{ "id": 570696, "name": "DENNIS KENNY, Plaintiff-Appellee, v. ASSURANCE COMPANY OF AMERICA, Defendant-Appellant", "name_abbreviation": "Kenny v. Assurance Co. of America", "decision_date": "2001-09-18", "docket_number": "No. 1\u201400\u20142739", "first_page": "904", "last_page": "913", "citations": [ { "type": "official", "cite": "325 Ill. App. 3d 904" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "542 N.E.2d 53", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1989, "opinion_index": 0 }, { "cite": "185 Ill. App. 3d 943", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 2645180 ], "year": 1989, "pin_cites": [ { "page": "950" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/185/0943-01" ] }, { "cite": "375 N.E.2d 115", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1978, "opinion_index": 0 }, { "cite": "71 Ill. 2d 210", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 5450406 ], "year": 1978, "pin_cites": [ { "page": "215" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/71/0210-01" ] }, { "cite": "664 N.E.2d 1140", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1996, "opinion_index": 0 }, { "cite": "279 Ill. App. 3d 501", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 75369 ], "weight": 18, "year": 1996, "pin_cites": [ { "page": "503" }, { "page": "504" }, { "page": "505" }, { "page": "503" }, { "page": "503" }, { "page": "506" }, { "page": "507-08" }, { "page": "508" }, { "page": "508" }, { "page": "508" }, { "page": "509" }, { "page": "509-10" }, { "page": "510" }, { "page": "510" }, { "page": "511" }, { "page": "511" }, { "page": "511" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/279/0501-01" ] } ], "analysis": { "cardinality": 774, "char_count": 23858, "ocr_confidence": 0.766, "pagerank": { "raw": 4.03580807328026e-08, "percentile": 0.02034713220732174 }, "sha256": "7934d3a9424fe90f94cd541540224d7fed18da3b7603dd4ce77c90db428133ca", "simhash": "1:cafa6ce44d8cbc99", "word_count": 3802 }, "last_updated": "2023-07-14T19:13:10.268443+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "DENNIS KENNY, Plaintiff-Appellee, v. ASSURANCE COMPANY OF AMERICA, Defendant-Appellant." ], "opinions": [ { "text": "JUSTICE BURKE\ndelivered the opinion of the court:\nDefendant Assurance Company of America (Assurance) appeals from an order of the circuit court granting plaintiff Dennis Kenny\u2019s renewed motion for summary judgment and from an order vacating the trial court\u2019s prior grant of summary judgment to Assurance. On appeal, Assurance contends that the trial court erred in granting summary judgment in favor of Kenny because Kenny, by allowing entry of a dismissal order in a separate lawsuit filed by him against Gregory Burdo based upon an accident in which Burdo was driving a vehicle that rear-ended a vehicle in which Kenny was a passenger and which was also the accident underlying Kenny\u2019s claim against Assurance, extinguished any subrogation rights Assurance possessed against Burdo and, therefore, Assurance was not liable for underinsured motorist benefits to Kenny. For the reasons set forth below, we affirm.\nSTATEMENT OF FACTS\nKenny was injured on December 21, 1989, while riding in a vehicle operated by Scott Kent and owned by Bill Sullivan Pontiac, Kenny\u2019s and Kent\u2019s employer, when the vehicle was rear-ended by a car driven by Burdo. Kenny\u2019s employer was insured under a policy issued by Assurance. The policy contained an uninsured motorist limit and an underinsured motorist limit of $1 million and provided that Assurance would make damage payments to the insured, but\n\u201conly after all liability bonds or policies have been exhausted by judgments or payments, unless we:\na. Have been given written notice in advance of a settlement between an \u2018insured\u2019 and the owner or operator of the \u2018underinsured motor vehicle;\u2019 and\nb. Decide to advance payment to the \u2018insured\u2019 in an amount equal to the tentative settlement.\u201d\nThe policy further provided that \u201c[a]ny judgment for damages arising out of a \u2018suit\u2019 brought without written notice to [Assurance was] not binding on [it].\u201d The policy also contained an exclusion provision that the policy would not apply if \u201c[a]ny claim [was] settled without [Assurance\u2019s] consent.\u201d Lastly, the policy provided that if the insured was entitled to recover damages from another, those rights were transferred to Assurance and that the insured \u201cmust do everything necessary to secure [Assurance\u2019s] rights and must do nothing after \u2018accident\u2019 or \u2018loss\u2019 to impair them.\u201d\nOn November 28, 1990, because Kenny\u2019s counsel had been advised by the State of Illinois that Burdo was uninsured, Kenny notified Assurance of his claim for uninsured benefits, and the parties agreed to arbitrate this claim. On October 16, 1991, Kenny filed a negligence action against Burdo (the Burdo case). Kenny\u2019s action was dismissed, but Kenny later refiled it. In September 1992, Kenny\u2019s counsel forwarded a demand letter to Assurance, seeking $800,000 under the policy.\nIn February 1994, Kenny requested a copy of the insurance policy but never received one. In November, Kenny requested that Assurance make a settlement offer. There is no evidence in the record that Assurance responded to this request.\nIn June 1995, Assurance learned that Burdo was in fact insured with Allstate and had a policy with a limit of $100,000. Although Assurance offered the services of its counsel to Allstate to represent Burdo, Allstate retained its own counsel. Assurance then requested to be kept informed of any negotiations with Kenny. Thereafter, Kenny\u2019s claim against Assurance was suspended. On July 20, 1995, Kenny\u2019s counsel wrote to Assurance, recognizing its subrogation rights and asking it to take over representation of the lawsuit against Burdo. There is no evidence in the record whether Assurance responded to this letter.\nOn November 3, 1997, Kenny and Burdo reached a settlement in the amount of $100,000, Burdo\u2019s policy limit. On November 6, at a case management conference, Burdo\u2019s counsel had the court enter an agreed order dismissing the case with prejudice based on the parties\u2019 settlement of Kenny\u2019s claim. The order further provided that \u201c[s]aid dismissal shall be a bar to the bringing of any action against the Defendant based on or including the claim for which this action has been brought.\u201d On November 10, Kenny signed an unlimited general release of all claims against Burdo. On November 18, Kenny\u2019s counsel wrote to Assurance with respect to the settlement, attaching a copy of the release, renewing his demand for underinsured benefits, and specifically asking Assurance whether Kenny should retain Allstate\u2019s settlement draft. There is no evidence in the record that Assurance responded to Kenny\u2019s letter.\nOn December 1, Burdo\u2019s counsel wrote to Assurance, advising it that Burdo had settled with Kenny and attaching a copy of the release. On December 5, Burdo\u2019s counsel faxed a copy of the release and dismissal order to Assurance. In response, Assurance wrote to Kenny on December 31, denying underinsured benefits to him based on its contention that Kenny had violated the terms of the insurance policy by failing to advise Assurance of a limits offer prior to settlement and by settling the claim without Assurance\u2019s consent, thereby extinguishing Assurance\u2019s subrogation rights.\nOn April 14, 1998, Kenny\u2019s counsel wrote to Assurance, reiterating his request that Assurance either settle or submit Kenny\u2019s under-insured claim to arbitration. On May 11, Kenny filed a complaint against Assurance to compel arbitration and seeking penalties based on Assurance\u2019s bad faith conduct. In its answer, Assurance denied all the allegations of the complaint. Assurance also filed a counterclaim against Kenny (denying coverage based on. the settlement without consent policy exclusion) and a third-party complaint against Allstate and Burdo (seeking a declaration that it was not barred from pursuing its subrogation rights).\nOn March 15, 1999, Kenny filed a motion for summary judgment, contending that the settlement of his action against Burdo did not prejudice Assurance\u2019s subrogation rights because Allstate knew of Assurance\u2019s rights and the release did not cover Assurance\u2019s subrogation interest. On June 11, Assurance filed a cross-motion for summary judgment, contending that Kenny was not entitled to underinsured benefits because his settlement of the Burdo case violated the insurance policy and he settled and dismissed the claim against Burdo without Assurance\u2019s consent or knowledge and, therefore, Assurance was prejudiced because its subrogation rights against Burdo were barred. On September 14, the trial court denied Kenny\u2019s motion for summary judgment and granted Assurance\u2019s motion for summary judgment, finding that Kenny, by virtue of allowing dismissal of the Burdo case with prejudice, abrogated and defeated any right Assurance would have by way of subrogation and, therefore, Assurance was not obligated to arbitrate Kenny\u2019s claim. On October 14, Kenny filed a motion to reconsider. The trial court granted the motion on February 16, 2000, and also vacated its previous order granting summary judgment to Assurance. The court concluded that it had erroneously placed the burden of proof on Kenny rather than requiring Assurance to prove the applicability of the policy\u2019s exclusion provision. On March 27, Kenny filed a renewed motion for summary judgment, which the trial court granted on July 18. In its order, the court made specific findings and conclusions of law, including: (1) the general release signed by Kenny \u201cdid not include an amount specifically designated as covering [Assurance\u2019s] subrogation interest\u201d; (2) the general release did not prejudice Assurance\u2019s subrogation rights because Burdo and Allstate were aware of and had notice of Assurance\u2019s subrogation interest prior to the settlement; and (3) the decision in Richter v. Standard Mutual Insurance Co., 279 Ill. App. 3d 501, 664 N.E.2d 1140 (1996), was controlling and, pursuant to Richter, the dismissal order of the Burdo case did not result in Kenny\u2019s forfeiture of underinsured motorist benefits under Assurance\u2019s policy. Based on these findings, the court concluded that no material question of fact existed and that Kenny was entitled to judgment as a matter of law. The court further ordered Assurance to submit Kenny\u2019s underinsured claim to arbitration. This appeal followed.\nANALYSIS\nAssurance contends that the trial court erred in granting summary judgment in Kenny\u2019s favor because Kenny, by allowing dismissal of his action against Burdo with prejudice, destroyed Assurance\u2019s subrogation rights and, therefore, Kenny is not entitled to underinsured motorist benefits under Assurance\u2019s policy. According to Assurance, Kenny did not notify it of the Burdo settlement offer, nor did he timely advise it of the execution of the release, which violated the terms of Assurance\u2019s policy. With respect to the dismissal order, Assurance maintains that the dismissal with prejudice is a final adjudication and, therefore, any action it may attempt to bring against Burdo would be barred by the doctrine of res judicata. Assurance further argues that Kenny knew of Assurance\u2019s subrogation rights, and his attorney confirmed his knowledge and the fact that Kenny was obligated to \"protect those rights. According to Assurance, Kenny\u2019s argument, that he was not required to comply with the policy exclusions because he did not receive a copy of the policy, is disingenuous since he did not need to see the policy to be aware of Assurance\u2019s subrogation rights. With respect to Kenny\u2019s failure to obtain Assurance\u2019s consent to settle the Burdo case, Assurance argues that had it been informed of Kenny\u2019s intent to dismiss the case, it could have intervened to protect its subrogation rights.\nKenny counters that Assurance completely ignores Richter, which the trial court relied upon and is directly on point and controlling in this case. According to Kenny, like the defendant in Richter, Assurance failed to take the appropriate steps to secure its rights. Kenny argues that if Assurance had intended to pursue its subrogation rights, it had sufficient time to do so and should have moved to intervene in the Burdo case and then should have sought relief under section 2 \u2014 1401 of the Code of Civil Procedure (Code) (735 ILCS 5/2 \u2014 1401 (West 1998)) to set aside the dismissal. Kenny further argues that because Assurance failed to do so, it cannot now complain. With respect to receiving a copy of the policy, Kenny maintains that because he did not receive a copy of the insurance policy, Illinois law will not allow Assurance to take advantage of a policy limitation or exclusion.\nIn response, Assurance first argues that regardless of whether Kenny had a copy of the policy and whether he knew of the exact language of the policy, he knew of Assurance\u2019s subrogation rights and that he had a duty to protect those rights. With respect to Richter, Assurance contends that it did not have an opportunity to intervene to prevent dismissal of the Burdo case because it did not receive notice of the dismissal until 30 days after it was entered. Assurance further maintains that, unlike the defendant in Richter, it had no advance notice or knowledge of the settlement in the Burdo case. Assurance also argues that the main focus of Richter was the effect of the release oh the defendant\u2019s subrogation rights and the case is silent as to whether the dismissal was with prejudice or without prejudice. Lastly, Assurance maintains that Richter failed to analyze whether section 2 \u2014 1401 relief was actually available to a defendant and that the Richter court erred in finding that section 2 \u2014 1401 relief is not \u201cextraordinary\u201d because a proceeding based on section 2 \u2014 1401, by its very nature, is an extraordinary proceeding.\nIn Richter, the plaintiff settled with an underinsured tortfeasor and her insurance carrier and executed an unlimited release. Richter, 279 Ill. App. 3d at 503. Subsequently, the plaintiffs attorney sent a letter to the defendant (plaintiffs own insurance carrier), informing it of the settlement and demanding settlement under the plaintiffs underinsured motorist provision. Richter, 279 Ill. App. 3d at 504. The defendant denied the claim, stating that the plaintiff had not sought its consent to settle and that it had not approved the settlement, as required by the insurance policy, and, therefore, the plaintiff was not entitled to underinsured motorist benefits. Richter, 279 Ill. App. 3d at 505. Thereafter, the plaintiff filed a declaratory judgment action against the defendant, seeking a declaration that the settlement did not prejudice the defendant\u2019s subrogation rights. Richter, 279 Ill. App. 3d at 503. The trial court concluded that the defendant\u2019s rights were not prejudiced by the release and settlement and, therefore, the plaintiff was not barred from recovery under her underinsured motorist policy provision with the defendant. Richter, 279 Ill. App. 3d at 503.\nOn appeal, the defendant first contended that the plaintiffs signing of the release without informing defendant of her intent to settle,\nin violation of the policy provisions, prejudiced its subrogation rights. Richter, 279 Ill. App. 3d at 506. The Richter court disagreed, finding that crucial to the disposition of this issue was whether the tortfeasor or her carrier had notice of the defendant\u2019s subrogation rights. The Richter court relied on Home Insurance Co. v. Hertz Corp., 71 Ill. 2d 210, 215, 375 N.E.2d 115 (1978), where the court held that an unlimited release that does not specifically include an amount designating coverage for the subrogation interest will not bar a subsequent subrogation action against the tortfeasor if the tortfeasor or his insurance carrier had knowledge of the insured\u2019s subrogation interest before the settlement. The Richter court concluded that the tortfeasor and her carrier did have notice of the defendant\u2019s subrogation interest before the plaintiff executed the release. Richter, 279 Ill. App. 3d at 507-08. The Richter court further noted that the release \u201cdid not include an amount designated as covering defendant\u2019s subrogation interest.\u201d Richter, 279 Ill. App. 3d at 508. Accordingly, the Richer court found that the defendant\u2019s subrogation rights survived the settlement. Richter, 279 Ill. App. 3d at 508.\nThe defendant in Richter next argued that it properly denied coverage because the policy was not applicable when an insured settles a claim without the written consent of the defendant. Richter, 279 Ill. App. 3d at 508. The Richter court again disagreed. It first noted that the defendant, who was attempting to limit liability based on an exclusion provision, \u201cmust affirmatively demonstrate the applicability of the policy exclusion.\u201d Richter, 279 Ill. App. 3d at 509. The court concluded that the defendant had ample notice of the impending settlement with the plaintiff, it could have sent a lien letter to the tortfeasor\u2019s carrier, and it clearly knew that the plaintiff intended to make a claim for underinsured coverage, which would require the tortfeasor\u2019s carrier to settle for the full limits of its policy because, under the defendant\u2019s policy, it would not be liable until the limits of any and all other applicable insurance policies had been paid to the plaintiff. Richter, 279 Ill. App. 3d at 509-10. The Richter court concluded that the plaintiffs complaint against the tortfeasor and the correspondence between the plaintiffs and the defendant\u2019s attorneys with respect to underinsured coverage\n\u201cshow[ed] that defendant had sufficient notice to prompt it, at the very least, to make further inquiries regarding plaintiffs suit *** in order to protect its subrogation rights. In light of these facts, defendant [could] hardly contend it had no prior notice that plaintiff intended to settle her claim ***. Moreover, defendant [could not] deny plaintiff coverage under the policy pursuant to its exclusion clause when it [was] defendant who failed to take the appropriate steps to secure its rights.\u201d Richter, 279 Ill. App. 3d at 510.\nLastly, the defendant in Richter argued that because it received notice of the settlement on the same day a dismissal order was entered, it had insufficient time to take any action to prevent entry of the dismissal order. Richter, 279 Ill. App. 3d at 510. The Richter court again rejected the defendant\u2019s argument, finding that, \u201c[u]pon learning of the dismissal, defendant made no attempt to contact plaintiffs attorney or to take any legal action to protect its subrogation rights ***. Instead, defendant set about determining a manner in which to deny plaintiff recovery under the underinsured motorist provisions of the policy.\u201d Richter, 279 Ill. App. 3d at 511. The Richter court further stated:\n\u201cTo justify its course of action, defendant contends that it is not required to take any \u2018extraordinary\u2019 action to protect its subrogation rights because it is plaintiffs obligation to \u2018do nothing after loss to prejudice such rights.\u2019 Defendant\u2019s argument is flawed on two accounts: first, plaintiffs signing of the releases did not prejudice defendant\u2019s subrogation rights because the release did not specifically designate an amount for covering defendant\u2019s subrogation interest, and second, in the event defendant was uncertain as to the effects of the release on its rights, it would be incumbent upon defendant to take steps to safeguard its rights, especially because it might be bound by any resulting order or judgment. Filing a petition to intervene can hardly be termed an \u2018extraordinary\u2019 step to preserve defendant\u2019s interest. Further, as an intervenor, defendant would be entitled to all the rights of an original party, including the right to seek postjudgment relief pursuant to section 2 \u2014 1401 of the Code.\u201d Richter, 279 Ill. App. 3d at 511.\nAlthough the defendant argued it had no viable claim under section 2 \u2014 1401, the Richter court stated that the defendant would have a viable claim against the tortfeasor to set aside the dismissal order because the defendant\u2019s subrogation rights were not barred by the release. Richter, 279 Ill. App. 3d at 511. See also Schultz v. Gotlund, 185 Ill. App. 3d 943, 950, 542 N.E.2d 53 (1989) (while the insured released the tortfeasor and the trial court dismissed the action against the tortfeasor, the appellate court concluded that there was a question whether the insurer\u2019s subrogation rights were still viable because the record did not contain any evidence whether the tortfeasor or his carrier knew of the subrogation rights prior to settlement, and the cause was remanded for a hearing to determine this issue and, if the trial court concluded that the tortfeasor or his carrier did have knowledge, the subrogation rights were not extinguished and the court was to determine the amount to which the insurer was entitled).\nWe agree with Kenny and the trial court that Richter is directly on point and controlling in the instant case. Contrary to Assurance\u2019s argument, the Richter court based its holding on three rationales and it did not label one more important or crucial than another. In fact, the Richter court\u2019s discussion of the dismissal order is almost as lengthy as its discussion of the release issue. We note that in the instant case, Assurance only raises the issue of the dismissal order. We must conclude therefore that it concurs that Kenny\u2019s execution of the release alone does not bar its subrogation rights and that Kenny\u2019s failure to obtain consent to settle would not extinguish his right to underinsured benefits, as the Richter court held. We must also presume that Assurance does not contest the fact that Burdo and Allstate had knowledge of and were aware of Assurance\u2019s subrogation rights prior to settlement. Accordingly, we need not address the trial court\u2019s findings in these respects. We note, however, that like the defendant in Richter, because Assurance was aware of Kenny\u2019s lawsuit against Burdo and, pursuant to its policy, it would not be liable to Kenny until all other policies were exhausted and paid, Assurance had ample notice of an impending settlement with Burdo and could have, and should have, taken measures to protect its interests. As the defendant in Richter, Assurance did not take appropriate steps to secure its rights.\nWe also do not find the fact that the Richter decision is silent on whether the dismissal order was with or without prejudice significant. We can presume that the order was with prejudice and, thus, final. First, settlements generally require entry of an order of dismissal with prejudice \u2014 that is the purpose of a settlement, i.e., to bring finality to the matter. Second, there is no evidence that the trial court retained any jurisdiction over the matter. Third, the Richter court referred to section 2 \u2014 1401, which pertains only to final orders. As such, if the order in that case was without prejudice, it would not be final, and section 2 \u2014 1401 would not have been applicable.\nWe also do not believe that because the defendant in Richter was advised of the settlement on the same day that the dismissal order was entered, whereas here, Assurance was notified 30 days later, is controlling. Again, the Richter court referred to section 2 \u2014 1401, which pertains to relief from judgments 30 days after they are entered. Accordingly, the timing of notice to the defendant could not have been vital to the court\u2019s decision and does not mandate a different result in the instant case.\nLastly, with respect to Assurance\u2019s contention that the Richter court failed to analyze whether section 2 \u2014 1401 relief was available, we do not believe this warrants our rejection of the Richter court\u2019s holding. As previously stated above, section 2 \u2014 1401 provides for relief from final judgments or orders after 30 days following their entry. 735 ILCS 5/2 \u2014 1401 (West 1998). The movant is required to file a petition and support it by affidavit or other appropriate showing of matters not of record. In the instant case, in order to obtain section 2 \u2014 1401 relief, Assurance would have needed to only file a petition to intervene and a motion to vacate judgment alleging error in entry of the dismissal order based on its subrogation rights. We do not believe this would have required extraordinary efforts on the part of Assurance. We note that while Assurance contends that filing a section 2 \u2014 1401 motion is an extraordinary remedy, it has cited no authority to support this proposition and our independent research has revealed no cases so holding. Given the facts of the instant case, we conclude that relief under section 2 \u2014 1401 would have been available to Assurance and that it would have been entitled to relief under that section.\nWe further note that because Assurance received notification of the dismissal order on the thirtieth day following its entry, Assurance could have proceeded under section 2 \u2014 1301 of the Code (735 ILCS 5/2 \u2014 1301 (West 1998)), allowing for relief from judgments within 30 days. While this may have required Assurance to move hastily, it was nonetheless an option available to it.\nBased on the foregoing, we conclude that no material question of fact existed as to Kenny\u2019s right to underinsured motorist benefits and, therefore, the trial court properly granted summary judgment in favor of Kenny.\nCONCLUSION\nFor the reasons stated, we affirm the judgment of the circuit court of Cook County.\nAffirmed.\nCERDA and HALL, JJ., concur.\nAssurance voluntarily dismissed its complaint against Burdo and Allstate on April 24, 2000.", "type": "majority", "author": "JUSTICE BURKE" } ], "attorneys": [ "McKenna, Storer, Rowe, White & Farrug, of Chicago (James P. DeNardo, Richard M. Clark, and Kristin Dvorsky Tauras, of counsel), for appellant.", "Pretzel & Stouffer, Chtrd., of Chicago (Robert Marc Chemers and Andrew W. Witik, of counsel), for appellee." ], "corrections": "", "head_matter": "DENNIS KENNY, Plaintiff-Appellee, v. ASSURANCE COMPANY OF AMERICA, Defendant-Appellant.\nFirst District (2nd Division)\nNo. 1\u201400\u20142739\nOpinion filed September 18, 2001.\nMcKenna, Storer, Rowe, White & Farrug, of Chicago (James P. DeNardo, Richard M. Clark, and Kristin Dvorsky Tauras, of counsel), for appellant.\nPretzel & Stouffer, Chtrd., of Chicago (Robert Marc Chemers and Andrew W. Witik, of counsel), for appellee." }, "file_name": "0904-01", "first_page_order": 922, "last_page_order": 931 }