ILLINOIS OFFICIAL REPORTS
Appellate Court
Country Preferred Insurance Co. v. Whitehead, 2011 IL App (3d) 110096
Appellate Court COUNTRY PREFERRED INSURANCE COMPANY, Plaintiff-
Caption Appellee, v. TERRI WHITEHEAD, Defendant-Appellant.
District & No. Third District
Docket No. 3-11-0096
Filed August 30, 2011
Rehearing denied October 18, 2011
Held In an action for the injuries defendant suffered in an accident with an
(Note: This syllabus uninsured motorist in Wisconsin, the provision of the automobile liability
constitutes no part of policy plaintiff issued to defendant imposing a two-year statute of
the opinion of the court limitations on uninsured motorist claims violated public policy as applied
but has been prepared to defendant and was unenforceable, since Wisconsin has a three-year
by the Reporter of statute of limitations for such claims and applying the two-year period
Decisions for the would not place defendant in the same position she would have been in
convenience of the if the other motorist had been insured; therefore, the trial court’s denial
reader.)
of defendant’s motion to compel arbitration of her claim on the ground
that she did not act within two years was reversed.
Decision Under Appeal from the Circuit Court of Will County, No. 09-MR-1122; the
Review Hon. Barbara Petrungaro, Judge, presiding.
Judgment Reversed and remanded.
Counsel on Robert Marc Chemers (argued) and Heather E. Plunkett, both of Pretzel
Appeal & Stouffer, Chtrd., of Chicago, for appellant.
Keith G. Carlson (argued), of Carlson Law Offices, of Chicago, for
appellee.
Panel JUSTICE LYTTON delivered the judgment of the court, with opinion.
Justice Holdridge concurred in the judgment and opinion.
Justice McDade dissented, with opinion.
OPINION
¶1 Plaintiff, Country Preferred Insurance Company, filed a complaint for declaratory
judgment against defendant, Terri Whitehead, alleging that she was barred from pursuing an
uninsured motorist claim because she did not file a request for arbitration within the two-year
policy limitation. Defendant filed a motion to compel arbitration, stating that the two-year
limitation violated public policy because the accident occurred in Wisconsin, which has a
three-year statute of limitations. The trial court denied defendant’s motion. We reverse and
remand.
¶2 On July 27, 2007, defendant was in an automobile accident with a vehicle driven by
Mario Lopez-Juarez in Wisconsin. Lopez-Juarez was uninsured. Defendant was insured by
plaintiff, Country Preferred Insurance Company. Her policy with Country Preferred provided
that disputes with uninsured motorists were to be decided by arbitration. The arbitration
provision contained in the policy provided in pertinent part: “[I]f we and an insured disagree
over whether that insured is legally entitled to recover damages from the owner or operator
of an uninsured motor vehicle or if agreement cannot be reached on the amount of damages,
either party must make a written demand for arbitration.” Another provision of the policy
relating to uninsured motorist claims stated: “[A]ny suit, action or arbitration will be barred
unless commenced within two years from the date of the accident.”
¶3 Defendant notified Country Preferred of her accident shortly after it occurred. As of
October 2007, Country Preferred had assigned a claim number and claim representative to
defendant’s uninsured claim. Several times thereafter, Country Preferred’s claim
representative, Andrea Dunmore, sent correspondence to defendant.
¶4 On May 5, 2009, defendant’s counsel wrote Dunmore, advising her that he represented
defendant, “who sustained injuries as a result of an uninsured motorist,” and requesting a
copy of defendant’s insurance policy. On October 6, 2009, defendant’s counsel made a
written demand for arbitration on defendant’s uninsured motorist claim.
-2-
¶5 On October 30, 2009, Country Preferred filed a complaint for declaratory judgment
against defendant, alleging that she was barred from making an uninsured motorist claim
under her policy because she did not make a written demand for arbitration within two years
of her accident. On July 19, 2010, defendant filed a motion to compel arbitration. The trial
court denied defendant’s motion.
¶6 Where a provision of an insurance contract is in conflict with public policy, courts will
not enforce it. American Service Insurance Co. v. Pasalka, 363 Ill. App. 3d 385, 390 (2006).
Whether a contractual provision violates public policy must be determined on a case-by-case
basis. See American Federation of State, County & Municipal Employees v. State, 158 Ill.
App. 3d 584, 592 (1987), aff’d, 124 Ill. 2d 246 (1988).
¶7 Illinois law requires insurers to offer uninsured motorist coverage in all automobile
policies. 215 ILCS 5/143a (West 2008). “[T]he intent of the legislature in enacting section
143a was to ensure that persons injured by an uninsured motorist are protected at least to the
extent that compensation is made available to persons injured by a motorist insured for the
minimum legal limits.” Pasalka, 363 Ill. App. 3d at 390. “[T]he public policy behind the
uninsured motorist statute is to place the injured party in substantially the same position he
would have been in if the uninsured driver had been insured.” Hoglund v. State Farm Mutual
Automobile Insurance Co., 148 Ill. 2d 272, 279 (1992).
¶8 An insurance policy violates Illinois public policy when it places an injured party in a
substantially different position than if the tortfeasor had carried insurance. See Severs v.
Country Mutual Insurance Co., 89 Ill. 2d 515, 519-20 (1982); Pasalka, 363 Ill. App. 3d at
392; Kerouac v. Kerouac, 99 Ill. App. 3d 254, 262 (1981); Burgo v. Illinois Farmers
Insurance Co., 8 Ill. App. 3d 259, 263-64 (1972).
¶9 The issue before us is whether Illinois public policy is served when an insurance policy
limits coverage to two years when an accident occurs in a state that has a three-year statute
of limitations.
¶ 10 In Burgo, the court held that a contract provision requiring insureds to demand arbitration
within one year of an accident violated Illinois’s uninsured motorist statute because it
shortened the applicable statute of limitations. Burgo, 8 Ill. App. 3d at 263-64. Under Illinois
law, Burgo had two years to sue the tortfeasor. See id. at 260; see also 735 ILCS 5/13-202
(West 2008). The contract’s one-year provision shortened the state’s two-year statutory
limitations period. Burgo, 8 Ill. App. 3d at 263. Thus, it placed Burgo in a substantially
different position than he would have been in had the tortfeasor carried insurance. Id. at 263-
64. The court held that “[t]he one-year limitation in the policy is a dilution or diminution of
the uninsured motorist statute and is an attempt to defeat the intent and the purpose of the
statute; therefore it is against public policy and the statute must prevail.” Id. at 264.
¶ 11 Similarly, in Severs, the supreme court held that a two-year contractual limitation against
a minor was unenforceable because it shortened the time within which the minor was
required to file suit. Severs, 89 Ill. 2d at 519-20. The court explained that the uninsured
motorist statute required that the minor “be allowed the same period of time within which
to bring suit that she would have had if the driver *** had been insured.” Id. at 519. In
Illinois, a minor has two years after attaining age 18 to file suit. See id. at 519-20 (citing Ill.
-3-
Rev. Stat. 1973, ch. 83, ¶ 22 (now see 735 ILCS 5/13-211 (West 2008))). The two-year
policy provision restricted that limitations period and placed the minor in a substantially
different position than she would have been in if the tortfeasor had carried insurance. See
Severs, 89 Ill. 2d at 520. Thus, the two-year limitation in the policy deprived the minor of the
uninsured motorist coverage required by statute and could not be used against the minor. Id.;
see also Kerouac, 99 Ill. App. 3d at 262.
¶ 12 Here, the two-year period contained in the policy at issue violates public policy as to
defendant because it effectively shortens the applicable Wisconsin statute of limitations from
three years to two years. Thus, it places defendant in a “substantially different” position than
if the other driver had been insured. See Burgo, 8 Ill. App. 3d at 263-64. If the driver of the
other vehicle involved in defendant’s accident had been insured, defendant could have
brought her personal injury action against him in Wisconsin, and a three-year statute of
limitations would apply. See Wis. Stat. §§ 801.05(3), 893.54(1) (2011).
¶ 13 Nevertheless, plaintiff argues that a two-year contract limitation has been approved by
our courts. See Hannigan v. Country Mutual Insurance Co., 264 Ill. App. 3d 336, 342
(1994); Shelton v. Country Mutual Insurance Co., 161 Ill. App. 3d 652, 660 (1987).
However, the courts in those cases upheld a two-year policy limitation because it was the
same length as the statute of limitations for personal injuries occurring in Illinois. See 735
ILCS 5/13-202 (West 2008); Hannigan, 264 Ill. App. 3d at 342; Shelton, 161 Ill. App. 3d at
659-60. As such, the insureds were placed in the same position they would have been in had
the offending motorists been insured.
¶ 14 Those cases do not reflect the facts in this case. Here, the two-year limitations period in
the policy is less than the three-year statute of limitations in Wisconsin; defendant is not
placed in substantially the same position she would have been in if the uninsured driver had
been insured. Thus, the insurance contract violates public policy as applied to defendant and
is unenforceable. See Pasalka, 363 Ill. App. 3d at 390.
¶ 15 The order of the circuit court of Will County is reversed and the cause is remanded for
further proceedings consistent with this opinion.
¶ 16 Reversed and remanded.
¶ 17 JUSTICE McDADE, dissenting:
¶ 18 I dissent from the majority’s finding that the “two-year period contained in the policy at
issue violates public policy as to defendant because it effectively shortens the applicable
Wisconsin statute of limitations from three years to two years.” Supra ¶ 12. This reasoning
ignores the fact that it is not our role to make policy; rather, we must ascertain the public
policy of this state with reference to the Illinois Constitution, statutes, and long-standing case
law. Timothy Whelan Law Associates, Ltd. v. Kruppe, 409 Ill. App. 3d 359, 361 (2011).
Thus, I do not believe that an Illinois court can use a foreign jurisdiction’s laws to establish
a violation of Illinois public policy.
¶ 19 In the interest of clarity, I find it necessary to set out the specific basis of defendant’s
-4-
arbitration demand. Defendant’s arbitration demand is found in her counterclaim. While
defendant’s counterclaim asserts that she “timely presented and *** [plaintiff] acknowledged
*** [her] claim for uninsured motorist coverage benefits as early as October 21, 2007,” this
was not the actual basis for her arbitration demand. Instead, defendant argued that section 2
of the policy violates Illinois public policy because it bars relief, which would otherwise be
available under Wisconsin law. Stated another way, defendant’s counterclaim sought to have
section 2 of the policy voided on public policy grounds, as opposed to arguing that she
complied with section 2. Both defendant’s initial brief and reply brief confirm the narrow
scope of her argument.
¶ 20 First, defendant states the question presented for review as:
“Whether Country Preferred Insurance Company’s enforcement of the two-year time
limitation provision for a demand for arbitration of an uninsured motorist claim violates
Illinois public policy where the motor vehicle accident occurred in Wisconsin, which has
a three year statute of limitations for personal injury actions, because it places the insured
in a substantially different position than if the other driver had been insured.”
In addition, defendant’s initial brief states, in pertinent part:
“Here, the singular issue before this Court is whether the application of Country’s
[uninsured motorist] time limitation provision as it pertains to Whitehead violates Illinois
public policy.”
Defendant’s reply brief states, in pertinent party:
“Because of the disagreement between the parties as to Country’s contentions,
Whitehead’s motion to compel arbitration was brought on the legal issue of whether the
time limitation provision was against Illinois public policy. Whitehead denied that the
[uninsured motorist] claim was not made within two years of the accident, however, even
if it wasn’t Whitehead contended that Country can not have a contractual limitation in
its policy that places its insured in a substantially different position than she would have
been in had the tortfeasor carried the insurance required by statute because such a
limitation violates public policy. In the interest of judicial economy, the [public policy]
argument was made on an ‘assuming arguendo’ basis simply because if the Court held
that the two-year time limitation provision was against Illinois public policy, the case
would be over and there would be no issue as to whether Whitehead’s demand for
arbitration was timely.”
¶ 21 While defendant, through her counterclaim, could have raised both the arguments of
timeliness and public policy as grounds for her arbitration demand, she chose not to do so.
Instead, she has expressly defined the timeliness of her notice to Country out of our
consideration on interlocutory appeal. Thus, for purposes of this interlocutory appeal I
examine only the merits of defendant’s public policy contention. This scope finding,
however, would not mean that defendant cannot contest the issue of timeliness in the
underlying declaratory judgment proceedings. The record reveals that defendant’s answer to
plaintiff’s complaint for declaratory judgment expressly denies plaintiff’s allegation that she
“did not make a written demand for uninsured motorist arbitration on or before July 27,
2009.” I now turn to the merits of defendant’s public policy contention.
-5-
¶ 22 Courts will not enforce an insurance policy provision if it is in fundamental conflict with
public policy. American Service Insurance Co. v. Pasalka, 363 Ill. App. 3d 385, 390 (2006).
Whether a provision in a contract, insurance policy, or other agreement is invalid because it
violates public policy is a question of law, which we review de novo. In re Estate of
Feinberg, 235 Ill. 2d 256, 263 (2009).
¶ 23 Illinois public policy provides that an insurance policy provision may not place an
insured in a substantially different position than she would have been had the tortfeasor
carried the required insurance coverage mandated by law. Burgo v. Illinois Farmers
Insurance Co., 8 Ill. App. 3d 259, 263 (1972). Here, the automobile accident between
defendant and the tortfeasor occurred in Wisconsin. Wisconsin law provides that an action
to recover damages for personal injury “shall be commenced within three years or be barred.”
Wis. Stat. § 893.54(1) ( 2008). Thus, had the tortfeasor carried insurance coverage defendant
would have had three years to bring a personal injury action against the tortfeasor under
Wisconsin law.1 In contrast, Illinois has a two-year general statute of limitations for personal
injury actions. 735 ILCS 5/13-202 (West 2008).
¶ 24 Like Illinois law, section 3 of the policy requires that “any suit, action or arbitration” be
brought within two years of the accident or else it is barred. On appeal, defendant argues that
section 2 violates Illinois public policy because “it places her in a substantially different
position than she would have been in if *** [the tortfeasor] carried the minimum liability
insurance.” Accepting this argument, the majority finds that because Wisconsin law would
have allowed defendant three years to bring a claim against an insured tortfeasor, section 2
is a dilution or diminution of her rights under Wisconsin law and therefore against Illinois
public policy. Supra ¶ 12. I disagree.
¶ 25 Defendant has failed to provide any authority supporting her claim that the laws of
another jurisdiction can somehow be used to show a violation of Illinois public policy. The
reason defendant has been unable to cite any supporting authority is because the public policy
of each particular state has been carved and developed against the backbone of that particular
state’s own individual constitution, case law, statutes and supreme court rules. Feinberg, 235
Ill. 2d at 265. “When the resolution of an issue turns upon public policy, it is not the role of
a court to make policy; rather, the court must ascertain the public policy of this state with
reference to the Illinois Constitution, statutes, and long-standing case law.” Kruppe, 409 Ill.
App. 3d at 361. The majority simply ignores this fact and instead chooses to find a violation
of Illinois public policy through the arbitrary application of Wisconsin law. I not only believe
this holding is legally incorrect, but I fear its progeny will result in the public policy of our
state being subjugated to the Constitution, statutes and case law of 49 other states. And one
has to wonder how an Illinois court would resolve this issue if there were yet another
additional party whose state had a 4-year limitation statute. Thus, I reject both defendant’s
attempt and the majority’s acceptance of Wisconsin law to show a violation of Illinois public
policy.
¶ 26 Instead, I believe an Illinois court must look to Illinois law to determine whether Illinois
1
This assumes Wisconsin law is found to be applicable under a conflict of law analysis.
-6-
public policy has been violated. Again, our unique public policy has slowly developed
through the analysis of our unique laws. Upon looking to Illinois law, I find the trial court
did not err in denying defendant’s request to compel arbitration on the basis of her public
policy argument. Illinois courts, applying Illinois law, have determined that the language
found in section 2 of the policy does not violate Illinois public policy. See Hannigan v.
Country Mutual Insurance Co., 264 Ill. App. 3d 336, 342 (1994); Shelton v. Country Mutual
Insurance Co., 161 Ill. App. 3d 652, 660 (1987).
¶ 27 This well-accepted holding that the insurance policy’s language does not violate Illinois
public policy is grounded upon the fact that a two-year policy limitation, such as the one at
issue here, does not place the insured in a substantially different position than she would
have been had the tortfeasor carried the required insurance coverage mandated by law
because Illinois law itself has a two-year general statute of limitations for personal injury
actions. See 735 ILCS 5/13-202 (West 2008). I find it extremely troubling that under the
majority’s analysis, an Illinois citizen, who is involved in a vehicle accident in Wisconsin
with an uninsured driver, is somehow afforded broader rights than an Illinois citizen, who
is involved in a vehicle accident in Illinois with an uninsured driver. It is this outcome that
I believe actually violates public policy.
¶ 28 In reaching this conclusion, I would be remiss if I did not address the fact that both the
parties and the majority simply assume that Wisconsin law would be applicable if the
tortfeasor were insured. This assumption is apparently based upon the fact that the
automobile accident occurred in Wisconsin. This assumption, however, ignores the fact that
the parties have sought resolution of their grievances in the courts of Illinois. Thus, without
some conflict of laws analysis, it is inappropriate to simply assume the applicability of
Wisconsin law. As discussed above, if Wisconsin law were not applicable, defendant would
have no public policy argument because Illinois law itself has a two-year general statute of
limitations for personal injury actions. While my above analysis would not require addressing
this issue, I believe the majority’s logic is fatally flawed absent any type of conflict of laws
analysis.
¶ 29 For the foregoing reasons, I would affirm the judgment of the trial court denying
defendant’s request to compel arbitration.
-7-