A Chicago appeals panel has tossed State Farm back into a class action lawsuit, which accused the company of using an attorney who fraudulently served summonses in traffic crash suits, leading to allegedly bogus judgments against people involved in traffic crashes with State Farm customers.
The court said allegations that State Farm Insurance 'directed and ratified' their attorney's actions are plausible.
The March 31 decision was penned by Justice David Ellis, with concurrence from Justices Margaret McBride and Nathaniel Howse, of Illinois First District Appellate Court.
Illinois First District Appellate Justice David Ellis
| Illinoiscourts.gov
The ruling involved a suit filed in October 2010 in Cook County Circuit Court by named plaintiffs Frank Selby, Martin Young, Adriana Lopez and Katherine (Scheiwe) Polk. Defendants are State Farm, headquartered in downstate Bloomington, and James M. O’Dea, an Orland Park lawyer retained by State Farm to pursue auto accident insurance claims against third parties. O'Dea's wife works for State Farm, Justice Ellis noted.
Plaintiffs were drivers involved in accidents with State Farm customers. Plaintiffs alleged O’Dea sought bogus default judgments against them by having his former brother-in-law serve summonses on them, instead of using the sheriff’s office or a licensed process server, as required by court rules. O'Dea allegedly charged plaintiffs the $60 fee the sheriff demands for serving summonses, although the sheriff was not used. In some cases, plaintiffs were not even served, according to the suit.
In addition, plaintiffs alleged the “verified” complaints O’Dea filed in court were not legitimate because State Farm employees signed them, not the underlying motorists who were involved in the traffic accidents.
As a consequence of these alleged maneuvers, O'Dea secured fraudulent judgments against plaintiffs, the suit said.
O’Dea would then allegedly file with the Illinois Secretary of State a “record of unsatisfied judgment,” which would cause suspension of plaintiffs' driver’s licenses. In some cases, O’Dea filed this record less than 30 days after the default judgment, a period during which plaintiffs were allowed to vacate the judgment, plaintiffs alleged.
O'Dea did not file copies of the records of unsatisfied judgment in circuit court, so as to hide the license suspensions from defendants and judges, the suit alleged.
Plaintiffs claimed State Farm was liable for O'Dea's conduct, because he was their agent and the company allegedly endorsed his actions.
Plaintiffs alleged defendants committed fraud, abuse of process, conspiracy to commit abuse of process and malicious prosecution. Plaintiffs said the suit should be a class action, because there are a large number of other drivers who have been similarly allegedly defrauded.
The abuse of process claims by all plaintiffs and the malicious prosecution count by one plaintiff against State Farm were tossed, prompting State Farm to appeal.
Justice Ellis put the abuse claims back in place, saying he found plausible allegations State Farm "directed and ratified" O'Dea's alleged misuse of process.
In regard to the conspiracy allegation, Ellis spent much time in his 62-page ruling, examining the question of whether State Farm could use privileged communications between the company and O'Dea to fight the suit, but then deny plaintiffs access to the communications — citing privilege — so plaintiffs could not adequately challenge the company's arguments.
"The litigant injects an issue into the case that relies on privileged attorney-client communications, fundamental fairness requires that the opposing party be allowed to examine those otherwise privileged communications," Ellis said.
Ellis upheld dismissal of the malicious prosecution claim, saying the plaintiff argued State Farm's case against her was thrown out because the statute of limitations expired. But Ellis said State Farm had a "credible basis" for pressing a claim against her, as she was allegedly at fault in a traffic crash with someone covered by State Farm.
Plaintiffs are represented by Wein & Associates, of Chicago.
State Farm is represented by Riley, Safer, Holmes & Cancila, of Chicago.