                                         FIRST DIVISION
                                         FILED: October 12, 2010




No.   1-10-0216

AMERICAN FAMILY MUTUAL INSURANCE        )     APPEAL FROM THE
COMPANY, as subrogee of MICHAEL P.      )     CIRCUIT COURT OF
McGRATH, JR.,                           )     COOK COUNTY
                                        )
          Plaintiff-Appellant,          )
                                        )
                     v.                 )
                                        )
NORTHERN HERITAGE BUILDERS, L.L.C., and )     Nos. 07 L 8252
PATRICK PLUNKETT ARCHITECTURAL DESIGN, )           08 L 5548
LTD.,                                   )
                                        )
          Defendants-Appellees          )
                                        )
and                                     )
                                        )
RAPCIAK CONSTRUCTION, INC.,             )     HONORABLE
                                        )     DENNIS J. BURKE,
          Defendant.                    )     JUDGE PRESIDING.


      JUSTICE HOFFMAN delivered the opinion of the court:

      American Family Insurance Company (American Family) appeals

from an order of the Circuit Court of Cook County which dismissed

its action against Northern Heritage Builders, L.L.C. (Northern

Heritage), and Patrick Plunkett Architectural Design, Ltd. (Patrick

Plunkett).   American Family brought the instant action against

Northern Heritage and Patrick Plunkett as the subrogee of its

insured, Michael P. McGrath, Jr. (McGrath), asserting claims based

upon a theory of equitable subrogation by reason of its having made
No. 1-10-0216

payments to McGrath under a policy of insurance for water damage to

his residence.   The trial court found that, since its policy of

insurance with McGrath provides for subrogation, American Family

had not, and could not, assert claims based upon the doctrine of

equitable subrogation.   For the reasons which follow, we agree and

affirm the judgment of the circuit court.

     The facts of this case are not in dispute.     McGrath is the

owner of a three-story single-family residence located at 1848 N.

Orchard, Chicago, Illinois.   The residence was designed by Patrick

Plunkett and built by Northern Heritage pursuant to contracts

entered into with McGrath.

     McGrath purchased a homeowner’s policy from American Family

insuring the residence (the Policy). On August 23, 2006, while the

Policy was in force, McGrath made a claim under the Policy for

damage to the residence by reason of rain and moisture penetrating

the exterior due to alleged faulty construction.   American Family

denied the claim, and McGrath filed suit against American Family in

the United States District Court for the Northern District of

Illinois (hereinafter referred to as the Federal Action).

     On August 6, 2007, while the Federal Action was pending and

undetermined, McGrath filed suit in the Circuit Court of Cook

County against Northern Heritage and Rapciak Construction, Inc.

(hereinafter referred to as case 07 L 8252), seeking damages for

the construction defects which resulted in the same damage to his

residence that gave rise to the claim that was the subject of the


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No. 1-10-0216

Federal Action against American Family.           Following the filing of

case 07 L 8252, an order was entered in the Federal Action granting

a summary judgment in favor of McGrath on the issue of coverage

under   the    Policy   for   the    water    damage   to   his    residence.

Thereafter, the Federal Action was tried, resulting in a jury

verdict in favor of McGrath.        Subsequent to the verdict, on May 16,

2008, McGrath and American Family settled the Federal Action, and

American Family paid McGrath under the Policy for the damage to his

residence.    The terms of the settlement are contained in a written

agreement which does not contain an assignment to American Family

of McGrath’s rights of recovery against any party by reason of the

damage to his residence.

     On May 20, 2008, American Family filed the instant action as

the subrogee of McGrath,      which was docketed in the Circuit Court

of Cook County as case 08 L 5548.            American Family asserted the

same allegations as McGrath made in case 07 L 8252.               On July 22,

2008, an order was entered consolidating McGrath’s action, case 07

L 8252, and the American Family action, case 08 L 5548, for

purposes of discovery.

    On March 13, 2009, American Family filed its third amended

complaint in the instant action, case 08 L 5548, asserting claims

based upon a theory of equitable subrogation against Northern

Heritage and Patrick Plunkett by reason of the payment it made to

McGrath for construction defects which resulted in damage to his

residence.    In addition to a recitation of the foregoing historical


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No. 1-10-0216

facts, American Family attached to, and incorporated into, its third

amended complaint a certified copy of the Policy which, as it

relates to subrogation, provides as follows:

     "Subrogation.     An insured may waive in writing before a

     loss all rights of recovery against any person.            If not

     waived,    we   may   require    an   assignment   of   rights   of

     recovery for a loss to the extent that payment is made by

     us.

     If an assignment is sought, an insured must sign and

     deliver all related papers and cooperate with us.

     Where prohibited by law, subrogation does not apply under

     Section II to Medical Expense Coverage or Damage to

     Property of Others."

     On May 13, 2009, Patrick Plunkett filed a combined motion

pursuant to section 2-619.1 of the Code of Civil Procedure (Code)

(735 ILCS 5/2-619.1 (West 2008)), seeking dismissal of American

Family’s third amended complaint.          Northern Heritage joined in the

motion on the following day.         Pursuant to section 2-615 (735 ILCS

5/2-615 (West 2008)), the motion argued that the third amended

complaint was insufficient at law for the following reasons: 1)

American Family failed to plead how and when it became the subrogee

of McGrath's rights of action in violation of section 2-403 of the

Code (735 ILCS 5/2-403 (West 2008)); 2) the third amended complaint

was not verified; and 3) it fails to state a claim based upon a

theory of equitable subrogation by reason of the existence of a


                                       4
No. 1-10-0216

contractual subrogation provision in the Policy. In support of its

prayer for involuntary dismissal pursuant to section 2-619 (735

ILCS 5/2-619 (West 2008)), the motion asserted that, as McGrath had

never assigned his rights to recover pursuant to the terms of the

Policy, American Family could not maintain a claim as his subrogee.

The argument was supported by McGrath's answer to a request to

admit facts wherein he denied ever having assigned his rights to

American Family.

     On July 13, 2009, American Family moved for leave to file an

amendment    to    its     third    amended      complaint,         supplying    the

verification      which    had   been    omitted       when   the   third   amended

complaint was originally filed.

     On August 3, 2009, the circuit court entered an order granting

the motion to dismiss the third amended complaint and entering

judgment    thereon   in    favor   of       Patrick    Plunkett     and    Northern

Heritage.      In addition, the circuit court made the requisite

finding under Supreme Court Rule 304(a) (210 Ill. 2d R. 304(a))

that there was no just reason to delay enforcement or appeal from

its order.

     On August 27, 2009, American Family filed a motion seeking

reconsideration of the dismissal order of August 3rd.                  That motion

was denied on December 22, 2009, and this timely appeal followed.

     A motion to dismiss pursuant to section 2-615 of the Code

tests the legal sufficiency of a complaint; whereas, a section 2-

619 motion admits the legal sufficiency of the complaint, but


                                         5
No. 1-10-0216

asserts affirmative matter outside of the complaint which defeats

the claim.    Solaia Technology, LLC. v. Specialty Publishing Co.,

221 Ill. 2d 558, 578-79, 852 N.E.2d 825 (2006).              Our review of a

dismissal under either section of the Code is de novo.                 King v.

First Capital Financial Services Corp., 215 Ill. 2d 1, 12, 828

N.E.2d 1155 (2005).

     In urging reversal, American Family argues that, once it paid

McGrath's claim under the Policy, it was equitably subrogated to

his rights of action against the wrongdoers responsible for the

loss to the extent of its payment to McGrath.          It asserts that this

equitable subrogation is independent of any rights under the

Policy. Patrick Plunkett and Northern Heritage argue that, because

the Policy provides for contractual subrogation, American Family is

not entitled to any recovery under an equitable subrogation theory.

     The right of subrogation originated as a creature of chancery

as a doctrine which allowed a person compelled to pay the debt or

claim of another to succeed to that person's rights with respect to

the debt or claim so paid.        This common law or equitable right of

subrogation   is   a   remedial    device   utilized    to   prevent    unjust

enrichment.     Dix Mutual Insurance Co. v. LaFramboise, 149 Ill. 2d

314, 319, 597 N.E.2d 622 (1992).          Now, a right of subrogation may

also arise by statute or contract.        In re Estate of Scott, 208 Ill.

App. 3d 846, 848, 567 N.E.2d 605 (1991).         In this case, we address

the question left unanswered by the supreme court in Schultz v.

Gotlund, 138 Ill. 2d 171, 173, 561 N.E.2d 652 (1990); namely, the


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No. 1-10-0216

effect of an express contractual subrogation provision on a common

law or equitable subrogation theory of recovery. Schultz, 138 Ill.

2d at 173.

       Where the right of subrogation is created by the terms of an

enforceable contract, the contract terms control, rather than

common law or equitable principles.               Benge v. State Farm Mutual

Automobile Insurance Co., 297 Ill. App. 3d 1062, 1071, 697 N.E.2d

914 (1998).     As stated in Couch on Insurance, "where the right of

an insurer to subrogation is expressly provided for in the policy,

its right must be measured by, and depend solely on, the terms of

such provisions."          16 Couch on Insurance Law § 222:23, at 222-51

(3rd   ed.   2000).        Stated    otherwise,    common   law   or   equitable

subrogation cannot stand in the face of an express contractual

right of subrogation.           See Benge, 297 Ill. App. 3d at 1071; Capitol

Indemnity Corp. v. Strike Zone, S.S.B.&B. Corp., 269 Ill. App. 3d

594, 596, 646 N.E.2d 310 (1995); In re Estate of Scott, 208 Ill.

App. 3d at 848.        We conclude, therefore, that whatever right of

subrogation American Family acquired in this case by reason of its

having paid McGrath for the damage to his residence, it acquired

pursuant to the subrogation provision of the Policy, not by virtue

of any equitable or common law principle.

       The   terms    of   an    unambiguous   insurance    policy     should   be

enforced as written. King v. Allstate Insurance Co., 269 Ill. App.

3d 190, 192, 645 N.E.2d 503 (1994).            According to the unambiguous

language of the Policy, American Family had the right to require


                                         7
No. 1-10-0216

McGrath to execute an assignment of his rights of recovery for the

damage to his residence to the extent that American Family paid the

loss.   In support of the section 2-619 grounds for involuntary

dismissal of American Family's third amended complaint, Patrick

Plunkett attached a copy of McGrath's answer to a request to admit

facts wherein he denied ever having assigned his rights of recovery

to American Family.   No counter-evidentiary material was filed by

American Family.   In the absence of such an assignment, American

Family failed to perfect its rights of subrogation under the terms

of the Policy, and for this reason, we affirm the dismissal of its

third amended complaint.

     Affirmed.


     HALL, P.J., and LAMPKIN, J., concur.




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