Willis v. United Equitable Insurance Co.
2017 IL App (1st) 162308
| Ill. App. Ct. | 2017Background
- On August 5, 2008 Valentina Willis’s car (with Kathy Willis as passenger) was hit by a stolen Hertz rental car; Hertz denied coverage. Valentina sought uninsured motorist (UM) coverage under her United Equitable Insurance Company (UEIC) policy.
- The UEIC policy required that coverage/damage disputes be submitted to arbitration (AAA or by party-selected arbitrators) and stated that “suit, arbitration or appraisal” must be commenced within two years of the accident.
- Valentina’s counsel sent letters on August 26, 2009 and September 11, 2009 stating, in substance, a conditional demand for arbitration (“we hereby make demand for arbitration if this claim is not resolved within two years/one year after the accident”). Additional correspondence in 2010 and an AAA filing occurred in 2012—more than two years after the accident.
- Valentina (and Kathy, who intervened) sued UEIC for breach of contract and bad faith and sought declaratory relief compelling UM arbitration; UEIC counterclaimed seeking a declaration of no coverage because arbitration was not commenced within two years.
- The trial court granted summary judgment for plaintiffs, finding the 2009 letters satisfied the policy’s arbitration-commencement requirement; UEIC appealed. The appellate court reversed and remanded, holding the 2009 letters were conditional (not unequivocal) and therefore did not commence arbitration within the two-year limitations period.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether arbitration was "commenced" under the policy within two years of the accident | Willis argued her counsel’s 2009 letters sufficiently requested/demanded arbitration within two years | UEIC argued the letters were conditional/insufficient and arbitration was not commenced until the 2012 AAA filing (after two-year limit) | Court held the 2009 letters were conditional and not an unequivocal demand; arbitration was not commenced within two years, so policy’s requirement was not met |
| Whether a “request” (vs. the word “demand”) can satisfy a policy’s arbitration-start requirement | Plaintiffs relied on cases holding a request may be the functional equivalent of a demand | UEIC stressed prior precedent requiring an unequivocal written demand | Court applied precedent distinguishing equivocal statements from unequivocal requests and found these letters equivocal (conditional) and insufficient |
| Whether naming an arbitrator within two years was required to commence arbitration | Plaintiffs argued naming an arbitrator was not mandatory to commence arbitration under the policy | UEIC argued the alternative arbitration procedure required selecting arbitrators within the policy timeframe | Court did not decide this issue because it resolved the case on the demand/timeliness ground |
| Whether summary judgment was proper on the declaratory/arbitration claim | Plaintiffs argued no genuine issue that the 2009 correspondence commenced arbitration | UEIC argued a factual/legal deficiency (no unequivocal demand within two years) precluded summary judgment | Court reversed trial court summary judgment for plaintiffs and remanded for further proceedings |
Key Cases Cited
- Arangold Corp. v. Zehnder, 204 Ill. 2d 142 (Ill. 2003) (summary-judgment standard and contract/policy interpretation principles)
- Hobbs v. Hartford Insurance Co. of the Midwest, 214 Ill. 2d 11 (Ill. 2005) (apply contract-construction rules to insurance policies)
- Rein v. State Farm Mutual Auto Insurance Co., 407 Ill. App. 3d 969 (Ill. App. 2011) (de novo review of policy interpretation and summary judgment)
- Buchalo v. Country Mutual Insurance Co., 83 Ill. App. 3d 1040 (Ill. App. 1980) (distinguishes statements of opinion from an unequivocal written demand to commence arbitration)