                           ILLINOIS OFFICIAL REPORTS
                                         Appellate Court




             Guzman v. 7513 West Madison Street, Inc., 2013 IL App (1st) 122161




Appellate Court            MARCELINO GUZMAN, BERTHA GUZMAN and BEVERLY
Caption                    MYERS, Plaintiffs-Appellants, v. 7513 WEST MADISON STREET,
                           INC., d/b/a Duffy’s Tavern, Defendant-Appellee.



District & No.             First District, Fifth Division
                           Docket No. 1-12-2161


Filed                      March 29, 2013


Held                       In an action under the Dramshop Act where the shop’s insurer is
(Note: This syllabus       insolvent and the Illinois Insurance Guaranty Fund is defending, and
constitutes no part of     plaintiffs have recovered from their underinsured motorist insurer, the
the opinion of the court   intoxicated person’s automobile liability insurer or their group health
but has been prepared      insurer, and the jury’s verdict exceeds defendant’s maximum liability
by the Reporter of         under the Act, the reduction for “other insurance” recoveries arising from
Decisions for the          section 546(a) of the Illinois Insurance Code should be made from
convenience of the         defendant’s maximum dramshop liability to each plaintiff, not from the
reader.)
                           jury’s damage award.


Decision Under             Appeal from the Circuit Court of Cook County, No. 09-L-15784; the
Review                     Hon. Moira S. Johnson, Judge, presiding.



Judgment                   Certified question answered; cause remanded.
Counsel on                 Kevin B. Apter, of Lipkin & Higgins, of Chicago, for appellants.
Appeal
                           Mary Beth O’Brien, of Lindsay, Rappaport & Postel, LLC, and Hugh C.
                           Griffin, of Hall Prangle & Schoonveld, LLC, both of Chicago, for
                           appellee.


Panel                      JUSTICE HOWSE delivered the judgment of the court, with opinion.
                           Presiding Justice McBride and Justice Palmer concurred in the judgment
                           and opinion.



                                              OPINION

¶1          In this case we consider a question certified by the trial court concerning the obligation
        of the Illinois Insurance Guaranty Fund when the Fund assumes the defense of a dramshop
        case because the defendants’ insurer is declared insolvent. We granted leave to appeal in this
        permissive interlocutory appeal pursuant to Supreme Court Rule 308 (Ill. S. Ct. R. 308 (eff.
        Feb. 26, 2010)).
¶2          The following question was certified by the circuit court:
            “In a case under the Dram Shop Act where the defendant dram shop is being defended
            by the Illinois Insurance Guaranty Fund after defendant’s dram shop liability insurer was
            declared insolvent and the plaintiffs have already made insurance recoveries from their
            underinsured motorist insurer and/or from the alleged intoxicated person’s auto liability
            insurer and/or from their group health insurer, and the jury returns a verdict in excess of
            the Defendant’s maximum liability under the Dram Shop Act, is the reduction for ‘other
            insurance’ recoveries set forth in Section 546(a) of the Illinois Insurance Guaranty Fund
            Act applied against the Defendant’s maximum dram shop liability of $58,652.333 to each
            Plaintiff?”
¶3          For the reasons that follow we answer the question in the affirmative.

¶4                                        BACKGROUND
¶5          On June 18, 2009 plaintiff Marcelino Guzman was operating a motor vehicle with a
        passenger, his wife, Bertha Guzman. They were struck by a vehicle driven by Nikki Klassert.
        A third plaintiff, Beverly Myers, was a pedestrian who was injured as a result of the collision
        of the two automobiles. Plaintiffs alleged that at the time of the accident Klassert negligently
        operated her vehicle, that Klassert was intoxicated and that she had been served alcoholic
        liquors by Duffy’s Tavern, the defendant.
¶6          On July 20, 2009, the Guzman plaintiffs filed a negligence action against Ms. Klassert
        in the circuit court of Cook County seeking to recover for the injuries they allegedly

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       sustained in the collision. This case was subsequently settled by the payment of $40,000, the
       policy limits of Klassert’s automobile liability insurer, Safeway Insurance Co. The settlement
       payment was divided among the Guzmans and Beverly Myers. Marcelino Guzman received
       $13,333.34. Bertha Guzman and Myers each received the sum of $13,333.33 from the
       settlement.
¶7         Plaintiffs recovered insurance proceeds from other solvent insurers as a result of the
       injuries they suffered. Plaintiffs Marcelino Guzman and Bertha Guzman each received
       $36,666.66 from their own underinsured motorist coverage in addition to the Klassert
       settlement. Plaintiff Myers received $236,666.67 from her own automobile liability insurer
       and $87,529.78 from her group health insurer.
¶8         On May 5, 2010, plaintiffs filed the instant action against defendant under the Dramshop
       Act (Act) (235 ILCS 5/6-21 (West 2008)), seeking damages for their injuries. The Dramshop
       Act provides limited no-fault liability where a plaintiff can demonstrate that a patron was
       intoxicated as a result of liquor provided by a bar and the plaintiff suffered resulting injuries
       because of the patron’s intoxication. The Dramshop Act provides: “in no event shall the
       judgment or recovery for injury to the person or property of any person exceed” the
       maximum recovery allowed under the Act. 235 ILCS 5/6-21 (West 2008). The maximum
       amount recoverable in a dramshop case may increase or decrease annually depending on a
       formula provided in the Act which is based on the consumer price index. The parties agree
       the maximum amount of damages recoverable by the plaintiffs for their injuries in this case
       under the Dramshop Act is $58,652.33 per plaintiff.
¶9         At the time of the accident, defendant was insured under a liquor liability policy issued
       by Constitutional Casualty Company, which had a $1 million policy limit. On January 21,
       2011, Constitutional Casualty Company was declared insolvent and placed into liquidation
       by the Illinois Department of Insurance. The Illinois Insurance Guaranty Fund (the Fund) has
       assumed responsibility for the obligations of Constitutional Casualty Company to Illinois
       claimants and policyholders, subject to the limitations and conditions of the Illinois Insurance
       Code (hereinafter Guaranty Fund Act) (215 ILCS 5/532 et seq. (West 2008)). Accordingly,
       attorneys engaged by the Fund assumed the defense of this case on behalf of the defendant.
¶ 10       The attorneys retained by the Fund filed an affirmative defense. As an affirmative
       defense, defendant alleged that the Dramshop Act set the maximum recovery of each plaintiff
       in this case at $58,652.33, and, therefore, $58,652.33 is the extent of the obligation of the
       Fund. Defendant argues that under section 546(a) of the Guaranty Fund Act, the obligation
       of the Fund and the defendant’s liability to each of the plaintiffs is required to be reduced in
       an amount equal to each plaintiff’s recovery from other insurance companies. Therefore,
       because Marcelino and Bertha Guzman had each received $50,000 from other insurance, the
       Fund’s obligation and defendant’s liability to them is reduced in the same amount and the
       maximum recovery for each of the Guzman plaintiffs would be $8,652.33. Defendant argued
       Beverly Myers would not be entitled to any recovery because her recovery from other
       insurance exceeded the $58,652.33 obligation of the Fund under section 546(a).
¶ 11       Section 546(a) provides:
           “An insured or claimant shall be required first to exhaust all coverage provided by any


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           other insurance policy, regardless of whether or not such other insurance policy was
           written by a member company, if the claim under such other policy arises from the same
           facts, injury, or loss that gave rise to the covered claim against the Fund. The Fund’s
           obligation under Section 537.2 shall be reduced by the amount recovered or recoverable,
           whichever is greater, under such other insurance policy.*** To the extent that the Fund’s
           obligation under Section 537.2 is reduced by application of this Section, the liability of
           the person insured by the insolvent insurer’s policy for the claim shall be reduced in the
           same amount.” 215 ILCS 5/546(a) (West 2008).
¶ 12       Plaintiffs filed a motion to strike defendant’s affirmative defense. The plaintiffs did not
       contest that the funds received from Klassert’s liability insurer, their own underinsured
       policy and the amounts from group health insurance are subject to the reductions required
       in section 546(a). However, the plaintiffs contest the manner in which the reduction should
       be applied.
¶ 13       The Dramshop Act allows a plaintiff to present a damage claim to a jury for a damage
       award with no instruction about the damage cap of the Dramshop Act:
           “In every such action the jury shall determine the amount of damages to be recovered
           without regard to and with no special instructions as to the dollar limits on recovery
           imposed by this Section.” 235 ILCS 5/6-21 (West 2008).
¶ 14       Plaintiffs argue that a jury should be allowed to determine the full amount of their
       damages and the reduction for other insurance required by section 546(a) should be made
       from the jury’s damage award. Plaintiffs argue the statute should be interpreted such that if
       the jury’s damage award, after the reductions required by section 546(a) are made, exceeds
       the dramshop damage limits, the trial court could reduce the award and enter judgment for
       the maximum damages allowed by the Dramshop Act.
¶ 15       On April 30, 2012, the trial court judge denied the plaintiffs’ motion to strike the
       affirmative defense. On July 16, 2012, the trial court certified the question presented for
       review. We granted leave to appeal.

¶ 16                                         ANALYSIS
¶ 17       In this case, we consider a certified question concerning how the “other insurance”
       reduction required by section 546(a) of the Guaranty Fund Act impacts a dramshop claim
       made against a defendant where the defense has been assumed by the Illinois Insurance
       Guaranty Fund due to the insolvency of the insurer. This case involves a certified question
       concerning the interpretation of a statute. Therefore, we are presented with a question of law
       and our standard of review is de novo. Barbara’s Sales, Inc. v. Intel Corp., 227 Ill. 2d 45, 57-
       58 (2007); Advincula v. United Blood Services, 176 Ill. 2d 1, 12 (1996).
¶ 18       “The cardinal rule of statutory construction is to ascertain and give effect to the
       legislature’s intent.” Moore v. Green, 219 Ill. 2d 470, 479 (2006). Like any other exercise in
       statutory construction, the court’s analysis begins with the specific language contained in the
       statute because the words used provide the best indication of legislative intent. Hernandez
       v. Kirksey, 306 Ill. App. 3d 912, 914 (1999). “Where an enactment is clear and unambiguous,
       we are not at liberty to depart from the plain language and meaning of the statute by reading

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       into it exceptions, limitations or conditions that the legislature did not express.” DeSmet v.
       County of Rock Island, 219 Ill. 2d 497, 510 (2006).
¶ 19       The Fund is a nonprofit entity created to protect the policyholders of insolvent insurers
       and third parties who make claims under policies issued by insurers that become insolvent.
       Hasemann v. White, 177 Ill. 2d 414, 416 (1997). The Fund’s liability is subject to the
       limitation that the subject claim must be a covered claim. 215 ILCS 5/534.3 (West 2008);
       Roth v. Illinois Insurance Guaranty Fund, 366 Ill. App. 3d 787 (2006).
¶ 20       A claimant possessing a covered claim is required to exhaust his rights under any other
       policy of insurance which involves the same facts, injury or loss that gave rise to the covered
       claim. 215 ILCS 5/546(a) (West 2008). The obligation of the Fund is reduced by the amounts
       a claimant receives from other insurance. Roth, 366 Ill. App. 3d 787. Therefore, for payments
       a plaintiff receives from his medical insurer or his own automobile insurer for the same facts,
       injury or loss, a deduction must be made from the Fund’s liability to the plaintiff. Id. This
       court has repeatedly stated that the Fund is a fund of last resort. Illinois Insurance Guaranty
       Fund v. Farmland Mutual Insurance Co., 274 Ill. App. 3d 671, 674 (1995); Harrell v.
       Reliable Insurance Co., 258 Ill. App. 3d 728, 731 (1994).
¶ 21       To consider the question presented to us, we first look to the statute. When the defense
       of a claim has been assumed by the Illinois Insurance Guaranty Fund, section 546(a) requires
       a reduction of the Fund’s obligation by the sum a plaintiff receives from another insurer.
¶ 22       Section 546(a) provides, in relevant part:
           “The Fund’s obligation under Section 537.2 shall be reduced by the amount recovered
           or recoverable, whichever is greater, under such other insurance policy.” 215 ILCS
           5/546(a) (West 2008).
¶ 23       Section 537.2 defines the obligation of the Fund and provides that the Fund is obligated
       to the extent of the covered claims:
           “The Fund shall be obligated to the extent of the covered claims existing prior to the
           entry of an Order of Liquidation against an insolvent company and arising within 30 days
           after the entry of such Order ***.” 215 ILCS 5/537.2 (West 2008).
¶ 24       The definition of a covered claim is also found in the statute:
           “Covered claim; unearned premium defined.
                (a) ‘Covered claim’ means an unpaid claim for a loss arising out of and within the
           coverage of an insurance policy to which this Article applies and which is in force at the
           time of the occurrence giving rise to the unpaid claim *** made by a person insured
           under such policy or by a person suffering injury or damage for which a person insured
           under such policy is legally liable ***.” 215 ILCS 5/534.3 (West 2008).
¶ 25       Thus, a “covered claim” is an unpaid claim made by a person suffering injury or damage
       under a policy issued by a company that has been declared insolvent for which a person
       insured under such policy is legally liable.
¶ 26       The Dramshop Act provides: “[I]n no event shall the judgment or recovery for injury to
       the person or property of any person exceed” the maximum recovery allowed under the
       Dramshop Act. 235 ILCS 5/6-21 (West 2008). The parties agree that the maximum recovery

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       allowed under the Dramshop Act in this case is $58,652.33 per person. Therefore, the
       defendant is legally liable to the plaintiffs up to the maximum recovery possible under the
       Dramshop Act, $58,652.33 per plaintiff. Id. When we read the relevant provisions of the
       Guaranty Fund Act together with the Dramshop Act, we conclude the extent of the covered
       claims determines the obligation of the Fund. Since defendant’s legal liability is limited to
       $58,652.33 per person, the extent of the covered claims is $58,652.33 per person. Therefore,
       the Fund is obligated to the extent of the covered claims or $58,652.33 per person. 215 ILCS
       5/537.2 (West 2008).
¶ 27        Accordingly, under section 546(a), the obligation of the Fund ($58,652.33 per person)
       is required to be reduced by the recoveries received by plaintiffs from other insurance
       policies and the certified question is answered in the affirmative.
¶ 28        Plaintiffs argue that the reductions for other insurance required by section 546(a) should
       be made from the jury damage award, citing Kurth v. Amee, Inc., 3 Ill. App. 3d 506 (1972).
       In that case Watson, plaintiff, filed a complaint which alleged she was injured in an accident
       caused by Robert Menge. The complaint alleged Menge was intoxicated at the time of the
       accident and the dramshop defendants had sold or furnished the alcohol that caused his
       intoxication. Menge was dismissed after plaintiff signed a covenant not to sue Menge in
       consideration of $24,000 received from him. The dramshop defendants subsequently filed
       a motion to dismiss. The trial court granted the motion to dismiss on the basis that plaintiff
       is entitled to only one recovery and that she had already received $24,000 for her negligence
       claim, more than the maximum amount recoverable under the Dramshop Act. Kurth, 3 Ill.
       App. 3d at 508.
¶ 29        On appeal the court acknowledged that plaintiffs may receive but one satisfaction for one
       injury. If several remedies and actions exist, setoffs should be allowed to prevent a double
       recovery. Id. at 510. However, the court stated this principle should not be administered in
       a manner that prevents plaintiff’s total recovery. In reversing the dismissal order, the
       appellate court considered the proper procedure to follow in a dramshop case to prevent a
       double recovery without prejudicing a plaintiff’s right to a complete recovery. In such cases,
       the appellate court ordered that the total damages should be assessed without reference to any
       amounts already received and the verdict reduced by such amount. Id. The difference would
       be subject to the maximum limits provided in the Dramshop Act.
¶ 30        Kurth does not support the plaintiffs’ position in this case. The Kurth court determined
       the proper procedure to allow setoffs to prevent a double recovery in dramshop cases. Kurth
       did not interpret how the reductions required by section 546(a) are made in cases where
       dramshop defendants are represented by the Illinois Insurance Guaranty Fund. The legislature
       in section 546(a) clearly and unambiguously requires that the obligation of the Fund be
       reduced by the amount recovered from other insurance.
¶ 31        Other courts have interpreted section 546(a) as we have. In Tralmer v. Soztneps, Inc., 283
       Ill. App. 3d 677 (1996), the plaintiff was injured when the car she was driving collided with
       an automobile driven by Pamela Loeb. Plaintiff Tralmer sued Loeb alleging that the collision
       was due to Loeb’s negligence and that Loeb was intoxicated at the time of the collision.
       Tralmer, 283 Ill. 3d at 679.


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¶ 32       Tralmer also filed a dramshop case against defendants Hob Knob and Vertigo, alleging
       that they were liable under the Dramshop Act for serving liquor to Loeb. The defendants’
       dramshop insurer was declared insolvent and the Illinois Insurance Guaranty Fund became
       obligated to defendants Hob Knob and Vertigo. Id. In 1992, the limit of recovery under the
       Dramshop Act for injuries was $30,000.
¶ 33       Tralmer then settled her case against Loeb for $100,000, the liability limit under Loeb’s
       automobile insurance policy. Hob Knob and Vertigo subsequently filed motions for summary
       judgment on the grounds that under section 546(a), the maximum $30,000 that Tralmer could
       recover should be reduced by the $100,000 she had received from Loeb under her insurance
       policy. In 1992, section 546(a) provided:
           “Any insured or claimant having a covered claim against the Fund shall be required first
           to exhaust his rights under any provision in any other insurance policy which may be
           applicable to the claim. Any amount payable on a covered claim under this Article shall
           be reduced by the amount of such recovery under such insurance policy.” 215 ILCS
           5/546(a) (West 1992).
¶ 34       The trial court concluded that because plaintiff had recovered $100,000 from Loeb’s
       insurance policy, and the dramshop maximum recovery was $30,000, Tralmer could never
       obtain additional recovery from the defendants. Therefore, the court entered summary
       judgment for the defendants. Tralmer, 283 Ill. 3d at 679.
¶ 35       The appellate court observed that Tralmer’s negligence claim against Loeb was based on
       common law tort. The dramshop case Tralmer filed against Hob Knob and Vertigo was a
       statutory cause of action. Therefore, the two cases did not constitute the “same claim” within
       the meaning of section 546(a). Accordingly, the appellate court reversed the trial court
       because the provisions of section 546(a) did not require the $30,000 dramshop maximum
       recovery to be reduced by Tralmer’s $100,000 settlement because it was not from the same
       claim. Id. at 681-82.
¶ 36       In 1997, one year after the appellate court in Tralmer determined that a negligence claim
       is not the same as a dramshop claim for purposes of section 546(a), the legislature amended
       section 546(a) and changed the wording of the statute, expanding its deduction requirements
       from instances of the “same claim” to instances where a claim arises from the “same facts,
       injury or loss.” The statute now provides:
           “An insured or claimant shall be required first to exhaust all coverage provided by any
           other insurance policy, regardless of whether or not such other insurance policy was
           written by a member company, if the claim under such other policy arises from the same
           facts, injury, or loss that gave rise to the covered claim against the Fund. The Fund’s
           obligation under Section 537.2 shall be reduced by the amount recovered or recoverable,
           whichever is greater, under such other insurance policy.” (Emphasis added) 215 ILCS
           5/546 (West 2010).
¶ 37       We presume the legislature was aware of Kurth when it amended section 546(a):
                “Where statutes are enacted after judicial opinions are published, it must be presumed
           that the legislature acted with knowledge of the prevailing case law.” People v. Hickman,
           163 Ill. 2d 250, 262 (1994).

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¶ 38        In this case, the 1997 amendment to section 546(a) was enacted after Tralmer was filed
       in 1996. Accordingly, we must presume that the legislature knew that the Tralmer court
       interpreted section 546(a) to require the reduction for other insurance coverage be applied
       to reduce the maximum dramshop liability and not a jury damage award. We observe that the
       legislature did not change the Tralmer court’s interpretation that the “other insurance”
       reduction required by section 546(a) applied to reduce the Fund’s maximum obligation in
       dramshop cases. The 1997 amendment clarifies that the reduction required by section 546(a)
       applied “if the claim under such other policy arises from the same facts, injury, or loss that
       gave rise to the covered claim against the Fund,” regardless of the theory of
       recovery–whether negligence or dramshop.
¶ 39        Therefore, we presume in 1997, when the legislature amended the Act, it was aware that
       Illinois courts interpreted section 546(a) to required the “other insurance” deduction apply
       to reduce the maximum dramshop awards. The legislature expanded the applicability of the
       claim requirement without changing the Tralmer court’s method of applying section 546(a)
       to dramshop damage limits, implicitly approving the manner in which the court applied
       section 546(a).
¶ 40        Plaintiffs also argue that the $1 million policy limit is the Fund’s obligation and the
       deduction required in section 546(a) be made from the policy limits. However, the Guaranty
       Fund Act in section 537.2 clearly and unambiguously states that the Fund’s obligation is the
       amount of the covered claims. In this case, the extent of the covered claims is $58,652.33.
¶ 41        Moreover, the statute makes it clear that the Fund’s obligation and the policy limits are
       not synonymous terms and the obligation of the Fund could be less than the policy limits:
                “Any obligation of the Fund to defend an insured shall cease upon the Fund’s
            payment or tender of an amount equal to the lesser of the Fund’s covered claim
            obligation limit or the applicable policy limit.” 215 ILCS 5/537.2 (West 2008).
¶ 42        Plaintiff also argues that the Guaranty Fund Act has a $300,000 per-claimant limitation
       and the Guaranty Fund Act limitation should apply rather than the limitation found in the
       Dramshop Act. The Guaranty Fund Act provides a limit on damages regardless of the theory
       of recovery. In contrast, the damage limitation provided in the Dramshop Act is a specific
       limitation of the statute under which plaintiff is seeking recovery. “[W]here there are two
       statutory provisions, one of which is general and designed to apply to cases generally and the
       other is particular and relates to only one subject, the particular provision must prevail.”
       (Internal quotation marks omitted.) Hernon v. E.W. Corrigan Construction Co., 149 Ill. 2d
       190, 195 (1992). In this case, the damage limitation of the Dramshop Act is specific to the
       statutory dramshop claim filed by the plaintiff and applies here instead of the general damage
       limitation of the Guaranty Fund Act.
¶ 43        Finally, the parties have also cited a Fifth District opinion, Rogers v. Imeri, 2013 IL App
       (5th) 110546. In Rogers, the Fifth District considered the same issue in the certified question
       before us–how should the deduction for other insurance recoveries be made where the Fund
       provides a defense for a dramshop defendant. In its decision, the Fifth District determined
       that the deduction for other insurance recoveries should be made from the jury damage
       award, which is a different outcome from our decision.


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¶ 44       We agree with the Fifth District’s finding in Rogers that the obligation of the Fund must
       be reduced by recoveries from other insurance policies. However, we reach a different result
       because the Guaranty Fund Act has clearly and unambiguously defined the obligation of the
       Fund as the extent of covered claims. In this case, the extent of covered claims is $58,652.33
       per claimant. Therefore, the reduction required for recoveries from other insurance in section
       546(a) is required to be made from the $58,652.33 covered claim obligation in this case.

¶ 45                                   CONCLUSION
¶ 46      We answer the trial court’s question in the affirmative and remand.

¶ 47      Certified question answered; cause remanded.




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