Illinois Appellate Court Reverses and Remands Insurance Case Regarding Demand for Arbitration

The plaintiffs in this case filed a complaint against the defendant insurance company, United Equitable Insurance Co., alleging breach of contract in bad faith when United Equitable would not pay the plaintiffs’ claims from an auto accident involving an uninsured motorist.

The plaintiffs filed a motion for summary judgment, which the trial judge granted. On appeal, United Equitable argued that the court erred because the policy required plaintiffs to unequivocally demand arbitration and appoint an arbitrator within two years of the incident, which plaintiffs did not do.

The appeals panel stated that the court erred in granting plaintiffs’ motion. The arbitration provision in the insurance policy stated that disagreements concerning uninsured motorist coverage and damages “shall be submitted to arbitration” within two years. A party sufficiently commences arbitration if the request for arbitration is unequivocal and made according to the terms of the policy.

In this case, the plaintiff’s letters stated “[w]e hereby make demand for arbitration if this claim is not resolved within two years after the accident.” According to the court, that letter was not a demand to begin arbitration because it was contingent on whether the claim could be resolved.

On Aug. 5, 2008, Valentina Willis and Kathy Dobson Willis were involved in an accident with a stolen rental car from Hertz.  Kathy Willis was a passenger in Valentina’s car when the accident occurred. At the time, Valentina’s vehicle was insured through a policy issued by United Equitable.  Hertz denied coverage since its car had been stolen, so Valentina sought coverage under the uninsured motorist provision of her United Equitable policy.

In addition to the letter sent by the Willis’s lawyer, it was stated that a demand for arbitration under the policy was made by a letter that stated “[s]ince Ms. Willis’s uninsured motorist claim is still not resolved, I renew my request for arbitration.” In addition, the attorney filed a claim with the American Arbitration Association (AAA) requesting arbitration in this case. United Equitable rejected Valentina’s uninsured motorist claim. Later, Valentina Willis filed a lawsuit against United Equitable alleging breach of contract in bad faith. Kathy Willis filed a motion to intervene as a plaintiff which the trial judge allowed.

United Equitable filed a counterclaim seeking a declaration that its policy provides no coverage for plaintiffs’ claims because they “did not commence arbitration within two years of accident” and did not “select an Arbitrator and demand arbitration” within that timeframe.

The appeals panel found that Valentina Willis’s claim for arbitration with AAA was more than two years after date of the accident. Therefore, in order for the arbitration clause to apply, the letter sent by the Willis’s lawyer must have sufficiently “request[ed] arbitration” as set forth under the alternative method for submission of arbitration claims. The appellate court also found that a party sufficiently commences arbitration if his or her request or demand for arbitration is unequivocal and is made according to the terms of the policy and within the limitations period set forth therein. For those reasons, the judgment of the circuit court granting summary judgment in favor of the Willis’s on Count II of their complaint was reversed. The cause was remanded for further proceedings to the trial court.

Willis v. United Equitable Insurance Co., 2017 IL App (1st) 162308 (June 29, 2017).

Kreisman Law Offices has been handling uninsured motorist claims, automobile accident cases, truck accident cases, motorcycle accident cases and bicycle injury cases for individuals, families and the loved ones who have been injured, harmed or killed by the negligence of another for more than 40 years, in and around Chicago, Cook County and its surrounding areas, including Burr Ridge, Oak Lawn, Palos Heights, Midlothian, Glenview, Westmont, Naperville, Villa Park, Park Ridge, Des Plaines, Chicago (Rogers Park, Andersonville, Bronzeville, Wicker Park), New Lenox, Lemont and River Forest, Ill.

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