Phoenix Insurance Company v. Rosen

SUPREME COURT CASES

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State: Illinois

Docket No: 110679 NRel

Case Date: 04/21/2011

Preview:Docket No. 110679.

IN THE SUPREME COURT OF THE STATE OF ILLINOIS

PHOENIX INSURANCE COMPANY, Appellant, v. MARTHA ROSEN, Appellee. Opinion filed April 21, 2011.

JUSTICE GARMAN delivered the judgment of the court, with opinion. Justices Freeman, Thomas, Karmeier, Burke, and Theis concurred in the judgment and opinion. Chief Justice Kilbride took no part in the decision. OPINION This case presents the question of whether a provision allowing either party to an insurance contract to demand a trial de novo following arbitration is unenforceable when it appears in an underinsured-motorist policy. For the reasons below, we hold that such provisions are enforceable. BACKGROUND The facts are not in dispute. On April 19, 2001, Martha Rosen was injured in an accident with another driver. The other driver's vehicle was insured for a maximum limit of $25,000 for claims of bodily injury, while Rosen's automobile insurance includes underinsuredmotorist coverage with a maximum limit of $500,000. Rosen filed a claim with her insurer, Phoenix Insurance Company, requesting coverage under the underinsured-motorist provisions of her policy. The arbitration agreement contained in the underinsured-motorist coverage provides:

"A. If we and an `insured' do not agree: 1. Whether that person is legally entitled to recover damages under this endorsement; or 2. As to the amount of damages; either party may make a written demand for arbitration. In this event, each party will select an arbitrator. The two arbitrators will select a third. If such arbitrators are not selected within 45 days, either party may request that the arbitration be submitted to the American Arbitration Association. B. We will bear all the expenses of the arbitration except when the `insured's' recovery exceeds the minimum limit specified in the Illinois Safety responsibility law. If this occurs, the `insured' will be responsible up to the amount by which the `insured's' recovery exceeds the statutory minimum for: 1. Payment of his or her expenses; and 2. An equal share of the third arbitrator's expenses. C. Unless both parties agree otherwise, arbitration will take place in the county in which the `insured' lives. Local rules of law as to procedure and evidence will apply. A decision agreed to by two of the arbitrators will be binding as to: 1. Whether the `insured' is legally entitled to recover damages; and 2. The amount of damages. This applies only if the amount does not exceed the minimum limit for bodily injury liability specified by the Illinois Safety Responsibility Law. If the amount exceeds that limit, either party may demand the right to a trial. This demand must be made within 60 days of the arbitrators' decision. If the demand is not made, the amount of damages agreed to by the arbitrators will be binding." (Emphasis added.) Following arbitration, Rosen was awarded $382,500, "subject to reduction by all applicable set-offs in favor of Travelers Insurance Company,[1] including but not limited to medical payments made by
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According to the pleadings, Phoenix Insurance Company is "a Travelers Insurance Company." Several documents in the record, including the

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Travelers Insurance Company." Phoenix filed a complaint in the Cook County circuit court rejecting the arbitration award and demanding a jury trial, citing the so-called "trial de novo" provision of paragraph (C)(2) of the arbitration agreement, quoted above. Rosen filed an answer in which she asserted as an affirmative defense that the trial de novo provision was "invalid and unenforceable as against the public policy of the State of Illinois." She also filed a counterclaim asking the court to enforce the arbitration award in her favor. Phoenix filed a section 2

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