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Liberty Mutual Ins. Co. v. Duray

APRIL 6, 1972.

LIBERTY MUTUAL INSURANCE COMPANY, PLAINTIFF-APPELLANT,

v.

FRED A. DURAY, DEFENDANT-APPELLEE.



APPEAL from the Circuit Court of Cook County; the Hon. EDWARD J. EGAN, Judge, presiding. MR. PRESIDING JUSTICE MCGLOON DELIVERED THE OPINION OF THE COURT:

This is an appeal from an order of the Circuit Court granting defendant Duray's motion to dismiss plaintiff Liberty Mutual's complaint for declaratory judgment and a subsequent order refusing to vacate the order of dismissal. The trial court ruled favorably upon defendant's motion on the basis that a previous order of the Circuit Court, denying plaintiff's petition to stay arbitration, was res judicata of the matters raised in the complaint for declaratory judgment. Plaintiff argues on appeal that the denial of its petition to stay arbitration was not a bar to its suit for declaratory judgment. Plaintiff argues on appeal that the denial of its petition to stay arbitration was not a bar to its suit for declaratory judgment, and furthermore, that its complaint states a good cause of action.

We affirm.

Duray was injured by a racing car driven by one Mark Perrin who was racing at the Rockford Speedway, at which Duray was a spectator. Perrin was uninsured, and consequently Duray filed a "Demand for Arbitration" pursuant to the uninsured motorist provision of the insurance policy issued by Liberty Mutual Insurance Company, under which he was an insured. Liberty Mutual thereafter filed an answer and an objection to hearing locale, both of which were denied by the American Arbitration Association. Liberty Mutual then filed in the Circuit Court a petition to stay arbitration which reads in relevant part as follows:

"4. That Petitioner denies that the alleged uninsured motorist was operating a `highway vehicle' as defined in the aforementioned policy at the time of the occurrence complained of.

5. That the dispute is one of policy construction.

6. That coverage questions are not arbitrable under the arbitration clause of said policy.

7. That only the issues of liability and damages are the subject of arbitration.

WHEREFORE, your Petitioner LIBERTY MUTUAL INSURANCE COMPANY prays the Court for an Order staying the arbitration proceedings now pending before the American Arbitration Association under their No. 51 20 0206 67."

Duray filed a motion to dismiss this petition, and Liberty Mutual answered the motion to dismiss. On August 1, 1967, the following order was entered by the Circuit Court:

"The matters having been heard before this court, the court having jurisdiction thereof and being fully advised in the premises.

IT IS HEREBY ORDERED that the Petition to Stay Arbitration filed herein by Liberty Mutual Insurance Co. is hereby denied."

No appeal was ever taken from this order.

On December 14, 1967, Liberty Mutual filed its complaint for declaratory judgment in the Circuit Court requesting that the court consider and adjudicate the question of coverage. This action was dismissed on the ground that the order of August 1 was res judicata of the issues raised. Liberty Mutual then filed a motion to vacate this order of dismissal which was denied.

Liberty Mutual begins its argument by urging that questions of coverage are matters of law and not properly subject to arbitration. It alleges that it only agrees to arbitrate the issues of liability and damages when its insured is injured by an uninsured motorist driving a "highway vehicle." Liberty Mutual further alleges that there is an issue of fact as to whether the vehicle driven by Perrin was a "highway vehicle" under the terms of the policy, and that such an issue is properly decided by a court of law since it goes to the heart of whether or not there is an ...


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