                               Illinois Official Reports

                                      Appellate Court



                              Crackel v. State Farm Insurance Co.,
                                  2014 IL App (5th) 130366



Appellate Court          ANTHONY CRACKEL and DAVID CRACKEL, Plaintiffs-
Caption                  Appellants, v. STATE FARM INSURANCE COMPANY,
                         Defendant-Appellee.



District & No.           Fifth District
                         Docket No. 5-13-0366



Filed                    August 28, 2014



Held                       In an action seeking a declaratory judgment that defendant insurer was
(Note: This syllabus required to pay plaintiffs for the loss of their car through a fraudulent
constitutes no part of the sales transaction, the trial court erred in granting summary judgment
opinion of the court but for the insurer, notwithstanding the policy provision excluding
has been prepared by the coverage for a transaction in which the insureds voluntarily
Reporter of Decisions relinquished possession of the vehicle pursuant to an actual or
for the convenience of presumed sales agreement, since no sales agreement existed where the
the reader.)               buyer falsely identified himself and paid with a fraudulent cashier’s
                           check, and under those circumstances, plaintiffs’ relinquishment of
                           possession could not be deemed voluntary.



Decision Under           Appeal from the Circuit Court of Effingham County, No. 11-MR-92;
Review                   the Hon. Allan F. Lolie, Judge, presiding.



Judgment                 Reversed and remanded with directions.
     Counsel on               Aaron C. Jones, of Taylor Law Offices, P.C., of Effingham, for
     Appeal                   appellants.

                              Dominique N. Seymoure, of Reed, Armstrong, Mudge & Morrissey,
                              P.C., of Edwardsville, for appellee.



     Panel                    JUSTICE GOLDENHERSH delivered the judgment of the court, with
                              opinion.
                              Presiding Justice Welch and Justice Stewart concurred in the
                              judgment and opinion.


                                               OPINION


¶1          Plaintiffs, David Crackel and Anthony Crackel, filed a complaint for declaratory judgment
       against defendant, State Farm Insurance Company (State Farm), seeking compensation from
       an insurance policy issued by State Farm for the loss of their vehicle. State Farm filed its
       answer and countercomplaint for declaratory judgment, asserting that plaintiffs’ loss of vehicle
       fell under an exception in their insurance policy whereby State Farm was not liable. Plaintiffs
       subsequently filed an answer to State Farm’s countercomplaint, and after completing
       discovery, both parties filed cross-motions for summary judgment with the circuit court (735
       ILCS 5/2-1005 (West 2012)).
¶2          The circuit court granted State Farm’s motion for summary judgment and denied plaintiffs’
       motion for summary judgment. Plaintiffs now appeal the circuit court’s ruling, contending that
       the court erred in granting State Farm’s motion for summary judgment and denying plaintiffs’
       motion for summary judgment on the ground that the loss of plaintiffs’ vehicle fell within an
       exclusion to their insurance policy and, therefore, was excluded from coverage. The exclusion
       the circuit court relied upon provides that coverage shall be excluded when an insured
       voluntarily relinquishes possession of his or her vehicle under either an actual sales agreement
       or a presumed sales agreement.
¶3          Plaintiffs assert that their loss of vehicle is not excluded from coverage under their
       insurance policy because relinquishment of their vehicle was not voluntary, and ask that
       judgment be entered in favor of plaintiffs on both motions for summary judgment. We reverse
       the judgment of the circuit court and remand with directions to enter judgment for plaintiffs
       and against defendant on plaintiffs’ motion for summary judgment and deny State Farm’s
       motion for summary judgment.

¶4                                       BACKGROUND
¶5        On July 23, 2011, plaintiff Anthony Crackel sold his 2003 Mercury Marauder to a man
       who identified himself as Kevin Northington. Plaintiff had advertised his vehicle on Auto


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       Trader, and Northington contacted plaintiff concerning the purchase of the vehicle. After
       plaintiff and Northington met in person, Northington took plaintiff’s vehicle for a test drive
       and personally inspected it, after which Northington made an offer of $10,500 to purchase the
       vehicle. Plaintiff accepted the offer.
¶6         After plaintiff accepted Northington’s offer, he prepared duplicate originals of a bill of sale
       that documented the sale of his vehicle to Northington. Plaintiff and Northington each
       completed and signed portions of the bill of sale, with plaintiff signing the bill of sale as the
       seller. After signing the bill of sale, plaintiff gave all of the vehicle’s keys to Northington and
       allowed him to take possession of the vehicle. In return, plaintiff accepted a cashier’s check in
       the amount of $10,500. However, when plaintiff attempted to deposit the cashier’s check, his
       bank informed him that the check was a counterfeit and was fraudulent.
¶7         The Effingham police department then opened an investigation. After the investigation was
       completed, it was determined that the man who identified himself as Northington was actually
       George Caldwell, who was a member of an auto theft ring. The case was investigated as a theft
       by deception. Caldwell, who identified himself as Northington, was arrested and charged in
       federal district court in the southern district of Illinois with aggravated identity theft, wire
       fraud, and conspiracy to possess and pass counterfeit securities. Caldwell (Northington) pled
       guilty to these charges on March 15, 2013, and admitted that he had used a counterfeit
       cashier’s check to defraud plaintiffs when he used the fraudulent check for payment of
       plaintiffs’ vehicle.
¶8         At issue in this case is the automobile insurance policy that State Farm issued to plaintiffs
       that was in effect on July 23, 2011, the date that Northington drove away with plaintiffs’
       vehicle after providing a fraudulent cashier’s check. After discovering that the cashier’s check
       was fraudulent, plaintiffs sought indemnity from State Farm for the loss of their vehicle.
       However, State Farm denied the claim pursuant to an exclusion in the insurance policy that
       State Farm alleges applies to these facts. The circuit court granted State Farm’s motion for
       summary judgment, finding the exclusion barred State Farm from liability for plaintiffs’ loss
       of vehicle. Plaintiffs now appeal the circuit court’s ruling, contending that the exclusion in
       their insurance policy does not apply, and, therefore, State Farm is liable for their loss of
       vehicle.

¶9                                               ANALYSIS
¶ 10       On appeal, plaintiffs contend that State Farm is obligated to compensate them for their loss
       of vehicle pursuant to the terms of their insurance policy. The circuit court found the theft of
       plaintiffs’ vehicle was excluded from State Farm’s insurance coverage based upon policy
       provisions of that coverage provided to the court. We disagree.
¶ 11       The relevant provisions under the “Physical Damage Coverages” section of the insurance
       policy plaintiffs purchased from State Farm provide that State Farm will pay for the following:
               “a. for loss *** to a covered vehicle; and
               b. transportation expenses incurred by an insured as a result of the total theft of your car
               or a newly acquired car. These transportation expenses are payable:
                    (1) during the period that:
                        (a) starts on the date you report the theft to us; and
                        (b) ends on the earliest of:

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                             (i) the date the vehicle is returned to your possession in a drivable condition;
                             (ii) the date we offer to pay for the loss if the vehicle has not yet been
                        recovered; or
                             (iii) the date we offer to pay for the loss if the vehicle is recovered, but is a
                        total loss as determined by us[.]”
       The policy defines loss as “direct, sudden, and accidental damage to” or “total or partial theft
       of” a covered vehicle. The policy also contains an exclusion for which the insurer may deny
       liability for a loss. The exclusion states that State Farm is not liable for “loss to your car or a
       newly acquired car if an insured voluntarily relinquishes possession of that car to a person or
       organization under an actual or presumed sales agreement.”
¶ 12        The exclusion State Farm relies upon for denying coverage to plaintiffs’ vehicle states that
       there must exist an actual or presumed sales agreement under which the insured voluntarily
       relinquishes possession. We first address whether an actual sales agreement existed between
       plaintiffs and Northington.
¶ 13        An offer, acceptance, and consideration are the basic ingredients of a contract. Steinberg v.
       Chicago Medical School, 69 Ill. 2d 320, 329, 371 N.E.2d 634, 639 (1977). For an actual sales
       agreement to exist, there must be an offer and acceptance of consideration. Northington made
       an offer of $10,500 to purchase plaintiffs’ vehicle that was accepted. However, there was no
       actual consideration present in the agreement. Consideration is defined as a “bargained-for
       exchange of promises or performance.” Tower Investors, LLC v. 111 East Chestnut
       Consultants, Inc., 371 Ill. App. 3d 1019, 1027, 864 N.E.2d 927, 937 (2007). Because the
       cashier’s check plaintiffs received in exchange for the vehicle was fraudulent, Northington’s
       offered consideration of $10,500 for plaintiffs’ vehicle did not qualify and was not effective as
       consideration. Furthermore, Northington never received title to plaintiffs’ vehicle. If the
       transaction between plaintiffs and Northington had not been fraudulent and the transfer of
       ownership and title to Northington had been proper, a sales agreement would have existed.
       However, the cashier’s check given to plaintiffs was void from the beginning, as Northington
       never intended to purchase the vehicle or provide consideration. Accordingly, because
       consideration was not present in the alleged sales agreement and Northington never acquired
       title to plaintiffs’ vehicle, an actual sales agreement did not exist. Therefore, an actual sales
       agreement cannot be grounds for denying plaintiffs’ coverage.
¶ 14        We now address whether a presumed sales agreement existed. First, we must analyze the
       meaning of the phrase “presumed sales agreement,” as State Farm’s insurance policy does not
       clearly define the phrase. State Farm points out that when a term in an insurance policy is not
       defined, the court looks to the dictionary definition. Founders Insurance Co. v. Munoz, 237 Ill.
       2d 424, 436, 930 N.E.2d 999, 1005 (2010). State Farm asserts that when looking to the
       dictionary definition, a presumed sales agreement in the context of the policy’s exclusion is
       where one assumes that he has an agreement with another to sell the insured vehicle in
       exchange for money. Notably, where the provisions of an insurance policy are clear and
       unambiguous, there is no need for construction and the provisions of the policy will be applied
       as written. Menke v. Country Mutual Insurance Co., 78 Ill. 2d 420, 423, 401 N.E.2d 539, 541
       (1980). However, as plaintiffs point out, if it can be reasonably said that a provision of an
       insurance contract is ambiguous, it will be construed in favor of the insured and against the
       insurer who drafted the ambiguous provision. United States Fire Insurance Co. v.
       Schnackenberg, 88 Ill. 2d 1, 4-5, 429 N.E.2d 1203, 1205 (1981). If policy language is

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       susceptible to more than one reasonable interpretation, the language is considered ambiguous
       and the court must construe the policy in favor of the insured and strictly against the insurer.
       Central Illinois Light Co. v. Home Insurance Co., 213 Ill. 2d 141, 153, 821 N.E.2d 206, 213
       (2004).
¶ 15        In this case, the term “presumed” is susceptible to more than one reasonable interpretation
       because the term is not explicitly defined by the policy. Furthermore, where an exclusionary
       clause is relied upon to deny coverage, its application must be free from doubt because “any
       doubts as to coverage will be resolved in favor of the insured.” International Minerals &
       Chemical Corp. v. Liberty Mutual Insurance Co., 168 Ill. App. 3d 361, 367, 522 N.E.2d 758,
       762 (1988). A policy provision that “purports to exclude or limit coverage will be read
       narrowly and will be applied only where its terms are clear, definite, and specific.” Gillen v.
       State Farm Mutual Automobile Insurance Co., 215 Ill. 2d 381, 393, 830 N.E.2d 575, 582
       (2005). State Farm bears the burden as the insurer in this case to show that plaintiffs’ claim
       falls within an exclusion.
¶ 16        The phrase “presumed sales agreement” is ambiguous because there is more than one
       reasonable interpretation of the phrase. There is no distinct language in State Farm’s policy
       that reveals who must presume that a sales agreement exists. One interpretation is that the
       insured party and buyer must both reasonably conclude that a sales agreement exists. Another
       interpretation is that only the insured party must conclude that a sales agreement exists. There
       simply is no definitive language in the policy that points to a specific understanding of the
       phrase, causing the phrase to be ambiguous.
¶ 17        As the buyer of the vehicle in this case, Northington could not have presumed that a sales
       agreement existed between him and plaintiffs because he knowingly used a fraudulent
       cashier’s check to defraud plaintiffs for payment of the vehicle. Because there is more than one
       interpretation of the phrase “presumed sales agreement,” any doubts as to coverage must be
       resolved in favor of the insured, and since Northington could not have presumed that a sales
       agreement existed, we conclude a sales agreement did not exist.
¶ 18        We now address whether State Farm is liable for the loss of plaintiffs’ vehicle. State
       Farm’s insurance policy covers total or partial theft of a covered automobile. While the term
       “theft” is not specifically defined in State Farm’s insurance policy, it is clearly defined in the
       Illinois Criminal Code as occurring when someone knowingly obtains or exerts “unauthorized
       control over property of the owner” or obtains by “deception control over property of the
       owner.” 720 ILCS 5/16-1(a)(1)-(2) (West 2010). A person commits theft by deception when he
       knowingly obtains by deception control over the property of the owner and plans to
       permanently deprive the owner of the use or benefit of the property. People v. Kotlarz, 193 Ill.
       2d 272, 299, 738 N.E.2d 906, 919 (2000).
¶ 19        In this case, Northington committed a theft by deception, as he obtained control of
       plaintiffs’ vehicle by misrepresenting who he was and paying for the vehicle with a fraudulent
       check. State Farm’s insurance policy explicitly states that it will pay for a loss to a covered
       vehicle, and defines a loss as a partial or total theft of the vehicle. Accordingly, because
       plaintiffs’ loss of vehicle was a result of a theft, it should be covered by the insurance policy.
¶ 20        State Farm’s insurance policy excludes coverage when an insured “voluntarily”
       relinquishes possession of his or her vehicle. State Farm contends that plaintiffs voluntarily
       gave possession of their vehicle to Northington, and because this transfer was voluntary, the
       loss of vehicle is excluded from coverage. We disagree. Plaintiffs’ relinquishment of their

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       vehicle involved a theft based on fraud and, as such, cannot be deemed voluntary. No actual
       sales agreement existed between plaintiffs and the purported buyer of their vehicle. Plaintiffs
       believed possession of their vehicle was given to a man named Northington in exchange for a
       cashier’s check of $10,500. Plaintiffs did not voluntarily give possession of their vehicle to a
       deceptively identified person in exchange for a fraudulent cashier’s check.

¶ 21                                        CONCLUSION
¶ 22       For the reasons stated herein, we reverse the judgment of the circuit court of Effingham
       County and remand with directions to enter judgment for plaintiffs and against defendant on
       plaintiffs’ motion for summary judgment and deny State Farm’s motion for summary
       judgment.

¶ 23      Reversed and remanded with directions.




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