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Piser v. State Farm Mutual Automobile Insurance Company

405 Ill.App.3d 341, 938 N.E.2d 640, 345 Ill. Dec. 201 (1st dist. 5th div. 2010)

Words & Phrases

Assistance And Cooperation

Trial Judge

Lynn M. Egan


Insured’s failure to cooperate with insurer’s investigation provided a complete defense barring insured’s claims for breach of contract and vexatious and unreasonable delay.

Fact Summary

Piser filed a claim with his automobile insurer, State Farm, reporting theft of his Harley Davidson valued at over $60,000. To process Piser’s claim, State Farm requested Piser’s authorization to obtain his credit report. Piser failed to respond to this and additional requests made by State Farm’s claims representative necessary to process Piser’s claim. As a result, State Farm denied Piser’s claim.

Piser sued State Farm for breach of contract and vexatious and unreasonable delay pursuant to section 155 of the Insurance Code. (215 ILCS 5/155). State Farm moved to dismiss based on Piser’s breach of the policy’s cooperation clause pursuant to Section 2-619 of the Insurance Code. The circuit court granted State Farm’s motion, relying on the State Farm claims representative’s affidavit and demonstrative evidence that Piser never responded to production requests. Piser appealed.

In a footnote, the court stated that its decision was issued to clarify Illinois law regarding the scope of an insured’s duty to cooperate in the context of insurance coverage. First, the court affirmed long standing Illinois precedent holding that “failure to cooperate” is a valid defense and can bar a claim as an “other affirmative matter.” The court described the duty to cooperate as a necessary means of getting information into the hands of those who need it (insurers) from those who have it (insureds). In this particular policy, the duty to cooperate clause stated “The insured shall cooperate with us and, when asked assist us in… (2) securing and giving evidence.” Piser’s complete failure to respond to State Farm’s production requests demonstrated substantial prejudice to State Farm’s investigation. As such, State Farm was entitled to defend against Piser’s claim citing failure to cooperate. In fact, the court held that an insured’s compliance with an insurer’s request under a cooperation clause “is a condition precedent” to recovery under a policy. Further, if an insured completely fails to comply with a cooperation clause, the insurer is entitled to judgment as a matter of law.

Piser’s second argument to support his opposition to State Farm’s motion to dismiss was that the affidavit of State Farm’s claims representative and the materials that he prepared lacked evidentiary foundation. The court disagreed, holding that not only did Piser fail to rebut the representative’s affidavit, thus admitting the facts therein, the affidavit was not hearsay because it was based on the representative’s personal knowledge. Materials prepared by State Farm’s representative were not hearsay because they were not offered to prove the truth of the matter asserted. Rather, State Farm’s attached materials were offered to show that Piser had notice of its production requests. The court further held that even if the materials were deemed hearsay, they would still be admissible under the business records exception to the hearsay rule. In addition to the foregoing grounds, the court found Piser’s claims foreclosed due to his failure to submit a counter affidavit in response to State Farm’s section 2-619 motion.