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Gean v. State Farm Mutual Automobile Insurance Co.

Court of Appeals of Illinois, First District, Second Division

July 25, 2019

JOSEPH GEAN, Plaintiff and Counterdefendant-Appellant,
v.
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant and Counterplaintiff-Appellee.

          Appeal 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.

          OPINION

          LAVIN, PRESIDING JUSTICE

         ¶ 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. We affirm.

         ¶ 2 BACKGROUND

         ¶ 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 vehicle."

         State 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, 000.

         ¶ 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, ...


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