Hassan v. State Farm Mut. Auto. Ins. Co.

1

2024 IL App (1st) 231382-U

SUFYAN HASSAN, Plaintiff and Counterdefendant-Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant and Counterplaintiff-Appellee.

No. 1-23-1382

Court of Appeals of Illinois, First District, Fourth Division

February 22, 2024

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

Appeal from the Circuit Court of Cook County No. 2020 CH 05785 The Honorable Joel Chupack, Judge, presiding.

JUSTICE OCASIO delivered the judgment of the court. Presiding Justice Rochford and Justice Martin concurred in the judgment.

ORDER

OCASIO JUSTICE.

¶ 1 Held: The trial court's order granting the motion to stay arbitration and denying the motion to compel arbitration is reversed, and the cause remanded, where State Farm did not waive its right to contest coverage but there remained an unresolved factual question as to whether it was estopped from doing so. The appeals from the trial court's orders denying Hassan's motion to strike affirmative defenses and motion to dismiss counterclaim are dismissed for lack of jurisdiction.

¶ 2 Plaintiff Sufyan Hassan appeals, under Illinois Supreme Court Rule 307(a)(1) (eff. Nov. 1, 2017), the trial court's interlocutory orders (1) staying arbitration and denying his motion to compel arbitration, (2) denying his motion to strike defendant State Farm Mutual Automobile Insurance Company's (State Farm) affirmative defenses and (3) denying his motion to dismiss State Farm's counterclaim. Because there remains an unresolved question of fact as to whether State Farm should be estopped from contesting coverage, we reverse the order staying arbitration and declining to compel arbitration and remand for further proceedings in accordance with section 2 of the Uniform Arbitration Act. 710 ILCS 5/2 (West 2022). However, we find that we lack jurisdiction to review the trial court's orders denying Hassan's motion to strike affirmative defenses and motion to dismiss counterclaim, which are neither independently appealable under Rule 307 nor intertwined with the arbitration order, so we dismiss his appeal from those orders.

¶ 3 I. BACKGROUND

¶ 4 A. The Insurance Policy

¶ 5 This case involves an automobile insurance policy issued by State Farm to Hassan (the Policy) that was effective from October 26, 2017, to April 26, 2018, and covered a 2007 Cadillac Escalade owned by Hassan. The Policy included coverage for liability, medical payments (limited to $10,000 per person), physical damage (including related expenses such as emergency road service, car rentals, and travel), and uninsured and underinsured motor vehicles. Under the uninsuredmotorist coverage, which was required by section 143a(1) of the Illinois Insurance Code (215 ILCS 5/143a(1) (West 2018)), State Farm agreed to pay Hassan compensatory damages for bodily injuries sustained in an accident caused by a vehicle that either was not covered by liability insurance or whose driver or owner could not be identified. The Policy required binding arbitration of any disputes about two specific questions that might arise under the uninsured-motorist coverage:

"a. Is the insured legally entitled to recover compensatory damages from the owner or driver of the uninsured motor vehicle?

b. *** [W]hat is the amount of the compensatory damages that the insured is legally entitled to recover from the owner or driver of the uninsured motor vehicle?" (Italics in original.)

The arbitration agreement further provided that arbitrators would "have no authority to decide any questions of law."

¶ 6 Under the Policy, any person defined as an insured had a duty to "submit to an examination under oath provide a statement under oath, or do both, as reasonably often as [State Farm] require[s]." With respect to the uninsured motor vehicle coverage, the term insured included (among others) Hassan as the policyholder named on the declarations page, any spouse who "resid[ed] primarily with" him, and "any person entitled to recover compensatory damages as a result of bodily injury to an insured." (Italics in original.) The Policy also contained a provision entitled "Concealment or Fraud," which stated as follows:

"There is no coverage under this policy if you or any other person insured under this policy has made false statements with the intent to conceal or misrepresent any material fact or circumstance in connection with any claim under this policy." (Italics in original.)

¶ 7 B. Hassan's Insurance Claim

¶ 8 In February 2018, Hassan filed a claim under the Policy for losses stemming from an alleged hit-and-run collision on February 12, 2018. His claim involved physical damage to the car as well as physical injuries to his person and associated medical expenses sustained during the collision, including a torn distal bicep tendon in his left arm, which required surgery.

¶ 9 Materials in the record show that State Farm initially denied the claim as it pertained to physical damage to the insured vehicle under the belief that the damage pre-existed the alleged collision, but it later reversed course and paid for repairs. Following those repairs, Hassan continued experiencing problems with an oil-pressure sensor and a crash sensor, but State Farm declined to pay to fix those problems after determining that they were not related to the February 12, 2018 incident. The record does not show that State Farm took any action on the claim as it pertained to medical expenses or uninsured-motorist coverage at that time.

¶ 10 At the time of the alleged hit-and-run collision, Hassan was married to Lieim Yusuf. In July 2018, Yusuf filed for divorce. Several weeks later, her divorce attorney notified the attorney Hassan had retained in connection with his insurance claim that any "monetary award" in his "personal injury case" would be considered a marital asset. Then, in November 2018, Yusuf contacted State Farm and alleged that Hassan had actually torn his tendon while lifting weights about a week before the alleged hit-and-run.

¶ 11 In January 2019, State Farm sent Hassan a reservation-of-rights letter. The letter, which was signed by a claim specialist at State Farm, stated:

"State Farm *** may have no duty to pay, indemnify, defend, or otherwise perform under the policy *** because:

A question exists as to whether or not there has been a material misrepresentation as to the facts, circumstances and alleged injuries surrounding this loss.

It is questionable whether the injury was caused by a hit-and-run motor vehicle, so as to qualify as an uninsured motor vehicle under the Uninsured Motor Vehicle coverage.

For these reason(s), and for any other reasons which may become known, State Farm *** reserves all rights under the policy, including the right to deny coverage in its entirety.

***

Any action taken by State Farm *** or any of its authorized representatives to investigate, evaluate, pay, defend, or otherwise adjust any claim arising out of the alleged loss shall not waive any of the terms or conditions of the State Farm policy of insurance ***, nor shall such action waive any of your rights under the policy."

The letter also stated that State Farm did "not intend *** to waive any policy defenses not stated above" and it purported to "specifically reserve[] its right to assert such additional policy defenses at any time."

¶ 12 About three weeks later, Hassan's attorney sent a letter to State Farm asserting that the reservation-of-rights letter was deficient because the grounds stated in the letter for reserving rights "lack[ed] any specificity." He noted that the first ground given in the reservation-of-rights letter did not "describe with any particularity *** the potential misrepresentations" and that the second ground was merely "unsupported questioning of established facts." The record does not contain a response from State Farm.

¶ 13 Within a week of Hassan responding to the reservation-of-rights letter, State Farm requested that he submit to an examination under oath as required by the Policy. On February 24, 2019, counsel for State Farm sent a letter to Hassan's attorney reflecting that Hassan had agreed to sit for the examination under oath. The letter also anticipated that the claim could go to arbitration:

"In the event State Farm and Mr. Hassan are unable to agree on the appropriate measure of damages upon completion of State Farm's investigation of this claim, and assuming no coverage defenses, State Farm is willing to proceed to binding arbitration as detailed in the applicable policy."

The letter goes on to detail State Farm's position about what the appropriate forum for arbitration would be under the Policy.

¶ 14 That same day, State Farm received a report it had solicited from a firm called Crash Data Services, LLC, concerning the cause of the damage to Hassan's Escalade. The report concluded that, based on the shape, location, and nature of the damage and the absence of paint transfer, the Escalade had been "backed into a tall, rounded, concrete barrier," not struck by another vehicle. The report described Hassan's account of a hit-and-run collision as "patently false."

¶ 15 In April 2019, Hassan, as required by the Policy submitted to an examination under oath. He testified that, on February 12, 2018, he was parked on the side of the road when a white pick-up truck struck him from behind and then drove away. He said that, at the moment of impact, he had his left hand on the steering wheel and was reaching toward the back seat to retrieve his phone, which had fallen to the floor. He attributed his bicep injury to the collision, and he denied Yusuf's allegation that he had injured his bicep lifting weights. After the...