{ "id": 8499514, "name": "MARGARET ADDUCI et al., Plaintiffs-Appellants, v. VIGILANT INSURANCE COMPANY, INC., et al., Defendants-Appellees", "name_abbreviation": "Adduci v. Vigilant Insurance", "decision_date": "1981-07-14", "docket_number": "No. 80-2405", "first_page": "472", "last_page": "479", "citations": [ { "type": "official", "cite": "98 Ill. App. 3d 472" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "342 N.E.2d 116", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "35 Ill. App. 3d 350", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 5305693 ], "pin_cites": [ { "page": "356" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/35/0350-01" ] }, { "cite": "194 N.E.2d 489", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "44 Ill. App. 2d 235", "category": "reporters:state", "reporter": "Ill. App. 2d", "case_ids": [ 5243247 ], "pin_cites": [ { "page": "253" } ], "opinion_index": 0, "case_paths": [ "/ill-app-2d/44/0235-01" ] }, { "cite": "37 Ill. 2d 627", "category": "reporters:state", "reporter": "Ill. 2d", "opinion_index": 0 }, { "cite": "232 N.E.2d 155", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1968, "opinion_index": 0 }, { "cite": "88 Ill. App. 2d 343", "category": "reporters:state", "reporter": "Ill. App. 2d", "case_ids": [ 8499378 ], "year": 1968, "pin_cites": [ { "page": "347" } ], "opinion_index": 0, "case_paths": [ "/ill-app-2d/88/0343-01" ] }, { "cite": "343 N.E.2d 36", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1967, "opinion_index": 0 }, { "cite": "35 Ill. App. 3d 993", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 5304285 ], "year": 1967, "pin_cites": [ { "page": "996" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/35/0993-01" ] }, { "cite": "338 N.E.2d 912", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "33 Ill. App. 3d 943", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 2870887 ], "pin_cites": [ { "page": "947" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/33/0943-01" ] }, { "cite": "301 N.E.2d 19", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "13 Ill. App. 3d 809", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 5340426 ], "pin_cites": [ { "page": "813-14" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/13/0809-01" ] }, { "cite": "60 N.E.2d 896", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1973, "opinion_index": 0 }, { "cite": "325 Ill. App. 649", "category": "reporters:state", "reporter": "Ill. App.", "case_ids": [ 4950663 ], "year": 1973, "pin_cites": [ { "page": "673" } ], "opinion_index": 0, "case_paths": [ "/ill-app/325/0649-01" ] }, { "cite": "34 Ill. 2d 629", "category": "reporters:state", "reporter": "Ill. 2d", "year": 1945, "opinion_index": 0 }, { "cite": "216 N.E.2d 198", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1966, "opinion_index": 0 }, { "cite": "69 Ill. App. 2d 196", "category": "reporters:state", "reporter": "Ill. App. 2d", "case_ids": [ 2591754 ], "year": 1966, "pin_cites": [ { "page": "204" } ], "opinion_index": 0, "case_paths": [ "/ill-app-2d/69/0196-01" ] }, { "cite": "393 N.E.2d 718", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1966, "opinion_index": 0 }, { "cite": "74 Ill. App. 3d 1027", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 3268655 ], "year": 1966, "pin_cites": [ { "page": "1030" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/74/1027-01" ] } ], "analysis": { "cardinality": 830, "char_count": 17364, "ocr_confidence": 0.848, "pagerank": { "raw": 2.8540774682255633e-07, "percentile": 0.8408959364040143 }, "sha256": "b542e5558a1eee8d149e898895942460d60bea639d702de829ae13c2d5d27158", "simhash": "1:7e0a5cf5251894e0", "word_count": 2801 }, "last_updated": "2023-07-14T20:11:15.436815+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "HARTMAN, P. J., and STAMOS, J., concur." ], "parties": [ "MARGARET ADDUCI et al., Plaintiffs-Appellants, v. VIGILANT INSURANCE COMPANY, INC., et al., Defendants-Appellees." ], "opinions": [ { "text": "Mr. JUSTICE DOWNING\ndelivered the opinion of the court:\nPlaintiffs Margaret and Joseph Adduci (the Adducis) filed a two-count complaint against defendants Vigilant Insurance Co., Inc., and Chubb & Son Insurance Co. (hereinafter collectively referred to as Insurer). The Adducis sued as the assignees of Insurer\u2019s insured, Connie Mihelich Contursi (Insured), asserting Insured\u2019s claim for recovery of that portion of a judgment against Insured which exceeded the limits of coverage of her insurance policy with Insurer. The trial court granted Insurer\u2019s motion to dismiss both counts of the Adducis\u2019 amended complaint.\nThe Adducis ask this court to decide whether (1) they have alleged sufficient facts in their amended complaint to state a cause of action for Insurer\u2019s alleged bad faith refusal to settle, within their policy limits, a civil action against Insured; and (2) Illinois law should recognize a duty on the part of an insurer to treat the insured\u2019s interests as paramount to its own in undertaking policy-related actions.\nAs a consequence of the trial court\u2019s disposition of the case, the facts available from the record come entirely from the complaint and the parties\u2019 briefs concerning Insurer\u2019s motion to dismiss the complaint.\nInsured had contracted with Insurer for coverage under an accident and casualty liability insurance policy. Among that policy\u2019s provisions was a $25,000 single bodily injury liability limit.\nOn May 10,1975, during the effective term of the policy, Insured was involved in a one-car accident in Chicago. At the time of the accident, the car was occupied by Insured, Margaret Adduci, Janet Clancy, and Peggy Sabados.\nOn May 19, 1975, suit was filed in the circuit court of Cook County against Insured by the Adducis. The ad damnum of the complaint significantly exceeded the liability limits of Insured\u2019s policy with Insurer. The complaint alleged that Insured lost control of the vehicle, which was alleged to have been in proper working condition at the time. On May 29, 1975, Insured was served with notices of attorneys\u2019 liens on behalf of all the passengers of the vehicle and their spouses.\nThe action against Insured then proceeded through early discovery phases. On November 3, 1975, Insurer\u2019s defense counsel (apparently employed by Insurer to defend Insured) was supplied with a copy of an October 13,1975, medical report from Margaret Adduci\u2019s physician. Four days later, all parties received the physician\u2019s complete records on the patient.\nInterrogatories from Insured were served on the Adducis. The answers returned on November 4,1975, described the nature of Margaret Adduci\u2019s injuries, the sources of medical treatment, and the elements of damages sought.\nIn mid-1975 and in February 1976, counsel for the Adducis demanded that Insurer pay the full policy limits into the court in settlement of all claims. Insurer responded by requesting a discount. On April 2,\n1976, Margaret Adduci was deposed. At the deposition, Insurer\u2019s counsel allegedly acknowledged that Margaret Adduci\u2019s damages alone exceeded Insured\u2019s policy limits. At that time, counsel possessed complete hospital records for Margaret Adduci, as well as copies of medical bills and proof of her income loss.\nOn April 7, 1976, the attorney representing all claimants wrote to Insurer\u2019s attorneys, demanding payment of the full policy limits of Insured\u2019s policy in return for covenants not to sue Insured, to be executed by each passenger of Insured\u2019s car. The demand set a 28-day deadline and noted that it would be withdrawn if the amount was not submitted by the end of that period, unless a written extension based upon \u201cany reasonable grounds\u201d had been requested during the period. A second letter clarifying the demand was sent on April 15, 1976. No responsive communication was received by claimants\u2019 attorney within the 28-day period. Subsequent preparation of the case for trial \u201cforeclosed the opportunity for settlement,\u201d according to an allegation of the instant complaint. Included in these subsequent preparations was the filing of an amended complaint which added Clancy and Sabados as plaintiffs.\nInsurer\u2019s counsel indicated by letter on June 7,1976, that a response to the April 7 demand would be forthcoming at the pretrial conference set for June 18,1976. At that later date, 72 days after the claimants demanded settlement, Insurer\u2019s attorney offered to pay Insured\u2019s full policy limits ($25,000) in settlement. The claimants refused the offer.\nPrior to trial, the claims of Clancy and Sabados were settled, leaving $17,500 of insurance coverage remaining. The Adducis\u2019 claims went to trial. A jury returned a verdict in their favor for $70,000. On July 31,1979, Insurer paid the remainder of the policy limits into court, leaving an unpaid balance of $52,500. Citation proceedings against Insured showed her to have insufficient assets to pay the judgment. The Adducis then accepted an assignment from Insured which allowed the Adducis to bring the present action against Insurer.\nCount I of their complaint alleged that Insurer had failed to discharge its obligations to Insured reasonably and in good faith. Count II alleged that Insurer had breached the duty to treat Insured\u2019s interests as paramount to its own. Insurer moved to dismiss both counts, asserting (1) that the complaint failed to state a cause of action, and (2) that the Adducis had no cause of action against Insurer in any event because in taking Insured\u2019s assignment, the Adducis discharged Insured\u2019s liability to the Adducis under the judgment and thereby allegedly also discharged any liability of Insurer to Insured arising from the first trial. The trial court granted Insurer\u2019s motion on the first ground alleged.\nI\nThe Adducis assert that the allegations contained in their amended complaint are sufficient to state a cause of action against Insurer based upon its alleged \u201cbad faith\u201d failure to settle the suit against Insured within her policy limits. (Count I.)\nIllinois law recognizes a duty on the part of an insurer to give its insured\u2019s interests at least equal consideration with its own where the insured is a defendant in a suit in which the recovery may exceed her policy limits. Where the insurer fails to settle a case within policy limits through fraud, negligence, or bad faith, this duty is breached. If a judgment in excess of the insured\u2019s policy limits is a result of such breach, the insurer may then be held liable for the full amount of the judgment irrespective of the insured\u2019s policy limits. (See Scroggins v. Allstate Insurance Co. (1979), 74 Ill. App. 3d 1027, 1030, 393 N.E.2d 718; Cernocky v. Indemnity Insurance Co. (1966), 69 Ill. App. 2d 196, 204, 216 N.E.2d 198, appeal denied (1966), 34 Ill. 2d 629; Olympia Fields Country Club v. Bankers Indemnity Insurance Co. (1945), 325 Ill. App. 649, 673, 60 N.E.2d 896.) The mere fact of entry of the excess judgment against the insured constitutes damage and harm sufficient to permit recovery. Smiley v. Manchester Insurance & Indemnity Co. (1973), 13 Ill. App. 3d 809, 813-14, 301 N.E.2d 19.\nTherefore, in order to have stated a cause of action, the Adducis must have alleged sufficient well-pleaded facts indicating that such duty arose here, that Insured breached this duty through either fraud, negligence, or bad faith, and that such breach was the legal cause of harm to Insured. The Adducis must also have alleged the specifics of that harm.\nIn filing the motion to dismiss the Adducis\u2019 complaint, Insurer admitted as true all well-pleaded facts and allegations and granted every intendment of fair inference in favor of the pleading. The motion should have been denied if, under any aspect of the facts stated, the Adducis might recover on the theory set forth therein. Browning v. Heritage Insurance Co. (1975), 33 Ill. App. 3d 943, 947, 338 N.E.2d 912.\nExamination of the allegations contained in count I demonstrates that the Adducis have sufficiently alleged the existence of Insurer\u2019s duty to treat Insured\u2019s interests at least equally with its own. The allegations state that Insurer\u2019s counsel was aware of the almost certain liability of Insured for injuries suffered by Margaret Adduci and the other passengers. At a deposition, Insurer\u2019s counsel admitted that the extent of Adduci\u2019s injuries alone likely exceeded the policy limits. In such circumstances, Illinois law raises a duty on the part of Insurer to treat Insured\u2019s interests at least equally with its own. Therefore, the Adducis\u2019 complaint meets the initial step in pleading a valid cause of action on this theory.\nA.\nThe second step for pleading a valid cause of action is the presence of allegations which sufficiently show breach of that duty on the part of Insurer. In dismissing the complaint, the trial court found the Adducis\u2019 allegations lacking this element. Thus, these allegations constitute the crux of this appeal.\nThe central theory relied upon by the Adducis is that an insurer has breached its duty to the insured when it fails to respond to settlement overtures made by the party which is proceeding against the insured. We agree that as a general principle of law, facts demonstrating such a failure on the part of an insurer can serve to meet the requirements of the \u201cbreach\u201d element of this cause of action, if they are sufficiently pleaded and proved. The Adducis\u2019 complaint contains the following allegation on this matter:\n\u201c[Insurer] ignored and failed to respond to plaintiff\u2019s oral settlement demands and plaintiff\u2019s April 7, 1979 [sic] written offer of a settlement until long after said written offer, by its express terms, was withdrawn, and failed to ask for any extension of the life of said written settlement offer although they were invited to do so if there were reasonable grounds for an extension.\u201d\nYet, the complaint also alleges that:\n\u201cOn June 18, 1976, defendant\u2019s [Insurer\u2019s] counsel offered the full $25,000 policy limits to all claimants * * 0 and plaintiffs refused defendant\u2019s offer.\u201d\nThe sole reason alleged in the complaint for the claimants\u2019 refusal to accept Insurer\u2019s tender of the offer some 72 days after the demand was made and some 40 days after it \u201cexpired\u201d was that \u201cfurther preparation of the claims for trial was conducted, thereby necessitating a different attorney fee arrangement between plaintiffs\u2019 counsel and all three plaintiffs, which foreclosed the opportunity for settlement.\u201d No facts to amplify this bald allegation could be adduced by this court at oral argument.\nWe are of the opinion that these allegations are insufficient as a matter of law to demonstrate that the activities of Insurer constituted a breach of its duty to Insured. As stated, we recognize in some circumstances an insurer\u2019s failure to respond to a settlement demand, where trial could result in a judgment exceeding policy limits, could constitute a breach. Here, the allegations show that Insurer did respond to the claimants\u2019 demand. While this response was forthcoming after the passage of the claimants\u2019 self-imposed deadline, it followed only 40 days thereafter, and came only 13 months after the occurrence of the accident giving rise to the claimants\u2019 suit. No facts sufficiently indicate why the claimants found it impossible to accept the offer at this time, so as to fairly place the blame for failure of settlement upon Insurer. The allegations of the complaint simply do not show why the offer would have been good on May 7, 1976, but was not acceptable on June 18, 1976. In such circumstances, we cannot say that the recited facts adequately allege a breach of duty on the part of Insurer. Therefore, we conclude that the trial court did not err in so ruling.\nB.\nThe Adducis also allege in the amended complaint and assert here that the conduct of Insurer breached its duty to Insured in three other ways.\nFirst, the Adducis contend that Insurer breached its duty by failing to initiate settlement negotiations. It is settled in Illinois that insurance companies are not required to initiate negotiations to settle a case. (Haas v. Mid-America Fire & Marine Insurance Co. (1976), 35 Ill. App. 3d 993, 996, 343 N.E.2d 36; Powell v. Prudence Mutual Casualty Co. (1967), 88 Ill. App. 2d 343, 347, 232 N.E.2d 155, appeal denied (1968), 37 Ill. 2d 627.) The basis for this rule is that the imposition of such a requirement would put the insurer into a negotiating disadvantage which is imposed on no other litigant. (Oda v. Highway Insurance Co. (1963), 44 Ill. App. 2d 235, 253, 194 N.E.2d 489.) While an exception is recognized where the probability of an adverse finding on liability is considerable and the amount of probable damages would greatly exceed the insured\u2019s coverage (Kavanaugh v. Interstate Fire & Casualty Co. (1975), 35 Ill. App. 3d 350, 356, 342 N.E.2d 116), we believe that this exception should be sparingly used, and then only in the most glaring cases of an insured\u2019s liability, since \u201c[t]rial attorneys are not endowed with the gift of prophecy so as to be able to predict the precise outcome of personal injury litigation.\u201d (Kavanaugh, at 357.) No facts are alleged here to demonstrate the probable liability of Insured for high-figure damages to each of the passengers in her auto. Thus, as a matter of law, Insurer cannot be said to have breached its duty by failing to initiate settlement negotiations in this case. The trial court correctly so ruled.\nSecondly, the Adducis allege that Insurer breached its duty by failing to admit its liability in the case against Insured. The Adducis cite no authority supporting their position that the failure to so act constituted a breach. While in some set of circumstances, such an admission of liability might be necessary in order for the insurer to properly protect both the interest of itself and the insured, the present facts are not such a case. The trial court correctly held that this allegation failed to allege breach of Insurer\u2019s duty.\nFinally, the Adducis contend that Insured\u2019s \u201cpromise\u201d to pay the policy limits into the court was not kept and thus constitutes breach of Insurer\u2019s duty. Review of the transcript from the hearing held on june 18, 1976, illustrates no such promise. Additionally, had such a promise been made, no consideration in support thereof is apparent. Lastly, at that point in time, the Adducis\u2019 attorney indicated that they would reject Insurer\u2019s offer to settle within policy limits as untimely made. Thus, this allegation is of no legal significance. The trial court committed no error in dismissing this facet of the complaint.\nIn summary, count I of the Adducis\u2019 complaint fails to adequately allege facts demonstrating a breach of the recognized duty of Insurer to Insured. Therefore, the trial court correctly dismissed count I of the complaint with prejudice.\nII\nThe Adducis contend that this court should recognize a new, more stringent duty on the part of insurers toward their insured: the duty to treat the insured\u2019s interests as paramount to their own. (Count II.)\nAfter reviewing the authority cited by the Adducis and examining scholarly writing on the topic, we are of the opinion that maintaining the present status of Illinois law is the more acceptable direction for this court to pursue. First, the Adducis\u2019 argument is essentially hortatory. Research discloses that adoption of such a rule would put Illinois in the extreme minority viewpoint. (See, e.g., 7C Appelman, Insurance Law & Practice \u00a74711, at 396-97 (1979).) Additionally, while the Adducis\u2019 theory may have some intrinsic paternalistic logic to it, the theory also overlooks the realities in which insurer-insured business relationships operate. This court posits that not many insurance companies would find it economically advantageous to enter into liability protection services at reasonable costs to the insured if the insurer were required, in every instance, to initially overlook its own fiscal concerns while focusing solely upon the interests of its customers. Such a situation simply lacks sound business sense. The present Illinois standard, on the other hand, restrains the insurer from proceeding wholly in its self-interest, while allowing the insurer to continue to function as a profit-seeking operation. Protection is provided to both parties at present, while protection may in the end blanket neither party under the system proposed by the Adducis.\nIn sum, our research fails to demonstrate a firm basis in the law for adoption of the \u201cparamount\u201d test suggested by count II of the complaint. Illinois law as presently constructed is in line with the majority view and appears to adequately consider the relative positions of both parties. Therefore, the trial court did not err in dismissing count II of the complaint for failure to state a cause of action.\nFor the reasons stated above, we affirm the decision of the circuit court of Cook County.\nAffirmed.\nHARTMAN, P. J., and STAMOS, J., concur.\nShould read April 7,1976.", "type": "majority", "author": "Mr. JUSTICE DOWNING" } ], "attorneys": [ "Louis G. Davidson & Associates, Ltd., and Durchslag & Durchslag, both of Chicago (Keith L. Davidson, of counsel), for appellants.", "John E. Guy, of Abramson & Fox, of Chicago, for appellees." ], "corrections": "", "head_matter": "MARGARET ADDUCI et al., Plaintiffs-Appellants, v. VIGILANT INSURANCE COMPANY, INC., et al., Defendants-Appellees.\nFirst District (2nd Division)\nNo. 80-2405\nOpinion filed July 14, 1981.\nRehearing denied August 18, 1981.\nLouis G. Davidson & Associates, Ltd., and Durchslag & Durchslag, both of Chicago (Keith L. Davidson, of counsel), for appellants.\nJohn E. Guy, of Abramson & Fox, of Chicago, for appellees." }, "file_name": "0472-01", "first_page_order": 496, "last_page_order": 503 }