2013 IL App (1st) 120980
Ill. App. Ct.2013Background
- 10-year-old Kristie Talley died after her bicycle was caught between a curb and Barrington's school bus; litigation followed against Barrington, the school district, and the driver; Legion Indemnity Co. was declared insolvent and placed in liquidation, with the Liquidator overseeing claims; settlement funds paid to the Talleys included $1.2 million from Barrington, $250,000 from the Illinois Insurance Guaranty Fund, and $50,000 from uninsured motorist coverage; the Talleys assigned their rights to payment from Legion to Barrington, and Claimants sought the remaining $5.75 million from Legion in liquidation; the Liquidator approved only $1.2 million as reimbursement, and the circuit court affirmed, with Claimants seeking reconsideration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the Talley-Barrington assignment valid or void as an assignment of a personal injury claim? | Claimants contend the assignment was a bargained-for contractual right and should be treated as a valid claim. | Liquidator argues the assignment is effectively a personal injury claim and prohibited post-liquidation. | The assignment is void; Liquidator properly limited to $1.2 million. |
| Do Pine Top and Guillen support recognizing the remainder of the policy limits despite the assignment? | Claimants rely on Pine Top and Guillen to permit recovery of the full limits. | Liquidator correctly rejects windfall and differentiates the case from Pine Top and Guillen. | Pine Top and Guillen are distinguishable; windfall would occur if remainder were allowed; affirmed. |
| Does 209(8) prohibit reliance on a settlement/judgment entered after liquidation, constraining the Liquidator’s valuation? | Claimants argue the settlement agreement should be treated as a contractual right notwithstanding 209(8). | Liquidator and court properly deem the settlement based on post-liquidation judgment and not conclusive. | 209(8) prohibits reliance on post-liquidation judgments; liquidator may determine value accordingly; affirmed. |
Key Cases Cited
- Guillen v. Potomac Insurance Co. of Illinois, 323 Ill. App. 3d 121 (2001) (insured settlement in reasonable anticipation of liability; insurer not defending may bind)
- Pine Top Insurance Co., 266 Ill. App. 3d 99 (1994) (injured party may negotiate recovery against insured in liquidation; assignment issues arise)
- North Chicago Street R.R. Co. v. Ackley, 171 Ill. 100 (1897) (public policy against assignment of personal injury claims)
- Lincoln Towers Insurance Agency, Inc. v. Boozell, 291 Ill. App. 3d 965 (1997) (code-based liquidation procedures; marshaling assets impartially)
- In re Conservation of Alpine Insurance Co., 318 Ill. App. 3d 457 (2000) (complete statutory scheme; priority and orderly relief in liquidation)