The Illinois Appellate Court has answered a certified question that was brought to it from a circuit court judge. In this case, Michael McGrath owned a home designed and built by Patrick Plunkett Architectural Design Ltd. and insured by American Family Insurance Co. McGrath filed an insurance claim on Aug. 23, 2006 claiming that the water damage to his home was caused by the faulty design in construction by the defendant, Patrick Plunkett Architectural. American Family first denied McGrath’s claim; he then filed suit against American Family and won in federal court. McGrath won his case on summary judgment, and American Family agreed to a settlement for about $1.1 million. After paying McGrath, American Family requested that McGrath sign a written assignment to the extent of its payment, but McGrath chose not to respond.
American Family then filed suit against the defendants, Patrick Plunkett and his architectural firm, claiming negligence and causing the damage to McGrath’s home. Since American Family did not have an executed written assignment, the insurance company filed suit in its capacity as McGrath’s equitable subrogee. At the same time the American Family lawsuit was pending, it filed a lawsuit against McGrath for specific performance in order to obtain his executed written assignment. However, American Family’s suit against defendants was dismissed with prejudice on a combined motion to dismiss under §2-619.1 of the Code of Civil Procedure (735 ILCS 5/2-619.1), with a trial court finding that American Family was required to have a written assignment in order to pursue a subrogation claim. Shortly after that, American Family’s lawsuit against McGrath was dismissed with a trial court finding that American Family had released its claim for an assignment by settling the federal lawsuit. The trial judge also found that the claim was barred by res judicata based on the dismissal of the equitable subrogation suit against defendants.
American Family simultaneously appealed the dismissal of both lawsuits and the appellate court affirmed the dismissal of the subrogation claim, holding that American Family had failed to perfect its rights of subrogation under the terms of the insurance policy. However, the appellate court reversed the dismissal of American Family’s claim against McGrath and remanded the case. The opinion of the court in that case was unpublished under Supreme Court Rule 23. On remand, McGrath eventually did execute the assignment for American Family and that case was dismissed.