Hoglund v. State Farm Mut. Auto. Ins. Co.

• Decision Date: 26 March 1992
• Docket Number: 71714,Nos. 71713,s. 71713
• Citation: 170 Ill.Dec. 351,592 N.E.2d 1031,148 Ill.2d 272
• Parties: , 170 Ill.Dec. 351, 40 A.L.R.5th 891 Dawn HOGLUND, Appellee, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellant. Patricia GREENAWALT, Appellee, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellant.
• Court: Illinois Supreme Court

Page 1031

592 N.E.2d 1031

148 Ill.2d 272, 170 Ill.Dec. 351, 40

A.L.R.5th 891

Dawn HOGLUND, Appellee, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellant.

Patricia GREENAWALT, Appellee, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellant.

Nos. 71713, 71714.

Supreme Court of Illinois.

March 26, 1992.

Rehearing Denied June 1, 1992.

James J. Hoffnagle and Frank C. Stevens, of Taylor, Miller, Sprowl, Hoffnagle & Merletti, Chicago, for appellant.

Beermann, Swerdlove, Woloshin, Barezky, Chicago (Howard A. London, Alvin R. Becker and Lawrence R. Barezky, of counsel), for appellee Dawn Hoglund.

Gino P. Naughton, of Edward R. Vrdolyak, Ltd., Chicago, for appellee Patricia Greenawalt.

Justice HEIPLE delivered the opinion of the court:

These consolidated cases arose out of situations wherein plaintiffs were injured while they were passengers of uninsured motor vehicles when the drivers of the vehicles collided with other vehicles. In each case, the drivers of both vehicles were at fault. The drivers of the other vehicles each had bodily injury policy limits of $100,000, and this amount was paid to each plaintiff. Both plaintiffs allegedly suffered damages in excess of the $100,000 paid to them and filed claims against defendant, State Farm, each seeking uninsured motorist benefits for the excess damages under their own policies. State Farm denied the claims based on its interpretation of the policy language, finding a complete setoff.

Appellee Hoglund sought relief under her father's uninsured motor vehicle coverage because the driver of the motorcycle upon which she was a passenger was uninsured. She sought the policy limit of $100,000, claiming her total damages were over $200,000. Appellee Greenawalt also sought relief under her uninsured motorist policy. Her husband was driving the car in which she was a passenger. Although he carried insurance, he was effectively "uninsured" because the policy excluded claims by family members. Greenawalt claims her damages are in excess of $400,000 and seeks payment of her uninsured motorist policy limit of $100,000.

Although the parties do not raise the issue whether Greenawalt is entitled to recover under her uninsured motorist policy based on the doctrine of interspousal immunity, Allstate Insurance Co. v. Elkins (1979), 77 Ill.2d 384, 33 Ill.Dec. 139, 396 N.E.2d 528, is controlling. Elkins held that an insured woman was "legally entitled to recover" from her tortfeasor husband under an uninsured motorist policy. Thus, there is no bar to recovery in Illinois based on spousal immunity.

The uninsured motor vehicle policies issued to plaintiffs by defendant in the instant cases included a setoff and subrogation provision, which provides in part:

"Limits of Liability

* * * * * *

2. Any amount payable under this coverage shall be reduced by any amount paid or payable to or for the insured:

a. by or for any person or organization who is or may be held legally liable for the bodily injury to the insured;

b. for bodily injury under the liability coverage; or

c. under any worker's compensation, disability benefits, or similar law.

* * * * * *

Conditions

* * * * * *

3. Our Rights to Recover Our Payments

* * * * * *

b. Under uninsured motor vehicle coverage:

(1) we are subrogated to the extent of our payments to the proceeds of any settlement the injured person recovers from any party liable for the bodily injury." (Emphasis in original.)

Section 143a(4) of the Illinois Insurance Code provides:

"(4) In the event of payment to any person under the coverage required by this Section [minimum liability insurance] and subject to the terms and conditions of such coverage, the insurer making such payment shall, to the extent thereof, be entitled to the proceeds of any settlement or judgment resulting from the exercise of any rights of recovery of such person against any person or organization legally responsible for the property damage, bodily injury or death for which such payment is made * * *." Ill.Rev.Stat.1985, ch. 73, par. 755a.

State Farm argues that its policy language tracks the statute and that such language supports a setoff against uninsured motorist coverage of all amounts recovered from other sources. Accordingly, State Farm denied the claims of Hoglund and Greenawalt, stating that because both plaintiffs had received payments of $100,000 from a legally liable party, State Farm was entitled to a setoff whereby it could reduce its coverage by the $100,000 payment and thus owe the claimants nothing. Both plaintiffs then sought relief, requesting the court to declare that State Farm was obligated to indemnify them for their damages in excess of the amounts paid to them by the third parties up to the uninsured policy limits. In both cases, State Farm filed a motion for judgment on the pleadings arguing that its setoff provision absolved it from any obligation to indemnify plaintiffs. The motions were granted and plaintiffs appealed.

The appellate courts reversed in both cases. The appellate court below in Hoglund noted that the purpose behind the uninsured motorist statute is to compensate the insured for injuries caused by an uninsured motorist to the same extent as if the insured were injured by an insured motorist and that the setoff provision acts only to prevent double recovery by plaintiffs. Thus, because State Farm had not contested the total amount of plaintiff's damages or alleged any double recovery by the plaintiff, she was held entitled to recover the $100,000 limit under her uninsured motorist policy. Hoglund, 211 Ill.App.3d 600, 604, 156 Ill.Dec. 77, 570 N.E.2d 553.

The appellate court below in Greenawalt found that the uninsured motorist statute serves to place the "injured policyholder in substantially the same position" he would be in if the wrongful driver had insurance. The court there also determined that setoff would be proper only to prevent a double recovery of damages. However, if the plaintiff's damages actually exceeded the $100,000 already paid to her by the insured tortfeasor, the court held, it would be a violation of public policy to allow State Farm a setoff. Thus, because no determination of plaintiff's damages had been made, the court below remanded for such a finding. To the extent that the plaintiff's damages were in excess of $100,000, the court below held that she was entitled to "recover the difference between the $100,000 settlement and her assessed damages, up to the limits of the $100,000 uninsured motorist limitation." Greenawalt, 210 Ill.App.3d 543, 550, 155 Ill.Dec. 154, 569 N.E.2d 154.

It is well-settled law that the purpose behind the statutorily mandated uninsured motorist provision is that the insured be placed in substantially the same position as if the wrongful uninsured driver had been minimally insured. Ullman v. Wolverine Insurance Co. (1970), 48 Ill.2d 1, 4, 269 N.E.2d 295; Glidden v. Farmers Automobile Insurance Association (1974), 57 Ill.2d 330, 335, 312 N.E.2d 247.

Based on our review of the purpose of uninsured motorist coverage, we find that the meaning of the setoff provisions at issue both in the statute and in the policies in the instant cases is to prevent a double recovery by the insured.

Consider the case of Hoglund. Miss Hoglund, while riding as a passenger on an uninsured motorcycle, was involved in a crash with an insured automobile and suffered $200,000 in damages. Both drivers were at fault for the injury. The automobile driver had insurance with a $100,000 limit, which was paid to Miss Hoglund. Although the driver of the motorcycle on which she was riding had no insurance, Miss Hoglund was covered by the...