                           ILLINOIS OFFICIAL REPORTS
                                        Appellate Court




          Country Preferred Insurance Co. v. Whitehead, 2011 IL App (3d) 110096




Appellate Court            COUNTRY PREFERRED INSURANCE COMPANY, Plaintiff-
Caption                    Appellee, v. TERRI WHITEHEAD, Defendant-Appellant.



District & No.             Third District
                           Docket No. 3-11-0096


Filed                      August 30, 2011
Rehearing denied           October 18, 2011
Held                       In an action for the injuries defendant suffered in an accident with an
(Note: This syllabus       uninsured motorist in Wisconsin, the provision of the automobile liability
constitutes no part of     policy plaintiff issued to defendant imposing a two-year statute of
the opinion of the court   limitations on uninsured motorist claims violated public policy as applied
but has been prepared      to defendant and was unenforceable, since Wisconsin has a three-year
by the Reporter of         statute of limitations for such claims and applying the two-year period
Decisions for the          would not place defendant in the same position she would have been in
convenience of the         if the other motorist had been insured; therefore, the trial court’s denial
reader.)
                           of defendant’s motion to compel arbitration of her claim on the ground
                           that she did not act within two years was reversed.


Decision Under             Appeal from the Circuit Court of Will County, No. 09-MR-1122; the
Review                     Hon. Barbara Petrungaro, Judge, presiding.



Judgment                   Reversed and remanded.
Counsel on                 Robert Marc Chemers (argued) and Heather E. Plunkett, both of Pretzel
Appeal                     & Stouffer, Chtrd., of Chicago, for appellant.

                           Keith G. Carlson (argued), of Carlson Law Offices, of Chicago, for
                           appellee.


Panel                      JUSTICE LYTTON delivered the judgment of the court, with opinion.
                           Justice Holdridge concurred in the judgment and opinion.
                           Justice McDade dissented, with opinion.




                                             OPINION

¶1          Plaintiff, Country Preferred Insurance Company, filed a complaint for declaratory
        judgment against defendant, Terri Whitehead, alleging that she was barred from pursuing an
        uninsured motorist claim because she did not file a request for arbitration within the two-year
        policy limitation. Defendant filed a motion to compel arbitration, stating that the two-year
        limitation violated public policy because the accident occurred in Wisconsin, which has a
        three-year statute of limitations. The trial court denied defendant’s motion. We reverse and
        remand.
¶2          On July 27, 2007, defendant was in an automobile accident with a vehicle driven by
        Mario Lopez-Juarez in Wisconsin. Lopez-Juarez was uninsured. Defendant was insured by
        plaintiff, Country Preferred Insurance Company. Her policy with Country Preferred provided
        that disputes with uninsured motorists were to be decided by arbitration. The arbitration
        provision contained in the policy provided in pertinent part: “[I]f we and an insured disagree
        over whether that insured is legally entitled to recover damages from the owner or operator
        of an uninsured motor vehicle or if agreement cannot be reached on the amount of damages,
        either party must make a written demand for arbitration.” Another provision of the policy
        relating to uninsured motorist claims stated: “[A]ny suit, action or arbitration will be barred
        unless commenced within two years from the date of the accident.”
¶3          Defendant notified Country Preferred of her accident shortly after it occurred. As of
        October 2007, Country Preferred had assigned a claim number and claim representative to
        defendant’s uninsured claim. Several times thereafter, Country Preferred’s claim
        representative, Andrea Dunmore, sent correspondence to defendant.
¶4          On May 5, 2009, defendant’s counsel wrote Dunmore, advising her that he represented
        defendant, “who sustained injuries as a result of an uninsured motorist,” and requesting a
        copy of defendant’s insurance policy. On October 6, 2009, defendant’s counsel made a
        written demand for arbitration on defendant’s uninsured motorist claim.


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¶5          On October 30, 2009, Country Preferred filed a complaint for declaratory judgment
       against defendant, alleging that she was barred from making an uninsured motorist claim
       under her policy because she did not make a written demand for arbitration within two years
       of her accident. On July 19, 2010, defendant filed a motion to compel arbitration. The trial
       court denied defendant’s motion.
¶6          Where a provision of an insurance contract is in conflict with public policy, courts will
       not enforce it. American Service Insurance Co. v. Pasalka, 363 Ill. App. 3d 385, 390 (2006).
       Whether a contractual provision violates public policy must be determined on a case-by-case
       basis. See American Federation of State, County & Municipal Employees v. State, 158 Ill.
       App. 3d 584, 592 (1987), aff’d, 124 Ill. 2d 246 (1988).
¶7          Illinois law requires insurers to offer uninsured motorist coverage in all automobile
       policies. 215 ILCS 5/143a (West 2008). “[T]he intent of the legislature in enacting section
       143a was to ensure that persons injured by an uninsured motorist are protected at least to the
       extent that compensation is made available to persons injured by a motorist insured for the
       minimum legal limits.” Pasalka, 363 Ill. App. 3d at 390. “[T]he public policy behind the
       uninsured motorist statute is to place the injured party in substantially the same position he
       would have been in if the uninsured driver had been insured.” Hoglund v. State Farm Mutual
       Automobile Insurance Co., 148 Ill. 2d 272, 279 (1992).
¶8          An insurance policy violates Illinois public policy when it places an injured party in a
       substantially different position than if the tortfeasor had carried insurance. See Severs v.
       Country Mutual Insurance Co., 89 Ill. 2d 515, 519-20 (1982); Pasalka, 363 Ill. App. 3d at
       392; Kerouac v. Kerouac, 99 Ill. App. 3d 254, 262 (1981); Burgo v. Illinois Farmers
       Insurance Co., 8 Ill. App. 3d 259, 263-64 (1972).
¶9          The issue before us is whether Illinois public policy is served when an insurance policy
       limits coverage to two years when an accident occurs in a state that has a three-year statute
       of limitations.
¶ 10        In Burgo, the court held that a contract provision requiring insureds to demand arbitration
       within one year of an accident violated Illinois’s uninsured motorist statute because it
       shortened the applicable statute of limitations. Burgo, 8 Ill. App. 3d at 263-64. Under Illinois
       law, Burgo had two years to sue the tortfeasor. See id. at 260; see also 735 ILCS 5/13-202
       (West 2008). The contract’s one-year provision shortened the state’s two-year statutory
       limitations period. Burgo, 8 Ill. App. 3d at 263. Thus, it placed Burgo in a substantially
       different position than he would have been in had the tortfeasor carried insurance. Id. at 263-
       64. The court held that “[t]he one-year limitation in the policy is a dilution or diminution of
       the uninsured motorist statute and is an attempt to defeat the intent and the purpose of the
       statute; therefore it is against public policy and the statute must prevail.” Id. at 264.
¶ 11        Similarly, in Severs, the supreme court held that a two-year contractual limitation against
       a minor was unenforceable because it shortened the time within which the minor was
       required to file suit. Severs, 89 Ill. 2d at 519-20. The court explained that the uninsured
       motorist statute required that the minor “be allowed the same period of time within which
       to bring suit that she would have had if the driver *** had been insured.” Id. at 519. In
       Illinois, a minor has two years after attaining age 18 to file suit. See id. at 519-20 (citing Ill.


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       Rev. Stat. 1973, ch. 83, ¶ 22 (now see 735 ILCS 5/13-211 (West 2008))). The two-year
       policy provision restricted that limitations period and placed the minor in a substantially
       different position than she would have been in if the tortfeasor had carried insurance. See
       Severs, 89 Ill. 2d at 520. Thus, the two-year limitation in the policy deprived the minor of the
       uninsured motorist coverage required by statute and could not be used against the minor. Id.;
       see also Kerouac, 99 Ill. App. 3d at 262.
¶ 12        Here, the two-year period contained in the policy at issue violates public policy as to
       defendant because it effectively shortens the applicable Wisconsin statute of limitations from
       three years to two years. Thus, it places defendant in a “substantially different” position than
       if the other driver had been insured. See Burgo, 8 Ill. App. 3d at 263-64. If the driver of the
       other vehicle involved in defendant’s accident had been insured, defendant could have
       brought her personal injury action against him in Wisconsin, and a three-year statute of
       limitations would apply. See Wis. Stat. §§ 801.05(3), 893.54(1) (2011).
¶ 13        Nevertheless, plaintiff argues that a two-year contract limitation has been approved by
       our courts. See Hannigan v. Country Mutual Insurance Co., 264 Ill. App. 3d 336, 342
       (1994); Shelton v. Country Mutual Insurance Co., 161 Ill. App. 3d 652, 660 (1987).
       However, the courts in those cases upheld a two-year policy limitation because it was the
       same length as the statute of limitations for personal injuries occurring in Illinois. See 735
       ILCS 5/13-202 (West 2008); Hannigan, 264 Ill. App. 3d at 342; Shelton, 161 Ill. App. 3d at
       659-60. As such, the insureds were placed in the same position they would have been in had
       the offending motorists been insured.
¶ 14        Those cases do not reflect the facts in this case. Here, the two-year limitations period in
       the policy is less than the three-year statute of limitations in Wisconsin; defendant is not
       placed in substantially the same position she would have been in if the uninsured driver had
       been insured. Thus, the insurance contract violates public policy as applied to defendant and
       is unenforceable. See Pasalka, 363 Ill. App. 3d at 390.
¶ 15        The order of the circuit court of Will County is reversed and the cause is remanded for
       further proceedings consistent with this opinion.

¶ 16       Reversed and remanded.

¶ 17       JUSTICE McDADE, dissenting:
¶ 18       I dissent from the majority’s finding that the “two-year period contained in the policy at
       issue violates public policy as to defendant because it effectively shortens the applicable
       Wisconsin statute of limitations from three years to two years.” Supra ¶ 12. This reasoning
       ignores the fact that it is not our role to make policy; rather, we must ascertain the public
       policy of this state with reference to the Illinois Constitution, statutes, and long-standing case
       law. Timothy Whelan Law Associates, Ltd. v. Kruppe, 409 Ill. App. 3d 359, 361 (2011).
       Thus, I do not believe that an Illinois court can use a foreign jurisdiction’s laws to establish
       a violation of Illinois public policy.
¶ 19       In the interest of clarity, I find it necessary to set out the specific basis of defendant’s


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       arbitration demand. Defendant’s arbitration demand is found in her counterclaim. While
       defendant’s counterclaim asserts that she “timely presented and *** [plaintiff] acknowledged
       *** [her] claim for uninsured motorist coverage benefits as early as October 21, 2007,” this
       was not the actual basis for her arbitration demand. Instead, defendant argued that section 2
       of the policy violates Illinois public policy because it bars relief, which would otherwise be
       available under Wisconsin law. Stated another way, defendant’s counterclaim sought to have
       section 2 of the policy voided on public policy grounds, as opposed to arguing that she
       complied with section 2. Both defendant’s initial brief and reply brief confirm the narrow
       scope of her argument.
¶ 20       First, defendant states the question presented for review as:
                “Whether Country Preferred Insurance Company’s enforcement of the two-year time
           limitation provision for a demand for arbitration of an uninsured motorist claim violates
           Illinois public policy where the motor vehicle accident occurred in Wisconsin, which has
           a three year statute of limitations for personal injury actions, because it places the insured
           in a substantially different position than if the other driver had been insured.”
       In addition, defendant’s initial brief states, in pertinent part:
           “Here, the singular issue before this Court is whether the application of Country’s
           [uninsured motorist] time limitation provision as it pertains to Whitehead violates Illinois
           public policy.”
       Defendant’s reply brief states, in pertinent party:
           “Because of the disagreement between the parties as to Country’s contentions,
           Whitehead’s motion to compel arbitration was brought on the legal issue of whether the
           time limitation provision was against Illinois public policy. Whitehead denied that the
           [uninsured motorist] claim was not made within two years of the accident, however, even
           if it wasn’t Whitehead contended that Country can not have a contractual limitation in
           its policy that places its insured in a substantially different position than she would have
           been in had the tortfeasor carried the insurance required by statute because such a
           limitation violates public policy. In the interest of judicial economy, the [public policy]
           argument was made on an ‘assuming arguendo’ basis simply because if the Court held
           that the two-year time limitation provision was against Illinois public policy, the case
           would be over and there would be no issue as to whether Whitehead’s demand for
           arbitration was timely.”
¶ 21       While defendant, through her counterclaim, could have raised both the arguments of
       timeliness and public policy as grounds for her arbitration demand, she chose not to do so.
       Instead, she has expressly defined the timeliness of her notice to Country out of our
       consideration on interlocutory appeal. Thus, for purposes of this interlocutory appeal I
       examine only the merits of defendant’s public policy contention. This scope finding,
       however, would not mean that defendant cannot contest the issue of timeliness in the
       underlying declaratory judgment proceedings. The record reveals that defendant’s answer to
       plaintiff’s complaint for declaratory judgment expressly denies plaintiff’s allegation that she
       “did not make a written demand for uninsured motorist arbitration on or before July 27,
       2009.” I now turn to the merits of defendant’s public policy contention.

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¶ 22        Courts will not enforce an insurance policy provision if it is in fundamental conflict with
       public policy. American Service Insurance Co. v. Pasalka, 363 Ill. App. 3d 385, 390 (2006).
       Whether a provision in a contract, insurance policy, or other agreement is invalid because it
       violates public policy is a question of law, which we review de novo. In re Estate of
       Feinberg, 235 Ill. 2d 256, 263 (2009).
¶ 23        Illinois public policy provides that an insurance policy provision may not place an
       insured in a substantially different position than she would have been had the tortfeasor
       carried the required insurance coverage mandated by law. Burgo v. Illinois Farmers
       Insurance Co., 8 Ill. App. 3d 259, 263 (1972). Here, the automobile accident between
       defendant and the tortfeasor occurred in Wisconsin. Wisconsin law provides that an action
       to recover damages for personal injury “shall be commenced within three years or be barred.”
       Wis. Stat. § 893.54(1) ( 2008). Thus, had the tortfeasor carried insurance coverage defendant
       would have had three years to bring a personal injury action against the tortfeasor under
       Wisconsin law.1 In contrast, Illinois has a two-year general statute of limitations for personal
       injury actions. 735 ILCS 5/13-202 (West 2008).
¶ 24        Like Illinois law, section 3 of the policy requires that “any suit, action or arbitration” be
       brought within two years of the accident or else it is barred. On appeal, defendant argues that
       section 2 violates Illinois public policy because “it places her in a substantially different
       position than she would have been in if *** [the tortfeasor] carried the minimum liability
       insurance.” Accepting this argument, the majority finds that because Wisconsin law would
       have allowed defendant three years to bring a claim against an insured tortfeasor, section 2
       is a dilution or diminution of her rights under Wisconsin law and therefore against Illinois
       public policy. Supra ¶ 12. I disagree.
¶ 25        Defendant has failed to provide any authority supporting her claim that the laws of
       another jurisdiction can somehow be used to show a violation of Illinois public policy. The
       reason defendant has been unable to cite any supporting authority is because the public policy
       of each particular state has been carved and developed against the backbone of that particular
       state’s own individual constitution, case law, statutes and supreme court rules. Feinberg, 235
       Ill. 2d at 265. “When the resolution of an issue turns upon public policy, it is not the role of
       a court to make policy; rather, the court must ascertain the public policy of this state with
       reference to the Illinois Constitution, statutes, and long-standing case law.” Kruppe, 409 Ill.
       App. 3d at 361. The majority simply ignores this fact and instead chooses to find a violation
       of Illinois public policy through the arbitrary application of Wisconsin law. I not only believe
       this holding is legally incorrect, but I fear its progeny will result in the public policy of our
       state being subjugated to the Constitution, statutes and case law of 49 other states. And one
       has to wonder how an Illinois court would resolve this issue if there were yet another
       additional party whose state had a 4-year limitation statute. Thus, I reject both defendant’s
       attempt and the majority’s acceptance of Wisconsin law to show a violation of Illinois public
       policy.
¶ 26        Instead, I believe an Illinois court must look to Illinois law to determine whether Illinois


       1
           This assumes Wisconsin law is found to be applicable under a conflict of law analysis.

                                                  -6-
       public policy has been violated. Again, our unique public policy has slowly developed
       through the analysis of our unique laws. Upon looking to Illinois law, I find the trial court
       did not err in denying defendant’s request to compel arbitration on the basis of her public
       policy argument. Illinois courts, applying Illinois law, have determined that the language
       found in section 2 of the policy does not violate Illinois public policy. See Hannigan v.
       Country Mutual Insurance Co., 264 Ill. App. 3d 336, 342 (1994); Shelton v. Country Mutual
       Insurance Co., 161 Ill. App. 3d 652, 660 (1987).
¶ 27        This well-accepted holding that the insurance policy’s language does not violate Illinois
       public policy is grounded upon the fact that a two-year policy limitation, such as the one at
       issue here, does not place the insured in a substantially different position than she would
       have been had the tortfeasor carried the required insurance coverage mandated by law
       because Illinois law itself has a two-year general statute of limitations for personal injury
       actions. See 735 ILCS 5/13-202 (West 2008). I find it extremely troubling that under the
       majority’s analysis, an Illinois citizen, who is involved in a vehicle accident in Wisconsin
       with an uninsured driver, is somehow afforded broader rights than an Illinois citizen, who
       is involved in a vehicle accident in Illinois with an uninsured driver. It is this outcome that
       I believe actually violates public policy.
¶ 28        In reaching this conclusion, I would be remiss if I did not address the fact that both the
       parties and the majority simply assume that Wisconsin law would be applicable if the
       tortfeasor were insured. This assumption is apparently based upon the fact that the
       automobile accident occurred in Wisconsin. This assumption, however, ignores the fact that
       the parties have sought resolution of their grievances in the courts of Illinois. Thus, without
       some conflict of laws analysis, it is inappropriate to simply assume the applicability of
       Wisconsin law. As discussed above, if Wisconsin law were not applicable, defendant would
       have no public policy argument because Illinois law itself has a two-year general statute of
       limitations for personal injury actions. While my above analysis would not require addressing
       this issue, I believe the majority’s logic is fatally flawed absent any type of conflict of laws
       analysis.
¶ 29        For the foregoing reasons, I would affirm the judgment of the trial court denying
       defendant’s request to compel arbitration.




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