2020 IL App (1st) 182462
Ill. App. Ct.2020Background
- Plaintiffs Marc and Deborah Jacobs obtained a ~$26M judgment (2015) against Yellow Cab and its driver Ezeagu for severe injuries. Plaintiffs later sought to collect from the defendants’ insurer, American Country Insurance Co. (American).
- The insurance policy limit was $350,000 and contained a supplementary-payments clause: insurer pays postjudgment interest but its duty ends when it has paid, offered to pay, or deposited in court the portion within policy limits.
- The day after the judgment the insureds filed for bankruptcy; American obtained relief from the bankruptcy court to deposit its policy limit into the Cook County circuit clerk’s office and deposited $427,319.40 (policy limit + 10 days’ interest) on March 27, 2015.
- Plaintiffs later pursued a supplemental citation and turnover against American, claiming the clerk deposit did not constitute a statutory “tender” under 735 ILCS 5/2-1303 and seeking an additional ~$6.6M in postjudgment interest.
- The circuit court dismissed the citation; the appellate court affirmed, holding American complied with its contractual obligations and the statutory tender rule does not control an insurer’s discharge of its policy duty.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a deposit with the circuit clerk satisfies the statutory “tender” under 735 ILCS 5/2-1303 and thus stops accrual of postjudgment interest | Jacobs: deposit with clerk is not a valid "tender" under §2-1303 and therefore insurer still owes accrued interest | American: §2-1303 governs judgment debtors, not insurers; insurer need only comply with its policy (which permits deposit with clerk) | Court: §2-1303 applies to judgment debtors, not insurers; insurer satisfied its policy by depositing funds with clerk, so plaintiffs may not recover more from insurer |
| Whether the supplementary-payments clause is void as against public policy or inconsistent with mandatory taxi-insurance purposes | Jacobs: clause improperly abridges statutory interest rights and undermines public policy behind mandatory cab insurance | American: clause is a lawful contractual allocation of insurer obligations and promotes prompt resolution/indemnification; it does not alter plaintiffs’ statutory rights against judgment debtors | Court: clause is enforceable; it does not contravene §2-1303 or taxi-insurance policy and American’s deposit did not impair plaintiffs’ statutory interest claim against the judgment debtors |
Key Cases Cited
- River Valley Cartage Co. v. Hawkeye-Security Insurance Co., 17 Ill. 2d 242 (1959) (insurer’s postjudgment-interest liability is defined by its policy language)
- Halloran v. Dickerson, 287 Ill. App. 3d 857 (1997) (policy language controls adequacy of insurer’s offer to stop interest accrual; clerk deposit can be inadequate if not authorized by policy)
- Needy v. Sparks, 74 Ill. App. 3d 914 (1979) (insurer may have option to deposit with court clerk under policy terms)
- Casciola v. Gardner, 101 Ill. App. 3d 852 (1981) (postjudgment-interest statute applies to judgment debtor, not insurer discharging policy obligations)
- Niemeyer v. Wendy’s International Inc., 336 Ill. App. 3d 112 (2002) (tender under §2-1303 must be unconditional and for full amount)
- Schneider v. Autoist Mutual Insurance Co., 346 Ill. 137 (1931) (judgment creditor’s rights against insurer are no greater than insured’s)
- Second New Haven Bank v. Kobrite, Inc., 86 Ill. App. 3d 832 (1980) (in supplemental proceedings creditor succeeds only to rights the judgment debtor had against insurer)
- Progressive Universal Insurance Co. v. Liberty Mutual Fire Insurance Co., 215 Ill. 2d 121 (2005) (public-policy invalidation of contracts is disfavored and imposed narrowly)
- American Country Insurance Co. v. Wilcoxon, 127 Ill. 2d 230 (1989) (statutes intended to protect the public cannot be negated by private contract)
- Nelson v. Artley, 2015 IL 118058 (2015) (mandatory vehicle-insurance statutes provide limited, not full, compensation; purpose is modest public protection)