Guarantee Trust Life Insurance Co. v. Platinum Supplemental Insurance, Inc.
2016 IL App (1st) 161612
| Ill. App. Ct. | 2017Background
- GTL (insurer) and Platinum (producer) entered a 2002 exclusive marketing agreement under which Platinum solicited applications, delivered policies, collected premiums, and was responsible for supervising/training agents; Wayne Briggs signed as Platinum’s CEO.
- The agreement contained a broad mandatory arbitration clause (section 17) stating all disputes "shall be submitted to binding, non-appealable arbitration" under AAA rules and also included a sentence that either party “may within one year from the date of the alleged breach … make a demand for arbitration.”
- GTL discovered widespread, long-running supervision/training failures by Platinum while defending the Casper coverage suit; GTL paid a jury judgment in that suit and sought indemnification from Platinum under the marketing agreement, which Platinum denied.
- GTL terminated the marketing agreement, entered a July 9, 2015 settlement with Platinum over termination issues, then (Dec. 2015) demanded arbitration of indemnity/settlement disputes; GTL later filed this suit (Dec. 2015) against Platinum and Briggs asserting rescission, fraud, breach of fiduciary duty, breach of contract (against Platinum) and fraud, breach of fiduciary duty, tortious interference (against Briggs).
- Platinum moved to compel arbitration of GTL’s claims under section 17; Briggs (a nonsignatory) sought to compel arbitration or, alternatively, a stay of the claims against him pending arbitration between GTL and Platinum.
- The trial court compelled arbitration as to Platinum, denied Briggs’s motion to compel (but stayed the claims against Briggs pending the Platinum arbitration); GTL and Briggs appealed. The appellate court affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether GTL’s claims against Platinum must be arbitrated despite the clause’s one‑year demand language | The one‑year sentence limits the time to demand arbitration; claims for which no demand was made within one year may be litigated in court | Section 17 is a mandatory arbitration clause; the one‑year sentence is a procedural demand window, not a forfeiture of the arbitration remedy | Arbitrable: Section 17 is a broad, mandatory arbitration clause; the court compelled arbitration against Platinum |
| Effect of the one‑year demand sentence (timeliness) | The one‑year language extinguishes arbitration if no demand filed within one year of breach | The one‑year phrase is a procedural rule about making a demand, not a waiver of arbitration; timeliness is for the arbitrator | Court: Substantive arbitrability established; procedural timeliness is for the arbitrator to decide; no judicial finding that arbitration is time‑barred |
| Whether claims against Briggs (nonsignatory) must be arbitrated because claims arise from the marketing agreement | GTL: Briggs signed only as Platinum’s agent; as a nonsignatory he cannot compel arbitration | Briggs: As Platinum’s CEO/agent and alleged co‑wrongdoer, he may invoke the clause or equitable estoppel to compel arbitration | Denied: Briggs (nonsignatory) cannot compel arbitration under Illinois law; equitable estoppel/agency exceptions not adopted here |
| Whether litigation against Briggs should be stayed pending arbitration of Platinum | GTL: Litigation against Briggs should proceed separately | Briggs: Alternatively sought stay pending arbitration | Stayed: Trial court did not abuse discretion; stay warranted for judicial economy because arbitration may resolve core issues |
Key Cases Cited
- Donaldson, Lufkin & Jenrette Futures, Inc. v. Barr, 124 Ill. 2d 435 (Ill. 1988) (Illinois policy favors arbitration; three‑part test for compelling arbitration)
- LRN Holding, Inc. v. Windlake Capital Advisors, LLC, 409 Ill. App. 3d 1025 (Ill. App. Ct. 2011) (standard of review for orders compelling arbitration)
- QuickClick Loans, LLC v. Russell, 407 Ill. App. 3d 46 (Ill. App. Ct. 2011) (construction of arbitration clauses reviewed de novo)
- John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543 (U.S. 1964) (courts decide substantive arbitrability; procedural arbitrability for arbitrator)
- Keeley & Sons, Inc. v. Zurich American Insurance Co., 409 Ill. App. 3d 515 (Ill. App. Ct. 2011) (distinguishing narrow versus generic arbitration clauses)
- Ervin v. Nokia, Inc., 349 Ill. App. 3d 508 (Ill. App. Ct. 2004) (declining to adopt the broader federal equitable‑estoppel rule allowing nonsignatories to compel arbitration)