Court Opinion

ID: 9956208
Source: CourtListenerOpinion
Date Created: 2024-04-01 15:00:42.498764+00
Date Added: 2024-06-11T08:15:43.579487
License: Public Domain

In the

    United States Court of Appeals
                For the Seventh Circuit
                    ____________________
Nos. 22-2776 & 22-2858
HARTFORD ACCIDENT AND INDEMNITY CO.,
                        Plaintiff-Appellee/Cross-Appellant,
                                 v.

ZHEN FENG LIN and LI CHEN,
                      Defendants-Appellants/Cross-Appellees.
                    ____________________

        Appeals from the United States District Court for the
          Northern District of Illinois, Eastern Division.
         No. 1:20-cv-01415 — Matthew F. Kennelly, Judge.
                    ____________________

        ARGUED JUNE 1, 2023 — DECIDED APRIL 1, 2024
                 ____________________

   Before EASTERBROOK, WOOD, and PRYOR, Circuit Judges.
    PRYOR, Circuit Judge. Zhen Feng Lin was in a car accident
while working as a food delivery driver for Win Win Seafood
Wholesale, LLC in 2017. Lin sustained serious injuries in the
collision, but the at-fault driver, Katherine Chickey, was un-
derinsured. Lin—along with his wife, Li Chen, who brought
a loss of consortium claim—settled with Chickey in a state-
court suit for her insurance policy limits of $100,000. Lin also
received workers’ compensation beneﬁts from his employer’s
2                                             Nos. 22-2776 & 22-2858

workers’ compensation insurance carrier, Hartford Fire In-
surance Company (“Hartford Fire”). Lin then sought to re-
coup his additional losses under his employer’s underinsured
motorist policy, provided by Hartford Accident and Indem-
nity Company (“Hartford Accident”).
    Although Lin and Hartford Accident initially agreed to ar-
bitrate the question of Lin’s damages, the insurer and the in-
sured saw eye to eye on little else. Unable to resolve issues
around arbitration and the underinsured motorist policy lim-
its, Hartford Accident ﬁled this declaratory judgment suit
against Lin and Chen in federal court seeking to clarify the
extent of its liability. 1
     Over the next four years, the parties sparred over the scope
of the policy’s arbitration clause, whether Hartford Accident
acted in bad faith in delaying the resolution of Lin’s claim,
and to what extent the underinsured motorist policy’s $1 mil-
lion limit should be reduced by sums Lin received from other
sources. In the end, neither party was satisﬁed with the result,
and both appealed. Because the district court was correct on
all fronts, we aﬃrm.
                           I. BACKGROUND
    This appeal involves orders at various stages of litigation:
a dismissal under Federal Rule of Civil Procedure 12(b)(6); an
order denying a motion to compel arbitration; and a grant of
a motion for summary judgment under Federal Rule of Civil
Procedure 56. In reviewing the dismissal and summary judg-
ment orders, we take the facts and allegations and view them

1 From here, we refer to Lin and Chen collectively as “Lin,” unless context

requires us to distinguish between the two.
Nos. 22-2776 & 22-2858                                              3

in the light most favorable to Lin and Chen, the non-movants,
and construe all reasonable inferences in their favor. Dixon v.
County of Cook, 819 F.3d 343, 346 (7th Cir. 2016). For the order
denying Lin’s motion to compel arbitration, we view the facts
in the light favorable to Hartford Accident. Tinder v. Pinkerton
Sec., 305 F.3d 728, 735–36 (7th Cir. 2002).
   Zhen Feng Lin was injured in a car accident in Chicago on
March 24, 2017, while making a delivery for his employer,
Win Win Seafood Wholesale, LLC. The impact of the crash
knocked him unconscious and fractured his spine. Lin sought
compensation to cover the medical costs, pain, and lost work
associated with his injuries.
    First, Lin went to state court and sued Katherine Chickey,
the driver who crashed into him. See Lin v. Chickey, No. 2017-
L-00571. Then, about a month after he sued in state court, Lin,
pursuant to the Illinois Workers’ Compensation Act, filed a
claim with Win Win Seafood. Lin recouped $301,259.90 in
workers’ compensation benefits from his employer’s workers’
compensation insurance carrier, Hartford Fire. Lastly, Lin de-
manded payment from his employer’s commercial automo-
bile insurer, Hartford Accident, under the underinsured mo-
torist policy requesting benefits and arbitration of his claim. 2
(Hartford Fire and Hartford Accident are separate entities.)
Hartford Accident responded to the demand letter requesting
more information and noted that the matter was not ripe for
arbitration.

2 Lin was covered under Win Win’s insurance policy with Hartford Acci-

dent.
4                                      Nos. 22-2776 & 22-2858

    A. Lin Settles Personal-Injury Lawsuit
    Lin’s threefold approach soon started to pay dividends.
After about a year of state-court litigation, Chickey offered to
settle for her policy limits—$100,000. Lin asked Hartford Ac-
cident for permission to agree to the settlement offer. Before
receiving a response from Hartford Accident, however, Lin
entered into a settlement agreement with Chickey, and the
state court allocated the proceeds in August 2018. An attorney
for Hartford Accident eventually responded—in January
2019—that the company had “no objection” to Lin accepting
the proposed settlement offer.
    B. Lin Receives Workers’ Compensation Award
   In July 2019, after resolving his claims against Chickey, Lin
received workers’ compensation benefits. In total, Lin was
awarded $301,259.90 in workers’ compensation benefits,
which consisted of indemnity (temporary total disability)
payments, medical costs, and a lump-sum settlement. (The
parties dispute the legal implication of these different pay-
ments, but they agree on the total.)
    These sums were paid out by Hartford Fire, Win Win Sea-
food’s workers’ compensation provider. But because Win
Win Seafood was not responsible for the accident, Hartford
Fire, under Illinois’s Workers’ Compensation Act, was enti-
tled to a lien against any funds Lin obtained from at-fault par-
ties. Utilizing funds from the state court settlement, Lin paid
Hartford Fire $73,320.72 to satisfy its lien.
    This put an end to two of Lin’s recovery paths—the per-
sonal-injury suit and workers’ compensation. Lin, however,
believed that he was still not made whole. Indeed, he calcu-
lated that that his damages were over $2.5 million. Because of
Nos. 22-2776 & 22-2858                                              5

this shortfall, Lin resumed his discussions with Hartford Ac-
cident.
   C. Lin Rebuffed by Hartford Accident
   Hartford Accident’s underinsured motorist policy is
meant to cover the difference between what an insured em-
ployee is legally entitled to recover from the at-fault driver for
bodily injuries sustained in an accident, and what the at-fault
driver is able to pay, up to $1 million. Unless the parties reach
a “settlement agreement,” as defined by the policy, the
amount recovered by the insured shall be reduced by any
sums “paid or payable” by anyone legally responsible for the
insured’s injuries or under any workers’ compensation. 3
    Here, as soon as the settlement proceeds were allocated
and the workers’ compensation claim was resolved, Lin again
submitted a demand to Hartford Accident, this time for
$900,000 under the policy. Lin made what he believed to be a
“policy-limits demand,” subtracting the $100,000 that he had
already received from Chickey in the settlement.
    Hartford Accident rejected the demand. It contended that
the policy limit should be further reduced to account for the
money Lin had received in workers’ compensation. With that
calculation in mind, Hartford Accident counteroffered to set-
tle at $100,000.
   Lin declined the counteroffer, which he said was so low
that it had to have been made in bad faith. Lin also argued
that Hartford Accident’s reduction of the policy limits was in-
correct because there had been a settlement agreement

3 This provision of the Hartford Accident underinsured motorist policy

appears in Section D.2 of the Endorsement.
6                                      Nos. 22-2776 & 22-2858

between the parties. Moreover, Lin maintained that Hartford
Accident did the math wrong. He argued that the amount he
paid to resolve the workers’ compensation lien—$73,320.72—
should be credited to him, and not deducted from the policy
limits.
    D. Federal Court Proceedings
    Because of this impasse, Hartford Accident filed a com-
plaint seeking a declaratory judgment in the Northern District
of Illinois to resolve the extent of its liability to Lin.
   Before filing an answer, Lin asked the district court to stay
or dismiss the lawsuit in favor of arbitration. In support, he
pointed to the arbitration clause in Hartford Accident’s insur-
ance policy:
       If we and an “insured” disagree whether the
       “insured” is legally entitled to recover damages
       from the owner or driver of an “underinsured
       motor vehicle” or do not agree as to the amount
       of damages that are recoverable by that “in-
       sured”, then the matter may be arbitrated. How-
       ever, disputes concerning coverage under this
       endorsement may not be arbitrated.
Under this provision, Lin argued, the parties agreed to arbi-
trate not only the subject of Hartford Accident’s complaint—
the extent of the workers’ compensation setoff—but also
whether Hartford Accident acted in bad faith in dealing with
his claim.
    The district court denied the motion, finding the arbitra-
tion clause unambiguous and the dispute at issue in Hartford
Accident’s complaint—regarding the proper setoffs to policy
limits—not the type of disagreement that the parties agreed
Nos. 22-2776 & 22-2858                                          7

to arbitrate. Instead, the district court determined the parties
had agreed to arbitrate only two, distinct things: disputes
over fault and the amount of damages that are recoverable by
the insured.
    Following the court’s ruling on the motion to stay, Lin
filed his answer asserting various counterclaims, including
one for bad faith.
    Hartford Accident then moved for summary judgment ar-
guing that because there was no “settlement agreement” be-
tween Lin and Hartford Accident, the policy limits in this case
should be offset by both the Chickey settlement and Lin’s to-
tal workers’ compensation award. In response, Lin argued
that the underinsured motorist policy limit should be reduced
only by the Chickey settlement of $100,000. He also main-
tained in the alternative that, if the district court decided to
offset the policy limits by the amount of workers’ compensa-
tion, then the amount that he paid to settle the statutory lien—
$73,320.72—should be credited back to him, and not deducted
from the policy limits. Lin also asked the district court to defer
ruling on the motion until Hartford Accident produced addi-
tional discovery.
    To start, the district judge denied Lin’s request to defer
ruling on the motion until Lin received more discovery, find-
ing the present dispute to be legal, and not factual. As for the
merits, the district court ultimately agreed with Hartford Ac-
cident’s reading of the policy language and determined look-
ing at the evidence that the parties had not entered into a set-
tlement agreement, so the policy limit should be further re-
duced to account for what Lin had received in workers’ com-
pensation benefits.
8                                       Nos. 22-2776 & 22-2858

    Under the terms of Hartford Accident’s underinsured mo-
torist policy, the district court determined, both the $100,000
settlement and Lin’s $301,259.90 workers’ compensation
award should be deducted from the policy limits. The district
court also concluded, however, that it was too early to deter-
mine whether the amount that Lin paid to Hartford Fire to
settle the workers’ compensation lien should be credited back
to Lin. The court noted that if Lin’s total damages, after arbi-
tration, were found to exceed the policy’s limit, only the
money that he had retained after satisfying Hartford Fire’s
lien would be factored into the policy reduction. Addition-
ally, the district court dismissed Lin’s counterclaims, specifi-
cally finding his bad faith claim premature.
    Next, the district court ordered the parties to arbitrate the
issue of Lin’s damages. The arbitration panel calculated Lin’s
damages at $1,063,895.00. Because this amount exceeded the
policy limits, Hartford Accident—in line with the district
court’s summary judgment ruling—credited Lin for the
amount he paid to settle the workers’ compensation lien. In
the end, Hartford Accident issued Lin a check, in accordance
with the district court’s summary judgment ruling, for
$672,060.82.
    Lin was not done with the lawsuit, though. In May 2022,
Lin filed an amended counterclaim alleging that Hartford Ac-
cident breached its contract and acted in bad faith in unrea-
sonably drawing out the process of paying out his claim.
Finding no plausible claim that would support the argument
that Hartford Accident unreasonably delayed settling Lin’s
claim, the district court dismissed these allegations.
    The district court then entered final judgment. Both par-
ties appealed.
Nos. 22-2776 & 22-2858                                               9

                           II. ANALYSIS
    On appeal, Lin argues that the district court erred in three
ways. First, by denying his motion to compel arbitration of his
bad faith claim against Hartford Accident. 4 Second, by dis-
missing his amended counterclaims. And third, by conclud-
ing that the money Lin received in workers’ compensation
benefits should be included in the underinsured motorist pol-
icy limits. On cross-appeal, Hartford Accident takes issue
with the district court’s interpretation of the policy’s reduc-
tions clause, arguing that the limit should have been further
reduced to account for the full $100,000 Lin received in settle-
ment awards. In other words, Hartford Accident argues that
Lin should not have been credited for the amount he paid to
settle his workers’ compensation lien.
    We review each of the disputed decisions de novo, mean-
ing we take a fresh look at the issues. E.g., United Nat. Foods,
Inc. v. Teamsters Local 414, 58 F.4th 927, 933 (7th Cir. 2023) (re-
viewing denial of motion to compel arbitration); Smykla v. Mo-
linaroli, 85 F.4th 1228, 1234 (7th Cir. 2023) (reviewing a grant
of a Rule 12(b)(6) motion to dismiss); Ellison v. USPS, 84 F.4th
750, 755 (7th Cir. 2023) (reviewing a grant of summary judg-
ment).
     Because our jurisdiction is based on diversity of citizen-
ship, we look to the forum state’s choice-of-law rules to deter-
mine which state’s substantive laws apply. Sosa v. Onfido, Inc.,
8 F.4th 631, 637 (7th Cir. 2021). The parties do not dispute that
Illinois law applies here. See Donaldson v. Johnson & Johnson,

4 At oral argument, Lin affirmatively waived any argument that the dis-

trict court should have compelled the parties to arbitrate how much the
policy limits should be offset.
10                                      Nos. 22-2776 & 22-2858

37 F.4th 400, 406 (7th Cir. 2022). Therefore, we must resolve
this appeal how we believe the highest court of Illinois would
if this case were before that tribunal. Green Plains Trade Grp.,
LLC v. Archer Daniels Midland Co., 90 F.4th 919, 927 (7th Cir.
2024). In predicting what the Illinois Supreme Court would
do, we may rely on the holdings of the Illinois appellate
courts, when there is no prevailing authority from the Illinois
Supreme Court. Id.; see also Baltzell v. R&R Trucking Co., 554
F.3d 1124, 1130 (7th Cir. 2009).
     A. Lin’s Motion to Compel Arbitration
   The first of Lin’s arguments on appeal merits little discus-
sion. He argues that the district court erred by not compelling
arbitration of his bad faith claim asserted under 215 ILCS
5/155(1), a section of the Illinois Insurance Code that allows
individuals to recover attorneys’ fees when an insurer unrea-
sonably and vexatiously delays providing coverage.
   Yet, arbitration is a creature of contract. ACME-Wiley Hold-
ings, Inc. v. Buck, 799 N.E.2d 337, 341–42 (Ill. App. Ct. 2003)
(“While arbitration is a favored method of dispute resolution,
the courts have consistently cautioned that an agreement to
arbitrate is a matter of contract.”). A party “cannot be re-
quired to submit to arbitration any dispute which he has not
agreed so to submit.” Scheurer v. Fromm Family Foods LLC, 863
F.3d 748, 752 (7th Cir. 2017) (citation omitted). Recall the lan-
guage of the parties’ arbitration agreement:
        If [Hartford Accident] and an “insured” disa-
        gree whether the “insured” is legally entitled to
        recover damages from the owner or driver of an
        “underinsured motor vehicle” or do not agree
        as to the amount of damages that are
Nos. 22-2776 & 22-2858                                          11

       recoverable by that “insured”, then the matter
       may be arbitrated. However, disputes concern-
       ing coverage under this endorsement may not
       be arbitrated.
This unambiguous language reveals Lin and Hartford Acci-
dent agreed maybe to arbitrate two types of disputes: Lin’s
entitlement to recover damages from Chickey and the amount
of damages. The parties’ narrow arbitration agreement
simply does not cover bad faith claims, and therefore the dis-
trict court was correct in denying Lin’s motion to stay and
compel arbitration.
    Lin resists this conclusion by citing a case in which we
deemed arbitration necessary for a bad faith claim. See Hen-
nessy Indus., Inc. v. Nat’l Union Fire Ins. Co., 770 F.3d 676, 678–
80 (7th Cir. 2014). In Hennessy, the contractual language man-
dated arbitration of “any dispute” that required interpreting
the contract. Id. at 678. Because the unreasonableness of the
insurer’s delay was one such dispute, we held that the in-
sured’s section 155 claim was subject to arbitration. Id. But ar-
bitration in one case doesn’t compel arbitration in all cases.
    The parties’ narrow arbitration clause in this case does not
cover bad faith claims. The fact that the arbitration clause con-
sidered in Hennessy cast a wider net does not alter this analy-
sis in any way.
   B. Lin’s Amended Counterclaims
    When the district court denied his motion to compel arbi-
tration, Lin filed five counterclaims, including for breach of
contract and bad faith. The district court dismissed these
claims as premature while arbitration was pending. A few
months later, the arbitration panel awarded damages to Lin
12                                        Nos. 22-2776 & 22-2858

and Hartford Accident paid. Lin then filed an amended coun-
terclaim alleging three separate actions: (1) breach of contract;
(2) breach of the implied covenant of good faith and fair deal-
ing; and (3) unreasonable and vexatious delay under Illinois’s
insurance laws. The district court dismissed the amended
counterclaims with prejudice finding that an amendment
would be futile.
    In the amended counterclaim, Lin alleged that Hartford
Accident had “[a]ll pertinent information” that it needed to
evaluate his insurance claim, but that Hartford Accident
breached its contractual duties under the policy by failing to
“promptly and comprehensively adjust” it. Before the district
court and again on appeal, Lin asserts that Hartford Acci-
dent’s duty to adjust his claim was an implied one in the con-
tract, stemming from various provisions of the Illinois Insur-
ance Code and the Illinois Administrative Code.
     While we recognize this behavior may have run afoul of
Illinois’s insurance regulations, Lin points to nothing in the
plain language of the only document that matters to his
breach of contract claim—the insurance policy—that required
Hartford Accident to adjust his claim within a certain time-
line. Bernacchi v. First Chicago Ins. Co., 52 F.4th 324, 329–30 (7th
Cir. 2022) (affirming dismissal of breach-of-contract claim
premised on breaches of Illinois’ insurance regulations, not
policy provisions). As we explained in Bernacchi, an alleged
regulatory violation alone does not create a private cause of
action. Id. at 330. Therefore, because Hartford Accident’s con-
tractual provisions do not incorporate these state regulations
and statutes, Lin’s claim fails.
   Lin’s reliance on the covenant of good faith and fair deal-
ing fares no better. In Illinois, the implied covenant of good
Nos. 22-2776 & 22-2858                                        13

faith and fair dealing is an interpretive tool of contract con-
struction, ensuring only that parties “do not try to take ad-
vantage of each other in a way that could not have been con-
templated at the time the contract was drafted.” Cramer v. Ins.
Exch. Agency, 675 N.E.2d 897, 903 (Ill. 1996); see also Fox v.
Heimann, 872 N.E.2d 126, 134 (Ill. App. Ct. 2007). It does not
allow parties to add terms to a contract that are not there. Mid-
West Energy Consultants, Inc. v. Covenant Home, Inc., 815
N.E.2d 911, 915–16 (Ill. App. Ct. 2004). In other words, we can-
not use this doctrine to rewrite the parties’ contract to impose
obligations that the parties did not agree to.
   The Hartford Accident policy does not mention a duty to
adjust, much less the strict deadlines that Lin claims Hartford
Accident was bound to abide by. Thus, the district court was
correct in finding no plausible claim dismissing Lin’s
amended breach of contract and bad faith counterclaim.
    Lin’s amended counterclaim also reasserted his request
for statutory penalties for Hartford Accident’s sluggish han-
dling of his claim based on § 155 of Illinois’s Insurance Code.
See 215 ILCS 5/155. This argument also fails. Section 155 al-
lows individuals to recover penalties from insurance compa-
nies that unreasonably and vexatiously delay settling a claim.
Id. Lin believes that he is entitled to these damages because
Hartford Accident waited two and a half years after he made
a policy-limits demand on July 11, 2019, to issue him a check.
    We see nothing in the record, however, to suggest that
Hartford Accident’s delay was either unreasonable or vexa-
tious. Lin first sent his claim for coverage and demand for ar-
bitration on June 7, 2017. The parties then agreed to hold the
claim in abeyance until everything was resolved with Chickey
and Lin’s workers’ compensation claim. It appears that the
14                                     Nos. 22-2776 & 22-2858

workers’ compensation claim was resolved around July 11,
2019.
    From that date until arbitration in December 2021, the par-
ties disputed and then litigated the application of the policy’s
reductions clause. An insurer’s delay is not unreasonable
when “there is a bona fide dispute concerning the scope and
application of insurance coverage.” Citizens First Nat’l Bank of
Princeton v. Cincinnati Ins. Co., 200 F.3d 1102, 1110 (7th Cir.
2000).
    As for the length of time it took for the district court to
resolve the matter, we agree with the district judge closest to
the action that this delay must be attributed to Lin himself.
Over the course of two years, Lin’s counsel sought to expand
the scope of arbitration to include disputes not covered by the
policy’s arbitration clause, then moved to withdraw the arbi-
tration demand altogether, refused to meet and confer with-
out a court reporter, and engaged with opposing counsel in a
manner that prompted a sharp rebuke from the district court.
    Section 155 sanctions are unwarranted here. In sum, the
district court properly dismissed Lin’s amended counter-
claims.
     C. Calculation of the Policy Reductions
    Finally, we must resolve two matters regarding how much
Hartford Accident’s policy limits should be reduced to ac-
count for the money that Lin received from other sources. Re-
call that Hartford Accident’s underinsured motorist policy
had a $1,000,000 limit. On appeal, the parties agree that this
limit should be reduced by the $100,000 that Lin received
from the Chickey settlement. But the parties continue to disa-
gree about whether the policy limits should be further
Nos. 22-2776 & 22-2858                                       15

reduced by the amount that Lin received in workers’ compen-
sation, and, if so, whether Lin should be credited for the
amount that he paid back to Hartford Fire—$73,320.72—to re-
solve the workers’ compensation lien.
   On appeal, Lin argues that the maximum coverage should
be $900,000—the policy limits minus the at-risk driver settle-
ment agreement. In its cross-appeal, Hartford Accident insists
that the district court rightly reduced the policy limits by the
workers’ compensation award, but the court went awry in
crediting Lin for the $73,320.72 that he paid to resolve the
workers’ compensation lien.
   1. Reduction for Workers’ Compensation
    Whether Lin’s workers’ compensation benefits were
rightly counted against him depends on whether the parties
entered into a settlement agreement. The policy provides that
“except in the event of a ‘settlement agreement,’” the $1 mil-
lion limit of insurance shall be reduced by all sums “paid or
payable” by anyone legally responsible for the accident and
by all sums paid under any workers’ compensation. Compar-
atively, when the insurer and the insured settle, the $1 million
policy limit is reduced only by “the limits of bodily injury li-
ability bonds or policies applicable to the owner or operator
of the ‘underinsured motor vehicle.’” In other words, without
a settlement agreement, Hartford Accident would be entitled
to deduct—among other things—whatever Lin received in
workers’ compensation benefits.
   Lin argues that the district court erred by finding that the
parties had not entered into a “settlement agreement.” Under
the underinsured motorist policy at issue, a “settlement
agreement” exists if the parties:
16                                      Nos. 22-2776 & 22-2858

       agree that the “insured” is legally entitled to re-
       cover, from the owner or operation of the “un-
       derinsured motor vehicle,” damages for “bodily
       injury” and, without arbitration, agree also as to
       the amount of damages. Such agreement is final
       and binding regardless of any subsequent judg-
       ment or settlement reached by the “insured”
       with the owner or operator of the “underin-
       sured motor vehicle.”
In other words, the parties must have agreed both as to (1)
liability and (2) the amount of damages.
     Lin argues that he entered a “settlement agreement” with
Hartford Accident when a Hartford Accident representative
confirmed via email in January 2019 that the company had
“no objection” to Lin accepting the settlement offers in the
state personal-injury suit. In Lin’s telling, by not objecting to
the settlement agreement between him and Chickey, Hartford
Accident admitted that Lin was not at fault, that Chickey was
underinsured, and that Lin was entitled to recover from Hart-
ford Accident. In his view, this counted as an agreement both
as to liability and as to the amount of damages. Therefore, the
policy limit should not have been further reduced by the
$301,259.90 that he received in workers’ compensation bene-
fits.
    In response, Hartford Accident maintains that its indica-
tion that it had “no objection” to the state settlement did not
qualify under the policy as a “settlement agreement.” Among
other things, Hartford Accident points out that Lin demanded
arbitration on the “amount of damages,” therefore the parties
could not have agreed to settlement prior to the arbitration
proceedings.
Nos. 22-2776 & 22-2858                                                     17

    We agree with Hartford Accident. The clear and unambig-
uous terms of insurance policies must be enforced as written.
E.g., Galarza v. Direct Auto Ins. Co., ___ N.E.3d ___, ___, 2023
IL 129031, ¶ 38 (Ill. 2023); Sproull v. State Farm Fire & Cas. Co.,
184 N.E.3d 203, 209 (Ill. 2021); Sanders v. Illinois Union Ins. Co.,
157 N.E.3d 463, 467 (Ill. 2019). Here, the plain language of the
insurance policy says that there is a “settlement agreement”
only if the parties agree on liability and the amount of dam-
ages the insured suffered in the underlying accident. That
never happened here. There simply was no discussion—
much less agreement—about what Lin’s total damages might
be. Moreover, Hartford Accident’s “no objection” email came
months after Lin received the settlement proceeds from the
personal-injury suit. Without more, we cannot say that Hart-
ford Accident entered into a settlement agreement with Lin
simply by not objecting to something that had already hap-
pened.
    Lin’s argument rests entirely on American Economy Insur-
ance Company v. Greeley, 2013 IL App (1st) 113403-U, an un-
published Illinois appellate court decision that interpreted a
similar insurance provision. 5 Greeley concluded that, by de-
clining to object to a settlement agreement between the in-
sured and the tortfeasor, the insurer itself entered into a set-
tlement agreement with the insured. We first note that Illinois

5 In Greeley, a passenger was seriously injured while exiting a taxi. 2013 IL

App. (1st) 113403‐U, ¶ 12. He sued the taxi driver, who offered to settle
the case for his policy limits, $250,000. Id. ¶ 39. The passenger asked his
underinsured motorist insurance provider for approval; it responded that
it “d[id] not object” to the passenger accepting the settlement offer. Id. In-
terpreting the same insurance provisions involved in this case, see id. ¶¶
28–29, the Greeley court decided that the parties had entered into a “settle-
ment agreement,” id. ¶ 41.
18                                              Nos. 22-2776 & 22-2858

prohibits parties from citing unpublished decisions as prece-
dent except under limited circumstances not relevant here.
See ILL. SUP. CT. R. 23(e). Even if Greeley could be cited for per-
suasive purposes, the facts of this case and Greeley are distin-
guishable. In Greeley, the insurance company’s “no objection”
email came before the insured received any proceeds from the
personal-injury lawsuit. 2013 IL App. (1st) 113403-U, ¶¶ 12,
37–39. Here, on the other hand, Hartford Accident’s “no ob-
jection” email came months after Lin received the tortfeasor’s
settlement proceeds. So, even if we accept that the communi-
cations here are like those in Greeley, the difference in timing
is enough to command a different result.
    Because the district court was correct in finding that Lin
and Hartford Accident had not entered into a “settlement
agreement,” the district court did not err in reducing the un-
derinsured motorist policy limit by the amount of Lin’s work-
ers’ compensation award. The district court also properly cal-
culated this setoff as $301,259.90, which is the sum of Lin’s
medical and disability payments, in addition to his lump-sum
workers’ compensation settlement. 6
    One final word on this issue. Lin briefly contends that the
district judge abused his discretion by denying his motion for

6 This workers’ compensation setoff accounts for medical payments and

disability payments, which includes any lump-sum workers’ compensa-
tion settlement. 820 ILCS 305/8(a)–(b) (listing amount of compensation un-
der Workers’ Compensation Act as including medical costs and tempo-
rary total disability payments); id. at 305/10.1 (allowing employee to re-
ceive lump-sum workers’ compensation payment in lieu of permanent
disability payments); Berrey v. Travelers Indem. Co. of Am., 770 F.3d 591, 593
& n.1 (7th Cir. 2014) (applying Illinois law) (reciting workers’ compensa-
tion benefits as including medical bills and disability payments).
Nos. 22-2776 & 22-2858                                        19

additional discovery before ruling on Hartford Accident’s
motion for summary judgment concerning this issue. Lin ar-
gues that he needed to discover Hartford Accident’s claim
file, which, he says, would have revealed “critical evidence”
that there was a “settlement agreement” between the parties.
But determining whether there was a “settlement agreement”
here is only a question about whether the parties had a meet-
ing of the minds about liability and the amount of damages.
Whether that happened or not is answered by the parties’ ex-
ternal communications, not by Hartford Accident’s internal
discussions contained in their claim file. Because Lin already
knew Hartford Accident’s position on his desire to settle with
Chickey and it was part of the summary judgment record, the
district judge did not abuse his discretion in denying Lin’s
motion for additional discovery before ruling. Sterk v. Redbox
Automated Retail, LLC, 770 F.3d 618, 628 (7th Cir. 2014) (affirm-
ing denial of Rule 56(d) motion because requested discovery
was not “material to the district court’s summary judgment
ruling”).
   2. Credit for Settlement of Workers’ Compensation Lien
    Finally, we turn to Hartford Accident’s cross-appeal,
which deals with whether the district court correctly reduced
the policy limit by only the money Lin retained after satisfy-
ing his lien with Hartford Fire, rather than the full sum of his
settlement and workers’ compensation awards.
   To recap, after Lin was hurt on the job, he received two
payments from sources other than Hartford Accident. First,
he received $100,000 in settlement proceeds from the per-
sonal-injury lawsuit. Second, he collected $301,259.90 in
workers’ compensation. Lin then paid $73,320.72 of that set-
tlement recovery to Hartford Fire to execute a release of its
20                                               Nos. 22-2776 & 22-2858

lien. 7 This left Lin with $327,939.18 in his pocket, which is the
only amount the district court held should be counted against
him when calculating the policy reductions.
    As noted above, Section D.2 of the underinsured motorist
policy provides that, except in the event of a settlement agree-
ment, the limit of insurance will be reduced by all sums “paid
or payable” by anyone who is legally responsible for the acci-
dent—in this matter, Chickey—and under any workers’ com-
pensation law. For the reasons stated herein, we agree with
the district court that this provision requires that the policy
limit be reduced only by the amount Lin actually retained fol-
lowing his payment of the workers’ compensation lien. This
conclusion aligns with both the text of the policy, as inter-
preted by Illinois courts, and the purpose of underinsured
motorist insurance coverage in Illinois.
   In Acuity v. Decker, an Illinois appellate court interpreted
the same contractual language that we have here and con-
cluded that the insurance company should not be allowed to
reduce its policy limits by the amount that the insured driver
paid to satisfy his worker’s compensation lien. 46 N.E.3d 402,
406–07 (Ill. App. Ct. 2015). The reason why derived, in part,

7 When an employee suffers a job-related injury and recovers both from a

third party and through workers’ compensation, “Illinois law gives the
employer a lien on any recovery that an employee obtains from a third
party.” Baltzell v. R&R Trucking Co., 554 F.3d 1124, 1127 (7th Cir. 2009) (cit-
ing 820 ILCS 305/5(b)). This lien allows an employer to “get[] first crack”
at the third-party recovery. Id. The reason for this is that workers’ com-
pensation is not meant to provide a double recovery for employees. E.g.,
Scott v. Indus. Comm’n, 703 N.E.2d 81, 88 (Ill. 1998). So, Hartford Fire was
entitled by law to have a lien on any of Lin’s $100,000 settlement proceeds
from the personal-injury lawsuit. See 820 ILCS 305/5(b); Baltzell, 554 F.3d
at 1127.
Nos. 22-2776 & 22-2858                                           21

from the text of the policy which provided that the only re-
ductions to the limits were for those coming from a “sum
paid” from certain third parties. Id. at 405. Relying on this lan-
guage, the court explained that when the insured driver set-
tled his workers’ compensation lien, he no longer had “re-
ceived” that money for purposes of calculating his underin-
sured motorist recovery. Id. at 406–07 (“When the [money]
was paid for the workers’ compensation lien, that amount
was no longer part of Decker’s workers’ compensation award,
i.e., it was no longer a sum paid on the workers’ compensation
claim, or an amount Decker actually recovered.”).
     In coming to this conclusion, the Acuity court relied on a
prior decision in Roberts v. Northland Insurance Company, 685
N.E.2d 371 (Ill. App. Ct. 1997), aff’d in part, rev’d in part, 705
N.E.2d 762 (Ill. 1998). In Roberts, an Illinois appellate court cal-
culating the limits on an underinsured motorist policy deter-
mined that the policy could not be reduced by the insured’s
settlement payment because the entire amount had been paid
directly to the workers’ compensation carrier to resolve its
lien. 685 N.E.2d at 374. The court reasoned that the insured
had not “actually recover[ed]” the settlement award, and
therefore the insurer was not allowed to reduce its policy lim-
its to account for it. Id. To the Acuity court, this holding sup-
ported its conclusion that underinsured motorist policy set-
offs should be limited to only those amounts actually received
by, or paid to, the insured. 46 N.E.3d at 407.
    The situation in Acuity is virtually indistinguishable from
the one we have here. Moreover, its holding is well-supported
by precedent and well-grounded in the text of the policy. Us-
ing our best judgment, we believe that Acuity’s approach is
also the approach the Illinois Supreme Court would adopt
22                                              Nos. 22-2776 & 22-2858

were the issue before it. See Zahn v. North American Power &
Gas, 815 F.3d 1082, 1087 (7th Cir. 2016) (stating that, when
there is no Illinois Supreme Court decision on point, we must
use our best judgment to estimate how the Illinois Supreme
Court would apply the state’s law); Allstate Ins. Co. v. Menards,
Inc., 285 F.3d 630, 637 (7th Cir. 2002) (noting that we must
“give great weight to the holdings of the state’s intermediate
appellate courts”).
    In coming to this conclusion, we disagree with Hartford
Accident that our opinion in Berrey v. Travelers Indemnity Com-
pany of America requires a different result. 770 F.3d 591, 594–
98 (7th Cir. 2014) (applying Illinois law). In Berrey, we dealt
with a driver who suffered $310,000 in damages but only re-
ceived $100,000 from the tortfeasor’s insurance company. Id.
at 593. The injured driver had underinsured motorist cover-
age with a $1,000,000 per-accident policy limit. Id. Because the
amount of damages was less than the policy limits, we found
the question of policy limit reductions “irrelevant” and the
provision of the policy that dealt with these reductions “inap-
plicable.” Id. at 595. Berrey, then, provides us no guidance on
what counts as a “sum paid” applicable to reduce Hartford
Accident’s limit under Section D.2 of the underinsured mo-
torist policy. 8 It’s Acuity, instead, that leads the way.
    Not reducing the policy limits by the amount that Lin paid
to settle his workers’ compensation lien is also supported by

8 To be sure, Berrey does discuss Section D.4, which says that “[n]o one

will be entitled to receive duplicate payments for the same elements of
‘loss.’” 770 F.3d at 596. This provision is largely not implicated in this ap-
peal, but Hartford Accident does suggest, in only one paragraph, that
crediting Lin for the $73,320.72 that he paid to settle the workers’ compen-
sation lien “granted Lin a duplicate payment.” We don’t see how. This
Nos. 22-2776 & 22-2858                                                 23

the purpose of underinsured motorist coverage in Illinois,
which is “to place the insured in the same position he would
have occupied if injured by a motorist who carried liability
insurance in the same amount as the policyholder.” Sulser v.
Country Mut. Ins. Co., 591 N.E.2d 427, 430 (Ill. 1992); see also
Banes v. Western States Ins. Co., 616 N.E.2d 1021, 1025 (Ill. App.
Ct. 1993) (“[T]he setoff or reduction provision of the insurance
policy must be read in conjunction with the public policy be-
hind the statute and the coverage intended by the insurance
policy.”).
    Here, Hartford Accident issued an underinsured motorist
insurance policy with a $1,000,000 per-accident cap, and Lin’s
damages—as found by an arbitral panel—were in excess of
that limit, at $1,063,895. Prior to the damages’ determination,
Lin received $301,259.90 in workers’ compensation payments
from Hartford Fire and $100,000 in settlement award pay-
ments from Chickey, for a total of $401,259.90. He then had to
pay $73,320.72 back to Hartford Fire to settle the workers’
compensation lien. Because of this fact, the district court de-
termined that Lin had actually received only $327,939.18 from
third parties—that’s $100,000 (the settlement) plus
$301,259.90 (the workers’ compensation) minus $73,320.72
(the lien settlement). The district court’s calculation was

case is not like Berrey, in which the injured driver wanted the insurance
company to pay the full amount of her damages—on top of the settlement
from the tortfeasor and workers’ compensation proceeds that she re-
ceived. Id. at 593, 595–96. That’s a double recovery; she wanted more than
$413,000, while her damages were pegged at $310,000. Id. at 595. Here,
though, Lin seeks only to make himself whole—up to $1,000,000—as if the
tortfeasor were adequately insured.
24                                      Nos. 22-2776 & 22-2858

correct and aligns with Illinois public policy. See Sulser, 591
N.E.2d at 430.
    Under Hartford Accident’s reading of the policy, it would
reduce the $1,000,000 limit by the full Chickey settlement—
$100,000—and the entire workers’ compensation award—
$301,259.90—and call it a day. But this ignores the fact that
Lin had to pay $73,320.72 of his workers’ compensation
award back to Hartford Fire to settle its lien on his settlement
proceeds. It’s Hartford Accident’s burden—based on Illinois’s
public policy—to bridge the shortfall between its policy limits
($1,000,000) and that amount that he received from third par-
ties. Id. That’s $672,060.82—the exact amount it ended up ten-
dering to Lin, pursuant to the district court’s rulings.
    By reducing the policy limits by $327,939.18 and requiring
Hartford Accident to pay Lin $672,060.82, the district court
ensured that Lin recovered a total of $1,000,000, thus fulfilling
the purpose of underinsured motorist coverage under Illinois
law. Had the court reduced the award by Lin’s workers’ com-
pensation and Lin’s settlement recovery without factoring in
the lien payment—as Hartford Accident suggests it should
have—Lin would have recovered less than what he would
have recovered had Chickey been insured for $1,000,000—an
untenable result.
    Crediting Lin with the amount he spent to settle the work-
ers’ compensation lien does not grant him a double recovery.
Instead, it merely reflects the amount Lin actually received.
Any other result would be an impermissible underpayment
on the part of Hartford Accident. Acuity, 46 N.E.3d at 406-07.
Nos. 22-2776 & 22-2858                                         25

    For these reasons, we find the district court was correct in
calculating the appropriate setoffs in this case and the appli-
cable policy limit.
                              * * *
    We conclude by briefly addressing the matter of sanctions.
Hartford Accident has moved for sanctions against Lin’s at-
torney pursuant to Federal Rule of Appellate Procedure 38.
We agree with Hartford Accident that some of Lin’s claims
raised on appeal are frivolous and are concerned that Lin’s
counsel did not mention a recent case of ours, Bernacchi, 52
F.4th at 325, which squarely foreclosed some of his counter-
claims. See Gonzalez-Servin v. Ford Motor Co., 662 F.3d 931, 934
(7th Cir. 2011) (“When there is apparently dispositive prece-
dent, an appellant may urge its overruling or distinguishing
or reserve a challenge to it for a petition for certiorari but may
not simply ignore it.”). Nevertheless, we will not impose sanc-
tions. Dolin v. GlaxoSmithKline LLC, 951 F.3d 882, 888 (7th Cir.
2020) (noting that, even when appeal is frivolous, court has
discretion as to whether to impose sanctions under Rule 38).
We instead caution Lin’s attorney to carefully consider the
district court’s reasons for denying his client’s motions and all
relevant precedent from this court before filing an appeal in
the future. Hartford Accident’s motion for sanctions is de-
nied. Lin’s cross-motion for sanctions is also denied.
                       III. CONCLUSION
  For those reasons, we AFFIRM the district court’s judg-
ment.