                               Illinois Official Reports

                                      Appellate Court



                  State Farm Mutual Automobile Insurance Co. v. Easterling,
                                 2014 IL App (1st) 133225



Appellate Court          STATE FARM MUTUAL AUTOMOBILE INSURANCE
Caption                  COMPANY, Plaintiff-Appellant, v. SHEENA L. EASTERLING and
                         JANET K. WIGGINS, Defendants-Appellees.



District & No.           First District, Fourth Division
                         Docket No. 1-13-3225


Filed                    September 18, 2014


Held                       In an action arising from an automobile accident in which plaintiff’s
(Note: This syllabus insured suffered physical injuries and damage to his vehicle due to
constitutes no part of the defendant’s negligence, and plaintiff insurer and its insured signed a
opinion of the court but release for a check issued in the settlement of the insured’s personal
has been prepared by the injury action against defendant tortfeasors that did not specifically
Reporter of Decisions include an amount designated to cover plaintiff insurer’s subrogation
for the convenience of interest in the damage to its insured’s vehicle, that release did not bar
the reader.)               plaintiff insurer from bringing a subrogation action against the
                           tortfeasors for the property damage incurred by plaintiff’s insured,
                           especially when defendants were aware of plaintiff’s subrogation
                           claims before they filed their personal injury action.




Decision Under           Appeal from the Circuit Court of Cook County, No. 12-MI-017464;
Review                   the Hon. James Snyder, Judge, presiding.



Judgment                 Reversed.
     Counsel on               Frank Stevens, of Taylor Miller LLC, of Chicago, for appellant.
     Appeal
                              Keely Hillison, of Parrillo, Weiss & O’Halloran, of Chicago, for
                              appellees.



     Panel                    JUSTICE TAYLOR delivered the judgment of the court, with
                              opinion.
                              Presiding Justice Fitzgerald Smith and Justice Epstein concurred in
                              the judgment and opinion.


                                               OPINION

¶1         Following an automobile accident in which Frank R. Krupa was injured by a car driven by
       defendant Sheena Easterling and owned by her mother, defendant Janet K.
       Easterling-Wiggins, 1 plaintiff State Farm Mutual Automobile Insurance Company (State
       Farm) paid Krupa’s medical expenses and property damage and then sought reimbursement
       through subrogation rights from defendants’ insurer, Safeway Insurance Company (Safeway).
       Prior to this suit, Krupa had filed a personal injury suit against Sheena Easterling, the parties
       settled for $20,000, and Krupa signed a general release. State Farm endorsed the settlement
       check resulting from that suit. State Farm’s present subrogation suit against defendants was
       dismissed because of the prior settlement between Krupa and Easterling. This appeal followed.
       On appeal, defendants argue that, by signing the settlement check, State Farm gave up all its
       subrogation rights. State Farm argues that the settlement check only covered damages for
       bodily injury; therefore, it still has subrogation rights for property damage.

¶2                                           BACKGROUND
¶3         On February 13, 2009, a car owned and driven by Frank Krupa was struck by a car driven
       by Sheena Easterling and owned by her mother, Janet K. Easterling-Wiggins. The collision
       caused injury to Krupa and damage to Krupa’s car. Plaintiff insured Krupa’s car and paid for
       the property damage minus the deductible.
¶4         On February 26, 2009, plaintiff sent Safeway a letter in which it stated: “We have been
       informed that you are the insurance carrier for Janet Easterling-Wiggins. Our investigation of
       this accident establishes that your insured, Janet Easterling-Wiggins, was responsible for this
       accident. Please accept this letter as notice of our subrogation rights. Should we make
       payments under our policy, we will be looking to you for reimbursement.”
¶5         On April 24, 2009, Safeway sent a letter to plaintiff stating: “This will acknowledge receipt
       of your subrogation claims. Our investigation is complete, we can settle this claim for
       $7,147.92.” The letter further indicated that all offers were pending management approval. It


             1
            Although the caption refers to defendant as Janet K. Wiggins, the parties in their briefs
       consistently refer to her as Janet K. Easterling-Wiggins.

                                                   -2-
     further stated, “Please be advised that we require a property damage release before issuing
     payment ***.”
¶6       On August 11, 2009, Krupa filed a lawsuit (the Krupa suit) against Sheena Easterling for
     personal injuries, medical expenses, and lost wages. In paragraph 8, he alleged that he
     “sustained property damage and had to expend monies for alternative means of
     transportation.” Janet K. Easterling-Wiggins was not a defendant in this suit.
¶7       On October 19, 2009, plaintiff filed a subrogation action against defendants to recover its
     payments. This lawsuit was the predecessor to the instant lawsuit. We shall refer to this suit as
     “State Farm I.” Plaintiff alleged that it had paid for part or all of the personal injuries, medical
     expenses, and property damage incurred by Krupa as a result of the February 13, 2009 traffic
     accident pursuant to the Illinois motor vehicle liability statute, which states:
                 “(b) Owner’s policy.–Such owner’s policy of liability insurance:
                                                   ***
                 3. Shall insure every named insured and any other person using or responsible for
             the use of any motor vehicle owned by the named insured and used by such other
             person with the express or implied permission of the named insured on account of the
             maintenance, use or operation of any motor vehicle owned by the named insured,
             within the continental limits of the United States or the Dominion of Canada against
             loss from liability imposed by law arising from such maintenance, use or operation, to
             the extent and aggregate amount, exclusive of interest and cost, with respect to each
             motor vehicle, of $20,000 for bodily injury to or death of one person as a result of any
             one accident and, subject to such limit as to one person, the amount of $40,000 for
             bodily injury to or death of all persons as a result of any one accident and the amount of
             $15,000 for damage to property of others as a result of any one accident.” 625 ILCS
             5/7-3179(b)(3) (West 2008).
¶8       Plaintiff also alleged that it was assigned all claims and demands against defendants for
     such loss and expenses, under an insurance policy and by virtue of common law rights of
     subrogation due to plaintiff’s payment of insured’s expenses. Plaintiff also claimed it was
     subrogated to the amount of the insured’s deductible pursuant to section 143b of the Illinois
     Insurance Code, which states in pertinent part:
                 “§ 143b. Any insurance carrier whose payment to its insured is reduced by a
             deductible amount under a policy providing collision coverage is subrogated to its
             insured’s entire collision loss claim including the deductible amount unless the
             deductible amount has been otherwise recovered by the insured, but if the deductible
             amount has been otherwise recovered by the insured it shall not be included in the
             subrogated loss claim and shall be excluded from the amount of loss pleaded. If the
             deductible amount is included in the subrogated loss claim the insurance carrier shall
             pay the full pro rata deductible share to its insured out of the net recovery on the
             subrogated claim. Administrative expenses of the insurance carrier cannot be deducted
             from the gross recovery, and only incurred expenses of the carrier, such as attorney’s
             fees, collection fees and adjuster’s fees, may be deducted therefrom to determine the
             net recovery. When the insurance carrier is recovering directly from a third party a
             claim by means of installments, the insured shall receive his full pro rata deductible
             share as soon as such amount is collected and before any part of such recovery is
             applied to any other use.” 215 ILCS 5/143b (West 2008).

                                                  -3-
¶9         Plaintiff also alleged that it had paid for the damages, losses and expenses of its insured
       (Krupa), that the insured incurred a deductible and that plaintiff was now the subrogee for the
       amounts paid by plaintiff. State Farm then asked for an award in the amount of $8,073.30.
¶ 10       Subsequently, a settlement was reached in the Krupa suit. On March 24, 2011, that lawsuit
       was dismissed with prejudice pursuant to settlement, with the court expressly retaining
       jurisdiction to adjudicate liens and stating that the case had been settled for the policy limit of
       $20,000. On March 31, 2011, Krupa executed a general release for Sheena Easterling and
       Safeway. The release did not mention plaintiff or its subrogation claim and it did not release
       Janet K. Easterling-Wiggins. The general release stated, in pertinent part:
                    “Frank Krupa, (hereinafter referred to as ‘Plaintiff’), for and in consideration of
               Twenty-Thousand Dollars ($20,000.00), receipt of which is hereby acknowledged,
               does hereby for himself and for his heirs, executors, administrators, successors and
               assigns release, remise and forever discharge Sheena Easterling and Safeway Insurance
               Company and their affiliates, subsidiaries, successors, agents, servants, officers,
               directors, and employees of and from all manner of actions, proceedings, causes of
               action, claims for more money damages, suits, debts, property damages, loss of
               property, foreseen and unforeseen bodily and personal injuries and emotional distress
               and the consequences thereof, judgments, claims and demands, whatsoever of any
               nature, and of every kind and description, choate and inchoate, in law or in equity,
               which he now has or ever had, or hereafter can, shall or may have, for, upon or by
               reason of any matter, cause or thing resulting from, relating to or caused by any of the
               following: all matters alleged, claimed or referred to in a lawsuit regarding an auto
               accident which happened on or about the 13th day of February, 2009, on the I-90/94
               Dan Ryan Expressway, Chicago, Illinois brought in the Circuit Court of Cook County,
               Illinois entitled: Frank Krupa v. Sheena Easterling under docket no: 09 L 9475.
                    Plaintiff agrees to pay-off, satisfy, and discharge any and all claims for liens upon
               or against the settlement amount described above, including any lien asserted by a
               public agency, doctor, hospital, or other health care provider for services rendered or
               provided in connection with the injuries to Plaintiff. Plaintiff agrees to indemnify,
               defend and hold harmless Sheena Easterling and Safeway Insurance Company, their
               affiliates, subsidiaries, successors, agents, servant, officers, directors, and employees
               from and against any claim for a lien upon or against the settlement amount.”
¶ 11       On April 25, 2011, Safeway issued a $20,000 settlement check payable to Frank Krupa, his
       attorney, Anthony J. Peraica and Associates, Ltd., City of Chicago Medical Plan, MacNeal
       Health Network, State Farm, and Neurological Surgery and Spine Surgery, S.C. The following
       text appears appear on the face of the check: “Full and final settlement BI claim for accident on
       2/13/09 at I-94, Chicago, IL.” It also contained the text “Coverage BI.” Plaintiff asserts that
       “BI” stands for “bodily injury.”
¶ 12       On May 24, 2011, plaintiff sent Krupa’s attorney, Brady Kosic of Anthony J. Peraica and
       Associates, Ltd., a limited power of attorney to act on behalf of plaintiff by endorsing the
       settlement check. Plaintiff wrote two letters waiving its subrogation rights with respect to the
       benefits it paid Krupa under the medical payments coverage of his policy. The first letter
       stated:
                    “This letter provides you, Brady Kosic, Limited Power of Attorney to act on behalf
               of State Farm Mutual Automobile Insurance Company, hereinafter, State Farm, by

                                                    -4-
               endorsing a check from Safeway Insurance in the amount of $20,000.00. This limited
               power of attorney is only to be exercised to endorse the check described above on
               behalf of State Farm. This limited power of attorney expires once exercised for the
               described purpose.
                   In return for using the limited power of attorney, you agree to pay State Farm $zero.
               The amount of your check to us represents our agreed upon portion of the settlement
               received from Safeway Insurance.”
       In another letter of the same date also addressed to Brady Kosic, plaintiff stated: “This letter
       will confirm our conversation wherein we agreed State Farm would release any and all rights
       of recovery it has related to the Medical Payments coverage for your client Frank R. Krupa in
       this matter.”
¶ 13       On December 6, 2012, plaintiff voluntarily dismissed its original lawsuit. The order
       provided that “this matter is dismissed without prejudice and with leave to refile.” Plaintiff
       filed a new complaint on December 21, 2012, seeking to recover property and medical
       expenses incurred by Krupa in the February 13, 2009, traffic accident with defendants. State
       Farm alleged it had paid on behalf of the insured (Krupa) various monies for damages, losses
       and expenses totaling the sum of $10,967.42 and that plaintiff was now the actual bona fide
       subrogee for the amounts so paid by plaintiff and that the insured had incurred a deductible.
¶ 14       On February 13, 2013, defendants filed a motion to dismiss pursuant to section 2-619 of
       the Code of Civil Procedure, arguing that “this matter was previously filed, settled, dismissed
       with prejudice and paid” in State Farm I. 735 ILCS 5/2-619 (West 2010).
¶ 15       On May 1, 2013, the court ordered plaintiff to provide proof of Safeway’s knowledge
       regarding plaintiff’s subrogation interest. Plaintiff subsequently filed a copy of the above
       mentioned letter dated February 26, 2009, informing Safeway of State Farm’s subrogation
       rights, and a copy of Safeway’s letter of April 24, 2009, stating acknowledgment of State
       Farm’s subrogation rights.
¶ 16       On May 22, 2013, the court granted defendants’ motion to dismiss with prejudice. Plaintiff
       filed a motion for rehearing which was denied on September 9, 2013. This appeal followed.

¶ 17                                               ANALYSIS
¶ 18        Plaintiff argues that the trial court erred in granting defendants’ motion to dismiss, because
       its limited power of attorney regarding the settlement check in the Krupa suit only pertained to
       bodily injury payments and did not waive its subrogation rights as to property damage
       payments. Plaintiff also maintains that the general release signed by Krupa does not operate as
       a waiver of plaintiff’s subrogation rights. Defendants maintain that plaintiff, by giving power
       of attorney to its insured’s attorney to endorse the settlement check for $20,000, has waived its
       subrogation rights as to all claims related to the accident from February 13, 2009, not just the
       bodily injury claims. They further maintain that the parties to the Krupa suit intended to release
       all claims related to the accident and that plaintiff’s mistake about the claims settled, released
       and paid is not a valid reason to reinstate any of the claims.
¶ 19        A motion to dismiss pursuant to section 2-619 of the Code of Civil Procedure (735 ILCS
       5/2-619 (West 2000)) admits the legal sufficiency of the plaintiff’s claim, but asserts certain
       defects or defenses outside the pleading to defeat the claim. Provenzale v. Forister, 318 Ill.
       App. 3d 869, 878 (2001). The questions a court must consider where a section 2-619 dismissal


                                                    -5-
       is challenged on appeal are whether a genuine issue of material fact exists and whether the
       defendant is entitled to judgment as a matter of law. 735 ILCS 5/2-619 (West 2000); Saichek v.
       Lupa, 204 Ill. 2d 127, 134 (2003); Nowak v. St. Rita High School, 197 Ill. 2d 381, 389 (2001).
       Our review of a dismissal under section 2-619 is de novo. Id.; Arteman v. Clinton Community
       Unit School District No. 15, 198 Ill. 2d 475, 479 (2002).
¶ 20       The following principles are generally relevant to this appeal. “ ‘Subrogation simply
       means substitution of one person for another; that is, one person is allowed to stand in the shoes
       of another and assert that person’s rights against the defendant.’ ” Trogub v. Robinson, 366 Ill.
       App. 3d 838, 842 (2006) (quoting Dan B. Dobbs, Law of Remedies § 4.3(4), at 604 (2d ed.
       1993)). “ ‘Factually, the case arises because, for some justifiable reason, [a party] has paid a
       debt owed by the defendant.’ ” Id. (quoting Dan B. Dobbs, Law of Remedies § 4.3(4), at 604
       (2d ed. 1993)). “ ‘Having paid the defendant’s creditor, the [party] stands in the creditor’s
       shoes *** and “is entitled to exercise all the remedies which the creditor possessed” against the
       defendant.’ ” Id. (quoting Dan B. Dobbs, Law of Remedies § 4.3(4), at 604 (2d ed. 1993),
       quoting American Surety Co. of New York v. Bethlehem National Bank of Bethlehem, 314 U.S.
       314, 317 (1941)). “ ‘Thus, a subrogee merely succeeds to the legal rights or claims of a
       subrogor.’ ” Trogub, 366 Ill. App. 3d at 842 (quoting 73 Am. Jur. 2d Subrogation § 1, at 542
       (2001)).
¶ 21       Subrogation rights originated in common law to prevent unjust or unearned enrichment of
       one party at the expense of another, but they may also be created by statute or contract. Trogub,
       366 Ill. App. 3d at 842 (citing Aames Capital Corp. v. Interstate Bank of Oak Forest, 315 Ill.
       App. 3d 700, 706-07 (2000)). In the case of an insurance contract, subrogation rights arise
       where (1) a third party has caused a loss and is primarily liable to the insured for the loss, (2)
       the insurer is secondarily liable to the insured due to an insurance policy, and (3) the insurer
       pays the insured under that policy, thereby extinguishing the debt owed by the third party. Id.;
       State Farm General Insurance Co. v. Stewart, 288 Ill. App. 3d 678, 686-87 (1997).
¶ 22       We first consider plaintiff’s contention that the limited authorization to Krupa’s attorney to
       endorse the settlement check on its behalf was not a waiver of its subrogation rights as to
       property damage and does not bar plaintiff’s subrogation suit. As discussed above, plaintiff
       filed its initial subrogation action against defendants (State Farm I) in municipal court. It later
       voluntarily dismissed that action and refiled its subrogation action on December 21, 2012. In
       that second suit, plaintiff asserted that Krupa was the owner and/or driver of the car damaged
       by Sheena Easterling in the collision and, as a result of Easterling’s negligence, Krupa suffered
       personal injuries, pain and suffering, and lost wages as well as incurring medical and car repair
       expenses for which he was covered under the policy. Plaintiff claimed that it had paid on
       Krupa’s behalf “various monies for [his] damages, losses and expenses and that Krupa had
       incurred a deductible, totaling the sum of $10,967.42.” It stated that, pursuant to the policy,
       Krupa had assigned it all of his claims and demands against any party for his damage, loss or
       expenses. State Farm argued that it was now the “bona fide subrogee to the amounts” it had
       paid on Krupa’s behalf and requested the court to award it a judgment of $10,967.42 plus costs
       against defendants.
¶ 23       Defendants claim that plaintiff has waived all such subrogation rights. Waiver arises from
       an affirmative act, is consensual, and consists of an intentional relinquishment of a known
       right. Home Insurance Co. v. Cincinnati Insurance Co., 213 Ill. 2d 307, 326 (2004); Crum &
       Forster Managers Corp. v. Resolution Trust Corp., 156 Ill. 2d 384, 396 (1993). A waiver may

                                                    -6-
       be either expressed or implied, arising from acts, words, conduct, or knowledge of the insurer.
       Id.; Western Casualty & Surety Co. v. Brochu, 105 Ill. 2d 486, 499 (1985). An implied waiver
       arises when conduct of the person against whom waiver is asserted is inconsistent with any
       intention other than to waive it. Id.; Liberty Mutual Insurance Co. v. Westfield Insurance Co.,
       301 Ill. App. 3d 49, 53 (1998). Where there is no dispute as to the material facts and only one
       reasonable inference can be drawn, it is a question of law as to whether waiver has been
       established. Id.; Liberty Mutual, 301 Ill. App. 3d at 53. The failure of a paying insurer to
       reserve its rights against a nonpaying insurer may constitute a waiver of the right to equitable
       remedies. Home Insurance Co., 213 Ill. 2d at 326-27; 15 Steven Plitt et al., Couch on Insurance
       § 218:32 (3d ed. 2005). An insurer desiring to reserve its rights against a second insurer must
       make this position clear in its correspondence with the second insurer; it is also considered
       good practice to include such reservation language in any settlement agreement or order, then
       provide a copy of it to the nonsettling insurer. Id.
¶ 24        Defendants maintain that plaintiff’s act of authorizing Krupa’s attorney to endorse
       Safeway’s settlement check, without placing any limitations or restrictions and without
       expressing any reservations whatsoever, was wholly inconsistent with any intention other than
       to waive all of plaintiff’s subrogation rights. Relying on Home Insurance Co., 213 Ill. 2d at
       328, for the proposition that an insurer desiring to reserve its rights against a second insurer
       must make this position clear in its correspondence with the second insurer, defendants argue
       that plaintiff waived any subrogation claims by failing to notify the other insurer, Safeway, at
       the time of the underlying settlement, that plaintiff claimed anything more than the $20,000
       settlement check issued by Safeway and endorsed by Krupa’s attorney on behalf of plaintiff.
       Defendants further maintain that the settlement check was intended to resolve all of plaintiff’s
       subrogation claims, since the check was made payable to plaintiff and others.
¶ 25        Plaintiff contends that the reason it was included in Safeway’s check was because in
       addition to paying for damage to Krupa’s car, plaintiff paid for some of Krupa’s medical
       expenses pursuant to the medical payments coverage. Krupa’s medical expenses were part of
       his bodily injury claim, and plaintiff was subrogated to that claim to the extent of its payments.
       Plaintiff acknowledges that it did waive its subrogation rights to any bodily injury claims by
       Krupa, as evidenced by its limited power of attorney to Krupa’s attorney and also by the two
       letters that it sent to Safeway on May 24, 2011. However, it argues that such waiver was
       limited to bodily injury claims alone, as evidenced by its letter to Safeway stating “This letter
       will confirm our conversation wherein we agreed State Farm would release any and all rights
       of recovery it has related to the Medical Payments coverage for your client Frank R. Krupa in
       this matter.” (Emphasis added.) As further support, plaintiff points out that the settlement
       check stated on its face that it was a “Full and Final Settlement BI claim,” that is, a bodily
       injury claim only. Plaintiff also points out that the order entered in the Krupa suit on March 24,
       2011 stated that the case had been settled for the policy limit. Under the Illinois motor vehicle
       liability statute, the amount of $20,000 could only be for bodily injury:
                    “(b) Owner’s policy.–Such owner’s policy of liability insurance:
                                                     ***
                    3. Shall insure every named insured *** to the extent and aggregate amount,
                exclusive of interest and cost, with respect to each motor vehicle, of $20,000 for bodily
                injury to or death of one person as a result of any one accident and, subject to such limit
                as to one person, the amount of $40,000 for bodily injury to or death of all persons as a

                                                    -7-
                result of any one accident and the amount of $15,000 for damage to property of others
                as a result of any one accident.” 625 ILCS 5/7-317(b)(3) (West 2008).
¶ 26       Further, plaintiff maintains that the property damage claim was not part of Krupa’s suit or
       settlement because it did not belong to Krupa, as evidenced by section 143b of the Illinois
       Insurance Code, which states in pertinent part:
                “Any insurance carrier whose payment to its insured is reduced by a deductible amount
                under a policy providing collision coverage is subrogated to its insured’s entire
                collision loss claim including the deductible amount unless the deductible amount has
                been otherwise recovered by the insured, but if the deductible amount has been
                otherwise recovered by the insured it shall not be included in the subrogated loss claim
                and shall be excluded from the amount of loss pleaded. If the deductible amount is
                included in the subrogated loss claim the insurance carrier shall pay the full pro rata
                deductible share to its insured out of the net recovery on the subrogated claim.” 215
                ILCS 5/143b (West 2008).
       In this case, Krupa is the insured under the State Farm policy, and State Farm paid his medical
       expenses. Krupa accepted the benefits of that policy by allowing plaintiff to pay his medical
       expenses. The settlement check was for medical expenses as evidenced by the BI caption and
       the fact that the court order stated “policy limit $20,000.” Further, plaintiff maintains that it is
       common practice for an insurer to authorize a claimant’s attorney to endorse a check on its
       behalf, where the subrogation claim has been waived or agreed to. Therefore, for all these
       reasons, plaintiff argues that the limited power of attorney did not compromise the claim for
       property damage asserted.
¶ 27       We agree with plaintiff. In the case at bar, the record demonstrates that plaintiff did not
       commit any act that can reasonably be construed as a relinquishment by plaintiff of its property
       damage subrogation claim, or that Krupa effectively released plaintiff’s property damage
       subrogation claims against Safeway. Instead, plaintiff consistently maintained its position that
       there was never a waiver of its property damage subrogation claim. As noted earlier, a waiver
       is comprised of a litigant’s intentional relinquishment of a known right and it stems from a
       consensual and affirmative act by that litigant. Home Insurance Co. v. Cincinnati Insurance
       Co., 213 Ill. 2d 307, 326 (2004). No such affirmative act appears in this case with regard to
       plaintiff’s claim for property damage.
¶ 28       In fact, plaintiff correctly notes that the release given by Krupa did not designate any
       amount as covering plaintiff’s subrogation claim and, therefore, does not bar its subrogation
       claim. Plaintiff maintains that Safeway knew of plaintiff’s claim for property damage,
       evidenced by Safeway’s letter of April 16, 2009, in which Safeway tried to settle that claim for
       $7,147.92. Plaintiff relies on Home Insurance Co. v. Hertz Corp., 71 Ill. 2d 210, 215 (1978),
       where the plaintiff’s insurer brought a subrogation suit to recover property damage and
       medical payments made to its insured as a result of an automobile accident. As in this case, the
       defendants moved to dismiss on the basis of a general release given by the insured in
       connection with a settlement between the insured and the defendants. As in this case, the
       defendants had notice of plaintiff’s subrogation rights prior to settlement. The trial court
       granted the motion and the appellate court affirmed. However, our supreme court reversed,
       stating:
                    “We accordingly hold that an unlimited release executed by an insured-subrogor
                for consideration not specifically including an amount designated as covering the

                                                    -8-
               insurer’s subrogation interest does not bar a subsequent subrogation action by an
               insurer-subrogee against the tortfeasor, if the tortfeasor or his insurance carrier had
               knowledge of the insurer-subrogee’s interest prior to the release.” Home, 71 Ill. 2d at
               215.
       Likewise, in the present case, there was an unlimited release without a specific amount
       designating plaintiff’s subrogation interest, which Safeway had knowledge of prior to the
       release signed by Krupa. Thus, plaintiff’s subrogation action is not barred by the unlimited
       release.
¶ 29       Defendants nevertheless argue that the release and settlement check encompassed all
       property damage claims, because the settlement check was made payable to plaintiff. Further,
       defendants maintain that because plaintiff accepted the settlement by endorsing the settlement
       check, plaintiff’s subrogation claims are extinguished. Defendants rely on Rakowski for the
       proposition that “one who purports to release all claims should clearly specify any that he
       intends and desires to reserve.” (Emphasis and internal quotation marks omitted.) Rakowski v.
       Lucente, 104 Ill. 2d 317, 324 (1984). Defendants maintain that neither Krupa in executing the
       general release nor plaintiff in drafting its limited power of attorney to endorse the settlement
       check expressed any intention to exempt or preserve any property damage claim or
       subrogation claim. A release executed with knowledge of its meaning bars any cause of action
       covered by the release, with no exception for rights of subrogation. Chicago Transit Authority
       v. Yellow Cab Co., 110 Ill. App. 3d 379, 383 (1982). Defendants maintain that the release and
       settlement check encompassed all property damage claims, and the fact that the settlement
       check was made payable to State Farm was sufficient to extinguish plaintiff’s subrogation
       claims.
¶ 30       Plaintiff responds that the property damage subrogation claim was not part of Krupa’s suit
       because it did not belong to Krupa. In Krupa’s complaint, he did not assert a claim for the cost
       of repairing or replacing his car, but only for the cost of alternative transportation, which was a
       cost that is not covered under the collision coverage and was not paid by plaintiff. The claim
       for property damage was plaintiff’s to make, both by the terms of the policy and by statute
       under the Illinois Insurance Code, which states, in pertinent part:
               “Any insurance carrier whose payment to its insured is reduced by a deductible amount
               under a policy providing collision coverage is subrogated to its insured’s entire
               collision loss claim including the deductible amount unless the deductible amount has
               been otherwise recovered by the insured, but if the deductible amount has been
               otherwise recovered by the insured it shall not be included in the subrogated loss claim
               and shall be excluded from the amount of loss pleaded. If the deductible amount is
               included in the subrogated loss claim the insurance carrier shall pay the full pro rata
               deductible share to its insured out of the net recovery on the subrogated claim.
               Administrative expenses of the insurance carrier cannot be deducted from the gross
               recovery, and only incurred expenses of the carrier, such as attorney’s fees, collection
               fees and adjuster’s fees, may be deducted therefrom to determine the net recovery.
               When the insurance carrier is recovering directly from a third party a claim by means of
               installments, the insured shall receive his full pro rata deductible share as soon as such
               amount is collected and before any part of such recovery is applied to any other use.”
               215 ILCS 5/143b (West 2008).


                                                    -9-
¶ 31        Plaintiff correctly points out that Chicago holds only that plaintiff Chicago Transit
       Authority was bound by a release that it signed. It does not support a claim that a plaintiff
       insurer could be bound by a release it did not sign and that was only signed by the insured.
       Under Illinois law, any claim not within the contemplation of the parties when a release is
       signed is not included therein. Chicago, 110 Ill. App. 3d at 383; Mitchell v. Weiger, 56 Ill. App.
       3d 236 (1977).
¶ 32        As plaintiff notes, since there was no designation of a subrogee in the release of the claim,
       the subrogee’s interests are not extinguished. Home, 71 Ill. 2d 210. “To require him to execute
       a release of all claims, even though the tortfeasor has knowledge of the insurer’s interest and
       the probable existence of a standard insurance policy provision obligating the insured to
       protect the insurer’s subrogation rights, is simply not consistent with fair dealing and ought not
       to be encouraged.” Home, 71 Ill. 2d at 214. In the light of the above, we find plaintiff did not
       release its subrogation rights as to property damage but only to bodily damage.
¶ 33        Defendants argue that plaintiff’s mistake as to the full extent and nature of the claims and
       liens being released and paid cannot alter the legal effect of the full release and payment of all
       claims. A unilateral or self-induced mistake is not a valid ground for setting aside a clear and
       unambiguous release. To accomplish that, a mutual mistake, material to the transaction and
       affecting its substance, must clearly and convincingly be established. Rakowski, 104 Ill. 2d at
       324; Hoops v. Fitzgerald, 204 Ill. 325, 331 (1903); Ogren v. Graves, 39 Ill. App. 3d 620, 622
       (1976). Defendants argue that plaintiff released its subrogation lien when it authorized Krupa’s
       attorney to endorse the settlement check on its behalf.
¶ 34        Plaintiff responds that the release may bar a property damage claim asserted by Frank
       Krupa, but not plaintiff’s claim. We agree. As noted above, “an unlimited release executed by
       an insured-subrogor for consideration not specifically including an amount designated as
       covering the insurer’s subrogation interest does not bar a subsequent subrogation action by an
       insurer-subrogee.” Home, 71 Ill. 2d at 215. Thus, contrary to defendants’ claims, plaintiff did
       not make any mistake regarding the extent of the claims released in the Krupa settlement.
¶ 35        Defendants argue that the release encompassed all property damage claims and that
       plaintiff accepted the settlement by endorsing the settlement check and that all claims are
       extinguished. Plaintiff maintains that this sounds of accord and satisfaction and correctly
       argues that there was no accord and satisfaction of its claim for property damage because there
       was no evidence of a mutual intent to compromise the property damage claim. We agree with
       plaintiff.
¶ 36        An accord and satisfaction is generally defined as an agreement to discharge a debt or
       claim by some performance other than that which was originally due. Kreutz v. Jacobs, 39 Ill.
       App. 3d 515, 518 (1976); 1 C.J.S. Accord and Satisfaction § 2, at 458 (1985). It is
       distinguishable from a release in that a release is a relinquishment of a right, which may be
       given gratuitously or for inadequate consideration, while an accord and satisfaction is the
       discharge of a debt or claim by the acceptance of some payment which is agreed to constitute
       full satisfaction. 1 C.J.S. Accord and Satisfaction § 7, at 464 (1985). An accord and satisfaction
       is contractual in nature, and, as in all contracts, the intent of the parties is of central importance.
       Gord Industrial Plastics, Inc. v. Aubrey Manufacturing, Inc., 103 Ill. App. 3d 380, 383-84
       (1982). Thus, a transaction will constitute an accord and satisfaction of a claim only where
       both parties intend it to have that effect. Amoco Oil Co. v. Segall, 118 Ill. App. 3d 1002, 1012
       (1983); 1 Am. Jur. 2d Accord and Satisfaction § 14, at 311 (1962). When a payment of less

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       than what is claimed is tendered and accepted, it will not constitute an accord and satisfaction
       of the entire claim unless it can be demonstrated that the creditor intended to accept it as full
       satisfaction. Brubaker v. United States, 342 F.2d 655, 661-62 (7th Cir. 1965). In the absence of
       such intent, the partial payment will operate as a discharge of only the amount paid, and the
       creditor will be entitled to maintain an action to recover the balance of his claim. 1 C.J.S.
       Accord and Satisfaction § 37, at 511-12 (1985).
¶ 37       Thus, the question to be decided in the case at bar is whether the parties intended the
       defendants’ payment to operate as the full satisfaction of the plaintiff’s claim. To determine the
       intent of the parties, it is necessary to examine the language of the order of satisfaction and
       release in light of the circumstances existing at the time of the transaction. Hulke v.
       International Manufacturing Co., 14 Ill. App. 2d 5, 31 (1957); Holman v. Simborg, 152 Ill.
       App. 3d 453, 456 (1987). Here, as noted above, the release is silent on any amount covering the
       insurer. We, therefore, conclude that the language contained in the letter, when considered in
       light of the defendants and Krupa’s knowledge, establishes that the plaintiff did not intend to
       accept the payment, which was waived as to bodily injury, as full satisfaction of its property
       damage claim. Thus, we find that no accord and satisfaction was effected at that time as
       between defendants and plaintiff and therefore, plaintiff was not barred from pursuing a
       judgment on its claim for property damage.
¶ 38       We find factual distinctions between the case at bar and the cases defendants rely on for the
       proposition that plaintiff was entitled to recoup its claims from the settlement funds.
       Defendants maintain that plaintiff was entitled to recoup its subrogation claims from the
       settlement funds. Relying on Country Mutual Insurance Co. v. Birner, 293 Ill. App. 3d 452,
       455 (1997), defendants argue that since the subrogee insurer was named as a payee on the
       settlement check from the tortfeasors’ insurer, the subrogation rights of the injured plaintiff’s
       automobile insurer are subject to payment out of the settlement funds paid by the defendant
       tortfeasor’s insurer. In Country, an attorney filed a personal injury suit on behalf of his client
       and subsequently obtained a settlement from the tortfeasor’s insurance carrier. The settlement
       included payment in full amount to the client’s insurance company and the releases obtained
       and payments made included an amount designated to cover the insurer’s subrogation amount.
       Country Mutual was named as a payee on the check and the amount of the check was exactly
       equal to the amount of Country Mutual’s lien. By contrast, in the case at bar, the release was
       obtained without a designated amount covering the insurer’s subrogation interest. We find that
       since there was no designation of a subrogee in the release of the claim, the subrogee’s interests
       are not extinguished. See Home, 71 Ill. 2d at 215.
¶ 39       Further, defendants rely on Meyers v. Hablutzel, 236 Ill. App. 3d 705, 708 (1992), arguing
       that a subrogee can only enforce those rights which the subrogor could enforce. In Meyers,
       following settlement for an amount well in excess of the subrogation claim and following
       dismissal of the subrogor’s personal injury case, the court held that the subrogee insurer’s
       recovery was limited to recoupment of settlement funds paid to its insured subrogor, and the
       liability of the defendant tortfeasor was extinguished. In Meyers, the plaintiff had already filed
       suit before the insurer paid the medical expenses and informed the attorney of its subrogation
       rights and its determination not to hire the attorney. The court found that when plaintiff settled
       in full with defendant, including the amount subject to subrogation, that settlement barred any
       further claim by plaintiff or his insurer for damages against defendant arising out of the
       incident at issue. Id. In the case at bar, we find there was no amount designated as to


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       subrogation claims and defendants were aware of plaintiff’s subrogation claims well before
       Krupa filed his personal injury suit.
¶ 40        The trial court found that the letter from plaintiff allowing power of attorney to Krupa’s
       attorney was dispositive, stating that if plaintiff was displeased with the result, its recourse was
       to file a claim against Krupa if there were any problems. In response, plaintiff correctly points
       out that the Illinois Supreme Court rejected this option. “Denied enforcement of its
       subrogation rights against the real wrongdoer, the insurer must instead seek recovery from its
       own insured, an obviously unpalatable alternative.” Home, 71 Ill. 2d at 213. “Thus the
       tortfeasor and his own liability insurer, if any, escape payment for damage caused by the
       tortfeasor, while the tort victim is effectively denied payment from his own insurance carrier
       and from the tortfeasor.” (Emphasis omitted.) Id. at 213-14. Moreover, plaintiff points out that
       Krupa’s settlement with the defendants did not include the physical damage to his car and thus
       he did not receive any payment for that damage, precluding plaintiff from receiving
       reimbursement from Krupa.
¶ 41        It is a fundamental principle of appellate law that when an appeal is taken from a judgment
       of a lower court, “ ‘[t]he question before [the] reviewing court is the correctness of the result
       reached by the lower court and not the correctness of the reasoning upon which that result was
       reached.’ ” People v. Johnson, 208 Ill. 2d 118, 128 (2003) (quoting People v. Novak, 163 Ill.
       2d 93, 101 (1994)). Furthermore, the record supports plaintiff’s position that defendants had
       knowledge of plaintiff’s subrogation claims. For example, the letter to Safeway dated February
       26, 2009, stated in relevant part: “We have been informed that you are the insurance carrier for
       Janet Easterling-Wiggins. Our investigation of this accident establishes that your insured,
       Janet Easterling-Wiggins, was responsible for this accident. Please accept this letter as notice
       of our subrogation rights. Should we make payments under our policy, we will be looking to
       you for reimbursement.” Moreover, Safeway acknowledged these facts in its response dated
       April 24, 2009, where it stated, in relevant part: “This will acknowledge receipt of your
       subrogation claims. Our investigation is complete, we can settle this claim for $7,147.92.” The
       letter further indicated all offers are pending management approval. Finally it stated “Please be
       advised that we require a property damage release before issuing payment ***.”
¶ 42        Thus, it is undisputed that defendants had notice of plaintiff’s subrogation rights prior to
       the settlement of the insured’s suit and the signing of the release. Plaintiff maintains that
       clearly, the import of this letter is that plaintiff was entitled to its subrogation rights as to
       property damage. “We accordingly hold that an unlimited release executed by an insured-
       subrogor for consideration not specifically including an amount designated as covering the
       insurer’s subrogation interest does not bar a subsequent subrogation action by an
       insurer-subrogee against the tortfeasor, if the tortfeasor or his insurance carrier had knowledge
       of the insurer-subrogee’s interest prior to the release.” Home, 71 Ill. 2d at 215.

¶ 43                                         CONCLUSION
¶ 44       The judgment of the circuit court is accordingly reversed, and the cause is remanded to the
       circuit court of Cook County for further proceedings consistent herewith.

¶ 45      Reversed.



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