Scottsdale Ins. Co. v Lakeside Community Committee
2016 IL App (1st) 141845 (Ill. App., 2016)Words & Phrases
Agent Broker: Statute Of LimitationsTrial Judge
Sophia HallAppellate Judge
HymanHolding
Discovery rule applied to two-year statute of limitations against broker to date when insured learns of denial of coverage.Fact Summary
Tragically, two-year old Angel Hill was killed while in the care of her mother, Angel Green, and her boyfriend, Anthony Prater. At the time of Angel’s death, she and her siblings were wards of the court with the Illinois Department of Children and Family Services acting as the children’s guardian due to findings of abuse. DCFS retained Lakeside Community Committee to monitor the children’s visits to Green’s home. During one visit, Green informed a Lakeside caseworker of bruises on Angel’s stomach. The caseworker took no action. A few days later, Angel was dead; Green and Prater were charged with her murder.
On behalf of Angel’s estate, the Cook County Public Guardian sued Lakeside for wrongful death. Lakeside agreed to a consent judgment in the amount of $3.5 million and assigned its claims against its insurer, Scottsdale Insurance Company, and its insurance broker, W.A. George Insurance Agency, to the Public Guardian. Scottsdale denied coverage and filed a declaratory judgment action. The Public Guardian then filed a third party complaint against W.A. George, alleging fraud, negligence, breach of contract, and breach of fiduciary duty in procuring the insurance policy. The trial court dismissed the third party complaint on statute of limitations grounds, finding Lakeside knew or should have known that W.A. George obtained the wrong type of insurance policy when the policy was procured, more than two years before the third party complaint was filed. We disagree and reverse. Lakeside’s cause of action accrued when it learned its insurer was denying coverage, not when the policy was procured. Because Lakeside filed its claim less than two years after learning of the denial of coverage, the statute of limitations poses no bar to the action.
Lakeside, a long-established non-profit corporation, contracts with DCFS to provide foster care and child welfare services such as supervising foster families and children who have been made wards of the state, including children victimized by abuse. In early 2009, Lakeside asked W.A. George, an insurance broker, to obtain an appropriate insurance policy to cover its services. Lakeside representatives met with W.A. George agents in February 2009 to provide information about Lakeside’s insurance needs and discuss the nature of the business, including its role as a DCFS contractor. Lakeside gave W.A. George a brochure describing Lakeside’s programs and services and its affiliation with DCFS. Based on this information, W.A. George applied for and obtained insurance from Scottsdale Insurance Company on Lakeside’s behalf.
The policy was a commercial general liability policy, effective until March 2010, and then renewed for another year, to March 2011. In at least two places—the supplemental declarations page and the “sexual and/or physical liability coverage form”—the policy erroneously described Lakeside’s business as a “halfway house.”