MemberSelect Ins. Co. v. Luz, 1–14–1947.
| Citation | 51 N.E.3d 953,402 Ill.Dec. 201 |
| Decision Date | 17 March 2016 |
| Docket Number | No. 1–14–1947.,1–14–1947. |
| Parties | MEMBERSELECT INSURANCE COMPANY, Plaintiff–Appellee, v. Ferdinand LUZ, Defendant–Appellant. |
| Court | United States Appellate Court of Illinois |
Caren Schulman, Chicago, for appellant.
Esther Joy Schwartz, of Stellato & Schwartz Ltd., Chicago, for appellee.
delivered the judgment of the court, with opinion.
¶ 1 This appeal addresses whether a letter sent by an insured, defendant Ferdinand Luz, to plaintiff MemberSelect Insurance Company (MemberSelect) was a sufficient demand for arbitration under the underinsured motorist provision of defendant's car insurance policy with MemberSelect. The policy contained a limitations provision that barred any arbitration of an underinsured motorist claim unless it was “commenced within three years after the date of the accident.” Less than two months after the accident, defendant's attorney sent MemberSelect a letter requesting arbitration of the underinsured motorist claim. There was no subsequent correspondence between the parties in the more than three years that passed while the underlying personal-injury suit progressed and ultimately settled. Defendant then sought arbitration of his underinsured motorist claim, and MemberSelect filed this declaratory-judgment action seeking a declaration that it did not have to cover defendant's claim because the limitations period had run. On cross-motions for summary judgment, the trial court found that defendant's letter had not sufficiently demanded arbitration because it was not unequivocal and because defendant failed to select an arbitrator.
¶ 2 We disagree. Defendant's request for arbitration was unequivocal. And under the terms of the policy, defendant could have reasonably concluded that, in order to commence arbitration—and thus avoid the limitations period—all he had to do was demand arbitration. The policy did not require defendant to select an arbitrator in order to commence arbitration. Accordingly, we vacate the trial court's award of summary judgment for MemberSelect and remand with directions that the trial court enter summary judgment in favor of defendant.
¶ 4 On July 18, 2007, defendant was in a car accident with another vehicle in Skokie, Illinois. The driver of the other vehicle had an insurance policy with a limit of $20,000 per person.
¶ 5 At the time of the accident, defendant's policy with MemberSelect had a provision providing him coverage in case of an accident with an underinsured driver (i.e., a driver whose policy limits would be insufficient to cover defendant's damages, up to the limits of defendant's own policy). The underinsured motorist coverage contained a provision governing the conduct of arbitration between defendant and MemberSelect, providing that, if defendant or MemberSelect had a dispute regarding defendant's ability to recover damages from the underinsured driver, or the amount of damages:
The underinsured motorist coverage also contained a limitations provision, which read, “Under Underinsured Motorists Coverage, any suit, action or arbitration against [MemberSelect] will be barred unless commenced within three years after the date of the accident.”
¶ 6 On September 4, 2007—less than two months after the accident—defendant's attorney sent MemberSelect a letter entitled, “NOTICE OF ATTORNEY'S LIEN for UNDERINSURED MOTORIST and MEDICAL PAYMENTS CLAIM.” It stated defendant's name, the policy number, and the date and location of the accident. It also notified MemberSelect of the attorney fee agreement with defendant and claimed a lien on any recovery defendant would receive. The letter concluded with the following two paragraphs:
MemberSelect received the letter on September 10, 2007.
¶ 7 On June 22, 2009, defendant's counsel sent MemberSelect a list of “partial items of medical special damages totaling $15,196.40.” Defendant's counsel requested that MemberSelect pay the amount of damages, or its policy limits, whichever was smaller. MemberSelect paid defendant $1,000, the limits of the medical payment coverage under the policy.
¶ 8 On July 10, 2009, defendant filed his lawsuit against the other driver involved in the car accident. His complaint sought damages “in excess of $30,000.”
¶ 9 On March 8, 2011, defendant settled his underlying personal-injury suit with the other driver in the accident. Defendant received $20,000, the limits of the other driver's policy.
¶ 10 On March 11, 2011, defendant's counsel sent MemberSelect a letter which listed “special damages incurred by [defendant] as a result of the negligence of an underinsured motorist.” Counsel added that she would contact MemberSelect “within the next two weeks to determine if [they could] arrive at an amicable disposition of this matter.”
¶ 11 On May 3, 2012, defendant filed a demand for arbitration of the underinsured motorist claim with the American Arbitration Association.
¶ 12 MemberSelect sent defendant a letter on May 14, 2012, denying defendant's underinsured motorist claim because the limitations period in the policy had run. Defendant's counsel responded to MemberSelect's denial by saying that she had sent MemberSelect “notice demanding arbitration” on September 4, 2007. She also said, “[I]n as much as the underlying tort claim was not settled until November 2011, * * * there was no underinsured motorist claim to be commenced until the underlying tort claim was concluded.”
¶ 13 MemberSelect filed a complaint for declaratory judgment, alleging that it did not have to cover defendant's underinsured motorist claim because the limitations provision of the policy barred coverage. The complaint also included other counts not at issue in this appeal.
¶ 14 Both parties moved for summary judgment. Defendant argued that his attorney's September 4, 2007 letter to MemberSelect was sufficient to demand arbitration under the policy's arbitration clause. According to defendant, because he had commenced arbitration, the limitations period had not run. Defendant also argued that MemberSelect was estopped from raising the limitations period, that the limitations period was tolled pursuant to section 143.1 of the Illinois Insurance Code (215 ILCS 5/143.1 (West 2006)
), and that the limitations provision violated public policy.
¶ 15 MemberSelect argued that the September 2007 letter was insufficient to serve as a demand for arbitration under the policy because “[i]t did not ‘demand’ arbitration or name, identify, or select an arbitrator.” Thus, according to MemberSelect, arbitration never commenced, and the limitations period ran in 2010. MemberSelect also argued that it was not estopped from raising the limitations period as a defense, that section 143.1 did not toll the limitations period, and that the limitations period did not violate public policy.
¶ 16 The trial court granted MemberSelect's motion for summary judgment and denied defendant's. With regard to defendant's request for arbitration, the court found that “the policy requires an unequivocal demand for arbitration” and that “[r]equesting arbitration is insufficient.” The court also found that, in order to commence arbitration and thus stop the running of the limitations provision, defendant was required to name an arbitrator, which he did not do. The court also rejected defendant's claims regarding estoppel, section 143.1, and public policy.
¶ 17 After the trial court made the necessary findings to make its order appealable pursuant to Illinois Supreme Court Rule 304(a)
(eff. Feb. 26, 2010), defendant filed this appeal.
¶ 19 Defendant raises three reasons why the trial court erred in granting summary judgment for MemberSelect: (1) that his attorney's September 2007 letter was sufficient to demand arbitration under the policy and was therefore within under the limitations period on his underinsured motorist claim; (2) MemberSelect was estopped from asserting the limitations period as a defense; and (3) section 143.1 tolled the limitations period when defendant filed his proof of loss with MemberSelect in 2009. We need only address the first of these arguments because, for the reasons stated below, defendant commenced arbitration under the terms of the policy when he requested arbitration in September 2007. Thus, the limitations period did not run, and defendant is entitled to arbitrate his underinsured motorist claim.
¶ 20 Summary judgment is proper where the pleadings, depositions, admissions, and affidavits on file reveal that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. 735 ILCS 5/2–1005(c)
(West 2012); Hall v. Henn, 208 Ill.2d 325, 328, 280 Ill.Dec. 546, 802 N.E.2d 797 (2003). Where, as here, the parties filed cross-motions for summary judgment, they concede the absence of a genuine issue of material fact and invite the court to decide the questions presented as a matter of law. Bank of America, N.A. v. Carpenter, 401 Ill.App.3d 788, 795, 340 Ill.Dec. 919, 929 N.E.2d 570 (2010). We apply de novo review. Hall, 208 Ill.2d at 328, 280 Ill.Dec. 546, 802 N.E.2d 797.
¶ 21 When construing the language of an insurance policy, we apply the same principles as when we construe the language of a contract. Hobbs v. Hartford Insurance Co. of the Midwest, 214 Ill.2d 11, 17, 291 Ill.Dec. 269, 823 N.E.2d 561 (2005)
. Our primary goals are to determine the parties' intent in agreeing to...
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