Appeal from the Circuit Court of Saline County. No. 02-MR-42 Honorable Ronald R. Eckiss, Judge, presiding.
The opinion of the court was delivered by: Justice Goldenhersh
NOTICE Decision filed 01/12/12. The text of this decision may be changed or corrected prior to the filing of a Petition for Rehearing or the disposition of the same.
JUSTICE GOLDENHERSH delivered the judgment of the court, with opinion. Justices Welch and Wexstten concurred in the judgment and opinion.
¶ 1 The instant appeal involves a dispute about the distribution of underinsured-motorist proceeds following a tragic accident involving a group of teenage boys who were riding together in a Jeep Cherokee being driven by one of the boys' mothers, Katherine Duncan. Defendants-counterplaintiffs, Jared Head, Martha Head and Wayne Head, individually and as parents of Jared Head, a minor (hereinafter Jared), who has since attained the age of majority, and Katherine Duncan, Ross Duncan, and Russell Duncan, appeal the order of the circuit court of Saline County which distributed the underinsured-motorist proceeds. Jared and the Duncans will collectively be referred to as appellants. Appellee is the other defendant, Dr. Roger Herrin, special administrator of the estate of Michael Herrin. Michael Herrin died as a result of the accident, and Dr. Herrin was his father. While appellants and appellee both recognize that the formula set forth in Janes v. Western States Insurance Co., 335 Ill. App. 3d 1109, 783 N.E.2d 37 (2001), controls, appellants argue the trial court incorrectly applied the formula. Appellants contend the misapplication of Janes resulted in appellee receiving a disproportionately large share of the host vehicle's underinsured-motorist coverage, specifically arguing: (1) the ratio method is not the method of distribution Janes requires when distributing a common pool of underinsured-motorist coverage available upon a host vehicle; (2) the trial court erred when it used the value of the amounts actually received by appellee from separate underinsured-motorist coverage available exclusively to it instead of the total limits of underinsured-motorist coverage which were available exclusively to it; and (3) the trial court erred when it used as the valuations for each occupant's injuries the amounts set during a prior bench trial which distributed the bodily injury liability proceeds of $100,000 from the driver of the at-fault vehicle's insurance policy instead of requiring that the valuation of injury awards for use in distributing underinsured-motorist proceeds be set by arbitration. We affirm in part, reverse in part, and remand for further proceedings.
¶ 3 On June 14, 2001, Michael Herrin, Jared Head, and Ross Duncan were passengers in a Jeep Cherokee being driven by Katherine Duncan when they were hit by a truck being driven by Brian Bramlet, who failed to stop at an intersection. Michael Herrin was killed in the accident while Katherine Duncan, Ross Duncan, and Jared Head all received injuries. All occupants of the Jeep Cherokee filed separate personal injury claims against Brian Bramlet, the at-fault driver. Bramlet's truck was insured by Columbia Mutual Insurance Company (Columbia Mutual) with policy limits of $100,000 per occurrence. Columbia Mutual tendered its $100,000 policy limits.
¶ 4 An issue arose as to how to divide the $100,000 in liability insurance proceeds provided by the Columbia Mutual policy. Accordingly, the trial court conducted a consolidated bench trial in December 2007 in order to establish values for each of the claims. After hearing all the evidence, the trial court found the following values for the claims of the occupants of Katherine Duncan's vehicle:
Estate of Michael Herrin $10,010,953.61
¶ 5 Dr. Herrin owned several nursing homes and purchased business insurance on the nursing homes and insurance on certain vehicles owned through the nursing homes. Two policies specifically provided automobile insurance coverage on certain listed vehicles and provided underinsured-motorist coverage not only on Dr. Herrin but also on relatives who resided with him, including Michael. The policies were issued by Monroe Guaranty and Cincinnati Insurance. After litigation, it was determined that Dr. Herrin's nursing home policies provided his family with $5 million of underinsured-motorist coverage and specifically covered the accident in which Michael was killed on June 14, 2001. Dr. Herrin was also covered by an automobile policy through Encompass Insurance Company (Encompass), which provided an additional $500,000 in underinsured-motorist coverage for appellee's wrongful-death claim for a total of $5.5 million in underinsured-motorist coverage. This $5.5 million is exclusive to appellee's claims, and appellants can make no claim against the $5.5 million pool of appellee's underinsured-motorist coverage.
¶ 6 After mediation, the Herrin estate settled its wrongful-death claim for $1.65 million out of the $5.5 million in underinsured-motorist coverage available exclusively to the Herrin estate. A total of $1.25 million was paid by Monroe Guaranty and $400,000 was paid by Cincinnati Insurance. The trial court approved the $1.65 million settlement.
¶ 7 At the time of the accident, Jared's family carried underinsured-motorist coverage on their vehicles totaling $100,000; however, because the driver of the at-fault vehicle, Brian Bramlet, was carrying $100,000 in personal liability insurance through Columbia Mutual, Bramlet was not an underinsured motorist for purposes of Jared's family's automobile insurance carrier. The Duncan family carried automobile insurance through Encompass on numerous vehicles. After extended stacking litigation, including an appeal to this court, it was determined that the Duncans' underinsured-motorist coverage aggregated to $900,000. Encompass was given a setoff for the $100,000 in tortfeasor liability insurance on the basis that those funds will be distributed to the parties injured by the tortfeasor Bramlet, leaving a total of $800,000 available from the underinsured-motorist coverage provided by Encompass. See Columbia Mutual Insurance v. Herrin, No. 5-04-0575 (2007) (unpublished order under Supreme Court Rule 23 (eff. July 1, 1994)).
¶ 8 On April 21, 2009, Encompass filed a motion for leave to deposit $800,000 of underinsured-motorist benefits with the court with a request that Encompass be discharged from liability upon deposit of those funds and a request that the occupants of the Duncan vehicle be ordered to settle between themselves their rights or claims to the underinsured benefits available under the Encompass policy. While not objecting to $800,000 being paid into the court, appellants objected to Encompass's motion on the basis that the amounts to be distributed to the occupants of the Duncan vehicle were issues that needed to be arbitrated and they should not be "ordered to settle" their rights and claims to the common pool of host vehicle underinsured-motorist coverage when a good-faith disagreement existed on that issue.
¶ 9 On December 1, 2009, the trial court conducted a hearing on Encompass's motion and appellants' objections thereto. The trial court found that the arbitration clause of the Encompass policy would not be followed because the court previously set the amounts of each claim in a bench trial which determined the value of the claims when considering how the $100,000 in liability insurance coverage carried by the tortfeasor should be distributed. The trial court noted that the Herrin estate already received $1.65 million in underinsured- motorist settlement proceeds from policies which were only available to the Herrin estate and that it would apply the ...