Trial De Novo is Inherent Remedy and Proper Method to Resolve Rejection of Arbitration Awards when No Policy Provision with Explicit Language Exists
In Nelson v. County Insurance Co., Nelson was in a car accident while driving a company van belonging to Turbo Tubs of Chicago (“TTC”). The other driver involved had a policy with Nationwide Mutual Insurance Company (“Nationwide”) that included a $100,000 underinsured motorist liability limit. Within that policy, Nelson collected $90,000. Country Mutual Insurance Company (“Country Mutual”), meanwhile, insured Nelson’s employer with an underinsured motorist liability limit of $1 million. Nelson proceeded with an underinsured motorist claim against Country Mutual, and Country Mutual filed an action for setoffs. Following an arbitration hearing, two arbitrators, with one dissenting, returned an award in favor of Nelson in the amount of $850,000 and reserved any issue regarding setoffs and worker’s compensation. Nelson filed an application to approve the arbitration award, while Country Mutual filed an amended complaint rejecting the award and asking for a trial de novo. In response, Nelson filed a motion to dismiss Country Mutual’s amended complaint. The trial court denied Nelson’s motion to dismiss, which eventually led to the court granting Country Mutual’s motion for summary judgment.
On appeal, Nelson first contended that the trial court erred in vacating the award and setting the matter for trial because the underinsured endorsement provision of the insurance policy did not explicitly provide for a trial de novo remedy upon the rejection of an arbitration award. Nelson asserted that there is more than one interpretation of the outcome of a cause following a rejection and that, if Country Mutual wanted trial de novo as a remedy, it was required to put such specific language in the policy. Nelson further claimed that, because Country Mutual chose not to, the policy is ambiguou, and Country Mutual forfeited trial de novo as a remedy following rejection of the award.
The court reviewed whether the trial court’s vacation of the arbitration award and its setting of the instant matter for trial de novo were wholly proper in light of the circumstances presented in the instant cause. The court affirmed that such trial de novo provisions are valid, enforceable, and not against public policy, even when the insurance policy at issue did not contain the specific words “trial de novo” as a remedy for rejection.
Illinois Insurance Law: Even when there is no policy provision with explicit language calling for trial de novo as a remedy for the rejection of an arbitration award, the court rules that such remedy is inherent in the dictates of the policy and is the proper method to resolve the rejection of arbitration awards exceeding the limits dictated by the policy and by statute.
Nelson v. County Mutual Insurance Co., 2014 IL App (1st) 131036.
