                                        No. 3--06--0606

Filed April 10, 2007.
                          IN THE APPELLATE COURT OF ILLINOIS

                                        THIRD DISTRICT

                                             A.D., 2007

VIRGINIA SURETY COMPANY, INC.             )               Appeal from the Circuit Court
                                          )               of the 12th Judicial Circuit,
      Plaintiff-Appellant,                )               Will County, Illinois
                                          )
      v.                                  )
                                          )
BILL’S BUILDERS, INC., a corporation, and )
WILLIAM R. GEIGNER,                       )
                                          )
      Defendants-Appellees.             )
______________________________________ )                  No. 05-MR-0370
                                          )
WILLIAM R. GEIGNER,                       )
                                          )
      Third-Party Plaintiff,              )
                                          )
      v.                                  )
                                          )
RYAN-REUM INSURANCE AGENCY, INC., )                       Honorable
                                          )               Herman S. Haase,
      Third-Party Defendant.              )               Judge, Presiding.

______________________________________________________________________________

                 JUSTICE CARTER delivered the opinion of the court:
______________________________________________________________________________

       Plaintiff, Virginia Surety Company (Virginia Surety), brought action for declaratory judgment

seeking a determination that William R. Geigner (Geigner) was not covered under the workers’

compensation insurance policy of Bill’s Builder’s, Inc. (the corporation) and that Virginia Surety had

no duty to make payment on Geigner’s workers’ compensation claim. Virginia Surety and Geigner

filed cross motions for summary judgment. The trial court granted Geigner’s motion for summary
judgment and denied Virginia Surety’s motion. Virginia Surety appeals. We reverse the trial court’s

order granting Geigner’s motion for summary judgment as to count one (coverage) and count two

(reimbursement) of the complaint, affirm the trial court’s order granting Geigner’s motion for

summary judgment as to count three (rescission) of the complaint, affirm the trial court’s order

denying Virginia Surety’s cross-motion for summary judgment as to count three of the complaint, and

remand this case for further proceedings consistent with this order.



                                              FACTS

       The facts as determined from the pleadings and other documents filed by the parties in the trial

court are as follows. The corporation was involved in the construction business, an extra hazardous

activity as defined by the Illinois Workers’ Compensation Act (820 ILCS 305/3 (West 2004) (the

Act)). Geigner was president of the corporation.

       In March of 2002, the corporation applied for workers’ compensation insurance through

Ryan-Reum Insurance Agency (Ryan-Reum). The application was prepared by Thomas Ryan of

Ryan-Reum and bore the alleged signature of Geigner. The business was described in the application

as a one-man carpenter contractor business with no employees. Page two of the application

contained a section entitled, “INDIVIDUALS INCLUDED/EXCLUDED”, under which Geigner and

his wife, Kristina (the secretary of the corporation), were listed. In a column labeled, “INC/EXC,”

the notation “Excl” was written in reference to both Geigner and Kristina. The “E”, “c”, and “l” in

“Excl” were handwritten. The “x” was typewritten. The bottom of page two also bore the alleged

signature of Geigner. After it was rejected by other carriers, the application was submitted for

coverage through the National Council on Compensation Insurance (NCCI), the assigned risk pool


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for workers’ compensation insurance in Illinois.

       In response to the application, Virginia Surety issued the workers’ compensation insurance

policy in question. The corporation was listed on the policy as the insured. The policy covered the

period from April 3, 2002 to April 3, 2003. Attached to the policy was endorsement number

WC000308,      entitled,   “PARTNERS,        OFFICERS        AND       OTHERS       EXCLUSION

ENDORSEMENT” (emphasis in original). The endorsement provided as follows:

       “The policy does not cover bodily injury to any person described in the (s)chedule.

       The premium basis for the policy does not include the remuneration of such persons.

       You will reimburse us for any payment we must make because of bodily injury to such

       persons.”

Geigner and Kristina were listed in the schedule on the endorsement.

       In March of 2003, Geigner suffered a spinal cord injury when he fell from a scaffold while

working for the corporation. A claim was made against the workers’ compensation insurance,

however, coverage was denied. Geigner subsequently filed a claim with the Industrial Commission

for workers’ compensation benefits.

       While the claim was pending, Virginia Surety filed in the trial court a three-count complaint

for declaratory judgment.1 Count one alleged that Virginia Surety had no duty to provide coverage

for Geigner’s injury because Geigner had been excluded from coverage. Count two alleged that if

Virginia Surety was required to provide coverage for Geigner’s injury, it was entitled to

reimbursement from the corporation for all amounts paid with respect to the claim. Count three



       1
        The complaint of relevance to this appeal is Virginia Surety’s first amended complaint.
We will refer to it here simply as “the complaint”.

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alleged that the policy should be rescinded because it was procured through a material misstatement.



       Geigner filed a motion for summary judgment as to all three counts of the complaint alleging

that he had not effectively been excluded from coverage or from operation of the Act. Geigner also

filed a third-party complaint against Ryan-Reum alleging that Geigner’s signature had been forged

on the insurance application.

       Virginia Surety opposed Geigner’s motion for summary judgment and filed a cross-motion

for summary judgment as to count three of the complaint (rescission). In support of its argument,

Virginia Surety submitted, among other things, the deposition testimony of Ryan (the insurance

agent). Ryan testified that he had provided different types of insurance to Geigner and Kristina over

the past several years and had dealt “exclusively” with Kristina. In March of 2002, Kristina contacted

Ryan and informed him that she needed a workers’ compensation policy for their business. Kristina

provided Ryan with the information necessary to prepare the application over the phone. Ryan

discussed with Kristina the cost of the insurance with her and Geigner included in the policy and with

her and Geigner excluded from the policy. Ryan knew that Kristina was familiar with the effect of

exclusion because he and Kristina had previously discussed the matter in the context of a prior

workers’ compensation policy, in which Kristina and Geigner elected to be excluded from coverage.

Kristina informed Ryan that she and Geigner were to be excluded from the policy. Ryan prepared

the application as directed and mailed it to Kristina for her and Geigner to sign. The application was

subsequently returned to Ryan in the mail in a signed condition. Ryan did not see who signed the

application in Geigner’s name and denied that he or a member of his office signed the application.

Ryan testified that the “E”, “c” and “l” were added to the application after it had been sent off to


                                                  4
NCCI. Although he could not remember clearly, Ryan believed that shortly after the application had

been submitted, he was contacted by phone to clarify whether the “x” meant that Geigner and Kristina

were to be included or excluded.

       Further information regarding Geigner’s signature on the application was provided in a

request to admit facts. In response to the request, Geigner acknowledged that Kristina had

conversations with Ryan regarding purchasing workers’ compensation coverage for the corporation.

Geigner asserted, however, that he did not sign the application for insurance and that he did not know

who did.

       In support of its motion, Virginia Surety also tendered the affidavit of the underwriter of the

policy, Joyce Johnson. Johnson attested that Virginia Surety issued the policy with the understanding

that Geigner and his wife were to be excluded from coverage. The premium amount charged was

based upon that exclusion. Johnson attested further that she learned after the policy had been issued

that Geigner’s signature on the application was not genuine, and that had Virginia Surety known that

Geigner’s signature was a forgery, it would have rejected the application for insurance.

       After considering the pleadings and all of the other documents filed in the trial court, the trial

judge granted Geigner’s motion for summary judgment and denied Virginia Surety’s motion. This

appeal followed.



                                             ANALYSIS

       Virginia Surety first argues that the trial court erred in granting summary judgment in favor

of Geigner as to count one (coverage) and count two (reimbursement) of the complaint. Virginia

Surety asserts that Geigner effectively excluded himself from coverage under the insurance policy and


                                                   5
under the Act and thus was barred from making a workers’ compensation claim. Geigner argues that

because Virginia Surety did not notify Geigner that an exclusion from insurance coverage also served

to exclude Geigner from the protection of the Act, the exclusion was ineffective and void. See

General Cas. Co. of Illinois v. Carroll Tiling Service, Inc., 342 Ill. App. 3d 883, 892-897, 796 N.E.

2d 702, 709-713 (2003).

       Summary judgment is proper where, when viewed in the light most favorable to the

nonmoving party, the pleadings, depositions, admissions, and affidavits on file reveal that there is no

genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of

law. 735 ILCS 5/2-1005(c) (West 2004); In re Estate of Muppavarapu, 359 Ill. App. 3d 925, 928,

836 N.E. 2d 74, 76-77 (2005). In appeals from summary judgment rulings, our standard of review

is de novo. Muppavarapu, 359 Ill. App. 3d at 928, 836 N.E. 2d at 77.

       The protections of the Act automatically apply to certain businesses declared to be extra

hazardous. 820 ILCS 305/3 (West 2004). An employer involved in such a business, therefore, may

purchase an insurance policy to insure its entire workers' compensation liability. 820 ILCS

305/4(a)(3) (West 2004); General Cas. Co. of Illinois, 342 Ill. App. 3d at 894, 796 N.E. 2d at 710.

Such a policy, however, must cover all of the employees and the entire workers’ compensation

liability of the employer. 820 ILCS 305/4(a)(3) (West 2004); General Cas. Co. of Illinois, 342 Ill.

App. 3d at 894, 796 N.E. 2d at 711. Any attempt by an insurance carrier to limit its liability, except

as provided for in the Act, is void. See 820 ILCS 305/4(a)(3) (West 2004); General Cas. Co. of

Illinois, 342 Ill. App. 3d at 895, 796 N.E. 2d at 711.

       One such limitation provided for in the Act applies to extra hazardous businesses. A

corporate officer of such a business may elect to withdraw from the operation of the Act. 820 ILCS


                                                  6
305/3(17)(b) (West 2004); General Cas. Co. of Illinois, 342 Ill. App. 3d at 892-893, 796 N.E. 2d at

709. The procedure for doing so is stated in section 3(17)(b) of the Act, which provides as follows:

               “The corporate officers of any domestic or foreign corporation

               employed by the corporation may elect to withdraw themselves as

               individuals from the operation of this Act. Upon an election by the

               corporate officers to withdraw, written notice shall be provided to the

               insurance carrier of such election to withdraw, which election shall be

               effective upon receipt by the insurance carrier of such written notice.

               A corporate officer who thereafter elects to resume coverage under

               the Act as an individual shall provide written notice of such election

               to the insurance carrier which election shall be effective upon receipt

               by the insurance carrier of such written notice. For the purpose of this

               paragraph, a "corporate officer" is defined as a bona fide President,

               Vice President, Secretary or Treasurer of a corporation who

               voluntarily elects to withdraw.” 820 ILCS 305/3(17)(b) (West 2004).

A corporate officer who withdraws from the protection of the Act cannot file a claim for workers'

compensation benefits. General Cas. Co. of Illinois, 342 Ill. App. 3d at 893, 796 N.E. 2d at 709.

       In the present case, to determine if summary judgment was properly granted in favor of

Geigner, we must determine if Geigner effectively withdrew from the operation of the Act in the

application for insurance. Absent such a withdrawal, the protections of the Act automatically apply

to Geigner and coverage for Geigner must be provided for in the insurance policy. See 820 ILCS

305/3, 4(a)(3) (West 2004); General Cas. Co. of Illinois, 342 Ill. App. 3d at 894, 796 N.E. 2d at 711.

                                                  7
Unless Geigner effectively withdrew from operation of the Act, any attempt to exclude him from the

protection of the insurance policy or of the Act is void. See 820 ILCS 305/4(a)(3) (West 2004);

General Cas. Co. of Illinois, 342 Ill. App. 3d at 895, 796 N.E. 2d at 711.

       The exact issue before us in this case was addressed by the Second District Appellate Court

in General Cas. Co. of Illinois v. Carroll Tiling Service, Inc. In General Casualty, the corporation

sought to reduce its premium costs for workers’ compensation insurance. General Cas. Co. of

Illinois, 342 Ill. App. 3d at 887, 796 N.E. 2d at 705. Prior to being injured, the individual defendant

(the vice president of the corporation) executed a written form requesting to be excluded from

coverage under the corporation’s workers’ compensation policy. General Cas. Co. of Illinois, 342

Ill. App. 3d at 887, 796 N.E. 2d at 705. The form was entitled “Illinois Workers Compensation

Benefits Rejection Form,” bore the legend, “NOTICE TO BUSINESS OWNERS OR PARTNERS

(emphasis in original),” and provided as follows:

       “If you are either the sole owner of your business or a business partner, Illinois’

       workers compensation law automatically applies to you. This means that you are

       automatically covered under your business workers compensation policy and that

       your payroll will be included when we calculate the premium for your policy. If you

       do not want to be covered under this policy, you must specifically reject the coverage

       by signing this form and returning it to your agent.” General Cas. Co. of Illinois, 342

       Ill. App. 3d at 887-888, 796 N.E. 2d at 705.

After reviewing the rejection form and construing the language of the statute, the appellate court

found that the rejection form did not effectively remove the individual defendant from the operation



                                                    8
of the Act. General Cas. Co. of Illinois, 342 Ill. App. 3d at 892-897, 796 N.E. 2d at 709-713. In

reaching that conclusion, the appellate court noted that the form applied only to insurance coverage,

did not mention withdrawal from the operation of the Act or rejection of benefits under the Act, and

was directed to a sole proprietor or business partner (the individual defendant was neither). General

Cas. Co. of Illinois, 342 Ill. App. 3d at 892-897, 796 N.E. 2d at 709-713.

        We do not agree with the Second District Appellate Court’s statutory analysis in General

Casualty. There is no rule of statutory construction which authorizes a court to declare that the

legislature did not mean what the plain language of the statute imports. Kunkel v. Walton, 179 Ill.

2d 519, 534, 689 N.E. 2d 1047, 1054 (1997). A court is not at liberty to depart from the plain

language of a statute by reading into it exceptions, limitations or conditions that the legislature did

not express. Kunkel, 179 Ill. 2d at 534, 689 N.E. 2d at 1054. Although the election must be in strict

conformity with the statute, section 3(17)(b) of the Act merely requires that the corporate officer take

affirmative action by making an election to be excluded from operation of the Act and that the

insurance carrier be notified of the election in writing. 820 ILCS 305/3(17)(b) (West 2004). The

statute does not require that any special language be used in the election form to opt out from the

operation of the Act and from coverage of insurance. Nor does the statute require the insurance

carrier to take further action, upon receiving the written notice, to confirm that the corporate officer

understands that by opting out of coverage of the insurance policy, he is giving up the right to make

a claim under the Act. It would be improper for this Court to require either party to take affirmative

action not required by the statute before the election to withdraw from the operation of the Act can

be effective.

        In the case before us, Geigner allegedly indicated on an application for insurance that he

                                                   9
wanted to be excluded from coverage of the insurance policy. If we assume for the purpose of this

particular analysis that Geigner’s signature is valid or authorized, and considering the election in the

context of which it was made (an application for workers’ compensation insurance), the application

would be sufficient under the statute to exclude Geigner from coverage and to provide Virginia

Surety with written notice of that election. See 820 ILCS 305/3(17)(b) (West 2004). No additional

language is necessary. Nor is Virginia Surety required to take affirmative action to confirm that

Geigner understood the consequences of his election. Considered in context, the application is

sufficient to indicate an objective affirmative action to effectively withdraw Geigner from operation

of the Act. If the alleged signature is not valid or not authorized, then there is no evidence of a valid

objective affirmative election to withdraw from the operation of the Act.

        An issue of material fact remains, however, as to whether Geigner actually made the election.

Virginia Surety has presented evidence to suggest that Geigner, or someone with authority to act on

Geigner’s behalf, elected to be excluded from the coverage of the insurance policy and signed the

application. The application bears the alleged signature of Geigner. Ryan (the insurance agent)

testified that Kristina was familiar with the consequences of opting out of coverage because she and

Geigner had opted out of coverage in a previous workers’ compensation insurance policy. Ryan

testified further that he mailed the application to Kristina for her and Geigner to sign and that he

received the application back in a signed condition.

        Geigner, however, has presented evidence to the contrary. Geigner testified that he did not

sign the application and that he does not know who did. In addition, Geigner’s position is advanced

by some of the evidence presented by Virginia Surety. Virginia Surety’s underwriter acknowledged

that Geigner’s signature on the application for insurance was not genuine. Further, Ryan testified that

                                                   10
his only contact in this case was Kristina. Ryan never explained the exclusion to Geigner or received

Geigner’s instruction to prepare the application with Geigner excluded. The application, which was

sent out to be signed, merely contained an “x” in the column labeled, “INC/EXC,” without any

reference to whether Geigner was to be included or excluded. The “E”, “c”, and “l” were written on

the application (to complete the abbreviation “Excl”) after the application had been submitted.

        Thus, an issue of material fact remains as to whether Geigner, or someone authorized to act

on his behalf, actually made the election. Because an issue of material fact remains, it was error for

the trial court to grant summary judgment in favor of Geigner as to count one (coverage) and count

two (reimbursement) of the complaint. This case must be remanded for further proceedings to

resolve that issue of fact.

        Virginia Surety argues next that the trial court erred in granting Geigner’s motion for

summary judgment as to count three of the complaint (rescission) and in denying Virginia Surety’s

cross motion for the same. Virginia Surety asserts that the policy was issued based on the material

misstatement of Geigner or Geigner’s agent that Geigner was to be excluded from insurance

coverage. As noted above, in appeals from summary judgment rulings, our standard of review is de

novo. Muppavarapu, 359 Ill. App. 3d at 928, 836 N.E. 2d at 77.

        Before we reach the merits of Virginia Surety’s argument, we must first address Geigner’s

contention that Virginia Surety’s claim for rescission is time barred. Section 154 of the Insurance

Code provides that policies for certain types of insurance shall not be rescinded after the policy has

been in effect for one year or one policy term, whichever is less. 215 ILCS 5/154 (West 2004). As

Virginia Surety correctly notes, however, the one-year limitation only applies to automobile



                                                 11
insurance, fire and extended coverage insurance, and all other policies of personal lines (any other

policy of insurance issued to a natural person for personal or family protection). 215 ILCS 5/154,

143.13 (West 2004). Thus, the one-year limitation does not apply in the present case. See 215 ILCS

5/154, 143.13 (West 2004).

        Having rejected Geigner’s timeliness argument, we now turn to the merits of Virginia Surety’s

claim for rescission. Under the Insurance Code, no misrepresentation in a written insurance policy

application shall defeat or avoid the policy unless it shall have been made with actual intent to deceive

or unless it materially affects either the acceptance of the risk or the hazard assumed by the company.

215 ILCS 5/154 (West 2004); Ratcliffe v. International Surplus Lines Ins. Co., 194 Ill. App. 3d 18,

25, 550 N.E. 2d 1052, 1057 (1990). A misrepresentation in an application for insurance is a

statement of something as a fact which is untrue and affects the risk undertaken by the insurer.

Ratcliffe, 194 Ill. App. 3d at 25, 550 N.E. 2d at 1057. A material misrepresentation will void the

contract even though made through mistake or good faith. Ratcliffe, 194 Ill. App. 3d at 25, 550 N.E.

2d at 1057. In other words, it is unnecessary for the insurer to prove that a misrepresentation was

made with the intent to deceive if it was material to the risk assumed. Ratcliffe, 194 Ill. App. 3d at

25, 550 N.E. 2d at 1057.

        In the cross-motion for summary judgment, Virginia Surety argues that Geigner, or someone

who had the authority to act on his behalf, made a false statement in the application for insurance that

Geigner was to be excluded from the operation of the Act, and thus, from insurance coverage. The

facts presented before the trial court, however, do not support Virginia Surety’s contention. Geigner

either made (or authorized) the election or did not make (or authorize) the election. Thus, there is

no indication that Geigner made a false statement in the application for insurance, and Virginia

                                                   12
Surety’s claim for rescission must fail.

        The trial court, therefore, properly granted Geigner’s motion for summary judgment as to

count three of the complaint (rescission) and denied Virginia Surety’s cross motion for the same. It

is of no consequence that the trial court seems to have based its entire ruling on the ineffectiveness

of the withdrawal form. In reviewing a trial court’s grant of summary judgment, we may affirm the

trial court’s decision on any ground in the record, regardless of whether the trial court relied on that

ground or whether the trial court’s reasoning was correct. Illinois State Bar Ass'n Mut. Ins. Co. v.

Coregis Ins. Co., 355 Ill. App. 3d 156, 163, 821 N.E. 2d 706, 712 (2004).

        For the foregoing reasons, we reverse the judgment of the Circuit Court of Will County

granting Geigner’s motion for summary judgment as to count one (coverage) and count two

(reimbursement) of the complaint, affirm the judgment of the Circuit Court of Will County granting

Geigner’s motion for summary judgment as to count three (rescission) of the complaint, affirm the

judgment of the Circuit Court of Will County denying Virginia Surety’s cross-motion for summary

judgment as to count three of the complaint, and remand this case for further proceedings consistent

with this order.

        Reversed in part and affirmed in part; case remanded.

        LYTTON, P. J. and O’BRIEN, J. concur.




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