23 Order Filed: March 16, 2017
to Publish Granted: May 15, 2017
from the Circuit Court of Wayne County. No. 12-L-3 Honorable
Larry D. Dunn, Judge, presiding.
Attorneys for Appellant Daniel G. Hasenstab, John P.
Cunningham, Brown & James, P.C., Richland for Plaza
Attorneys for Appellee William P. Gavin, Catherine E. Gavin,
Gavin Law Firm
JUSTICE GOLDENHERSH delivered the judgment of the court, with
opinion. Justices Chapman and Cates concurred in the judgment
2 This appeal arises from a dispute regarding underinsured
motorist coverage. Plaintiff, Michael B. Worley, sustained
serious injuries in an automobile accident on May 12, 2011,
when he collided with a vehicle operated by P. Jean Fender.
At the time of the accident, plaintiff was operating a 2005
Freightliner FLD132 box truck during the course and scope of
his employment with Davis & Sons Oil Company (Davis &
Sons). Davis & Sons owned the box truck. Fender caused
the accident by failing to stop at a stop sign and yield to
the vehicle plaintiff was driving.
3 After the accident, plaintiff filed a personal injury claim
against Fender. Fender's automobile was covered by an
automobile liability insurance policy issued by State Auto
Property & Casualty Insurance Company (State Auto). State
Auto offered the $100, 000 limits of Fender's policy to
plaintiff in exchange for a release of all causes of action
plaintiff had against Fender as a result of the accident.
Plaintiff accepted State Auto's offer, and State Auto
tendered $100, 000 to plaintiff.
4 Plaintiff also made a claim against Davis & Sons'
commercial automobile insurance policy (policy) issued by
defendant, Federated Mutual Insurance Company, which covered
the vehicle plaintiff was driving at the time of the
accident. The policy was initially issued to Davis & Sons
in April 2004 and was subsequently renewed each year
thereafter through the date of the accident. At the time of
the accident, the policy stated it was effective from April
1, 2011, to April 1, 2012. With respect to coverage, the
policy provided bodily injury liability limits of $1 million.
It further provided underinsured motorist coverage limits of
$500, 000 for directors, partners, officers, or owners of the
named insured and family members who qualified as insureds.
The policy provided underinsured motorist coverage limits of
$40, 000 for any other person who qualified as an insured.
Defendant denied plaintiff's demands for underinsured
motorist benefits on grounds that the limits of the
policy's underinsured motorist coverage for plaintiff was
$40, 000, and plaintiff had already received $100, 000 from
5 Initially, plaintiff filed a four-count complaint against
defendants Fender, Davis & Sons, and State Auto. Counts
III and IV of the original complaint were settled and
dismissed, and Fender and State Auto were also dismissed.
6 Defendant subsequently removed this case to the United
States District Court for the Southern District of Illinois.
While the case was in federal court, plaintiff filed a
two-count first amended complaint which remains the subject
of this appeal. The first count sought declaratory relief and
a reformation of defendant's policy so that it provided
underinsured motorist coverage and benefits to plaintiff with
limits of $1 million rather than $40, 000. Specifically,
plaintiff argued the underinsured motorist limits had to be
reformed to match the policy's bodily injury liability
limits of $1 million because Davis & Sons did not
effectively reject the policy's bodily injury liability
limits. Plaintiff further alleged that the structure of the
policy, which included step-down underinsured motorist limits
for different classes of insureds, violated Illinois law and
public policy because the terms restricted the limits of
coverage based solely on an insured's status at the time
of a loss. Plaintiff also sought that defendant be required
to participate in binding arbitration with plaintiff. The
second count alleged defendant's failure to acknowledge
plaintiff's claim for underinsured motorist benefits
under the policy with reasonable promptness was
"vexatious and unreasonable and constitute[d] an
improper claims practice" under section 154.6 of the
Illinois Insurance Code (215 ILCS 5/154.6 (West 2010)).
Plaintiff sought money damages and attorney fees.
7 On May 19, 2014, after this case was remanded by the
federal court to Wayne County, plaintiff filed a motion for
summary judgment on count I of plaintiff's first amended
complaint. On June 10, 2014, defendant filed a motion for
summary judgment on both counts of plaintiff's first
amended complaint asserting plaintiff was not an
"underinsured motorist" as defined by the policy
because the limits available under Fender's policy ($100,
000) exceeded the underinsured motorist limits available to
plaintiff under the policy at issue ($40, 000). As plaintiff
had already received an amount ($100, 000) in excess of the
limits available to plaintiff under the policy ($40, 000),
defendant argued no underinsured motorist coverage was
available to plaintiff.
8 A hearing on the cross-motions was held on July 23, 2014.
On November 10, 2015, the trial court entered an order which
granted partial summary judgment in favor of plaintiff on the
first count, and granted summary judgment in favor of
defendant on the second count. With respect to count I, the
court granted plaintiff's request that the policy be
reformed to provide underinsured motorist coverage limits
equal to the policy's bodily injury liability limit of $1
million but rejected plaintiff's argument that the
structure of the policy's underinsured motorist coverage
was void under Illinois law. The court further determined no
arbitration was required concerning plaintiff's
underinsured motorist claim. Regarding count II, the court
concluded there was no vexatious and unreasonable delay on
the part of defendant.
9 Defendant subsequently filed a motion to reconsider, which
was denied. Defendant then timely filed a notice of appeal,