State Farm Mutual Automobile Insurance Company v. Burke

2016 IL App (2d) 150462
No. 2-15-0462
Opinion filed March 29, 2016
______________________________________________________________________________

IN THE

APPELLATE COURT OF ILLINOIS

SECOND DISTRICT
______________________________________________________________________________

STATE FARM MUTUAL AUTOMOBILE ) Appeal from the Circuit Court
INSURANCE COMPANY, ) of Du Page County.
)
Plaintiff and Counterdefendant- )
Appellant, )
)
v. ) No. 13-MR-307
)
PATRICK BURKE and LISA BURKE, )
Individually and as Parents and Guardians of )
Jonathon Burke, a Minor, )
)
Defendants )
) Honorable
(Granite State Insurance Company, Defendant ) Bonnie M. Wheaton,
and Counterplaintiff-Appellee). ) Judge, Presiding.
______________________________________________________________________________

JUSTICE BIRKETT delivered the judgment of the court, with opinion.
Presiding Justice Schostok and Justice Zenoff concurred in the judgment and opinion.

OPINION

¶1 Plaintiff and counterdefendant, State Farm Mutual Automobile Insurance Company,

appeals the judgment of the circuit court of Du Page County granting summary judgment in

favor of defendant and counterplaintiff, Granite State Insurance Company. At issue is the

applicability of uninsured motorist coverage through a policy issued by Granite State. State

Farm argues that the uninsured motorist provision in the Granite State policy is unenforceable

because it violates Illinois law and public policy requiring that all motorists have uninsured
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motorist coverage, notwithstanding the choice-of-law provision spelled out in the policy.

Alternatively, State Farm argues that Granite State waived its policy defenses by extending

coverage to defendants Patrick and Lisa Burke and their son Jonathon. Last, State Farm argues

generally that it would be unjust to allow Granite State to evade the requirements of Illinois

public policy embodied in the mandatory insurance laws. We agree that Granite State waived its

policy defenses, and we reverse and remand.

¶2 I. BACKGROUND

¶3 Patrick Burke (Burke) worked as an insurance investigator for Ryan R. Robison and

Company, a Michigan-based company. Burke resided in Naperville, Illinois, at all times relevant

to this case. On December 17, 2010, Burke’s wife, Lisa, and their sons Zack and Jonathon, were

riding with him in a Chevrolet Trailblazer. The Trailblazer was a Robison company car provided

to Burke for his employment, delivered to his home in Naperville, but there were no restrictions

on its use by Burke. At approximately 7 p.m., the Trailblazer was involved in a motor vehicle

accident with a vehicle driven by James Drascal, an uninsured driver. Burke, Lisa, and Jonathon

all reported injuries resulting from the collision.

¶4 The Trailblazer was insured at the relevant time under the Granite State policy, issued to

Robison. Burke personally insured Lisa’s car, a Toyota minivan, under a State Farm policy.

Both policies provided uninsured motorist coverage; however, the Granite State policy contained

a Michigan uninsured motorist endorsement while the State Farm policy provided uninsured

motorist coverage pursuant to the requirements of Illinois law.

¶5 Isabell Kendl, an insurance broker with an office in Illinois, procured the Granite State

policy for Robison’s company vehicles. When Burke joined Robison in 2010, the Trailblazer

was added to the policy as a covered vehicle. The Granite State policy provided Robison with

uninsured motorist coverage of up to $1 million for owned automobiles. In the Michigan

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uninsured motorist endorsement, the policy contained several provisions relevant to our

discussion.

¶6 Under section A, “Coverage,” the policy provided:

“We will pay those sums, and only those sums, that an ‘employee’ is ‘legally

entitled to recover’ as compensatory damages because of ‘bodily injury’ sustained in an

‘accident’ with an ‘uninsured motor vehicle’ while such ‘employee’ was ‘occupying’ a

covered ‘auto’ in the ‘course and scope of employment’ with the ‘Named Insured’.”

¶7 Section B, “Who is an Insured,” of the endorsement provided:

“The uninsured and underinsured motorists coverage of this Endorsement is

provided solely and exclusively for ‘employees’ of the ‘Named Insured’, while such

‘employees’ are ‘occupying’ a covered ‘auto’. Only such ‘employees’ are ‘insureds’ for

uninsured and underinsured motorists coverage under this Endorsement. Neither the

Company nor the ‘Named Insured’ intend or reasonably expect to provide such coverage

to any other persons, or with respect to any ‘automobiles’ other than covered ‘auto’.”

¶8 Section C, “Exclusions,” included:

“Anyone other than an ‘employee’ in the ‘course and scope of employment’ with

the Named Insured at the time of the ‘accident’ for which a claim is being made under

this endorsement.”

¶9 Section E.3 of the endorsement provided that the “ ‘employee’ must file any suit against

[Granite State] for coverage under this endorsement within three hundred sixty five (365)

calendar days of the ‘accident’. ” The limitations period would not apply if the parties agree or if

the employee has filed suit for bodily injury against the uninsured motorist within the 365-

calendar-day period.

¶ 10 Section F of the endorsement included the following relevant “Additional Definitions”

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pertaining specifically to the policy language used in the endorsement:

“ ‘Accident’ means actual physical contact between an ‘automobile’ and a

covered ‘auto’ that occurs during the policy period, on a ‘public highway’ in the State of

Michigan, causing ‘injury’ to an ‘employee’ for which a ‘claim’ is made under this

Endorsement.

‘Auto’ or ‘Automobile’ means a vehicle propelled other than by human power,

having a minimum of four (4) wheels, that must be registered with a State under

applicable law for use solely and exclusively on a ‘public highway’ to transport people or

property.

***

‘Course and scope of employment’ means that the ‘employee has in fact applied

for and received benefits under applicable Worker’s Compensation law for the injuries

for which a claim is being made under this Endorsement.

‘Employee’ means:

1. A person who is a full-time ‘employee’ of the ‘Named Insured’, who

has in fact applied for and received benefits under applicable Worker’s

Compensation law for the injuries for which a claim is being made under this

Endorsement; or

2. The personal representative of the estate of an ‘employee’ appointed by

a court of competent jurisdiction if the ‘injury’ for which a ‘claim’ is made under

this Endorsement has resulted in the death of such ‘employee’.”

¶ 11 Finally, section H, “Choice of Law,” provided:

“This Endorsement, and the Michigan uninsured/underinsured motorists coverage

provided by this Endorsement, are to be governed and interpreted in accordance with the

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law of the State of Michigan, but without reference to the choice of law principles of the

State of Michigan, irrespective of whether such choice of law principles are set forth by

statute, regulation, common law, equity, or otherwise.”

¶ 12 After the accident, Burke notified his office manager at Robison, and the insurance claim

process began. Eventually, the Burkes’ claims were reported to Granite State. Granite State

turned to York Risk Services, a third-party administrator, to handle the claims. Katherine Heyl,

a senior analyst, was assigned to the claims. Heyl did not have the authority to settle the claims

or to extend uninsured motorist coverage. Thomas Del Monte, a claims management analyst,

supervised Heyl’s work on the claims. Del Monte had the authority to enter a settlement as well

as to extend uninsured motorist coverage.

¶ 13 On December 9, 2011, Heyl apparently communicated to Del Monte that she believed

that the Burkes’ claims were within the uninsured motorist coverage offered under the Granite

State policy. Del Monte cautioned Heyl not to give Burke the impression that the claims would

be covered and informed her that his initial assessment left him with concerns over whether the

claims would be covered. On December 16, 2011, after further investigation, Heyl confirmed to

Del Monte that Burke had not filed a workers’ compensation claim for the accident. On January

26, 2012, Heyl sent Del Monte a report noting that Burke might not have been within the scope

of his employment at the time of the accident and further noting that this presented a potential

coverage issue.

¶ 14 On February 10, 2012, Del Monte informed Heyl that Granite State would “agree to

provide [the] mandatory minimum” coverage pursuant to Illinois uninsured motorist

requirements for the Burkes’ claims. On February 27, 2010, Heyl informed Burke in an email

that Granite State would “be granting coverage” to Burke and requested copies of medical

records. Heyl also offered to investigate further regarding Lisa and Jonathon’s coverage under

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the Granite State policy. As a result of that investigation, Heyl drafted reports to Del Monte

concluding that Lisa and Jonathon did not have coverage under the policy, because they were not

on company business at the time of the accident. Heyl drafted letters denying coverage to Lisa

and Jonathon. Del Monte, however, did not authorize the release of the denial letters. On June

19, 2012, Del Monte decided to provide coverage for Lisa and Jonathon, again in the minimum

amount required under Illinois uninsured motorist law.

¶ 15 On July 16, 2012, Granite State extended offers of $12,000 to Burke and $200 each to

Lisa and Jonathon. Burke countered, requesting a total of $85,000. Granite State countered

Burke’s request, and offered $20,000 to Burke and $300 each to Lisa and Jonathon. Burke again

rejected Granite State’s offer. Burke retained an attorney and filed an arbitration demand under

the policy. In December 2012, Granite State, by letter, denied coverage for all of the Burkes’

claims.

¶ 16 After Granite State refused coverage to the Burkes, Burke made a demand for arbitration

pursuant to his individual State Farm policy. On February 25, 2013, State Farm filed a

declaratory judgment action against Granite State and the Burkes, seeking a declaration that

Granite State’s policy would provide the primary uninsured motorist coverage. Granite State

counterclaimed, seeking a declaration that its policy did not apply.

¶ 17 The parties conducted discovery. Eventually, Granite State filed a motion for summary

judgment and State Farm filed a cross-motion for summary judgment. Granite State argued that

Illinois law was inapplicable because the insurance contract specified that Michigan law would

apply and was delivered to Robison in Michigan, so section 143a of the Illinois Insurance Code

(215 ILCS 5/143a (West 2010)), which required a policy to be “renewed, delivered, or issued for

delivery” in Illinois for its uninsured motorist provisions to apply, was on its face inapplicable to

this case. Granite State then argued that the policy was inapplicable because, under the terms of

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the insurance contract, the Burkes were not “employees,” because when the accident occurred

none of them were within the scope of employment. Granite State also raised the policy defense

that Burke had not filed for arbitration within the contract’s 365-day limitations period. Finally,

Granite State affirmatively argued that it could raise its policy defenses notwithstanding what it

described as settlement offers extended to the Burkes.

¶ 18 For its part, State Farm, relying on the fact that the Trailblazer was principally garaged in

Illinois, argued that the Michigan uninsured motorist endorsement violated Illinois public policy

and that the uninsured motorist provisions of the Insurance Code should be applied to reach the

Granite State policy’s uninsured motorist coverage. State Farm also argued that Granite State’s

365-day limitations period violated section 143.1 of the Insurance Code (215 ILCS 5/143.1

(West 2010)) and that Granite State had waived its policy defenses by extending coverage to the

Burkes under its policy. On March 31, 2015, the trial court granted Granite State’s motion for

summary judgment and denied State Farm’s cross-motion for summary judgment. The trial

court stated:

“There’s no question that [uninsured motorist] coverage would have been

available to Mr. Burke if he had been using this vehicle in the course of his employment.

This is, this case comes before the Court on cross[-]motions for summary judgment, and

there is no genuine issue of material fact. I think this is purely a question of law, as both

counsel have delineated.

I believe State Farm’s argument would be stronger if Mr. Burke were the owner

of the policy. However, the owner of the policy is Ryan Robison, which is clearly

located in the State of Michigan. I don’t think there’s anything nefarious about a

Michigan corporation contracting in an insurance policy to apply Michigan law. I believe

the question of delivery is not delivery to Mr. Burke. It’s delivery to the owner. And

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delivery is not complete until it is actually received by the owner. The fact that it first

went to a broker in Illinois and then came to the owner in Michigan is not something that

I believe determines where delivery took place. Delivery is obviously in Michigan when

it was in the possession of the owner.

I believe that under these circumstances Mr. Burke did exactly what he should

have done as the operator of the vehicle. I think Section 143a [of the Insurance Code]

applies to this situation. Since he is the operator of the vehicle, he complied with his

obligation under the financial responsibility portion of the statute, which imposed on him

the obligation to have insurance in the State of Illinois with [uninsured motorist]

coverage, and he did that by purchasing the State Farm policy. I believe that as a matter

of law it is incumbent on the court to grant the motion for summary judgment of Granite

State’s and deny that of State Farm. That will be a final and appealable order.”

¶ 19 State Farm timely appeals.

¶ 20 II. ANALYSIS

¶ 21 On appeal, State Farm argues that the trial court erred in denying its motion for summary

judgment and granting Granite State’s motion for summary judgment. State Farm contends that

the Granite State policy’s uninsured motorist endorsement is unenforceable under Illinois law

and public policy. State Farm also contends that, notwithstanding the policy language, Michigan

law cannot be applied to the interpretation of the Granite State policy, so the provisions that are

contrary to Illinois law cannot be enforced as written and must be interpreted in conformity with

applicable Illinois statutes. In addition, State Farm contends that Granite State waived its

defenses under the policy, like the limitations period and the scope-of-employment requirement,

and that it should be estopped from now raising those defenses. Finally, State Farm contends

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that, in general, it would be “unjust” to uphold the Granite State policy and allow it to evade

Illinois’s mandatory insurance laws.

¶ 22 Before addressing State Farm’s arguments, we note that Granite State provides a lengthy

recitation of deficiencies in State Farm’s brief. Granite State argues that State Farm’s “Nature of

the Action” section contains statements unsupported by citations to the record; that State Farm’s

statement of facts is deficient because factual assertions in the argument section of State Farm’s

brief are not contained in the statement of facts and relevant facts were omitted; that State Farm

did not quote relevant statutory language pursuant to Illinois Supreme Court Rule 341(h)(5) (eff.

Feb. 6, 2013); and that State Farm’s appendix does not comply with Illinois Supreme Court Rule

342 (eff. Jan. 1, 2005). Granite State does not request that we strike the purportedly offending

sections of State Farm’s brief; likewise, it has not filed a motion seeking relief with respect to the

flaws it identifies. Even if it had, we do not find the flaws identified to be so serious as to

interfere with our ability to understand and adjudicate this case; to the extent necessary, we will

ignore any material that is noncompliant with supreme court rules or that is unsupported in the

record. We now turn to State Farm’s contentions.

¶ 23 A. Standard of Review

¶ 24 This case comes before us after the trial court resolved the matter on the parties’ cross-

motions for summary judgment. A motion for summary judgment may be granted where the

pleadings, depositions, admissions, and affidavits establish that there exists no genuine issue of

material fact and that the moving party is entitled to judgment as a matter of law. 735 ILCS 5/2-

1005(c) (West 2014); WKS Crystal Lake, LLC v. LeFew, 2015 IL App (2d) 150544, ¶ 13. If the

parties have filed cross-motions for summary judgment, the parties believe that no genuine issues

of material fact are presented to the court, only issues of law. LeFew, 2015 IL App (2d) 150544,

¶ 13. As with any question of law, we review de novo the trial court’s determination on cross-

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motions for summary judgment. Id. Likewise, interpreting an insurance policy or a statute

presents questions of law, so our review is de novo. Hoover v. Country Mutual Insurance Co.,

2012 IL App (1st) 110939, ¶ 32. With these principles in mind, we turn to State Farm’s

contentions on appeal.

¶ 25 B. Enforceability of Uninsured Motorist Endorsement

¶ 26 First, State Farm contends that the Granite State policy’s uninsured motorist endorsement

is unenforceable because it violates Illinois public policy. State Farm argues that Illinois public

policy regarding uninsured motorist coverage as is relevant to this case is embodied in sections

143a and 143a-2 of the Insurance Code (215 ILCS 5/143a, 143a-2 (West 2010)) and in section 7-

601(a) of the Illinois Vehicle Code (625 ILCS 5/7-601(a) (West 2010)).

¶ 27 Illinois’s public policy is reflected in its constitution, statutes, and judicial decisions.

Schultz v. Illinois Farmers Insurance Co., 237 Ill. 2d 391, 400 (2010). If the terms of an

insurance policy conflict with a statute, the provision will be deemed void and unenforceable.

Id. Similarly, an insurance policy cannot be allowed to circumvent the purpose of a statute in

force at the time the policy was issued. Id.

¶ 28 Section 143a provides, pertinently:

“No policy insuring against loss resulting from liability imposed by law for bodily injury

or death suffered by any person arising out of the ownership, maintenance or use of a

motor vehicle that is designed for use on public highways and that is either required to be

registered in this State or is principally garaged in this State shall be renewed, delivered,

or issued for delivery in this State unless coverage is provided therein or supplemental

thereto, in limits for bodily injury or death set forth in Section 7-203 of the Illinois

Vehicle Code [(625 ILCS 5/7-203 (West 2010))] for the protection of persons insured

thereunder who are legally entitled to recover damages from owners or operators of

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uninsured motor vehicles and hit-and-run motor vehicles because of bodily injury,

sickness or disease, including death, resulting therefrom.” 215 ILCS 5/143a(1) (West

2010).

¶ 29 Similarly, section 143a-2 provides, pertinently:

“No policy insuring against loss resulting from liability imposed by law for bodily injury

or death suffered by any person arising out of the ownership, maintenance or use of a

motor vehicle shall be renewed or delivered or issued for delivery in this State with

respect to any motor vehicle designed for use on public highways and required to be

registered in this State unless uninsured motorist coverage as required in Section 143a of

this Code is included in an amount equal to the insured’s bodily injury liability limits

unless specifically rejected by the insured as provided in paragraph (2) of this Section.”

215 ILCS 5/143a-2(1) (West 2010).

¶ 30 Finally, section 7-601 of the Vehicle Code provides, pertinently:

“No person shall operate, register or maintain registration of, and no owner shall permit

another person to operate, register or maintain registration of, a motor vehicle designed to

be used on a public highway unless the motor vehicle is covered by a liability insurance

policy.

The insurance policy shall be issued in amounts no less than the minimum

amounts set for bodily injury or death and for destruction of property under Section 7-203

of this Code [(625 ILCS 5/7-203 (West 2010))], and shall be issued in accordance with

the requirements of Sections 143a and 143a-2 of the Illinois Insurance Code, as amended

[(215 ILCS 5/143a, 143a-2 (West 2010))]. No insurer other than an insurer authorized to

do business in this State shall issue a policy pursuant to this Section for any vehicle

subject to registration under this Code.” 625 ILCS 5/7-601(a) (West 2010).

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¶ 31 State Farm argues that Illinois public policy conflicts with the Granite State policy as

written. According to State Farm, based on this conflict with Illinois public policy, we must

invalidate the conflicting provisions in the Granite State policy and impose the requirements of

Illinois law and public policy in their place.

¶ 32 In particular, State Farm argues that the Trailblazer was principally garaged in Illinois,

thus bringing it within the express requirements of sections 143a and 143a-2 of the Insurance

Code. Granite State argues that State Farm’s view effectively and improperly reads out of

section 143a the requirement that the policy “shall be renewed, delivered, or issued for delivery

in” Illinois.

¶ 33 In support of its claim that State Farm’s interpretation improperly nullifies the “renewed,

delivered, or issued for delivery” clause, Granite State cites Nila v. Hartford Insurance Co. of the

Midwest, 312 Ill. App. 3d 811, 817 (2000), Comet Casualty Co. v. Jackson, 125 Ill. App. 3d 921,

922 (1984), and Kerouac v. Kerouac, 99 Ill. App. 3d 254, 257 (1981). Based on these cases,

Granite State contends that Illinois courts “have repeatedly stated that Section 143a is limited in

application to policies issued or delivered in Illinois.” Granite State misreads this authority.

¶ 34 In Nila, this court was tasked with deciding whether the policy at issue was a new policy

or a renewal policy; if it was new, then the uninsured motorist coverage would have to conform

to the new policy limits, but if it was a renewal, then the uninsured motorist coverage would

remain at the previous limits. Nila, 312 Ill. App. 3d at 815-16. What Granite State misreads as

the holding was actually a recitation of the statutory language, aimed at providing a foundation

for the discussion and resolution of the actual issue in the case. We cannot find that Nila stands

for a judicial pronouncement limiting the application of section 143a to policies issued or

delivered in Illinois.

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¶ 35 In Jackson, the court considered whether the defendant could claim uninsured motorist

coverage after he was struck by his own insured vehicle, which was being driven away by an

unknown thief. Jackson, 125 Ill. App. 3d at 921. Thus, the court was faced with the issue of

whether the unknown thief would be deemed an uninsured motorist under the defendant’s policy.

Id. at 922. In analyzing this issue, the court cited Barnes v. Powell, 49 Ill. 2d 449 (1971),

explaining that the supreme court “first examined section 143a of the [Insurance Code] [citation],

which requires insurers to include uninsured motorist coverage in all motor vehicle liability

policies issued in Illinois,” and then noting that the supreme court held that “ ‘[t]he intent of the

legislature was that the uninsured motorist coverage would protect an insured generally against

injuries caused by motorists who are uninsured.’ ” Jackson, 125 Ill. App. 3d at 922-23 (quoting

Barnes, 49 Ill. 2d at 454). Once again, Granite State misreads the facts and actual holding of

Jackson in favor of wrenching preliminary and background language from its context and

creating, with the assistance of strategically placed ellipses, a purported principle that is, frankly,

not present in Jackson and, at best, only tangentially related to Jackson’s actual holding. 1

Jackson simply does not decide the issue of whether section 143a “is limited in application to

policies issued or delivered in Illinois.”

¶ 36 Finally, and most egregiously, Granite State cites Kerouac. There, the plaintiffs had filed

a declaratory judgment action against the insurance company, attempting to invoke the uninsured

motorist coverage of the owner’s automobile insurance policy for injuries he and one of his sons

1
The Jackson court held that, because the defendant could not recover for his injuries

under the liability portion of the insurance policy, the defendant’s automobile was uninsured for

purposes of the uninsured motorist coverage, and the defendant could therefore pursue a claim.

Jackson, 125 Ill. App. 3d at 924.

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sustained in an accident while the car was being driven by another son. Kerouac, 99 Ill. App. 3d

at 256. Quoting from the factual recitation of the case, Granite State again purports to derive the

holding that the application of section 143a is limited to policies issued or delivered in this state.

Id. at 257. Kerouac did not involve a consideration of the applicability of section 143a; rather, it

decided whether the uninsured motorist coverage of the insurance policy at issue was applicable

to the facts of that case. We cannot agree, despite the fact that the quoted words exist in the

case, 2 that Kerouac represents a judicial determination regarding the contours of section 143a.

¶ 37 We do not speculate as to Granite State’s motivation in attempting to create apposite

holdings from inapposite cases; it is sufficient to say that Granite State misrepresents the actual

holdings of Nila, Jackson, and Kerouac.

¶ 38 Rejecting Granite State’s authorities as irrelevant to the proper interpretation of section

143a does not resolve the question, however. State Farm contends that section 143a is applicable

to the Granite State policy and serves to invalidate any conflicting provisions. Additionally, the

trial court based its decision, at least in part, on the ground that the plain language of section

143a precluded its application to the Granite State policy, because the policy was not delivered in

Illinois to Burke, but was delivered in Michigan to Robison. We note that our endeavor here is

to review the trial court’s judgment and not the trial court’s reasoning, even if that reasoning is

2
Kerouac stated that “[a]nother defense asserted by Country Mutual in the trial court was

that section [143a] of the [Insurance Code] violated the Illinois constitutional ban against special

legislation [citation] and the constitutional guarantee of equal protection [citation].” Kerouac, 99

Ill. App. 3d at 256-57. Thus, it was not the Kerouac court, but the party in the case asserting that

section 143a applies to provide uninsured motorist coverage in policies issued or delivered in

Illinois. Id. at 257.

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not correct. See Allianz Insurance Co. v. Guidant Corp., 387 Ill. App. 3d 1008, 1026 (2008) (a

reviewing court conducts a de novo review of the trial court’s grant of summary judgment, and it

may affirm on any basis in the record regardless of whether the trial court relied on it or whether

the trial court’s reasoning was correct). Accordingly, we first turn to the principles of statutory

construction before addressing whether section 143a is applicable to the Granite State policy.

¶ 39 When we construe statutory provisions, our primary objective is to ascertain and give

effect to the legislative intent. Klaine v. Southern Illinois Hospital Services, 2016 IL 118217,

¶ 14. The best and most reliable indicator of that intent is the language of the statute, given its

plain and ordinary meaning. Id. If the statutory language is clear and unambiguous, the statute

must be given effect as written, and we need not resort to further aids of statutory construction.

Id. We interpret the statute in its entirety, and our interpretation should yield logical and

meaningful results while avoiding an interpretation that results in absurdity or that renders

specific terms and provisions meaningless or superfluous. In re Application of the County

Collector, 2014 IL App (2d) 140223, ¶¶ 15-16. Finally, where different statutes touch on the

same or related subject matter, we consider them together so as to render a harmonious result.

Relf v. Shatayeva, 2013 IL 114925, ¶ 23.

¶ 40 Similarly, when construing a contract, our primary objective is to ascertain and give

effect to the intent of the parties. CitiMortgage Inc. v. Parille, 2016 IL App (2d) 150286, ¶ 24.

The contractual language, given its plain and ordinary meaning, provides the best indication of

the parties’ intent. Id. We consider the contract as a whole, viewing each part in light of the

others. Id. With these principles in mind, we return to State Farm’s contentions.

¶ 41 State Farm argues that, pursuant to Illinois public policy, all vehicles regularly kept in

Illinois (“principally garaged,” in the statutory language) must be insured and the policy must

also include uninsured motorist coverage commensurate with the liability limits. State Farm

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argues that the Granite State policy is unenforceable because its uninsured motorist endorsement

does not provide the mandated coverage.

¶ 42 Section 143a states that no insurance policy for “a motor vehicle *** that is either

required to be registered in this State or is principally garaged in this State shall be renewed,

delivered, or issued for delivery in this State” unless it includes uninsured motorist coverage at

specific minimum limits or greater. 215 ILCS 5/143a(1) (West 2010). State Farm contends that

the Trailblazer was “principally garaged in this State” and that therefore section 143a required

Robison to provide uninsured motorist coverage conforming to Illinois public policy. However,

State Farm’s argument omits any analysis of the phrase, “renewed, delivered, or issued for

delivery in this State.”

¶ 43 As noted, when interpreting a statute, we must avoid constructions that render specific

language meaningless. County Collector, 2014 IL App (2d) 140223, ¶ 16. Here, the command

of section 143a, that “[n]o policy *** shall be renewed, delivered, or issued for delivery in this

State unless [uninsured motorist] coverage is provided therein,” appears to limit the applicability

of section 143a to policies that are “renewed, delivered, or issued for delivery” in Illinois. 215

ILCS 5/143a(1) (West 2010). Under State Farm’s view, section 143a applies to any vehicle

principally garaged in Illinois. However, this construction eliminates the limitation that the

policy be “renewed, delivered, or issued for delivery in Illinois” and it is therefore strongly

disfavored under the rules of statutory construction. County Collector, 2014 IL App (2d)

140223, ¶ 16. Moreover, the term “principally garaged” modifies “motor vehicle,” which is part

of the preposition delineating the sort of risks to which the insurance policy will apply.

Accordingly, we hold that section 143a applies only to policies that are “renewed, delivered, or

issued for delivery” in Illinois.

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¶ 44 Similarly, section 143a-2 states that no liability insurance policy “shall be renewed or

delivered or issued for delivery in this State” for any motor vehicle “required to be registered in

this State” unless it includes uninsured motorist coverage as specified in section 143a. 215 ILCS

5/143a-2(1) (West 2010). This section also contains the verb phrase, “shall be renewed or

delivered or issued for delivery.” However, in this section, the uninsured motorist coverage is

required only for motor vehicles “required to be registered” in Illinois. Nevertheless, because of

the similarity to section 143a and the similar purposes of the two sections, we hold that they

should be interpreted in the same fashion. Thus, we hold that section 143a-2 applies only to

insurance policies that are “renewed or delivered or issued for delivery” in Illinois.

¶ 45 These interpretations are borne out in at least two cases (although not, as explained

above, in Nila, Jackson, or Kerouac). In Alshwaiyat v. American Service Insurance Co., 2013 IL

App (1st) 123222, the court construed section 143a-2 in regard to whether the insurer was

required to obtain another rejection of higher uninsured and underinsured motorist limits when

renewing an automobile liability policy with higher liability limits. Id. ¶ 30. The court held that

“[t]he statutory language of section 143a-2 clearly provides that the requirement for mandatory

[uninsured motorist] and [underinsured motorist] coverage in an amount matching an insurance

policy’s liability limits applies only when policies of liability insurance are ‘renewed or delivered

or issued for delivery.’ ” (Emphasis in original.) Id. ¶ 32 (quoting 215 ILCS 5/143a-2(1) (West

2008)). Given the similarity between the pertinent language in sections 143a-2 and 143a, we

believe that the court’s analysis applies equally to section 143a. Thus, both sections apply only

to policies renewed, delivered, or issued for delivery in Illinois.

¶ 46 In Roser v. Anderson, 222 Ill. App. 3d 1071 (1991), the court interpreted a different

version of section 143a-2. In giving effect to the provision allowing the insured to reject the

higher limits of uninsured and underinsured motorist coverage upon renewing a liability policy

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with increased limits, the court held that the insurer’s position “would render the inclusion of the

term ‘renewed’ in section 143a-2(1) mere surplusage and meaningless. *** The prohibition [in

section 143a-2(1)] that ‘[n]o policy *** shall be renewed *** unless uninsured motorist coverage

*** is offered ***’ [citation] would be meaningless.” Id. at 1077 (quoting Ill. Rev. Stat. 1987,

ch. 73, ¶ 755a-2(1) (now codified at 215 ILCS 5/143a-2(1) (West 2010))). Our analysis of State

Farm’s argument mirrors that in Roser: by focusing solely on the motor vehicle and whether it

was principally garaged in Illinois, State Farm’s interpretation would render meaningless the

term, “renewed, delivered, or issued for delivery.” Accordingly, we hold that both Alshwaiyat

and Roser directly support our analysis and conclusion, because both cases were interpreting the

same provisions at issue here and used the same rationale to reach the same result that we have

reached.

¶ 47 Having determined that section 143a is applicable only to policies renewed, delivered, or

issued for delivery in Illinois, we turn to the undisputed facts in the record. Granite State, a

foreign insurer, issued outside of Illinois an automobile liability policy to Robison. Robison was

domiciled in Michigan. The policy was delivered to Robison in Michigan. Thus, for purposes of

sections 143a and 143a-2, the Granite State policy was not delivered or issued for delivery in

Illinois. Accordingly, the requirements set forth in those sections are not applicable to the

Granite State policy, because the policy was not renewed, delivered, or issued for delivery in

Illinois.

¶ 48 State Farm argues that, nevertheless, public policy in Illinois requires that all motor

vehicles principally garaged in this state must have insurance policies that will provide uninsured

motorist coverage at certain minimum limits for all users of those vehicles. We do not believe

that public policy may be invoked to circumvent the plain and unambiguous language of a

statute. Section 143a and section 143a-2 both apply to policies renewed, delivered, or issued for

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delivery in this state. Thus, it would be accurate to say that Illinois public policy is invested in

making sure that policyholders of policies renewed, delivered, or issued for delivery in Illinois

are protected at certain minimum limits if injured by uninsured or underinsured motorists. By

focusing on the motor vehicle being principally garaged in Illinois, State Farm subverts the

legislative intent manifest in sections 143a and 143a-2, that the obligations therein apply only to

those policies renewed, delivered, or issued for delivery in Illinois. Accordingly, we cannot

accept State Farm’s public-policy argument.

¶ 49 State Farm next contends that the Granite State policy is enforceable because the policy

as written violates Illinois public policy. According to State Farm, public policy is violated

because Burke would have been compensated had he been the at-fault driver in the accident, but,

because he was not the at-fault driver and the at-fault driver was uninsured, he received no

coverage under the policy, due to its requirements that he be within the course and scope of his

employment with Robison at the time of the accident and that he apply for workers’

compensation benefits as a result of the accident. State Farm argues that the availability of

liability coverage juxtaposed against the lack of uninsured motorist coverage violates the Illinois

public policy to provide broad and generous uninsured motorist coverage under sections 143a

and 143a-2.

¶ 50 While we might agree with State Farm’s sentiment concerning uninsured and

underinsured motorist coverage, we are nevertheless constrained to ascertain and give effect to

the legislative intent embodied in the statutory provisions at issue. Blum v. Koster, 235 Ill. 2d

21, 29 (2009). We may not depart from the plain language of the statute by reading into it

exceptions, limitations, or conditions that the legislature did not express or intend. Id. Here,

both sections 143a and 143a-2 apply to policies that are renewed, delivered, or issued for

delivery in Illinois. If a policy is not renewed, delivered, or issued for delivery in Illinois, then

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2016 IL App (2d) 150462

neither section applies to that policy, meaning that the uninsured motorist coverage requirements

also would not apply to that policy. That is the situation with the Granite State policy. It was not

renewed in Illinois; it was not delivered in Illinois; and it was not issued for delivery in Illinois.

¶ 51 State Farm argues that section 143a does not define the term “delivered.” State Farm

urges that, because this term is not defined, we may look to additional sources in determining the

legislature’s intent. Generally, where a term is undefined in a statute, we may look to a

dictionary definition of the term. Lacey v. Village of Palatine, 232 Ill. 2d 349, 363 (2009).

Rather than seek a dictionary definition, State Farm argues, citing Brucker v. Mercola, 227 Ill. 2d

502, 513-14 (2007), that we should consider the purpose and necessity for the law, the evils

sought to be remedied, and the goals to be achieved, keeping in mind that the legislature did not

intend to produce absurd, inconvenient, or unjust results. According to State Farm, an absurd

result obtains if we hold that, because the Granite State policy was “physically sent to Michigan

for a vehicle that was physically [present] in Illinois,” the policy somehow escapes the reach of

Illinois public policy regarding the vehicle. We disagree.

¶ 52 “Deliver” or “delivery” is defined as the giving over of something to another. Black’s

Law Dictionary 440 (7th ed. 1999). Thus, “deliver” is defined with an eye toward the recipient.

Here, Robison procured the policy at issue, and the policy was not delivered until Robison

actually received it, in Michigan. Accordingly, section 143a does not apply, because the policy

was not “delivered,” meaning that the proper recipient did not receive the policy, in Illinois. The

legislative intent is clear, obvious, and unambiguous. We cannot say that Granite State is

somehow evading Illinois public policy when that public policy, as defined in section 143a,

clearly does not apply to the Granite State policy. 3

3
That is not to say, however, that Robison was not attempting to evade Illinois public

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2016 IL App (2d) 150462

¶ 53 State Farm also contends that section 7-601 of the Vehicle Code compels a different

result. In support, State Farm points specifically to the language of section 7-601 that requires

any vehicle operated in Illinois to have a liability insurance policy, which must “be issued in

accordance with the requirements of Sections 143a and 143a-2” of the Insurance Code. 625

ILCS 5/7-601(a) (West 2010). However, as we have seen, both sections 143a and 143a-2 apply

only to policies that are renewed, delivered, or issued for delivery in Illinois. Thus, section 7-

601 compels the result we have already reached, and it cuts squarely against State Farm’s

argument.

¶ 54 State Farm argues that the canons of statutory construction require that we consider

sections 143a and 143a-2 of the Insurance Code and section 7-601 of the Vehicle Code not in

isolation, but together, so that we can interpret them harmoniously and consistently. Section 7-

601 requires liability insurance for vehicles operated in Illinois and uninsured and underinsured

motorist coverage as required pursuant to sections 143a and 143a-2. Our interpretation, which

gives effect to the clear intent of the legislature as expressed by the clear and unambiguous

language of the provisions, reaches that harmonious and consistent result. Sections 143a and

143a-2 unambiguously apply to policies renewed, delivered, or issued for delivery in this state;

sections 143a and 143a-2 require uninsured and underinsured motorist coverage for those types

of enumerated policies; sections 143a and 143a-2 are therefore not inconsistent with section 7-

601, as it expressly references those sections and implicitly references any limitations found in

policy by procuring an insurance policy that did not conform to Illinois public policy for a motor

vehicle that it intended to principally garage in Illinois. However, that is not a question before us

and we express no opinion in relation to it.

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2016 IL App (2d) 150462

those sections. While we accept State Farm’s contention about consistency, we determine that

State Farm’s conclusion is not supported by its argument.

¶ 55 State Farm cites Luechtefeld v. Allstate Insurance Co., 167 Ill. 2d 148 (1995), for the

proposition that “[s]ection 143a provides that every liability insurance policy issued for any

motor vehicle registered or principally garaged in Illinois must provide coverage for bodily

injury or death caused by an uninsured or hit-and-run vehicle.” Id. at 152. While Luechtefeld

did indeed make this pronouncement, it is not remotely close to the holding of the case.

¶ 56 The issue in Luechtefeld was whether an insurance policy may, consistently with Illinois

public policy, exclude uninsured motorist coverage for a vehicle owned by the insured and

covered by uninsured motorist coverage under another insurance policy. Id. at 149. The insured

in Luechtefeld owned a motorcycle, which was insured under a second policy, as well as a car

that was insured under an Allstate policy that specifically excluded from uninsured motorist

coverage those vehicles that were insured (including uninsured motorist coverage) under a

different policy. Id. at 149-51. The court held that public policy was not violated by the Allstate

policy’s exclusion of the motorcycle. Id. at 152-53.

¶ 57 State Farm’s reliance on Luechtefeld is misplaced. In the first place, Burke was not the

owner of the vehicle. Burke in fact owned another vehicle, and the policy for that vehicle

appears to have been issued by State Farm and in conformity with Illinois law and public policy.

By contrast, the car Burke was driving at the time of the accident was owned by Robison and

registered in Michigan, even though it was garaged in Illinois. The Granite State policy appears

to have been issued to Robison in conformity with Michigan law and public policy. The Granite

State policy was a commercial auto policy that limited the uninsured motorist coverage to an

employee in the scope and course of his or her employment with Robison and who filed a

workers’ compensation claim as a result of the accident. While this limitation might not pass

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2016 IL App (2d) 150462

muster under Illinois public policy, Burke did not procure the insurance policy and the vehicle

was not registered in Illinois. Based on these facts, we cannot say that the Granite State policy

violated Luechtefeld. Rather, State Farm’s reliance on Luechtefeld is misplaced, and Luechtefeld

is factually distinct (and does not actually hold the premise for which it was cited).

¶ 58 State Farm also argues that the Granite State policy was delivered in Illinois. According

to State Farm, the Granite State policy was delivered in Illinois because the broker, who was

located in Illinois, received the policy before passing it along to Robison in Michigan. We

disagree. Important in the definition of “delivered” is the transfer of the item to its recipient.

The broker, Kendl, was not the intended recipient of the Granite State policy; rather, Robison,

the insured, was the intended recipient. Accordingly, State Farm’s argument applies a strained

and twisted definition to the term “delivered.” The dictionary may supply definitions for words

not defined in a statute. Lacey, 232 Ill. 2d at 363. Because the focus of a “delivery” is the

transfer to the recipient, and not a middleman, we reject State Farm’s contention as strained, at

best, and otherwise at odds with the plain and ordinarily understood definition of the term

“delivered.”

¶ 59 C. Choice of Law

¶ 60 State Farm next contends that the Granite State policy’s choice-of-law provision violates

Illinois public policy and is unenforceable. State Farm asserts instead that Illinois law should be

deemed to govern the terms of the Granite State policy, and any terms that conflict should be

held to be unenforceable. Granite State counters by contending that the only public policy

applicable to this case is that embodied in section 143a (and, we note, section 143a-2), which is

inapplicable by its own terms, so there is no reason to invalidate the choice-of-law provision in

the Granite State policy.

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¶ 61 Illinois courts have adopted the Restatement (Second) of Conflict of Laws (1971) (the

Restatement). Where a contract has expressly included a choice-of-law provision, section 187 of

the Restatement applies. Under section 187, the parties’ choice of law will govern unless (1) the

chosen jurisdiction has no substantial relationship to the parties or the transaction, or (2)

application of the chosen law would be contrary to the fundamental public policy of the

jurisdiction with a materially greater interest in the disputed issue. Restatement (Second) of

Conflict of Laws § 187 (1971); International Surplus Lines Insurance Co. v. Pioneer Life

Insurance Co. of Illinois, 209 Ill. App. 3d 144, 153 (1990).

¶ 62 Applying this rule to the facts of this case, we agree with Granite State’s contention

regarding the choice-of-law provision in the uninsured motorist endorsement. We first consider

whether the chosen jurisdiction has a substantial relationship to the parties. Michigan is the

chosen jurisdiction and it is substantially related to the insured, Robison, because Robison is a

Michigan company domiciled in Michigan. Granite State provides insurance in Michigan; it is

not domiciled or headquartered there, but the fact that it does business in Michigan is sufficient

for this analysis. The transaction was also consummated by the delivery of the Granite State

policy to Michigan; moreover, the policy itself was based on the requirements of Michigan law,

as evidenced by the Michigan uninsured motorist endorsement. Accordingly, we hold that

Michigan has a sufficiently substantial relationship to the parties.

¶ 63 Second, as to whether public policy will be offended, State Farm has identified only

sections 143a and 143a-2 as sources for ascertaining Illinois public policy regarding the issues in

this case. We have determined that the language of those sections renders them inapplicable.

Because they are inapplicable, we cannot say that the application of Michigan law to the Granite

State policy would violate Illinois public policy. Moreover, the Granite State policy included

liability insurance for the Trailblazer as well as uninsured motorist coverage, albeit not according

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to the requirements of the inapplicable Illinois law. Based on this we cannot say that applying

Michigan law to the Granite State policy would be contrary to Illinois public policy.

¶ 64 State Farm argues that uninsured motorist coverage is not statutorily required in

Michigan (see DeFrain v. State Farm Mutual Automobile Insurance Co., 817 N.W.2d 504, 509

(Mich. 2012) (providing uninsured motorist coverage in Michigan is optional and not statutorily

mandated)), whereas in Illinois uninsured motorist coverage is mandatory. State Farm further

argues that the no-fault insurance embodied in Michigan’s no-fault act (Mich. Comp. Laws §

500.3101 et seq. (West 2014)) has been rejected as unconstitutional in Illinois in Grace v.

Howlett, 51 Ill. 2d 478 (1972). State Farm concludes that the combination of optional uninsured

motorist coverage and no-fault insurance is repugnant to Illinois public policy; thus the

application of Michigan law in this case must be precluded. We disagree.

¶ 65 In the first place, an examination of Grace reveals that our supreme court did not make a

blanket holding that no-fault automobile insurance was unconstitutional. Rather, as the court

itself recognized, Grace “held unconstitutional as special legislation a section of the automobile

no-fault liability statute which discriminated with regard to limits on recovery amounts between

those injured by private vehicles and those injured by commercial vehicles.” In re Belmont Fire

Protection District, 111 Ill. 2d 373, 385-86 (1986) (citing Grace, 51 Ill. 2d at 487-88). Thus,

State Farm’s contention that Michigan’s no-fault auto insurance law is repugnant to Illinois

public policy is flatly overstated.

¶ 66 Secondarily, the fact that uninsured motorist coverage is optional in Michigan means that

a policy containing such coverage is analyzed pursuant to the principles of contract

interpretation. DeFrain, 817 N.W.2d at 509 (“[b]ecause providing [uninsured motorist]

coverage is optional and not statutorily mandated under the no-fault act [in Michigan], the policy

language alone controls the circumstances entitling a claimant to an award of benefits”). State

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2016 IL App (2d) 150462

Farm does not suggest that principles of contract interpretation in Illinois are noticeably different

from those in Michigan.

¶ 67 Finally, State Farm attempts to clinch its argument by invoking section 143a of the

Insurance Code, claiming that the application of Michigan law, which unlike Illinois law does

not mandate uninsured motorist coverage, would contravene Illinois’s legislative intent. The

flaw with this contention, as we have determined above, is that section 143a (as well as section

143a-2), by its terms, is inapplicable. Thus, the legislative intent behind section 143a is not

offended where section 143a is not applicable to the circumstances of this case. For these

reasons, we reject State Farm’s contentions.

¶ 68 State Farm next argues that International Surplus suggests that Michigan has little

relationship with the parties to this case. International Surplus, 209 Ill. App. 3d at 153 (the

parties’ choice of law should govern unless the chosen state has no substantial relationship to the

parties or the transaction). In support, State Farm recites that Burke, Lisa, and Jonathon were

citizens of Illinois, the Trailblazer was principally garaged in Illinois, the accident occurred in

Illinois, and Burke’s use of the vehicle for work and personal purposes was unrestricted. While

this is true, the transaction to which International Surplus refers is not the accident, but the

execution of the contract of insurance. Thus, State Farm’s focus on the accident is analytically

incorrect under International Surplus. Id. at 154 (the state of incorporation or principal place of

doing business usually suffices under choice-of-law principles).

¶ 69 Moreover, the proper questions are whether Illinois had a materially greater interest in the

matter than Michigan and whether the application of Michigan law would violate fundamental

Illinois public policy. Id. It is true that Illinois was the situs of the accident and that the accident

involved Illinois citizens. However, the insurance contract was procured by Robison and

delivered to Robison in Michigan. The premiums were paid by Robison from Michigan, and the

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2016 IL App (2d) 150462

vehicle was registered in Michigan. Based on this, we cannot say that Illinois’s interest in this

case was materially greater than Michigan’s. Additionally, as we have determined above, we

perceive no violation of Illinois public policy (and State Farm does not suggest that fundamental

public policy, which it does not differentiate from simple public policy, is in danger of violation

by the application of Michigan law). Accordingly, we reject State Farm’s contentions.

¶ 70 State Farm argues that, under choice-of-law principles, the Granite State policy’s

limitations period must be voided because it conflicts with section 143.1 of the Insurance Code

(215 ILCS 5/143.1 (West 2010)). The Granite State policy contains a limitations provision

requiring a claimant to bring his or her claim within 365 days of the accident. Section 143.1 tolls

the limitations period from the date the proof of loss is filed until the date the claim is denied in

whole or in part. Id. State Farm argues that the limitations provision thus contravenes Illinois

public policy because it conflicts with the terms of section 143.1.

¶ 71 While we agree that there is a conflict, under the choice-of-law analysis above, the

existence of a conflict between a contractual provision and a statutory provision might not be

enough to invalidate the parties’ contractual choice of law. Regardless, we need not decide this

issue, because issues regarding limitations on actions, such as statutes of limitations, are

procedural, and procedural issues are governed by the law of the forum state regardless of the

parties’ contractual choice-of-law provisions. Belleville Toyota, Inc. v. Toyota Motor Sales,

U.S.A., Inc., 199 Ill. 2d 325, 351 (2002). This is because a procedural issue does not affect

substantive rights. Thus, a contractual limitations provision may be overridden by the law of the

forum state, because a statute of limitations only fixes the time in which a remedy for a wrong

may be sought and does not alter substantive rights. Id. Accordingly, procedural issues remain

under the aegis of Illinois law. Id.

¶ 72 D. Waiver and Estoppel

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¶ 73 State Farm next turns to the alternative contention that Granite State waived its policy

defenses and should be estopped from raising them in this case. Waiver is an intentional

relinquishment of a known right. Home Insurance Co. v. Cincinnati Insurance Co., 213 Ill. 2d

307, 326 (2004); Acorn Investment Co. v. Michigan Basic Property Insurance Ass’n, 852

N.W.2d 22, 32 (Mich. 2014). State Farm contends that Granite State waived all of its possible

policy defenses when it extended coverage under the Granite State policy to the Burkes.

¶ 74 Specifically, on February 27, 2012, Heyl wrote an email to Burke on behalf of Granite

State stating, “We will be granting coverage.” Around June 19, 2012, coverage was expressly

granted for Lisa and Jonathon. The coverage was extended to the Burkes even though, as Del

Monte admitted, he was aware that Burke did not claim that he was within the scope of his

employment with Robison. Granite State’s investigation, conducted by Heyl, also indicated that

Burke was not within the scope of his employment with Robison and that he had not, and did not

intend to, make a workers’ compensation claim. Additionally, in February 2012, when Granite

State informed Burke that it would be “granting coverage,” the 365-calendar-day limitations

period specified in the uninsured motorist endorsement would have run in December 2011 (as

the accident occurred in December 2010), so Granite State made its decision to grant coverage

well outside of the policy’s limitations period. Thus, despite knowing that it could invoke or

reserve the policy defenses of scope of employment and the limitations period, Granite State

nevertheless “grant[ed] coverage” to the Burkes. Because waiver is an intentional

relinquishment of a known right under both Michigan and Illinois law, and because, by “granting

coverage” to the Burkes, Granite State relinquished known policy defenses, we hold that Granite

State waived its policy defenses.

¶ 75 Granite State somewhat confusingly argues that, under Michigan law, “waiver and

estoppel generally cannot be applied to ‘create a liability contrary to the express provisions of the

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contract the parties did not make,’ ” citing Kirschner v. Process Design Associates, Inc., 592

N.W.2d 707, 710 (Mich. 1999) (quoting Ruddock v. Detroit Life Ins. Co., 177 N.W. 242, 248

(Mich. 1920)). The problem lies not with Kirschner, but with Granite State’s choice of a quote.

Kirschner states, quite straightforwardly, that “[t]he application of waiver and estoppel is

limited, and, usually, the doctrines will not be applied to broaden the coverage of a policy to

protect the insured against risks that were not included in the policy or that were expressly

excluded from the policy.” Id. at 709-10. This, we believe, is Granite State’s point: waiver

cannot be used to manufacture coverage that is not available in the policy itself.

¶ 76 Kirschner, however, is inapposite. In that case, an insurance company had notified the

defendant that it was defending under a reservation of rights. Id. at 708. The Michigan Supreme

Court held that the insurance company was not estopped from raising policy defenses against the

plaintiff, who was seeking to recover insurance proceeds from the defendant insured. Id. Thus,

the discussion of the extent of the doctrines of waiver and estoppel in Kirschner arose in the

context of whether estoppel particularly could be raised even though the insurance company had

notified its insured that it was proceeding under a reservation of rights. Id. at 710. In this case,

by contrast, Granite State was dealing directly with the Burkes and it did not enter a reservation

of rights but actually “grant[ed] coverage” to them despite its awareness that Burke was not

within the scope of his employment with Robison, Burke did not file a workers’ compensation

claim, and the 365-day policy limitations period had run. Thus, despite Kirschner’s general

statements about waiver and estoppel, it is factually distinct from the circumstances of this case

and cannot offer any specific guidance.

¶ 77 Additionally, to the extent that Kirschner’s point about not using the doctrines of waiver

and estoppel to extend the coverage beyond the terms of the policy (id. at 710) is applicable, we

offer two thoughts. First, the uninsured motorist endorsement in this case was insuring against

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precisely the risk under which the Burkes (and, through them, State Farm) were claiming

damages: an accident caused by an uninsured motorist. The Burkes and State Farm are not

seeking to extend the coverage offered under the Granite State policy beyond its uninsured

motorist protection. Second, again, waiver is an intentional relinquishment of a known right.

The record amply demonstrates that Granite State was aware of its policy defenses: that Burke

was not within the scope of his employment and that the policy limitations period had expired.

Notwithstanding this knowledge, Granite State “grant[ed] coverage” to the Burkes under the

uninsured motorist endorsement. This is a clear relinquishment of known rights, and we cannot

say that State Farm illegitimately raised it to extend coverage under the policy beyond what

Granite State decided when it “grant[ed] coverage” to the Burkes. Accordingly, we reject

Granite State’s contention that somehow Kirschner can successfully preclude State Farm’s claim

that Granite State waived its policy defenses.

¶ 78 Citing Nationwide Mutual Insurance Co. v. Filos, 285 Ill. App. 3d 528, 534 (1996),

Granite State alternatively argues that, under Illinois law, the doctrines of waiver and estoppel

cannot be used to create primary liability or to increase the coverage provided under an insurance

policy. We need not address this argument, because we have determined that we should evaluate

the policy under the parties’ choice of Michigan law. Additionally, for the same reasons the

contention fails when considered under Michigan law, it also fails under Illinois law: Granite

State waived its policy defenses when it “grant[ed] coverage” to the Burkes despite its

knowledge that it could have invoked its policy defenses to preclude liability.

¶ 79 Granite State argues that it simply offered to settle with the Burkes and that it did not

provide insurance benefits under the terms of its policy. This contention is factually rebutted by

the record. The record clearly demonstrates that Granite State was “granting coverage” under

the policy. Whatever internal deliberations Del Monte discussed during his deposition, the

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2016 IL App (2d) 150462

undeniable fact remains that Granite State told Burke that it was “granting coverage” to him and,

later, to Lisa and Jonathon. Moreover, the record demonstrates further that the internal

deliberations were not shared with Burke. Granite State took pains not to raise Burke’s hopes

about coverage while it was investigating the Burkes’ claims; likewise it did not communicate its

belief that its policy defenses would preclude coverage. Instead, after silence regarding the issue

of coverage, Granite State informed Burke that it was “granting coverage” to the Burkes under

the policy. We reject Granite State’s contention.

¶ 80 Granite State also argues that Heyl “had stated to the Burkes that she did not believe there

was coverage under the terms of the [uninsured motorist] endorsement because Patrick Burke

was not ‘on company business at the time.’ ” In support, Granite State cites Heyl’s deposition.

However, the portion of the record cited clearly indicates that Heyl communicated her belief that

Granite State was not liable not to Burke, but to Del Monte. In other words, Granite State’s

agents communicated among themselves, but not to the Burkes, that Granite State might not have

had any liability under the policy. This can scarcely be characterized as Granite State somehow

preserving its policy defenses by communicating its internal doubts about coverage to the

Burkes. Indeed, had Granite State communicated any doubts to the Burkes, its subsequent grant

of coverage would even more strongly support waiver. Nevertheless, our review of the record

suggests that Granite State never communicated to the Burkes that they had no coverage under

the policy; rather, the opposite is true: Granite State expressly “grant[ed] coverage” to the Burkes

under the policy. Accordingly, we reject Granite State’s “company-business” contention.

¶ 81 Granite State also contends that its grant of coverage was not a waiver of its policy

defenses, but instead was the opening salvo of settlement negotiations. Granite State argues that

State Farm is equating its settlement offers with waiver and urges that it would be contrary to

sound public policy to conflate settlement overtures with waiver, because it would, in fact, serve

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2016 IL App (2d) 150462

to discourage parties from settling their controversies. While we agree with Granite State’s

sentiments about the danger of conflating waiver with settlement negotiations, this does not

change the undisputed facts in the record. Granite State was aware, after an apparently thorough

investigation, that its liability under the policy was very likely precluded because Burke was not

within the scope of his employment with Robison at the time of the accident and the Burkes’

claims were not timely under the policy’s limitations provision. While fully in possession of this

knowledge, Granite State nevertheless informed Burke that it was “granting coverage” to the

Burkes under the policy. Granite State did not inform Burke that, although it was not liable

under the policy, it was willing to nevertheless settle the Burkes’ claims in order to avoid further

dispute. It is the grant of coverage that serves to transform Granite State’s conduct

unambiguously into a waiver of its policy defenses. Thus, Granite State’s concern over chilling

offers of settlement is legally and factually irrelevant to the issues in this case. Accordingly, we

reject Granite State’s contention on this point.

¶ 82 E. Injustice to State Farm

¶ 83 State Farm last argues that it would be unjust to allow Granite State to avoid Illinois’s

mandatory insurance laws, and it posits the creation and exploitation of a loophole to allow a

foreign insurer to write a policy for a foreign insured for a vehicle principally garaged in Illinois

if this court upholds the grant of summary judgment in favor of Granite State and against State

Farm. We need not address State Farm’s argument, in light of our determination that Granite

State waived its policy defenses.

¶ 84 III. CONCLUSION

¶ 85 For the foregoing reasons, the judgment of the circuit court of Du Page County is

reversed and the cause is remanded for further proceedings consistent with this opinion.

¶ 86 Reversed and remanded.

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