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08/05/96 TERRY A. ABELS v. SAFEWAY INSURANCE

August 5, 1996

TERRY A. ABELS, INDIVIDUALLY AND ON BEHALF OF ALL OTHER PERSONS SIMILARLY SITUATED, PLAINTIFF-APPELLANT,
v.
SAFEWAY INSURANCE COMPANY, DEFENDANT-APPELLEE.



Appeal from the Circuit Court of Cook County. Honorable Richard L. Curry, Judge Presiding.

Rehearing Denied September 10, 1996. Released for Publication September 16, 1996.

The Honorable Justice Braden delivered the opinion of the court. Campbell, P.j., and Wolfson, J., concur.

The opinion of the court was delivered by: Braden

JUSTICE BRADEN delivered the opinion of the court:

Plaintiff, Terry A. Abels, filed the instant action in the circuit court of Cook County against defendant, Safeway Insurance Company (Safeway), seeking a declaration of rights and liabilities under an automobile insurance policy it issued to plaintiff. Plaintiff appeals from a February 4, 1992, order dismissing his complaint with prejudice, pursuant to section 2-615 of the Illinois Code of Civil Procedure (735 ILCS 5/2-615 (West 1994)). Plaintiff argues that the trial court erroneously dismissed his class action complaint, contending that (1) it was the intent of the Illinois legislature that an insurance policy holder not be obligated for arbitration costs and fees under section 143a(1) of the Illinois Insurance Code (the Code) (Ill. Rev. Stat. 1985, ch. 73, par. 755a); (2) Safeway's refusal to pay arbitration fees or costs is invalid and contrary to the Code; and (3) Safeway's proposed pro-rata allocation of arbitrator fees and costs violates the Consumer Fraud and Deceptive Business Practices Act (Ill. Rev. Stat. 1985, ch. 121 1/2, par. 262).

We affirm.

On February 6, 1990, plaintiff was involved in a motor vehicle accident with an uninsured motorist, sustaining injury as a result. Plaintiff was insured by Safeway under a policy which provided uninsured motorist coverage in accordance with the Code. Plaintiff subsequently filed an uninsured motorist claim with Safeway.

Plaintiff's policy provided for arbitration of uninsured motorist claims by either a three-person panel or by the American Arbitration Association (AAA). The subject insurance policy states:

"Upon the insured requesting arbitration, each party to the dispute shall select an arbitrator and the two arbitrators so named shall select a third arbitrator. If such arbitrators are not selected within 45 days from such request either party may request that such arbitration be submitted to the American Arbitration Association. In the event the two selected arbitrators cannot agree upon a third arbitrator either party may petition any judge in any court of record in the County and State in which the arbitration is pending to select a third arbitrator upon Notice of Motion to the other party or attorney and without the necessity of filing a lawsuit or serving the other party with process. The arbitrators shall then hear and determine the questions in dispute, and the decision in writing of any two arbitrators shall be binding upon the parties. All arbitration hearings, under this policy, including both the tripartite panel and the American Association of Arbitration, shall be conducted in the County and State in which the insured resides and in accordance with the usual rules governing procedure and admission of evidence in courts of law in that county."

On December 4, 1990, Safeway selected its arbitrator pursuant to the terms of the subject policy. On December 19, 1990, plaintiff selected his arbitrator, and on May 21, 1991, a third arbitrator was selected by order of the court. Safeway subsequently sent letters to plaintiff on both May 1 and May 6, 1991, advising him that Safeway would not pay fees for the arbitrator selected by plaintiff and would only pay one-half of the fees for the third arbitrator.

On August 30, 1991, plaintiff filed a two-count class action complaint. Count I alleged breach of the Code. Count II alleged breach of the Consumer Fraud and Deceptive Business Practices Act (Ill. Rev. Stat. 1985, ch. 121 1/2, par. 262). Both counts sought (1) a declaration by the trial court that Safeway's refusal to pay arbitrator fees for uninsured motorist claims was invalid; (2) an order enjoining Safeway from refusing to pay such arbitrator fees in similar policies in pending claims; and (3) an order obligating Safeway to reimburse its policyholders for arbitrator fees.

On February 4, 1992, the trial court dismissed both counts of plaintiff's complaint with prejudice, holding that the arbitrators are to decide responsibility for payment of fees and expenses.

On appeal, plaintiff first argues that the trial court erroneously ruled that the Uniform Arbitration Act (Ill. Rev. Stat. 1985, ch. 10, par. 110), provides authority for arbitrators to decide responsibility for payment of arbitration fees and expenses in resolving uninsured motorist claims between policyholder and insurer where the subject policy provides for arbitration. Plaintiff asserts that responsibility for arbitration fees and costs is an issue to be decided by the courts and not by the arbitrators. Plaintiff contends that neither section 143 of the Code nor section 10 of the Uniform Arbitration Act (Ill. Rev. Stat. 1985, ch. 10, par. 110), provides clear authority as to whether the insurer is only responsible for one-half of arbitration fees and expenses to resolve uninsured motorist claims. Plaintiff also argues that section 10 conflicts with Nickla v. Industrial Fire & Casualty Insurance Co., 38 Ill. App. 3d 927, 349 N.E.2d 644 (1976). We disagree.

As to plaintiff's first contention, the Illinois legislature has addressed the issue of whether courts or arbitrators determine responsibility for fees and expenses by allowing the arbitrator(s) to decide the award in each case. This legislation is codified in ...


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