Illinois Supreme Court Civil Issues Pending: Insurance
[UPDATED THROUGH May 9, 2013]
American Access Casualty Co. v. Reyes
Supreme Court Case Number: 115601
Appellate Court: Second District
Appellate Court Case Number: 2-12-0296
Issue Presented: Is a clause of an automobile insurance policy excluding all liability coverage for the sole named insured and titleholder on the insured vehicle void as against public policy?
Appellate Court Opinion Summary: Plaintiff issued an automobile insurance policy to the defendant. The policy listed the defendant as the sole named insured, as well as the titleholder on the insured vehicle. However, in the policy section identifying the “operators” of the vehicle, next to the defendant’s name, rather than the defendant’s license number, the policy carries a notation: “EXCLUDED.” In the same section, the policy identifies a second operator by name and an international driver’s license number. The policy also includes an endorsement stating that no claim or suit arising from the named insured’s operation of the vehicle is covered, and an exclusion for any damages caused while in the vehicle is “in control of an excluded operator.” In late 2007, the named insured/defendant struck two pedestrians while driving the car; one was seriously injured, and the other died of his injuries. The victims’ father sued the defendant for negligence. The plaintiff filed this declaratory judgment action, seeking a declaration of no coverage for the accident; a second insurer, which provided uninsured motorist coverage to the victims, intervened and counterclaimed, arguing that the exclusion of the defendant from coverage was contrary to public policy and unenforceable. The Circuit Court granted the plaintiff’s motion for summary judgment, and denied the intervening insurer’s motion for reconsideration.
The Appellate Court reversed. The Court noted that pursuant to Section 7-317(b)(2) of the Safety and Family Financial Responsibility Law, a motor vehicle owner’s liability insurance policy must “insure the person named therein.” Because the exclusion of the defendant, the sole named insured, from any liability coverage under the policy squarely conflicted with that statutory command, the Court held that it was contrary to public policy and therefore unenforceable. The Court noted that other courts had upheld named-driver exclusions, but found that each of those cases had involved a driver who was not the sole named insured on the policy. The Court further acknowledged that the Supreme Court had, in two recent cases (Founders Insurance Co. v. Munoz and Progressive Universal Insurance Co. of Illinois v. Liberty Mutual Fire Insurance Co.), approved clauses which, under certain circumstances, excluded coverage for named insureds. However, the Appellate Court distinguished these holdings, noting that these were limitations on coverage, whereas the named insured in the case at hand had no coverage under any circumstances.
Skokie Castings Inc. v. Illinois Insurance Guaranty Fund
Supreme Court Number: 113873
Appellate Court: First District, Third Division
Appellate Court Case Number: 1-11-1533
Issues Presented: (1) Was a self-insuring employer's claim for reimbursement for workers compensation benefits paid a claim for workers compensation exempt from the Fund's $300,000 liability cap under 215 ILCS 5/537.2? (2) Was a self-insuring employer an "insurer" under the Act, meaning that it was obligated to continue paying benefits until it became insolvent, rather than seeking reimbursement from the Fund?
Appellate Court Opinion Summary: An employee suffered a bullet wound to the head in the scope of her employment, and sought and was awarded workers compensation benefits. Plaintiff was at the time a qualified self-insurer with respect to workers compensation insurance, and also held an aggregate excess policy. After plaintiff had exhausted its retention amount, the excess insurer paid benefit until it went into receivership. The defendant Fund then paid benefits for a time, until it informed plaintiff that its $300,000 limit pursuant to 215 ILCS 5/537.2 had been reached. Plaintiff sued, seeking a declaration that the statutory cap did not apply to the award. Upon cross-motions for summary judgment, the circuit court granted summary judgment for the plaintiff, and the defendant appealed. Although section 537.2 expressly excludes "any workers compensation claims" from the $300,000 limit, the Fund argued that the insolvent insurer's obligation to reimburse plaintiff was not such a "workers compensation claim." The Appellate Court disagreed, holding that the term could extend to claims of policyholders of workers compensation policies issued by insolvent insurers. In the alternative, the Fund argued that because plaintiff had elected to remain self-insured, it was an "insurer" within the meaning of the Act, and was obligated to continue paying benefits until it became insolvent. The Appellate Court rejected the Fund's argument, holding that if the legislature had intended to exclude self-insuring employers from the Act, it would have done so, and that the facts were not analogous to a contract for reinsurance.
Standard Mutual Insurance Co. v. Lay
Supreme Court Number: 114617
Appellate Court: Fourth District
Appellate Court Case Number: 4-11-0527
Issue Presented: Is the Federal statutory penalty imposed pursuant to the Federal Telephone Consumer Protection Act for sending unsolicited advertisements to a fax machine in the nature of punitive damages, and therefore uninsurable as a matter of Illinois law?
Appellate Court Opinion Summary: Click here.
Steadfast Insurance Co. v. Caremark RX, Inc.
Supreme Court Case Number: 104906
Appellate Court: First District, Division 2
Appellate Court Case Number: 1-06-1221
Issues Presented: (1) Where an insurer pays its insured's defense costs solely in order to comply with a trial court order, may the insurer seek reimbursement of those payments when the order finding a duty to defend is reversed? (2) Did the Circuit Court abuse its discretion by permitting the insurer to amend its complaint for declaratory judgment after the order on duty to defend is reversed to state a claim for unjust enrichment?
Appellate Court Opinion Summary: The insurer's insured was sued for allegedly conspiring to obtain undisclosed discounts, rebates and kickbacks for favoring certain drugs. Insurer denied a defense and filed a declaratory judgment action. The Circuit Court granted the insured's motion for summary judgment, ordered insurer to provide a defense, and refused to stay enforcement of its order pending review. The Appellate Court reversed, holding that insurer had no duty to defend. On remand, insurer filed a motion for restitution, seeking to recover defense costs expended between entry of the trial court's order and reversal. The Circuit Court held that the insurer's declaratory judgment action was the "functional equivalent" of a defense on reservation of rights, and the insurer was therefore barred from recovering defense costs under General Agents Ins. Co. of Am. v. Midwest Sporting Goods Co., 215 Ill.2d 146 (2005). The Appellate Court affirmed the Circuit Court's denial of the motion for restitution, finding that although the motion was not governed by General Agents, insurer had not stated any cause of action which could support a remedy of restitution. However, the Appellate Court reversed the Circuit Court's refusal to permit the insurer to amend to state a claim for unjust enrichment.
Citations to Opinion: 373 Ill.App.3d 895, 311 Ill.Dec. 897, 869 N.E.2d 910
