Keeley & Sons, Inc. v. Zurich American Insurance
409 Ill. App. 3d 515
| Ill. App. Ct. | 2011Background
- Keeley & Sons, Inc. sued Zurich American Insurance for overpayments of premiums totaling $274,270 under two workers' compensation policies.
- 00 Policy covered 12/31/2002–12/31/2003; 01 Policy covered 12/31/2003–12/31/2004; premiums tied to defendant's rating manuals and classifications.
- Endorsements on the 00 Policy included a contingent experience rating factor of 1.77 and an Illinois mod/retro calculation provision; 01 Policy had related endorsements setting mods to 1.00 or 1.82 and noting return premiums subject to audit.
- Plaintiff alleges improper application of experience modification factors (1.77 for 00 and 1.75 for 01) increased premiums, with retrospective calculations reducing alleged overcharges.
- Retrospective premiums are determined under Incurred Loss Retrospective Rating Agreements, which contain arbitration clauses.
- Trial court denied Zurich’s motion to compel arbitration; Zurich appeals under Rule 307(a)(1).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the arbitration clauses cover the breach-of-contract claims | Keeley contends arbitration clauses apply only to the Retrospective Rating Agreements, not the Policies. | Zurich argues the generic arbitration clause encompasses disputes arising out of the overall subject matter, including the Policies. | Arbitration clause is generic but limited to the Retrospective Rating Agreements; not applicable to the Policies. |
| If ambiguous, whether the matter should be decided by arbitrator or court | Clauses are not ambiguous and should not compel arbitration of policy claims. | If scope is ambiguous, Illinois law may require arbitration for disputes within the clause. | Not reached; clause deemed non-ambiguous with no compulsion to arbitrate the Policy claims. |
Key Cases Cited
- Flood v. Country Mutual Insurance Co., 41 Ill.2d 91 (1968) (arbitration scope limited to clear language)
- A.E. Staley Manufacturing Co. v. Robertson, 200 Ill.App.3d 725 (1990) (arbitration clause may be generic but scope depends on contract wording)
- Ozdeger v. Altay, 66 Ill.App.3d 629 (1978) (generic arbitration clauses limited by 'arising out of this agreement' language)
- Roosevelt University v. Mayfair Construction Co., 28 Ill.App.3d 1045 (1975) (contract arbitration clause language affects scope of arbitration)
- Donaldson, Lufkin & Jenrette Futures, Inc. v. Barr, 124 Ill.2d 435 (1988) (arbiter vs. court for scope determination when language uncertain)