Mid-Century misses mutual mistake; court doesn't.

Posted on October 7, 2010 by Dan Wills

In Mid-Century Ins. Co. v. Founders Ins. Co. (Ill.App., First District, No. 1-09-1858, 9-24-10), the court rejected Founders' claim for equitable contribution from Mid-Century for an accident where both policies covered the vehicle at issue because a mutual mistake of fact obviated coverage under Mid-Century's policy. 

On February 23, 2005, Bryan Berry, while driving his Chevy Cavalier, hit a pedestrian, who sued him. Berry had insured the Cavalier and his Dodge Durango with Mid-Century but let the policy lapse on the Cavalier and insured it with Founders before the accident. Mid-Century had accordingly canceled the policy for the Cavalier and issued an insurance card listing the Durango as the covered vehicle. However, the policy Mid-Century issued listed the Cavalier as the covered vehicle.

Founders settled the tort case for $100,000 and sought equitable contribution of $50,000 from Mid-Century. The circuit court granted Founders summary judgment in the ensuing declaratory action.

Although both carriers assumed throughout the litigation that the Mid-Century policy covered the Cavalier, and argued instead whether the automatic termination provision in the Mid-Century policy applied and whether notice to Mid-Century was timely,  the appellate court exercised its right to decide a case on grounds not raised by the parties and reversed.

More specifically, the court noted that Berry intended to let coverage for the Cavalier lapse with Mid-Century and in any case would not pay two premiums for the same coverage. Mid-Century, which issued an insurance card on the Durango, intended to cancel coverage for the Cavalier. Because the parties reached a good faith agreement that was erroneously not expressed in their written agreement, there was a mutual mistake of fact, and the parties' actual intent would prevail.

Thus, Founders could not stand in Berry's shoes to enforce the Mid-Century policy as written, and Mid-Century won for reasons it never argued. Which of course raises the question of whether the appellate court should have ruled on a basis neither party raised. As the court noted, it should not address an unbriefed issue if doing so would transform it from jurist to advocate. Here, I think the court acted properly. Berry did not participate in the appeal, where he might have raised the issue. Also, the court sought supplemental briefs on the issue, but apparently neither party addressed it.

 

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One occurrence under cause theory for accident with three vehicles

Posted on July 23, 2010 by Dan Wills

In Auto-Owners Ins. Co. v. Munroe, (7th Cir., no. 09-3427, 7-22-10), the court held that a $1 million policy limit applied even though three insured vehicles caused the accident.

Munroe sufferred serious injury on November 6, 2006, when he tried to pass one truck, struck the rear of a second truck, then collided head on with a third truck. the three trucks, traveling in a convoy, were owned by Wayne Wilkens Trucking. Wilkins and the trucks were insured by Auto-Owners, which provided coverage of $1 million per occurrence and aggregate.

The Munroes sued, alleging negligence against each driver and Wilkens. They settled for policy limits (less a PD payment), with their claim that policy limits were more than $1 million left for a  declaratory action. The district court granted Auto-Owners summary judgment in that action, finding that coverage was limited to $1 million per occurrence. 

On appeal the Munroes argued that the policy provided $3 million in coverage (three occurrences or $1 million per vehicle). The court rejected the claim for $1 million per vehicle because the policy limited coverage to $1 million regardless of how many persons a claim was made against (severability clause) or the number of vehicles scheduled or involved in the accident (combined limit of liability provision).

Regarding the number of occurrences, the court, citing Nicor, Inc. v. Associated Elec. & Gas, 223 Ill.2d 407 (2006), noted that Illinois applies the cause theory, which presupposes multiple discrete events and asks whether the events had a common cause. In finding only one occurrence, the court distinguished Illinois Nat'l Ins. Co. v. Szczepkowicz, 542 N.E.2d 90 (1989), where the insured truck was struck by a vehicle, moved forward to free a lane, and was struck by a second vehicle five minutes later. Because the two collisions there were not the result of a "single force, nor an unbroken or uninterupted continuum that...caused multiple injuries," there were seperate causes and thus seperate applicable insurance limits.

Here, there was a "single force" and thus a single continuous occurrence. Even if there were seperate causes, then, because they occurred after the single force was set in motion, they were not intervening causes. 

In Addison Insurance Co v. Fay, 232 Ill.2d 446 (2009), the court applied a "space and time" test to determine the number of occurrences, stating that it applied to omissions as opposed to affirmative acts of negligence. It seems that without stating as much the Munroe court applied the "space and time" test to "affirmative acts of negligence" as a "continuous occurrence" is simply one lacking  separation in space or time.  

 

 

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