{ "id": 5495507, "name": "DUNN, BRADY, GOEBEL, ULBRICH, MOREL, KOMBRINK & HUNDMAN, Plaintiff-Appellee, v. STATE FARM INSURANCE COMPANY, Defendant-Appellant", "name_abbreviation": "Dunn, Brady, Goebel, Ulbrich, Morel, Kombrink & Hundman v. State Farm Insurance", "decision_date": "1981-09-04", "docket_number": "No. 17024", "first_page": "93", "last_page": "100", "citations": [ { "type": "official", "cite": "100 Ill. App. 3d 93" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "238 N.E.2d 259", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "96 Ill. App. 2d 1", "category": "reporters:state", "reporter": "Ill. App. 2d", "case_ids": [ 2535978 ], "opinion_index": 0, "case_paths": [ "/ill-app-2d/96/0001-01" ] }, { "cite": "184 Neb. 588", "category": "reporters:state", "reporter": "Neb.", "case_ids": [ 5281477 ], "weight": 4, "pin_cites": [ { "page": "596" }, { "page": "605-06" } ], "opinion_index": 0, "case_paths": [ "/neb/184/0588-01" ] }, { "cite": "393 N.E.2d 1080", "category": "reporters:state_regional", "reporter": "N.E.2d", "weight": 2, "opinion_index": 0 }, { "cite": "75 Ill. App. 3d 208", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 3275044 ], "weight": 2, "opinion_index": 0, "case_paths": [ "/ill-app-3d/75/0208-01" ] }, { "cite": "400 N.E.2d 949", "category": "reporters:state_regional", "reporter": "N.E.2d", "pin_cites": [ { "page": "953" } ], "opinion_index": 0 }, { "cite": "81 Ill. App. 3d 59", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 3226817 ], "pin_cites": [ { "page": "64" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/81/0059-01" ] }, { "cite": "361 N.E.2d 1100", "category": "reporters:state_regional", "reporter": "N.E.2d", "pin_cites": [ { "page": "1102" } ], "opinion_index": 0 }, { "cite": "66 Ill. 2d 119", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 5463533 ], "pin_cites": [ { "page": "124" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/66/0119-01" ] } ], "analysis": { "cardinality": 760, "char_count": 16457, "ocr_confidence": 0.914, "pagerank": { "raw": 5.234718841822308e-08, "percentile": 0.3298804293223273 }, "sha256": "952950f87a67910dc237add2b04ffbeadaa452ce5d6a1059e901b489e2673cae", "simhash": "1:5838ce134fcd9779", "word_count": 2622 }, "last_updated": "2023-07-14T21:36:06.230892+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "DUNN, BRADY, GOEBEL, ULBRICH, MOREL, KOMBRINK & HUNDMAN, Plaintiff-Appellee, v. STATE FARM INSURANCE COMPANY, Defendant-Appellant." ], "opinions": [ { "text": "Mr. JUSTICE MILLS\ndelivered the opinion of the court:\nOur inquiry: Is plaintiff law firm entitled to attorney fees on the subrogation recovery paid to State Farm?\nWe hold not.\nWe reverse.\nState Farm Insurance (defendant) appeals a circuit court judgment granting plaintiff\u2019s motion for summary judgment and denying State Farm\u2019s cross-motion for summary judgment. Dunn, Brady (plaintiff) \u2014 a legal partnership \u2014 sued to recover attorney\u2019s fees for services allegedly performed which were beneficial to State Farm. Dunn, Brady claims that through its representation of individuals insured by State Farm (a subrogee), it recovered monies paid to the clients under State Farm\u2019s automobile insurance policy.\nFacts\nThe chronology of events is complex.\nOn June 19, 1975, at Zephyr Cove, Nevada, an automobile accident occurred. Dallas Lane, members of his family, and a family friend were passengers in Lane\u2019s Winnebago which was struck head-on by a car driven by a California resident. The Winnebago was destroyed, Lane\u2019s party suffered personal injuries, and the California resident was killed.\nThe California resident was insured by Commercial Union Assurance Company (Commercial). Lane, an Illinois resident, was insured by State Farm for personal injury, property damage, medical payments, lost earnings, and collision. The Lanes were ultimately paid in excess of $28,000 for physical damages, and medical and wage claims, by State Farm under the policy.\nIn July 1975, Lane hired plaintiff law firm to represent him in the personal injury suit, and plaintiff contacted State Farm to obtain its investigation file. State Farm referred plaintiff to a field claim representative for Commercial. Both carriers were advised that plaintiff represented the passengers in the Winnebago.\nIn September of 1975, State Farm began reimbursing the injured for their medical bills, and the insureds signed forms entitled \u201creceipt for expense advance.\u201d Those payments continued through 1977, when the case was ultimately settled.\nOn September 26, 1975, State Farm sent Commercial its notice of subrogation lien. An interoffice memorandum, and deposition testimony in the record from Gerald Larsen, a claims adjuster for Commercial, indicate that by November of 1975 Commercial accepted liability on behalf of its deceased insured and would honor State Farm\u2019s subrogation payments upon requisite proof of loss.\nOn January 28, 1976, plaintiff asked defendant if it could represent State Farm on its subrogation claim. State Farm refused, telling plaintiff that it intended to pursue the subrogation claim directly with Commercial. On April 1, 1976, Commercial began making payments directly to State Farm to offset State Farm\u2019s payout to its insureds.\nBy letter of June 16, 1976, plaintiff notified State Farm that it had filed a negligence suit against the estate of the decedent in Federal court. On May 12, 1977, plaintiff sent a letter to State Farm requesting that it forward an account of all monies received by State Farm from Commercial after the date of the filing of the lawsuit since plaintiff expected State Farm to pay its ratable share of attorney\u2019s fees from the monies received on the subrogation claim. By return letter, State Farm refused the request for fees, claiming that it had settled the claim directly with Commercial.\nOn December 8, 1976, Commercial paid State Farm the second installment on the subrogation claim. A final payout for several inadvertently overlooked items was made by Commercial in early 1978.\nOn August 17, 1977, State Farm executed a release in the amount of $27,732.82. On or about the same day, a $96,000 settlement was reached, and the insureds also executed releases. The personal injury lawsuit was dismissed on September 27,1977.\nOn November 1, 1977, plaintiff again contacted State Farm and requested attorney\u2019s fees and a proportionate share of costs. State Farm again declined the request for fees, and this lawsuit resulted.\nTheory of Suit\nPlaintiff\u2019s right to recover attorney\u2019s fees is ostensibly based on the equitable \u201cfund doctrine.\u201d The doctrine has been thus described:\n\u201c[Wjhere a fund has been created as the result of legal services performed by an attorney for his client, and a subrogee of the client, who has done nothing to aid in creating the fund, seeks to benefit therefrom, the attorney is entitled to a fee from the subrogee in proportion to the benefit received by the subrogee. This theory of recovery by an attorney, known as the \u2018fund doctrine,\u2019 is based on the equitable concept that an attorney who performs services in creating a fund should in equity and good conscience be allowed compensation out of the whole fund from all those who seek to benefit from it.\u201d (Baier v. State Farm Insurance Co. (1977), 66 Ill. 2d 119, 124, 361 N.E.2d 1100, 1102.)\nStated in a different manner it has also been held that,\n\u201cIn order to recover under the doctrine it is necessary for a plaintiff seeking recovery from a subrogee to show (1) that the fund was created as a result of legal services performed by an attorney * * *, (2) that the subrogee did not participate in the creation of the fund, and (3) that the subrogee benefited out of the fund that was created.\u201d Smith v. Marzolf (1980), 81 Ill. App. 3d 59, 64, 400 N.E.2d 949, 953.\nHere, the trial court, relying upon Sobczak v. Whitten (1979), 75 Ill. App. 3d 208, 393 N.E.2d 1080, concluded that the fund doctrine was applicable because the \u201csettlement\u201d of the subrogation claim between the carriers was only reached after State Farm knew of Dunn, Brady\u2019s representation of the insured parties and anticipated ancillary legal action. On appeal, State Farm argues that the fund doctrine is inapplicable to this case because no fund was created and none of Dunn, Brady\u2019s legal services in the ancillary personal injury action benefited State Farm. In a nutshell, defendant argues that its activities \u2014 not plaintiffs\u2019s \u2014 were responsible for settlement of the subrogation claim.\nI\nThe initial question we must resolve has two distinct aspects. Is there a fund, and if so, was it created as a result of legal services performed by plaintiff? The record discloses that agents for Commercial admitted liability as early as November of 1975, four months after they learned plaintiff was representing the Lanes, but seven months prior to the filing of the personal injury lawsuit. In addition, Commercial began making payments on the subrogation claim directly to State Farm some two months prior to the filing of that lawsuit. The record also discloses that settlement negotiations between plaintiff and Commercial were directed solely to the value of the injuries to plaintiff\u2019s clients without specific regard to defendant\u2019s subrogation interests. On the facts of this case, we hold that no \u201cfund\u201d was created since Commercial acknowledged and agreed to honor State Farm\u2019s subrogation claims irrespective of the inchoate personal injury claim. Absent a fund, plaintiff has not demonstrated that it is entitled to any fee for its alleged services.\nEven were we to accept the claim that a fund had been created on the theory that the monies emanate from a common source, we nevertheless cannot accept plaintiff\u2019s claim to fee entitlement. The second aspect of the fund doctrine requires that the subrogee not participate in the creation of the fund. Here, the facts graphically demonstrate that defendant expended direct and substantial time and energy in pursuing its subrogation claims directly with Commercial.\nThirdly, any possible benefit which defendant might have received on the basis of plaintiff\u2019s activity was purely incidental. One must distinguish between the acts establishing the fund as opposed to caretaker activity subsequent to the creation of that fund which necessarily must occur until such time as the nature and extent of the injuries have been diagnosed and treated and all claims have been processed and paid. Plaintiff\u2019s only activity in this regard was to gather records, bills, and receipts, turning them over either to State Farm or directly to Commercial on occasion. None of those activities are related to the creation of any fund.\nUnder the insurance policy, the insured is required to cooperate with his insurance company. To that end, defendant could well have collected the same information directly from the insured without the involvement of plaintiff. Moreover, it is arguable that the marshaling of this documentary evidence was of benefit to the insured rather than the subrogee to the extent that a determination of the nature and extent of the injuries affected the potential value of the injury claim, irrespective of the subrogation lien.\nII\nPlaintiff\u2019s reliance upon Sobczak v. Whitten (1979), 75 Ill. App. 3d 208, 393 N.E.2d 1080, for the proposition that the fund doctrine is applicable because the subrogation \u201csettlement\u201d was only reached after defendant knew of plaintiff\u2019s representation of the insured parties and anticipated ancillary legal action is misplaced. In that case, Sobczak was insured by Government Employees Insurance Company (GEICO). Defendant driver of the other vehicle was insured by Dairyland Insurance Company. Sobczak filed a complaint for personal injuries on September 22, 1976. Sometime between October and November of 1976, GEICO sent subrogation notices to Dairyland. On December 20, 1976, Dairyland filed a motion requesting leave to pay the monetary equivalent of the stated policy limits into the court. On the same day, Dairyland deposited $20,000 with the court.\nOn March 14, 1977, Sobczak filed a motion requesting a hearing to allow plaintiffs to prove damages and allow GEICO to proceed on its claim for subrogation. On March 31, 1977, GEICO filed a petition to intervene, and the funds were ultimately disbursed. GEICO thereafter appealed the trial court\u2019s order granting Sobczak\u2019s motion to reconsider a prior motion of the court disbursing the $20,000 without any allocation of an amount for plaintiffs\u2019 attorney\u2019s fees on the proportionate share received by GEICO on its subrogation claim. In granting the motion to reconsider, the court ordered that plaintiffs\u2019 attorneys receive approximately one-third of the $20,000 as a fee.\nGEICO asserted on appeal that the fund doctrine did not apply because it did not realize any actual benefit from the attorney\u2019s services since liability on the claim was clear and payment by the defendant insurance company was certain. The court noted that although defendant\u2019s answer to the complaint contested liability, defendant intended to settle from the suit\u2019s inception. The court also concluded, however, that it was only through the negotiations of plaintiffs\u2019 attorney that the suit was ultimately settled. Issues with regard to the limits of defendant\u2019s liability and the documentation of the extent of injuries were resolved solely on the basis of plaintiffs\u2019 lawsuit. The appellate court then held that it was not error for the trial court to direct an award of attorney\u2019s fees.\nNot only are the facts of Sobczak distinct from the case at bar, but we do not read the case as broadly as either plaintiff or the trial court. In Sobczak, the facts clearly demonstrated that GEICO did nothing to secure payment on its subrogation claim other than tender notices of subrogation to the parties. Sobczak\u2019s attorney was primarily responsible for the actual negotiation which resulted in settlement. GEICO played a completely passive role in the litigation up to the point it petitioned to intervene, several months after the funds were already on deposit with the court and subject to Sobczak\u2019s motion to prove up damages and allow GEICO to present its claim.\nIII\nMoreover, while we agree that the questions of notice, anticipated litigation, and contested liability are important, they are not determinative of a subrogee\u2019s liability for attorney\u2019s fees without an examination of the nature and extent of the carrier\u2019s own activities. Were it otherwise, subrogees would always be liable for a proportionate share of attorney\u2019s fees in the event an insured\u2019s attorney noticed the parties of an intent to file a claim for damages at a time when actual liability for the claim had not yet been conceded by the other carrier. To give effect to plaintiff\u2019s argument would force counsel upon a subrogee which not only does not want counsel but does not need counsel to pursue its subrogation claim.\nWhile plaintiff is correct in asserting that no case holds that a complaint must be filed before the fund doctrine applies (Krause v. State Farm Mutual Automobile Insurance Co. (1969), 184 Neb. 588,169 N.W.2d 601), plaintiff ignores the subsequent language in that opinion to the effect that allowance of attorney\u2019s fees depends upon \u201cconsideration of all of the circumstances including the nature of the contract with the insured and the amount and nature of the services rendered, and the other principles relating to the award of attorney\u2019s fees under the law.\u201d (184 Neb. 588, 596, 169 N.W.2d 601, 605-06.) In the same light, we have considered each of the cases cited by plaintiff in support of its position and conclude that the factual setting in each case is clearly distinguishable from that present in the case at bar.\nIV\nWe also reject plaintiff\u2019s claim that defendant is estopped from denying liability for fees on the theory that defendant could not have been subrogated to its insured while simultaneously receiving direct payments from Commercial. Plaintiff interprets the insurance contract to require the filing of a lawsuit to protect defendant\u2019s subrogation rights. Plaintiff then argues that the failure to file such a suit would abrogate the insured\u2019s duty under the insurance contract and defendant would be free to seek repayment of any monies advanced under the policy. The thrust of plaintiff\u2019s argument is that the efforts plaintiff rendered in connection with the filing and prosecution of the lawsuit were not only necessary but inherently beneficial to defendant. This argument is without merit.\nWhile the insurance policy requires that the insured do nothing to prejudice the rights of the subrogee, the policy does not dictate that the insured take any particular legal action to enforce the rights of the subrogee. If that were not the case, the International Reciprocal Arbitration Agreement requiring internal negotiation and settlement of certain subrogation claims under a stated amount would be pointless. The insurance contract clause is clearly there for the protection of the subrogee in the event that the insured finds it necessary to file suit to seek damages in excess of those or different from those covered by the insurance policy. The subrogee, however, is obviously free to pursue its own remedy against another carrier without the consent of the insured.\nV\nFinally, plaintiff argues that the trial court could have entered summary judgment on count II of the amended complaint, which alleged that under Nevada law, plaintiff was entitled to equitable apportionment of the expenses, costs, and services rendered. The trial court specifically declined to grant relief to plaintiff on that count because disposition with regard to count I terminated the litigation, obviating the need to address the alternative theory. The trial court did, however, deny defendant\u2019s motion for summary judgment, which was directed toward both counts of the complaint. Since the denial of a motion for summary judgment is never a final or appealable order, that issue is not properly before this court for review at this time. (Simon v. Jones (1968), 96 Ill. App. 2d 1, 238 N.E.2d 259.) In view of the erroneous disposition as to plaintiff\u2019s motion for summary judgment, we remand to the trial court for reconsideration of count II of the complaint.\nFor the foregoing reasons, the judgment of the circuit court is reversed and remanded with directions to enter summary judgment in favor of defendant as to count I of the complaint and for further proceedings.\nReversed and remanded with directions.\nLONDRIGAN and GREEN, JJ., concur.", "type": "majority", "author": "Mr. JUSTICE MILLS" } ], "attorneys": [ "James C. Wollrab, of Costigan & Wollrab, of Bloomington, for appellant.", "Livingston, Barger, Brandt, Slater & Schroeder, of Bloomington, for appellee." ], "corrections": "", "head_matter": "DUNN, BRADY, GOEBEL, ULBRICH, MOREL, KOMBRINK & HUNDMAN, Plaintiff-Appellee, v. STATE FARM INSURANCE COMPANY, Defendant-Appellant.\nFourth District\nNo. 17024\nOpinion filed September 4, 1981.\nRehearing denied October 14, 1981.\nJames C. Wollrab, of Costigan & Wollrab, of Bloomington, for appellant.\nLivingston, Barger, Brandt, Slater & Schroeder, of Bloomington, for appellee." }, "file_name": "0093-01", "first_page_order": 115, "last_page_order": 122 }