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