Haddick v. Valor Insurance, 2001 Ill. Lexis 1436, Docket No. 90226 (11/21/01). Insurer’s duty to settle within policy limits arises at the time a demand for a policy limits settlement is made by a third-party, if there is a reasonable probability of a finding of liability against the insured. Withdrawal of the policy limits demand does not obviate a bad-faith claim. James Griffin and Larry Woodley were in a single-car accident. Griffin died from the injuries, and his estate brought a wrongful-death action against Woodley. Before filing suit, Griffin’s estate made a $20,000 policy limit settlement demand on Woodley. After extending the deadline for settling, and still not having received an offer from Valor Insurance, Woodley’s insurer, Griffin’s estate sued and withdrew the demand. The estate got a judgment in excess of $150,900. Woodley assigned all of his claims against Valor to the estate, which then brought a bad-faith claim against Valor. The Supreme Court ruled that Valor’s duty to settle arose at the time the settlement demand was made, even though the wrongful-death action had not been filed. Further, the estate’s withdrawal of the policy limits demand did not undermine the cause of action.

IRMO Kates, 2001 Ill. Lexis 1437, Docket No. 90732 (11/21/01). DNA test results are a condition precedent for an adjudicated father to file a complaint to declare nonexistence of parent-child relationship. Wife gives birth to a child, but the father is not her husband, and she tells him so when she learns she is pregnant. After the child is born, husband files for divorce. He agrees to pay $20 per week in child support. The judgment of divorce states that the child was "born to the parties." When there are post-decree proceedings to increase support, husband disputes he is the father. He brings an action pursuant to section 7(b-5) of the Illinois Parentage Act, 750 ILCS 45/7(b-5), to declare that he is not the father. The Supreme Court held that the plain meaning of the Act "is that an action to declare the nonexistence of the parent and child relationship may be brought only if DNA test results show that the man adjudicated to be the father is not the natural father of the child." The husband argued that it is unreasonable to require DNA evidence prior to filing the complaint because fathers in those circumstances are unlikely to have custody of the child. The Court rejected that argument: "Given that section 7(b-5) creates a new cause of action that jeopardizes the finality of paternity adjudications, it is not unreasonable that the legislature chose to limit such an action only to those adjudicated fathers who first obtained DNA tests disproving paternity."

Morton v. Madison County Nursing Home Auxiliary, 2001 Ill. Lexis 1438, Docket No. 90796 (11/21/01). The relation-back provision in the Code of Civil Procedure requires that service be made on the proper person, albeit in the wrong capacity, before expiration of the statute of limitations. William Morton’s estate filed a wrongful-death action against the Madison County Nursing Home Auxiliary, and served the Auxiliary’s director with the complaint. The Auxiliary, however, had no title, interest, or authority over the nursing home. The proper party actually was Madison County. After the statute of limitations expired, the estate moved, pursuant to the relation-back statute, 735 ILCS 5/2-616(d), to amend the complaint to name the county. Leave was granted, and the estate then served the county clerk as registered agent. A motion to dismiss based on statute of limitations was granted, then affirmed on appeal. The Supreme Court affirmed, concluding that "Morton’s service on the nursing home director did not meet the third requirement of section 2-616(d), namely, that Morton had to serve the County or its agent [before expiration of the statute of limitations] for his amended complaint to relate back." The court rejected the argument that Supreme Court Rule 103(b) allowed for service after the limitations statute runs. "Rule 103(b) . . . is unavailable to plaintiffs, like Morton, who fail to name the proper defendant within the statute of limitations."

Board of Managers of the Village Centre Condominium Ass’n., Inc. v. Wilmette Partners, 2001 Ill. Lexis 1440, Docket No. 90439 (11/21/01). A waiver of the implied warranty of habitability is effective only if the contract specifically identifies that warranty. Waiver of implied warranties of merchantability and fitness do not serve as waiver of habitability warranty. Condo owners alleged that their five-story garage contained latent defects that rendered it unusable, so they sued the builder alleging breach of the warranty of habitability. The builder moved to dismiss, arguing that the owners’ contracts contained a disclaimer of the warranty. Actually, the contracts disclaimed the warranties of fitness for a particular purpose and merchantability. The contracts did not specifically disclaim the habitability warranty. The Supreme Court ruled that the latter warranties were not interchangeable with the habitability warranty, and that a disclaimer could be effective only if it were specifically identified. "Given that the implied warranty of habitability is distinct from other warranties by its very nature, we find any disclaimer that does not reference the implied warranty of habitability by name is not a valid disclaimer of that warranty."

Ryan v. Telemarketing Associates, Inc., 2001 Ill. Lexis 1439, Docket No. 89738 (11/21/01). Telephone fundraisers are not required to disclose the percentage of a donation that is distributed to the charity. Defendant telemarketer was fundraising for a charity, VietNow, pursuant to a contract. The contract called for the telemarketer to retain 85 percent of the donations received, the remainder to go to the charity. VietNow did not complain about the contract, but the attorney general sued the telemarketer for fraud and breach of fiduciary duty. The basis of the complaint was that the telemarketer did not volunteer to tell the persons from whom donations were sought the percentage of the donation that would be distributed to VietNow. After review of United States Supreme Court opinions, the Illinois Supreme Court ruled that placing an obligation upon a fundraiser to state the percentage of donations distributed to the charity would be a violation of the First Amendment. ". . . [A]n attempt to regulate the defendants’ ability to engage in a protected activity based upon a percentage-rate limitation" [has been rejected by the U.S. Supreme Court]. Further, there was no fraud because "fraud cannot be defined in such a way that it places on solicitors the affirmative duty to disclose to potential donors, at the point of solicitation, the net proceeds to be returned to the charity." The Court also was concerned that if an action like this were allowed to proceed, "all fund-raisers in this state would have the burden of defending the reasonableness of their fees."