September 2017 Case Notes & Comments

"By all these lovely tokens September days are here, with summer's best of weather and Autumn's best of cheer." ~ Helen Hunt Jackson

MONTHLY QUIZ: Three weeks after cab company (Company) leases cab to Driver, Driver hits Pedestrian in the crosswalk with the cab, causing permanent shoulder injuries and pain. Pedestrian sues Company for negligent and willful and wanton entrustment of the cab. At trial, Pedestrian argues that Company failed to properly screen Driver and introduces his driving record, which reveals that Driver had been convicted of a DWI twelve years earlier and that Driver had been ticketed seven year prior for speeding more than 85 mph. The jury returns a $900,000 verdict in favor of Pedestrian and Company appeals, arguing that Driver's record should not have been admitted because, among other reasons, such evidence is barred by the Illinois Rules of Evidence (i.e. Rule 609) and is too prejudicial. Are convictions older than 10 years barred for all purposes? Should the jury have been allowed to hear the evidence as to Driver's record? Was Company prejudiced by the introduction of such evidence? You be the judge. (Answer below). 

WORKERS' COMPENSATION - EMPLOYEE WAS NOT ENTITLED TO TTD WHERE HIS INJURIES HAD "STABILIZED" AND EMPLOYEE WAS ABLE TO REJOIN THE WORKFORCE: Claimant filed an application for adjustment of claim under the Workers' Compensation Act, (Act) (820 ILCS 305/1, et seq.) seeking benefits for work-related injuries, which he sustained operating a crane for Employer. Claimant was released to work full duty with no restrictions approximately three months after the accident. Claimant was subsequently terminated for his failure to call in or report to work for three consecutive days. At the time of his termination, while Claimant had not reached MMI and was still undergoing dental treatments and attending counseling sessions for post-accident anxiety, Claimant had been released to work full-duty with only one restriction, i.e. that he not operate a crane. Evidence was also presented that Claimant continued full-duty in his original job classification and that Claimant was not precluded or restricted from entering the job market. Indeed, Claimant did not dispute that he was employable. Following a hearing, Arbitrator found that Claimant was entitled to receive temporary total disability (TTD) benefits from the time he was terminated by Employer until the date of arbitration, a period of 15 and 1/7 weeks, but denied Claimant's claims for penalties and attorney fees. Employer appealed Arbitrator's award of TTD benefits. The Commission unanimously reversed Arbitrator's award of TTD, but the decision was reversed in the circuit court. The appellate court, however, upheld the Commission's decision to deny Claimant TTD benefits after his termination because there was ample evidence to support the Commission's finding that, at the time of his termination, the Claimant's work-related injuries had stabilized to the extent that he was able to reenter the workforce and Claimant's injuries had no further impact on his employment. Holocker v. Illinois Workers' Compensation Comm'n, 2017 IL App (3d) 160363 WC (Jun. 16, 2017). 

LEF PRESENTS SEMINAR ON ADDITIONAL INSUREDS AND CONFLICTS OF INTEREST: Patti M. Deuel and Jeffrey S. Pavlovich of LEF recently presented to a major property and casualty insurer on "Additional Insureds" and "Conflicts of Interest." The program focused on additional insured endorsements, tenders of defense and the limited circumstances under which "choice of counsel" must be granted. NOTE: Not all reservations of rights create a conflict! Contact LEF if you want to know more.  

STATUTE OF LIMITATIONS FOR CLAIM AGAINST INSURANCE AGENT FOR FAILURE TO PROCURE REQUESTED COVERAGE:  Insureds met with a sales Agent of Insurer regarding homeowner's insurance, and requested a policy with coverage equivalent to their then existing coverage, which included, inter alia, coverage for personal injury resulting from intentional acts or abuse. Insurer issued a policy to Insured which failed to include such coverage. Insureds repeatedly renewed the policy over subsequent years. More than two years after the initial policy issued, Insureds were sued for various intentional torts and Insureds submitted the claim to Insurer under the policy. Insurer denied the claim pursuant to the exclusion for injury resulting from intentional conduct or abuse and filed a declaratory action. Insureds filed a counterclaim against Insurer and a 3rd-party claim against Agent for failure to procure the requested insurance coverage. Insurer and Agent moved to dismiss on the basis that Insureds' claims were time-barred, having been filed more than two years after the policy was issued. The trial court granted the motions and Insureds appealed. In reversing, the appellate court held that when an insurance agent owes a fiduciary duty to an insured, the cause of action for a breach of that duty accrues at the time of the breach. The statute of limitations is, however, subject to tolling by application of the discovery rule. Here, the Insureds knew or reasonably should have known of the breach at the moment when coverage was denied. Because Insureds' filed their claims against Agent and Insurer within two years of the denial of coverage, Insureds' claims were not time-barred.  American Family Mutual Insurance Company v. Krop, 2017 IL App (1st) 161071 (May 11, 2017).

INSURANCE COVERAGE - PUTATIVE INSUREDS CANNOT RELY ON SELF-SERVING PLEADINGS TO BOLSTER COVERAGE: Construction Company and Landscaper-Employer entered into a construction contract that required Landscaper to name Company as an additional insured on Landscaper's liability insurance policy. Landscaper's Employee was injured on the jobsite and sued Company for negligence. Company tendered the complaint to Landscaper's Carrier for defense and indemnification. Carrier accepted Company's tender under a reservation of rights and proceeded to defend Company. Company filed a 3rd-party contribution claim against Landscaper and subsequently, Employee amended his complaint to include allegations of vicarious liability against Company for Landscaper's acts. Company's Insurer filed a declaratory judgment action, claiming it had no duty to defend Company. Company filed a motion to stay the declaratory action pending the resolution of Employee's injury case, which the trial court granted. Insurer appealed, arguing that the entry of the stay was an abuse of discretion because the declaratory action did not involve a determination of ultimate fact in Employee's underlying injury case. In reversing the order and lifting the stay, the appellate court noted that the trial court could determine, without actually resolving the parties' liability in the underlying case, whether the complaint included any allegations of vicarious liability (such that Insurer would have a duty to defend) simply by comparing the complaint to the language in the insurance policy. In further instructing the trial court, the appellate court stated that, while a court may consider evidence beyond the underlying complaint, including a 3rd-party complaint, there are exceptions to this rule. In particular, "a putative additional insured is not allowed to bolster its claim of coverage by referencing its own 3rd-party compliant." Accordingly, Company could not rely on its own 3rd-party complaint to bolster its position that a claim of vicarious liability is present in the underlying case and thus there is a duty to defend. On the other hand, the Employee's amended complaint could be considered because its facts supported a cause of action for vicarious liability, and thus it was "not a transparent attempt to plead into coverage." Pekin Ins. Co. v. Johnson-Downs Construction, Inc., et al., 2017 IL App (3d) 160601 (Jul. 6, 2017).

ANSWER TO QUIZ: Pedestrian wins, Company loses. The evidence of Driver's prior conviction and speeding were properly allowed. Illinois Rule of Evidence 609(b)(Rule 609) states, in part, that evidence of a conviction is not admissible if a period of more than 10 years have elapsed since the date of conviction or release from confinement, whichever is later. However, Rule 609 applies only where the conviction is being used "for the purpose of attacking the credibility of a witness." Here, the evidence was not being used to attack Driver's credibility, but rather, was used to show that Company did not screen Driver and was relevant to that issue. The court also found that the conviction was not overly prejudicial because such evidence was "highly relevant, if not essential" to Pedestrian's case. Judgment affirmed. Baumrucker v. Express Cab Dispatch, Inc., 2017 IL App (1st) 161278 (Jul. 18, 2017).