2011 IL App (2d) 100580
Ill. App. Ct.2011Background
- State Farm paid $400,000 to Jane's estate in Lubinski settlement; Lubinski sued County, Birkett, and Jane's estate for injuries from 2007 crash.
- County was a self-insured municipality with a $2 million retained limit under the Local Governmental and Governmental Employees Tort Immunity Act; excess liability covered by private insurers.
- State Farm sought declaratory relief for equitable subrogation and reimbursement, arguing County owed primary defense/indemnity; argued umbrella policy was excess over underlying insurance.
- District court granted partial judgment for County on equitable-subrogation and reimbursement; denied judgment on pleadings as to other issues; State Farm appealed.
- Umbrella policy defined other-insurance structure and underlying auto policies; three State Farm auto policies did not cover the 2003 Impala, so umbrella could be primary if County had no other valid underlying insurance.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Can State Farm obtain equitable subrogation from the County? | County is primarily liable as insurer; IRMA-like rationale applies. | County is a self-insured municipality, not an insurer or policy carrier. | No; self-insured County is not an insurer; equitable subrogation not available. |
| Is horizontal exhaustion applicable to require County to pay within its retained limit? | Vertical/excess coverage should not override primary self-insurance; umbrella can be primary. | County is not an insurer, so horizontal exhaustion does not apply. | Not applicable; County not an insurer, umbrella primary. |
Key Cases Cited
- Antiporek v. Village of Hillside, 114 Ill.2d 246 (1986) (IRMA self-insurance; public funds protection; immunity)
- Aetna Casualty & Surety Co. of Illinois v. James J. Benes & Associates, Inc., 229 Ill.App.3d 413 (1992) (IRMA; self-insurance vs insurer distinction)
- Yaccino v. State Farm Mutual Automobile Insurance Co., 346 Ill.App.3d 431 (2004) (IRMA; public funds protection; insurer status)
- CHRPP v. Illinois State Medical Inter-Insurance Exchange, 325 Ill.App.3d 970 (2001) (risk pool not pure self-insurance; public vs private funds)
- Home Insurance Co. v. Cincinnati Insurance Co., 213 Ill.2d 307 (2004) (equitable subrogation framework; primary vs excess considerations)