Tralmer v. Soztneps, Inc.
Annotate this Case
No. 2--96--0066
_________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
SECOND DISTRICT
_________________________________________________________________
KIMBERLY TRALMER, ) Appeal from the Circuit
) Court of Lake County.
Plaintiff-Appellant, )
) No. 93--L--1743
v. )
)
SOZTNEPS, INC., Indiv. and )
d/b/a Hob Knob Restaurant; )
PALATINE INVESTMENT CORPORATION;)
PIONEER BANK AND TRUST COMPANY, )
as Trustee of Trust No. 025026, )
Indiv. and d/b/a Vertigo, )
a/k/a Club Vertigo, )
)
Defendants-Appellees )
)
(Pamela K. Loeb and Greater ) Honorable
Rockford Investments, Inc., ) Bernard E. Drew, Jr.,
Defendants). ) Judge, Presiding.
______________________________________________________________
JUSTICE INGLIS delivered the opinion of the court:
Plaintiff, Kimberly Tralmer, appeals from the judgment of the
circuit court of Lake County granting summary judgment in favor of
defendants, Soztneps, Inc. (Hob Knob), and Palatine Investment
Corporation (Vertigo)(defendants, collectively).
On November 28, 1993, plaintiff was injured when the car she
was driving collided with a car operated by defendant, Pamela Loeb.
Plaintiff sued Loeb, alleging that Loeb was intoxicated at the time
of the accident and that her negligence caused the accident.
Additionally, plaintiff sued defendants, Hob Knob and Vertigo,
alleging that defendants were liable for serving liquor to Loeb
under the Illinois Dramshop Act. 235 ILCS 5/6--21 (West 1992).
On March 18, 1994, defendants' insurance carrier, River Forest
Insurance Company, was placed in liquidation. As a result of River
Forest's insolvency, the Illinois Insurance Guaranty Fund (Fund)
became obligated by law to defend Hob Knob and Vertigo. 215 ILCS
5/532 et seq. (West 1992). The Fund's payment obligation is
subject to the limitation contained under section 546(a) of the
Insurance Code (Code) (215 ILCS 5/546(a) (West 1992)), and the
setoff limitations of the Dramshop Act which limits recovery to
$30,000.
In December 1994 plaintiff settled her suit against Loeb for
$100,000, the liability limit under Loeb's automobile insurance
policy with State Farm Insurance Company. The agreement discharged
Loeb from liability and contribution to any other tort-feasor. The
cause of action against defendants continued.
Subsequently, Hob Knob and Vertigo each filed motions for
summary judgment on the ground that the nonduplication of recovery
provision under section 546(a) of the Code and section 6--21 of the
Dramshop Act relating to setoff recovery relieved them of
liability. The trial court found that the nonduplication of
recovery provision applied and directed that the maximum $30,000
which plaintiff could recover from the Fund should be reduced by
the $100,000 plaintiff had previously received from Loeb under her
insurance policy. The trial court concluded that plaintiff could
never obtain any additional recovery from defendants and,
therefore, summary judgment was appropriate. This timely appeal
followed.
Plaintiff contends that the trial court erred in granting
summary judgment for several reasons: (1) because there are
separate claims and risks, the nonduplication of recovery provision
is not applicable; (2) even if the provision applies, setoff of
recovery should not occur until damages are ascertained; (3)
regardless of whether the Fund contributes, plaintiff can still
pursue her claims against defendants; and (4) once plaintiff
settles with an inebriated tort-feasor, the statutory damages cap
of the Dramshop Act does not dictate that plaintiff's litigation
has ended.
Plaintiff first asserts that pursuant to section 546(a) her
recovery of $100,000 from Loeb's insurance carrier does not reduce
the Fund's obligation to plaintiff. Plaintiff insists that her
claims against the Fund are independent of any claims previously
pursued against Loeb and her insurer. Plaintiff argues that the
language of section 546(a) is clear and unambiguous in declaring
that the relief for any claimant having a covered claim against the
Fund is limited to making a claim first with any other solvent
insurer covering the same claim.
The nonduplication of recovery provision which is in dispute
provides in pertinent part:
Any insured or claimant having a covered claim against
the Fund shall be required first to exhaust his rights under
any provision in any other insurance policy which may be
applicable to the claim. Any amount payable on a covered
claim under this Article shall be reduced by the amount of
such recovery under such insurance policy. 215 ILCS 5/546(a)
(West 1992).
We have found no case construing section 546(a) in the present
situation, where the solvent insurer covers a claim for negligence
and the insolvent insurer covers a statutory dramshop claim.
Typically, section 546(a) has been applied where both the solvent
and insolvent insurance carriers cover the same type of claim.
See, e.g., Urban v. Loham, 227 Ill. App. 3d 772 (1992).
There is no question that in this case the statutory dramshop
claim is a separate claim from the negligence claim against the
driver, Loeb. Each claim derives from different risks: one under
statute, the other from common law. Moreover, the Dramshop Act
provides the only remedy against defendants. See Stevens v. Lou's
Lemon Tree, Ltd., 187 Ill. App. 3d 458 (1989). Dramshop defendants
are not considered to be concurring or joint tort-feasors with an
inebriated driver. Hopkins v. Powers, 113 Ill. 2d 206 (1986). We
must therefore examine whether the language of section 546(a)
restricts duplication of recovery where there are separate claims
involved.
The primary rule of statutory construction is to give effect
to the intent of the legislature. Urban, 227 Ill. App. 3d at 775.
A court should look to the language of the statute and additionally
consider the purposes to be achieved by the law. In re Estate of
Callahan, 144 Ill. 2d 32, 43 (1991).
The Fund was devised to fill a void in insurance coverage when
an Illinois insurance company which otherwise would be responsible
for coverage becomes insolvent. Lucas v. Illinois Insurance
Guaranty Fund, 52 Ill. App. 3d 237, 239-40 (1977). Although the
Fund is intended to be a "source of last resort" in the event of
insolvency (Urban, 227 Ill. App. 3d at 777), the legislative intent
is to bar double recovery by both a claimant and the Fund (Lonigro
v. Lockett, 253 Ill. App. 3d 308, 318-19 (1993)).
We have carefully reviewed the language of section 546(a) and
find it to be unambiguous. The plain language of the provision
clearly mandates that recovery from the Fund is reduced by the
amount that is received from another insurance policy that covers
the same claim. In the present case, the only insurance policies
which "may be applicable" to plaintiff's statutory dramshop claim
against defendants are those now held by the Fund. Loeb's
automobile policy does not provide coverage for plaintiff's
dramshop claim. Thus, we find that the Fund remains responsible,
subject to statutory limitations, to provide coverage for
plaintiff's dramshop claim.
In reaching this conclusion, we reject defendants' contention
that this court should be persuaded by dispositive authority from
other jurisdictions. Defendants cite Zhou v. Jennifer Mall
Restaurant, Inc., No. 84--CA--5771 (D.C. Super. Ct. August 10,
1994); Oglesby v. Liberty Mutual Insurance Co., 832 P.2d 834 (Okla.
1992); Rinehart v. Hartford Casualty Insurance Co., 91 N.C. App.
368, 371 S.E.2d 788 (1988); California Insurance Guarantee Ass'n
v. Liemsakul, 193 Cal. App. 3d 433, 238 Cal. Rptr. 346 (1987); and,
Stagg v. Strauss, 647 So. 2d 621 (La. App. 1994). These cases are
neither helpful nor binding in this case. The cases are different
from the present case in one major respect: the corresponding
statutes, although similar, use different language than our
statute. None of the other statutes contain the language, "which
may be applicable to the claim." Moreover, after thoroughly
researching this issue, we have not found any provision from other
jurisdictions which contain the language used in section 546(a).
Defendants argue that, because all insurers must contribute to
the Fund, it is the philosophy of the Fund to have all potential
claims against the Fund's assets reduced by a solvent insurer
whenever possible. Pierre v. Davis, 165 Ill. App. 3d 759, 760
(1987). If the legislature had intended to follow the result urged
by defendants in this case, it would have deleted the phrase,
"which may be applicable to the claim." This they did not do, and
we cannot now assume the role of the legislature.
Because we find that the nonduplication of recovery provision
does not apply and that the Fund is responsible for coverage of the
dramshop claim, there remains a question concerning the amount of
damages. Based on the record, we cannot conclude that the actual
damages sustained by plaintiff were less than $100,000, between
$100,000 and $130,000, or more than $130,000. "[T]he proper
procedure is [for the fact finder] to assess the total damages,
without reference to any amounts already received, and then reduce
the verdict by such amounts. The difference, of course, would be
subject to the maximum limits provided in the [Dramshop] Act."
Kurth v. Amee, Inc., 3 Ill. App. 3d 506, 510 (1972); Patton v. D.
Rhodes, Ltd., 166 Ill. App. 3d 809, 811-12 (1988). Accordingly,
because the nonduplication of recovery provision does not apply and
there remains a material fact as to the amount of damages, summary
judgment was improper. We need not consider plaintiff's remaining
contentions because of the disposition of this issue. We therefore
reverse and remand this cause.
The judgment of the circuit court of Lake County granting
summary judgment to defendants is reversed and the cause is
remanded.
Reversed and remanded.
McLAREN, P.J., and THOMAS, J., concur.
_________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
SECOND DISTRICT
_________________________________________________________________
KIMBERLY TRALMER, ) Appeal from the Circuit
) Court of Lake County.
Plaintiff-Appellant, )
) No. 93--L--1743
v. )
)
SOZTNEPS, INC., Indiv. and )
d/b/a Hob Knob Restaurant; )
PALATINE INVESTMENT CORPORATION;)
PIONEER BANK AND TRUST COMPANY, )
as Trustee of Trust No. 025026, )
Indiv. and d/b/a Vertigo, )
a/k/a Club Vertigo, )
)
Defendants-Appellees )
)
(Pamela K. Loeb and Greater ) Honorable
Rockford Investments, Inc., ) Bernard E. Drew, Jr.,
Defendants). ) Judge, Presiding.
______________________________________________________________
JUSTICE INGLIS delivered the opinion of the court:
Plaintiff, Kimberly Tralmer, appeals from the judgment of the
circuit court of Lake County granting summary judgment in favor of
defendants, Soztneps, Inc. (Hob Knob), and Palatine Investment
Corporation (Vertigo)(defendants, collectively).
On November 28, 1993, plaintiff was injured when the car she
was driving collided with a car operated by defendant, Pamela Loeb.
Plaintiff sued Loeb, alleging that Loeb was intoxicated at the time
of the accident and that her negligence caused the accident.
Additionally, plaintiff sued defendants, Hob Knob and Vertigo,
alleging that defendants were liable for serving liquor to Loeb
under the Illinois Dramshop Act. 235 ILCS 5/6--21 (West 1992).
On March 18, 1994, defendants' insurance carrier, River Forest
Insurance Company, was placed in liquidation. As a result of River
Forest's insolvency, the Illinois Insurance Guaranty Fund (Fund)
became obligated by law to defend Hob Knob and Vertigo. 215 ILCS
5/532 et seq. (West 1992). The Fund's payment obligation is
subject to the limitation contained under section 546(a) of the
Insurance Code (Code) (215 ILCS 5/546(a) (West 1992)), and the
setoff limitations of the Dramshop Act which limits recovery to
$30,000.
In December 1994 plaintiff settled her suit against Loeb for
$100,000, the liability limit under Loeb's automobile insurance
policy with State Farm Insurance Company. The agreement discharged
Loeb from liability and contribution to any other tort-feasor. The
cause of action against defendants continued.
Subsequently, Hob Knob and Vertigo each filed motions for
summary judgment on the ground that the nonduplication of recovery
provision under section 546(a) of the Code and section 6--21 of the
Dramshop Act relating to setoff recovery relieved them of
liability. The trial court found that the nonduplication of
recovery provision applied and directed that the maximum $30,000
which plaintiff could recover from the Fund should be reduced by
the $100,000 plaintiff had previously received from Loeb under her
insurance policy. The trial court concluded that plaintiff could
never obtain any additional recovery from defendants and,
therefore, summary judgment was appropriate. This timely appeal
followed.
Plaintiff contends that the trial court erred in granting
summary judgment for several reasons: (1) because there are
separate claims and risks, the nonduplication of recovery provision
is not applicable; (2) even if the provision applies, setoff of
recovery should not occur until damages are ascertained; (3)
regardless of whether the Fund contributes, plaintiff can still
pursue her claims against defendants; and (4) once plaintiff
settles with an inebriated tort-feasor, the statutory damages cap
of the Dramshop Act does not dictate that plaintiff's litigation
has ended.
Plaintiff first asserts that pursuant to section 546(a) her
recovery of $100,000 from Loeb's insurance carrier does not reduce
the Fund's obligation to plaintiff. Plaintiff insists that her
claims against the Fund are independent of any claims previously
pursued against Loeb and her insurer. Plaintiff argues that the
language of section 546(a) is clear and unambiguous in declaring
that the relief for any claimant having a covered claim against the
Fund is limited to making a claim first with any other solvent
insurer covering the same claim.
The nonduplication of recovery provision which is in dispute
provides in pertinent part:
Any insured or claimant having a covered claim against
the Fund shall be required first to exhaust his rights under
any provision in any other insurance policy which may be
applicable to the claim. Any amount payable on a covered
claim under this Article shall be reduced by the amount of
such recovery under such insurance policy. 215 ILCS 5/546(a)
(West 1992).
We have found no case construing section 546(a) in the present
situation, where the solvent insurer covers a claim for negligence
and the insolvent insurer covers a statutory dramshop claim.
Typically, section 546(a) has been applied where both the solvent
and insolvent insurance carriers cover the same type of claim.
See, e.g., Urban v. Loham, 227 Ill. App. 3d 772 (1992).
There is no question that in this case the statutory dramshop
claim is a separate claim from the negligence claim against the
driver, Loeb. Each claim derives from different risks: one under
statute, the other from common law. Moreover, the Dramshop Act
provides the only remedy against defendants. See Stevens v. Lou's
Lemon Tree, Ltd., 187 Ill. App. 3d 458 (1989). Dramshop defendants
are not considered to be concurring or joint tort-feasors with an
inebriated driver. Hopkins v. Powers, 113 Ill. 2d 206 (1986). We
must therefore examine whether the language of section 546(a)
restricts duplication of recovery where there are separate claims
involved.
The primary rule of statutory construction is to give effect
to the intent of the legislature. Urban, 227 Ill. App. 3d at 775.
A court should look to the language of the statute and additionally
consider the purposes to be achieved by the law. In re Estate of
Callahan, 144 Ill. 2d 32, 43 (1991).
The Fund was devised to fill a void in insurance coverage when
an Illinois insurance company which otherwise would be responsible
for coverage becomes insolvent. Lucas v. Illinois Insurance
Guaranty Fund, 52 Ill. App. 3d 237, 239-40 (1977). Although the
Fund is intended to be a "source of last resort" in the event of
insolvency (Urban, 227 Ill. App. 3d at 777), the legislative intent
is to bar double recovery by both a claimant and the Fund (Lonigro
v. Lockett, 253 Ill. App. 3d 308, 318-19 (1993)).
We have carefully reviewed the language of section 546(a) and
find it to be unambiguous. The plain language of the provision
clearly mandates that recovery from the Fund is reduced by the
amount that is received from another insurance policy that covers
the same claim. In the present case, the only insurance policies
which "may be applicable" to plaintiff's statutory dramshop claim
against defendants are those now held by the Fund. Loeb's
automobile policy does not provide coverage for plaintiff's
dramshop claim. Thus, we find that the Fund remains responsible,
subject to statutory limitations, to provide coverage for
plaintiff's dramshop claim.
In reaching this conclusion, we reject defendants' contention
that this court should be persuaded by dispositive authority from
other jurisdictions. Defendants cite Zhou v. Jennifer Mall
Restaurant, Inc., No. 84--CA--5771 (D.C. Super. Ct. August 10,
1994); Oglesby v. Liberty Mutual Insurance Co., 832 P.2d 834 (Okla.
1992); Rinehart v. Hartford Casualty Insurance Co., 91 N.C. App.
368, 371 S.E.2d 788 (1988); California Insurance Guarantee Ass'n
v. Liemsakul, 193 Cal. App. 3d 433, 238 Cal. Rptr. 346 (1987); and,
Stagg v. Strauss, 647 So. 2d 621 (La. App. 1994). These cases are
neither helpful nor binding in this case. The cases are different
from the present case in one major respect: the corresponding
statutes, although similar, use different language than our
statute. None of the other statutes contain the language, "which
may be applicable to the claim." Moreover, after thoroughly
researching this issue, we have not found any provision from other
jurisdictions which contain the language used in section 546(a).
Defendants argue that, because all insurers must contribute to
the Fund, it is the philosophy of the Fund to have all potential
claims against the Fund's assets reduced by a solvent insurer
whenever possible. Pierre v. Davis, 165 Ill. App. 3d 759, 760
(1987). If the legislature had intended to follow the result urged
by defendants in this case, it would have deleted the phrase,
"which may be applicable to the claim." This they did not do, and
we cannot now assume the role of the legislature.
Because we find that the nonduplication of recovery provision
does not apply and that the Fund is responsible for coverage of the
dramshop claim, there remains a question concerning the amount of
damages. Based on the record, we cannot conclude that the actual
damages sustained by plaintiff were less than $100,000, between
$100,000 and $130,000, or more than $130,000. "[T]he proper
procedure is [for the fact finder] to assess the total damages,
without reference to any amounts already received, and then reduce
the verdict by such amounts. The difference, of course, would be
subject to the maximum limits provided in the [Dramshop] Act."
Kurth v. Amee, Inc., 3 Ill. App. 3d 506, 510 (1972); Patton v. D.
Rhodes, Ltd., 166 Ill. App. 3d 809, 811-12 (1988). Accordingly,
because the nonduplication of recovery provision does not apply and
there remains a material fact as to the amount of damages, summary
judgment was improper. We need not consider plaintiff's remaining
contentions because of the disposition of this issue. We therefore
reverse and remand this cause.
The judgment of the circuit court of Lake County granting
summary judgment to defendants is reversed and the cause is
remanded.
Reversed and remanded.
McLAREN, P.J., and THOMAS, J., concur.
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