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Gerdesmeier v. Sutherland12/23/2003
Illinois Farmers Insurance Company, as the uninsured motorist insurer, appeals from the district court's refusal to allow it to intervene in the case and to vacate the default judgment its insured, respondents Ronald and Mary Gerdesmeier, obtained against an uninsured motorist. Because the district court did not abuse its discretion in refusing to permit intervention, we affirm that determination. Illinois Farmers Insurance Company further appeals from the subsequent judgment on the pleadings entered against it as the insurer and in favor of the respondents on the uninsured motorist claim. Because a policy provision providing for arbitration of uninsured motorist claims is enforceable and because the default judgment against the uninsured motorist does not preclude arbitration, we reverse the judgment against appellant and remand for arbitration.
FACTS
Respondents Ronald and Mary Gerdesmeier were involved in a car accident with Jeffry Sutherland, an uninsured motorist. On the date of the collision, the Gerdesmeiers had automobile insurance with appellant Illinois Farmers Insurance Company (Illinois Farmers). The policy included statutorily mandated uninsured motorist coverage and required arbitration if no agreement could be reached as to whether the insured was legally entitled to recover damages or as to the amount of damages. The policy also required insured individuals making claims to give prompt notice of the accident, cooperate with the insurance company, and promptly send the company any legal papers related to the claim.
Within the first months after the accident, the Gerdesmeiers sent several letters to Illinois Farmers, informing it of Sutherland's uninsured status and their intention to assert an uninsured motorist claim. Illinois Farmers sent a letter to the Gerdesmeiers requesting that all further correspondence be sent to its named claims adjuster. The Gerdesmeiers sent the requested documentation, including medical and accident reports, to that person.
One year after the accident, the Gerdesmeiers initiated legal action against Sutherland. Although Illinois Farmers disagrees, the district court found that the Gerdesmeiers sent Illinois Farmers a copy of the summons and complaint informing it that Sutherland was uninsured and asserting that "pursuant to recent case law [Illinois Farmers] will be bound by the decisions in this case."
After Sutherland failed to answer the complaint, the Gerdesmeiers brought a motion for default judgment. The district court found that a copy of this motion was sent to Illinois Farmers. On September 11, 2002, the district court entered judgment for the Gerdesmeiers for an amount in excess of $100,000. On September 24, the Gerdesmeiers sent Illinois Farmers a copy of the default judgment and requested payment of the judgment up to the uninsured motorist policy limits of $100,000. Illinois Farmers refused, claiming that it knew nothing of the litigation against Sutherland and that the Gerdesmeiers had to arbitrate their claims against Illinois Farmers.
The Gerdesmeiers then brought suit against Illinois Farmers for the uninsured policy limits and moved for a judgment on the pleadings. Illinois Farmers filed motions to intervene as a defendant in the litigation against Sutherland and to set aside the default judgment. It also claimed that in the uninsured motorist action the Gerdesmeiers had failed to provide Illinois Farmers with adequate notice of and an opportunity to participate and that they were, by terms of the policy, required to arbitrate the uninsured motorist claim. The district court denied Illinois Farmers' motions and granted the Gerdesmeiers' motion for judgment on the plead
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