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.
The insurance policy also listed Lombardi as living in far northwest suburban Woodstock, Ill. In September 2008, Lombardi was involved in a car accident in Florida. Trustgard offered to pay Lombardi the $100,000 limit under the insurance policy.
In February 2009, Lombardi’s attorney demanded $200,000 from Trustgard instead, claiming that the car was “garaged in all times in Florida” and therefore entitled to stacking coverage under Florida law.
In May 2009, Trustgard paid Lombardi $200,000. However, in November 2009, a lawyer retained by Trustgard contacted Crandall seeking information about the policy. In September 2010, Trustgard notified Crandall that it should not have issued the policy as Trustgard does not cover the state of Florida.
Trustgard stated that it was seeking recovery of the payout and filed a lawsuit against Crandall in October 2010. Crandall responded in December 2010. In July 2011, Trustgard sent notice to Crandall that they were requesting arbitration. Both parties moved for summary judgment. Crandall alleged that Trustgard had chosen not to file a demand for arbitration within a year of the dispute.
Crandall noted that no demand for arbitration was made until July 2011, almost three years after the incident and nine months after the filing the lawsuit. Crandall noted the terms of the contract that specified that failure to make the demand constituted waiver of the claim. The trial court granted Crandall’s motion for summary judgment. Trustgard appealed.
On appeal, Trustgard argued that its request for arbitration from July 2011 was sufficient to preserve its right to sue Crandall. Trustgard claimed that the dispute with Crandall did not technically “arise” until Crandall’s reply was filed in December 2010.
The Illinois Appellate Court disagreed and noted that the duty to arbitrate was to be interpreted broadly and that if Trustgard had filed a motion to stay proceedings pending arbitration, or even made a demand for arbitration, the trial court should not have granted those motions. However, neither one was filed.
The Illinois appeals panel turned to whether the July 2011 letter fulfilled the requirements of the contract’s arbitration clause. The appellate court noted that Trustgard hired a lawyer to represent it in dealing with Crandall in November 2009 and a representative of Trustgard admitted in deposition that by December 2009, “Trustgard knew it had a claim against Crandall.”
Accordingly, the appellate court found that Trustgard’s request for arbitration was sent 18 months after the dispute arose, well outside the terms of the contract. Therefore, Trustgard had forfeited its claim and the decision of the trial court was affirmed.
Trustgard Insurance Co. v. G.A. Crandall & Co., Inc., 2015 IL App (1st) 140761-U, March 31, 2015.
Kreisman Law Offices has been handling business disputes, commercial litigation and contract lawsuits for individuals, families and businesses for more than 38 years in and around Chicago, Cook County and its surrounding areas, including Bensenville, Lake Forest, Arlington Heights, Chicago (Rogers Park, Wicker Park), River Grove, River Forest, Rosemont and Schiller Park, Ill.
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