                           ILLINOIS OFFICIAL REPORTS
                                        Appellate Court




            Columbia Mutual Insurance Co. v. Herrin, 2012 IL App (5th) 100037




Appellate Court            COLUMBIA MUTUAL INSURANCE COMPANY, Plaintiff, v.
Caption                    ROGER HERRIN, Special Administrator of the Estate of Michael Herrin,
                           Deceased, KATHERINE DUNCAN, ROSS DUNCAN, and JARED
                           HEAD, ENCOMPASS INSURANCE, HARRISBURG MEDICAL
                           CENTER, BRIAN W. BRAMLET, and ROBERT BRAMLET,
                           Defendants (Roger Herrin, Special Administrator of the Estate of Michael
                           Herrin, Deceased, Counterplaintiff-Appellee, and Martha Head, as
                           Mother and Next Friend of Jared Head, a Minor, and Martha Head and
                           Wayne Head, Individually and as Parents of Jared Head, a Minor,
                           Counterplaintiffs-Appellants, v. Columbia Mutual Insurance Company,
                           Monroe Guaranty Insurance Company, and Encompass Insurance
                           Company, Counterdefendants, and Katherine Duncan, Ross Duncan, and
                           Russell Duncan, Counterdefendants-Appellants, and Roger Herrin,
                           Special Administrator of the Estate of Michael Herrin, Deceased,
                           Counterdefendant-Appellee).


District & No.             Fifth District
                           Docket No. 5-10-0037
Filed                      January 12, 2012
Rehearing denied           April 24, 2012
Held                       In complex litigation arising from an automobile accident that resulted in
(Note: This syllabus       a fatality and multiple injuries, the trial court erred in applying a ratio
constitutes no part of     method of distributing the underinsured-motorist coverage proceeds
the opinion of the court   without considering the amounts available exclusively to certain
but has been prepared      occupants before distributing the host vehicle’s underinsured-motorist
by the Reporter of         coverage, since James requires that the trial court take into account the
Decisions for the          presence of separate underinsured-motorist coverage exclusive to
convenience of the         individual passengers and give each passenger credit with the amount of
reader.)
                           those benefits available exclusively to them, but the valuations of each
                           occupant’s injuries previously set forth in a bench trial would be
                           controlling.
Decision Under             Appeal from the Circuit Court of Saline County, No. 02-MR-42; the Hon.
Review                     Ronald R. Eckiss, Judge, presiding.



Judgment                   Affirmed in part and reversed in part; cause remanded with directions.


Counsel on                 Douglas N. Dorris, of Howerton, Dorris & Stone, of Marion, for
Appeal                     appellants Jared Head, Martha Head, and Wayne Head.

                           Mark D. Prince, of Prince Law Firm, of Marion, for appellants Katherine
                           Duncan, Ross Duncan, and Russell Duncan.

                           James B. Bleyer, of Bleyer & Bleyer, of Marion, for appellees Brian W.
                           Bramlet and Robert Bramlet.

                           John Womick, of Womick Law Firm, Chtrd., of Herrin, for appellee
                           Roger Herrin.


Panel                      JUSTICE GOLDENHERSH delivered the judgment of the court, with
                           opinion.
                           Justices Welch and Wexstten concurred in the judgment and opinion.



                                            OPINION

¶1          The instant appeal involves a dispute about the distribution of underinsured-motorist
        proceeds following a tragic accident involving a group of teenage boys who were riding
        together in a Jeep Cherokee being driven by one of the boys’ mothers, Katherine Duncan.
        Defendants-counterplaintiffs, Jared Head, Martha Head and Wayne Head, individually and
        as parents of Jared Head, a minor (hereinafter Jared), who has since attained the age of
        majority, and Katherine Duncan, Ross Duncan, and Russell Duncan, appeal the order of the
        circuit court of Saline County which distributed the underinsured-motorist proceeds. Jared
        and the Duncans will collectively be referred to as appellants. Appellee is the other
        defendant, Dr. Roger Herrin, special administrator of the estate of Michael Herrin. Michael
        Herrin died as a result of the accident, and Dr. Herrin was his father. While appellants and
        appellee both recognize that the formula set forth in Janes v. Western States Insurance Co.,
        335 Ill. App. 3d 1109, 783 N.E.2d 37 (2001), controls, appellants argue the trial court
        incorrectly applied the formula. Appellants contend the misapplication of Janes resulted in

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     appellee receiving a disproportionately large share of the host vehicle’s underinsured-
     motorist coverage, specifically arguing: (1) the ratio method is not the method of distribution
     Janes requires when distributing a common pool of underinsured-motorist coverage available
     upon a host vehicle; (2) the trial court erred when it used the value of the amounts actually
     received by appellee from separate underinsured-motorist coverage available exclusively to
     it instead of the total limits of underinsured-motorist coverage which were available
     exclusively to it; and (3) the trial court erred when it used as the valuations for each
     occupant’s injuries the amounts set during a prior bench trial which distributed the bodily
     injury liability proceeds of $100,000 from the driver of the at-fault vehicle’s insurance policy
     instead of requiring that the valuation of injury awards for use in distributing underinsured-
     motorist proceeds be set by arbitration. We affirm in part, reverse in part, and remand for
     further proceedings.

¶2                                      BACKGROUND
¶3        On June 14, 2001, Michael Herrin, Jared Head, and Ross Duncan were passengers in a
     Jeep Cherokee being driven by Katherine Duncan when they were hit by a truck being driven
     by Brian Bramlet, who failed to stop at an intersection. Michael Herrin was killed in the
     accident while Katherine Duncan, Ross Duncan, and Jared Head all received injuries. All
     occupants of the Jeep Cherokee filed separate personal injury claims against Brian Bramlet,
     the at-fault driver. Bramlet’s truck was insured by Columbia Mutual Insurance Company
     (Columbia Mutual) with policy limits of $100,000 per occurrence. Columbia Mutual
     tendered its $100,000 policy limits.
¶4        An issue arose as to how to divide the $100,000 in liability insurance proceeds provided
     by the Columbia Mutual policy. Accordingly, the trial court conducted a consolidated bench
     trial in December 2007 in order to establish values for each of the claims. After hearing all
     the evidence, the trial court found the following values for the claims of the occupants of
     Katherine Duncan’s vehicle:
              Estate of Michael Herrin       $10,010,953.61
              Jared Head                     $ 633,804.70
              Katherine Duncan               $ 155,855.11
              Ross Duncan                    $ 125,892.50
              Russell Duncan                 $     40,000.00
              Total                          $10,966,505.92
¶5        Dr. Herrin owned several nursing homes and purchased business insurance on the nursing
     homes and insurance on certain vehicles owned through the nursing homes. Two policies
     specifically provided automobile insurance coverage on certain listed vehicles and provided
     underinsured-motorist coverage not only on Dr. Herrin but also on relatives who resided with
     him, including Michael. The policies were issued by Monroe Guaranty and Cincinnati
     Insurance. After litigation, it was determined that Dr. Herrin’s nursing home policies
     provided his family with $5 million of underinsured-motorist coverage and specifically
     covered the accident in which Michael was killed on June 14, 2001. Dr. Herrin was also


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     covered by an automobile policy through Encompass Insurance Company (Encompass),
     which provided an additional $500,000 in underinsured-motorist coverage for appellee’s
     wrongful-death claim for a total of $5.5 million in underinsured-motorist coverage. This $5.5
     million is exclusive to appellee’s claims, and appellants can make no claim against the $5.5
     million pool of appellee’s underinsured-motorist coverage.
¶6       After mediation, the Herrin estate settled its wrongful-death claim for $1.65 million out
     of the $5.5 million in underinsured-motorist coverage available exclusively to the Herrin
     estate. A total of $1.25 million was paid by Monroe Guaranty and $400,000 was paid by
     Cincinnati Insurance. The trial court approved the $1.65 million settlement.
¶7       At the time of the accident, Jared’s family carried underinsured-motorist coverage on
     their vehicles totaling $100,000; however, because the driver of the at-fault vehicle, Brian
     Bramlet, was carrying $100,000 in personal liability insurance through Columbia Mutual,
     Bramlet was not an underinsured motorist for purposes of Jared’s family’s automobile
     insurance carrier. The Duncan family carried automobile insurance through Encompass on
     numerous vehicles. After extended stacking litigation, including an appeal to this court, it
     was determined that the Duncans’ underinsured-motorist coverage aggregated to $900,000.
     Encompass was given a setoff for the $100,000 in tortfeasor liability insurance on the basis
     that those funds will be distributed to the parties injured by the tortfeasor Bramlet, leaving
     a total of $800,000 available from the underinsured-motorist coverage provided by
     Encompass. See Columbia Mutual Insurance v. Herrin, No. 5-04-0575 (2007) (unpublished
     order under Supreme Court Rule 23 (eff. July 1, 1994)).
¶8       On April 21, 2009, Encompass filed a motion for leave to deposit $800,000 of
     underinsured-motorist benefits with the court with a request that Encompass be discharged
     from liability upon deposit of those funds and a request that the occupants of the Duncan
     vehicle be ordered to settle between themselves their rights or claims to the underinsured
     benefits available under the Encompass policy. While not objecting to $800,000 being paid
     into the court, appellants objected to Encompass’s motion on the basis that the amounts to
     be distributed to the occupants of the Duncan vehicle were issues that needed to be arbitrated
     and they should not be “ordered to settle” their rights and claims to the common pool of host
     vehicle underinsured-motorist coverage when a good-faith disagreement existed on that
     issue.
¶9       On December 1, 2009, the trial court conducted a hearing on Encompass’s motion and
     appellants’ objections thereto. The trial court found that the arbitration clause of the
     Encompass policy would not be followed because the court previously set the amounts of
     each claim in a bench trial which determined the value of the claims when considering how
     the $100,000 in liability insurance coverage carried by the tortfeasor should be distributed.
     The trial court noted that the Herrin estate already received $1.65 million in underinsured-
     motorist settlement proceeds from policies which were only available to the Herrin estate and
     that it would apply the principles of Janes when distributing the Encompass underinsured-
     motorist funds. The trial court used a ratio method and, ultimately, distributed the Encompass
     funds as follows:



                                              -4-
              Herrin Estate         $677,851.06
              Jared Head            $147,368.96
              Katherine Duncan      $ 36,228.77
              Ross Duncan           $ 29,286.12
              Russell Duncan        $ 9,265.09
              Total                 $900,000.00
       Jared Head and the Duncans filed separate motions to reconsider or modify. The trial court
       denied the motions. Appellants filed timely notices of appeal.

¶ 10                                        ANALYSIS
¶ 11       We first address appellee’s argument that this case is moot because the $800,000 of
       Encompass funds have already been distributed. According to appellee, the trial court has
       already paid out Encompass’s underinsured-motorist funds to the administrator of the Herrin
       estate, who has already paid them out from the probate estate, and, thus, no funds remain in
       the estate of Michael Herrin. We point out that an issue is only moot if no actual controversy
       exists or where events occur which make it impossible for the court to grant effectual relief.
       Wheatley v. Board of Education of Township High School District 205, 99 Ill. 2d 481, 484-
       85, 459 N.E.2d 1364, 1366 (1984). Here, we agree with appellants that the early distribution
       of any of the Encompass insurance proceeds, which was done over the objection of Jared
       Head, does not make the issues in this appeal moot. There is nothing in the record to indicate
       that the funds distributed to the estate of Michael Herrin through the administrator of the
       estate, Dr. Roger Herrin, Michael’s father, have been spent. In any event, even if the funds
       have been spent, Dr. Herrin can be required to make restitution. See First National Bank of
       Jonesboro v. Road District No. 8, 389 Ill. 156, 162-63, 58 N.E.2d 884, 887 (1945). We turn
       now to the issues raised by appellants.

¶ 12                             I. METHOD OF DISTRIBUTION
¶ 13       Appellants first contend the trial court erred by employing the ratio method of
       distribution. Appellants insist that Janes requires the host vehicle occupants with separate
       sources of underinsured-motorist coverage exclusive to them access their own sources of
       underinsured-motorist coverage before participating in the host vehicle’s common pool of
       underinsured-motorist coverage and that the common pool coverage should be used initially
       to satisfy the claims of occupants with no outside source of underinsured-motorist coverage.
       We agree.
¶ 14       In Janes, the plaintiff, Linda Janes, and her husband were involved in a car accident in
       their van. Her husband was driving and was killed. Linda survived but incurred medical bills
       in the amount of $162,226. Four other van passengers, two married couples, Cleo and Jerry
       Harris and Connie and Charles Church, were also killed. Alice Phelps was driving a car that
       crossed the centerline and caused the collision. Phelps had $50,000 in bodily injury liability
       coverage that was tendered by her insurance company.
¶ 15       The plaintiff and her husband had two separate auto insurance policies. One issued by

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       Western States Insurance Company (Western States) provided $50,000 in underinsured-
       motorist coverage, and the other issued by Transamerica Indemnity Company (Transamerica)
       stacked to provide $300,000 in underinsured-motorist coverage for a total of $350,000. That
       amount was reduced to $300,000 because of the $50,000 in tortfeasor liability coverage
       already paid into the court. Cleo and Jerry Harris received $50,000 each from their own
       insurance policy for a total of $100,000 in underinsured-motorist benefits exclusive to them.
       Connie and Charles Church each received $100,000 from their own insurance policy for a
       total of $200,000 in underinsured-motorist benefits exclusive to them.
¶ 16        One of the issues in Janes was how to divide the $300,000 in underinsured-motorist
       benefits provided by the Janes’s two insurance policies among the six passengers of the van.
       The trial court ruled that the $300,000 should be divided equally among the six occupants
       of the Janes’s van. The trial court awarded each of the six claimants $8,333.33 from the
       Western States policy and $41,666.66 from the Transamerica policy. Janes, 335 Ill. App. 3d
       at 1114, 783 N.E.2d at 40-41. Plaintiff appealed the trial court’s distribution of the host
       vehicle underinsured-motorist coverage in equal amounts. The Janes court found that the
       trial court’s distribution of the host vehicle’s underinsured-motorist benefits to the occupants
       of the insured vehicle in equal shares failed to fill the gap between the tortfeasor’s policy and
       the insured’s policy because the trial court failed to consider payments of underinsured
       benefits to the occupants individually and failed to adjust payments of underinsured-motorist
       benefits payable on the van to equalize the funds received by each occupant. Janes
       specifically stated:
                “If a court decides that the passengers are equally entitled to recover damages, the
            ‘gap’ should be filled first by the policies specific to a policyholder and then by policies
            general to all occupants. Assuming plaintiff has correctly assessed the limits of the other
            injured parties’ policies, plaintiff would be entitled to the first $100,000 to become equal
            to the Harrises, and then the funds of the Janes policy would be equally distributed with
            the Harrises until all parties are equal to the Churches. Upon remand, a hearing will be
            required to allow plaintiff to prove that the Harrises and the Churches had other
            coverage.” Janes, 335 Ill. App. 3d at 1123-24, 783 N.E.2d at 48.
       The result of the Janes decision was that all occupants of the vehicle would ultimately
       receive $100,000 in underinsured-motorist coverage.
¶ 17        The Janes court rejected the ratio method employed by the trial court because it did not
       take into account the separate sources of underinsured-motorist coverage the Churches and
       the Harrises had available exclusively to them before dividing the common pool of
       underinsured-motorist coverage. Pursuant to the holding in Janes, the Churches were not
       entitled to any additional underinsured-motorist funds available through the host vehicle’s
       common pool of underinsured-motorist proceeds because the Churches’ own underinsured-
       motorist coverage available exclusively to them already provided them with $100,000 each.
       The Harrises were entitled to another $50,000 each from the host vehicle policy, which
       combined with their own underinsured-motorist coverage of $50,000 each resulted in a total
       of $100,000 each. Plaintiff and her deceased husband would take $100,000 for a total of
       $200,000.


                                                 -6-
¶ 18       Here, as in Janes, the trial court erred in applying a ratio method without considering the
       amounts of underinsured-motorist coverage which the occupants of the Duncan vehicle had
       available exclusively to them before dividing up the host vehicle’s underinsured-motorist
       coverage provided by the Encompass policy. Janes requires a court to take into account the
       presence of separate underinsured-motorist coverage exclusive to individual passengers and
       give each passenger credit with the amount of underinsured-motorist benefits available
       exclusively to them. Therefore, we reverse that portion of the trial court’s order which
       apportioned the Encompass policy between the occupants of the host vehicle and remand
       with directions that when determining the apportionment of an $800,000 pool of host vehicle
       underinsured-motorist coverage available through Encompass, the trial court give credit for
       the underinsured-motorist coverage available exclusively to the estate of Michael Herrin.

¶ 19                     II. SETTLEMENT VS. COVERAGE AVAILABLE
¶ 20        Appellants next contend that the trial court erred by crediting only the amount of the
       settlement received ($1.65 million) rather than the amount of the coverage available to the
       estate of Michael Herrin ($5.5 million). After careful consideration, we find that this issue
       need not be decided because using either figure, it is clear that the value of the claims of the
       occupants in the Duncan host vehicle who did not have outside sources of underinsured-
       motorist insurance exceeds the $800,000 available under the Encompass policy.
¶ 21        In the instant case, a bench trial was conducted to determine the value of the claims of
       the occupants of the Duncan vehicle when considering how the $100,000 in liability
       coverage carried by the tortfeasor should be distributed. All parties participated in the bench
       trial, and no party appealed the trial court’s findings. The trial court specifically valued
       appellants’ claims as follows:
                Katherine Duncan            $155,855.11
                Ross Duncan                 $125,892.50
                Russell Duncan              $ 40,000.00
                Jared Head                  $633,804.70
                Total                       $955,552.31
       Thus, the sum of appellants’ claims exceeds the amount of underinsured-motorist coverage
       available under the Duncans’ Encompass policy. Because the Herrin estate has already
       received $1.65 million in underinsured-motorist benefits available exclusively to the estate,
       which far exceeds the $800,000 of underinsured-motorist coverage available on the host
       vehicle, it is clear that under either computation ($1.65 million or $5.5 million), the Herrin
       estate will not be able to recover any additional funds.

¶ 22                                   III. ARBITRATION
¶ 23       Finally, appellants contend the trial court erred when it used as valuations for each
       occupant’s injuries the amounts set during the prior bench trial which distributed the bodily
       injury liability proceeds of $100,000 from the at-fault driver’s insurance policy instead of
       requiring the valuation of the injury awards for use in distributing underinsured-motorist

                                                 -7-
       proceeds under the Duncans’ Encompass policy be set by arbitration as per the language of
       the Encompass policy. We disagree.
¶ 24        The instant case presents a tragedy where neither the appellants nor the appellee can
       really ever be declared a winner. The best we can hope for is that sooner rather than later this
       complex litigation will come to a logical conclusion, and the appellants and the appellee will
       receive equitable compensation for their grave losses. While appellants contend that they are
       entitled to arbitration on the issue of damage awards, we find that the damage awards decided
       by the trial court during the bench trial to determine the distribution of the tortfeasor’s bodily
       injury liability should control.
¶ 25        It is well settled that the fixing of damages is a function of the trier of fact and should not
       be disturbed upon review unless there is no evidence to support the finding or the award does
       not bear a reasonable relation to plaintiffs’ loss. Netzel v. United Parcel Service, Inc., 181
       Ill. App. 3d 808, 817, 537 N.E.2d 1348, 1354 (1989). Here, appellants did not object to these
       damage awards at the time they were decided by the trial court, nor did they file an appeal
       on that issue. Appellants had an opportunity to present their evidence and cross-examine
       witnesses.
¶ 26        Appellants argue that because they believed that the evidence during the bench trial was
       only being used to set the damage awards affecting the distribution of the $100,000 from the
       tortfeasor’s policy, no party had much desire to strike an adversarial position. However,
       during this appeal, appellants have failed to show us how the valuations are flawed or
       unreasonable. Even though the parties were not initially aware that these valuations would
       be used, considering the totality of the circumstances, we find the trial court’s decision to use
       the valuations for each occupant’s injuries previously set during the bench trial distributing
       the bodily injury liability proceeds from the at-fault driver’s policy not to be an abuse of its
       discretion.

¶ 27                                      CONCLUSION
¶ 28       For the foregoing reasons, the judgment of the circuit court of Saline County is hereby
       affirmed in part and reversed in part, and the cause is remanded with directions consistent
       with this opinion to distribute to each of the injured occupants of the host vehicle from the
       $800,000 of common pool Encompass underinsured-motorist coverage by properly applying
       the formula for distribution mandated in Janes. The valuations for each occupant’s injuries
       previously set forth in the bench trial are controlling and arbitration is unnecessary.

¶ 29       Affirmed in part and reversed in part; cause remanded with directions.




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