Court Opinion

ID: 9819204
Source: CourtListenerOpinion
Date Created: 2023-09-01 06:20:10.014388+00
Date Added: 2024-06-11T07:38:25.159244
License: Public Domain

JUSTICE HOMER, specially concurring in part and dissenting in part: I would affirm the trial court’s holding in its entirety. I disagree with the majority that both insurers are entitled to a setoff for the workers’ compensation award and would allow only the primary insurer the setoff. However, I agree that the setoff cannot include payment by the tortfeasor that was applied to a workers’ compensation award pursuant to statute. I also agree that a setoff for social security disability benefits cannot be allowed. As the majority notes, the primary purpose in construing an insurance policy is to give effect to the intention of the parties as expressed in the agreement. De Los Reyes v. Travelers Insurance Cos., 135 Ill. 2d 353, 358, 553 N.E.2d 301, 304 (1990). Where the language of a policy is clear and unambiguous, the policy must be enforced as the plain meaning dictates. United States Fire Insurance Co. v. Schnackenberg, 88 Ill. 2d 1, 4-5, 429 N.E.2d 1203, 1205 (1981). However, the language of a policy must be read in reference to the facts of the case, the policy holder’s reasonable expectations, the public policy behind the applicable statutes, and the coverage intended by the policy itself. See Hoglund v. State Farm Mutual Automobile Insurance Co., 148 Ill. 2d 272, 279, 592 N.E.2d 1031, 1034 (1992). When an insurance policy is issued, the applicable statutory provisions in effect at the time are treated as part of the policy. Pick v. Associated Indemnity Corp., 191 Ill. App. 3d 121, 125, 547 N.E.2d 555, 558 (1989). In this case, the public policy underlying the underinsured motorist statute is evidenced by the legislative intent in enacting that statute. Sulser v. Country Mutual Insurance Co., 147 Ill. 2d 548, 591 N.E.2d 427 (1992). The intent of the legislature in enacting the underinsured motorist statute was to place the injured policy holder in the same financial position he would have occupied had he been injured by a motorist who carried liability insurance in the same amount as the policy holder. Sulser, 147 Ill. 2d 548, 591 N.E.2d 427. To implement this intent, a plaintiff must be placed in the same financial position he would have been in had the tortfeasor carried liability insurance with limits equal to the plaintiff’s underinsured motorist coverage. In the instant case, the plaintiff had two policies, a primary policy with coverage of $300,000 and an excess policy with coverage of $500,000. If the tortfeasor had $800,000 in coverage, then the amount paid by the tortfeasor’s insurance carrier could be reduced by the workers’ compensation award only once. If both CMCI and Northland are allowed to take the setoff, the $800,000 coverage would be reduced twice. Therefore, the literal interpretation of the policies should not be enforced since that would contravene the intent of the underinsured motorist statute by placing the plaintiff in a worse financial position. The trial court used this analysis and correctly concluded the defendant insurers should not both be allowed to apply the setoff. Furthermore, an insurance policy that is ambiguous or susceptible of at least two reasonable interpretations should be construed in favor of the insured. Hall v. Burger, 277 Ill. App. 3d 757, 761, 660 N.E.2d 1328, 1331 (1996). A "latent ambiguity” exists when the language employed is clear and intelligible and suggests but a single meaning, but some extrinsic fact or extraneous evidence creates a necessity for interpretation or choice from two or more possible meanings. Hoglund, 148 Ill. 2d at 279, 592 N.E.2d at 1034-35, citing Black’s Law Dictionary 102 (3d ed. 1933). When the setoff provisions of the defendants’ policies are read together with the present fact situation, it is apparent that the following choices of possible meanings exist: (1) both insurers are entitled to claim a setoff for the entire amount recovered; (2) both insurers are entitled to a pro-rata setoff; (3) CMCI is entitled to the setoff because of its position as the primary insurer; or (4) Northland is entitled to the setoff because of its position as excess insurer. Consequently, a latent ambiguity exists. Therefore, the policies should be construed to allow but one setoff. If we accept that only one setoff of the workers’ compensation award may be taken for a plaintiff to be fully compensated for his injury, we must determine which insurer is entitled to take the set-off. The trial court followed the rationale of Cobb v. Allstate Insurance Co., 663 A.2d 38 (Me. 1995), a Maine case similar to the case at bar. In Cobb, the Supreme Judicial Court of Maine held the primary carrier was entitled to 100% of the setoff, and the excess carrier was not entitled to any portion of the setoff. The Maine court reasoned that the excess insurer has no liability until the primary coverage is exhausted, and the primary insurer should receive the setoff because of the greater risk it faces. The Maine decision appears to be in accord with the majority of jurisdictions that have considered the issue. I would adopt the Cobb rationale. Northland and the majority cite Chester v. State Farm Mutual Automobile Insurance Co., 227 Ill. App. 3d 320, 591 N.E.2d 488 (1992), as support for the proposition that both the primary and the excess carriers are entitled to take the setoff. The majority notes Chester resulted in a dual setoff. However, the insurance company allowed the setoff by the appellate court in Chester was the primary carrier, and the excess carrier allowed the setoff by the trial court was not a party to the appeal. Consequently, the issue of whether the excess carrier was also entitled to the setoff was not addressed by the appellate court in Chester. Similarly, the majority’s reliance upon Obenland is misplaced. Obenland v. Economy Fire & Casualty Co., 234 Ill. App. 3d 99, 599 N.E.2d 999 (1992). Obenland involved insurance provisions precluding stacking of coverage and "other insurance” clauses that are not involved in this case. For the foregoing reasons, I respectfully dissent with that part of the majority’s opinion allowing both defendants a setoff for the workers’ compensation award. I would allow only a single setoff to the primary insurer CMCI.