How could an Illinois plaintiff win a billion dollars in damages without proving a penny in damages?

How could a judge commit four colossal mistakes in one trial?

How could an appellate court uphold all four mistakes?

Answers leap from the pages of the Illinois Supreme Court’s Aug. 18 decision in Avery vs. State Farm Insurance. The high court's landmark ruling reversed the Fifth District Appellate Court, which had affirmed a Williamson County verdict against State Farm.

According to the Supreme Court, the trial judge allowed a claim for breach of contract when there was no contract, allowed a fraud claim when there was no fraud, certified a class action when there was no class and awarded damages when there were no damages.

In four parts, the Record will excerpt portions of Chief Justice Mary Ann McMorrow’s opinion dealing with contract, fraud, class and damages.

On the contract, McMorrow wrote:

“Crash parts consist of two categories. The first category is comprised of new parts made by or on behalf of the automobile’s original manufacturer. These parts are commonly referred to as ‘Original Equipment Manufacturer’ parts, or ‘OEM’ crash parts. The second class includes aftermarket parts made by companies not affiliated with original equipment manufacturers…

“Plaintiffs alleged that…State Farm promised ‘to restore plaintiffs’ vehicles to their pre-loss condition using parts of like kind and quality.’ According to plaintiffs, the term ‘like kind and quality,’ as stated in this promise, meant ‘like kind and quality to OEM parts.’

"However, plaintiffs also alleged that the non-OEM parts at issue in this case were categorically inferior to their OEM counterparts…

“Plaintiffs alleged that State Farm’s contractual agreement with its policyholders was a uniform ‘Policy,’ in the singular…State Farm argued, to the contrary, that there was no uniform State Farm automobile insurance policy nationwide...

“The court took the position that the specific form of the individual policies was immaterial so long as the operative contract language in each policy was susceptible of uniform interpretation…

“Prior to trial, the parties tendered a number of motions in limine. One of plaintiffs’ motions sought to bar State Farm from presenting evidence to the jury that the regulation of insurance varied from state to state, and another…sought to prohibit any disclosure of the states where the class members’ policies were filed.”

“Still another…sought to preclude the introduction of evidence regarding differences in State Farm’s contractual obligations to class members…The circuit court granted several of plaintiffs’ motions in limine, including those…

“Among the witnesses appearing for defendant was Don Porter, a State Farm property consultant in general auto claims…According to Porter, State Farm has ‘always had a commitment to restoring the vehicle to its pre-loss condition.’ Porter also testified that the parts specified ‘must be as good as the part that was on the car prior to the loss’….

“Following the close of evidence, the circuit court…reiterated the view that State Farm’s contractual obligation was the same for each member of the class. In describing this uniform obligation, the circuit court pointed to Porter’s testimony…

“The jury found that ‘defendant State Farm failed to perform its obligations under the contract and breached its contract with the plaintiff class’…

“The appellate court concluded, as had the circuit court, that State Farm’s contractual promise was the same for each member of the class. The appellate court stated:...‘State Farm’s own witness, Don Porter, a claims consultant, acknowledged that State Farm had a uniform nationwide obligation to policyholders…

“We disagree…Porter’s testimony about State Farm’s commitment to restoring the vehicle to its 'pre-loss condition’ referred to a ‘basic philosophy’ goal of the company, rather than a contractual obligation. Porter never testified that all of the policy forms at issue in this case were uniform…

“There was no single contract. Rather, there were multiple policy forms which differed materially. On its face, therefore, the verdict is improper…

“We also look at the individual relevant policy forms and consider whether plaintiffs established a breach of any of them…

“With regard to the Massachusetts policies and the ‘assigned risk’ policies, we conclude that there was no breach. Neither of these policy forms contained the ‘like kind and quality’ or the ‘pre-loss condition’ language….

“We turn next to the policies containing the ‘pre-loss condition’ and the ‘you agree’ language. As noted, these provisions state:…‘You agree with us that such parts may include either parts furnished by the vehicle’s manufacturer or parts from other sources including non-original equipment manufacturers’…

“In other words, the insured agrees that the ‘pre-loss condition’ promise may be met by specifying non-OEM parts. In their brief to this Court, plaintiffs do not explain, in any way, how a contract containing the ‘you agree’ language, which expressly permits the specification of non-OEM parts, may be breached by the specification of non-OEM parts…

“It is unclear that the contracts of any of the named plaintiffs’ policies contained the ‘like kind and quality’ language…Accordingly, plaintiffs’ claim for breach of the ‘like kind and quality’ promise fails for lack of proof…

“Also contradicting the position that ‘like kind and quality’ means OEM parts is the contract language:…’If the repair or replacement results in better than like kind and quality, you must pay for the amount of the betterment’…

"According to plaintiffs, all the non-OEM parts at issue in this case are categorically inferior to OEM parts. This means, of necessity, that OEM parts represent the highest possible standard of quality…

“But this reasoning cannot be correct. State Farm’s policy cannot be referring to OEM parts when it uses the term ‘like kind and quality’ because the policy itself says that there is a standard of quality which is better than ‘like kind and quality’ parts…

“State Farm maintains that ‘pre-loss condition’ is what defines ‘like kind and quality,’ rather than the other way around…We agree with State Farm.”

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