The Illinois Appellate Court has answered a certified question that was brought to it from a circuit court judge. In this case, Michael McGrath owned a home designed and built by Patrick Plunkett Architectural Design Ltd. and insured by American Family Insurance Co. McGrath filed an insurance claim on Aug. 23, 2006 claiming that the water damage to his home was caused by the faulty design in construction by the defendant, Patrick Plunkett Architectural. American Family first denied McGrath’s claim; he then filed suit against American Family and won in federal court. McGrath won his case on summary judgment, and American Family agreed to a settlement for about $1.1 million. After paying McGrath, American Family requested that McGrath sign a written assignment to the extent of its payment, but McGrath chose not to respond.
American Family then filed suit against the defendants, Patrick Plunkett and his architectural firm, claiming negligence and causing the damage to McGrath’s home. Since American Family did not have an executed written assignment, the insurance company filed suit in its capacity as McGrath’s equitable subrogee. At the same time the American Family lawsuit was pending, it filed a lawsuit against McGrath for specific performance in order to obtain his executed written assignment. However, American Family’s suit against defendants was dismissed with prejudice on a combined motion to dismiss under §2-619.1 of the Code of Civil Procedure (735 ILCS 5/2-619.1), with a trial court finding that American Family was required to have a written assignment in order to pursue a subrogation claim. Shortly after that, American Family’s lawsuit against McGrath was dismissed with a trial court finding that American Family had released its claim for an assignment by settling the federal lawsuit. The trial judge also found that the claim was barred by res judicata based on the dismissal of the equitable subrogation suit against defendants.
American Family simultaneously appealed the dismissal of both lawsuits and the appellate court affirmed the dismissal of the subrogation claim, holding that American Family had failed to perfect its rights of subrogation under the terms of the insurance policy. However, the appellate court reversed the dismissal of American Family’s claim against McGrath and remanded the case. The opinion of the court in that case was unpublished under Supreme Court Rule 23. On remand, McGrath eventually did execute the assignment for American Family and that case was dismissed.
American Family then filed another lawsuit against the defendants in this case, this time as McGrath’s contractual subrogee. Defendants again filed a motion to dismiss, claiming that the lawsuit was barred by the statute of limitations. The trial court denied the motion to dismiss finding that the statute of limitations had been equitably tolled. The defendants then moved for a permissive interlocutory appeal pursuant to Illinois Supreme Court Rule 308 and the trial court certified one question for review: “Is ‘equitable tolling’ a proper basis to deny Plunkett’s and TPAD’s motion to dismiss based upon the statute of limitations found in 735 ILCS 5/13-214(b)?” The Illinois Appellate Court granted leave to appeal and answered the trial court’s certified question in the negative. As background, McGrath, who was the owner of a single-family home in Chicago designed by the defendants and covered by an insurance policy written by American Family suffered water damage on August 23, 2006 allegedly caused by faulty design in construction. American Family having denied the claim, McGrath file suit against American Family in the United District Court for the Northern District of Illinois. Summary Judgment was granted in McGrath’s favor on the issue of coverage and the case proceeded to a jury trial on the issue of damages. A jury returned a verdict in favor of McGrath in the amount of $1,130,680.16.
On May 11, 2010, the court granted McGrath’s motion to dismiss, finding that the case was in fact barred and that the settlement agreement’s failure to reference the subrogation rights of American Family meant that it had been waived. On October 12, 2010, the appellate court dismissed the suit against McGrath, holding that American Family “failed to protect its right of subrogation” and that there was no equitable subrogation available.
However, on March 14, 2011, the appellate court reversed and remanded the suit against Plunkett holding that American Family’s claims were not barred by res judicata or the settlement agreement. American Family again sought to get McGrath’s subrogation rights.
On Oct. 10, 2012, American Family filed this complaint against Plunkett as a subrogee of McGrath now having received an executed assignment from McGrath. Plunkett however moved to dismiss pointing to the statute of limitations, four years from August 2006 discovery of the problem, but the court determined that equitable tolling would apply to the statute of limitations and extended the filing time.
The appellate court panel noted that equitable tolling did not require the defendant to be at fault, relevant as Plunkett in no way impeded or deceived American Family. The court noted that equitable tolling is rarely applied in Illinois, although it is recognized.
The court acknowledged that after the settlement agreement with McGrath, American Family was diligent in pursuing subrogation rights. However, the court commented that its failure to perfect its rights in the settlement agreement was the cause of any alleged damage done to it and could be considered “self-inflicted”.
The court therefore answered the certified question in the negative and sent the case for further proceedings back to the trial court.
American Family Mutual Insurance Co. v. Patrick Plunkett and Patrick Plunkett Architectural Design, Ltd., 2014 IL App (1st) 131631.
Kreisman Law Offices has been handling commercial litigation, insurance litigation, injury cases, automobile and truck accident cases and medical negligence cases for individuals and families who have been harmed, injured or died as a result of the carelessness or negligence of another for more than 38 years in and around Chicago, Cook County and its surrounding areas, including Glenview, Northfield, Buffalo Grove, Vernon Hills, Wheeling, Palatine, Cicero, Arlington Heights, LaGrange Park, Westchester, Yorkfield, Chicago (Marquette Park, Archer Heights, Lawndale, Austin, Belmont Heights, Jefferson Park, Edgebrook), Lincolnshire, Berwyn, Hinsdale, Lockport, and Joliet, Ill.
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