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Illinois Farmers Insurance Co. v. Hagenberg

Court of Appeals of Columbia District

August 31, 2017

Illinois Farmers Insurance Co., Appellant,
Robert John Hagenberg, III, Appellee.

          Argued May 17, 2017

         Appeals from the Superior Court of the District of Columbia (CAV-3069-14) (Hon. Brian F. Holeman, Motion Judge)

          Danny L. Worker, with whom Mary F. Sitko, Melissa H. Katz, Stephen Horvath, and Matthew Roberson were on the brief, for appellant.

          Jacob Lebowitz for appellee.

          Before Thompson and Beckwith, Associate Judges, and Pryor, Senior Judge.

          Beckwith, Associate Judge.

         Appellant Illinois Farmers Insurance Company (Illinois Farmers) appeals the trial court's ruling that the coverage limits of three Illinois Farmers car-insurance policies covering appellee Robert John Hagenberg could "stack" or aggregate to allow Mr. Hagenberg to recover compensation up to three times the policies' individual coverage limits. Illinois Farmers contends that the trial court erred when it held, following Boatright v. Illinois Farmers Ins. Co., 2013 IL App (5th) 120297-U, 2013 WL 3776817, that the three policies' anti-stacking clauses were ambiguous and thus unenforceable under Illinois law. Illinois Farmers also appeals the trial court's grant of attorneys' fees to Mr. Hagenberg. We reverse both rulings.



         Mr. Hagenberg was injured when a car struck his bicycle. The driver of the car had $25, 000 in liability insurance, an amount insufficient to cover Mr. Hagenberg's medical expenses and other damages. Mr. Hagenberg himself had underinsured-motorist coverage, however, that would compensate him for the difference between his actual damages-capped at $500, 000 by the policy-and the limit of the other party's liability coverage. Mr. Hagenberg's policy was issued by Illinois Farmers.[1]

         Mr. Hagenberg sued the driver and Illinois Farmers in the Superior Court. Mr. Hagenberg's claims against the driver were negligence claims, and they were subsequently settled for the $25, 000 limit of the driver's liability coverage. Mr. Hagenberg's cause of action against Illinois Farmers was breach of contract-he alleged that Illinois Farmers had failed to pay money owed to him under the underinsured-motorist provision. He specifically claimed that he was entitled to $475, 000, the difference between the $500, 000 coverage limit and the $25, 000 paid by the driver.

         Illinois Farmers moved to enforce an arbitration clause in the insurance policy, and the trial court, over Mr. Hagenberg's opposition, stayed the case and submitted the matter to binding arbitration. The arbitrator ultimately "awarded [Mr. Hagenberg] $750, 000." Illinois Farmers did not pay this amount but instead paid Mr. Hagenberg $475, 000.

         Mr. Hagenberg was unsatisfied with the $475, 000 recovery. He moved the trial court to vacate the arbitration stay, which it did, and he filed an amended complaint. In his amended complaint, Mr. Hagenberg revised his breach-of-contract claim to request $750, 000 in damages, and he added claims for declaratory judgment and enforcement of the arbitration award. He did not rely in his amended complaint on the arbitrator's seemingly categorical language "award[ing] [him] $750, 000, " and in fact throughout the course of the litigation in the trial court and in this court, Mr. Hagenberg has conceded that the only issue before the arbitrator was the extent of his damages, not his entitlement to have Illinois Farmers cover those damages.[2] Instead, in claiming that he could recover the full $750, 000 in damages from Illinois Farmers, Mr. Hagenberg relied on a contention-conceded by Illinois Farmers-that he was covered not only by his own insurance policy, but also by his parents' Illinois Farmers insurance policies.[3]Mr. Hagenberg's parents' insurance policies each provided $500, 000 in underinsured-motorist coverage, and Mr. Hagenberg asserted that all three policies' coverage limits could be "stacked" to provide up to $1, 500, 000 in coverage. He acknowledged that the policies contain anti-stacking language purporting to prohibit the aggregation of multiple policies' limits of coverage, but he contended that this language was ambiguous and thus unenforceable.[4]

         Illinois Farmers filed an answer and counterclaim for declaratory judgment, and the parties each filed motions for summary judgment on the validity of the anti-stacking language. Illinois Farmers also filed a motion requesting that the arbitration award be "modified to reflect that [Illinois] Farmers' obligation is limited to the amount of coverage available under the policy" or, in the alternative, that the award be vacated on the ground that "the arbitrator exceeded his authority [by] render[ing] an award that would impermissibly require stacking."

         The trial court issued an omnibus order granting summary judgment for Mr. Hagenberg and denying Illinois Farmers' motions for summary judgment and modification of the arbitration award. In ruling on the summary judgment motions, in particular, the court relied primarily on Boatright, 2013 IL App (5th) 120297-U, an unpublished opinion of the Illinois Fifth District Appellate Court.[5]The court in Boatright had considered the enforceability of an anti-stacking clause in several Illinois Farmers policies issued to the plaintiffs in that case. The Boatright court held that the anti-stacking clause was ambiguous-and thus unenforceable-because by its terms, the clause applied only to policies issued by "members of the Farmers Insurance Group of Companies, " and it was unclear whether "the named insurer on the declarations page" of the policies was one of those "members." Id. ¶ 32. The trial court in the present case found Boatright analytically sound and moreover concluded that Boatright was binding under the doctrine of collateral estoppel. The court accordingly held that the anti-stacking clause in the policies in this case was, like the clause in Boatright, ambiguous and unenforceable and entered judgment for Mr. Hagenberg in the amount of $750, 000.

         Further, upon Mr. Hagenberg's motion, the trial court granted attorneys' fees to Mr. Hagenberg under D.C. Code § 16-4425 (c) (2012 Repl.). The court reasoned that Illinois Farmers' conduct in this case was "troublesome given that it successfully moved for submission of the personal injury dispute to arbitration, yet effectively refused to abide by the decision of the arbitrator." The court thought that by defending the validity of the anti-stacking clause, Illinois Farmers needlessly "expend[ed] considerable judicial resources litigating the exact same issue already decided by [the] appellate court [in Boatright]." The court thus concluded that "equitable and policy considerations" justified a fee award.


         Before proceeding to the legal issues presented in this appeal, we briefly summarize the pertinent parts of the three Illinois Farmers insurance policies central to this case. The policies are identical in all material respects. They each contain the following anti-stacking clause: "The limits provided by this policy may not be stacked or combined with the liability limits provided by any other policy issued to any Insured Person by any of the Farmers Insurance Group of Companies." (Emphasis added.) Though none of the three policies contains an express representation stating that it was issued by one of the "Farmers Insurance Group of Companies, " each policy document does contain a "Notice of Information Practices" addendum that ends with the following:

This notice is sent on behalf of the Farmers Insurance Group of Companies, whose members include, but are not limited to:
Farmers Insurance Exchange, Fire Insurance Exchange, Truck Insurance Exchange, Mid-Century Insurance Company, Farmers New Century Insurance, Farmers Insurance Company, Inc. (A Kansas Corp.), Farmers Insurance Company of Arizona, Farmers Insurance Company of Idaho, Farmers Insurance Company of Oregon, Farmers Insurance Company of Washington, Farmers Insurance Company of Columbus, Inc., Farmers Texas County Mutual Insurance Company, Illinois Farmers Insurance Company, Mid-Century Insurance Company of Texas, Texas Farmers Insurance Company, Civic Property and Casualty Company, Exact Property and Casualty Company, and Neighborhood Spirit Property and Casualty Company.

(Emphases added.) The declarations page for each policy states that the policy was issued by "Illinois Farmers Insurance Company, Aurora, Illinois, "[6] and next to the name of the issuer is a "Farmers Insurance Group" logo. See infra Appendix. Each policy also bears the purported signatures of the secretary and vice president of "Illinois Farmers Insurance Company" and "Mid-Century Insurance Company."


         Illinois Farmers challenges the trial court's ruling that the anti-stacking clause in the three insurance policies is ambiguous and thus unenforceable. It argues that the trial court erred in concluding that Boatright 's holding on the enforceability of the anti-stacking clause in that case collaterally estopped Illinois Farmers from seeking to enforce the anti-stacking clause in the present case. Illinois Farmers further argues that as a substantive legal matter, the anti-stacking clause in the present case is unambiguous and enforceable. We address the collateral estoppel issue first.


         Under the doctrine of collateral estoppel, a party is precluded from relitigating an issue that the party "actually litigated" in a prior judicial proceeding and that was "determined by a valid, final judgment on the merits." Modiri v. 1342 Rest. Grp., Inc., 904 A.2d 391, 394 (D.C. 2006) (quoting Davis v. Davis, 663 A.2d 499, 501 (D.C. 1995)).[7] The party against whom collateral estoppel is invoked must have had a "full and fair opportunity" to litigate the issue, and the determination of the issue in the prior proceeding must have been "essential to the judgment, and not merely dictum." Id. (quoting Davis, 663 A.2d at 501). Significantly, "the previously resolved issue must be identical to the one presented in the current litigation; similarity between the issues is insufficient." District of Columbia v. Gould, 852 A.2d 50, 56 (D.C. 2004) (emphasis added). Where the issue in question is the legal effect of a document, identity of the issues typically exists where the document in the current case is "identical in all relevant respects" to the document whose effect was adjudicated in the earlier action. Restatement (Second) of Judgments § 27 cmt. c (Am. Law Inst. 1982).[8] Whether these factors justify the application of collateral estoppel is a question of law that we review de novo.[9] Franco v. District of Columbia, 3 A.3d 300, 304 (D.C. 2010).

         Illinois Farmers claims that the trial court erred in finding that Boatright's holding on the ambiguity and enforceability of the anti-stacking clause in that case precluded litigation of the ambiguity and enforceability of the anti-stacking clause in the present case. Illinois Farmers relies primarily on the identity requirement, arguing that the collateral estoppel doctrine does not apply because the anti-stacking clause and related provisions in Boatright are not identical to those in the present case.

         In Boatright, the plaintiffs sought to stack the underinsured-motorist-coverage limits for several Illinois Farmers insurance policies. 2013 IL App (5th) 120297-U, ¶¶ 2-3. The policies, however, contained language stating that the coverage limits could "not be stacked or combined with the limits provided by any other policy issued to [the policyholder] or a family member by any member company of the Farmers Insurance Group of Companies." Id. ¶ 9 (emphasis added). The policies in Boatright also contained a "Notice of Information Practices" page listing the "members" of the "Farmers Insurance Group of Companies." Id. ¶ 11. Included in the list-which was identical to the list on the Notice of Information Practices page in the present case, reproduced in Part I.B, supra-was "Illinois Farmers Insurance Company." See id. As in the present case, the issuer of each policy was identified on the declarations page not as "Illinois Farmers Insurance Company" but as "Illinois Farmers Insurance Company, Aurora, Illinois" Id. ¶ 6 (emphasis added).

         The Boatright court found that a reasonable person could be uncertain as to whether "Illinois Farmers Insurance Company, Aurora, Illinois, " referred to the same entity as "Illinois Farmers Insurance Company" and thus be uncertain as to whether the issuer of the policies, as identified on the declarations page, was one of the listed members of the Farmers Insurance Group of Companies. 2013 IL App (5th) 120297-U ¶¶ 28, 32. The court explained:

Despite the ease of which to do so, . . . "Illinois Farmers Insurance Company, Aurora, Illinois[, ]" . . . was [not] identified in the policy as a "member company of the Farmers Insurance Group of Companies." Nor do[es] th[is] name[] appear verbatim in the text listing the member companies of Farmers Insurance Group of Companies. Although "Illinois Farmers Insurance Company" . . . [is] named as [a] member[] of the Farmers Insurance Group of Companies, ...

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