Brooks v. Cigna Property & Cas. Companies

• Decision Date: 01 September 1998
• Docket Number: No. 1-97-4260,1-97-4260
• Citation: 700 N.E.2d 1052,299 Ill.App.3d 68,233 Ill.Dec. 344
• Parties: , 233 Ill.Dec. 344 Eugene BROOKS, Plaintiff-Appellant, v. CIGNA PROPERTY AND CASUALTY COMPANIES, Defendant-Appellee.
• Court: United States Appellate Court of Illinois

Page 1052

700 N.E.2d 1052

299 Ill.App.3d 68, 233 Ill.Dec. 344

Eugene BROOKS, Plaintiff-Appellant, v. CIGNA PROPERTY AND CASUALTY COMPANIES, Defendant-Appellee.

No. 1-97-4260.

Appellate Court of Illinois First District, Second Division.

Sept. 1, 1998.

[299 Ill.App.3d 70] E. Bryan Dunigan, Chicago (Stephen J. Klyczek, of counsel), for appellant.

Debboli, Millman & Spiegel, Chicago (Stephen C. Debboli, of counsel), for appellee.

Justice RAKOWSKI delivered the opinion of the court:

While working for Illinois Trailer Equipment Company, plaintiff Eugene Brooks was injured by an uninsured motorist. He notified his employer's insurance carrier, Cigna Property and Casualty Companies (Cigna), of his uninsured motorist claim under section 143a of the Illinois Insurance Code (Code) (215 ILCS 5/143a (West 1996) (formerly Ill.Rev.Stat.1983, ch. 73, par. 755a)) and demanded arbitration. Eleven years after the accident with no resolution of his claim, Brooks filed suit against Cigna, alleging breach of contract and "vexatious delay." Cigna moved to compel arbitration, which the circuit court granted. Brooks now argues he cannot be compelled to arbitrate the claim. Because we conclude that arbitration under the Code is mandatory and cannot be waived, we affirm.

FACTS

Brooks was injured in 1984 when involved in an automobile accident with Preston Strickland, an uninsured driver. At the time of the accident, Brooks was driving a truck owned by his employer, Illinois Trailer Equipment Company. Illinois Trailer Equipment Company had a policy of automobile insurance with Cigna that provided for uninsured motorist benefits. Brooks notified Cigna of his claim. At some point, Cigna offered to settle. Brooks rejected the settlement offer and renewed his previous demand for arbitration. His demand went unanswered and, in 1995, Brooks filed suit. Cigna's motion to dismiss based on the statute of

[233 Ill.Dec. 346] limitations was granted. We reversed that decision in an unpublished order under Supreme Court Rule 23 (Brooks v. Cigna Property & Casualty Cos., No. 1-96-2101 (January 23, 1997)), and remanded to the circuit court for further proceedings. On remand, Cigna filed a motion to compel arbitration that was granted. The trial court did not address Brooks' "vexatious delay" count and that count remains pending in the trial court. We have jurisdiction pursuant to Supreme Court Rule 307(a). 166 Ill.2d R. 307(a).

ANALYSIS

I. MOTION TO STAY APPEAL

Taken with the case is Brooks' motion to stay appeal. Because the constitutionality of section 143a is presently pending before the Illinois Supreme Court and the validity of section 143a is key to his appeal, Brooks contends this appeal must be stayed until the supreme court resolves the issue.

In Reed v. Farmers Insurance Group, 291 Ill.App.3d 1068, 226 Ill.Dec. 282, 685 N.E.2d 385 (1997), the third district declared section 143a unconstitutional. The supreme court granted leave to appeal (Reed v. Farmers Insurance Group, 175 Ill.2d 553, 228 Ill.Dec. 725, 689 N.E.2d 1146 (1997)).

After thoroughly reviewing the merits of Brooks' motion and considering the benefits of staying this appeal, we deny Brooks' motion to stay. The statute found unconstitutional in Reed is the 1996 version of the statute, not the 1983 statute that is relevant to the instant case. The 1996 version contains different provisions, in particular, the "escape hatch" provision allowing for review of arbitration awards above minimal financial liability limits but binding awards below those limits. The crux of the Reed decision was the inequity and unconscionability of this provision in that it favors insurers because arbitration awards above liability limits are nonbinding and awards lower than those limits are binding. See Reed, 291 Ill.App.3d 1068, 226 Ill.Dec. 282, 685 N.E.2d 385. In the instant case, the relevant version of section 143a contains no "escape hatch" provision. The statutory language is neutral and there is no differentiation between awards below the limits and those above the limits. Based on the difference in the statutory provisions and because the third district's decision centered on the offensive nature of the distinction between high and low awards, we conclude that the supreme court's resolution of Reed would not affect the issues before us.

Accordingly, we deny Brooks' motion to stay appeal.

II. STANDARD OF REVIEW

"A motion to compel arbitration is in the nature of a prayer for injunctive relief, and a denial [or grant] of that motion can be reviewed by an appellate court as an interlocutory appeal pursuant to Supreme Court Rule 307(a)(1)." Yandell v. Church Mutual Insurance Co., 274 Ill.App.3d 828, 830, 211 Ill.Dec. 337, 654 N.E.2d 1388 (1995). The standard is whether the trial court abused its discretion in granting or denying the motion to compel. Yandell, 274 Ill.App.3d at 831, 211 Ill.Dec. 337, 654 N.E.2d 1388. "The sole issue before the appellate court on an interlocutory appeal is whether a sufficient showing was made to sustain the order of the trial court." Yandell, 274 Ill.App.3d at 830, 211 Ill.Dec. 337, 654 N.E.2d 1388.

III. PROPRIETY OF GRANTING MOTION TO COMPEL ARBITRATION

Brooks first contends that he cannot be compelled to arbitrate because he is not a party to the arbitration agreement contained in the insurance policy; he is merely a third-party beneficiary.

Arbitration was designed to speed the resolution and determination of disputed issues. M. Rhodes, 14 Couch on Insurance 2d § 50:305, at 55 (Supp.1998). See also State Farm Fire & Casualty Co. v. Yapejian, 152 Ill.2d 533, 541, 178 Ill.Dec. 745, 605 N.E.2d 539 (1992) (arbitration provision added to statute to "expedite the processing of uninsured motorist claims"). Generally, "[a]rbitration is a matter of contract, and a party cannot be required to arbitrate any dispute which he or she has not agreed to arbitrate." Kennedy v. Commercial Carriers, Inc., 258 Ill.App.3d 939, 943, 196 Ill.Dec.

[233 Ill.Dec. 347] 894, 630 N.E.2d 1059 (1994). Similarly, a nonparty to the contract or a third-party beneficiary cannot be compelled to arbitrate. See Yandell v. Church Mutual Insurance Co., 274 Ill.App.3d 828, 833, 211 Ill.Dec. 337, 654 N.E.2d 1388 (1995); City of Peru v. Illinois Power Co., 258 Ill.App.3d 309, 312-13, 196 Ill.Dec. 519, 630 N.E.2d 454 (1994); Jacob v. C & M Video, Inc., 248 Ill.App.3d 654, 659, 188 Ill.Dec. 697, 618 N.E.2d 1267 (1993); Property Management, Ltd. v. Howasa, Inc., 14 Ill.App.3d 536, 540, 302 N.E.2d 754 (1973).

However, in Illinois, arbitration of uninsured motorist claims is provided for by statute. Statutes that are in force at the time a policy is issued are controlling. American Family Mutual Insurance Co. v. Baaske, 213 Ill.App.3d 683, 688, 157 Ill.Dec. 239, 572 N.E.2d 308 (1991). Where a statute provides for uninsured motorist coverage, the statute becomes a part of each policy to which the statute applies to the same effect as if the statutory language were written in the policy. 8C J. Appleman & J. Appleman, Insurance Law & Practice § 5067.35, at 36 (1981). As such, in the case of arbitration of uninsured motorist claims more is involved than simply a matter of contract rights and remedies.

Section 143a of the Illinois Insurance Code states:

"No such policy shall be renewed * * * unless it is provided therein that any dispute with respect to such coverage shall be submitted for arbitration to the American Arbitration Association or for determination in the following manner: Upon the insured requesting arbitration, each party to the dispute shall select an arbitrator * * *. If such arbitrators are not selected within 45 days from such request, either party may request that such arbitration be submitted to the American Arbitration Association." Ill.Rev.Stat.1983, ch. 73, par. 755a(1).

Arbitration under section 143a is binding on the parties. American Family Mutual Insurance Co., 213 Ill.App.3d at 688, 157 Ill.Dec. 239, 572 N.E.2d 308. The Illinois Supreme Court has interpreted section 143a to require arbitration of disputes "once coverage [is] established.' " Topps v. Unicorn Insurance Co., 271 Ill.App.3d 111, 114, 207 Ill.Dec. 758, 648 N.E.2d 214 (1995), quoting Yapejian, 152 Ill.2d at 541, 178 Ill.Dec. 745, 605 N.E.2d 539. Thus, the Illinois Supreme Court has interpreted this section to require that the issues of liability and damages be submitted to arbitration for resolution and are not subject to judicial resolution or to judicial review, except under limited circumstances. Yapejian, 152 Ill.2d at 541-43, 178 Ill.Dec. 745, 605 N.E.2d 539. See also Reed v. Farmers Insurance Group, 291 Ill.App.3d 1068, 1073, 226 Ill.Dec. 282, 685 N.E.2d 385 (1997) (arbitration under section 143a is "compulsory arbitration * * * mandated by statute"; "section 143a of the Insurance Code * * * requires that all disputes regarding liability and damages be submitted to arbitration"); Yandell, 274 Ill.App.3d at 831-32, 211 Ill.Dec. 337, 654 N.E.2d 1388 ("[t]oday [unlike prior to 1978], by statute, all U[ninsured] M[otorist] claims are subject to mandatory arbitration"; "[s]ection 143a of the Illinois Insurance Code [citation] mandates binding arbitration, even if the policy provides for nonbinding arbitration"); Topps, 271 Ill.App.3d at 114, 207 Ill.Dec. 758, 648 N.E.2d 214 (the Illinois Supreme Court has "interpreted section 143a(1) of the Illinois Insurance Code regarding uninsured motorist coverage [citation] to require arbitration of disputes concerning covered claims once coverage was established' [citation] )"; American Family Mutual Insurance Co., 213 Ill.App.3d at 686, 157 Ill.Dec. 239, 572 N.E.2d 308 ("[u]nder [section 143a], disputes involving uninsured motorist claims must be submitted for arbitration"). More specifically, in Herriford v. Boyles, 193 Ill.App.3d 947, 140 Ill.Dec. 769, 550 N.E.2d 654 (1990), the court was called upon to answer the following certified question: "Does [section...