Norris v. National Union Fire Insurance ( 2006 )

1-05-3132
SECOND DIVISION
October 17, 2006
No. 1-05-3132
THADEUS NORRIS and NICOLETTE NORRIS, ) Appeal from the
as special administrators of the ) Circuit Court of
Estate of TOMMY J. NORRIS, Deceased, ) Cook County.
)
Plaintiffs-Appellees, )
)
v. )
)
NATIONAL UNION FIRE INSURANCE )
COMPANY OF PITTSBURGH, PA., ) Honorable
) Mary Anne Mason,
Defendant-Appellant. ) Judge Presiding.
PRESIDING JUSTICE WOLFSON delivered the opinion of the
court:
This is the second time this case has come before the appellate court. The
defendant National Union Fire Insurance Co. of Pittsburgh, PA. (National Union)
contends the uninsured motorist coverage limits rulings against it the first time were
wrong and asks us to change them. National Union also contends the statutorily
required arbitration based on the first decision is not binding on the parties and should
not have been confirmed by the trial court. We adhere to the rulings in the first Norris
decision and we affirm the trial court=s judgment on the arbitration award.
FACTS
A clear understanding of the issues before us requires us to recount the history
of this case.
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Plaintiffs Thadeus and Nicolette Norris are special administrators of the estate of
Tommy J. Norris, a truck driver employed by Jones Truck Lines, Inc. (Jones). Jones
was insured under a commercial fleet general liability policy issued by National Union.
On October 4, 1989, Tommy Norris was involved in a fatal accident with an uninsured
motorist while working for Jones. The National Union policy had personal injury limits of
$2 million per accident but did not include uninsured motorist coverage. Norris= estate
received $200,000 in workers= compensation benefits as a result of his death.
Plaintiffs filed suit seeking a declaration that National Union=s policy should be
reformed to include uninsured motorist coverage equal to the policy=s bodily injury
liability limits of $2 million. On cross-motions for summary judgment, the trial court
granted plaintiffs= motion to reform the policy, but ordered the policy reformed to the
minimum statutory limits of $20,000 per person and $40,000 per occurrence. Because
Norris= estate received $200,000 in workers= compensation benefits, the trial court held
the workers= compensation set-off provision in the policy barred recovery under any
possible uninsured motorist claim. Plaintiffs appealed.
In Norris v. National Union Fire Insurance Co. of Pittsburgh, PA., 326 Ill. App. 3d
314, 760 N.E.2d 141 (2001) (Norris I), this court considered: (1) whether the trial court
correctly reformed the commercial trucking policy to require the insured to provide
uninsured motorist benefits only in the amount of the statutory minimum requirements;
(2) whether plaintiffs= receipt of workers= compensation benefits in excess of the
statutory minimum for uninsured motorist coverage served as a set-off, barring plaintiffs=
uninsured motorist claim; (3) whether the exclusive remedy afforded by the Workers=
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Compensation Act barred plaintiffs= claim for uninsured motorist coverage against the
decedent=s employer or its insurer; and (4) whether plaintiffs= claim for uninsured
motorist coverage was barred because the National Union policy specifically excluded
employees who are injured during the course of employment and covered by workers=
compensation coverage.
The court reversed the trial court=s order and remanded the cause for further
proceedings, finding the National Union policy should have been reformed to include
uninsured motorist coverage up to the personal injury limits of the policy, $2 million.
Norris, 326 Ill. App. 3d at 322. Since the reformation should have included uninsured
motorist coverage up to $2 million, the court concluded consideration of whether
workers= compensation benefits in excess of the statutory minimum uninsured motorist
coverage act as a set-off against any recovery was Arendered unnecessary.@ Norris,
326 Ill. App. 3d at 322.
The court rejected National Union=s argument that the exclusive remedy
provision of the Workers= Compensation Act (820 ILCS 305/5(a) (West 2000)) barred
plaintiffs= claims, finding A[t]he category of third parties liable in tort to an injured
employee is conspicuously absent from the language of the Workers= Compensation
Act.@ Norris, 326 Ill. App. 3d at 323. The court also held the employee exclusion
contained in the National Union policy was Aunenforceable as a matter of public policy in
this situation.@ Norris, 326 Ill. App. 3d at 323. National Union filed a petition for leave to
appeal to the Illinois Supreme Court, which was denied. Norris v. National Union Fire
Insurance Co. of Pittsburgh, PA., 198 Ill. 2d 618, 770 N.E.2d 220 (2002).
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On remand, the trial court ordered the matter to arbitration pursuant to the 1989
version of section 143a-1 of the Insurance Code. Ill. Rev. Stat. 1989, ch. 73, par. 755a-
1 (Aany dispute with respect to uninsured motorist coverage shall be submitted for
arbitration to the American Arbitration Association.@) The defendant did not attempt to
appeal the trial court=s order. The arbitrator entered a $2 million award for plaintiffs,
which was reduced to $1,575,500 based on the decedent=s contributory negligence and
the workers= compensation benefits received by decedent=s estate. On June 3, 2005,
plaintiffs filed a motion to confirm the arbitration award. National Union filed a rejection
of the arbitration award and requested a trial, relying on Supreme Court Rule 95 (134 Ill.
2d R. 95). National Union did not file a motion to vacate the arbitration award. On
August 19, 2005, the trial court confirmed the award, noting:
AThe law in effect at the time the policy was issued provided
for mandatory and binding arbitration. If mandatory and
binding arbitration means anything, it means that the losing
party does not have a right to a trial de novo.@
DECISION
National Union contends this court=s decision in Norris I should be overturned
because it is palpably erroneous and works a manifest injustice against both insurers
and insureds. National Union contends the law of the case doctrine does not bar
reconsideration of the issues raised and decided in Norris I.
Plaintiffs contend National Union forfeited its right to challenge Norris I as
palpably erroneous because it failed to raise the issue on remand in the trial court. We
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fail to see how National Union could have raised such a challenge in the trial court. On
remand, the trial court was bound to follow this court=s directions. See Harris Trust &
Savings Bank v. Otis Elevator Co., 297 Ill. App. 3d 383, 387, 696 N.E.2d 697 (1998)
(AWhen a judgment of the circuit court is reversed and the cause is remanded by this
court with specific directions as to the action to be taken, it is the duty of the trial court to
follow those directions.@) Any argument to the contrary would have been futile. We find
forfeiture does not apply here.
Under the law of the case doctrine, questions of law decided on a previous
appeal are binding on the trial court on remand as well as on the appellate court on a
subsequent appeal. Martin v. Federal Life Insurance Co., 268 Ill. App. 3d 698, 701, 644
N.E.2d 42 (1994). However, the doctrine Amerely expresses the practice of courts
generally to refuse to reopen what has been decided; it is not a limit on their power.@
People v. Patterson, 154 Ill. 2d 414, 468, 610 N.E.2d 16 (1992).
The law of the case doctrine=s purpose is Ato protect settled expectations of the
parties, ensure uniformity of decisions, maintain consistency during the course of a
single case, effectuate proper administration of justice, and bring litigation to an end.@
Petre v. Kucich, 356 Ill. App. 3d 57, 63, 824 N.E.2d 1117 (2005). The law of the case
doctrine is also intended to maintain the prestige of the courts. Emerson Electric Co. v.
Aetna Casualty and Surety Co., 352 Ill. App. 3d 399, 417, 815 N.E.2d 924 (2004). A[I]f
an appellate court issues contrary opinions on the same issue in the same case, its
prestige is undercut.@ Emerson Electric Co., 352 Ill. App. 3d at 417. AWhen an
appellate court reverses and remands the cause with a specific mandate, the only
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proper issue on a second appeal is whether the trial court=s order is in accord with the
mandate.@ Petre, 356 Ill. App. 3d at 63.
There are two recognized exceptions to the law of the case doctrine=s
application: (1) when a higher reviewing court, subsequent to the lower court=s decision,
makes a contrary ruling on the same issue; and (2) when a reviewing court finds its prior
decision was palpably erroneous. Martin, 268 Ill. App. 3d at 701; Stallman v.
Youngquist, 152 Ill. App. 3d 683, 504 N.E.2d 920 (1987).
I. Section 143a-2 of the Insurance Code
National Union contends the Norris I court erroneously held National Union=s
offer of uninsured motorist benefits to Jones was invalid under section 143a-2 of the
Insurance Code.
The 1989 version of section 143a-2(1) of the Insurance Code provides:
ANo policy insuring against loss resulting from liability
imposed by law for bodily injury or death suffered by any
person arising out of the ownership, maintenance or use of a
motor vehicle shall be renewed or delivered or issued for
delivery in this State *** unless uninsured motorist coverage
as required in Section 143a of this Code is offered in an
amount up to the insured=s bodily injury limits.@ Ill. Rev.
Stat., 1989, ch. 73, par 755a-2(1).
To satisfy the requirements of section 143a-2 of the Insurance Code, an offer
must: (1) notify the insured in a commercially reasonable manner if the offer is not made
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in face-to-face negotiations; (2) specify the limits of the optional coverage without using
general terms; (3) intelligibly advise the insured of the nature of the offer; and (4) advise
the insured that optional coverage is available for a relatively modest premium increase.
Cloninger v. National General Insurance Co., 109 Ill. 2d 419, 425-26, 465 N.E.2d 956
(1984). AThe remedy for an inadequate offer of uninsured motorist coverage is to
increase the existing coverage to limits equal to the bodily injury liability limits of the
insured person=s policy.@ Watson v. Hartford Casualty Insurance Co., 205 Ill. App. 3d
88, 95, 562 N.E.2d 1261 (1990).
In this case, the offer form instructed Jones to accept or reject uninsured
coverage and informed Jones of the basic limits required in several states, including
Illinois. As to Illinois, the form stated the basic limits required $30,000 in coverage.
That was incorrect. The Insurance Code required a minimum of $20,000 per person
and $40,000 per occurrence. The form also failed to identify how much additional
coverage would cost.
Larry E. May, Director of Risk Management for Jones, testified at his deposition
and by affidavit that it was Jones= corporate policy to reject uninsured motorist coverage
where possible or, alternatively, to carry only the statutorily mandated minimum
coverage. May testified at his deposition:
AQ. And I think you answered earlier, I just want to make
sure the record is clear. You understood at all times when
procuring insurance from National Union that you could
purchase uninsured coverage up to your liability limits of $2
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million?A. It was my understanding if I wanted it, they
probably would sell me anything I was willing to pay for it.
Q. Anything over-
A. Let me add one comment to that. They at all times
offered me uninsured and underinsured motorist, and I at all
times said no, as I=ve told you in my initial presentation, I
would reject--I do not want uninsured motorist or
underinsured motorist to be a part of my program. If it=s
mandated by law, I will have to have it and you will have to
cover it, but at whatever their absolute minimums are. And
at that point in time there is no need to talk about, well we
can give you $5 million. I am not interested because I don=t
want it coming out of my pocket.@
May did not directly answer the question asked: whether Jones knew National Union
could provide it with uninsured motorist coverage up to the $2 million bodily injury policy
limit. Nor did May explicitly say the $2 million limits were offered to Jones by National
Union. An Aoffer@ is required by section 143a-2(1) of the Insurance Code. Failure to
obtain from May a clear statement that the $2 million limit was offered to Jones
substantially weakens National Union=s case for a finding of palpable error.
In Norris I, the majority held that as a result of the errors on the offer form,
considering all presumptions in favor of the insured, it was as if no offer was made.
Norris, 326 Ill. App. 3d at 322. The majority held it was Aunreasonable to ask a
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company or individual to accept or reject coverage that is incorrectly listed on the forms
presented.@ Norris, 326 Ill. App. 3d at 321. While the majority recognized Jones had
clearly marked an X in the space for rejecting uninsured motorist coverage, it concluded
Jones could not make an informed choice to accept or reject since the offer was not
made in a proper manner. Norris, 326 Ill. App. 3d at 322. The dissent, however,
believed it was uncontested that National Union offered uninsured motorist coverage to
Jones in an amount up to the insured=s bodily injury limits. Norris, 326 Ill. App. 3d at
326.
If we are going to apply the palpably erroneous standard, we should endeavor to
define it. Few cases do. It comes up when courts are asked to deviate from the law of
the case doctrine. See Stallman, 152 Ill. App. 3d at 689. No decision we have found
explicitly defines the standard. But we are not without guidance. APalpable@ can be
defined.
The Abridged Sixth Edition of Black=s Law Dictionary defines palpable as Aeasily
perceptible, plain, obvious, readily visible, noticeable, patent, distinct, manifest.@ Black=s
Law Dictionary 767 (6th ed. 1991). In A Dictionary of Modern Legal Usage, Second
Edition, palpable is defined as Atangible, apparent.@ A Dictionary of Modern Legal
Usage 635 (2d ed. 1995).
Not many Illinois decisions have applied the palpably erroneous standard to
change the law of a specific case. It does happen. It happened in Stallman where the
court decided to reconsider the parent-child tort immunity rule. Stallman, 152 Ill. App.
3d at 689. But the decision made it clear the palpably erroneous standard is used only
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when the court, in the first instance, remands the case for a new trial on all issues. On
the second appeal, then, the court would actually reach a different decision based on a
new and different trial. Stallman, 152 Ill. App. 3d at 689. See also Martin, 268 Ill. App.
3d at 701. That is not what happened in the case before us. Here, the mandate in
Norris I foreclosed a trial on the issues. There are no new facts concerning coverage
limits. All that remained to be done was to obtain an arbitrator=s decision on the amount
of recovery. Norris I did not turn on findings of law. It analyzed the record to conclude
no contested factual issue existedB-reformation takes the policy to the $2 million limit.
The other recognized exception to the law of the case doctrineB-when a higher
reviewing court makes a contrary ruling on the same issueB-has not happened to Norris
I. In fact, this court has relied on Norris I to support the proposition that A >every liability
insurance policy issued for any motor vehicle registered or principally garaged in Illinois
must provide coverage for bodily injury or death caused by an uninsured or hit-and-run
vehicle.= @ Harrington v. American Family Mutual Insurance Co., 332 Ill. App. 3d 385,
392, 773 N.E.2d 98 (2002), quoting Norris, 326 Ill. App. 3d at 321.
We conclude the law of the case doctrine prevents us from revisiting the Norris I
reformation ruling. We reach this conclusion with some reluctance. Had the judges on
this panel decided the issue in the first instance, the result well might have been
different. But this is the second instance, and good legal policy reasons and the factual
record compel the result we reach.
The law of the case doctrine, as we read it, applies to all of the issues raised by
National Union. We could move directly to the arbitration issue raised by National
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Union, but for the sake of completeness we will address National Union=s other two
reasons for contending Norris I should not be followed.
II. Exclusive Remedy Provision
National Union contends the Norris I court=s decision that the Workers=
Compensation Act=s exclusivity bar did not prohibit employees and their families from
seeking and obtaining uninsured motorist benefits from the employer=s insurer was
palpably erroneous.
Section 5(a) of the Illinois Workers= Compensation Act (the Act) states, in
relevant part, that:
ANo common law or statutory right to recover damages from
the employer, his insurer, his broker, and service
organization retained by the employer, his insurer or his
broker to provide safety service, advice or recommendations
for the employer or the agents or employees of any of them
for injury or death sustained by any employee while engaged
in the line of his duty as such employee, other than the
compensation herein provided, is available to any employee
who is covered by the provisions of this Act, to any one
wholly or partially dependent upon him, the legal
representatives of his estate, or any one otherwise entitled to
recover damages for such injury.@ (Emphasis Added.) 820
ILCS 305/5(a) (West 2000).
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However, section 143a-1 of the Insurance Code, which was passed after the
adoption of the Workers= Compensation Act, provides that no policy shall be issued in
Illinois unless uninsured motorist coverage is provided up to the statutorily required
minimum set forth in section 7-203 of the Illinois Vehicle Code Afor the protection of
persons insured thereunder who are legally entitled to recover damages from owner or
operators of uninsured motor vehicles.@ Ill. Rev. Stat. 1989, ch. 73, par. 755a-1.
The intent of the legislature in enacting section 143a was to ensure persons
injured by an uninsured motorist are protected at least to the extent that compensation
is made available to persons injured by a motorist insured for the legal limits. Severs v.
County Mutual Insurance Co., 89 Ill. 2d 515, 519, 434 N.E.2d 290 (1982); American
Services Inc. v. Pasalka, 363 Ill. App. 3d 385, 390, 842 N.E.2d 1219 (2006). Nothing in
the language of the statute excludes its application to employees injured by uninsured
motorists during the course of their employment.
In this case, Jones was required to include uninsured motorist benefits up to the
statutorily mandated minimum when he purchased his commercial fleet general liability
policy from National Union. See Ill. Rev. Stat. 1989, ch. 73, par. 755a-1. Norris, a truck
driver employed by Jones, was an intended beneficiary of the statutorily required
protection. The injuries that ultimately led to Norris= death were caused by an uninsured
third party, not by his employer or a co-employee. As the majority in Norris I noted,
nothing in the Act explicitly precludes an employee=s recovery of uninsured motorist
benefits from the employer=s automobile insurer. AThe category of third parties liable in
tort to an injured employee is conspicuously absent from the language of the Workers=
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Compensation Act.@ Norris, 326 Ill. App. 3d at 323.
We recognize the language Ahis insurer or his broker to provide safety service,
advice or recommendations for the employer@ in section 5(a) of the Act has been
interpreted to extend immunity beyond workers= compensation carriers to general
liability insurers in one distinct area--liability for negligent safety inspections. See Mier
v. Staley, 28 Ill. App. 3d 373, 384, 329 N.E.2d 1 (1975) (AIn view of the language of the
statute, and its legislative history, we hold that the general liability insurer, is immune
from suit when the basis alleged is negligent safety inspections.@) The apparent
purpose of the amendment was to promote industrial safety inspections. Mier, 28 Ill.
App. 3d at 385. However, nothing in the legislative history, Illinois case law, or the Act
itself suggests the legislature intended to extend immunity to an employer=s automobile
insurer.
After reviewing the analysis and reasoning of the Norris I court=s decision, we
agree Athe bar contained in section 5(a) does not apply.@ Norris, 326 Ill. App. 3d at 323.
Although no other Illinois case has considered this precise question, a majority of
jurisdictions that have considered the question have reached a similar conclusion. See
Elam v. Hartford Insurance Co., 42 S.W.3d 443 (Ark. 2001) (Ait is clear that Hartford
[employer=s automobile insurer] was not the workers= compensation carrier, thus making
that extension of the exclusive-remedy statute inapplicable here@); Philadelphia
Indemnity Insurance Co. v. Morris, 990 S.W.2d 621, 625 (Ky. 1999) (exclusive remedy
provision did not preclude recovery of uninsured motorist benefits because it was
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intended only to protect the employer, not its underinsured motorist insurance carrier);
Muller v. Tri-State Insurance Co. of Minnesota, 560 N.W.2d 130, 133-34 (Neb. 1997)
(exclusive remedy provision protected the employer=s insurer in its role as the workers=
compensation carrier, not in its roles as employer=s underinsured motorist carrier). But
see Berger v. H.P. Hood, Inc., 416 Mass. 652, 624 N.E.2d 947 (Mass. 1993); National
Union Fire Insurance Co. of Pittsburgh, PA. v. Figaratto, 423 Mass. 346, 667 N.E.2d
877 (Mass. 1996)(AAn employee injured on the job by an underinsured third person is
not permitted to recover UM benefits provided under a standard policy by an employer=s
motor vehicle insurer.@)
National Union contends both Atlantic Mutual Insurance Co. v. Payton, 289 Ill.
App. 3d 866, 869, 682 N.E.2d 1144 (1997), and Robertson v. Travelers Insurance Co.,
95 Ill. 2d 441, 446-52, 682 N.E.2d 1144 (1983), make clear that the exclusive remedy
provision operates in favor of an employer=s insurer. National Union focuses on the
court=s statement in Payton that Athe legislature created this exclusive remedy not only
for employers and co-employees but also specifically and expressly for insurers.@
Payton, 289 Ill. App. 3d at 870.
Contrary to National Union=s contention, neither Payton nor Robertson applies in
this case. In Payton, the court held an employee was not entitled to uninsured motorist
benefits from his employer=s automobile insurance carrier because the co-employee
who caused the injuries was immune from suit under section 5(a) of the Workers=
Compensation Act. Payton, 289 Ill. App. 3d at 872-74. The court specifically noted,
however, that the case differed from third-party cases, which do not involve employee,
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co-employee, and employer relationships. Payton, 289 Ill. App. 3d at 869.
In Robertson, our supreme court held an employee could not file a common law
action for outrageous conduct against his employer=s workers= compensation insurer
because section 19(k) of the Act provided the exclusive remedy for the unreasonable or
vexatious delay in payment of benefits. Robertson, 95 Ill. 2d at 449-50. The supreme
court did not address whether section 5(a) of the Act granted immunity to an employer=s
general liability or uninsured motorist carrier.
We therefore find this court=s prior decision regarding the applicability of the
exclusive remedy provision was not palpably erroneous. In fact, it was correct.
III. Insurance Policy=s Employment Exclusion
National Union contends the Norris I majority erroneously held the insurance
policy=s employment exclusions violated Illinois public policy.
A[A]n insurance policy is a contract between the insurance company and the
policyholder, the benefits of which are determined by the terms of the contract unless
the terms are contrary to public policy.@ Sulser v. Country Mutual Insurance Co,, 147 Ill.
2d 548, 558, 591 N.E.2d 427 (1992). When the language of an insurance policy is clear
and unambiguous the court will give effect to its terms. Grevas v. United States Fidelity
& Guaranty Co., 152 Ill. 2d 407, 410, 604 N.E.2d 942 (1992). However, Athe purpose
underlying a statute cannot be circumvented by the insertion of a contrary or restricting
provision in an insurance policy.@ Severs, 89 Ill. 2d at 520.
In this case, the insurance policy issued to Jones specifically excludes from
coverage Abodily injury@ to A[a]n employee of the >insured= arising out of and in the
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course of employment by the >insured.= @ Exclusion three of the policy, entitled AWorkers
Compensation,@ also excludes A[a]ny obligation for which the >insured= or the >insured=s=
insurer may be held liable under any workers compensation, disability benefits or
unemployment compensation law or similar law.@
In Norris I, the court held the exceptions were unenforceable as a matter of
public policy. Norris, 326 Ill. App. 3d at 323. The court held:
ALogic dictates that a commercial trucking venture
necessitates the use of employees to drive the trucks. It is
highly likely that, like the decedent, some employees are
going to get into traffic accidents with persons other than
employers or co-employees. *** If the other driver had
insurance, the Norris plaintiffs would be suing him and his
insurer and would likely recover. As we have seen, the
requirement of uninsured motorist coverage is mandated by
the statute so as to facilitate an injured plaintiff or his or her
heirs being made whole. In this particular situation, it would
be both inequitable and against public policy to leave the
heirs of this dead driver with no remedy.@ Norris, 326 Ill.
App. 3d at 323-24.
Although no other Illinois court has considered whether employee or workers=
compensation exclusions preclude an employee from recovering uninsured motorist
benefits, other jurisdictions that have considered the issue have held the exclusions do
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not apply when a negligent third party is at fault.
In Mirales v. Snoderly, 602 S.E.2d 534 (W.Va. 2004), the West Virginia Supreme
Court considered whether a workers= compensation exclusion to uninsured motorist
coverage in a commercial business auto policy precluded an employee from recovering
uninsured motorist benefits for injuries he sustained during the course of his
employment as the result of an automobile accident with a negligent third-party. The
employee also received worker=s compensation benefits. The court concluded the
workers= compensation exclusion did not apply because the employee was injured by a
third-party tortfeasor, not his employer. Mirales, 602 S.E.2d at 540-41.
The court=s conclusion was based on the determination that while an employee
may recover workers= compensation benefits for injuries that occurred in the course and
scope of his employment, he Ais not statutorily barred from also pursuing [his] claims
against the third-party as this individual does not enjoy the immunity afforded by the
workers= compensation statutes.@ Mirales, 602 S.E.2d at 540. See also Aetna Casualty
& Surety Co. v. McMichael, 906 P.2d 92, 100 (Colo. 1995) (Because the injured
employee=s claim was based on liability incurred by the third-party driver who caused
the accident, the workers= compensation exclusion in the policy did not apply to the
employee=s uninsured benefits claim.) Neither court concluded the exclusion violated
public policy.
In this case, similar to Mirales, decedent was injured by a third-party tortfeasor,
not his employer or a co-employee. Since the exclusions in Jones= policy do not
specifically refer to uninsured motorist coverage or to injuries caused by a negligent
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third party, we might have found a different reason to conclude the exclusions did not
prevent plaintiffs= recovery of uninsured motorist benefits. In our opinion the employee
and workers= compensation exclusions in Jones= policy simply do not apply to the facts
of this case. See Mirales, 602 S.E.2d at 540. In light of the purpose of section 143a-1,
however, we cannot say this court=s conclusion in Norris I that the exclusions violated
public policy was palpably erroneous.
IV. Binding Arbitration
National Union contends the 1989 version of section 143a-1 of the Insurance
Code provides for mandatory but non-binding arbitration of uninsured motorist claims.
In support, National Union points out that mandatory arbitration and binding arbitration
are not always the same. Because the legislature did not use the word Abinding@ to
modify "arbitration," National Union contends the arbitration in this case cannot be read
as binding.
Questions of statutory interpretation are issues of law reviewed de novo. In re
County Collector, 356 Ill. App. 3d 668, 670, 826 N.E.2d 951 (2005). The primary rule in
statutory interpretation is to determine and effectuate the intent of the legislature. In re
County Collector, 356 Ill. App. 3d at 670. The best indication of legislative intent is the
language of the statute. U.S. Bank National Assoc. v. Clark, 216 Ill. 2d 334, 346, 837
N.E.2d 74 (2005). Words in the statute should be construed in context and given their
plain and ordinary meaning. In re County Collector, 356 Ill. App. 3d at 670; Clark, 216
Ill. 2d at 346. If the statute=s language is clear, extrinsic aids to interpretation are
unnecessary. Clark, 216 Ill. 2d at 346; In re County Treasurer and Ex-Officio Collector
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of Cook County, 323 Ill. App. 3d 1044, 1049, 753 N.E.2d 363 (2001). Where a term in a
statute is ambiguous, use of the term in other parts of the statute or similar statutes can
indicate the legislature=s intent. In re County Collector, 356 Ill. App. 3d at 670.
Pointing to Illinois Supreme Court Rules 86 through 95, which provide for
mandatory but non-binding arbitration, National Union contends arbitration cannot be
considered binding unless expressly indicated.
Contrary to National Union=s contention, Supreme Court Rules 86 through 95 do
not apply to this case. Uninsured motorist claims are arbitrated pursuant to section
143a-1 of the Insurance Code, not Supreme Court Rule 86. See Allstate Insurance Co.
v. Fisher, 212 Ill. App. 3d 712, 714-15, 571 N.E.2d 792 (1991) (AThe State=s insurance
code requires automobile policies containing uninsured motorist clauses to provide for
arbitration. Ill. Rev. Stat. 1989, ch. 73, par. 755a et seq.@)
As National Union points out, a mandatory arbitration process has been
established in several large urban counties in the State pursuant to Illinois Supreme
Court Rule 86. But Supreme Court Rules 86 through 95 apply only where money
damages do not exceed the maximum amount established by each judicial circuit. 155
Ill. 2d R. 86(b), (c). The maximum amount in Cook County is $30,000. See Cook Co.
Cir. Ct. R. 18.3(b). The arbitration rules do not apply in this case, where the claim made
by plaintiffs far exceeds the maximum limit anticipated by the supreme court rules. See
State Farm Insurance Co. v. Harmon, 335 Ill. App. 3d 687, 688, 781 N.E.2d 335 (2002).
Section 143a-1 of the Insurance Code provides:
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ANo policy shall be renewed, delivered, or issued for delivery
in this State unless it is provided therein that any dispute
with respect to the 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 and the 2 arbitrators so named shall select a
third arbitrator. If such arbitrators are not selected within 45
days from such request, either party may request that the
arbitration be submitted to the American Arbitration
Association.@ Ill. Rev. Stat. 1989, ch. 73, par. 755a-1. (now
codified, as amended, at 215 ILCS 5/143a-1 (West 2004)).
This court has previously concluded arbitration conducted pursuant to section
143a-1 of the Insurance Code is binding. American Family Mutual Insurance Co. v.
Baaske, 213 Ill. App. 3d 683, 572 N.E.2d 308 (1991). While we recognized in Baaske
that arbitration is not always binding, we said arbitration is Aordinarily and properly
understood to be binding and to be an alternative to or replacement for the judicial
resolution of a dispute.@ Baaske, 213 Ill. App. 3d at 687. For example, while Supreme
Court Rules 86 through 95 provide for mandatory arbitration, the rules explicitly state
the arbitration is not binding. Baaske, 213 Ill. App. 3d at 687. By contrast, neither the
1989 version of section 143a-1 nor the Insurance Code contains a similar provision.
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Baaske, 213 Ill. App. 3d at 687. See also State Farm Fire & Casualty Co. v. Yapejian,
152 Ill. 2d 533, 541, 605 N.E.2d 539 (1992) (purpose of section 143a-1 is to Aexpedite
the processing of uninsured motorist claims@); Brooks v. Cigna Property and Casualty
Co., 299 Ill. App. 3d 68, 73, 700 N.E.2d 1052 (1998) (AThe Code compels mandatory
arbitration of uninsured motorist claims as to liability and damages; these claims cannot
be resolved in the judicial forum.@)
We see no reason to depart from our prior decisions in Baaske and Brooks.
Accordingly, we find mandatory arbitration pursuant to the 1989 version of section 143a-
1 of the Insurance Code is binding. CONCLUSION
We find this court=s rulings in Norris I were not palpably erroneous. We further
find the arbitration conducted here was mandatory and binding pursuant to the 1989
version of section 143a-1 of the Insurance Code, as the trial court found.
Affirmed.
HOFFMAN, and SOUTH, JJ., concur.
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