Court Interprets ‘Relative’ And ‘Away At School’ In Auto Policy

May 19, 2015 / Writing and Speaking

The 1st District Appellate Court recently held that an underinsured motorist coverage provision applicable to “relatives” residing “primarily” with “you,” including a child “away at school,” provided coverage for the child even though he did not live primarily with the insured and arguably did not intend to return to living with his parents.

The plaintiff insurer in State Farm Mutual Automobile Insurance Co. v. Progressive Northern Insurance Co., 2015 IL App (1st) 140447 (March 27, 2015), whose policy was at issue, was represented by Taylor, Miller LLC. Magnani & Buck Ltd. represented Progressive Northern, the insurer seeking to trigger coverage under the State Farm Mutual policy.

State Farm issued two automobile policies to Randall Toig, father of Andrew Toig, and one policy to Teri Zenner, Andrew’s stepmother. Progressive issued one automobile policy to Allison Wines, Andrew Toig’s natural mother.

The State Farm policies provided coverage to, among others, a “relative,” which was defined as “a person related to you or your spouse by blood, marriage or adoption who resides primarily with you. It includes your unmarried and unemancipated child away at school.”

With his family members residing in the Chicago area, Andrew Toig was injured in an automobile accident while a student at Colorado College. The parties stipulated that he was not married and not emancipated at the time. Progressive did not contest applicability of its UIM coverage. The issue was whether State Farm’s UIM coverage applied.

State Farm filed this declaratory action contesting coverage based on the definition of “relative,” and it filed a summary judgment motion limited to that issue. Progressive filed a cross-motion that raised related issues such as the amount of UIM coverage available under the applicable policies and allocation of loss among the policies.

State Farm did not address those related issues, and the trial court denied State Farm’s motion and granted that of Progressive.

State Farm subsequently moved to reconsider, in which it raised the “relative” definition and, for the first time, raised the related issues and yet another issue concerning whether the policy issued to Andrew’s stepmother would apply.

Although Progressive argued that State Farm waived all the additional issues, the trial court decided them on their merits but ended up denying the motion to reconsider. State Farm then took this appeal.

Standard Of Review

In an opinion by Justice Robert E. Gordon, the 1st District affirmed. He initially addressed the applicable standard of review, finding that a de novo standard applied to the summary judgment ruling against State Farm on the definition of “relative.”

State Farm, however, also appealed the denial of its motion to reconsider. According to Gordon, State Farm sought to have the de novo standard apply to the trial court’s ruling on the additional issues raised in that motion since the trial court decided them on the merits and did not make a finding that they had been waived.

Gordon observed, however, that the abuse-of-discretion standard typically applied to the grant or denial of a motion to reconsider. That standard, moreover, could not be avoided on the theory that the trial court had not found that the newly raised issues had not been waived.

Accordingly, he stated that the trial court did not abuse its discretion by denying the motion for reconsideration based on legal claims that were not previously advanced and affirmed the denial on that basis.

Meaning Of “Relative”

Turning to the definition of “relative,” Gordon addressed whether the word “it” in the second part of the definition referred to “relative” or “person,” which could affect the interpretation. He found that “it,” a neuter pronoun, necessarily referred to “relative,” as a term rather than “person,” which would require “he or she.”

State Farm argued, however, that the insured child “relative,” if “away at school,” still had to meet the first part of the definition and “reside primarily with you.” Gordon rejected the argument for several reasons.

One was that if the child “away at school” had to reside “primarily” with the named insured, no such child would ever qualify. The second was that the definition arguably was ambiguous and would be construed against State Farm. And a third was cases from other states, the majority of which Gordon construed as disagreeing with State Farm’s argument.

He thus determined that a child who is away at school does not have to also prove that he or she primarily resides with the policyholder.

With respect to the meaning of “away at school,” State Farm contended that Andrew Toig was not “away” because he had a history of attending out-of-state schools, was registered to vote in Colorado and had a Colorado driver’s license. These circumstances, according to State Farm, suggested that he did not intend to return to Chicago after graduation and, therefore, was not “away.”

Again Gordon disagreed. He determined that whenever Andrew attended out-of-state schools, he was “away at school.” And the definition of “relative,” while excluding emancipated and married children, said nothing about voter registration or driver’s license.

The court concluded that Andrew qualified for UIM coverage as a “relative” and affirmed the trial court.

Key Points

  • An abuse-of-discretion standard of review applies to arguments raised for the first time on a motion to reconsider in the trial court, even if decided on their merits.
  • Under a definition of “relative” limited to relatives residing with the named insured, but including a “child away at school,” such a child need not also reside with the named insured to qualify for coverage.
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