Fuller's Car Wash v. Liberty Mutual Insurance

No. 2--97--1156
_________________________________________________________________

IN THE

APPELLATE COURT OF ILLINOIS

SECOND DISTRICT
_________________________________________________________________

FULLER S CAR WASH, INC., OSCAR ) Appeal from the Circuit Court
SALAZAR, and AMERICAN STATES ) of Du Page County.
INSURANCE COMPANY, )
)
Plaintiffs-Appellants, ) No. 97--MR--0190
)
v. )
)
LIBERTY MUTUAL INSURANCE )
COMPANY, LAMKIN LEATHER AND )
RUBBER COMPANY, and MILDRED )
KISEL, ) Honorable
) Robert E. Byrne,
Defendants-Appellees. ) Judge, Presiding.
_________________________________________________________________

JUSTICE McLAREN delivered the opinion of the court:
The plaintiffs, Fuller's Car Wash (Fuller's), Oscar Salazar,
and American States Insurance Company (American States), appeal an
order denying the plaintiffs' motion for summary judgment and
granting the motion of the defendants, Liberty Mutual Insurance
Company (Liberty Mutual), Lamkin Leather & Rubber Company (Lamkin
Leather), and Mildred Kisel, to dismiss on the pleadings. The
trial court found that defendant Liberty Mutual did not owe a duty
to defend the plaintiffs in a personal injury suit. We affirm.
On May 20, 1993, Robert Lamkin, the owner of Lamkin Leather,
brought his vehicle (owned by Lamkin Leather) to Fuller's to be
washed. Allegedly, Salazar, a Fuller's employee, negligently drove
Lamkin's vehicle and struck and injured another Fuller's customer,
Mildred Kisel. At the time of the incident Fuller's was covered by
an insurance policy issued to Fuller's by American States. Lamkin
was covered by Liberty Mutual. Kisel sued Fuller's and Salazar for
her injuries in the circuit court of Cook County, alleging
negligence. As of April 2, 1998, the suit was still pending.
American States provided a defense to Fuller's and Salazar
with respect to the Kisel suit pursuant to the garage keeper's
liability coverage contained in the policy. On April 24, 1996,
American States tendered Fuller's and Salazar's defense to Lamkin's
automobile insurance carrier, Liberty Mutual. On June 25, 1996,
Liberty Mutual declined the tender based on an exclusion to the
permissive use provision of its policy.
On March 25, 1997, the plaintiffs, American States, Fuller's,
and Salazar, filed a complaint seeking declaratory relief
concerning the scope and nature of the obligations that Liberty
Mutual owed to Fuller's and Salazar as permissive users under the
policy issued to Lamkin. On May 30, 1997, Liberty Mutual and
Lamkin filed a section 2--615 motion to dismiss, alleging that the
plaintiffs failed to state a cause of action. 735 ILCS 5/2--615
(West 1996). On July 3, 1997, the plaintiffs filed a motion for
summary judgment.
In Liberty Mutual's reply memorandum, in support of its motion
to dismiss and in opposition to the plaintiff's motion for summary
judgment, the defendant attached an affidavit of Walter Fuller, a
part-owner of Fuller's Car Wash. The affidavit was first filed in
the Kisel case in the circuit court of Cook County. In the
affidavit, Walter Fuller stated that, when a customer brings his
vehicle to Fuller's for a car wash, he allows Fuller's employees to
vacuum the interior of the vehicle and then drive it from the
vacuum area to the entrance of the car wash. The car is visible to
the customer at all times and the customer retains authority to
stop the cleaning at any time.
After hearing arguments on the cross-motions, the trial court
granted the defendants' motion to dismiss and denied the
plaintiffs' motion for summary judgment. On November 20, 1997, the
plaintiffs filed a notice of appeal.
On appeal, the plaintiffs argue that the trial court erred in
granting the defendants' motion to dismiss and in denying the
plaintiffs' motion for summary judgment. More specifically, the
plaintiffs claim that (1) the exclusion at issue does not apply to
the plaintiffs; (2) the language in the exclusion at issue is
ambiguous; and (3) the defendant Liberty Mutual is estopped from
raising any defense to coverage because it wrongfully failed to
defend the plaintiffs.
Summary judgment is proper when the pleadings, exhibits,
affidavits, and depositions on file disclose no genuine issue of
material fact and the moving party is entitled to judgment as a
matter of law. 735 ILCS 5/2--1005 (West 1996); Berlin v. Sarah
Bush Lincoln Health Center, 179 Ill. 2d 1, 7 (1997). A motion for
summary judgment and its supporting documents must be construed
"strictly against the movant and liberally in favor of the
opponent." Barnett v. Zion Park District, 171 Ill. 2d 378, 385
(1996). We review a trial court's decision to grant or deny a
motion for summary judgment de novo. Berlin, 179 Ill. 2d at 7.
The question presented by a section 2-615 motion to dismiss
for failure to state a cause of action is "whether the plaintiff
has alleged sufficient facts in the complaint, which, if proved,
would entitle the plaintiff to relief." Boyd v. Travelers
Insurance Co., 166 Ill. 2d 188, 194 (1995). All well-pleaded facts
in the complaint are taken as true (Boyd, 166 Ill. 2d at 194), but
any conclusions drawn from the facts as alleged should be
disregarded (Bank of Northern Illinois v. Nugent, 223 Ill. App. 3d
1, 9 (1991)). For the purpose of a motion to dismiss, exhibits
attached to the complaint become part of the complaint and will be
considered. Abbott v. Amoco Oil Co., 249 Ill. App. 3d 774, 778-79
(1993). We review a trial court's decision to grant a motion to
dismiss de novo. T&S Signs, Inc. v. Village of Wadsworth, 261 Ill.
App. 3d 1080, 1084 (1994). Further, the reviewing court may affirm
on any basis justified by the record, regardless of the trial
court's reasoning. Becker v. Zellner, 292 Ill. App. 3d 116, 130
(1997).
The standards by which a court determines whether an insurer
is obligated to defend its insured are clear. Ordinarily, a court
looks to the allegations in the underlying complaint and compares
those allegations to the relevant provisions of the insurance
policy. American States Insurance Co. v. Koloms, 177 Ill. 2d 473,
479 (1997). The insurer's duty to defend arises if the facts
alleged in the complaint fall within, or potentially within, the
language of the policy. Koloms, 177 Ill. 2d at 479. In
interpreting the language of the policy, a court is to ascertain
and give effect to the intentions of the parties as expressed in
their agreement. Koloms, 177 Ill. 2d at 479. Further, a court
must construe the policy as a whole, taking into account the type
of insurance purchased, the nature of the risks involved, and the
overall purpose of the contract. Crum & Forster Managers Corp. v.
Resolution Trust Corp., 156 Ill. 2d 384, 391 (1993). A court must
give clear and unambiguous terms their plain and ordinary meaning.
Koloms, 177 Ill. 2d at 479. Terms that are susceptible to more
than one meaning are considered ambiguous and must be construed
strictly against the insurer. Koloms, 177 Ill. 2d at 479. Also,
provisions that limit or exclude coverage must be interpreted
liberally in favor of the insured and against the insurer.
National Union Fire Insurance Co. v. Glenview Park District, 158 Ill. 2d 116, 122 (1994).
Defendant Liberty Mutual refused to accept the tender of the
defense of the plaintiffs pursuant to the following provision of
the Liberty Mutual policy issued to Lamkin:
"The following are insureds:
a. You for any covered auto.
b. Anyone else while using with your permission a covered
auto you own, hire or borrow except:
***
(3) Someone using a covered auto while he or she is
working in a business of selling, servicing, repairing or
parking autos unless that business is yours." (Emphasis
added.)
This provision, commonly called the "automobile business
exclusion," has been broadly interpreted by Illinois courts. See,
e.g., State Farm Mutual Auto Insurance Co. v. McAnally, 49 Ill.
App. 3d 475 (1977). Although the meaning and applicability of this
exclusion have been discussed in Illinois cases (see, e.g.,
McAnally, 49 Ill. App. 3d 475; Grahame v. Mitchell, 28 Ill. App. 3d
334 (1975); Great Central Insurance Co. v. Harris, 46 Ill. App. 3d
542 (1977)), the applicability of the exclusion to the car wash
business is one of first impression in Illinois.
The provision at issue excludes from coverage those using the
Lamkin's automobile while that person is working in a business of
"servicing" autos. "Servicing" is defined as "the act of providing
service." Webster s Third New International Dictionary 2076
(1993). To "service" is "to repair or provide maintenance for."
Webster s Third New International Dictionary 2075 (1993).
Applying the plain and ordinary meaning of Liberty Mutual's
automobile exclusion, we hold that the exclusion applies to the
case at bar. It is uncontroverted that Fuller's was in the
business of washing and vacuuming cars. Clearly, these services
are provided for the purpose of maintenance.
This interpretation is consistent with Metropolitan Property
& Liability Insurance Co. v. Mr. Pride of Atlanta, Inc., 258 Ga.
770, 374 S.E.2d 82 (1988)), the only case our research has
uncovered that discusses whether a car wash business is in the
business of "servicing" of automobiles. In Mr. Pride, an employee
of a car wash negligently drove a customer's car into the drying
bay of a car wash and struck and killed two patrons. The owner of
the car was insured by Metropolitan, which denied coverage based on
an automobile business exclusion similar to the one at bar. The
exclusion at issue in Mr. Pride provided:
" 'We do not cover ***
(e) bodily injury or property damage arising out of automobile
business operations.' " Mr. Pride, 258 Ga. at ___, 374 S.E.2d at 82.
The policy defined "automobile business operations" as:
" '[T]he business or occupation of selling, leasing,
repairing, servicing, storing or parking motor vehicles or
trailers.' " (Emphasis added) Mr. Pride, 258 Ga. at ___, 374 S.E.2d at 82.
The Supreme Court of Georgia held that the car wash was in the
business of "servicing" automobiles and, therefore, the employee
was excluded from coverage. Mr. Pride, 258 Ga. at ___, 374 S.E.2d
at 82.
Regardless of the clear meaning of the court's holding, the
plaintiffs contend that Mr. Pride supports their position and
stands for the proposition that the automobile business exclusion
does not apply to a car wash unless the car wash also dispenses
gasoline. The plaintiffs rely on the following portion of the Mr.
Pride decision to support its claim:
"We reverse for the reasons given in the dissenting
opinion of the Court of Appeals, i.e., that the term
'servicing' in the exclusion provision reasonably can be
construed to include the services which were being performed
on the insured automobile, namely: cleaning, waxing,
vacuuming, and filling with gasoline." (Emphasis added.) Mr.
Pride, 258 Ga. at ___, 374 S.E.2d at 82-83.
In light of the Supreme Court of Georgia's statement and its
reliance on the dissenting opinion of the appellate court, we find
the plaintiffs' interpretation of Mr. Pride without merit.
Nothing in Mr. Pride suggests that, in making its decision,
the court relied on the fact that the car wash also dispensed
gasoline. Further, the dissent to which the Supreme Court of
Georgia approvingly referred explained:
"The business of a car wash service is to provide maintenance
for automobiles. Automobile maintenance includes keeping the
vehicle clean. *** [T]he term 'servicing' should not be
construed to excise car-washing from its common meaning. Just
because the business specialized in cleaning rather than offer
the full range of service, including washing which is provided
by a service station, does not render it any less in the
business of 'servicing.' " Mr. Pride of Atlanta, Inc. v.
Metropolitan Property & Liability Insurance Co., 187 Ga. App.
737, ___, 371 S.E.2d 211, 213 (1988) (Beasley, J., dissenting,
joined by Birdsong, C.J., and Carly and Sognier, JJ.), rev'd,
258 Ga. 770, 374 S.E.2d 82 (1988).
Thus, we do not agree with the plaintiffs that the Liberty Mutual's
automobile business exclusion does not apply in the case at bar
simply because Fuller's did not also dispense gasoline.
Further, the plaintiffs' reliance on another case from Georgia
(Georgia Mutual Insurance Co. v. Kurtz, 206 Ga. App. 716, 426 S.E.2d 248 (1992)) is misplaced. In Kurtz, the court held that an
automobile exclusion provision did not apply to a car wash business
because the car wash did not also dispense gasoline. However,
Kurtz is distinguishable from the case at bar in that the policy
exclusion in Kurtz denied coverage for accidents "arising out of
the operation of a *** service station." (Emphasis added.) Kurtz,
206 Ga. App. at ___, 426 S.E.2d at 249. The provision at issue in
this case does not contain the phrase "service station." Rather,
it excludes coverage for those working in "a business *** servicing
*** autos." (Emphasis added.) Because the common meanings of these
terms differ, the holding in Kurtz does not apply to the case at
bar.
In addition, in Smith v. State Farm Mutual Automobile
Insurance Co., 193 Ga. App. 347, 387 S.E.2d 623 (1989), the Court
of Appeals of Georgia held that the automobile business exclusion
applied to a car wash; the court made this holding without first
discussing whether the car wash business at issue dispensed
gasoline. Thus, the plaintiffs' argument fails.
Further, the plaintiffs' argument that Liberty Mutual's
automobile business exclusion is ambiguous in the car wash context
is without merit. A term is not ambiguous unless it is subject to
more than one reasonable interpretation. Loftis v. Vesta Cos, 292
Ill. App. 3d 772, 774 (1997). Given the common meaning of the term
"servicing" and its application to the car wash business in Mr.
Pride, we do not believe that the term is ambiguous in the context
of the facts presented in this case.
In addition, we do not agree with the plaintiffs' next
contention that the automobile business exclusion does not apply in
this case because no bailment was created. A bailment is created
where the parties enter into an express or implied agreement. Wall
v. Airport Parking Co. of Chicago, 41 Ill. 2d 506, 509 (1969). To
determine whether an implied bailment exists, a court may consider
the "circumstances surrounding the transaction, such as the
benefits to be received by the parties, their intentions, the kind
of property involved, and the opportunities of each to exercise
control over the property." Wall, 41 Ill. 2d at 509.
While our research has not found an Illinois case discussing
whether a bailment is created in the context at bar, our supreme
court has discussed bailments in the context of parking lots. In
Wall v. Airport Parking Co. of Chicago, 41 Ill. 2d 506 (1969), our
supreme court stated that a bailment is typically created in the
parking lot context where the owner delivers his automobile to the
parking lot attendant and leaves the keys in the automobile so that
the attendant can move it. Wall, 41 Ill. 2d at 508. However, a
bailment is typically not created where the owner does not deliver
his automobile to an attendant but parks it himself and retains the
keys. Wall, 41 Ill. 2d at 508.
We note that this explanation is consistent with the purpose
of the automobile business exclusion, which states:
"[W]hile a vehicle is entrusted to an automobile business, the
vehicle owner exercises no control over either the selection
of the driver, or the places where the car is driven, or the
manner in which the car is driven. Such increased risks are
considered to be too substantial for an insurer to cover under
a policy for a personal automobile, whereas, it is considered
reasonable to have an automobile business bear the costs of
insuring for such risks under a garage liability policy."
Eliot J. Katz, Annotation, Who Is 'Employed or Engaged in the
Automobile Business' Within the Exclusionary Clause of
Liability Policy 2(a), 55 ALR 4th 261, 268 (1987).
Applying the same reasoning to the case at bar, it is
undisputed that Lamkin delivered his automobile to a Fuller's
employee and relinquished the keys so that the automobile could be
moved by a Fuller's employee. Further, once Lamkin relinquished
his automobile and the keys, Lamkin had no control over who drove
his car or how it was driven. At that point, contrary to the
plaintiffs' assertion, Salazar and not Lamkin exercised control of
the automobile. The fact that Lamkin did not lose sight of his
automobile and could stop the vacuuming process at any time does
not eliminate the fact that Salazar, and not Lamkin, had actual
physical control of the automobile. Thus, we determine that,
regardless of its short duration, a bailment was created.
Lastly, the plaintiffs assert that Liberty Mutual is estopped
from raising defenses to coverage because it had a duty to defend
and failed to defend under a reservation of rights and failed to
seek a declaratory judgment as to its rights and obligations. We
disagree with the plaintiffs.
Generally, if the allegations of an underlying complaint
present a case of potential coverage, an insurer who fails to
defend the action under a reservation of rights and fails to seek
a declaratory judgment concerning its obligation to defend will be
estopped from relying upon any policy defenses to coverage.
Sportmart, Inc. v. Daisy Manufacturing Co., 268 Ill. App. 3d 974,
979 (1994). However, where the allegations of the complaint clearly
show on their face that the claim is beyond the coverage of the
policy, the insurer is not estopped from raising defenses to
coverage. Illinois National Insurance Co. v. Universal
Underwriters Insurance Co., 261 Ill. App. 3d 84, 88 (1994).
Because the language of Liberty Mutual's policy clearly
excludes coverage for the business at issue in the case at bar, the
facts alleged in the underlying complaint do not present a case of
potential coverage. Thus, the plaintiffs' estoppel argument fails.
See JG Industries, Inc. v. National Union Fire Insurance Co., 218
Ill. App. 3d 1061, 1066-67 (1991).
Further, the cases cited by the plaintiffs to support their
position are distinguishable because, unlike the case at bar, the
insureds in those cases had a duty to defend. See Insurance Co. of
the State of Pennsylvania v. Protective Insurance Co., 227 Ill.
App. 3d 360, 366-67 (1992); Central Mutual Insurance Co. v.
Kammerling, 212 Ill. App. 3d 744, 750 (1991). Thus, the trial
court properly granted the defendant's motion to dismiss and
properly denied the plaintiffs' motion for summary judgment.
The judgment of the circuit court of Du Page County is
affirmed.
Affirmed.
INGLIS and DOYLE, JJ., concur.