Illinois Official Reports

Appellate Court

Nelson v. Country Mutual Insurance Co., 2014 IL App (1st) 131036

Appellate Court 

Caption

FOREST LEE NELSON, Plaintiff-Appellant, v. COUNTRY 

MUTUAL INSURANCE COMPANY, Defendant-Appellee.

District & No. First District, Fourth Division

Docket No. 1-13-1036

Filed October 9, 2014

Held

(Note: This syllabus 

constitutes no part of the 

opinion of the court but 

has been prepared by the 

Reporter of Decisions 

for the convenience of 

the reader.)

In an action arising from a vehicular collision where plaintiff settled 

with the insurer of the other party and then proceeded with an 

underinsured motorist claim under the policy issued by the insurer of 

the company van he was driving and obtained an arbitration award for 

$850,000, the trial court’s vacation of the arbitration award and entry 

of summary judgment to his employer’s insurer setting the matter for a 

trial de novo was affirmed by the appellate court, despite the absence 

of explicit language in the policy allowing a trial de novo as a remedy 

following the rejection of an arbitration award, since the Illinois 

Supreme Court has held that such a remedy is inherent and is proper 

following the rejection of an arbitration award in excess of the limits 

dictated by the policy and by statute.

Decision Under 

Review

Appeal from the Circuit Court of Cook County, No. 07-CH-10133; the 

Hon. Stuart Palmer, Judge, presiding.

Judgment Affirmed.
- 2 -

Counsel on

Appeal

Michael S. Cetina, of Walsh Knippen Pollock & Cetina, Chtrd., of 

Wheaton, for appellant.

Keith G. Carlson, of Carlson Law Offices, of Chicago, for appellee.

Panel PRESIDING JUSTICE FITZGERALD SMITH delivered the

judgment of the court, with opinion.

Justices Howse and Taylor concurred in the judgment and opinion.

OPINION

¶ 1 Following a bench trial, judgment was entered in favor of defendant-appellee Country 

Mutual Insurance Company (Country Mutual) and against plaintiff-appellant Forest Lee 

Nelson (Nelson).1 Nelson appeals, attacking not this final judgment but, rather, a prior order 

entered by the trial court vacating an arbitration award, granting summary judgment in favor of 

Country Mutual and allowing trial in the first place. He contends that the underinsured 

endorsement provision to the insurance policy at issue did not provide the option for a trial to 

take place and that the provision, which was the basis for the arbitration award’s rejection, was 

ambiguous. He asks that we reverse the judgment of the trial court, that we reinstate the 

arbitration award, and that we remand the cause for determination of the proper setoffs to the 

award. For the following reasons, we affirm.

¶ 2 BACKGROUND

¶ 3 On August 31, 1999, Nelson, while driving a company van in the employ of Turbo Tubs of 

Chicago, was in a car accident. The other driver involved was insured by Nationwide Mutual 

Insurance Company and, pursuant to the $100,000 underinsured motorist liability limit within 

that policy, Nelson collected $90,000.

¶ 4 Nelson’s employer, meanwhile, was insured by Country Mutual with an underinsured 

motorist liability limit of $1 million. Nelson proceeded with an underinsured motorist claim 

against Country Mutual, and Country Mutual filed an action for setoffs. Relevant to the instant 

 

1We note for the record that the party designations in this cause are somewhat confused, perhaps 

due to the fact that the cause began in the chancery division of the trial court and later was transferred to 

the law division for final disposition. As Nelson notes, he was originally named as the “defendant,” 

since Country Mutual filed the initial chancery action; however, once the cause was transferred, the 

caption was changed and Nelson was named as the “plaintiff” and Country Mutual was named as the 

“defendant.” Whatever the propriety of these technical designations, we have labeled them according to 

the notice of appeal filed in our court and, to minimize any further confusion, we choose to refer to them 

in our decision by their proper names rather than by any titular designations.
- 3 -

appeal, the arbitration clause of the policy between Nelson’s employer and Country Mutual 

stated:

“b. Unless both parties agree otherwise, arbitration will take place in the county in 

which the insured lives. Local rules of law as to arbitration procedure and evidence 

will apply. A decision agreed to by two of the arbitrators will be binding on the insured

and us for amounts not exceeding the limits for bodily injury required by Illinois 

Law.” (Emphases in original.)

After some seven years of discovery, Nelson and Country Mutual agreed to arbitration. In 

December 2010, following an arbitration hearing, two arbitrators, with one dissenting, 

returned an award in favor of Nelson in the amount of $850,000, and reserved any issue 

regarding setoffs and worker’s compensation. Nelson filed an application to approve the 

arbitration award, while Country Mutual filed an amended complaint rejecting the award and 

asking for a trial de novo. In response, Nelson filed a motion to dismiss Country Mutual’s 

amended complaint.

¶ 5 In August 2011, a hearing was held on Nelson’s motion to dismiss. Nelson argued that the 

insurance provision at issue did not allow for a trial de novo as Country Mutual requested 

because it did not explicitly state that this was a remedy upon the rejection of an arbitration 

award; he further argued that the insurance provision at issue was entirely ambiguous with 

respect to the limit of award necessary for rejection. The trial court disagreed. First, it relied on 

Zappia v. St. Paul Fire & Marine Insurance Co., 364 Ill. App. 3d 883 (2006), to find that trial 

de novo was the proper remedy here despite the provision’s language. Second, the court noted 

that while there could be a minor ambiguity regarding the pertinent statutory amount 

contemplated by the phrase “the limits for bodily injury required by Illinois Law” as used in 

the provision, because the amount was only either $20,000 or $50,000 and because both of 

these amounts were clearly less than the $850,000 Nelson was awarded, Country Mutual 

undeniably had the right to reject the arbitration award. Thus, the trial court denied Nelson’s 

motion to dismiss. Country Mutual, upon the trial court’s recommendation, then filed a motion 

for summary judgment, asking that the arbitration award be vacated and that a trial de novo be 

ordered. The trial court granted Country Mutual’s motion for summary judgment and 

transferred the cause to the law division.

¶ 6 At the conclusion of trial, a verdict was entered in favor of Country Mutual and against 

Nelson. Nelson filed a motion for a new trial, arguing that the arbitration award should never 

have been vacated and that the finding in favor of Country Mutual was against the manifest 

weight of the evidence. The trial court denied Nelson’s motion.

¶ 7 ANALYSIS

¶ 8 As noted earlier, Nelson does not challenge the ultimate judgment in this cause which 

followed the trial. Rather, he challenges only the decision granting summary judgment in favor 

of Country Mutual, vacating the arbitration award and allowing trial in the first place.

¶ 9 Nelson’s first contention on appeal is that the trial court erred in vacating the award and 

setting the matter for trial because the underinsured endorsement provision of the insurance 

policy at issue does not explicitly provide for a trial de novo remedy upon the rejection of an 

arbitration award. Citing several cases where insurance provisions included such language, he 

asserts that there is more than one interpretation of the outcome of a cause following a rejection 

and that, if Country Mutual wanted trial de novo as a remedy, it was required to put such 
- 4 -

specific language in the policy. He further claims that, because it chose not to, the policy is 

ambiguous and Country Mutual forfeited trial de novo as a remedy following rejection of the 

award. We disagree.

¶ 10 The instant situation, where a car accident results in an arbitration award which is rejected 

by an unsatisfied party who then demands trial pursuant to the insurance policy at issue, is a 

classic one. Despite some debate, our courts have come to affirm that such trial de novo

provisions are valid, enforceable and not against public policy. And, this has been found to be 

true even when the insurance policy at issue did not contain the specific words “trial de novo” 

as a remedy for rejection.

¶ 11 In considering this evolution, we turn first to Reed v. Farmers Insurance Group, 188 Ill. 2d 

168 (1999). There, the insured was injured in a car accident by an uninsured motorist who fled 

the scene. As required by statute, the insured’s policy with her insurer contained a clause 

calling for arbitration if they could not agree on the amount of coverage to which she was 

entitled under the policy’s uninsured motorist coverage. See Reed, 188 Ill. 2d at 170-71 (citing 

215 ILCS 5/143a (West 1996)). The policy further provided, also as required by statute, that 

the arbitration award would be binding on the parties if it fell below a specified amount, 

namely, the minimum required limits for bodily injury as set forth in the Illinois Financial 

Responsibility Law which, at that time, was $20,000 per person. See Reed, 188 Ill. 2d at 170 

(citing 625 ILCS 5/7-100 et seq. (West 1996)). Thus, if the arbitration award was more than 

that amount, then either party could reject the award. See Reed, 188 Ill. 2d at 170. With this 

policy in place, and before the matter was even submitted to arbitration, the insured filed an 

action seeking a declaratory judgment that the policy’s arbitration provision was 

unconstitutional, challenging both the clause permitting either party to reject awards greater 

than $20,000 and the requirement that the matter be submitted to arbitration at all. See Reed, 

188 Ill. 2d at 171. The insurer moved to dismiss and, while the trial court granted its motion, 

the appellate court agreed with the insured and reversed. See Reed, 188 Ill. 2d at 171.

¶ 12 The cause then proceeded to our state supreme court, which held that the trial de novo 

provision of the uninsured motorist provision in the insurance policy at issue did not, contrary 

to the insured’s insistence, violate public policy. See Reed, 188 Ill. 2d at 174. The Reed court 

explained that because such provisions were explicitly required by statute to be included in all 

uninsured motorist coverage policies, it was only logical that they could not, at the same time, 

be violative of public policy. See Reed, 188 Ill. 2d at 174 (“the legislature has determined that 

uninsured-motorist coverage must contain this provision, and [our statute] accordingly 

requires its presence in automobile policies”; thus, the insured’s “appeal to public policy as 

grounds for invalidating the arbitration provision is unavailing here, for the arbitration 

provision that appears in [her] insurance contract is already an expression of public policy and 

represents the legislature’s consideration of the question”).

¶ 13 While Reed focused primarily on the aspect of trial de novo provisions and their validity 

pursuant to public policy concerns, it also spoke critically to the situation present in the instant 

cause. That is, like the instant cause, the policy at issue in Reed did not contain any specific 

language explicitly calling for a trial upon the rejection of an arbitration award. Instead, and 

again like the instant cause, the policy simply tracked the language of the statute, which, as 

noted, called for arbitration if the parties could not agree on a coverage amount and prescribed 

that the arbitration would be binding only if the award reached fell below a specified amount, 

i.e., the minimum required limits for bodily injury as set forth in the Illinois Financial 
- 5 -

Responsibility Law, which, at that time, was $20,000. See Reed, 188 Ill. 2d at 170. In 

reviewing these policy provisions, and the mandates of section 143a of the Illinois Insurance 

Code, which statutorily required them in all uninsured motorist coverage policies, the Reed

court explained:

“The arbitrators’ determination is binding only with respect to awards below 

$20,000, however, for the statute permits either party to reject an award that exceeds 

that amount and to resolve the claim instead through the judicial process.” Reed, 188 

Ill. 2d at 172.

Thus, in this situation where there was no policy provision with explicit language calling for 

trial de novo as a remedy for the rejection of an arbitration award, our state supreme court made 

clear that such a remedy was, nonetheless, inherent in the dictates of the policy and was the 

proper method to resolve the rejection of arbitration awards exceeding the limits dictated by 

the policy and by statute. See Reed, 188 Ill. 2d at 172.

¶ 14 Following Reed was Zappia v. St. Paul Fire & Marine Insurance Co., 364 Ill. App. 3d 883 

(2006), which left this area of law with two significant points. In Zappia, identical to the case at 

bar, the insured was injured in a car accident, settled with the negligent party’s insurance 

carrier, and then claimed benefits under the underinsured motorist provision of a policy he held 

with his own insurer. The cause proceeded to arbitration, which resulted in an award to the 

insured of $31,415.27 (after setoffs). See Zappia, 364 Ill. App. 3d at 884. The insured, unhappy 

with this award, filed a complaint for trial de novo, citing the following provision of his 

underinsured motorist policy:

“ ‘A decision agreed to by two of the arbitrators will be binding for amounts of 

damages that are up to the minimum financial responsibility limits as prescribed by 

Illinois law.’ ” Zappia, 364 Ill. App. 3d at 884.

Just as in Reed, the statutory limit at that time was $20,000. See Zappia, 364 Ill. App. 3d at 884 

(citing 625 ILCS 5/7-203 (West 2002)). Thus, the insured argued, he had the right to reject the 

arbitration award since it was more than the statutory limit and, once he did so, he was entitled 

to a trial de novo. See Zappia, 364 Ill. App. 3d at 884.

¶ 15 The Zappia court’s main focus, as in Reed, was whether the trial de novo provision violated 

public policy. See Zappia, 364 Ill. App. 3d at 884-85. This was because, since Reed, attempts 

were being made to distinguish between uninsured motorist coverage and underinsured 

motorist coverage and the validity of trial de novo provisions, with some courts finding such 

provisions to be valid as in line with public policy for uninsured motorist coverage because 

they were statutorily required (as discussed in Reed), but invalid as against public policy for 

underinsured motorist coverage because there was no similar statute requiring their use in that 

context. See Zappia, 364 Ill. App. 3d at 884-85 (discussing several cases in this respect). From 

this debate came the first significant point of Zappia. After reviewing all the cases at odds with 

each other, the Zappia court found that, just as trial de novo provisions included in arbitration 

clauses governing uninsured motorist coverage do not violate public policy, trial de novo 

provisions included in arbitration clauses governing underinsured motorist coverage similarly 

do not violate public policy. See Zappia, 364 Ill. App. 3d at 887-88. Disagreeing with those 

cases holding otherwise, the Zappia court noted that it did not matter that the former may be 

statutorily required while the latter was a contractual element of the insurance policy. See 

Zappia, 364 Ill. App. 3d at 887. Instead, the Zappia court concluded that trial de novo

provisions in underinsured motorist coverage were also valid and enforceable, and any 
- 6 -

distinction between those and similar trial de novo provisions in uninsured motorist coverage 

would be “anomalous.” (Internal quotation marks omitted.) Zappia, 364 Ill. App. 3d at 887-88; 

see also Phoenix Insurance Co. v. Rosen, 242 Ill. 2d 48, 66 (2011) (reaffirming Zappia and 

finally settling any dispute between uninsured and underinsured trial de novo provisions, 

holding that neither violates public policy because uninsured motorist coverage and 

underinsured motorist coverage have the same legislative consideration behind them, which is 

to “ensure that an injured policyholder will be compensated for her damages up to the limits of 

coverage she has paid for, regardless of the coverage carried by the at-fault driver”).

¶ 16 The second point of importance gleaned from Zappia is, perhaps, even more critical to the 

case at bar. The facts of that cause make clear that, contrary to Nelson’s contention here, 

explicit language calling for a trial de novo as the remedy upon rejection of an arbitration 

award pursuant to underinsured motorist coverage is not necessary for trial to be the remedy. 

Again, in Zappia, the insured was unhappy with the result of the arbitration, which was above 

the binding limit as prescribed in the policy. Citing that provision, which, identical to the one 

in the instant cause, stated only that arbitration would be binding for an amount “ ‘up to the 

minimum financial responsibility limits’ ” of Illinois law (i.e., at that time, $20,000), the 

insured demanded trial de novo. Zappia, 364 Ill. App. 3d at 884. The Zappia court concluded 

that, as the arbitration award was over the prescribed limit, this was, undeniably, his right. See 

Zappia, 364 Ill. App. 3d at 888. Significantly, it was of no relevance that the insurance policy 

did not specifically state that trial de novo was the remedy for the rejection of an arbitration 

award. Instead, it was clearly inherent that, once the arbitration award was properly rejected, 

the cause would proceed to the only remedy available to settle the dispute, namely, trial.

¶ 17 Accordingly, in both Reed, which involved uninsured motorist coverage, and Zappia, 

which involved underinsured motorist coverage, the arbitration clauses of the insurance 

policies at issue did not contain explicit language ordering a trial de novo upon the rejection of 

an arbitration award. However, in both cases, our courts consistently referred to the arbitration 

clauses, which allowed for the rejection of any arbitration award in an amount over the 

minimum financial responsibility limits as prescribed by Illinois law because they are 

nonbinding, as trial de novo provisions. And, most significantly, in both cases, our courts 

concluded that, despite the absence of any formal language ordering it, trial de novo was the 

proper remedy to be had following the proper rejection of an arbitration award.

¶ 18 Applying Reed and, more particularly, Zappia to the instant cause, we find that Nelson’s 

argument that specific language ordering trial de novo as the remedy following rejection of an 

arbitration award was required for Country Mutual to proceed to trial here lacks merit. Again, 

the arbitration clause at issue in this cause is virtually identical to those in Reed and Zappia. It 

stated that “a decision agreed to by two of the arbitrators will be binding on the insured and us

for amounts not exceeding the limits for bodily injury required by Illinois Law.” (Emphases 

in original.) The arbitrators in the instant cause awarded Nelson $850,000–clearly (as we 

discuss below) in excess of the limits for bodily injury under Illinois law. Thus, pursuant to the 

policy, Country Mutual had every right to reject the arbitration award. And, pursuant to Reed 

and Zappia, it had every right to then proceed to the only remedy available pursuant to that 

rejection in order to resolve the matter between the parties: trial de novo. As those cases found, 

it is irrelevant that there is no specific language in the policy ordering a trial de novo as a 

remedy upon rejection. Instead, this remedy is inherent in the arbitration provision allowing for 
- 7 -

the proper rejection of an arbitration award that is nonbinding because it exceeds the amount of 

damages that are up to the minimum limits prescribed by Illinois law.

¶ 19 Nelson makes a second, and final, contention on appeal. Again highlighting the same trial 

de novo provision at issue in his insurance policy with Country Mutual, he briefly claims that 

the words “not exceeding the limits for bodily injury required by Illinois Law” are 

ambiguous. He claims that, because Country Mutual did not use the words “minimum limits of 

the Illinois Safety Responsibility Law,” it is unclear what the limits are to justify the rejection 

of an arbitration award under the policy and that the phrase used could either mean the limits of 

the Illinois Safety and Family Financial Responsibility Law or the limits of the policy. Again, 

we disagree.

¶ 20 First, it is clear that Nelson’s assertion that the phrase used in the policy could mean the 

limits of the policy is not logical. If “not exceeding the limits for bodily injury required by 

Illinois Law” meant not exceeding the policy limits, then this provision would never apply. 

This is because, as Country Mutual points out, there could never be an award greater than the 

policy limits. Therefore, it would render the provision completely meaningless. See Atwood v. 

St. Paul Fire & Marine Insurance Co., 363 Ill. App. 3d 861, 863 (2006) (policy language is not 

ambiguous simply because parties disagree on meaning; only reasonable interpretations may 

be considered and all provisions should be read together and with intended effect).

¶ 21 Moreover, if the phrase used cannot mean the limits of the policy, the only other logical, 

reasonable and unstrained meaning is that the phrase means the limits of the Illinois Safety and 

Family Financial Responsibility Law. Interestingly, in Zappia, the phrase used there was 

almost identical to the one in the instant case. It stated that a decision agreed to by the 

arbitrators would be binding for amounts of damages that are “ ‘up to the minimum financial 

responsibility limits as prescribed by Illinois law.’ ” Zappia, 364 Ill. App. 3d at 884. No 

ambiguity was found there, as the phrase was clearly, and without question, referencing “the 

$20,000 minimum required limits for bodily injury as set forth in the Illinois Safety and Family 

Financial Responsibility Law (625 ILCS 5/7-203 (West 2002)).” Zappia, 364 Ill. App. 3d at 

884. We find the same to be true here.

¶ 22 In any event, Nelson was awarded $850,000 by the arbitrators. This was a nonbinding 

award under the policy, since it clearly exceeded “the limits for bodily injury required by 

Illinois Law.”2 Country Mutual, therefore, had the right to reject it and, accordingly, to 

proceed with the only viable remedy here that would resolve the dispute between the parties 

pursuant to the insurance policy, namely, a trial de novo. Accordingly, we find that the trial 

court’s vacation of the arbitration award and its setting of the instant matter for trial de novo

were wholly proper in light of the circumstances presented in the instant cause.

¶ 23 CONCLUSION

¶ 24 For all the foregoing reasons, we affirm the judgment of the trial court.

¶ 25 Affirmed.

 

2As the trial court here found, the only possible ambiguity in the use of the phrase at issue is not 

whether it refers to the limits of the law cited or the limits of the policy but, rather, the minor one of the 

applicable amount of the limits for bodily injury under the law cited, since that law has been amended 

various times.