Illinois Supreme Court Overturns Appellate Court Decision Setting the Maximum Amount of Recovery Allowed Against a Self-Insured Rental Car Company

The Illinois Supreme Court has overturned the Illinois Appellate Court decision regarding the cap on self-insured rental car companies. The Supreme Court reversed a $600,000 judgment against Enterprise Rent-A-Car’s Chicago area’s subsidiary.

The Supreme Court ruled that self-insured rental car companies are liable for a maximum of $100,000 toward all injured parties in a rental car crash.

The decision of the Supreme Court was unanimous. In 2007, a crash in which an Enterprise vehicle was involved, injured at least two individuals. Enterprise paid $75,000 to two of the people involved in the crash. Enterprise argued that it had responsibility  to pay only an additional $25,000 allowed under the cap to the plaintiff.

The First District Appellate Court decision was overturned when a Cook County Circuit Court judge entered a $600,000 default judgment against Donald Artley and Enterprise Rent-A-Car. Artley was driving an Enterprise vehicle rented by another person.

Deshawn Nelson and Artley were driving together in the Enterprise vehicle, but it was rented by another person. Nelson filed his complaint against Artley in the Circuit Court of Cook County in January 2010 alleging that the crash caused his right femur to fracture. During a May 2010 prove-up hearing, the $600,000 default judgment was entered against Artley.

Then, one month later, Nelson initiated a citation proceedings against Enterprise to collect on the judgment.

Enterprise originally argued it was not responsible for any payments after the crash, arguing that Artley had stolen the vehicle from the woman who was authorized to rent it. Enterprise ultimately waived that defense.

Enterprise instead asserted that it was responsible only for $100,000 per occurrence under Illinois state law. Since at that time Enterprise had already paid $75,000 to the other people involved in this crash, it argued that just $25,000 remained to be paid to Nelson.

In September 2011, Nelson petitioned the court for a turnover order for the full $600,000 plus interest and costs. He argued that Enterprise retained a risk up to $2 million in third-party liabilities per occurrence because it opted to self-insure under state regulations.

In the 11-page decision filed by the Illinois Supreme Court, it stated that there were three ways for a rental-car company to satisfy proof-of-insurance requirements under the Illinois Vehicle Code. The rental company can file motor vehicle liability bonds with the Illinois Secretary of State, file certain insurance forms provided by that office or get a certificate of self-insurance issued by the state’s Department of Insurance.

The former two options, under Sections 9-103 and 9-105 of the code, require the company to be able to pay at least $100,000 in collisions, but the Vehicle Code doesn’t specify the amount required for self-insured companies under Section 9-102.

In a 2005 decision by the Illinois Appellate Court, Third District, in the case of Fellhauer v. Alhorn, the majority held that self-insurers are subject to the same upper limits on liability as those who get their proof-of-insurance in the other two ways – $100,000.

The Circuit Court judge in this case, following the Fellhauer decision, granted the turnover petition in May 2010, but limited the amount to the remaining $25,000.

The Fellhauer decision has been in place for a decade, Justice Karmeier wrote without any modifications by the legislature.

“Fellhauer stood unquestioned, and the legislature allowed the relevant provisions of the Vehicle Code to remain in effect, as written, without change throughout this period.” The majority in this opinion added that the purpose of the three “proof-of-financial responsibility” options under the Vehicle Code is not to prove the ability to fully satisfy judgments.

“Rather, it is merely proof of the ability to provide some base-level of financial coverage where otherwise there would be none. That base-level coverage is therefore the standard by which self-insurers’ liability must be gauged.”

“Under the result reached by the appellate court, the ability of persons injured in accidents involving rental cars to recover from the cars’ owner would become a lottery. Two otherwise identical injured parties could thus face substantially different recovery prospects based solely on the fortuity of which option the rental car company had chosen to satisfy our state’s proof of financial responsibility requirements.”

The Supreme Court opinion stated that “the conclusion it reached was properly followed by the Circuit Court in this case. It should have been followed by the appellate court as well.”

For these reasons, the Illinois Supreme Court reversed the Illinois Appellate Court’s findings and limited the plaintiffs’ recovery to $100,000 as provided by statute.

Nelson v. Artley, No. 118058 (October 8, 2015).

Kreisman Law Offices has been handling truck accident cases, automobile accident cases, bicycle accident cases and nursing home abuse cases for individuals and families who have been injured or killed by the negligence of another for more than 38 years, in and around Chicago, Cook County and its surrounding areas including, Maywood, Naperville, Joliet, Bolingbrook, Crestwood, Park Forest, Forest Park, Park Ridge, Oak Park, Oak Lawn, Bridgeview and Schaumburg, Ill.

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