State Farm Mutual Automobile Insurance Company v. Burke
51 N.E.3d 1082
Ill. App. Ct.2016Background
- Patrick Burke (Illinois resident) was driving a company Chevrolet Trailblazer owned/insured by Michigan company Ryan R. Robison & Co.; the Trailblazer was principally garaged in Illinois; the at-fault driver was uninsured and occupants claimed injuries.
- Granite State issued Robison a commercial auto policy with a Michigan uninsured/underinsured motorist (UM) endorsement limiting UM benefits to employees while occupying a covered auto in the course and scope of employment and requiring a workers’ compensation filing; endorsement also contained a 365‑day suit limitation and a Michigan choice‑of‑law clause.
- Burke had a separate State Farm policy on his personal vehicle that provided Illinois‑law UM coverage; State Farm sought declaration that Granite State’s policy was primary for the Trailblazer occupants’ UM claims.
- Granite State initially investigated, then informed Burke it would "be granting coverage," later made low settlement offers and ultimately denied coverage; State Farm sued for declaratory relief and Granite State counterclaimed.
- Trial court granted Granite State summary judgment, reasoning the Granite State policy was issued/delivered to the Michigan insured (Robison) and therefore Illinois statutory UM mandates did not apply; State Farm appealed.
Issues
| Issue | Plaintiff's Argument (State Farm) | Defendant's Argument (Granite State) | Held |
|---|---|---|---|
| Applicability of Illinois UM statutory mandates (215 ILCS 5/143a / 143a‑2) | Trailblazer was principally garaged in Illinois so Illinois UM law/public policy should invalidate conflicting policy terms | Sections apply only to policies "renewed, delivered, or issued for delivery in" Illinois; policy was delivered in Michigan to Robison | Statutory language limits §§143a/143a‑2 to policies renewed/delivered/issued for delivery in Illinois; those sections do not apply here |
| Enforceability of Michigan choice‑of‑law clause | Choice‑of‑law should not defeat Illinois public policy mandating UM coverage for vehicles principally garaged in Illinois | Michigan has substantial relation (insured domiciled there); applying Michigan law does not violate Illinois fundamental public policy here | Choice‑of‑law clause enforces Michigan law; Michigan has sufficient relationship and Illinois public policy (as embodied in §§143a/143a‑2) is not offended because those statutes do not apply |
| Validity of 365‑day contractual limitations (conflict with 215 ILCS 5/143.1) | Contractual 365‑day suit limitation conflicts with Illinois §143.1 and is therefore void | Contractual limitation binding under chosen Michigan law | Court did not decide the conflict on the merits; procedural limitations are governed by forum law (Illinois) and choice‑of‑law does not override procedural rules |
| Waiver/estoppel based on Granite State's conduct ("granting coverage") | Granite State waived policy defenses (scope‑of‑employment, workers’ comp requirement, 365‑day limit) by affirmatively granting coverage and making settlement offers | Assertions that communications were settlement overtures or internal reservations of rights; waiver cannot be used to create coverage beyond the policy | Granite State waived its policy defenses by intentionally relinquishing known rights when it told Burke it was "granting coverage" despite knowing the defenses existed |
Key Cases Cited
- Schultz v. Illinois Farmers Ins. Co., 237 Ill. 2d 391 (Ill. 2010) (statutory conflict with insurance policy renders policy provision void)
- Luechtefeld v. Allstate Ins. Co., 167 Ill. 2d 148 (Ill. 1995) (discussion of §143a’s purpose concerning UM coverage for vehicles registered or principally garaged in Illinois)
- International Surplus Lines Ins. Co. v. Pioneer Life Ins. Co. of Illinois, 209 Ill. App. 3d 144 (Ill. App. Ct.) (parties’ contractual choice of law governs unless chosen state lacks substantial relation or application would violate forum public policy)
- Belleville Toyota, Inc. v. Toyota Motor Sales, U.S.A., Inc., 199 Ill. 2d 325 (Ill. 2002) (procedural issues, such as statutes of limitations, are governed by the forum state's law despite contractual choice of law)
- Alshwaiyat v. American Service Ins. Co., 2013 IL App (1st) 123222 (Ill. App. Ct.) (§143a‑2 applies only where policy is renewed/delivered/issued for delivery in Illinois)
- Roser v. Anderson, 222 Ill. App. 3d 1071 (Ill. App. Ct.) (statutory language treating “renewed” as operative; court rejects reading that makes "renewed" surplusage)
- Kirschner v. Process Design Assocs., Inc., 463 Mich. 115 (Mich. 2000) (waiver and estoppel limited; typically not used to expand coverage beyond express policy terms)
- DeFrain v. State Farm Mut. Auto. Ins. Co., 491 Mich. 359 (Mich. 2012) (Michigan treats UM coverage as optional under its no‑fault framework; policy language controls entitlement)