Country Mutual Insurance Co. v. Under Construction and ... - Microsoft

Illinois Official Reports

Appellate Court

Digitally signed by Reporter of Decisions Reason: I attest to the accuracy and integrity of this document Date: 2022.10.05 14:08:40 -05'00'

Country Mutual Insurance Co. v. Under Construction & Remodeling, Inc., 2021 IL App (1st) 210600

Appellate Court Caption

COUNTRY MUTUAL INSURANCE COMPANY, PlaintiffAppellee, v. UNDER CONSTRUCTION AND REMODELING, INC., and KAZIMIERZ SZYMANSKI, Defendants (Kazimierz Szymanski, Defendant-Appellant).

District & No.

First District, Third Division No. 1-21-0600

Filed

December 22, 2021

Decision Under Review

Judgment

Counsel on Appeal

Appeal from the Circuit Court of Cook County, No. 20-CH-03915; the Hon. David B. Atkins, Judge, presiding.

Reversed and remanded.

David M. Barish and Abdu-Raheem Igbadume, of Katz, Friedman, Eagle, Eisenstein, Johnson, Bareck & Bertuca, P.C., of Chicago, for appellant.

David W. Porter and Rita Louise Lowery Gitchell, of Chilton Yambert Porter LLP, of Geneva, for appellee.

Panel

PRESIDING JUSTICE GORDON delivered the judgment of the court, with opinion. Justices McBride and Burke concurred in the judgment and opinion.

OPINION

? 1

Defendant Kazimierz Szymanski1 was allegedly injured while working for his employer,

defendant Under Construction and Remodeling, Inc. (Under Construction), and filed a

workers' compensation claim. Plaintiff Country Mutual Insurance Company, which had issued

a workers' compensation insurance policy to Under Construction, sought to investigate

Szymanski's claim and contacted Under Construction for information. When Under

Construction failed to respond after repeated attempts to reach it, plaintiff filed a complaint for

declaratory judgment in the circuit court of Cook County, alleging that plaintiff owed no duty

to defend or indemnify Under Construction because Under Construction had breached the

insurance policy's cooperation clause. Under Construction did not file an appearance in the

lawsuit, and the court entered a default judgment against it. Plaintiff then moved for summary

judgment, which was granted on the basis of Under Construction's breach of the cooperation

clause. Szymanski appeals, and for the reasons set forth below, we reverse and remand.

? 2

BACKGROUND

? 3

The facts underlying the instant appeal are taken from plaintiff's complaint and the exhibits

attached thereto, as well as plaintiff's motion for summary judgment. Since the issue on appeal

turns on the adequacy of plaintiff's attempts to contact Under Construction, we relate the facts

concerning that issue in some detail.

? 4

On June 28, 2016, Under Construction submitted an application for a workers'

compensation insurance policy with plaintiff, using an insurance agent named Kathy Spiewak.

According to the application, Under Construction had been in business since 2010 and was in

the business of "siding installation--all types--residential dwelling." The application also

provided that Under Construction had three full-time employees and listed a mailing address

on Clark Lane in Des Plaines. The owner of the business was listed as Jan Kaznecki, and the

application included Kaznecki's phone number and e-mail address.

? 5

The insurance policy at issue on appeal was a renewal policy with a policy period from

May 17, 2019, through May 17, 2020; as with the application, the renewal policy was issued

using Spiewak as the insurance agent. The policy listed an address on Lincoln Avenue in

Chicago as the business address, and Kaznecki was listed as the owner. Part four of the policy

discussed "Your Duties if Injury Occurs" and provided, in full:

"Tell us at once if injury occurs that may be covered by this policy. Your other

duties are listed here.

1We note that Szymanski refers to himself as a third-party defendant in his brief on appeal. However, Szymanski was not a third-party defendant but was named as a defendant in plaintiff's declaratory judgment complaint, as injured claimants have been held to be necessary parties to such a suit. See M.F.A. Mutual Insurance Co. v. Cheek, 66 Ill. 2d 492, 495 (1977); Williams v. Madison County Mutual Automobile Insurance Co., 40 Ill. 2d 404, 407 (1968).

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1. Provide for immediate medical and other services required by the workers

compensation law.

2. Give us or our agent the names and addresses of the injured persons and of

witnesses, and other information we may need.

3. Promptly give us all notices, demands and legal papers related to the injury, claim, proceeding or suit.

4. Cooperate with us and assist us, as we may request, in the investigation,

settlement or defense of any claim, proceeding or suit.

5. Do nothing after an injury occurs that would interfere with our right to recover

from others.

6. Do not voluntarily make payments, assume obligations or incur expenses, except

at your own cost."

The insurance policy did not contain a schedule or list of employees, other than listing

Kaznecki as an "Excluded Owner, LLC member or Executive Officer" in an endorsement.

? 6

On November 20, 2019, Szymanski filed an application for adjustment of claim with the

Illinois Workers' Compensation Commission. Szymanski alleged that he injured his left

shoulder on July 2, 2019, while working for Under Construction and had orally notified his employer of the accident. Szymanski listed the Lincoln Avenue address as Under Construction's address.

? 7

Plaintiff commissioned an "audit" of Under Construction, covering the period of June 1,

2018, through June 1, 2019, which it received on December 7, 2019; plaintiff refers to this audit as a "Premium Audit" in its brief on appeal and does not claim that this audit had any

connection with Szymanski's claim. The audit listed an address on Lincoln Avenue in Chicago

as the business address and continued to list Kaznecki as the owner. The contact details for the business provided "John Kaznecki"2 as the contact, at the same phone number as provided in

the initial application but with a different e-mail address. Payroll lists on the audit named a

total of four individuals: Jan Kaznecki and three individuals identified as installers; Szymanski is not included on these payroll lists.

? 8

As explained in further detail below, between January 3, 2020, and April 17, 2020, plaintiff

attempted to contact Under Construction in connection with Szymanski's claim on nine occasions, without success.

? 9

On April 20, 2020, plaintiff filed a complaint for declaratory judgment against defendants,

seeking a finding that it owed no duty to defend or indemnify Under Construction in connection

with Szymanski's workers' compensation claim. In count I of its complaint, plaintiff alleged that Szymanski was not an employee of Under Construction on the date of his alleged accident,

so plaintiff's insurance policy did not apply. In count II of its complaint, plaintiff alleged that

Under Construction had failed to cooperate with plaintiff's investigation, so plaintiff had no obligation to defend or indemnify Under Construction in connection with Szymanski's

workers' compensation claim.

? 10

Due to the COVID-19 pandemic, the sheriff's office declined to serve defendants, and a

special process server was appointed to serve them. Szymanski was personally served on

2It is not clear if this is a phonetic spelling of "Jan Kaznecki" or a different individual. However, no one by the name "John Kaznecki" appears on the audit's list of employees.

- 3 -

August 3, 2020, and filed an appearance and answer on August 14, 2020. With respect to Under

Construction, the address for Under Construction on the initial summons and on an alias summons was the Lincoln Avenue address. However, a second alias summons listed an address

on Oxford Avenue in Chicago and provided the name of Chester Grochowski as Under Construction's registered agent.3 The affidavit of the special process server indicated that

Under Construction was served at the Oxford Avenue address on September 24, 2020, and that

a copy of the summons and complaint were personally served on Grochowski.

? 11

On November 6, 2020, plaintiff filed a motion for default judgment against Under

Construction, which had failed to file an appearance or answer. On November 16, 2020, the

trial court granted plaintiff's motion, further finding that Under Construction would be bound by any decision by the court as to the issues raised in the complaint.4

? 12

On January 5, 2021, plaintiff filed a motion for summary judgment. The sole argument

raised in the motion for summary judgment was that Under Construction had breached the

cooperation clause of the insurance policy and, therefore, plaintiff was not obligated to defend or indemnify it for any claims arising from Szymanski's alleged injury.5 Plaintiff claimed that

it had exercised a reasonable degree of diligence in seeking Under Construction's cooperation,

making "numerous" phone calls and sending "repeated" letters in an effort to discuss Szymanski's claim with Under Construction, beginning in January 2020. In June 2020, plaintiff's "Special Investigation Unit" attempted to contact Under Construction through e-

mails and phone calls but was unsuccessful. In July 2020, a representative from the special

investigation unit physically visited the address that was listed with the Secretary of State's office in an attempt to make contact but was able only to leave a business card and letter.6

Plaintiff claimed that Under Construction's silence "constitute[d] a willful refusal to

cooperate." Plaintiff further claimed that it was "greatly prejudiced" in its ability to obtain all necessary facts to defend the claim. Accordingly, plaintiff claimed that the breach of the

insurance policy's cooperation clause meant that plaintiff had no duty to defend or indemnify

Under Construction with respect to Szymanski's claim as a matter of law.

? 13

Attached to the motion for summary judgment was the affidavit of Jennifer Shepherd, a

claims representative with plaintiff, who was assigned to handle Szymanski's claim. In her affidavit, Shepherd averred that, through its investigation, plaintiff had attempted to contact

3 According to the corporate file detail report available on the Secretary of State's website, Grochowski has been the registered agent of Under Construction since April 2015. See Maldonado v. Creative Woodworking Concepts, Inc., 296 Ill. App. 3d 935, 938 (1998) ("records from the Illinois Secretary of State's office *** are public records that this court may take judicial notice of").

4The corporate file detail report available on the Secretary of State's website indicates that Under Construction was involuntarily dissolved on November 10, 2020. Neither party claims that this dissolution has any effect on the issue of whether Under Construction had violated the cooperation clause as of the date of the filing of the complaint.

5Indeed, in its reply in support of the motion for summary judgment, plaintiff made clear that Szymanski's employment status at the time of his accident was "immaterial[ ] to Plaintiff's argument based on UNDER CONSTRUCTION's non-cooperation. Non-cooperation alone is a sufficient basis to deny coverage for Szymanski's claim, as it unambiguously breaches the terms of the Policy."

6The motion does not specify which address was visited; the corporate file detail report available on the Secretary of State's website lists both the Lincoln Avenue address and the Oxford Avenue address of the registered agent.

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Under Construction in the following ways: (1) "January 3, 2020: Telephone call unanswered,

voicemail full"; (2) "January 7, 2020: Telephone call unanswered, voicemail full";

(3) "January 8, 2020: Contact letter sent to insured. No response received"; (4) "January 20,

2020: Telephone call unanswered, voicemail full; Contact letter sent to insured. No response

received"; (5) "February 27, 2020: Telephone call unanswered, voicemail full"; (6) "March

12, 2020: Cooperation letter sent to insured. No response received"; (7) "April 2, 2020: Letter

sent to insured requesting payroll records. No response received"; (8) "April 10, 2020:

Telephone call unanswered, voicemail full"; (9) "April 17, 2020: Reservation of rights letter

sent to insured. No response received"; (10) "June 29, 2020: Special Investigation Unit email

to insured. No response received"; (11) "July 2, 2020: Special Investigation Unit telephone

call unanswered. Voicemail full"; (12) "July 6, 2020: Special Investigation Unit telephone call

unanswered. Voicemail full"; (13) "July 7, 2020: Special Investigation Unit in-person contact

attempt at insured's address. No answer at the door, business card and letter left at address. No

response"; and (14) "July 9, 2020: Special Investigation Unit in-person contact attempt at

insured's address. No response." Shepherd's affidavit did not indicate the phone number that

was called or the address that was visited, nor did it indicate the time of day that these calls or

visits occurred. However, attached to her affidavit were several of the letters referenced in the

affidavit, which we relate in detail. We note that only one of these letters--the reservation of

rights letter--indicates that it was sent by certified mail, and Shepherd's affidavit does not

include details as to whether any of the letters were returned as undelivered or whether anyone

signed for the certified letter.

? 14

A January 8, 2020, letter from Shepherd to Under Construction was sent to the Lincoln

Avenue address and provided, in full:

"Dear--Under Construction and Remodeling:

COUNTRY Mutual Insurance Company, Bloomington, IL provides your Workers'

Compensation. We have recently been informed of your employee's injury.

Please contact me at the number listed below at your earliest convenience to discuss this claim."

? 15

A January 20, 2020, letter from Shepherd to Under Construction was sent to the Lincoln

Avenue address and provided, in full:

"Dear--Under Construction and Remodeling:

Your above named employee has filed an Application for Adjustment of Claim with the Illinois Workers' Compensation Commission in regard to the alleged injuries received on the date mentioned above.

The matter is receiving our attention and you need not appear at any hearing unless you are contacted by one of our representatives or by someone from our attorney's office. If you have any questions regarding this matter, please do not hesitate to contact me direct[ly].

If in the future you receive any additional correspondence regarding this matter,

please forward to the undersigned immediately."

On the same day, Shepherd also sent another letter to Under Construction at the Lincoln Avenue address, which was identical to the January 8 letter, except that the words "SECOND REQUEST" appeared at the top of the letter.

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