Court Opinion

ID: 9384011
Source: CourtListenerOpinion
Date Created: 2023-03-31 16:04:26.187862+00
Date Added: 2024-06-11T17:17:49.544853
License: Public Domain

2023 IL App (1st) 210567-U

                                            No. 1-21-0567

                                      Order filed March 31, 2023

                                                                                 FIFTH DIVISION

 NOTICE: This order was filed under Supreme Court Rule 23 and is not precedent except in the
 limited circumstances allowed under Rule 23(e)(1).
 ______________________________________________________________________________

                                     IN THE
                         APPELLATE COURT OF ILLINOIS
                                 FIRST DISTRICT
 ______________________________________________________________________________

 NATALIE D’AGOSTINO,                                            )   Appeal from the
                                                                )   Circuit Court of
           Plaintiff-Appellant,                                 )   Cook County.
                                                                )
     v.                                                         )   No. 19 CH 06907
                                                                )
 ILLINOIS FARMERS INSURANCE COMPANY,                            )   Honorable
                                                                )   Allen P. Walker,
           Defendant-Appellee.                                  )   Judge Presiding.

           JUSTICE LYLE delivered the judgment of the court.
           Justices Mitchell and Navarro concurred in the judgment.

                                              ORDER

¶1        Held: We affirm the judgment of the circuit court where the automobile insurance policy
                at issue is not ambiguous, the limitations period in the policy was not tolled, and
                the defendant insurance company did not waive the limitations period.

¶2        This appeal arises following the circuit court’s grant of defendant’s, Illinois Farmers

Insurance Company (Farmers), motion to dismiss the complaint of plaintiff, Natalie D’Agostino,

and the court’s subsequent denial of Ms. D’Agostino’s motion for reconsideration. Ms.

D’Agostino’s complaint was based on an underinsured motorist claim that she filed with Farmers
No. 1-21-0567

following her involvement in a motor vehicle accident. More than two years after she filed the

claim with Farmers, Farmers denied the claim and determined that Ms. D’Agostino had failed to

demand arbitration within the time limitation provided in the automobile insurance policy.

¶3     In her complaint, Ms. D’Agostino sought an order from the circuit court forcing Farmers

to arbitrate her claim. She also sought attorney fees pursuant to section 155 of the Illinois Insurance

Code (Insurance Code) (215 ILCS 5/155 (West 2004)) based on Farmers’ “unreasonable and

vexatious” conduct in handling the claim. Farmers filed a motion to dismiss the complaint pursuant

to section 2-619 of the Illinois Code of Civil Procedure (Code) (735 ILCS 5/2-619 (West 2018))

arguing that Ms. D’Agostino failed to make a timely demand for arbitration within the time

allowed by the policy. The court granted the motion and subsequently denied Ms. D’Agostino’s

motion for reconsideration.

¶4     On appeal, Ms. D’Agostino maintains that the circuit court erred in granting Farmers’

motion to dismiss and in denying her motion for reconsideration. She asserts that the limitations

provision in the policy is ambiguous, that the limitations period was tolled, and that Farmers had

waived its reliance on the limitations period by continuing to handle her claim after it claimed that

the limitations period had lapsed. She also maintains that the court erred in denying her claim for

fees and costs pursuant to section 155 of the Insurance Code. For the reasons that follow, we affirm

the judgment of the circuit court.

¶5                                       I. BACKGROUND

¶6     In her complaint, Ms. D’Agostino alleged that on March 11, 2015, she was involved in a

motor vehicle collision that caused her to suffer significant personal injury. She was not at fault in

the accident, and filed a claim against the responsible driver’s automobile insurance policy, which

was issued by Founders Insurance Company (Founders). Ms. D’Agostino and her husband, Donald

                                                 -2-
No. 1-21-0567

D’Agostino, were insured by Farmers. In January 2017, Ms. D’Agostino entered into a settlement

agreement with Founders for $20,000, the policy’s limit.1 Ms. D’Agostino filed an underinsured

motorist claim with Farmers under her policy.

¶7     Ms. D’Agostino alleged that she complied with all policy requirements, but Farmers “failed

and refused to pay the benefit” due under the policy. Ms. D’Agostino asserted that on May 6, 2019,

she demanded arbitration of her underinsured motorist claim, but Farmers refused to proceed to

arbitration. Ms. D’Agostino sought an order from the circuit court declaring (1) that their

automobile policy was “in full force and effect;” (2) that she complied with all of the conditions

under the policy; and (3) that Farmers must proceed to arbitration on her underinsured motorist

claim. Ms. D’Agostino also sought costs, fees, and penalties pursuant to section 155 of the

Insurance Code (215 ILCS 5/155 (West 2004)) based on Farmers’ “unreasonable and vexatious

conduct.”

¶8     Farmers filed a motion to dismiss the complaint pursuant to section 2-619 of the Code (735

ILCS 5/2-619 (West 2018)). In its motion, Farmers contended that pursuant to the limitations

language in the policy, Ms. D’Agostino failed to make a demand for arbitration within the time

allowed. Farmers noted that the policy contained a limitations provision that provided that:

                  “An insured person must agree to a settlement or begin a proceeding in arbitration

       by making written demand to us for such proceeding within two years from the date the

       limits of liability under any applicable bodily injury[,] liability bonds or policies have been

       exhausted by payment or judgment or settlement. Failure to comply with the time limit will

       relieve us of any obligation to the insured person under Coverage C-1.” 2

       1
           Mr. D’Agostino also entered into a settlement agreement with Founders for $20,000.
       2
           Coverage “C-1” concerns underinsured motorist claims.

                                                   -3-
No. 1-21-0567

Farmers alleged that it received notice that Ms. D’Agostino settled her claim with Founders and

executed a settlement with Founders on December 3, 2016. That settlement was tendered to

Founders on January 12, 2017. It was Farmer’s contention that under the limitations provision, this

constituted the exhaustion of the limits of liability of the Founders policy and triggered the two-

year limitations period for Ms. D’Agostino to begin the arbitration process with Farmers. Farmers

asserted that the deadline for Ms. D’Agostino’s arbitration demand was therefore January 12,

2019. Farmers contended that Ms. D’Agostino failed to demand arbitration within the limitations

period and was therefore barred from pursuing an underinsured motorist claim under the policy.

¶9     Farmers also asserted that the court should dismiss Ms. D’Agostino’s claim for fees and

costs under section 155 of the Insurance Code because it had a bona fide defense to the claim

which demonstrated that its conduct could not be considered unreasonable and vexatious. Farmers

maintained that granting its motion to dismiss also required the dismissal of the section 155 claim.

¶ 10   Ms. D’Agostino responded that although the signed settlement releases were forwarded to

Founders in January 2017, corrected payment checks were not issued until July 19, 2018. Ms.

D’Agostino stated that she submitted proof of loss to Farmers under the policy on August 15, 2015.

¶ 11   Ms. D’Agostino asserted that the limitations provision in the policy was ambiguous

because it was susceptible to more than one interpretation. Ms. D’Agostino pointed out that the

policy provided for three events that could trigger the running of the two-year limitations period

for filing arbitration. These three events were when the limits of liability had been exhausted by

payment, settlement, or judgment. She noted that the policy did not prioritize these events and

there was “no requirement that the insurer or policyholder select one trigger over another at the

time the claim is made or during the pendency of the claim.”

                                               -4-
No. 1-21-0567

¶ 12   Ms. D’Agostino maintained that Farmers erred in choosing to treat the initial issuance of

settlement checks from Founders as the triggering date for the running of the limitations period

because those checks were never cashed. She represented that the initial checks from Founders

listed several lienholders and were returned to Founders, and therefore the issuance and rejection

of the checks could not be considered “payment” sufficient to trigger the two-year limitations

period. Ms. D’Agostino argued that a reasonable date to use as the triggering event would be the

date that the final, corrected checks were issued from Founders on July 19, 2018. Ms. D’Agostino

maintained that this would therefore make her arbitration demand on May 6, 2019, timely.

¶ 13   Ms. D’Agostino also contended that Farmers had waived the limitations provision by

conducting itself in a manner which led Ms. D’Agostino to believe that her period to demand

arbitration had not lapsed. She pointed out that Farmers’ counsel sent a letter to her counsel on

January 31, 2019, after Farmers alleges the limitations period had lapsed. This letter inquired as to

whether Donald would be making a claim under the policy, but did not assert that the limitations

period had expired. Ms. D’Agostino also noted that there had been a series of letters between her

counsel and Farmers’ counsel during the two years that her claim was pending, but none of these

letters referenced the arbitration limitations period. She asserted that the lack of any reference to

the time limitations for filing an arbitration demand in the January 2019 letter could reasonably

lead her to believe that Farmers was not using the January 2017 settlement date as the triggering

event for the limitations period.

¶ 14   Ms. D’Agostino next argued that the limitations provision was not “applicable” under

Illinois insurance statutes. She maintained that she had complied with all of the policy

requirements and conditions, and nevertheless Farmers denied her claim almost four years after

she submitted her proof of loss. Ms. D’Agostino contended that under these circumstances, section

                                                -5-
No. 1-21-0567

143.1 of the Insurance Code (215 ILCS 5/143.1 (West 2018)) provided for the tolling of the

limitations period. Ms. D’Agostino argued that the running of the two-year limitations period was

therefore tolled beginning on August 15, 2015, and began running again when the claim was

denied on February 21, 2019. Ms. D’Agostino maintained that her arbitration demand, made less

than two years later, was therefore timely.

¶ 15   Finally, Ms. D’Agostino contended that the limitations provision did not apply to her claim

for unreasonable and vexatious conduct under section 155. Ms. D’Agostino maintained that “[d]ue

to its remedial nature, two year limitations periods for actions for statutory penalties do not apply

to actions brought under section 155.”

¶ 16   The circuit court granted Farmers’ motion to dismiss on December 23, 2020. The court’s

order reflects that it granted Farmers’ motion “[f]or the reasons stated at the hearing.” There is no

report of proceedings from said hearing included in the record filed on appeal.

¶ 17   Ms. D’Agostino filed a motion for reconsideration of the court’s ruling contending that the

court failed to adequately consider the letter from Farmers to Ms. D’Agostino’s counsel on January

31, 2019. Ms. D’Agostino asserted that this letter showed that Farmers was continuing to handle

the claim, and did not reference any intention to consider the claim closed for failure to demand

arbitration by January 16, 2019, 3 or earlier. Ms. D’Agostino further contended that the court erred

in finding that the tolling provision in section 143.1 of the Insurance Code was applicable only to

lawsuits. Ms. D’Agostino noted that some decisions of the appellate court had found that the tolling

principles in that section applied to the time to demand arbitration as well. Ms. D’Agostino

maintained that the trial court therefore erred in finding that the limitations period to demand

       3
           Two years from the date Founders issued the initial settlement checks.

                                                    -6-
No. 1-21-0567

arbitration was not tolled beginning on August 15, 2015, when Ms. D’Agostino submitted her

proof of loss to Farmers.

¶ 18   The court denied Ms. D’Agostino’s motion for reconsideration in a written order. In its

order, the court addressed the letter of January 31, 2019, which was attached to the motion for

reconsideration. The court noted that the letter had been previously mentioned in both the

complaint and Ms. D’Agostino’s response to the motion to dismiss, but it was not provided to the

court until it was attached as an exhibit to the motion for reconsideration. The court found that the

letter was neither an express nor implied waiver of the limitations provision because it did not

suggest that Farmers considered Ms. D’Agostino’s claim as “pending.” The letter only inquired

into whether Donald would also be filing an underinsured motorist claim. The court concluded

that it therefore properly rejected Ms. D’Agostino’s waiver claim.

¶ 19   The court found, however, that section 143.1 was applicable to Ms. D’Agostino’s demand

for arbitration. The trial court noted that the appellate court had “broadly” applied section 143.1 to

policy language that both limited an insured’s time period to bring a lawsuit and the time period

to bring an arbitration demand. Nonetheless, the court found that Ms. D’Agostino’s arbitration

demand was untimely despite the applicability of the tolling statute. The court noted that the statute

tolled the limitations period from the date proof of loss was filed until the date the claim was

denied. The court observed that Ms. D’Agostino claimed that she provided her proof of loss to

Farmers on August 15, 2015, but Ms. D’Agostino had failed to present any evidence of what

material she produced on that date. The court noted that Farmers sent several letters to Ms.

D’Agostino between November 2016 and November 2018 requesting medical records and other

information to evaluate Ms. D’Agostino’s claim, which suggested that Ms. D’Agostino had not

yet provided adequate proof of loss. Ms. D’Agostino’s counsel sent medical records and bills to

                                                -7-
No. 1-21-0567

Farmers on November 27, 2018, which the court determined was the date that Ms. D’Agostino

submitted adequate proof of loss to begin the tolling period.

¶ 20   The court determined that tolling ended on February 21, 2019, when Farmers denied Ms.

D’Agostino’s claim. The court therefore found that Ms. D’Agostino’s claim was tolled for a total

of 86 days from November 27, 2018, through February 21, 2019. Relying on the language in the

policy, the court noted that Ms. D’Agostino had two years from when the settlement releases were

tendered to Founders on January 12, 2017, to demand arbitration. That two-year period was further

extended 86 days by the tolling provision of section 143.1. The court concluded that Ms.

D’Agostino therefore had until April 8, 2019, to demand arbitration, but Ms. D’Agostino did not

make her arbitration demand until May 6, 2019. The court found that Ms. D’Agostino’s arbitration

demand was therefore time-barred despite the applicability of the tolling provision. As a result, the

court found that it did not err in granting Farmers’ motion to dismiss and denied Ms. D’Agostino’s

motion for reconsideration. Ms. D’Agostino filed a timely notice of appeal from the circuit court’s

ruling on May 18, 2021. We find that we have jurisdiction to consider this matter because Ms.

D’Agostino filed a notice of appeal within 30 days after the circuit court’s order disposing of her

motion for reconsideration. See Ill. S. Ct. R. 303 (eff. Jul. 1, 2017).

¶ 21                                       II. ANALYSIS

¶ 22   On appeal, Ms. D’Agostino contends that the trial court erred in dismissing her complaint

where the limitations provision in the policy was ambiguous. Ms. D’Agostino also asserts that

Farmers waived its reliance on its “selected” triggering event because it continued to correspond

with her counsel and handle her underinsured motorist claim after the claimed expiration date of

the limitations period. She maintains that the letter from January 31, 2019, demonstrated Farmers’

implied waiver of the limitations period. Ms. D’Agostino further maintains that the limitations

                                                 -8-
No. 1-21-0567

period was tolled because she provided proof of loss well before the triggering date claimed by

Farmers and that the circuit court erred in dismissing her claim for fees and costs.

¶ 23                                  A. Standard of Review

¶ 24   Here, the court granted Farmers’ motion to dismiss Ms. D’Agostino’s complaint pursuant

to section 2-619(a)(9) of the Code. 735 ILCS 5/2-619(a)(9) (West 2018). A motion to dismiss

based on section 2-619 admits the legal sufficiency of the complaint, but asserts that affirmative

matters based on the face of the complaint or based on external factors defeat the plaintiff’s claim.

Neppl v. Murphy, 316 Ill. App. 3d 581, 584 (2000). “When ruling on such motions, a court must

accept as true all well-pleaded facts, as well as any reasonable inferences that may arise from them

[citation], but a court cannot accept as true mere conclusions unsupported by specific facts

[citation].” Patrick Engineering, Inc. v. City of Naperville, 2012 IL 113148, ¶ 31. We review the

court’s ruling on a motion to dismiss the complaint pursuant to section 2-619 de novo. Krilich v.

American National Bank & Trust Co. of Chicago, 334 Ill. App. 3d 563, 569 (2002).

¶ 25                                       B. Ambiguity

¶ 26   Ms. D’Agostino first contends that the circuit court erred in granting Farmers’ motion to

dismiss because the limitations provision in the policy is ambiguous. Ms. D’Agostino points out

that the limitations provision provides for three events that can trigger the running of the two-year

limitations for demanding arbitration. She points out that the policy does not prioritize or define

these terms, creating ambiguity.

¶ 27   “An insurance policy is a contract, and the general rules governing the interpretation of

other types of contracts also govern the interpretation of insurance policies.” Hobbs v. Hartford

Insurance Co. of the Midwest, 214 Ill. 2d 11, 17 (2005). When construing insurance policies, the

policy should be enforced as written unless the policy provision in question is ambiguous or

                                                -9-
No. 1-21-0567

contravenes public policy. Pahn v. State Farm Mutual Automobile Insurance Co., 291 Ill. App. 3d

343, 345 (1997). An ambiguity exists where the policy language is subject to more than one

reasonable interpretation. Hobbs, 214 Ill. 2d at 17. “Although policy terms that limit an insurer’s

liability will be liberally construed in favor of coverage, this rule of construction only comes into

play when the policy is ambiguous.” Id.

¶ 28    Under the terms of the limitations provision in the policy, the insured person has two years

from the date the limits of liability under the policy of the underinsured motorist have been

exhausted by payment, judgment, or settlement. Farmers asserted, and the trial court agreed, 4 that

the limitations period began to run when Ms. D’Agostino settled her claims with Founders. Ms.

D’Agostino signed the release settling her claim with Founders on December 3, 2016, and the

settlement agreement was transmitted to Founders on January 12, 2017. Farmers therefore

maintained that January 12, 2017, was the date the two-year limitations period for Ms.

D’Agostino’s arbitration demand began to run.

¶ 29    Ms. D’Agostino contends, however, that it was unreasonable for Farmers to select that date

as the triggering event. She points out that Founders initially issued settlement checks to her in

accordance with the settlement agreement on January 16, 2017. Ms. D’Agostino maintains,

however, that those checks were improper and not able to be cashed because they contained the

names of other lienholders. Ms. D’Agostino claims that those checks were not deposited and were

returned to Founders. Ms. D’Agostino contends that Founders did not issue proper checks until

        4
          As noted, the trial court’s oral ruling on Farmers’ motion to dismiss is not included in the record
filed on appeal. However, the trial court does reference some of the findings it made in that ruling in its
written order denying Ms. D’Agostino’s motion for reconsideration.

                                                   - 10 -
No. 1-21-0567

September 18, 2018. She maintains that this date is a reasonable date to use in determining the

trigger date for the limitations period.

¶ 30   She asserts that the date the final payable checks were delivered is the date that the limits

of the Founders policy had been “exhausted.” She maintains that the Founders’ policy could only

be said to have been “exhausted” when the insurer properly paid its obligation. Ms. D’Agostino

also contends that the use of the word “settlement” in the policy is ambiguous because the date of

a “settlement” could be various dates depending on the definition—for example, the date the

settlement agreement is signed or the date the signed settlement agreement is transmitted to the

insurer—but none of those events “exhaust” the policy.

¶ 31   This argument, however, does not show that the policy is ambiguous and misconstrues the

term “exhausted” in this context. The policy provides for three distinct events that can trigger the

running of the limitations period. These events are the exhaustion of the policy limits by settlement,

payment, or judgment. Any one of these three triggers the limitations period and begins the two-

year limitation period for demanding arbitration. It is immaterial that the limitations provision does

not prioritize them because the focus is on the date of “exhaust[ion],” not on which of the three

triggering events precipitated the exhaustion. Ms. D’Agostino focuses on which of the triggering

events Farmers “selected,” but Farmers did not select any event; the limitations provision was

triggered by the settlement of her action with Founders.

¶ 32   This court has recognized that a settlement agreement between an insured and an insurer

exhausts the insurer’s coverage where the intent of the parties entering into the agreement is that

the settlement represents the policy’s limits even where the settlement monies are distributed in a

“piecemeal fashion.” See American Family Mutual Insurance Co. v. Hinde, 302 Ill. App. 3d 227,

233 (1999); see also, Douglas v. Allied American Insurance, 312 Ill. App. 3d 535, 540-41 (2000))

                                                - 11 -
No. 1-21-0567

(noting that a settlement—or judgment—exhausts an insurer’s policy limits because it “ ‘legally

obligate[s]’ ” the insurer to pay the damages.). Here, Ms. D’Agostino entered into a settlement

agreement with Founders for its policy limit of $20,000. Once that settlement agreement was

transmitted to Founders and its obligation to Ms. D’Agostino became finalized, its limits of

liability had been “exhausted.” It is inconsequential that Founders tendered proper checks to Ms.

D’Agostino much later because this had no bearing on whether the policy limits had been

exhausted by the settlement agreement. Accordingly, we find that the limitations provision is not

ambiguous.

¶ 33                                          C. Tolling

¶ 34   Ms. D’Agostino next contends that the two-year limitations period was tolled under section

143.1 of the Insurance Code because she sent her proof of loss to Farmers in August 2015, before

the claimed trigger date, and before Farmers denied her claim. Section 143.1 of the Insurance Code

provides that:

                 “Whenever any policy or contract for insurance, except life, accident and health,

       fidelity and surety, and ocean marine policies, contains a provision limiting the period

       within which the insured may bring suit, the running of such period is tolled from the date

       proof of loss is filed, in whatever form is required by the policy, until the date the claim is

       denied in whole or in part.” 215 ILCS 5/143.1 (West 2018).

Although section 143.1 refers specifically to “suit[s],” Ms. D’Agostino asserts that the tolling

provision statute applies with equal force to arbitration demands. Farmers responds that the section

explicitly refers only to suits and does not apply to arbitration demands. Farmers also maintains

that Ms. D’Agostino introduced insufficient evidence of the proof of loss that she submitted in

August 2015 to toll the limitations period.

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No. 1-21-0567

¶ 35    Ms. D’Agostino claims that she provided proof of loss to Farmers on August 13, 2015. 5

However, she did not introduce any evidence in the circuit court of what information she provided

on that date. Nevertheless, Ms. D’Agostino asserts that the materials that she submitted on that

date must have been sufficient to constitute proof of loss because it allowed Farmers to evaluate

her claim. The record shows, however, that between November 2016 and November 2018 Farmers

was sending letters to Ms. D’Agostino’s counsel requesting medical records and other information

so that it could evaluate Ms. D’Agostino’s claim.

¶ 36    Specifically, in November 2016, Farmers sent a letter to Ms. D’Agostino’s counsel asking

him to send his “client’s medical records, copies of bills and any other supporting documents” so

that Farmers could “evaluate this claim.” Farmers sent five more letters over the course of the next

two years each time requesting updated medical information. Ms. D’Agostino’s counsel did not

provide Farmers with updated medical information until November 27, 2018. Shortly thereafter,

Farmers informed Ms. D’Agostino that it was denying her claim and determined that she had failed

to request arbitration within the limitations period.

¶ 37    These letters demonstrate that whatever materials Ms. D’Agostino may have submitted in

August 2015 were insufficient to trigger the tolling statute because they did not satisfy the proof

of loss standard required by the policy.6 This is apparent based on Farmers’ letters requesting Ms.

D’Agostino’s medical information.

        5
           Before the circuit court, Ms. D’Agostino claimed that she submitted proof of loss to Farmers on
August 15, 2015, and the letters from Farmers to Ms. D’Agostino reflect that same date. The circuit court
also relied on the date of August 15, 2015. In her briefs before this court, however, Ms. D’Agostino
maintains that she submitted proof of loss to Farmers on August 13, 2015, and Farmers’ response brief
adopts the same date. We find, however, that the discrepancy is immaterial to our resolution of this case.
         6
           We observe that the only reference to proof of loss in the policy here is that a person claiming
coverage under the policy must “[p]rovide any written proofs of loss we require.”

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No. 1-21-0567

¶ 38   We find Ms. D’Agostino’s reliance on Tutson, 409 Ill. App. 3d 233 unpersuasive. In

Tutson, the plaintiff was involved in an automobile accident and submitted a claim to her insurance

company. Id. at 234. The plaintiff’s attorney sent a lien letter to the insurance company, who

acknowledged receipt of the lien letter and sent the plaintiff an “Accident Report Form.” Id. The

plaintiff did not complete the “Accident Report Form.” Id. About a year later, the insurance

company notified the plaintiff’s attorney that it was in possession of a police report from the

accident. Id. at 235. The plaintiff’s attorney then sent the insurance company the plaintiff’s medical

bills and records and made a written demand for payment under the policy. Id. At the insurance

company’s request, the plaintiff also submitted to an examination under oath. Id. A few months

later, the insurance company requested an ambulance invoice and the name and unit numbers of

the police officers and paramedics involved. Id. The insurance company represented that “[u]pon

receipt of the requested information we will then be in a position to evaluate your client’s personal

injury claim.” Id. The letter also stated that, “[a]t this time we are unable to accept or reject your

demand” for payment of the policy’s limit. Id. A few months later, in accordance with the letter,

the plaintiff’s attorney submitted an itemized ambulance bill, a paramedics report, and an “Incident

Detail” from the Chicago fire department. Id. The insurance company did not request any

additional information. Id.

¶ 39   Several months later, the plaintiff made a demand for arbitration that was filed outside the

two-year limitations period in the policy. Id. The policy in that case contained a provision that

provided that “any suit, action or arbitration will be barred unless commenced within two (2) years

after the date of the accident.” Id. The insurance company filed a complaint for a declaratory

judgment arguing that it was not obligated to arbitrate or settle the plaintiff’s claim because she

did not demand arbitration within the two-year time limitation. Id. at 236. The plaintiff filed a

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No. 1-21-0567

motion for summary judgment contending, inter alia, that section 143.1 of the Insurance Code

tolled the limitations period. Id. The insurance company responded that section 143.1 did not toll

the limitations period because the plaintiff did not file adequate proof loss in the form the

“Accident Report Form” as required by the policy. Id. The trial court found in favor of the

insurance company. Id.

¶ 40    On appeal, this court rejected the insurance company’s arguments that section 143.1 did

not serve to toll the limitations period because the plaintiff had failed to provide proof of loss. Id.

at 238-39. The court observed that during the two years following her accident, the plaintiff had

provided “information about her loss sufficient to constitute proof of loss,” including “a police

report from the accident, an itemized ambulance bill, a paramedics report, an ‘Incident Detail’

from the Chicago fire department,” medical bills and records, and a sworn statement. The court

found that this information was sufficient for the insurance company to identify the “ ‘particulars’

” of the loss as required by the policy’s proof of loss provision. Id. The court determined that the

insurance company had sufficient information based on these materials to “either pay the claim or

deny it.” Id.

¶ 41    Here, there is no evidence of what information Ms. D’Agostino submitted to Farmers

before November 27, 2018. What is clear, however, is that Farmers considered it insufficient to

identify the “particulars” of the loss and to either pay or deny this claim. This is evidenced by

Farmers’ November 2016 letter where it asked for information from Ms. D’Agostino so that

Farmers could evaluate her claim. Farmers then sent a series of letters to Ms. D’Agostino over the

next two years asking for more information. Ms. D’Agostino did not submit the requested

information until November 2018.

                                                - 15 -
No. 1-21-0567

¶ 42   In contrast, the plaintiff in Tutson continually submitted requested information during the

time her claim was pending so that the insurance company could evaluate her claim. The insurance

company in Tutson specifically told the plaintiff that it would be in a position to evaluate her

personal injury claim once she submitted the requested information. The plaintiff complied, but

the insurance company nonetheless argued that the plaintiff had not submitted sufficient proof of

loss. Despite Ms. D’Agostino’s assertions to the contrary, the holding in Tutson actually supports

the circuit court’s ruling here that Ms. D’Agostino did not provide sufficient proof of loss until

November 27, 2018. At that point, Farmers was in possession of all of the information it had

requested. We therefore reject Ms. D’Agostino’s contention that the limitations provision was

tolled beginning in August 2015.

¶ 43   Finally, we find that it is unnecessary for us resolve the question of whether the tolling

principles of section 143.1 apply to arbitration demands in addition to “suit[s].” Ms. D’Agostino

maintains, citing Tutson and Hermanson v. Country Mutual Insurance Co., 267 Ill. App. 3d 1031

(1994), that this court has broadly applied the tolling principles of section 143.1 to both lawsuits

and arbitration demands. Farmers responds that the statute explicitly refers only to suits and to the

extent that these cases stand for the proposition that the tolling principles can be applied to

arbitrations, they should be “abrogated.”

¶ 44   Nonetheless, even if we were to find that tolling applies in this case, Ms. D’Agostino’s

arbitration demand would still be untimely, as the circuit court recognized. Ms. D’Agostino

submitted proof of loss on November 27, 2018. This is the date that tolling would begin. Tolling

would end on February 21, 2019, the date when Farmers denied Ms. D’Agostino’s claim. This

results in a total of 86 days of tolling. Ms. D’Agostino sent the settlement release to Founders on

January 12, 2017. Under the terms of the policy, she would therefore have until January 12, 2019,

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two years after the date of the settlement, to demand arbitration. Accounting for the additional 86

days of tolling, Ms. D’Agostino would have until April 8, 2019, to demand arbitration. Ms.

D’Agostino did not demand arbitration until May 6, 2019. Accordingly, we find that Ms.

D’Agostino’s arbitration demand would be time-barred even if section 143.1 applied to arbitration

demands. We therefore find that Ms. D’Agostino’s arbitration demand was untimely.

¶ 45                                         D. Waiver

¶ 46   Ms. D’Agostino next asserts that Farmers waived the limitations provision because it

continued “handling” her claim even after January 12, 2019, the date that Farmers is now claiming

as the expiration of the two-year limitations period. Ms. D’Agostino maintains that this continued

handling of the claim led her to believe that the claim was still open, and that Farmers was not

asserting the limitations provision.

¶ 47   “Waiver consists of ‘the intentional relinquishment of a known right’ and may be express

or implied from the insurer’s acts, words, conduct, or knowledge.” American States Insurance Co.

v. National Cycle, Inc., 260 Ill. App. 3d 299, 305-06 (1994). Here, Ms. D’Agostino’s waiver

argument is based on a letter Farmers sent to her counsel on January 31, 2019. In that letter,

Farmers’ counsel stated: “[P]lease advise if an underinsured motorist claim is being made on

behalf of Donald D’Agostino, as we have not received medical specials from your office to date.”

Ms. D’Agostino maintains that this letter established that Farmers was continuing to handle her

pending underinsured motorist claim, and did not mention that Farmers considered the claim

closed based on her failure to demand arbitration by January 12, 2019.

¶ 48   Because Ms. D’Agostino is claiming waiver, she has the burden of proving Farmers’

intentional relinquishment of its right to assert the limitations provision in the policy. See Buchalo

v. Country Mutual Insurance Co., 83 Ill. App. 3d 1040, 1046 (1980) (stating that the party claiming

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waiver bears the burden of proof). In this case, Farmers plainly did not expressly waive its rights,

and therefore Ms. D’Agostino’s arguments focus on implied waiver. “Implied waiver of a legal

right must be proved by a clear, unequivocal, and decisive act of the party who is alleged to have

committed waiver.” Ryder v. Bank of Hickory Hills, 146 Ill. 2d 98, 105 (1991). “ ‘An implied

waiver may arise where a person against whom the waiver is asserted has pursued such a course

of conduct as to sufficiently evidence an intention to waive a right or where his conduct is

inconsistent with any other intention than to waive it.’ ” (Emphasis added.) Id. (quoting Kane v.

American National Bank & Trust Co., 21 Ill. App. 3d 1046, 1052 (1974)).

¶ 49   In this case, we cannot say that Farmers’ letter inquiring into whether Donald would be

submitting a claim represented a clear and unequivocal act intended to waive the two-year

limitations period in the policy. Ms. D’Agostino maintains that this communication by Farmers

led her to reasonably believe that her claim was still open, but the letter does not even reference

her claim. Nor does the letter reference the limitations provision. The letter merely represents

Farmers due diligence in inquiring into whether Donald was intending to submit a claim under the

policy, and does not demonstrate Farmers’ intention to waive the limitations period. There is

nothing in the letter that is inconsistent with Farmers’ position that the two-year limitations period

had run on Ms. D’Agostino’s claim. Accordingly, we find that Ms. D’Agostino has failed to

demonstrate that Farmers waived the limitations provision.

¶ 50                                  E. Section 155 Penalties

¶ 51   Finally, Ms. D’Agostino maintains that the court erred in dismissing her claim for fees,

costs, and other penalties pursuant to section 155 of the Insurance Code (215 ILCS 5/155 (West

2004)) because limitations periods do not apply to claims under this section.

¶ 52   Section 155 of the Insurance Code provides:

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                “(1) In any action by or against a company wherein there is in issue the liability of

       a company on a policy or policies of insurance or the amount of the loss payable thereunder,

       or for an unreasonable delay in settling a claim, and it appears to the court that such action

       or delay is vexatious and unreasonable, the court may allow as part of the taxable costs in

       the action reasonable attorney fees, other costs, plus an amount not to exceed any one of

       the following amounts:

                       (a) 60% of the amount which the court or jury finds such party is entitled to

                recover against the company, exclusive of all costs;

                       (b) $60,000;

                       (c) the excess of the amount which the court or jury finds such party is

                entitled to recover, exclusive of costs, over the amount, if any, which the company

                offered to pay in settlement of the claim prior to the action.” 215 ILCS 5/155(1)

                (West 2004).

Ms. D’Agostino contends that she should be awarded fees and costs under section 155 based on

Farmers’ vexations and unreasonable delay in settling the claim.

¶ 53   This court has recognized, however, that in order for a plaintiff to recover under section

155, the plaintiff must also succeed in the action on the policy. Hoover v. Country Mutual

Insurance Co., 2012 IL App (1st) 110939, ¶ 40; see also, Cramer v. Insurance Exchange Agency,

174 Ill. 2d 513, 522-23 (1996) (“[T]he statute provides an extracontractual remedy for

policyholders who have suffered unreasonable and vexatious conduct by insurers with respect to

a claim under the policy. It presupposes an action on the policy. As such, nothing in the statute

addresses tortious conduct or tort liability in general. The statute simply provides an

extracontractual remedy to an action on a policy.”). In essence, an insurer cannot be liable for

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section 155 relief where no benefits are owed. Martin v. Illinois Farmers Insurance, 318 Ill. App.

3d 751, 764 (2000). Having found that Ms. D’Agostino is not entitled to benefits under the policy,

it necessarily follows that her claim for section 155 fees and costs must also fail. Accordingly, we

find that the circuit court did not err in rejecting Ms. D’Agostino’s claim for section 155 fees and

costs where her action was time barred and the claim for bad faith was dependent on the success

of the underlying action on the policy. Hoover, 2012 IL App (1st) 110939, ¶ 41.

¶ 54                                   III. CONCLUSION

¶ 55   For the reasons stated, we affirm the judgment of the circuit court of Cook County.

¶ 56   Affirmed.

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