                             ILLINOIS OFFICIAL REPORTS
                                          Appellate Court




                             Czapski v. Maher, 2011 IL App (1st) 100948




Appellate Court              MARK CZAPSKI and ANNA CZAPSKI-FLOREK, Co-Special
Caption                      Administrators of the Estate of Roger Czapski, Deceased, Plaintiffs-
                             Appellees, v. CHRISTOPHER MAHER, MOTOR WERKS OF
                             BARRINGTON, INC., NATIONAL CASUALTY COMPANY, a
                             Corporation, FEDERAL INSURANCE COMPANY, a Corporation,
                             Defendants-Appellants (National Casualty Company, Defendant and
                             Counterplaintiff-Appellant; Christopher Maher, Individually; Mark
                             Czapski and Anna Czapski-Florek, Co-Special Administrators of the
                             Estate of Roger Czapski, Deceased, Counterdefendants-Appellees).



District & No.               First District, Sixth Division

                             Docket No. 1–10–0948


Filed                        June 10, 2011


Held                         A person who test-drives a motor vehicle is a "customer" within the
(Note: This syllabus         meaning of defendant automobile dealership's umbrella and excess
constitutes no part of the   insurance policies that excluded "customers" from coverage, since the
opinion of the court but     plain and ordinary meaning of the term "customer" includes a test-driver
has been prepared by the     of an automobile when the dealership gives permission to test-drive a
Reporter of Decisions for    vehicle, the term in this context is not subject to more than one
the convenience of the       reasonable interpretation, and the courts in many jurisdictions, including
reader.)                     Illinois, refer to test-drivers as "customers."

Decision Under               Appeal from the Circuit Court of Cook County, No. 09–CH–16166; the
Review                       Hon. William O. Maki, Judge, presiding.
Judgment                    Reversed and remanded with instructions.


Counsel on                  Thomas H. Crouch and Kurt M. Zitzer, both of Meagher & Geer, PLLP,
Appeal                      of Scottsdale, Arizona, and Roderick T. Dunne and Carrie Von Hoff,
                            both of Karbal, Cohen, Economou, Silk & Dunne, LLC, of Chicago, for
                            appellant National Casualty Company.

                            Todd S. Schenk and Amber C. Coisman, both of Tressler LLP, of
                            Chicago, for appellant Federal Insurance Company.

                            Kevin M. Forde and Joanne R. Driscoll, both of Kevin M. Forde, Ltd.,
                            Thomas R. Rakowski, of Thomas R. Rakowski, P.C., and Timothy J.
                            Cavanagh and Matthew M. Rundio, both of Cavanagh Law Group, all
                            of Chicago, for appellees.


Panel                       JUSTICE R. GORDON delivered the judgment of the court, with
                            opinion.
                            Presiding Justice Garcia and Justice Cahill concurred in the judgment
                            and opinion.




                                              OPINION

¶1          The key issue in this appeal is whether a person who test-drives a motor vehicle is a
        “customer” within the meaning of an auto dealership’s umbrella and excess insurance
        policies.

¶2                                         BACKGROUND
¶3          This is a declaratory judgment action regarding coverage under an auto dealership’s
        umbrella and excess insurance policies. The key issue in this appeal is whether a person who
        test-drives a motor vehicle is a “customer” within the meaning of two insurance polices
        which are the subject of the coverage question before us. For the reasons discussed below,
        we find that a test-driver is a “customer” in the context of the insurance policies that are the
        subject matter of this appeal.

¶4                                        I. Parties
¶5         Defendant Christopher Maher was test-driving a BMW automobile owned by defendant

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        Motor Werks of Barrington, Inc. (Motor Werks), accompanied by Motor Werks’ salesperson
        Roger Czapski, who was seated in the BMW’s front passenger seat. Czapski was killed when
        the BMW collided with another vehicle.1 The collision resulted in wrongful death and
        personal injury claims against Maher. The underlying wrongful death claim went to trial,
        resulting in a $13.72 million judgment against defendant Maher.
¶6          Prior to trial, plaintiffs, as well as the other passengers, filed a declaratory judgment
        action seeking declarations of coverage available to Maher under both: (1) certain insurance
        policies issued to Motor Werks, and (2) certain insurance policies issued to Kevin Maher,
        Christopher Maher’s father. The dealership, Motor Werks, had purchased a $5 million
        umbrella policy from defendant National Casualty Company (National) and a $10 million
        excess policy from defendant Federal Insurance Company (Federal). These policies were
        purchased to protect defendant Motor Werks from liability in excess of its $1 million primary
        policy. Defendant Motor Werks was a party in the declaratory judgment action, but not in the
        underlying wrongful death litigation.

¶7                                             II. Policies
¶8          The policies state that the term “insured” does not include the dealership’s “customers.”
        In particular, National’s policy states under the heading “Auto Dealership Limitation
        Endorsement”: “Your customers are not ‘named insureds’ or ‘insureds’ as defined in this
        policy.”2 Thus, the umbrella and excess policies insure the risk that the dealership itself
        would be liable for sums in excess of the primary policy, but do not insure the risk of a
        customer’s liability.
¶9          The term “customer” also appears in an endorsement in National’s policy entitled “Auto
        Dealership Limitation Endorsement.” In relevant part, it states:
                    “THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT
                CAREFULLY.
                                                   ***
                    4. Your customers are not ‘named insureds’ or ‘insureds’ as defined in this
                policy.”



        1
          Two friends of Maher were also occupants of the motor vehicle and were seriously injured as a
result of the collision, but they are not parties to this appeal.
        2
         Federal’s policy stated that it “will follow the terms and conditions of the controlling underlying
insurance policy scheduled in Item 6a of the Declarations.” Item 6a identified UMO 0030211 (the policy
number of the National umbrella policy) as the policy number of the controlling underlying insurance, and
$5 million (the limits of the National umbrella policy) as the limits of the insurance for the controlling
underlying insurance. It mistakenly identified the company issuing the controlling underlying insurance as
“Scottsdale Insurance Company” rather than “National Casualty Company” (the company that issued the
umbrella policy to Motor Werks). The trial court held that the Federal excess policy follows form to
National’s umbrella policy, and plaintiffs have not appealed that ruling.

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¶ 10                                      III. Procedural History
¶ 11         In the first declaratory action, National and Federal asserted that, as a test-driver, Maher
        was Motor Werks’ “customer” and, therefore, not covered under Motor Werks’ umbrella
        and excess policies. The trial court agreed, finding that Maher was not an insured and not
        covered under the policies. The trial court found that the term “customer” was unambiguous
        and included a test-driver.
¶ 12         On appeal, we found that the issue regarding whether Maher was covered by the umbrella
        and excess policies was not ripe for adjudication because Maher’s liability in the underlying
        tort action had not yet been determined and that the first declaratory judgment action was
        premature. Czapski v. Maher, 385 Ill. App. 3d 861 (2008).
¶ 13         After judgment was entered in the underlying wrongful death action, plaintiff instituted
        this second declaratory judgment action. In this second action, a different trial judge granted
        plaintiff’s motion for summary judgment and denied cross-motions for summary judgment
        filed by National and Federal. The second trial judge reached the opposite conclusion from
        the trial judge in the first action and found that the term “customer” was ambiguous. The
        second trial judge found that the term can be read to include only a person who has already
        made a purchase, and since Maher had not yet made a purchase, he was not a customer. The
        trial court reviewed various dictionary definitions and concluded that, even if the term
        “customer” could be interpreted to include a test-driver, this meant that the term was subject
        to multiple meanings and, therefore, was ambiguous. The trial court issued a declaratory
        judgment, finding that National and Federal had a duty to indemnify Maher. National and
        Federal then filed this timely appeal.3

¶ 14                                          ANALYSIS
¶ 15        The interpretation of the word “customer” in the insurance policies here is solely a legal
        issue, which this court reviews de novo. Founders Insurance Co. v. American Country
        Insurance Co., 366 Ill. App. 3d 64, 69 (2006) (the de novo standard applies to the
        interpretation of a contract and the review of a summary judgment).
¶ 16        Defendant argues that the trial court erred as a matter of law in its interpretation of the
        term “customer” by finding an ambiguity where none exists. Defendant claims that the court
        failed to give effect to the plain and ordinary meaning of the term “customer” as used in an
        automobile dealership policy and that the term “customer” includes one who is test-driving
        a dealership vehicle.
¶ 17        The burden is on the insurer to establish that a policy exclusion applies, and its
        applicability must be definite and free from doubt. Insurance Corp. of Hanover v. Shelborne
        Associates, 389 Ill. App. 3d 795, 799 (2009). Exclusion provisions that limit or exclude
        coverage must be construed liberally in favor of the insured and strictly against the insurer.


        3
        Prior to oral argument, National was dismissed from this appeal by agreement of the parties. Even
though National was dismissed as a party, its policy remains at issue in this appeal because its terms are
incorporated by Federal’s policy.

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       State Security Insurance Co. v. Burgos, 145 Ill. 2d 423, 438 (1991); Pekin Insurance Co. v.
       Miller, 367 Ill. App. 3d 263, 267 (2006).
¶ 18        In the case at bar, the term “customer” is not defined in National’s policy. Under Illinois
       law, “[i]f the words in the policy are *** unambiguous, [a] court [must] afford them their
       plain, ordinary meaning and will apply them as written.” Crum & Forster Managers Corp.
       v. Resolution Trust Corp., 156 Ill. 2d 384, 391 (1993). If the words are susceptible to more
       than one reasonable meaning, then they are ambiguous and must be construed in favor of
       coverage and against the insurer that drafted the policy. Valley Forge Insurance Co. v.
       Swiderski Electronics, Inc., 223 Ill. 2d 352, 363 (2006); Outboard Marine Corp. v. Liberty
       Mutual Insurance Co., 154 Ill. 2d 90, 108-09, 119 (1992).
¶ 19        This rule favoring coverage for an ambiguous term is especially true with respect to
       exclusionary clauses. Outboard Marine, 154 Ill. 2d at 119. When an exclusionary clause is
       relied upon to deny or limit coverage, it will be read narrowly and will be applied only where
       its terms are clear, definite, specific and free from doubt. Gillen v. State Farm Mutual
       Automobile Insurance Co., 215 Ill. 2d 381, 393 (2005). An ambiguity exists only if a term
       is subject to more than one reasonable interpretation. Hobbs v. Hartford Insurance Co. of the
       Midwest, 214 Ill. 2d 11, 17 (2005).
¶ 20        In the case at bar, defendant argues that the plain and ordinary meaning of the term
       “customer,” as used in a policy issued to an auto dealership, includes one who test-drives an
       auto that the dealership holds out for sale. Defendant claims that several Illinois courts have
       specifically referred to a “test-driver” as a dealership’s “customer.” For example, defendant
       cites to the Illinois Supreme Court’s opinion in State Farm Mutual Automobile Insurance
       Co. v. Universal Underwriters Group, 182 Ill. 2d 240 (1998). In that case, State Farm filed
       a subrogation claim against Universal, the dealer’s garage liability insurer. State Farm, 182
       Ill. 2d at 241. A test-driver was involved in a collision while test-driving a dealer’s vehicle.
       State Farm, 182 Ill. 2d at 241. Our supreme court found that the motorist was covered under
       the dealer’s insurance policy as primary coverage. Our supreme court observed that a state
       statute requires the inclusion of an omnibus clause in all automobile liability policies, and
       this clause requires liability coverage for all persons who use the named insured’s vehicle
       with permission. State Farm, 182 Ill. 2d at 244. Although the supreme court referred to the
       test-driver as a “customer,” the word “customer” was not at issue. State Farm, 182 Ill. 2d at
       241. The court did not have to decide whether that test-driver fell into the category of a
       customer. State Farm, 182 Ill. 2d at 243. However, by calling the test-driver a customer, the
       word choice of our supreme court provides some instruction on the plain and ordinary
       meaning of the word “customer.”
¶ 21        Defendant also cites a Third District case with basically the same scenario. Again, a court
       referred to the test-driver as a customer when the word “customer” was not at issue. Country
       Mutual Insurance Co. v. Universal Underwriters Insurance Co., 316 Ill. App. 3d 161, 163
       (2000).
¶ 22        Defendant argues that the term “customer,” as used in an automobile dealership’s
       insurance policy, includes a person who is considering the purchase of an auto by conducting
       a test-drive of a vehicle and that it is the plain, ordinary, commonsense meaning of the term


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       “customer” to include such a person. Defendant cites a number of cases from other
       jurisdictions. In all of these cases, the policies were garage liability policies and the state laws
       required the dealerships to obtain coverage for a permissive driver. However, in each of these
       cases, the courts referred to a test-driver of a dealership’s motor vehicle as a “customer,” and
       again, this provides us with further evidence that the plain and ordinary meaning of a
       “customer” includes a test-driver.
¶ 23       For example, a case from the Court of Appeal of Louisiana ruled that a dealership’s
       insurer waived its defense of a policy exclusion and that a test-driver of one of the
       dealership’s vehicles was an insured under a garage liability policy. In that case, it was
       undisputed by the parties that the test-driver was a “customer.” Alexander v. Cornett,
       42,147–CA; at 12 (La. App. 2 Cir. 7/11/07); 961 So. 2d 622, 630.
¶ 24       In a case from the Court of Appeals of Indiana, the garage liability policy interchanged
       the word “customer” with “a person *** operating an auto owned by the business described.”
       (Internal quotation marks omitted.) General Accident Insurance Co. of America v. Hughes,
       706 N.E.2d 208, 209 (Ind. Ct. App. 1999).
¶ 25       In another Court of Appeals of Indiana case, a test-driver was denied coverage under a
       garage dealer insurance policy because the vehicle was not owned by the dealership. The case
       was decided on the interpretation of the policy term “ ‘owned autos only’ ”; however, the
       court referred to the test-driver as a “customer.” Harden v. Monroe Guaranty Insurance Co.,
       626 N.E.2d 814, 818-19 (Ind. Ct. App. 1993).
¶ 26       Some cases in other jurisdictions have expressly ruled that the term “customer” does not
       mean only a person who has already made a purchase. In a case from the Court of Appeal of
       Louisiana, the defendant was test-driving a vehicle owned by a dealership when a collision
       occurred causing injury to the plaintiff. The defendant’s grandmother was considering
       purchasing a vehicle for him. The dealership’s insurer argued that the defendant was a
       “customer” of the dealership and excluded under its policy. The court ruled that the
       defendant was a customer and stated:
               “The exclusionary provision in the contract is clearly intended to exclude coverage
               for those members of the public whom the dealership permits to drive its vehicles in
               the ordinary course of trying to make a sale. This interpretation clearly suits the
               generally prevailing meaning of the term customer.” Marshall v. Seago, 41,138–CA,
               at 8 (La. App. 2 Cir. 6/28/06); 935 So. 2d 752, 757.
¶ 27       The Supreme Court of Vermont held that a potential purchaser of a used vehicle was a
       “customer” of the dealership when he purchased the vehicle even though the prior owner had
       not executed the title certificate at the time of the collision. In that case, the claimants argued
       that the “customer” exclusion in the dealership policy did not apply because title to the
       vehicle had not passed, and therefore, the purchaser could not be deemed a “customer.” The
       court stated:
               “We hold that [the purchaser’s] status as a customer of [dealership] did not depend
               on who owned the vehicle at the moment the accident occurred. He became a
               customer, not when he took title to the purchased item, but when he was first ‘a
               potential purchaser of a commodity.’ [Citations.]” Winn v. Becker, 660 A.2d 284, 285

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                 (Vt. 1995).
¶ 28        Here, the trial court based its ruling on dictionary definition of the word “customer” as
       “one who buys something” or “one that purchases a commodity or service.”
¶ 29        Illinois courts have generally utilized dictionaries to determine the meaning of undefined
       terms in many contexts. In Alhambra-Grantfork Telephone Co. v. Illinois Commerce
       Comm’n, 358 Ill. App. 3d 818 (2005), the appellate court utilized Webster’s Third New
       International Dictionary and Black’s Law Dictionary to define the term “customer” as it was
       used in an administrative code provision requiring notice to “customers.” Alhambra-
       Grantfork Telephone, 358 Ill. App. 3d at 822. First, the court noted that the parties engaged
       in a “complex debate” over the meaning of the term “customer.” Alhambra-Grantfork
       Telephone, 358 Ill. App. 3d at 822. Then, the court resolved the debate by referring to two
       dictionary definitions to determine the “plain and ordinary meaning” of the undefined term:
                     “Webster’s Third New International Dictionary defines ‘customer’ as ‘2 a: one
                 that purchases some commodity or service ***; esp: one that purchases
                 systematically or frequently ***.’ (Emphasis omitted.) Webster’s Third New
                 International Dictionary 559 (1993). Black’s Law Dictionary defines ‘customer’ as
                 ‘[o]ne who regularly or repeatedly makes purchases of, or has business dealings with,
                 a tradesman or business.’ Black’s Law Dictionary 348 (5th ed. 1979).” Alhambra-
                 Grantfork Telephone, 358 Ill. App. 3d at 822.
¶ 30        This division cited Black’s Law Dictionary to define “party” as used in the Code of Civil
       Procedure for substitution of judges (735 ILCS 5/2–1001(a)(2)(i) (West 2006)) in Powell v.
       Dean Foods Co., 405 Ill. App. 3d 354, 363 (2010), and cited Black’s Law Dictionary and
       Webster’s Unabridged Dictionary to define “coverage” as used in the Illinois Insurance Code
       in All American Roofing, Inc. v. Zurich American Insurance Co., 404 Ill. App. 3d 438, 445
       (2010). A recent edition of Black’s Law Dictionary does not now define “customer.” See
       Black’s Law Dictionary (7th ed. 1999).
¶ 31        Our Illinois Supreme Court utilized Webster’s Third New International Dictionary to
       define the word “entitle” in determining a policy exclusion. The court stated: “[when] a term
       in an insurance policy is not defined, we afford that term its plain, ordinary and popular
       meaning, i.e., we look to its dictionary definition.” Founders Insurance Co. v. Munoz, 237
       Ill. 2d 424, 436 (2010). The Illinois Appellate Court has likewise used dictionaries to define
       terms in insurance policies. General Star Indemnity Co. v. Lake Bluff School District No. 65,
       354 Ill. App. 3d 118, 127 (2004) (utilizing Webster’s Third New International Dictionary and
       Black’s Law Dictionary to define the term “damages” in an insurance policy); United States
       Fidelity & Guaranty Co. v. Specialty Coatings Co., 180 Ill. App. 3d 378, 391-92 (1989)
       (utilizing Webster’s Third New International Dictionary for meaning of “damages” in an
       insurance policy).
¶ 32        Webster’s Third New International Dictionary also defines “customer” as “2 b.: one that
       patronizes or uses the services (as of a library, restaurant, or theater).” Webster’s Third New
       International Dictionary 559 (1986). If we restrict the use to libraries, restaurants, and
       theaters, then a test-driver would not fit in that category. However, if the definition is not
       restricted to only three types of businesses, then a test-driver may be using or patronizing the


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       service of an auto dealership and may be a “customer” under that definition. It would be
       absurd if a person used the washroom facilities of a restaurant and was considered by
       definition a “customer,” when a test-driver of an automobile would not be considered a
       customer until after he or she purchased an automobile. We do not find that the definitions
       of “customer” from the dictionaries are helpful in this case.
¶ 33       If the term “customer” applied only to a person who had already made a purchase, then
       the exclusion in the policy here would have little or no meaning. It may only apply to people
       who have previously purchased motor vehicles and are now test-driving another vehicle. The
       Court of Appeals in Kansas refused to accept a trial court’s interpretation that was the same
       interpretation that the trial court made in the case at bar. American States Insurance Co. v.
       McCann, 845 P.2d 74 (Kan. Ct. App. 1993).
¶ 34       In McCann, defendant was given permission to take a vehicle from a dealership pending
       obtaining financing to pay for the vehicle. When McCann was unable to obtain the financing,
       he agreed to return the vehicle. Prior to returning the vehicle, he had a collision and the
       dealer’s insurer denied coverage based on a “customer” exclusion. The Kansas district court
       interpreted “customer” to mean a person who has already made a purchase and ruled
       McCann was not a customer.
¶ 35       The Kansas appellate court reversed. It concluded that the district court’s narrow
       interpretation was unreasonable because it essentially rendered the customer exclusion
       meaningless:
                “Interpreting ‘customer’ [to require an actual purchase] would seem to defeat the
                whole purpose of the exclusion, for once an individual purchased a vehicle, the car
                would no longer be owned by [the dealership] or covered by its policy. ‘[A]n
                interpretation of a contract or agreement which evolves unreasonable results, when
                a probable and reasonable construction can be adopted, will be rejected.’ [Citation.]”
                McCann, 845 P.2d at 826.
¶ 36       An Arizona appellate court followed the same reasoning in Messina v. Midway Chevrolet
       Co., 209 P.3d 147 (Ariz. Ct. App. 2008). It too concluded that interpreting the term
       “customer” to require an actual purchase was an unreasonable interpretation:
                “Interpreting ‘customer’ to require a completed purchase would render the customer
                exception in the insuring clause meaningless. Once an individual pays for an
                automobile, he or she becomes the owner, and, at least under the Policy at issue here,
                there would clearly be no coverage.” Messina, 209 P.3d at 151.
¶ 37       An interpretation that renders a provision meaningless is not reasonable. Atwood v. St.
       Paul Fire & Marine Insurance Co., 363 Ill. App. 3d 861, 864 (2006) (holding that a court
       is “not to interpret an agreement in a way that would nullify any of the provisions in the
       agreement or render them meaningless” (internal quotation marks omitted)); Cincinnati
       Insurance Co. v. Gateway Construction Co., 372 Ill. App. 3d 148, 151-52 (2007) (rejecting
       as unreasonable a policy interpretation that rendered a provision meaningless).
¶ 38       In a case from the Supreme Court of Nebraska, the court found that the test-driver was
       a customer within the meaning of the policy provision defining “insured” not to include
       customers, but the court provided no reasoning in the opinion. Leader National Insurance

                                                -8-
       Co. v. American Hardware Insurance Group, 545 N.W.2d 451, 455 (Neb. 1996).
¶ 39       In addition, in a court of appeals case in Wisconsin, a driver of an automobile, who was
       test-driving a vehicle at the request of a potential buyer was found to be a “customer” of the
       dealership within the meaning of a garage liability policy. The court found that the risk
       associated with the test-driving of a dealer’s autos was the type of risk that the dealership and
       insurer sought to exclude by their use of the term “customer.” The court decided the case on
       the basis of the risk that the parties sought to exclude, not on the plain and ordinary meaning
       of the word “customer.” Johnson v. Heritage Mutual Insurance Co., 524 N.W.2d 900, 902
       (Wis. Ct. App. 1994).

¶ 40                                        CONCLUSION
¶ 41        We conclude that the plain and ordinary meaning of the term “customer” in the context
       of an insurance policy includes a test-driver of an automobile when the dealership gives
       permission to test-drive the vehicle. We do not find the term “customer” in this context to
       be subject to more than one reasonable interpretation. The courts throughout many
       jurisdictions, including Illinois, refer to a test-driver as a “customer,” the auto dealership and
       insurer seek to exclude test-drivers of automobiles from coverage when they use the word
       “customer,” and the general public should be well aware that test-drivers are included in the
       term “customer.” In sum, the plain and ordinary meaning of the term “customer” as used in
       an insurance policy issued to an automobile dealership would reasonably include one who
       test-drives an automobile before purchase. We therefore reverse the trial court and instruct
       it to deny plaintiffs’ motion for summary judgment and grant National’s and Federal’s cross-
       motions for summary judgment.
¶ 42        Reversed and remanded with instructions.




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