Pekin Insurance v. Hiera

840 N.E.2d 1236, 362 Ill. App. 3d 699, 298 Ill. Dec. 801, 2005 Ill. App. LEXIS 1327
CourtAppellate Court of Illinois
DecidedDecember 1, 2005
Docket4-05-0594
StatusPublished
Cited by2 cases

This text of 840 N.E.2d 1236 (Pekin Insurance v. Hiera) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Pekin Insurance v. Hiera, 840 N.E.2d 1236, 362 Ill. App. 3d 699, 298 Ill. Dec. 801, 2005 Ill. App. LEXIS 1327 (Ill. Ct. App. 2005).

Opinion

JUSTICE COOK

delivered the opinion of the court:

Plaintiff, Pekin Insurance Company, sought a declaratory judgment of its rights and obligations as to defendant, Anthony J. Hiera, who is seeking uninsured-motorist (UM) coverage under a policy issued by plaintiff for injuries he allegedly received in an automobile accident. Defendant moved to compel immediate arbitration and plaintiff objected. The trial court granted defendant’s motion and plaintiff appeals. We affirm.

I. BACKGROUND

On October 4, 2002, defendant was injured in a motor vehicle collision caused by a UM. The collision occurred while defendant was operating his vehicle in the course and scope of his employment. At the time of the accident, defendant and his vehicle were insured by plaintiff, which provided UM coverage in the amount of $1 million. Defendant filed a claim with plaintiff under the UM coverage of its policy. Defendant also filed a claim for workers’ compensation benefits, which was still pending at the time of the trial court’s decision in this case.

After defendant made a demand upon plaintiff for arbitration of his UM claims, plaintiff sought a declaratory judgment from the trial court stating that it was not liable under its policy of insurance for any elements of defendant’s loss for which he has been or will be compensated in workers’ compensation benefits. Plaintiff also sought a stay of UM arbitration until defendant’s proceedings before the Illinois Workers’ Compensation Commission have been resolved. Defendant moved to compel immediate arbitration of his UM claim. The court found that plaintiff is entitled to a setoff for any element of defendant’s loss that has been paid for and which is payable by workers’ compensation benefits. The court then granted defendant’s motion to proceed with arbitration within a reasonable period of time. Plaintiff appeals the order denying its motion to stay the UM arbitration.

II. ANALYSIS

A. Standard of Review

Initially, the parties disagree as to the proper standard of review. An order granting a motion to compel arbitration is considered an order granting injunctive relief and, when appealed, is treated as an interlocutory appeal governed by Supreme Court Rule 307(a)(1) (134 Ill. 2d R. 307(a)(1)). Menard County Housing Authority v. Johnco Construction, Inc., 341 Ill. App. 3d 460, 463, 793 N.E.2d 221, 224 (2003).

Defendant argues that an abuse-of-discretion standard is appropriate in reviewing a motion to compel arbitration, citing Schroeder Murchie Laya Associates, Ltd. v. 1000 West Lofts, LLC, 319 Ill. App. 3d 1089, 1094, 746 N.E.2d 294, 298-99 (2001), and Bishop v. We Care Hair Development Corp., 316 Ill. App. 3d 1182, 1189, 738 N.E.2d 610, 616 (2000). Generally, the standard of review for an interlocutory appeal is whether the trial court abused its discretion. See Schroeder, 319 Ill. App. 3d at 1094, 746 N.E.2d at 298-99; Menard County Housing Authority, 341 Ill. App. 3d at 463, 793 N.E.2d at 224. Plaintiff, citing Cohen v. Blockbuster Entertainment, Inc., 351 Ill. App. 3d 772, 776-77, 814 N.E.2d 933, 936-37 (2004), argues that a de novo standard of review is more appropriate in this case as the trial court conducted no evidentiary hearing and the facts relevant to arbitrability are undisputed.

In both Schroeder and Bishop, the trial courts looked at the actions of the parties to determine whether the parties waived their contractual rights to arbitration. Schroeder, 319 Ill. App. 3d at 1095-99, 746 N.E.2d at 299-302; Bishop, 316 Ill. App. 3d at 1191-94, 738 N.E.2d at 617-19. In Cohen, the trial court denied defendant’s motion to compel arbitration, finding the arbitration clause was invalid because it provided an illusory remedy. Cohen, 351 Ill. App. 3d at 776, 814 N.E.2d at 936. On appeal, the Cohen court held that the defendant failed to show that the plaintiffs alleged any claims that would implicate the defendant’s arbitration agreement; thus the court affirmed the denial of the motion to compel arbitration. Cohen, 351 Ill. App. 3d at 777, 814 N.E.2d at 937.

In this case, both plaintiff and defendant agree that arbitration is appropriate. The issue is whether arbitration should start immediately or whether arbitration should start after the workers’ compensation hearing. The trial court did not have to hold any evidentiary hearings or review any disputed facts regarding arbitrability. This case is, therefore, analogous to Cohen. A de novo standard of review is appropriate. (Even if we were to review this case under an abuse-of-discretion standard of review, the result would be the same.)

B. Timing of Arbitration

Plaintiff argues that arbitration with defendant would be premature until the workers’ compensation claim is resolved as the amount of the workers’ compensation award will determine the amount of the setoff to which plaintiff is entitled. Temporarily delaying the arbitration, plaintiff contends, will promote the orderly administration of justice and judicial economy because (1) the amount of plaintiff’s potential liability is unknown and (2) the resolution of the workers’ compensation claim may result in plaintiff not being liable at all if the workers’ compensation claim exceeds the UM policy limits. Finally, plaintiff argues forcing arbitration before determining the amount of the setoff will result in prejudice to plaintiff as it may later be unable to recover the setoff amount if it does not assert the right to that amount during the arbitration.

Defendant argues the terms of the insurance contract do not provide for a stay of UM arbitration until the workers’ compensation claims are resolved. Further, the contract provides that if plaintiff makes any payment and defendant recovers from another party, defendant must “hold the proceeds in trust” for plaintiff and pay plaintiff back the amount it paid. Finally, defendant argues arbitration is designed to speed the resolution of disputed issues, and forcing the parties to wait to arbitrate until the workers’ compensation claim is determined will frustrate the “speedy” purpose of arbitration.

A primary purpose of an arbitration agreement is to “enable the parties to secure a speedy determination of the differences between them without conforming to the strict formalities necessary in a court of law.” Wilhelm v. Universal Underwriters Insurance Co., 60 Ill. App. 3d 894, 899, 377 N.E.2d 62, 66 (1978). Staying arbitration will thwart this purpose and delay the payment of defendant’s claim, but plaintiff requests that this court ignore the speedy-determination purpose of arbitration for the sake of the orderly administration of justice and judicial economy.

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Bluebook (online)
840 N.E.2d 1236, 362 Ill. App. 3d 699, 298 Ill. Dec. 801, 2005 Ill. App. LEXIS 1327, Counsel Stack Legal Research, https://law.counselstack.com/opinion/pekin-insurance-v-hiera-illappct-2005.