Find Legal Information

NO. 4-01-0721

IN THE APPELLATE COURT

OF ILLINOIS

FOURTH DISTRICT

JUSTICE MYERSCOUGH delivered the opinion of the court:

Plaintiff filed a claim for loss under its cargoinsurance policy after the theft of a detached trailer and itscargo from an unsecured parking lot. Plaintiff and defendantsfiled cross-motions for summary judgment. On March 20, 2001, thetrial court entered summary judgment in favor of plaintiff. Defendants filed a motion for reconsideration, which the trialcourt denied on July 20, 2001. Defendants appeal, arguing thetrial court erred in granting summary judgment inasmuch as theinsurance policy in question clearly and unambiguously did notprovide insurance for the loss. We disagree and affirm the trialcourt.

I. BACKGROUND

Defendants issued plaintiff, a transportation business,a cargo insurance policy, certificate No. NA40020N, which was ineffect between September 23, 1998, and September 23, 1999. Thecertificate of insurance identified the insured goods as "motortruck cargo."

On or about October 16, 1998, plaintiff's employee,Donald Baird, was transporting a shipment of liquid cooking oilproducts from Danville, Illinois, to Seaboard Tampa Terminal inTampa, Florida. Baird was driving a tractor attached to autility refrigeration trailer. On October 16, 1998, Bairddetached the trailer and parked it on a lot at the Dixie BoyTruck Stop in San Antonio, Florida. The truck stop did notprovide any fencing, guards, security, or surveillance fortrailers left on the lot. On October 19, 1998, Baird returned tothe parking lot and found the trailer with its cargo had beenstolen. Plaintiff submitted a claim for loss to defendants inthe amount of $45,104.04.

In three letters dated November 3, 1998, March 23,1999, and July 9, 1999, defendants denied the claim based ontheir interpretation of the policy language. Specifically,defendants asserted that the detached trailer parked in anunsecured lot with no security was not an insured "truck" as thatterm is defined by the clear and unambiguous language of thepolicy. According to the letters, leaving the trailer and loadon an unsecured lot did not comply with the terms of the policyand, therefore, no coverage existed for the loss. Moreover, theJuly 9, 1999, letter explained that the unattended truck endorsement affords coverage to "trucks" not in a building or fullyenclosed yard as long as there is either constant surveillance ora guard. The letter stated that under the instant facts, therewas no coverage as the detached trailer did not meet the definition of "truck."

According to the policy, coverage was for "all risks ofphysical loss or damage from an external cause to lawful cargo inand/or on a truck whilst in [the insured's] care, custody[,] orcontrol in the ordinary course of transit, including loading andunloading." Under the policy, the term "truck" is defined asfollows:

"a) The word 'truck' shall mean a truckor truck-trailer designed for travel on public roads.

'Truck' includes trailers and semi[]trailers,dollies or auxiliary wheels combined, or anycombination of them, or any unidentifiedtrailer, BUT ONLY

i) whilst attached to a covered truck ortrailer OR

ii) whilst temporarily detached for a periodnot exceeding 72 consecutive hours (Sundaysand holidays excluded) from a covered truckor tractor AND whilst garaged in a buildingor parked in a fully enclosed yard which issecurely closed and locked, or under constantsurveillance, or on a guarded lot AND thetrailer or semi[]trailer has all openingsclosed and securely locked with keys removed."

Under the policy, the term "unattended" is defined as follows:

"c) The word 'unattended' shall mean:

A truck which has been left without a responsible person whose duty is to drive, guard,or attend the truck being either on, in, orwithin ten yards of the truck."

Exclusion k provides as follows:

"This insurance does not insure theliability of the insured for:

k) Any losses from unattended trucks while inthe ordinary course of transit unless:

a) The truck is garaged in a building orparked in a fully enclosed yard which issecurely closed and locked, or under constantsurveillance, or on a guarded lot AND

b) The truck has all openings closed andsecurely locked and keys removed, in so far[sic] as local regulations permit." (Emphases added.)

The above emphasized language in exclusion k appears verbatim inthe policy definition of "truck." In addition, for simplicity,subsection (a) of exclusion k will hereinafter be referred to asthe "secured lot" requirement, and subsection (b) will be referred to as the "closed and locked" requirement.

An unattended truck endorsement was added to the policyand included in the optional endorsements section of the policyand stated:

"2) UNATTENDED TRUCK ENDORSEMENT

In consideration of the additional premiumcharged, it is hereby noted and agreed that,irrespective of exclusion k, this policy isextended to include losses to cargo directlyresulting from forcible and/or violent entryto unattended trucks, subject to such truckshaving all their openings closed, securelylocked[,] and all keys removed, but the limitof liability under this extension shall be $(schedule item 2) any one truck."

Based upon the above language of the policy, defendantsdenied plaintiff's claim for loss because the stolen trailer didnot meet the definition of "truck" and, therefore, did not fitwithin the coverage for loss extended in the unattended truckendorsement. Defendants argued the definition of "truck" wasclear, plain, and unambiguous, and the stolen trailer was not aninsured truck as defined by the policy. Defendants contended thepolicy at issue was designed to provide insurance to the truckingindustry for cargo in transit on trucks, but it did not insurecargo being stored or warehoused. Therefore, defendants argued,"inasmuch as cargo is insured only on a 'truck', *** the definition of 'truck' is of paramount importance in determining therisk covered." Defendants stated the detached trailer was not aninsured "truck" because it did not meet the "secured lot" requirement of the policy. Therefore, defendants found the detached trailer was not an insured truck under the policy anddenied coverage.

Plaintiff argued the policy was ambiguous and theunattended truck endorsement coverage was illusory. Plaintiffreasoned that a detached trailer was covered against loss underthe terms of exclusion k of the policy as long as it met the"secured lot" and "closed and locked" requirements. Plaintifffurther contended that the unattended truck endorsement extendedcoverage of the policy to provide for coverage due to theftspecifically when cargo was left unattended. According toplaintiff, the phrase "irrespective of exclusion k" in theunattended truck endorsement could only be interpreted as removing the "secured lot" requirement, thereby permitting a detachedtrailer to meet the definition of "truck" so long as it was"closed and locked."

The trial court entered summary judgment for theplaintiff, finding defendants' interpretation of the unattendedtruck endorsement would render the endorsement coverage illusory. The trial court then denied defendants' motion for reconsideration, and this appeal followed. II. ANALYSIS

Defendants appeal, arguing the language of the policyis clear, plain, and unambiguous. Defendants further allege thecourt failed to use the plain and ordinary meaning of the policylanguage in determining that plaintiff's detached and unattendedtrailer met the definition of "truck" as defined within thepolicy.

A. Standard of Review

Granting of a motion for summary judgment is notdiscretionary, and the proper standard of review is de novo. Town of Avon v. Geary, 223 Ill. App. 3d 294, 298-99, 585 N.E.2d194, 197-98 (1991). In reviewing the trial court's ruling on amotion for summary judgment, the appellate court should consideranew the facts and law related to the case and determine whetherthe trial court was correct. Shull v. Harristown Township, 223Ill. App. 3d 819, 824, 585 N.E.2d 1164, 1167 (1992). Moreover,the reviewing court is not limited to precise reasons stated orthose implied by the trial court in entering its summary judgmentin determining whether judgment was correctly entered for themoving party as a matter of law. Rather, the reviewing courtwill consider all grounds urged and facts revealed in the trialcourt when determining the propriety of summary judgment. Kirnbauer v. Cook County Forest Preserve District, 215 Ill. App.3d 1013, 1016, 576 N.E.2d 168, 171 (1991).

B. Interpretation of Policy Language

At issue in the instant case is whether the language ofthe policy was clear, plain, and unambiguous, thereby requiringstrict compliance with the terms. The construction of an insurance policy and a determination of the rights and obligationsthereunder are questions of law for the court which are appropriate subjects for disposition by way of summary judgment. Crum &Forster Managers Corp. v. Resolution Trust Corp., 156 Ill. 2d384, 391, 620 N.E.2d 1073, 1077 (1993). To ascertain the meaningof the policy's words and the intent of the parties, the courtmust construe the policy as a whole, with due regard to the riskundertaken, the subject matter that is insured and the purposesof the entire contract. Outboard Marine Corp. v. Liberty MutualInsurance Co., 154 Ill. 2d 90, 108, 607 N.E.2d 1204, 1212 (1992). If the words in the policy are susceptible to more than onereasonable interpretation, they are ambiguous and will be construed in favor of the insured and against the insurer whichdrafted the policy. Outboard Marine, 154 Ill. 2d at 108-09, 607N.E.2d at 1212. Where a policy provision is clear and unambiguous, its language must be taken in its "'plain, ordinary andpopular sense.'" United States Fidelity & Guaranty Co. v. WilkinInsulation Co., 144 Ill. 2d 64, 74, 578 N.E.2d 926, 930 (1991),quoting Hartford Accident & Indemnity Co. v. Case Foundation Co.,10 Ill. App. 3d 115, 121, 294 N.E.2d 7, 12 (1973). The courtwill not search for ambiguity where there is none. Crum &Forrester, 156 Ill. 2d at 391, 620 N.E.2d at 1078.

At issue in the instant case is whether a detachedtrailer meets the policy definition of "truck" as that termapplies to both exclusion k and the unattended truck endorsement. According to the definition, a detached trailer will only meetthe definition of "truck" if the trailer (1) is detached from acovered truck or tractor for a period not exceeding 72 consecutive hours, (2) meets the "closed and locked" requirement, and(3) meets the "secured lot" requirement. There is no disputethat the stolen trailer had been detached for a period notexceeding 72 hours or that it met the "closed and locked" requirement. There is also no dispute that the stolen trailer didnot meet the "secured lot" requirement. Therefore, the detachedtrailer did not meet the policy definition of "truck."

Exclusion k generally states the policy does not insureliability for losses from unattended trucks in the ordinarycourse of transit unless the unattended truck (1) meets the"secured lot" requirement, and (2) meets the "closed and locked"requirement. Applying the facts of the instant case to the termsof exclusion k, the detached trailer did not fit within theexemption from exclusion k for the same reason it did not meetthe definition of "truck," i.e., because it did not meet the"secured lot" requirement. Therefore, there was no coverage forplaintiff's loss under exclusion k.

Plaintiff asserts, however, that coverage for his lossexists under the unattended truck endorsement. This endorsementextended coverage to losses sustained to cargo on unattendedtrucks resulting from forcible and/or violent entry to same,subject only to the truck meeting the "closed and locked" requirement. Central to the determination of whether the endorsement provided coverage to plaintiff's loss is the application ofthe language, "irrespective of exclusion k," included therein.

Cargo left in unsecured areas presents risks notpresent when the cargo is left in a secured area. However, thebusiness of insurance is one of insuring against risks in exchange for a premium. The unattended truck endorsement in thispolicy extends coverage in exchange for an additional premium. Under that endorsement, unattended trucks are covered so long asthe "closed and locked" requirement is met. The unattended truckendorsement serves to eliminate the "secured lot" requirement.

Defendants argue at length that the language of theunattended truck endorsement, "irrespective of exclusion k, thispolicy is extended to include ***," operated to modify onlyexclusion k and not the definition of "truck" found elsewhere inthe policy. "Irrespective of" does not mean "with regard to." "Irrespective of" means "without..regard to" (Webster's Third NewInternational Dictionary 1196 (1981)) or without taking intoaccount" (definition of "regardless of" (Webster's Third NewInternational Dictionary 1911 (1981))). The language focused onby defendants could be read to say, "Without any particularthought being given to exclusion k, this policy is extended toinclude ***." The more important language is the languagestating what is being done: "this policy is extended ***." Thelanguage does not say that it applies only to exclusion k; itsays that it applies to the entire policy, and the entire policyis extended. Therefore, the language in the endorsement, "irrespective of exclusion k," did remove certain components from thedefinition of "truck" as asserted by plaintiff.

Defendants concede that unattended trucks, even unattended trucks which are parked on unsecured lots, are covered bythe policy by virtue of the endorsement. Defendants argue,however, that a trailer or semitrailer not attached to a tractoris not a "truck." Under the definition of "truck," detachedtrailers or semitrailers are only "trucks" if there has beencompliance with the "secured lot" requirement and with the"closed and locked" requirement. The "closed and locked" requirement was met here. Defendants' argument is accordingly thatthe endorsement eliminating the "secured lot" requirement doesnot apply here because plaintiff did not comply with the "securedlot" requirement.

Defendants argue that unattended semitrailers presentmore of a risk than unattended tractor-trailers and, accordingly,there was no intent for the unattended truck endorsement to applyto detached semitrailers. The policy, however, does not saythat. The policy says that detached trailers are "trucks"covered by the policy if the "secured lot" and "closed andlocked" requirements are satisfied. The unattended truck endorsement then overrides the "secured lot" requirement in exchange for the payment of an additional premium. Perhaps thereis some merit to defendants' argument that the endorsement waivedthe "secured lot" requirement only for purposes of exclusion kand not for the purpose of the definition of "truck." However,we find that argument--that language in one portion of the policyis waived, but identical language in another portion of thepolicy is not waived--unconvincing.

Defendants have drafted a policy where an ambiguity mayresult from the use of identical language in both the definitionsand exclusion k of the policy. The potential for ambiguity isrealized when the policy strikes language critical to the correctinterpretation of the policy, but strikes it only from exclusionk. The rule is that ambiguities in a policy, particularly inexclusions, will be interpreted against the insurer. AmericanStates Insurance Co. v. Koloms, 177 Ill. 2d 473, 479, 687 N.E.2d72, 75 (1997). Defendants' interpretation allows an insured topurchase the unattended truck endorsement, thinking that it isthereby allowed to park on unsecured lots, and to discover onlywhen a claim is made that detached trailers, where cargo isroutinely carried, are not covered.

Part of the problem here is that defendants have chosento insert an exclusion in their policy in the form of a definition, the definition of the word "truck," a practice almostcertain to create confusion. Certainly if there were two "secured lot" exclusions in this policy, exclusion k for tractor-trailers and another exclusion for detached semitrailers, theunattended truck endorsement (which is not by its terms limitedto exclusion k) would eliminate both exclusions. Specificlanguage would be necessary if the endorsement were to apply onlyto one of the exclusions. The confusion present in this case ispossible only because of defendants' choice in placing what isessentially an exclusion in the definition of "truck."

Accordingly, construing the policy as a whole and withdue regard to the risk undertaken, it was not error for the trialcourt to grant summary judgment in favor of plaintiff.

III. CONCLUSION

For the reasons set forth above, we affirm the trialcourt.

Affirmed.

COOK and TURNER, JJ., concur.