Interstate Bankers Casualty Co. v. Hernandez
3 N.E.3d 353
Ill. App. Ct.2014Background
- Interstate Bankers Casualty Co. and Jose Mendoza Gonzalez, subrogee, sued Alberto Hernandez for property damage from a January 9, 2012 car crash; Gonzalez’s insurer sought damages and subrogation under a policy.
- Section 143.24d of the Illinois Insurance Code (effective Jan. 1, 2012) requires mandatory arbitration of certain subrogation claims under NICAA when amount in controversy (excluding arbitration costs) is under $2,500.
- The circuit court dismissed Counts I and II of the complaint under § 143.24d, and plaintiffs appealed.
- The appellate court held § 143.24d unconstitutional for violating the Illinois constitutional right to jury trial, reasoning subrogation and negligence claims carry jury rights at common law.
- The court reversed and remanded for trial, finding the right to jury trial attaches to subrogation/negligence actions and that the statute improperly binds nonparties to arbitration and lacks a viable circuit court path.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 143.24d violates the jury trial right | § 143.24d abolishes jury trial for familiar negligence/subrogation claims | Statute rationally furthers arbitration policy; parties can seek other forums | Unconstitutional; jury trial right violated |
| Nature of the underlying claim in count I | Subrogation/action lies at common law with jury rights | Subrogation is governed by contract and statute; arbitration appropriate | Right to jury trial exists; subrogation tracked by common law |
| Effect on Gonzalez’s direct negligence claim (count II) | Count II is a direct negligence claim not subject to § 143.24d | Statutory scheme may affect all related proceedings | Count II should not have been dismissed; jury trial preserved for direct negligence claim |
Key Cases Cited
- Reed v. Farmers Insurance Group, 188 Ill. 2d 168 (1999) (upholding uninsured motorist arbitration; distinguishes common-law claims from statutory remedies)
- Grace v. Howlett, 51 Ill. 2d 478 (1972) (arbitration statute in limited counties violates jury trial right under Grace framework)
- Martin v. Heinold Commodities, Inc., 163 Ill. 2d 33 (1994) (jury trial rights attach to actions at common law as of 1970 Constitution; delineates scope of rights)
- In re K.J., 381 Ill. App. 3d 349 (2008) (contracts-based subrogation rights; statutory procedures cannot strip common-law rights)
- Noren v. Metropolitan Property & Casualty Insurance Co., 369 Ill. App. 3d 72 (2006) (insurer entitled to jury trial in declaratory actions where relief relies on factual issues)