Articles Posted in Arbitration

On July 21, 2007, Terri Whitehead was involved in a two-car crash in Wisconsin. The driver of the other car did not have insurance. Section 143.1 of the Illinois Insurance Code saved Whitehead’s uninsured motorist claim from being barred by a two-year deadline for initiating arbitration.

Although Whitehead did not demand arbitration on her uninsured motorist (UM) claim against Country Preferred Insurance Co. within two years of when she was injured by the uninsured motorist, and she failed to select an arbitrator when she eventually demanded arbitration, she did notify Country Preferred a few hours after the crash, plus she promptly filled out and returned its “notice of claim” form.

The notice of claim form was sufficient to trigger Section 143.1 which provides:

“Whenever any policy or contract for insurance * * * contains a provision limiting the period within which the insured may bring suit, the running of such period is tolled from the date proof of loss is filed, in whatever form is required by the policy, until the date the claim is denied in whole or in part.”

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The issue before the Illinois Appellate Court was whether the parties’ high-low agreement was a settlement agreement and if so, whether interest pursuant to Section 2-1303 of the Illinois Code of Civil Procedure accrues on an award that is predetermined by that high-low agreement. Mark Pinske thought he was entitled to 9% post-judgment interest on $100,000 of the $194,000 arbitration award he received against Lawrence White.

The arbitration award was made under a hybrid mediation/arbitration contract that also contained a high-low agreement. Pinske and White’s automobile insurer, Allstate Property & Casualty Insurance Co. agreed that Allstate would pay at least $50,000, but no more than $100,000 for injuries, that Pinske suffered in an automobile crash with White. The agreement asked a retired Cook County judge to mediate and that if the mediation effort failed, then to arbitrate the dispute for a binding result.

When Pinske sued for judgment on the award, he relied on Section 2-1303 of the Illinois Code of Civil Procedure. That section starts by saying “judgments recovered in any court shall draw interest at the rate of 9% per annum until satisfied.” The section also provides that “when judgment is entered upon any award, . . . interest shall be computed at the above rate, from the time when made or rendered to the time of entering judgment upon the same, and included in the judgment.”

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In August 2005, Trustgard Insurance Co. and G.A. Crandall & Co. came to an agreement that allowed Crandall to sell certain types of Trustgard insurance. The terms of the agreement specified that as a condition precedent to any lawsuit, the dispute must be first submitted to arbitration.

The parties’ agreement specified that the demand for arbitration must be made within one year of the dispute and that failure to make the demand on time, in writing and in a specified time period, would result in a waiver of any claim centered on the dispute.

In 2008, Richard Lombardi insured his 1995 Dodge with Trustgard automobile insurance purchased through Crandall. Lombardi’s policy had a limit of $100,000 in coverage for each accident.

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Deanne Berrey was working for Curry Ice when she was injured in a car accident caused by Sheri Campbell who only had $100,000 in liability insurance coverage.

Berrey sued Campbell and also collected $103,224 in worker’s compensation benefits. In addition, Berrey claimed underinsured-motorist benefits under a $1 million policy that Travelers Indemnity Co. sold to Curry Ice.

Campbell’s insurer settled with Berrey for $100,000 but paid all of the policy proceeds to Curry Ice because of Curry’s worker’s compensation lien. When the arbitrators considered the underinsured motorist (UIM) claim, it decided that Berrey’s damages totaled $310,000. Travelers claimed that Section D.2.4 of its insurance policy permitted it to reduce the award ($310,000) to $210,000 because Berrey had already technically received $100,000 from Campbell’s insurance policy, which was paid directly to Curry Ice.

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Larry Fabian was hired in 2001 by Cantor Fitzgerald to be a broker at the Chicago Mercantile Exchange. In 2007, he was transferred to BGC, which was a spinoff company of Cantor Fitzgerald.

In 2008, Fabian was named as a partner of “Founding Partner No. 69.” According to Fabian, he earned 100,393 “founding partner units” which could later be converted into common stock of the company.

On March 27, 2009, Fabian quit working for BGC to work for another securities firm. Shortly after leaving BGC, Fabian initiated arbitration before the Chicago Mercantile Exchange where he received $121,758 in commissions that he was owed from Cantor Fitzgerald. This did not include any reimbursement for his “founding partner units.”

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At the beginning of January 2015, the Law Division of the Circuit Court of Cook County, Ill., will begin its new mandatory arbitration program for certain cases. The program is targeted for cases that have value of less than $75,000. In order to file and hear a case in Law Division, the value of the matter must exceed $50,000.

The eligibility categories of cases that will be involved in the mandatory arbitration program include breach of contract, employment disputes, including discrimination, whistleblowing cases, civil or commercial fraud or conspiracy, business interference and shareholder disputes.

The program gained approval by the Illinois Supreme Court, and then the Circuit Court Judges voted to adopt the new local rule in December 2014. The presiding judge of the Law Division is Judge James T. Flannery Jr., who said that judges would begin referring cases at the start of 2015. Arbitration sessions will begin in April or May 2015.

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The U.S. Court of Appeals for the 7th Circuit in Chicago has reversed the decision of a U.S. District Court judge wherein an agreement between the parties, Hennessy Industries Inc. and National Union Fire Insurance Co. of Pittsburgh, required arbitration of any dispute that mandated an interpretation of the agreement. In this case, Hennessy Industries manufactured car parts. Since the 1980s, Hennessy has been the named defendant in many lawsuits for asbestos-related personal-injury cases. Hennessy has been looking to National Union Fire Insurance Co. of Pittsburgh for insurance coverage for these claims. The two companies entered into a cost-sharing agreement in 2008.

When the lawsuits for asbestos-related injuries started coming in, Hennessy requested that National Union indemnify it for settlement and defense costs as provided for in their agreement. The two parties, however, could not come to an agreement as to what was owed. Hennessy demanded arbitration in line with the agreement, which provided for arbitration of disputes between the parties.

Hennessy filed suit in 2013 under 215 ILCS 5/155(1), maintaining that National Union’s delays in granting coverage of the asbestos claims had been vexatious and unreasonable.

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Hennessy Industries was a car part manufacturer. It was sued frequently for asbestos-related personal injury claims. Hennessy sought insurance coverage for these claims from National Union Fire Insurance Co. The companies entered into a cost-sharing agreement in 2008. However, as the lawsuits and claims came in, Hennessy asked National Union to indemnify its settlements and defense costs. To resolve their differences about what was owed, Hennessy demanded arbitration under the agreement. Illinois law would be applied.

Hennessy filed a lawsuit against National Union under the Illinois Insurance Code, 215 ILCS 5/155(1), which provides that, in cases involving vexatious and unreasonable delay, the court may award reasonable attorney fees, other costs, plus an additional amount.

Hennessy claimed that National Union’s delays in providing coverage were vexatious and unreasonable. The federal district court judge in Chicago declined to dismiss the case, acknowledging a provision that “the arbitrator shall not be empowered or have jurisdiction to award punitive damages, fines or penalties,” but held that Hennessy’s claim arose under statutory law rather than under the cost-sharing agreement.

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The Illinois Appellate Court affirmed a decision of a Cook County judge barring testimony of the plaintiff, Bettie Payton-White, because she was more than 15 minutes late to a court-mandated arbitration session.

In November 2010, a car crash occurred between the motor vehicle driven by Bettie Payton-White and one driven by the defendant, Anthony Weir.  In August 2011, Payton-White filed a personal injury lawsuit against Weir claiming that the collision was caused by Weir’s negligent driving.  Weir denied that he was negligent, and the court assigned the lawsuit to mandatory arbitration scheduled for 8:30 a.m. on May 29, 2012.

At the arbitration session, neither Payton-White nor her representative was present.  At 8:45 a.m., after allowing a 15-minute grace period, the arbitrator entered a decision in Weir’s favor and awarded $436 in costs to Weir because of Payton-White’s failure to appear. 

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