Farmers Automobile Insurance v. Wroblewski

Citations: 887 N.E.2d 916; 382 Ill. App. 3d 688; 320 Ill. Dec. 772; 2008 Ill. App. LEXIS 401Docket: 1-06-3604

Court: Appellate Court of Illinois; May 2, 2008; Illinois; State Appellate Court

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Farmers Automobile Insurance Association filed a declaratory judgment action against insureds Stephen and Gloria Wroblewski, seeking a ruling that it was not obligated to provide uninsured motorist coverage following a traffic accident involving Wroblewski and uninsured motorist Sharon Drolet. The Appellate Court of Illinois addressed two main points on appeal: 

1. The circuit court's conclusion that Wroblewski's settlement with Drolet's employer, which released the employer's "agents" and "employees," did not release her claims against Drolet.
2. The court's determination that Wroblewski's $1.25 million settlement with Drolet’s employer should offset her total damages of $1.85 million.

The appellate court reversed the circuit court’s judgment and remanded for a ruling in favor of Farmers. The background includes Wroblewski sustaining serious injuries in a 1997 accident with Drolet, who later died. Wroblewski settled claims against both Drolet's estate for $10,000 and Walgreens for $1.25 million, executing releases for both parties. Walgreens fulfilled its settlement payment, but the insurer for Drolet became insolvent and failed to pay Wroblewski the agreed amount. This led to Wroblewski filing a claim for uninsured motorist coverage with Farmers. The insurance policy defined an uninsured motorist as one whose insurer "is or becomes insolvent."

Farmers contended that the limit of liability clause in Wroblewski's policy allowed them to offset the $100,000 limit for uninsured motorist coverage against the $1.25 million Wroblewski received from her Walgreens settlement. They pointed out that Wroblewski had signed a release that discharged Walgreens and all related entities from claims related to the vehicle collision with Drolet. Wroblewski responded by asserting that Farmers wrongfully denied her uninsured motorist claim, acknowledging the release but disputing Farmers' interpretation of its terms. 

Subsequently, Farmers filed a motion for judgment, which was transformed into a motion for summary judgment, ultimately denied by the circuit court without prejudice. Wroblewski later filed a motion to dismiss based on ripeness or to compel arbitration, arguing that her damages had not been determined as the case against Drolet's estate was still pending. She claimed it was illogical to consider the Walgreens settlement as barring her uninsured motorist claim since the action against Drolet's estate was unresolved, contending that Illinois law does not equate an employer settlement with extinguishing liability for the employee.

In response, Farmers reiterated that the release from the Walgreens settlement barred Wroblewski from receiving additional uninsured motorist coverage due to the funds already received. The circuit court denied both Wroblewski's motion to dismiss and Farmers' summary judgment motion without prejudice. Wroblewski filed a renewed motion to dismiss, clarifying that the court previously ruled on the release's ambiguity regarding Drolet's estate's liability. She emphasized that the determination of the release's scope should reflect the parties' intentions, as discerned from the release's language and context, citing relevant case law.

Wroblewski submitted affidavits from her attorney, Sheldon Brenner, and Walgreens' attorney, Tom Andrews, both affirming that the settlement aimed to release only Walgreens from liability, not Drolet's estate. Wroblewski highlighted a separate settlement with Drolet, reinforcing the intention that the Walgreens settlement did not release Drolet. On January 7, 2004, Farmers responded to Wroblewski's motion to dismiss and renewed its motion for summary judgment, arguing that Wroblewski was not entitled to uninsured motorist coverage because she had been fully compensated through the Walgreens settlement. Farmers contended that the settlement's release was comprehensive and unambiguous, covering all claims against Walgreens and its employees, including Drolet. In her January 12, 2004 response, Wroblewski reiterated that her damages were not fully determined, and her lawsuit against Drolet's estate was still pending. She argued that Illinois law does not support the notion that a settlement with an employer absolves an employee's direct liability and claimed the Walgreens release included "boilerplate language" that did not release her claims against Drolet's estate, as Drolet was not specifically named. Citing Alsup v. Firestone Tire & Rubber Co., Wroblewski asserted that ambiguous language in releases does not cover unnamed tortfeasors. On January 22, 2004, the circuit court ruled that the Walgreens release did not absolve Wroblewski's claims against Drolet's estate or her uninsured motorist claim against Farmers, stating that a trial or arbitration was necessary to ascertain Wroblewski's damages before determining insurance coverage. The court continued the case for further discussions on damage adjudication. On January 26, 2004, Farmers sought a Supreme Court Rule 304(a) finding to appeal the court's order and filed for a stay under Rule 305(b), both of which were denied by the court on January 29, 2004, which also instructed Wroblewski to file for arbitration.

On March 3, 2004, the circuit court established a filing schedule for Farmers to request certification for an interlocutory appeal under Rule 308 and set a status hearing for arbitration, noting the parties' agreement to arbitration. Farmers filed a motion for certification on March 10, 2004, questioning the release agreement regarding vicariously liable Walgreens and its implications for Drolet, while Wroblewski opposed the motion, arguing it did not present a question of law and would delay the case resolution. The court denied Farmers' motion on March 24, 2004, leading to arbitration regarding Wroblewski's damages. In October 2006, the arbitration panel awarded Wroblewski $1,850,000, with the damages subject to her uninsured motorist policy terms. The circuit court confirmed the award on November 28, 2006, entering judgment for Wroblewski against Farmers for $100,000, the maximum coverage available. Farmers appealed the November 28 order and the earlier January 22 order, challenging the court's determination that the Walgreens release did not absolve Drolet and the offset of Wroblewski's settlement against total damages rather than just the uninsured motorist coverage limit. Wroblewski contended that Farmers waived its claims by not contesting the November 28 order and by agreeing to arbitration. However, it was established that an appeal from a final judgment allows for the review of all preceding nonfinal orders that contributed to that judgment, thus enabling the review of both the January 22 and November 28 orders on appeal.

Waiver involves a litigant's intentional relinquishment of a known right, which must result from a consensual and affirmative act. In this case, Farmers did not relinquish its argument regarding Wroblewski's entitlement to uninsured motorist coverage or the effectiveness of the Walgreens release in releasing Wroblewski's claims against Drolet. Farmers maintained its positions in the circuit court and sought, albeit unsuccessfully, a Rule 304(a) finding and Rule 308 certification to appeal the court's orders. Wroblewski's challenge to Farmers' arbitration agreement and failure to object to the November 28, 2006, order was deemed unfounded, as any objection would have been futile, given that Farmers' arguments had been previously rejected.

Farmers contests the circuit court's January 22, 2004, order regarding the Walgreens release, which stated that it did not release Wroblewski's claims against Drolet, a Walgreens employee. Farmers argues that the release was unambiguous, making parol evidence regarding intent impermissible, and that the reference to "agents" and "employees" in the release was specific enough to include Drolet. A release is treated as a contract governed by contract law, with the intent of the parties being paramount. Courts should interpret contracts based on the plain meaning of the language and consider the contract as a whole. Clear and explicit terms in a release must be enforced as written, and extrinsic evidence is inadmissible to alter unambiguous contract provisions.

In Evans v. Lima Lima Flight Team, Inc., the Illinois Supreme Court clarified the requirements for a general release to effectively discharge the liability of joint tortfeasors under section 2(c) of the Uniform Contribution Among Tortfeasors Act. It established that for a release to cover tortfeasors who did not negotiate the release, they must be specifically identified, a standard that can be met by designating a class of individuals. Case law supports that terms such as "agents" or "employees" can sufficiently identify joint tortfeasors. In the case at hand, the release executed by Gloria and Stephen Wroblewski included the terms "agents" and "employees" in relation to Walgreen Co., effectively releasing claims against Sherri Drolet, who was specifically named in connection with the underlying incident. The court concluded that the release language unambiguously encompassed Drolet, and thus Wroblewski had released all claims against her for the incident in exchange for $1.25 million. The circuit court's contrary finding was deemed erroneous, and Wroblewski’s reliance on a different case did not affect this conclusion due to distinct factual circumstances.

In Duree, the plaintiff obtained sanctions against a defendant attorney from a Kansas court, subsequently enforcing that award as an Illinois judgment. The defendant argued that a release executed by the plaintiff and a third party in a different matter absolved him from the Kansas judgment since it mentioned "attorneys." The Duree court rejected this argument, stating that the intention of the parties governed the release's scope, which was determined by the release's language and surrounding circumstances. Key findings included: no evidence of the defendant being the third party's attorney; the release did not name the defendant and was limited to specified individuals; the language was unambiguous, focused on the matters between the plaintiff and the third party; and no indication that the third party knew of the Kansas judgment when signing the release. 

In the current case, Wroblewski is an employee of Walgreens, explicitly referenced in the release, contrasting with the ambiguity in Duree regarding the defendant's role. Additionally, Duree involved a foreign judgment's implications, making it inapplicable here. Wroblewski argues that the Walgreens release's intent should be interpreted using parol evidence, characterizing the language as "boilerplate," but does not claim ambiguity. The court finds the Walgreens release language clear and unambiguous, thus disregarding Wroblewski's reliance on parol evidence, which is barred by the parol evidence rule. The court asserts that the subjective understanding of contract language by the parties is not admissible to alter its clear terms.

The intention of the parties in a written contract is determined by the contract's language, not their subjective thoughts. In this case, the unambiguous terms of the Walgreens release indicate that Wroblewski released her claims against Drolet, precluding her from seeking uninsured motorist coverage from Farmers Insurance. Consequently, the coverage issue is rendered moot, as there is no actual controversy to address. The circuit court's error in granting Wroblewski entitlement to this coverage and submitting the matter to arbitration necessitates vacating the arbitration award, which constitutes a gross error of law. A reviewing court can vacate such awards where it is clear that the arbitrators would have ruled differently had they recognized the legal mistake. Upon review, it is determined that the arbitrators would have concluded Wroblewski was not entitled to uninsured motorist coverage due to the Walgreens settlement. The judgment of the circuit court is reversed, and the case is remanded for entry of judgment in favor of Farmers Insurance. Additionally, the appeal is brought on behalf of Gloria Wroblewski following the death of Stephen Wroblewski.