Court of Appeals of Illinois, First District, Second Division
from the Circuit Court of Cook County. No. 2016 CH 11275 The
Honorable Sophia H. Hall, Judge Presiding.
PRESIDING JUSTICE LAVIN delivered the judgment of the court,
with opinion. Justices Mason and Hyman concurred in the
judgment and opinion.
1 Joseph Gean, a policyholder, presented underinsured
motorist claims to State Farm Mutual Automobile Insurance
Company (State Farm) for damages he sustained in two car
accidents. The claims were submitted to arbitration and the
arbitrators entered awards in favor of Gean. When Gean sought
confirmation of the awards, a dispute arose regarding the
application of setoff provisions in his insurance policy.
Specifically, State Farm claimed the provisions permitted
setoffs equal to the amounts Gean recovered from the
underinsured motorists and his insurance policy to be applied
against the arbitration awards. The circuit court agreed and
ultimately entered summary judgment in favor of State Farm.
3 The relevant facts are not in dispute. On August 20, 2010,
Gean was involved in a collision with a driver, who was
insured by Infinity Insurance (Infinity) under a policy with
a bodily injury coverage limit of $20, 000. Infinity
subsequently paid the full $20, 000 to Gean as settlement of
his claim against the driver.
4 On November 29, 2010, Gean was involved in a second
collision with a driver, who was insured by Progressive
Northern Insurance Company (Progressive) under a policy with
a bodily injury coverage limit of $20, 000. Progressive also
paid the full $20, 000 to Gean as settlement of his claim
against the driver.
5 At the time of the accidents, Gean was covered under an
automobile insurance policy (No. 491 9483-F22-13B) issued by
State Farm. The policy included underinsured motorist (UIM)
coverage with a limit of $100, 000 for bodily injury, as well
as automobile medical payments (MP) coverage with a limit of
$1, 000. State Farm paid Gean the full $1, 000 in MP coverage
for each accident.
6 After recovering payments from Infinity and Progressive,
Gean presented UIM claims to State Farm. The claims were
submitted to arbitration pursuant to Gean's policy, which
required the arbitrators to decide "the amount of
compensatory damages that the insured is legally
entitled to recover" from the underinsured motorists.
Ultimately, the arbitrators awarded Gean $19, 000 for the
injuries sustained on August 20, 2010, and $25, 000 for the
injuries sustained on November 29, 2010.
7 State Farm subsequently informed Gean that pursuant to his
insurance policy, the arbitration awards were subject to
setoffs equal to the amounts he recovered from his
policy's MP coverage, Infinity and Progressive.
Specifically, the policy's "Nonduplication"
provision reduced the amount of payment owed to Gean under
his UIM coverage by damages that "have already been
paid." In addition, the "Limits" provision
restricted the amount of payment owed to Gean under his UIM
coverage to the lesser of:
"(1) the limit shown under 'Each Person' less
those amounts actually recovered under the applicable bodily
injury insurance policies, bonds, or other security
maintained on the underinsured motor vehicle; or
(2) the total amount of all damages resulting from that
bodily injury less those amounts actually recovered under the
applicable bodily injury insurance policies, bonds,
or other security maintained on the underinsured motor
Farm determined that Gean was not entitled to any payment
under his UIM coverage for the first accident because the
$19, 000 arbitration award was less than the total setoff
amount. Meaning, the $1, 000 that State Farm had paid him in
MP coverage, in addition to the $20, 000 settlement he
received from Infinity, equaled a total setoff amount of $21,
8 State Farm then calculated the amount of payment owed to
Gean under his UIM coverage for the second accident as
follows: the $25, 000 arbitration award would be setoff by
the $1, 000 that State Farm had paid him in MP coverage, as
well as the $20, 000 settlement he received from Progressive,
for a total setoff amount of $21, 000. When State Farm
tendered the $4, 000 balance to Gean, ...