMiceli. They are triggered by certain acts or failures to act of "any insured person" or of "an insuredperson." (Emphasis in original.) Although the clauses could be read as entirely prohibiting coveragefor a loss caused by the act or failure to act of "any" insured, they do not clearly state that the policywill be void or coverage will be excluded as to all insureds in the event of some improper behaviorby "any" insured. We conclude that the policy interpretation applied in Salemi and Miceli governsthe interpretation of the exclusions in plaintiff's policy.

Defendant argues that Salemi and Miceli are distinguishable because there is no indication thatthe policies in those cases contained joint obligations clauses. The joint obligations clause in plaintiff'spolicy provides that "the responsibilities, acts and failures to act of a person defined as an insuredperson will be binding upon another person defined as an insured person." (Emphasis in original.) The presence of this language does not change the result. Exclusions are to be construed narrowly. National Union Fire Insurance Co. of Pittsburgh, Pennsylvania v. Glenview Park District, 158 Ill. 2d116, 123 (1994). The "joint obligations" language is not a part of any of the exclusionary clauses butis instead found among the general policy declarations. We agree with plaintiff that one plausibleconstruction of the joint obligations clause is that it refers to the general obligations to pay premiumsand to take certain actions before and after a loss and that a reasonable insured would not understandthe clause to exclude coverage for all insureds when coverage is excluded for one insured. SeeAllstate Insurance Co. v. Worthington, 46 F.3d 1005, 1009 (10th Cir. 1995). The clause refers toan insured's obligations under the policy and not to any of the exclusions that preclude recovery fora loss caused by wrongdoing on the part of an insured. See C.P. v. Allstate Insurance Co., 996 P.2d1216, 1226 (Alaska 2000) (noting that "it is not clear how the joint obligations clause even bears onthe exclusionary language critical here"). One decision upon which defendant relies even recognizesthat the joint obligations clause is "more than a little mysterious." Allstate Insurance Co. v. Steele,74 F.3d 878, 881 (8th Cir. 1996). The joint obligations clause is, at best, ambiguous. Therefore, wewill not interpret it broadly enough to exclude coverage for an innocent insured when another insuredhas intentionally or criminally caused a loss.

IV. CONCLUSION

We hold as a matter of law that, as an innocent insured, plaintiff is entitled to recover for thelosses he sustained as a result of the fire. Therefore, the trial court should have denied defendant'smotion for summary judgment and granted plaintiff's motion for summary judgment.

Accordingly, the judgment of the circuit court of Lake County is reversed.

Reversed.

McLAREN and HUTCHINSON, JJ., concur.