2017 IL App (1st) 162308
FIRST DIVISION
June 29, 2017
No. 1-16-2308
VALENTINA WILLIS and ) Appeal from the
KATHY DOBSON WILLIS, ) Circuit Court of
) Cook County.
Plaintiffs-Appellees, )
)
v. ) No. 12 L 12756
)
UNITED EQUITABLE INSURANCE )
COMPANY, ) Honorable
) Sophia H. Hall,
Defendant-Appellant. ) Judge Presiding.
JUSTICE HARRIS delivered the judgment of the court, with opinion.
Presiding Justice Connors concurred in the judgment and opinion.
Justice Mikva specially concurred, with opinion.
OPINION
¶1 Defendant, United Equitable Insurance Company (UEIC), appeals the order of the circuit
court granting summary judgment in favor of plaintiffs, Valentina Willis and Kathy Dobson
Willis, on their declaratory judgment claim seeking coverage under UEIC’s policy. On appeal,
UEIC contends that the court erred in granting summary judgment because the clear terms of the
policy require plaintiffs to both unequivocally demand arbitration and appoint an arbitrator
within two years of the accident, which plaintiffs did not do. For the following reasons, we
reverse and remand for further proceedings.
¶2 JURISDICTION
¶3 The trial court granted summary judgment in favor of plaintiffs on February 20, 2015.
UEIC filed a notice of appeal on March 3, 2015. On March 22, 2016, this court entered a
summary order finding that we lacked jurisdiction to review an appeal where an order has not
No. 1-16-2308
been entered dismissing or otherwise disposing of UEIC’s counterclaim. Willis v. United
Equitable Insurance Co., 2016 IL App (1st) 150654-U, ¶ 8. Thereafter, UEIC filed a motion for
a finding pursuant to Illinois Supreme Court Rule 304(a) (eff. Mar. 8, 2016), and the trial court
entered an order with the requested Rule 304(a) language on August 19, 2016. UEIC filed a
notice of appeal on August 24, 2016. Accordingly, this court has jurisdiction pursuant to Illinois
Supreme Court Rule 303 (eff. May 30, 2008) and Rule 304(a) (eff. Mar. 8, 2016) governing
appeals from final judgments entered below.
¶4 BACKGROUND
¶5 The following facts are relevant to the determination in this appeal. On August 5, 2008,
Valentina’s vehicle was involved in an accident with a stolen rental car from Hertz. Kathy was a
passenger in Valentina’s car when the accident occurred. At the time, Valentina’s vehicle was
insured through a policy issued by UEIC. Hertz denied coverage since its car had been stolen, so
Valentina sought coverage under the uninsured motorist provision of her UEIC policy.
¶6 The policy’s uninsured motorist coverage contains an arbitration clause stating that if
“any person making claim hereunder” and UEIC “do not agree that both the vehicle(s) and the
driver(s) of the vehicles [involved in the accident] were not covered by liability insurance at the
time of the accident, or do not agree that [the insured] is legally entitled to recover damages from
the owner or operator of an uninsured motor vehicle, *** or do not agree as to the amount
payable hereunder, then these matters shall be submitted to arbitration.” The arbitration clause
further provides:
“Any dispute with respect to the coverage and the amount of damages shall be
submitted for arbitration to the American Arbitration Association and be subject to its
rules for the conduct of arbitration hearings as to all matters except medical opinions.
Alternatively, such disputes shall be determined in the following manner: Upon the
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Insured or the Company requesting arbitration, the insured and the Company shall each
select an arbitrator and the two arbitrators so named shall select a third arbitrator. ***If
such arbitrators are not selected within 45 days from such request, either party may
request that the arbitration be submitted to the American Arbitration Association.”
The UEIC policy also provides that “[i]n no event shall suit, arbitration or appraisal be
commenced against the Company more than two years after the date of accident.”
¶7 On August 26, 2009, Valentina’s attorney, Jordan Rifis, sent a letter to Ray Aviles at
UEIC stating that Valentina would seek “compensation under the uninsured motorist provision”
of her UEIC policy. The third paragraph of the letter stated that “[w]e hereby make demand for
arbitration if this claim is not resolved within two years after the accident.” (Emphasis in
original.) On September 11, 2009, Mr. Rifis sent another letter explaining that Hertz “is denying
coverage since the person who rented their automobile and who was the only one authorized to
drive their automobile was not the driver of the automobile at the time of the accident.” The
letter renewed the claim for uninsured motorist coverage under the policy and stated that “[w]e
hereby make demand for arbitration if this claim is not resolved within one year after the
accident.” (Emphasis in original.)
¶8 On February 14, 2011, Mr. Rifis sent a letter stating that he had sent Valentina’s medical
bills and records to UEIC on December 30, 2010, and also “made a demand for arbitration under
her policy.” The letter further stated that “[s]ince Ms. Willis’ uninsured motorist claim is still not
resolved, I renew my request for arbitration.” On September 18, 2012, Mr. Rifis filed a claim
with the American Arbitration Association (AAA) requesting arbitration in the matter. UEIC
rejected Valentina’s uninsured motorist claim on September 25, 2012.
¶9 On November 9, 2012, Valentina filed a complaint against UEIC alleging breach of
contract in bad faith. Kathy filed a motion to intervene as plaintiff, which the trial court allowed,
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and she filed her complaint on January 10, 2013, also alleging breach of contract in bad faith.
Valentina subsequently changed counsel and amended her complaint. In her final amended
complaint, she and her attorneys (1) alleged bad faith under section 155 of the Illinois Insurance
Code (215 ILCS 5/155 (West 2012)), (2) requested a declaratory judgment that the UEIC policy
“is in force” and “ordering this matter to uninsured motorist arbitration,” and (3) alternatively
pled professional negligence on the part of Mr. Rifis for failure to select and/or name an
arbitrator in writing within two years after the accident. Mr. Rifis, however, still represented
Kathy, who filed an amended complaint alleging (1) breach of contract and (2) bad faith under
section 155 of the Illinois Insurance Code (215 ILCS 5/155 (West 2012)). UEIC filed motions to
dismiss, which the trial court denied. The May 21, 2014, order denying the motions to dismiss
noted that Valentina “voluntary dismisses” and “non-suits” the professional negligence and
malpractice claim in count III of her amended complaint.
¶ 10 On May 28, 2014, UEIC filed a counterclaim seeking a declaration that its policy
provides no coverage for plaintiffs’ claims because they “did not commence arbitration within 2
years of accident” and did not “select an Arbitrator and demand arbitration” within that
timeframe. Valentina and Kathy filed motions for summary judgment, both requesting the trial
court to grant judgment in their favor as to count II and to compel arbitration. On February 2,
2015, the trial court granted summary judgment in favor of Valentina and Kathy, finding that
“the activities of the attorney in the letters regarding the request for arbitration satisfy
commencing and, accordingly, it’s appropriate to have arbitration.” It further found that the
selection of the arbitrator “is not subject to a time limit in the provisions of the policy” once the
demand for arbitration had been properly made. UEIC filed a notice of appeal on March 3, 2015.
¶ 11 On appeal, this court determined that we lacked jurisdiction because the trial court’s
order did not explicitly make a determination on UEIC’s counterclaim; therefore the order
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No. 1-16-2308
entered on February 2, 2015, was not a final and appealable order. The case was returned to the
trial court, and UEIC filed a motion for a Rule 304(a) finding and to continue to stay arbitration
proceedings pending resolution of the declaratory claims. The trial court granted the motion and
found, pursuant to Rule 304(a), that “there is no cause to delay appeal” and that the order was
“final and appealable.” UEIC filed this timely appeal.
¶ 12 ANALYSIS
¶ 13 The trial court considered and granted summary judgment in favor of Valentina and
Kathy only as to count II of their complaints, finding that the letters sent to UEIC on August 26,
2009, and September 11, 2009, sufficiently requested arbitration pursuant to the terms of the
policy. Summary judgment is proper where the pleadings, depositions, and admissions on file,
along with affidavits, if any, show that no genuine issue of material fact exists and the moving
party is entitled to judgment as a matter of law. Arangold Corp. v. Zehnder, 204 Ill. 2d 142, 146
(2003). Here, we must construe the terms of UEIC’s policy, and we apply the same principles as
we would apply when construing the language of a contract. Hobbs v. Hartford Insurance Co. of
the Midwest, 214 Ill. 2d 11, 17 (2005). Therefore, our main objective is to discern the intent of
the parties as expressed by the clear and plain terms of the policy and give effect to that intent.
Id. If the terms of the policy are unambiguous, they will be applied as written unless such
application contravenes public policy. Id. “Although policy terms that limit an insurer’s liability
will be liberally construed in favor of coverage, this rule of construction only comes into play
when the policy is ambiguous.” Id. We review de novo both the trial court’s interpretation of an
insurance policy and its grant of summary judgment. Rein v. State Farm Mutual Auto Insurance
Co., 407 Ill. App. 3d 969, 972 (2011).
¶ 14 The arbitration provision in the UEIC policy states that disagreements concerning
uninsured motorist coverage and damages “shall be submitted to arbitration.” The provision sets
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No. 1-16-2308
forth two ways in which the issue can be “submitted to arbitration.” First, it states that coverage
and damages disputes “shall be submitted for arbitration to the American Arbitration
Association.” The policy also provides that, “[a]lternatively, such disputes shall be determined in
the following manner: Upon the Insured or Company requesting arbitration,” the parties each
select an arbitrator, and the arbitrators named shall select a third arbitrator. “If such arbitrators
are not selected within 45 days from such request, either party may request that the arbitration be
submitted to the American Arbitration Association.” Furthermore, pursuant to the terms of the
policy, arbitration must commence within two years of the date of the accident.
¶ 15 Here, Valentina submitted her claim for arbitration with the AAA on September 18,
2012, more than two years after August 5, 2008, the date of the accident. Therefore, in order for
the arbitration clause to apply, the August 26, 2009, or September 11, 2009, letters must have
sufficiently “request[ed] arbitration” as set forth under the alternative method for submission of
arbitration claims. On this issue, we find Buchalo v. Country Mutual Insurance Co., 83 Ill. App.
3d 1040, 1042 (1980), and MemberSelect Insurance Co. v. Luz, 2016 IL App (1st) 141947,
instructive.
¶ 16 In Buchalo, the arbitration clause provided that “ ‘each party shall, upon written demand
of the Insured or upon written demand of the Company, select a competent and disinterested
arbitrator.’ ” Buchalo, 83 Ill. App. 3d at 1042. The policy at issue also stated that arbitration must
commence within two years “ ‘after the occurrence of the loss.’ ” Id. The insured’s counsel sent
a letter to the defendant on July 10, 1976, less than four months after the March 27, 1976,
accident, stating that he believed “ ‘the best thing to do with respect to this case is to arbitrate. I
will, in the future, forward you the name of our arbitrator.’ ” Id. at 1043. The letter also stated
that “ ‘[a]s long as we can negotiate his file with the view of settlement, I believe that my
demand stated in this letter will comply with your policy requirements.’ ” Id. On May 8, 1978,
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more than two years after the accident, counsel sent a letter stating that “ ‘I herein demand
arbitration on the matter and in further answer thereof, select as my arbitrator, Sheldon R.
Brenner.’ ” Id. at 1044. This court found that the unambiguous terms of the policy required a
written demand for arbitration and that the July 10, 1976, letter “did not constitute such a
demand.” Id. at 1045. The letter was “at best a statement of opinion by plaintiff’s former
counsel” regarding arbitration rather than “an unequivocal demand for arbitration.” Id.
¶ 17 In MemberSelect, the arbitration clause stated that
“ ‘Either party may demand, in writing, that the issues, excluding matters of coverage
[sic]. 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.’ ” MemberSelect, 2016
IL App (1st) 141947, ¶ 5.
The policy also contained a provision stating that any arbitration “ ‘will be barred unless
commenced within three years after the date of the accident.’ ” Id.
¶ 18 On September 4, 2007, less than two months after the accident, defendant’s attorney sent
a letter to MemberSelect notifying them of defendant’s underinsured motorist and medical
payments claim. Id. ¶ 6. The letter concluded by stating that defendant “ ‘Requests Arbitration of
the Underinsured Motorist Claim.’ ” (Emphasis added.) Id. MemberSelect argued that the letter
was insufficient because it requested rather than demanded arbitration, and it did not select an
arbitrator. Id. ¶ 15. The trial court granted MemberSelect’s motion for summary judgment,
finding that the policy required a demand for arbitration and that merely requesting arbitration
was insufficient. The court also found that the policy required defendant to name an arbitrator.
Id. ¶ 16.
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¶ 19 On appeal, this court disagreed, finding that the letter’s request for arbitration was
sufficient under the policy. Id. ¶ 38. We reasoned that the policy did not require the use of the
word “demand” and that “when a request is made for something that is one’s contractual right,
the difference between a ‘request’ and a ‘demand’ is semantic.” Id. ¶¶ 32-33. We therefore
determined that defendant in his letter requesting arbitration made “an unequivocal demand for
arbitration.” Id. ¶ 38. We found Buchalo distinguishable because the letter in that case stated
only that counsel “believe[d] the best thing to do with respect to this case is to arbitrate” which
showed “at best a statement of opinion” rather than “an unequivocal demand for arbitration.”
(Internal quotation marks omitted.) Id. ¶ 36 (quoting Buchalo, 83 Ill. App. 3d at 1043-45). We
also found that the selection of an arbitrator “was not mandatory” and therefore “not necessary to
‘commence’ the arbitration under the limitations provision in the insurance policy.” Id. ¶¶ 52-53.
¶ 20 Thus, pursuant to Buchalo and MemberSelect, a party sufficiently commences arbitration
if their request or demand for arbitration is unequivocal and is made according to the terms of the
policy within the limitations period set forth therein. Our initial determination, then, is whether
Valentina made an unequivocal request or demand for arbitration. The August 26, 2009, letter
stated that Valentina would seek “compensation under the uninsured motorist provision” of her
UEIC policy and that “[w]e hereby make demand for arbitration if this claim is not resolved
within two years after the accident.” (Emphasis in original.) The September 11, 2009, letter
renewed her claim for uninsured motorist coverage under the policy and stated that “[w]e hereby
make demand for arbitration if this claim is not resolved within one year after the accident.”
(Emphasis in original.)
¶ 21 As Valentina acknowledged in her brief on appeal, the arbitration demand in these letters
was a contingent demand—contingent on her claim not being settled within one or two years. A
contingent demand, by definition, is not unequivocal. Similar to the arbitration request in
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Buchalo, the focus of the request in these letters is on resolving Valentina’s claim rather than
demanding arbitration. Although a letter sent on December 30, 2010, renewed her request for
arbitration since her “uninsured motorist claim is still not resolved,” and Mr. Rifis filed a claim
on September 18, 2012, with the American Arbitration Association (AAA) requesting
arbitration, these requests occurred more than two years after the accident. Therefore, we find
that since Valentina did not unequivocally request arbitration within two years of the accident,
arbitration was not commenced as required under UEIC’s policy.
¶ 22 Due to our determination in this appeal, we need not consider UEIC’s argument that their
policy also requires a party to select an arbitrator within two years of the accident in order to
sufficiently commence arbitration.
¶ 23 For the foregoing reasons, the judgment of the circuit court granting summary judgment
in favor of plaintiffs on count II of their complaint is reversed and the cause is remanded for
further proceedings.
¶ 24 Reversed and remanded.
¶ 25 JUSTICE MIKVA, specially concurring.
¶ 26 Although I concur in the result reached in this case, I do not join the court’s opinion, for the
reasons that follow.
¶ 27 As the court recognizes, where, as here, the word “commence” is not otherwise defined in
a policy of insurance, an insured “sufficiently commences arbitration” against an insurance
company on an uninsured motorist claim by making a “request or demand for arbitration [that] is
unequivocal and is made according to the terms of the policy within the limitations period set forth
therein.” Supra ¶ 20. This is what we said in MemberSelect Insurance Co. v. Luz, 2016 IL App
(1st) 141947, ¶ 28, where we recognized that “[t]he formal demand is the mechanism by which the
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insured formally informs the insurance company of his or her desire to exercise the contractual
right to arbitration. The demand is the functional equivalent of the complaint in a civil action.”
¶ 28 I agree with the court’s ruling in this case, that the circuit court’s grant of summary
judgment in favor of the plaintiffs was erroneous, because, taken together, the letters Mr. Rifis sent
to UEIC on August 26, 2009, and September 11, 2009, did not constitute an unequivocal request or
demand for arbitration made within the two year time period that the policy required. The August
26 letter, sent approximately one year after the accident, made a conditional demand for arbitration
“if this claim is not resolved within two years after the accident.” Just over two weeks later,
however, counsel sent a second letter, with a different conditional demand: “[w]e hereby make
demand for arbitration if this claim is not resolved within one year after the accident.” (Emphasis
added.) This second letter failed to indicate whether it was meant to replace the initial demand and,
more confusingly, failed to acknowledge that the condition stated—a year passing after the
accident without resolution—had already been satisfied. Under these circumstances, the two
timely demands made by Mr. Rifis were confusing and unclear, rather than unequivocal. See
Black’s Law Dictionary (10th ed. 2014) (defining “unequivocal” as “[u]nambiguous; clear; free
from uncertainty”).
¶ 29 However, I respectfully disagree with the court’s unsupported statement that “[a]
contingent demand, by definition, is not unequivocal.” Supra ¶ 21.Simply because a demand is
made “[s]ubject to or dependent on a condition” (Black’s Law Dictionary (10th ed. 2014)
(defining “conditional”)) does not necessarily mean that it is “[o]f doubtful character[,]
questionable,” has “more than one meaning,” or is otherwise “ambiguous” (Black’s Law
Dictionary (10th ed. 2014) (defining “equivocal”)).
¶ 30 Our supreme court acknowledged long ago that a promise “may be an absolute or a
conditional promise” and still be unequivocal. (Internal quotation marks omitted.) St. John v.
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Stephenson, 90 Ill. 82, 83 (1878) (applying the rule that a debt discharged in bankruptcy may only
be revived by a clear, distinct, and unequivocal promise). Certain general rules of contract law
align with this view. Although a contract will not fail for want of consideration merely because it
involves a conditional promise, even when that condition is not certain to occur (Wilson v.
Continental Body Corp., 93 Ill. App. 3d 966, 970 (1981)), terms that “ ‘are so uncertain or
equivocal *** that the intention of the parties *** cannot be determined’ ” will render an
agreement unenforceable (Sweeting v. Campbell, 8 Ill. 2d 54, 57-58 (1956)).
¶ 31 In various contexts, federal courts have also distinguished between statements that are
conditional and ones that are equivocal. The Ninth Circuit, for example, has held that a criminal
defendant’s request to waive his right to counsel and proceed pro se was not equivocal simply
because it was a conditional request. See Adams v. Carroll, 875 F.2d 1441, 1445 (9th Cir. 1989)
(“Throughout the period before trial, [the defendant] repeatedly indicated his desire to represent
himself if the only alternative was the appointment of [a particular defense attorney]. While his
requests no doubt were conditional, they were not equivocal.” (Emphasis in original)). In another
case, that court likewise held that a criminal defendant’s request for legal representation, but only
if he was considered a suspect, was conditional but not equivocal. Smith v. Endell, 860 F.2d 1528,
1531-32 (9th Cir. 1988) (“[The defendant]’s initial request was clear enough: if the troopers
regarded him as a suspect in the murder *** he wanted an attorney. The request was not
ambiguous ***. *** [T]here was no ‘might’ or ‘maybe’ or ‘perhaps.’ ”). In unpublished decisions,
the Sixth and Eleventh Circuits, respectively, have also held that the sentence imposed in a
criminal case and the consent given by a party to search a vehicle may be conditional without
being equivocal. See United States v. Jackson, 434 F. App’x 483, 485 (6th Cir. 2011); United
States v. Washington, 319 F. App’x 781, 782 (11th Cir. 2009).
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¶ 32 Here, the request made in Mr. Rifis’s initial letter dated August 26, 2009, although
conditional, was indeed unequivocal. It unambiguously put UEIC on notice that the injured party
seeking coverage wished to arbitrate if the matter could not be resolved by a specified date, at
which point it would be apparent to all concerned whether that condition was satisfied. This initial
letter triggered arbitration through an unequivocal demand, while at the same time giving the
insured and the insurer time to attempt to resolve the claim. I agree with the court that Mr. Rifis’s
next letter to UEIC created confusion and ambiguity, negating the unequivocal demand that he had
previously made. However, by equating equivocal with conditional, the court suggests that an
insured cannot demand arbitration while, at the same time, expressing a willingness to discuss
settlement—essentially postponing arbitration until the last date on which the policy provides that
arbitration may begin. The court’s analysis could both discourage the voluntary settlement of
uninsured motorist claims and result in the loss of an insured’s right to coverage in cases where it is
crystal clear to the insurer that the insured is willing to arbitrate a claim. For this reason I
respectfully choose not to join the court’s opinion.
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