American Service Insurance Company v. Jones
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THIRD DIVISION
March 31, 2010
No. 1-08-0402
AMERICAN SERVICE INSURANCE
COMPANY,
Plaintiff-Appellant and Cross-Appellee,
v.
ARTHUR JONES, RAMOS MOVERS, INC.,
JOSE G. TORRES,
Defendants-Appellees
(Elite Rental, Inc., and National Casualty
Company,
Defendants-Appellees and
Cross-Appellants;
State Farm Mutual Insurance Company,
Defendant).
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APPEAL FROM THE
CIRCUIT COURT OF
COOK COUNTY
No. 05 CH 5359
)
HONORABLE
MARY ANNE MASON,
JUDGE PRESIDING.
JUSTICE STEELE delivered the opinion of the court:
In this declaratory judgment action, plaintiff American Service Insurance Company (ASI)
appeals an order of the circuit court of Cook County granting summary judgment to defendants
Elite Rental, Inc. (Elite), National Casualty Company (National), Ramos Movers, Inc. (Ramos),
and Jose G. Torres (Torres) on count II of ASI's complaint, ruling that ASI provided primary
coverage and was obligated to defend Ramos in an underlying automobile collision suit, while
National's policy provided excess coverage. National and Elite cross-appeal from the circuit
court's ruling on their counterclaim, granting summary judgment to ASI and Torres and declaring
that National's policy provides $1 million of coverage.1
1
Defendant State Farm Mutual Insurance Company, which insured Torres, is not a party
to this appeal.
1-08-0402
BACKGROUND
The record on appeal discloses the following facts. Ramos is a moving company that
owned two trucks for personal moving services. On October 5, 2004, defendant Arthur Jones
(Jones) rented a truck from Elite on behalf of Ramos to complete a scheduled move that day from
Crystal Lake, Illinois, to Crown Point, Indiana. En route, Jones was involved in a collision with
Torres, while still in Illinois, resulting in injuries to Torres.
Since 1995, the Illinois Commerce Commission (ILCC) had issued a public carrier
certificate and certificate of public convenience and necessity to Ramos, granting Ramos the
authority to operate as a common carrier of household goods between points within a 50-mile
radius of Chicago, Illinois, and as a common carrier of other goods to and from points in Illinois.
In 2003, Ramos applied to ASI for truck insurance. The application describes Ramos as a
local household furnishings mover. The application listed a truck and a van, each located in
Chicago, Illinois, with an operating radius of 50 miles.
ASI insured Ramos under a general liability policy, listing Ramos's two trucks as covered
vehicles. The ASI policy included a single, combined limit for bodily injury and property
damage of $750,000. The policy provides:
"COVERAGE A – BODILY INJURY LIABILITY
***
ADDITIONAL CONDITIONS
1. Other Insurance. Temporary Substitute and Newly Acquired Vehicles
With respect to a Temporary Substitute automobile, this insurance
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shall be excess insurance over any other valid and collectible insurance
available to the insured.
***
COVERAGE B – PROPERTY DAMAGE LIABILITY
The company will pay on behalf of the insured all sums, except for
punitive
or exemplary damages, which the insured shall become legally obligated to pay as
damages because of
A. bodily injury or
B. property damage
to which this insurance applies, caused by an accident and arising out of the
ownership, maintenance or use of an owned vehicle or any temporary substitute
automobile, and the company shall defend any suit alleging such bodily injury or
property damage and seeking damages which are payable under the terms of this
policy."
The ASI policy defines a "temporary substitute automobile" as:
"[A] vehicle not owned by the named insured or any resident of the same household,
while temporarily used with the permission of the owner as a substitute for an owned
vehicle when withdrawn from normal use for servicing or repair or because of its
breakdown, loss or distruction [sic]."
ASI's policy was certified with the ILCC in compliance with Illinois law and as proof of
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financial responsibility under the rules for carriers of property. ASI's policy further provides:
"When this policy is certified as proof of financial responsibility under the provisions of
any motor vehicle financial responsibility law, such insurance as is afforded by this policy
*** shall comply with the provisions of such law to the extent of the coverage and limits
of liability required by such law."
Moreover, ASI's policy provides:
"The insurance afforded by this policy is primary insurance, except when stated to
apply in excess of or contingent upon the absence of other insurance. When this
insurance is primary and the insured has other insurance which is stated to be
applicable to the loss on an excess or contingent basis, the amount of the
company's liability under this policy shall not be reduced by the existence of other
insurance."
National insured Elite under a commercial automobile liability policy, listing Elite's rental
vehicles as insured vehicles. National's policy defines "insureds" to include anyone using a
covered auto Elite owns, or hires or borrows with Elite's permission. A symbol endorsement to
the National policy defined symbol "10" automobiles as:
"Any auto used under a written rental agreement, issued by you, stating a rental period of
less than one year. Any auto used in your rental business, or used for non business
purposes with your permission."
The National policy provides coverage to symbol "10" automobiles up to $1 million per
occurrence.
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Another National endorsement – the "Daily Auto Rental Endorsement" – amended the
definition of an insured to include:
"The 'rentee' and any other person authorized by and designated in the 'rental agreement'
held by the 'rentee,' subject to all conditions set forth in this endorsement."
A"rentee" is defined as "a holder of a 'rental agreement' " with Elite "of less than one year." This
endorsement limits liability for rentees to $50,000 for bodily injury to any one person in one
accident, $100,000 for bodily injury to two or more people in one accident, and $50,000 for
property damage in any one accident.
The "Daily Auto Rental Endorsement" further replaces the general "other insurance"
condition to provide:
"For any covered 'auto,' the insurance provided by this policy is primary, unless stated
otherwise in the 'rental agreement,' for the 'rentee' and any other person authorized by the
'rental agreement' held by the 'rentee.' "
The rental agreement between Elite and Jones provides in part:
"Rentor provides liability coverage to persons using the vehicle with the permission of
the Rentor *** in accordance with the provisions of an automobile liability insurance
policy with limits equals [sic] to the minimum requirements of any applicable state
financial responsibility law or other similar law or statue [sic]. All coverages under this
Agreement are applicable only after all other valid and collectible insurance (whether
primary, excess or contingent) has been paid and exhausted to the full limits of all such
policies."
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ASI and National filed declaratory judgment actions in the circuit court of Cook County,
seeking a determination of their respective rights and obligations. ASI asked the court to find
that its policy did not cover Ramos or Jones because the rental vehicle was not an insured
automobile under the policy, or that National's policy provided primary coverage and that the
ASI policy provided excess coverage. Ramos filed a counterclaim, which he nonsuited prior to
this appeal. National and Elite also filed a counterclaim seeking declarations that: (1) National
did not owe a duty to defend Ramos; (2) ASI provided primary coverage; (3) Elite was an
additional insured under the ASI policy2; and (4) if National's policy applies, it was limited to
$50,000 of excess coverage.
On July 24, 2006, ASI moved for summary judgment on count II of its complaint, arguing
that National's coverage was primary and ASI's coverage – if any – was excess. On June 19,
2007, Torres filed a motion for summary judgment arguing that the ASI policy provided primary
coverage to Ramos. The same day, Torres filed a motion for partial summary judgment against
National and Elite, arguing that: (1) the rented truck was a covered auto with $1 million in
liability coverage under the National policy; and (2) Ramos was an insured under the National
policy. That same day Ramos moved for summary judgment, arguing that: (1) ASI's suit
breached the terms of its own policy and the financial responsibility laws of Illinois; and (2) ASI
acted in bad faith during the litigation and fraudulently induced Ramos to make statements in an
2
National and Elite abandoned this claim during briefing on the summary judgment
motions before the trial court.
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attempt to deny him coverage. On June 29, 2007, National and Elite filed a joint motion for
summary judgment arguing that: (1) National's coverage was subjected to the $50,000 limits; (2)
National's coverage was excess to the ASI policy; and (3) Elite is an additional insured under the
ASI policy. National and Elite also filed a cross-motion for summary judgment against ASI,
contending that: (1) the ASI policy must provide coverage in order to comply with the financial
responsibility laws of Illinois; and (2) Elite owed neither Torres nor the public a corresponding
duty to provide primary coverage in this case.
On December 14, 2007, the circuit court issued a memorandum opinion and order,
disposing of the summary judgment motions. The circuit court first ruled that ASI's argument
that the Elite truck was not a "temporary substitute vehicle" failed because the financial
responsibility laws of Illinois require that a carrier's insurance must cover any vehicle operated
under the authority of that carrier, whether or not the vehicle has been reported to the insurer.
The circuit court then ruled that the ASI policy provided primary coverage, because allowing ASI
to provide only excess coverage would violate the public policy of Illinois as established by the
financial responsibility laws of Illinois. The circuit court further ruled that National's policy was
ambiguous, resulting in an available limit of $1 million. Finally, the court denied Ramos's
motion for summary judgment, on the ground that the motion failed to identify the claims
asserted or the elements thereof, as well as why the undisputed material facts compelled
judgment as a matter of law in his favor.
On January 10, 2008, the circuit court denied ASI's motion to reconsider. On January 24,
2008, the circuit court denied National and Elite's motions to reconsider and found no just reason
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to delay enforcement or appeal of the December 14, 2007, order, pursuant to Illinois Supreme
Court Rule 304(a) (210 Ill. 2d R. 304(a)). On February 6, 2008, ASI filed an amended notice of
appeal to this court. On February 8, 2008, National and Elite filed a notice of cross-appeal to this
court.
DISCUSSION
The primary issue on appeal is whether the circuit court erred in granting summary
judgments to National, Elite and Torres (ruling the ASI policy provided primary coverage) and
also to Torres (ruling the National policy provided up to $1 million of excess coverage).
Appellate review of a summary judgment ruling is de novo. Arangold Corp. v. Zehnder, 204 Ill.
2d 142, 146, 787 N.E.2d 786, 789 (2003). Summary judgment is appropriate where "the
pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there
is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a
matter of law." 735 ILCS 5/2-1005(c) (West 2006). The interpretation of an insurance policy
and the coverage provided are questions of law that are appropriate for resolution through
summary judgment. Crum & Forster Managers Corp. v. Resolution Trust Corp., 156 Ill. 2d 384,
391, 620 N.E.2d 1073, 1077 (1993).
I
ASI first argues that the trial court erred in ruling that its policy provided primary
coverage. The circuit court ruled that ASI's policy provided primary insurance, rejecting ASI's
assertion that the truck rented from Elite was not covered by ASI's policy (or if it was covered,
that the policy was excess), because this assertion violated public policy as established by Illinois
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law. See Progressive Universal Insurance Co. v. Liberty Mutual Fire Insurance Co., 215 Ill. 2d
121, 129, 828 N.E.2d 1175, 1180 (2005). The circuit court relied on sections 18c-4901 and 18c4903 of the Illinois Commercial Transportation Law (Transportation Act) (625 ILCS 5/18c-4901,
18c-4903 (West 2006)). Section 18c-4901 provides:
"No motor carrier of property shall operate within this State unless it has on file
with the [Illinois Commerce] Commission or its agent proof of continuous insurance or
surety coverage in accordance with Commission regulations."
Section 18c-4903 provides:
"Each certificate or other proof of insurance or surety coverage shall have, as an
implied term, that *** all motor vehicles operated by or under authority of the carrier will
be covered, whether or not such vehicles have been reported to the insurance, surety, or
other company." 625 ILCS 5/18c-4903 (West 2006).
Accordingly, the circuit court rejected ASI's argument that the truck at issue was not covered by
its policy.
ASI argues that the requirements of the Transportation Act do not apply in this case
because the rented truck was being used for interstate commerce. ASI relies on Canal Insurance
v. A&R Transportation & Warehouse, LLC, 357 Ill. App. 3d 305, 312-13, 827 N.E.2d 942, 948
(2005), a case involving interstate commerce:
"Section 18c-1201 of the Transportation Act specifically states that the
jurisdiction of the Illinois Commerce Commission 'shall extend to for-hire transportation
by motor carrier *** within the State of Illinois, and except as otherwise provided
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elsewhere in this Chapter shall extend only to intrastate commerce.' (Emphasis added.)
625 ILCS 5/18c-1201 (West 2002). It is undisputed that, at the time of the occurrence
alleged in the underlying action, Boyd was hauling a load of refrigerated freight for A&R
from Illinois to Pennsylvania. As a consequence, Boyd was engaged in 'interstate
commerce' (see 625 ILCS 5/18c-1104(16) (West 2002)), and the provisions of the
Transportation Act upon which he relies are inapplicable to the occurrence alleged in the
underlying action. As such, they do not give rise to any obligation on the part of Canal to
provide coverage under the Policy for any vehicle which is not described in the
declarations or listed in Endorsement E69L."
Canal Insurance is distinguishable from this case. That appeal involved an interpretation
of section 18c-1201 of the Transportation Act and did not discuss the applicability of other
sections. Section 18c-1201, by its own terms, applies, "except as otherwise provided elsewhere
in this Chapter." 625 ILCS 5/18c-1201 (West 2006). Moreover, it is well settled that where two
statutory provisions cover the same subject matter, the more specific statute governs. Huskey v.
Board of Managers of Condominiums of Edelweiss, Inc., 297 Ill. App. 3d 292, 295, 696 N.E.2d
753, 755 (1998). Section 18c-1201 of the Transportation Act sets forth the general jurisdiction
of the ILCC, while section 18c-4101 of the Transportation Act specifically addresses the ILCC's
jurisdiction over motor carriers of property:
"Except as provided in Section 18c-4102 of this Chapter, the jurisdiction of the
Commission shall extend to all motor carriers of property operating within the State of
Illinois." 625 ILCS 5/18c-4101 (West 2006).
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The exceptions referenced in section 18c-4101 do not apply to this case. See 625 ILCS
5/18c-4102 (West 2006). Accordingly, under sections 18c-4901 and 18c-4903, the jurisdiction
of the ILCC is not limited solely to intrastate commerce.
Indeed, the ILCC's grant of authority to Ramos to operate in a zone surrounding Chicago
– with the required insurance – complements the federal Motor Carrier Act of 1980, which
provides for only limited federal jurisdiction over transportation provided "in a zone that is
adjacent to, and commercially a part of" a municipality. 49 U.S.C. §13506(b)(1) (2006). Nor
does it seem coincidental that the ILCC requires that the insurance submitted to satisfy our
financial responsibility laws have the same minimum amounts of coverage required by the
federal Department of Transportation for carriers involved in interstate commerce. 92 Ill. Adm.
Code §1425.30, amended at 18 Ill. Reg. 11162, 11165-66, eff. July 1, 1994; see Zurich American
Insurance Co. v. Key Cartage, Inc., 236 Ill. 2d 117, 130, 923 N.E.2d 710, 717 (2009) (Garman,
J., specially concurring). Thus, this is not a case raising constitutional issues involving the
regulation of interstate commerce and federalism. Rather, it is a situation in which federal and
state authorities – both anticipating that the real world business of motor carriers of property does
not always neatly fall into the categories of intrastate and interstate commerce – are operating
cooperatively to protect the public.
This overall scheme helps explain why Canal Insurance is also factually distinguishable.
Canal Insurance involved transporting freight from Illinois to Pennsylvania. In this case, Ramos
was driving a truck between Crystal Lake, Illinois, and Crown Point, Indiana. Ramos had
insurance from ASI for trucks expected to operate within a 50-mile radius of Chicago. Based on
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the ASI policy, the ILCC granted Ramos the authority to operate as a common carrier of
household goods between points within a 50-mile radius of Chicago, Illinois. ASI does not
dispute that both Crystal Lake, Illinois, and Crown Point, Indiana, fall within the 50-mile radius
authorized by the ILCC and contemplated by the ASI policy. ASI's argument, if accepted, would
frustrate the purpose of the Transportation Act that motor carriers of property carry insurance coextensive with the scope of their operations, for the protection of the public.
ASI also cites Bisco v. Liberty Mutual Insurance Co., 176 Ill. App. 3d 280, 530 N.E.2d
1163 (1988). In that case, this court interpreted section 18c-4901 and concluded that while the
United Parcel Service van at issue might usually be driven within the scope of the Transportation
Act, the van fell outside the scope of that law while being driven to an autobody shop by a shop
employee. Bisco, 176 Ill. App. 3d at 283, 530 N.E.2d at 1164. See also 625 ILCS 5/18c-4102
(West 2006) (exempting incidental use of a vehicle for a primary business purpose other than
transportation). In this case, the cartage of household goods falls directly within the activities
regulated by the Transportation Act. 625 ILCS 5/18c-4101 (West 2006).
For all of the aforementioned reasons, we conclude that the trial court did not err in ruling
that the ASI policy provides coverage in this case.
II
We next turn to the question of whether ASI's policy provides primary coverage in this
case. The circuit court relied on the rule that where two policies purport to be excess, and one
provision violates public policy, the contract violating public policy will be deemed primary.
Pekin Insurance Co. v. Fidelity & Guaranty Insurance Co., 357 Ill. App. 3d 891, 901, 830 N.E.2d
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10, 18 (2005). ASI argues that its policy is not primary, contending: (1) generally, where two
insurance policies each purport to offer only secondary coverage, the insurance of the vehicle's
owner is primary while that of the driver is secondary; and (2) section 9-105 of the Illinois
Vehicle Code (625 ILCS 5/9-105 (West 2006)) required Elite to provide an operator's policy.
The circuit court rejected these arguments, relying on this court's opinion in State Farm Mutual
Automobile Insurance Co. v. Hertz Claim Management Corp., 338 Ill. App. 3d 712, 789 N.E.2d
407 (2003), which we quote at length for its detailed discussion of the issue:
"Section 7-601(a) of the Illinois Vehicle Code provides that no one may operate a
motor vehicle or allow a vehicle to be operated without obtaining sufficient insurance.
625 ILCS 5/7-601(a) (West 2000). For most vehicles, section 7-203 requires that the
policy limits must be at least $20,000 per person or $40,000 per accident for personal
injury or death and at least $15,000 for property damage. 625 ILCS 5/7-601(a), 7-203
(West 2000). Section 7-317(b)(2) requires that the insurance must cover any person
driving the insured vehicle with the express or implied permission of the insured. 625
ILCS 5/7-317(b)(2) (West 2000). Such coverage is commonly referred to as 'omnibus
coverage.' If the policy does not expressly provide omnibus coverage, it will be
interpreted as providing it. State Farm Mutual Automobile Insurance Co. v. Universal
Underwriters Group, 182 Ill. 2d 240, 244, 695 N.E.2d 848, 850 (1998) (where omnibus
clauses are required by statute, such a clause must be read into each insurance policy).
Among the vehicles exempted from the requirements of section 7-601(a) are those
in compliance with other statutes that require insurance in amounts meeting or exceeding
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those required by section 7-601(a). 625 ILCS 5/7-601(b)(6) (West 2000). The Illinois
Supreme Court has held that this exception applies only if the other statute requires
coverage of the type mandated by section 7-601(a). Universal Underwriters Group, 182
Ill. 2d at 245, 695 N.E.2d at 851. Section 9-101 of the Illinois Vehicle Code requires the
owners of rental vehicles to provide proof of financial responsibility to the Secretary of
State. 625 ILCS 5/9-101 (West 2000). Financial responsibility may be in the form of a
bond, an insurance policy, or a certificate of self-insurance. 625 ILCS 5/9-102 (West
2000). If the owner of the rental car opts to provide an insurance policy, as Ford has done
in the instant case, it must provide coverage with limits of at least $50,000 per person for
bodily injury or death or $100,000 per accident for bodily injury or death and property
damage. The policy must cover any driver using the car with the insured's express or
implied permission. 625 ILCS 5/9-105 (West 2000). Because the rental car insurance
law requires rental cars to be insured in amounts exceeding those required by sections
7-601(a) and 7-203 and contains an omnibus clause identical to that found in section
7-317(b)(2), we find that rental cars fall within the exception provided by section
7-601(b)(6).
Section 7-317 and section 9-105 are silent on which insurer is to provide primary
coverage where the driver and the vehicle are covered by different policies. 625 ILCS
5/7-317, 9-105 (West 2000). However, the Illinois Supreme Court has stated that, absent
statutory language to the contrary, the omnibus clause found in section 7-317(b)(2) 'must
be construed to require primary coverage.' Universal Underwriters Group, 182 Ill. 2d at
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246, 695 N.E.2d at 851. We note that the two omnibus clauses serve the same purpose
and contain nearly identical language. For the reasons which follow, however, we
conclude, as have the other Illinois appellate courts to consider the issue, that section
9-105 does not require a rental car agency to provide primary insurance as long as such
coverage is available from another source.
The purpose of the omnibus provisions is to protect the public by ensuring that
adequate resources are available to compensate for injuries sustained as a result of
automobile accidents. Insurance Car Rentals, Inc. v. State Farm Mutual Automobile
Insurance Co., 152 Ill. App. 3d 225, 232, 504 N.E.2d 256, 261 (1987). Their purpose is
the protection of the public, not other insurance agencies. Continental Casualty Co. v.
Travelers Insurance Co., 84 Ill. App. 2d 200, 204, 228 N.E.2d 141, 144 (1967). In
general, where two insurance policies each purport to offer only secondary coverage, the
insurance of the vehicle's owner is primary while that of the driver is secondary. Dotson
v. Agency Rent-A-Car, Inc., 101 Ill. App. 3d 804, 807, 428 N.E.2d 1002, 1004 (1981).
However, the Illinois courts that have considered this question in the unique context of
rental cars have concluded that the general rule does not apply. Farm Bureau Mutual
Insurance Co., 319 Ill. App. 3d at 389, 744 N.E.2d at 305; Insurance Car Rentals, Inc.,
152 Ill. App. 3d at 234, 504 N.E.2d at 262; Dotson, 101 Ill. App. 3d at 808, 428 N.E.2d at
1005. This is so because the public policy at stake is not frustrated by departing from the
general rule. Farm Bureau Mutual Insurance Co., 319 Ill. App. 3d at 389, 744 N.E.2d at
305; Insurance Car Rentals, Inc., 152 Ill. App. 3d at 234, 504 N.E.2d at 262.
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In Insurance Car Rentals, Inc., as here, a driver rented a car for use while his car
was being repaired. Insurance Car Rentals, Inc., 152 Ill. App. 3d at 227, 504 N.E.2d at
258. As here, the car rental agency offered him a choice between relying on his insurance
company to provide primary coverage or paying a higher cost in order to be provided with
full coverage through the rental agency's insurer. The driver opted for the former option.
Insurance Car Rentals, Inc., 152 Ill. App. 3d at 228, 504 N.E.2d at 258. The Third
District Appellate Court found that the car rental agency fulfilled the purpose of
protecting the public because it 'did provide a means for obtaining insurance if a customer
chose to use [its] insurance.' Insurance Car Rentals, Inc., 152 Ill. App. 3d at 232, 504
N.E.2d at 261. In so holding, the court emphasized that there were two separate
agreements the driver could have entered into with the rental car agency. Had he chosen
to purchase insurance through the agency's insurer, he would have had to sign a different
form, which was a different color. Moreover, the cost of renting the car would have been
higher. Insurance Car Rentals, Inc., 152 Ill. App. 3d at 232, 504 N.E.2d at 261. Thus, the
court reasoned, the agency protected 'those who would otherwise be uninsured.'
Insurance Car Rentals, Inc., 152 Ill. App. 3d at 232, 504 N.E.2d at 261.
Similarly, in the case at bar, Auffenberg offered Kauling the option of purchasing
the liability insurance supplement and enjoying full primary coverage under the
defendants' policies. As in Insurance Car Rentals, Inc., the rental agreement between
Auffenberg and Kauling made it unmistakable to Kauling that he was declining such full
coverage. The supplement had to be purchased at an additional price. The rental contract
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contained paragraphs both on the front and on the reverse explaining that by not
purchasing the supplement, the driver was relying on his own insurance to provide
primary coverage. The paragraph was highlighted on the front of the contract and
preceded by the words 'NOTICE: Please read the following carefully' printed in bold
typeface. In addition, the rental agreement contained a space for Kauling to place his
initials indicating whether he accepted or declined the liability supplement. Thus,
Auffenberg provides insurance to drivers who otherwise might not be covered while
renting its cars. It also protects drivers from inadvertently declining coverage they need
or prefer. We find that these measures adequately protect the public." Hertz Claim
Management Corp., 338 Ill. App. 3d at 715-18, 789 N.E.2d at 41-12.
ASI argues that Hertz Claim Management Corp. is distinguishable, because Elite did not
provide separate agreements and did not provide Jones with an option to provide primary
insurance to Ramos. National replies that Hertz Claim Management Corp. is not distinguishable,
because Elite automatically provided National's insurance coverage, albeit excess, to its
customers, thereby satisfying the underlying public policy. Torres takes the position that whether
Elite provided or offered to provide insurance to Ramos is irrelevant, arguing that Ramos chose
to rely on its own primary coverage and that the public policy reasons for an exception to the
general rule remain.
The rationale of cases like Hertz Claim Management Corp. is that the rental car exception
is justified precisely because the rental agency is required to offer insurance to the driver who
otherwise might not be covered, protecting the driver from inadvertently declining coverage he or
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she needs or prefers and thereby satisfying the demands of Illinois public policy. However, as
Elite failed to offer primary insurance to Ramos, it cannot be said that Ramos chose to rely on its
own insurance; thus, the general rule that the insurance of the vehicle's owner is primary applies.
If Elite's automatic excess coverage was deemed sufficient, it would swallow the case law
holding that a rental agency must offer the choice of primary coverage to the customer to escape
the general rule that where two insurance policies each purport to offer only secondary coverage,
the insurance of the vehicle's owner is primary while that of the driver is secondary.
Accordingly, we agree with ASI that National's policy provides primary coverage for
public policy reasons, because Elite failed to offer Ramos the choice of primary coverage.
However, that conclusion does not preclude us from also agreeing with the circuit court's
conclusion that the ASI policy provides primary coverage pursuant to sections 18c-4901 and 18c4903 of the Transportation Act. 625 ILCS 5/18c-4901, 18c-4903 (West 2006). Where two
primary policies both contain "other insurance" clauses stating that the coverage provided is
"excess," we must conclude that the two "excess" clauses cancel each other out, and any loss is
prorated between the policies. See, e.g., Ohio Casualty Insurance Co. v. Oak Builders, Inc., 373
Ill. App. 3d 997, 1000-04, 869 N.E.2d 992, 994-97 (2007) (and cases cited therein).
III
ASI, National and Elite all take issue with the trial court's declaratory ruling that the
National policy provided up to $1 million of excess coverage, albeit for different reasons. ASI
argues that the issue was not ripe for decision. National and Elite argue that the National policy
was not ambiguous.
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"To maintain a declaratory judgment action, there must be an actual controversy between
the parties capable of being affected by a determination of the case." Weber v. St. Paul Fire &
Marine Insurance Co., 251 Ill. App. 3d 371, 372, 622 N.E.2d 66, 67 (1993). Whether an action is
considered "premature" or unripe for adjudication focuses on an evaluation of the fitness of the
issue for judicial decision at that point in time. Weber, 251 Ill. App. 3d at 372-73, 622 N.E.2d at
67.
ASI argues that the issue of policy limits is not ripe for adjudication, because it is
integrally related to the merits of the underlying suit of liability. See, e.g., Certain Underwriters
at Lloyd's, London v. Boeing Co., 385 Ill. App. 3d 23, 41-45, 895 N.E.2d 940, 956-59 (2008).
The circuit court had ruled to the contrary, based on Scottsdale Insurance Co. v. Robertson, 338
Ill. App. 3d 397, 398-99, 788 N.E.2d 279, 280 (2003). ASI notes that the insurer in Robertson
had already acknowledged its policy applied to the underlying claim; the parties merely disputed
the policy limits. Robertson, 338 Ill. App. 3d at 398-99, 788 N.E.2d at 280. Such is not the case
here. However, given our conclusion that the National policy provides primary coverage, the
issue is not premature.
The circuit court relied on the well-established rule that if the terms of an insurance
policy are susceptible to more than one meaning, they are considered ambiguous and will be
construed strictly against the insurer that drafted the policy. American States Insurance Co. v.
Koloms, 177 Ill. 2d 473, 479, 687 N.E.2d 72, 75 (1997). The circuit court ruled that the National
policy was ambiguous because the rental endorsement and the symbol endorsement both
purported to apply to vehicles rented under an agreement with a term of less than one year, but at
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two different policy limits. National's argument that the symbol endorsement applied to a
subcategory of the vehicles used in its business operations is unpersuasive, given that Elite's
business is renting trucks. Accordingly, the circuit court correctly determined that the National
policy provided up to $1 million of coverage, though it does so on a primary basis, as noted
earlier.
IV
Finally, ASI argues that the circuit court erred in denying ASI's motion for leave to file an
amended complaint and denied certain discovery. However, the circuit court did not decide these
issues in its December 14, 2007, order, and they are not implicated by the notice of appeal or
notice of cross-appeal. Thus, this court lacks jurisdiction to consider these questions at this time.
See, e.g., Neiman v. Economy Preferred Insurance Co., 357 Ill. App. 3d 786, 790-91, 829 N.E.2d
907, 911 (2005) (and cases cited therein).
CONCLUSION
In sum, we affirm the circuit court’s ruling that the ASI policy provides coverage in this
case. We also affirm the circuit court's ruling that ASI provided primary coverage in this case.
However, we conclude that the National policy also provided primary coverage, and that any loss
and costs of defense are to be prorated between the policies. Finally, we affirm the circuit court's
ruling that the National policy is ambiguous and, thus, provides up to $1 million of coverage.
For all of the aforementioned reasons, the judgment of the circuit court of Cook County is
affirmed as modified.
Affirmed as modified.
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MURPHY, P.J., and QUINN, J., concur.
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