FIFTH DIVISION SEPTEMBER 27, 2013

No. 1-12-1128

DIRECT AUTO INSURANCE COMPANY, ) Appeal from the ) Circuit Court of Plaintiff-Appellant, ) Cook County. ) v. ) No. 09 CH 33780 ) ELIA BELTRAN, MARIO BELTRAN, ARACELI ) Honorable BELTRAN, ACUITY INSURANCE COMPANY, ) LeRoy Martin, as subrogees of Alice Obermann, George ) Judge Presiding. Obermann, and Mark Obermann,, ALICE ) OBERMANN, and GEORGE OBERMANN, ) ) Defendants-Appellees. ) ) (CRESCEND TECHNOLOGIES LLC and ) LUTHERAN GENERAL HOSPITAL, ) ) Defendants.) )

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

OPINION

¶1 Plaintiff Direct Auto Insurance Co. (DAI) filed an action seeking a declaratory judgment,

arguing that: (1) an insurance policy it issued to defendant Elia Beltran was rescinded and null

and void, ab initio; (2) that DAI owed no duties under the policy to any of the defendants; and (3)

that defendants were not entitled to any recovery under the policy. DAI and defendant Acuity

Insurance Company (Acuity), as subrogee of Alice Obermann, George Obermann, and Mark

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Obermann, filed cross-motions for summary judgment. The trial court granted Acuity's motion

and denied DAI's motion, finding coverage. DAI filed a motion to reconsider, which the trial

court denied. DAI appeals, and we affirm.

¶2 BACKGROUND

¶3 I. The Parties and The Policy

¶4 DAI is an insurance company with its principal place of business in Chicago, Illinois.

DAI is duly licensed to underwrite policies for automobile insurance, and to sell such policies

and coverage to members of the general public. Elia Beltran (Elia), Mario Beltran (Mario), and

Araceli Beltran (Araceli) are Illinois residents. Elia speaks limited English and her Spanish

literacy is limited by the fact that she cannot write in Spanish.

¶5 DAI received an application for automobile insurance from Northwest Insurance

Network, Inc. (NIN), an insurance broker.1 The application listed Elia as the applicant. The

application lists Elia's gender as "M," despite Elia being a woman. The application states that

Elia has an international driver's license. However, Elia testified in her deposition that she does

not know how to drive an automobile. Elia owns a 2006 Ford Freestyle SE motor vehicle (the

Elia vehicle). Elia purchased the Elia vehicle with the intent that Mario, her brother, would use it

to drive her to and from work. Elia did not sign the application, and instead, the applicant

1 NIN is not a party to this lawsuit. In her affidavit, an NIN representative refers to NIN as an "independent broker." In the complaint, DAI refers to NIN as an "independent insurance agency."

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signature lines bear the notation "T/O."2 After receiving the application, DAI issued a policy of

insurance to Elia (the DAI policy). The DAI policy covered bodily injury, property damage,

medical payments, uninsured motorist, and physical damage. The DAI policy had an effective

date of November 23, 2008.

¶6 Acuity is a Wisconsin mutual insurance company, licensed and authorized to write

insurance in the State of Illinois. Alice Obermann (Alice), George Obermann (George), and

Mark Obermann (Mark) are Illinois residents. "Alice Obermann, George Obermann, and Mark

Obermann had in force a certain policy of insurance with Acuity Insurance Company [(the Acuity

policy)] which provided, among other things, automobile coverage for payment of property

damage and medical payments incurred as a result of an automobile collision."

¶7 The other defendants, Crescend Technologies, LLC (Crescend), an Illinois limited

liability corporation, and Lutheran General Hospital (Lutheran), an Illinois not-for-profit entity,

did not participate in this appeal.

¶8 II. The Underlying Action

¶9 The declaratory judgment action in the case at bar arises from an underlying subrogation

action filed by Acuity, as subrogee of Alice, George, and Mark. Acuity filed a two-count

complaint in the circuit court of Cook County, alleging negligence against Mario and negligent

entrustment against Elia. Acuity states in the underlying complaint that the lawsuit "is a

subrogation action wherein the real parties in interest are Acuity Insurance Company and Mark

2 Defendant Acuity Insurance Co. states in its brief that "T/O" "indicates that [the application] was made over the telephone." The application has three signature lines. Two contain the notation "T/O," and the third, which states "Received by," bears a signature.

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Orbermann" with regard to the negligence claim, and "is a subrogation action wherein the real

parties in interest are Acuity Insurance Company and Alice Obermann, George Obermann, and

Mark Orbermann" with regard to the negligent entrustment claim.

¶ 10 The underlying complaint alleges the following facts. On or about December 15, 2008,

Mario was operating the Elia vehicle, and Mark was operating his vehicle, which was covered by

the Acuity policy. Mario had a duty to operate the Elia vehicle in a safe and reasonable manner,

and Mario breached that duty. The two vehicles collided, "causing property damages to [Mark's]

vehicle and injuries to [Mark] requiring medical treatment." The complaint further alleges that

Elia placed the Elia vehicle "in the care and custody of [Mario] knowing that his ability to drive

the vehicle and his reliability were such that she was placing a careless, negligent, reckless,

incompetent and unsafe driver upon the streets when she knew, or in the exercise of ordinary

care, should have known, that by doing so, she might or could cause injury to other persons on

the public way." Pursuant to the Acuity policy, Acuity "paid policy benefits in the amount of

$10,000.00 for medical payments on behalf of [Mark] and property damage payments on behalf

of Alice Obermann, George Obermann, and Mark Obermann in the amount of $9,738.01,

including towing charges and storage and a $500.00 deductible."

¶ 11 III. The Declaratory Action

¶ 12 A. The Complaint

¶ 13 DAI filed a declaratory judgment action, alleging that Elia made material

misrepresentations in her application for insurance, and as a result, there was no coverage. DAI

alleges the following facts: NIN was an "independent insurance agency" acting as Elia's agent for

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the purpose of securing insurance. On or about November 24, 2008, Elia, through NIN,

submitted an electronic application for insurance to DAI. The DAI policy was issued on

November 28, 2008, based on the application submitted by NIN. Elia was the named insured

under the DAI policy, and owned the Elia vehicle.

¶ 14 The DAI policy was subject to the following terms and conditions:

"4. Fraud and Misrepresentation. Statements contained

in the application for insurance are deemed to be representations

relied upon by [DAI] in issuing this policy. In the event that any

representation contained in the application is false, misleading or

materially affects the acceptance or rating of risk by [DAI], by

either direct misrepresentation, omissions, concealment of facts or

incorrect statements, then coverage for the accident or loss in

question shall not be provided by [DAI] and/or this policy shall be

null and void and of no benefit whatsoever from its inception.

***

17. Declarations. By acceptance of this policy the named

insured agrees that the statements and representations contained in

the Application have been made by him/her or on his/her behalf

and said statements are representations and the statements in the

Application and in any subsequent application or questionnaire

accepted by [DAI] are offered as an inducement to [DAI] to issue

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or to continue this policy and that this policy is issued and

continued in reliance upon the truth of such statements and

representations and that this policy embodies all agreements

existing between himself/herself and [DAI] relating to this

insurance."

¶ 15 The application requests a list of the known drivers of the Elia vehicle. The application

lists Elia as a driver and states that "[a]pplicant warrants there are no other drivers other than

those listed below." No other drivers are so listed. The application contains a paragraph stating

that the applicant acknowledges that she has read and attests that all answers provided are true.

¶ 16 On or about December 15, 2008, Mario was operating the Elia vehicle, and at this time,

the Elia vehicle "came into contact with the person or property" of Alice and Mark. As a result

of the collision, Acuity, as subrogee of Alice and Mark, filed the underlying subrogation action

against Mario and Elia.

¶ 17 DAI alleges that Elia, "either individually or through her agent, intentionally misled DAI

as to the other drivers in her residence." DAI alleges that, had it known that the Elia vehicle was

to be operated by drivers other than Elia, "said information would have materially affected DAI's

decision to issue the DAI policy" to Elia, and that it would not have issued the DAI policy as

written. DAI further alleges that, due to Elia's material misrepresentation, the DAI policy is null

and void, ab initio. DAI rescinded the policy and returned Elia's full premium on or about

December 29, 2008, and owes no duty to defend or indemnify Mario and Elia.

¶ 18 DAI asks the trial court to declare: (1) that as a result of Elia's material

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misrepresentations, the DAI policy is "rescinded and null and void, ab initio, and of no benefit

whatsoever"; (2) that DAI owes no duty under the DAI policy to defend or indemnify Elia and

Mario with regard to any claim or lawsuit made by them or the other defendants as herein named

as a result of the vehicle collision; (3) that none of the defendants are entitled to recovery under

the DAI policy for or in connection with any claim or lawsuit resulting from the vehicle collision;

and (4) "any such other and further relief" that the trial court "deems just and appropriate in the

circumstances."

¶ 19 B. Answer and Default

¶ 20 Defendants Acuity, Alice, George, and Mark filed an answer and counterclaim to the

declaratory judgment action. The counterclaim also sought a declaratory judgment requesting:

(1) the trial court to "declare and adjudicate the rights, obligations, and liabilities of the parties to

this suit with respect to the DAI policy"; (2) a finding of coverage for indemnity of Mario and

Elia for the underlying action under the DAI policy; (3) a finding that DAI owes a duty to defend

Mario and Elia in the underlying action under the DAI policy; (4) a finding that DAI owes a duty

to indemnify Mario and Elia in the underlying action under the DAI policy; (5) that Acuity is

entitled to judgment in its favor; and (6) that Acuity is entitled to any other or further relief that

the trial court deems just and equitable.

¶ 21 The counterclaim alleges that the DAI policy contains the following term:

"Persons Insured. The following are Insured under Part I:

(a) With respect to the owned automobile;

(1) the named insured, or

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(2) any other person using such automobile to

whom the named insured has given permission,

provided the use is within the scope of such

permission."

Acuity alleges that Elia gave Mario permission to drive the Elia vehicle, and was therefore an

insured under the DAI policy.

¶ 22 Defendants Elia, Mario, Araceli, Crescend, and Lutheran did not file answers. DAI filed

motions for default against those defendants, and the trial court granted the motions, finding

them in default.

¶ 23 C. Motions for Summary Judgment

¶ 24 DAI and Acuity, as subrogee of Alice, George, and Mark, filed cross-motions for

summary judgment seeking judgment in their favor in their respective declaratory judgment

lawsuits.

¶ 25 1. DAI's Motion

¶ 26 DAI argues that Elia made an intentional material misrepresentation, and as a result, the

DAI policy is void, ab initio. DAI attached Elia's deposition, at which she was aided by a

Spanish interpreter. She testified that she and Mario lived in the same apartment on the day

before the effective date of the DAI policy. DAI argues that Elia's failure to disclose other

drivers in her household constituted a material misrepresentation that allowed DAI to rescind the

policy. DAI argues that even if Mario, an undisclosed driver who lived with Elia at the time the

DAI policy was issued, was a permissive user under the DAI policy, no coverage existed because

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Elia made material misrepresentations in her application for insurance, and thus, the policy was

void, ab initio. DAI argued that the policy was void, and that, unlike a policy defense in which

the policy still exists, if a policy is void due to a material misrepresentation, it is treated as having

never existed in the first place.

¶ 27 DAI asserted, through the affidavit of DAI claims manager Michael Torello, that it had

returned Elia's policy premium to NIN. DAI also argued that, because Elia, Mario, Araceli,

Crescend, and Lutheran were found to be in default, all well-pled allegations are considered

admitted against them.

¶ 28 Concerning NIN's role in submitting the application for the DAI policy, DAI attached the

affidavit of NIN representative Linda Robnett, in which she attested to the following.3 NIN is

not an agent of DAI, but is an independent broker. DAI exercises no control over NIN and does

not pay NIN. NIN sells products from "a variety of insurers, not just [DAI]." NIN receives a

commission, which is added to the premium paid by Elia, the insured. NIN did not contact DAI

until Elia "chose [DAI] as her insurer from a host of insurers available," and NIN received Elia's

application for insurance through an automobile dealership. "NIN records do not reflect Elia

Beltran or Elia Beltran's agent at the dealership disclosing Mario Beltran as a member of Elia

Beltran's household." (Emphasis added.)

¶ 29 The trial court denied DAI's motion for summary judgment.

3 Robnett's affidavit does not assert that her statements are based upon personal knowledge, nor does it attach sworn or certified copies of any documents referred to in the affidavit, as required by Illinois Supreme Court Rule 191(a) (eff. Jul. 1, 2002).

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¶ 30 2. Acuity's Motion

¶ 31 Acuity, as subrogee of Alice, George, and Mark, filed a motion for summary judgment

seeking a favorable disposition of its counterclaim for a declaratory judgment. The motion stated

the following. In DAI's answers to Acuity's interrogatories, DAI stated that NIN's commission is

included in the premium Elia paid for the DAI policy. Acuity attached a letter from DAI to NIN,

in which DAI informed NIN that the DAI policy was null and void, ab initio, because of material

misrepresentations made by Elia in her application. The letter began with "Dear Agent," and

stated that DAI would credit NIN's "agent statement."

¶ 32 Acuity also attached Elia's deposition, at which she testified to the following: Elia was

unable to recall the name of the dealership where she purchased her vehicle. Upon purchasing

the vehicle, someone at the dealership informed Elia that the vehicle came with insurance. Elia

does not know how to drive, and she purchased the vehicle with the intent that Mario would

operate it. Elia testified that someone at the dealership asked Elia about whether other people in

her household would drive the vehicle:

"Q. Did you inform this individual [at the dealership] that

Mario resided with you?

A. Yes.

Q. What did he say when you informed him that Mario

resided with you?

A. 'No, that's okay. That's okay.'

Q. He told you 'That's okay'?

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A. Since I tell [sic] him that I don't know how to drive and

that my brother is going to drive the [Elia vehicle], they said, 'It's

okay.' "

Elia testified that she did not speak with NIN to "apply [for] or obtain insurance for the [Elia

vehicle]," and that she did not contact NIN until the vehicle collision. Elia testified that the

signature on the NIN application was not hers. At the time of the accident, Mario obtained Elia's

permission to operate the Elia vehicle.

¶ 33 Acuity argues that the NIN application listed Elia's gender as "M," despite the fact that

Elia is a woman. The application further lists Elia as carrying an international driver's license,

but Elia does not have a driver's license.

¶ 34 Acuity argues that DAI failed to, and cannot, prove that Elia made a material

misrepresentation necessary to declare the policy void, ab initio, because Elia did not make a

false statement, and, even if she had, she had no intent to deceive or materially affect the

acceptance of the risk or hazard assumed by DAI. Acuity next argues that, even if Elia made a

material misrepresentation, DAI failed to properly rescind the DAI policy and has waived any

opportunity to do so. Acuity further argues that DAI is prevented from rescinding the DAI

policy, both by statute and by public policy.

¶ 35 Finally, Acuity argues that although independent insurance brokers like NIN can have

dual agencies to both insurers and insured, the facts of the case indicate that NIN was an actual or

apparent agent of DAI as a matter of law. As a result, NIN's actions and knowledge are imputed

onto DAI. Acuity argues that because of "NIN's knowledge that Elia could not drive and that

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Mario was a resident driver," DAI is imputed to have this knowledge and could not claim that

Elia made a misrepresentation.

¶ 36 The trial court granted Acuity's motion for summary judgment.

¶ 37 D. Motion to Reconsider

¶ 38 DAI filed a motion to reconsider the trial court's denial of its motion for summary

judgment and its granting of Acuity's motion for summary judgment. DAI asserts that the trial

court erred in applying the law because defendants did not counter facts attested to in the

affidavits DAI used to support its motion for summary judgment. DAI asserts that these

affidavits were sufficient to establish that Elia made a material misrepresentation, and thus it was

entitled to summary judgment. DAI also attached a printout analyzing the difference in the cost

of the premium had drivers in addition to Elia been disclosed in her application. The printout

states that, had Elia listed on the application that other drivers resided with her, her premium

would have been four times greater.

¶ 39 The trial court issued a written order denying DAI's motion to reconsider. The trial court

concluded that Elia made no intentional misrepresentation. The trial court further concluded that

"[t]here was one licensed, male driver in [Elia's] residence at the time of the application [Mario].

If the application had been completed correctly, with the name Mario instead of Elia, Mario

would not have been required to disclose that Elia lived in the residence with him because she is

not a licensed driver, according to the application form questions." The trial court found no

evidence of "any other indicators that might have affected the risk assumed negatively, such as a

negative driving record, etc." DAI appeals.

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¶ 40 ANALYSIS

¶ 41 DAI raises two issues on appeal: (1) whether the trial court erred in granting Acuity's

motion for summary judgment and denying DAI's motion for summary judgment; and (2)

whether the trial court erred in denying DAI's motion to reconsider. For the following reasons,

we affirm.

¶ 42 I. Standard of Review

¶ 43 Summary judgment is appropriate where the pleadings, depositions, admissions, and

affidavits show that there is no genuine issue of material fact and that the moving party is entitled

to judgment as a matter of law. Mashal v. City of Chicago,

. Summary

judgment is a "drastic means of disposing of litigation and, therefore, should be granted only

when the right of the moving party is clear and free from doubt." Mashal,

.

Where a case is decided through summary judgment, our standard of review is de novo. Pielet v.

Pielet,

. De novo consideration means we perform the same analysis that a

trial judge would perform. Khan v. BDO Seidman, LLP,

(2011). "A

defendant moving for summary judgment bears the initial burden of proof." Siegel Development,

LLC v. Peak Construction, LLC,

. "The defendant may meet its

burden of proof either by affirmatively showing that some element of the case must be resolved

in his favor or by establishing ' " 'that there is an absence of evidence to support the nonmoving

party's case.' " ' Siegel,

(quoting Nedzvekas v. Fung,

(2007), quoting Celotex Corp. v. Catrett,

(1986)). Where a

plaintiff has moved for summary judgment, the materials relied upon must establish the validity

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of the plaintiff's factual position on all the contested elements of the cause of action. General

Motors Corp. v. Douglass,

(1990).

¶ 44 Regarding the second issue, "[a] ruling on a motion to reconsider is within the sound

discretion of the trial court and will not be disturbed absent an abuse of discretion." Robidoux v.

Oliphant,

(2002). "An abuse of discretion will be found where no

reasonable person would take the view adopted by the circuit court." Fennell v. Illinois Central

R.R. Co.,

.

¶ 45 II. Summary Judgment Motions

¶ 46 DAI argues that the trial court erred when it granted defendants' motion for summary

judgment and denied DAI's motion for summary judgment. DAI argues that Elia made a material

misrepresentation in her application for the DAI policy, and as a result, DAI properly rescind the

DAI policy.

¶ 47 Section 154 of the Illinois Insurance Code (the Code) states the following:

"No misrepresentation or false warranty made by the insured or in

his behalf in the negotiation for a policy of insurance, or breach of

a condition of such policy shall defeat or avoid the policy or

prevent its attaching unless such misrepresentation, false warranty

or condition shall have been stated in the policy or endorsement or

rider attached thereto, or in the written application therefor. No

such misrepresentation or false warranty shall defeat or avoid the

policy unless it shall have been made with actual intent to deceive

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or materially affects either the acceptance of the risk or the hazard

assumed by the company." (Emphasis added.) 215 ILCS 5/154

(West 2008).

"The statute establishes a two-prong test to be used in situations where insurance policies may be

voided: the statement must be false and the false statement must have been made with an intent

to deceive or must materially affect the acceptance of the risk or hazard assumed by the insurer."

(Emphasis added.) Golden Rule Insurance Co. v. Schwartz,

(2003). "A

misrepresentation in an application for insurance is a statement of something as a fact which is

untrue and affects the risk taken by the insurer." (Emphasis added.) Northern Life Insurance Co.

v. Ippolito Real Estate Partnership,

(1992) (citing Weinstein v.

Metropolitan Life Insurance Co.,

(1945)). Whether an insured's statements are

material "is determined by whether reasonably careful and intelligent persons would have

regarded the facts stated as substantially increasing the chances of the events insured against, so

as to cause a rejection of the application." (Emphasis added.) Northern Life,

.

¶ 48 In establishing the materiality of a misrepresentation, an insurer may rely on the

underwriter's testimony or the testimony of its employees. Northern Life,

.

"Ordinarily, the materiality of a misrepresentation is a question of fact; however, where the

misrepresentation is of such a nature that all would agree that it is or is not material, the question

is appropriate for summary judgment." Northern Life,

.

¶ 49 First, DAI asserts, without argument, that the first prong of the rescission test has been

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satisfied because Elia made a false statement. DAI states that although Elia's application lists no

other drivers in her household, she testified in her deposition that she and Mario lived in the

same household. DAI argues that Elia also testified that Mario would drive the Elia vehicle and

therefore Elia herself "indicated that the information in the application was false" because she

failed to disclose a licensed driver at her residence in addition to herself.

¶ 50 However, Elia's testimony, which is unrebutted, unequivocally states that she herself was

not a licensed driver, and that she would not operate the Elia vehicle. Elia testified that she was

purchased the Elia vehicle with the intent that Mario would drive it. Elia did not testify that she

was a licensed driver or that there were licensed drivers in addition to Mario residing with her.

Therefore, the number of drivers covered under the policy is the same as the number of drivers

disclosed by Elia: one. In effect, Elia was given coverage seeking coverage for Mario for a non-

owned automobile.

¶ 51 The discrepancy lies in the name of the insured driver. The application states that a male

named Elia Beltran is the insured driver, when in fact (1) a male named Mario Beltran was the

intended insured driver and (2) Elia is a female.

¶ 52 DAI cites various cases to argue that Elia's misrepresentation was material. In Styzinski v.

United Security Life Insurance Co. of Illinois,

(2002), the insurer filed a

counterclaim asserting that the insured made a material misrepresentation on his application for

medical insurance, and asked the trial court to find that the policy be rescinded. Styzinski,

. The insured filled out an application for insurance, and answered "no" to the

following question: " 'Does any person named above contemplate or has within the last two years

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been engaged in the following activities: *** Motorcycle Driving or Racing ***.' " Styzinski,

. After the insurer issued the policy to the insured, the insured was injured

in a motorcycle accident. Styzinski,

.

¶ 53 The insurer filed a motion for summary judgment on its counterclaim, and attached the

depositions of the insured and the insurer's underwriting manager. In his deposition, the insured

testified that at the time he completed the application for insurance, he had a license to drive a

motorcycle and owned a "street bike" and an "off-road bike." Styzinski,

.

The insured, a mechanic, further testified that he repaired "approximately a dozen motorcycle or

dirt bikes per year and test-drove all of them." Styzinski,

. The insured

testified that he had operated dirt bikes and motorcycles during the two-year period prior to

submitting the application. Styzinski,

. However, the insured testified that

he operated the dirt bikes and motorcycles "off-road," and at the time he submitted the

application, he had not operated a motorcycle on the highway during the prior two years and he

had no intention of operating a motorcycle on the streets in the future. Styzinski,

. The insurer's underwriting manager testified in his deposition that in his capacity as

underwriting manager, he "evaluated the risks presented by insurance applications, determined

whether a policy should be issued, and if so, whether it should be issued with an endorsement

limiting or changing the terms of coverage." Styzinski,

. The

underwriting manager testified that had the insured answered "yes" to the motorcycle question on

the application, the insurer "would have asked follow-up questions regarding [the insured's] use

of motorcycles and issued an elimination endorsement excluding coverage for motorcycle

17 No. 1-12-1128

injuries." Styzinski,

. The trial court granted summary judgment, and this

court affirmed, finding that the insurer would not have provided coverage for motorcycle injuries

had the insured revealed that he test-drove motorcycles during the two years prior to submitting

the application.

¶ 54 In Northern Life, the insurer brought suit to rescind six life insurance policies issued to

the insured, arguing that the insured materially misrepresented the condition of his health when

he applied for life insurance. Northern Life,

. When the insured

completed the application for the sixth insurance policy, he disclosed the fact that he suffered

from hemophilia and disclosed all of his treatments and physicians for the preceding five years,

but he failed to disclose that he had recently suffered a weight loss of approximately 20 pounds.

Northern Life,

. The insured was subsequently diagnosed with AIDS.

Northern Life,

. The insured's physician explained to him that no cure for

AIDS existed and that he would eventually die from it. Northern Life,

.

After he was diagnosed with AIDS, the insured completed an amendment to the application for

the sixth policy, in which the insured verified that the information contained in the application as

amended was true and correct, that he continued to be in good health, and had not suffered any

sickness or consulted or attended by a physician. Northern Life,

.

¶ 55 The trial court found that the insured made material misrepresentations with regard to the

sixth policy, holding that the insured had an intent to deceive the insurer regarding the condition

of his health, and it granted summary judgment on the sixth policy. Northern Life,

. On appeal, this court found that "the record indicates that [the insurer] did indeed rely

18 No. 1-12-1128

upon representations made by [the insured] in the amendment." Northern Life,

. The insurer's chief underwriter testified "that disclosures made by [the insured] in the

amendment would be considered in evaluating whether [the insurer] could accept the risk."

Northern Life,

. The chief underwriter testified that, had the insured

disclosed on the amendment that he had been diagnosed with AIDS, the insurer "would have

declined coverage because AIDS was then, and is now, uninsurable." (Emphases added.)

Northern Life,

. Furthermore, a physician testified that he was familiar

with insurance industry practices, and opined that the insured's misrepresentation was material.

Northern Life,

. This court found that the insured misrepresented his

condition of health on the amendment because he did not disclose that he had been diagnosed

with AIDS and stated in his application that he continued to be in good health. Northern Life,

. This court determined that "reasonably careful and intelligent persons

would regard the diagnosis of AIDS, an uninsurable condition, substantially increasing the risk

assumed by [the insurer]," and thus "it was not improper for the circuit court to hold that [the

insured] materially misrepresented his condition of health." Northern Life,

. This court further concluded that the insured's misrepresentation was deliberate and

intentional because the insured learned new facts that rendered portions of his application no

longer true, but signed the amendment averring that the information contained in the application

was true. Northern Life,

(citing Stipcich v. Metropolitan Life Insurance

Co.,

(1928)). As a result, this court affirmed the trial court's grant of summary

judgment with regard to the sixth policy. Northern Life,

.

19 No. 1-12-1128

¶ 56 Finally, in Ratliff v. Safeway Insurance Co.,

(1993), the insured filed

a declaratory judgment action seeking a declaration that her son was insured under an automobile

insurance policy and that "the protection of the [insurance policy] extended to any claims arising

out of [the son's] operation of the [motor vehicle] described in the policy." Ratliff,

. In 1984, the insured applied for an automobile insurance policy with the insurer.

Ratliff,

. The insured applied for the insurance policy through "an

independent agency [the independent agency] selling policies for several insurance companies."

Ratliff,

. In 1986, after receiving a renewal notice, the insured called the

independent agency to renew the insurance policy. Ratliff,

. The insured

answered several questions and stated that "none of the information from the previous year had

changed; that she was the main driver of the automobile; that her son *** was an 'occasional'

driver of the automobile; and that there were no 'regular' drivers of the automobile under the age

of 25." Ratliff,

. The insured "never saw, read, or signed the application

for renewal, and did not know whose signature appears on it." Ratliff,

.

"The application for [the insured's] 1986 automobile insurance, which was completed by [the

independent agency], states in part that 'APPLICANT WARRANTS THAT THERE ARE NO

OTHER DRIVERS IN THE HOUSEHOLD, OTHER THAN THOSE LISTED BELOW.' "

Ratliff,

. The application did not list the insured's son as a driver of the

vehicle. Ratliff,

. The applicant signature line was blank and the

applicant's agent signature line contained an illegible signature. Ratliff,

.

¶ 57 On December 27, 1986, the insured's son was operating the vehicle with the insured's

20 No. 1-12-1128

permission and was "involved in an accident with another vehicle." Ratliff,

. At the time of the accident, the insured's son was 20 years old and "had always lived with

[the insured]." Ratliff,

. The insured's son drove the vehicle

approximately twice a week, and he always had the insured's permission to drive the vehicle.

Ratliff,

. The driver of the other vehicle filed suit against the insured and

her son, and the insurer refused to provide coverage or provide a defense to the insured and her

son. Ratliff,

. In response, the insured and her son filed a declaratory

action against the insurer. Ratliff,

. The case proceeded to a bench trial

and at the close of the insured's case, the insurer made a motion for a directed finding. Ratliff,

. The trial court granted the motion, finding that: (1) the insured's son was

not contemplated as an insured in the policy; (2) disclosure of the insured's son as a driver would

have presented an increased risk to the insurer; (3) the complaint in the underlying action arising

out of the accident could not state a cause of action against the insured solely on the basis of

ownership of the vehicle; and (4) the insurance policy was void. Ratliff,

.

¶ 58 On appeal, the only issue before this court was whether the trial court's finding that "the

contract of automobile insurance between [the insured] and [the insurer] did not provide

coverage for [the insured's son] was against the manifest weight of the evidence." Ratliff,

. This court stated that there were three circumstances under which a finding

would be against the manifest weight of the evidence: "(1) if [the independent agency] was acting

as [the insurer's] agent when it filled out the application for renewal of insurance; (2) if the non-

disclosure on the application form of [the insured's son] as another driver of the insured

21 No. 1-12-1128

automobile was not material and did not affect [the insurer's] risk; or (3) if the insurance contract

was ambiguous as to [the insured's son's] coverage." Ratliff,

.

¶ 59 This court found that "the nondisclosure of a 20-year-old driver residing in the same

household is a misrepresentation that materially affects the risk assumed by the insurer." Ratliff,

. This court stated that " '[i]t is a matter of common knowledge that the

rate frequency of accidents for drivers between the ages of sixteen and twenty-four is

substantially greater than for all drivers who are twenty-five years of age or more.' " Ratliff,

(quoting Western States Mutual Automobile Insurance Co. v. May,

(1958), overruled by Sobina v. Busby,

(1965)). This court

concluded that, had the insured disclosed the presence of her son as a driver in her household, his

age, and the amount he drove the vehicle, the insurer "certainly" would have reassessed the risk it

was assuming. Ratliff,

. This court stated that "the materiality of the non-

disclosure [was] confirmed by the stipulation in the record that *** almost a month after the

accident, [the insured] requested that [her son] be added to her policy, and that [the insurer]

charged an additional $320 to add him." Ratliff,

.

¶ 60 We find these cases distinguishable. In Styzinski, the insurer's underwriter testified that

the insurer would have specifically excluded coverage for motorcycle injuries had the insured

provided accurate responses. Styzinski,

. In Northern Life, the insured had

been diagnosed with AIDS and intended to misrepresent. Northern Life,

.

The insurer's underwriter stated that, had the insured disclosed his diagnosis, the insurer would

have denied coverage "because AIDS was then, and is now, uninsurable." (Emphasis added.)

22 No. 1-12-1128

Northern Life,

. In these two cases, the misrepresentations were material

because the insurers would have denied coverage had the insureds not made their

misrepresentations. In the case at bar, DAI stated that it would not have issued the policy as

written, and that Elia's premium would have been higher. In addition, in its motion to reconsider,

DAI submitted a document estimating what Elia's premium would have been had DAI known

that other potential drivers lived with Elia. Therefore, DAI cannot argue that it would have

found Elia uninsurable had it known that she lived with other drivers.

¶ 61 In Ratliff, both the insured and her son operated the vehicle, despite the insured's

application disclosing only one driver. Ratliff,

. The risk insured

against increased because the vehicle was regularly driven by twice as many people as were listed

on the policy. Ratliff,

. However, in the case at bar, Elia, did not operate

the Elia vehicle, despite being the named insurer. Elia testified in her unrebutted deposition that

only Mario operated the Elia vehicle, and, thus, the number of drivers listed on the application

matched the true number of drivers.4

¶ 62 DAI argues that Elia's misrepresentations were material because the "status, number and

character of the persons who are likely to be driving the [vehicle] with the owner's permission"

4 In its motion to reconsider, DAI argues that it was insuring three individuals: Elia, Mario, and Felipe Beltran (Felipe), Elia's 23-year-old son. DAI does not mention Felipe in its motion for summary judgment. DAI mentions Felipe for the first time in its motion for reconsideration. Whether Felipe qualifies as a "driver" under the terms of the application is unclear. Elia testified in her deposition that, on the day of the deposition, she lived with Felipe. Elia does not testify that she lived with Felipe on the day she applied for the DAI policy. Elia also testified that Felipe never drove the Elia vehicle. In addition, there is no evidence in the record to indicate whether Felipe had a driver's license.

23 No. 1-12-1128

are relevant to the risk. Government Employees Insurance Co. v. Dennis,

(1967). DAI's argument rests on the "number" of drivers likely to be driving the Elia

vehicle, and is premised on the assumption that Mario was a driver in addition to Elia. DAI

relies on Elia's deposition to prove that Mario lived with Elia on the effective date of the DAI

policy, and thus that Elia had additional drivers in her home. However, Elia's deposition

repeatedly states that Elia cannot and does not drive, and that she purchased the Elia vehicle with

the intention that Mario would drive it. Therefore, Elia's deposition indicates that there was only

one driver in her residence. As a result, there was no misrepresentation that "substantially

increas[ed] the chances of the events insured against." Northern Life,

.

The application stated that only one driver of the Elia vehicle resided at Elia's residence, and

although the application listed this person as Elia, the fact that the true driver was in fact Mario

did not increase the risk DAI insured against. The number of drivers likely to be driving the Elia

vehicle was one. As we stated above, the number of drivers disclosed on the application matches

the number of drivers who actually drove the Elia vehicle. Therefore, any misrepresentation by

Elia was not material because she did not misstate the number of regular drivers of the Elia

vehicle. Dennis,

. Nor did the misrepresentation "substantially increas[e]

the chances of the events insured against." Northern Life,

. Most

importantly, there is no showing that Elia intentionally misrepresented the facts. The policy

should have been classified as a non-owned vehicle policy with an increase in premium.

¶ 63 In its motion for summary judgment, DAI relies on the affidavits of its claims manager

and an NIN employee to support its arguments. DAI argues that the affidavits sufficiently

24 No. 1-12-1128

establish that Elia's misrepresentation was material. DAI relies on its claims manager's affidavit

to assert that "the [DAI] policy would not have been issued as written or would not have been

issued at all" had DAI known of the inaccuracies on the application. (Emphasis added.) The

affidavit states as follows:

"I, Michael Torello, being first duly and lawfully sworn on

my oath, depose and state that I have personal knowledge of the

following facts, and that, if sworn as a witness hereto, I could

competently and verily testify to the same:

1. that I am the claim's [sic] manager of [DAI] and have

been so employed in this capacity during all relevant times

herein.

2. that I have reviewed the Amended Complaint filed by

[DAI], captioned above, incorporated fully herein and

attached hereto with [DAI's] Motion for Summary

Judgment as Exhibit A, and verify the allegations contained

therein are true and correct to the best of my knowledge."

The affidavit does nothing more than assert that the factual allegations are "true and correct to the

best of [his] knowledge." Furthermore, the amended complaint alleges that "[Elia] had other

drivers [in her household]" at the time she made her application for insurance. This allegation is

contrary to the facts testified to in Elia's deposition, which DAI attaches as evidence to its motion

for summary judgment. Elia's unrebutted testimony, coupled with the facts surrounding the

25 No. 1-12-1128

discrepancy, i.e. that the female, unlicensed Elia was listed as a male with an international

driver's license, that the applicant signature lines bear the notation, "T/O,"5 and that the

application is written in English, a language that Elia does not speak, indicate that the sole error

in the application was the name of the insured, which resulted from poor communication. The

affidavit does not make more plausible the assertion that Elia was a driver of the Elia vehicle and

that there was more than one regular driver of the Elia vehicle.

¶ 64 DAI relies on the affidavit of NIN employee Linda Robnett to assert that NIN is not an

agent of DAI.6 Acuity asks that we not consider Robnett's affidavit, arguing that it does not

comply with Illinois Supreme Court Rule 191(a). Rule 191(a) requires that affidavits "shall be

made on the personal knowledge of the affiants; shall set forth with particularity the facts upon

which the claim, counterclaim, or defense is based; shall have attached thereto sworn or certified

copies of all documents upon which the affiant relies." Ill. S. Ct. R. 191(a) (eff. Jul. 1, 2002).

Robnett's affidavit does not aver that the statements made in her affidavit are based upon her

personal knowledge. Robnett asserts that Elia "chose [DAI] as her insurer from a host of

insurers available," but also asserts that "NIN received the application for [Elia's] insurance

through an automobile dealership" and that "NIN's records do not reflect any communications

5 Acuity asserts that "T/O" indicates that the application was made over the phone, and DAI does not dispute this assertion. 6 The parties argue in their briefs that whether or not NIN was an agent of DAI is relevant to this case. NIN was the agent of Elia for the obtaining of the insurance and may have been the agent of DAI for payment. A&B Freight Line, Inc. v. Ryan,

(1991) (holding that under certain circumstances, independent insurance agents may be agents of both insurer and insured). However, since we find that the misrepresentation was not material, it has no effect on our decision-making process.

26 No. 1-12-1128

with [Elia], other that [sic] the application submitted." Robnett does not assert how she knew

that Elia selected DAI as her insurer if no one at NIN ever communicated with her.

Furthermore, Robnett's affidavit makes reference to NIN documents, but no documents are

attached to the affidavit. As a result, Robnett's affidavit fails to comply with the requirements of

Rule 191(a).

¶ 65 DAI also argues that, because certain defendants, including Elia and Mario, are in default,

the allegations in the complaint are admitted against them and may be used as evidence. DAI

insists that it is not arguing that the allegations in its complaint are admitted against Acuity and

the Obermanns, but rather that the allegations are now evidence that Acuity and the Obermanns

must "meet and overcome."

¶ 66 A default admits the facts alleged against a defendant in the complaint to be true. People

v. $1,124,905 United States Currency & One 1988 Chevrolet Astro Van,

(1997). A default does not admit the conclusions present in the complaint. $1,124,905 U. S.

Currency,

. A default for failure to plead is effective against only the party in

default. Universal Casualty Co. v. Lopez,

(2007). After a trial court

enters an order of default, the trial court has the discretion to hold a "prove-up" hearing, at which

the plaintiff must present proof of the factual allegations in its complaint. American Service

Insurance Co. v. City of Chicago,

(2010). If the plaintiff fails to meet

its burden of proof at the prove-up hearing, the trial court may refuse to enter a default judgment.

American Service Insurance Co.,

.

¶ 67 DAI argues that, although the factual allegations of the complaint have not been admitted

27 No. 1-12-1128

against Acuity and the Obermanns, the factual allegations have been admitted against Elia and

Mario, and are thus evidence. DAI asserts that Acuity and the Obermanns must now "meet and

overcome" that evidence to defeat DAI's motion to dismiss. In essence, DAI is arguing that

because facts in the complaint are deemed judicially admitted against some parties, those facts

are to be treated as presumptively proven against the nondefaulting defendants, and the

nondefaulting defendants now have the burden to rebut the presumption.

¶ 68 DAI cites the Illinois Supreme Court case of Chamblin v. Chamblin,

(1936)

to bolster its point. However, DAI's reading of Chamblin is unpersuasive. First, Chamblin

explicitly states that "[t]he default of one defendant is not an admission by the others, and does

not relieve the complainant from the necessity of establishing his case against those who appear

and plead." Chamblin,

. Next, DAI relies upon a passage in Chamblin that states

that nondefaulting defendants "may meet and overcome, if they can, the evidence of the

complainant." Chamblin,

. However, DAI excludes the first clause of the

sentence, which states that complainants must "prove the issues to the answering defendants."

(Emphasis added.) Chamblin,

.

¶ 69 To treat the factual allegations of a complaint as "evidence" under DAI's reasoning would

be to place an improper burden upon nondefaulting defendants. Nondefaulting defendants would

be subjected to a higher burden as a result of the conduct of the defaulting defendants, which is

out of the control of nondefaulting defendants.

¶ 70 III. Motion to Reconsider

¶ 71 DAI also argues that the trial court improperly denied its motion to reconsider. The

28 No. 1-12-1128

intended purpose of a motion to reconsider is to bring to the court's attention newly discovered

evidence, changes in the law, or errors in the court's previous application of the existing law. In

re Marriage of Epting,

. "Newly discovered evidence" is

evidence that was not available prior to the hearing. Emrikson v. Morfin,

. "In the absence of a reasonable explanation regarding why the evidence was not

available at the time of the original hearing, the circuit court is under no obligation to consider

it." Emrikson,

.

¶ 72 DAI asserts in its motion to reconsider that the trial court erred in its application of the

law. However, DAI does not explain how the trial court misapplied the law when it granted

defendants' motion for summary judgment and denied DAI's motion. Instead, DAI reasserts its

arguments from its motion for summary judgment. DAI also attached print-out comparing the

cost of the premium DAI would have charged had DAI been insuring more than one individual

with the premium actually charged. We have stated above that the DAI policy did in fact cover

only one person: Mario. However, even if that were not true, the trial court could not consider it

because DAI gave no explanation as to why it did not previously attach such a document to its

motion for summary judgment. " 'Trial courts should not allow litigants to stand mute, lose a

motion and then frantically gather evidentiary material to show that the court erred in its ruling.' "

River Plaza Homeowner's Ass'n v. Healy,

(2009) (internal quotation

marks omitted) (quoting North River Insurance Co. v. Grinnell Mutual Reinsurance Co.,

(2006)). DAI also attached to its motion to reconsider a new affidavit from

a DAI employee, who argued that the misrepresentation was material because Mario's driving

29 No. 1-12-1128

record might have precluded DAI from covering him. However, no driving record is included in

the record on appeal. For the same reason, the trial court could not properly consider the

affidavit.

¶ 73 In a written order, the trial court found that "[t]here was only one licensed, male driver in

the residence at the time of the application." The trial court further found that if the application

had included Mario's name instead of Elia's, Mario "would not have been required to disclose

that Elia lived in the residence with him because she was not a licensed driver, according to the

application form questions." The trial court found no evidence of any indicators that insuring

Mario would have negatively affected DAI's risk, such as a bad driving record. We find no such

evidence in the record, and therefore, we cannot say that the trial court abused its discretion in

denying the motion for reconsideration.

¶ 74 CONCLUSION

¶ 75 For the foregoing reasons, the trial court properly granted summary judgment in favor of

Acuity and denied summary judgment in favor of DAI.

¶ 76 Affirmed.

30