Illinois Supreme Court Resolves Split in Appellate Districts Over How to Apply Set-Off’s When the Guaranty Fund Defendant a Dram Shop Defendant

This is post from my blog Illinois Personal Injury Trial Book.  It discusses a recent Illinois Supreme Court decision that is impacts the amount of insurance available to plaintiff’s when the Illinois Insurance Guaranty Fund is required to defend defendant/insured of an insolvent Dram Shop Carrier.

Rogers v. Imeri, 2013 IL 115860 (Theis)

Facts:  Plaintiff’s decedent was killed in a head-on motor vehicle collision with an intoxicated driver. The Estate had two available claims, the automobile negligence claim against the driver and a dram shop claim against the bar that served him alcohol.  The dram shop claim included claims for injury and loss of society thereby making $130,335.51 the total statutory amount available to the plaintiff under the Dram Shop Act.  The Estate obtained $26,550 from the driver’s insurance policy and an additional $80,000 in underinsured coverage from its own policy.  The insurer for the dram shop defendant was insolvent and so the Illinois Insurance Guaranty Fund was defending the case.  It sought a ruling from the trial court that pursuant to section 546(a) of the Illinois Insurance Guaranty Fund Act the $106,550 recovered by the plaintiff should be set off as “other insurance” from the $130,335.51 statutory cap amount such that the total recoverable to the plaintiff would be only $23,788.51.  The plaintiff argued that the “other insurance” set off should not be applied until after a jury verdict.  The trial court agreed with the plaintiff and ruled that the request was pre-mature and set-offs would be determined after a jury determined the total damages, however, it approved a 308 certified question which was accepted and affirmed by the appellate court.  The defendant petitioned the Illinois Supreme Court for review which due to a split in authority between the First District and Fifth District was accepted.

Holding:  When the Illinois Insurance Guaranty Fund is defending a claim under the Dram Shop Act, the set-off from other insurance are reduced from the total available limits under the Dram Shop Act, not from the verdict.

Filed in Trial Book Under:  Dram Shop Act, Illinois Insurance Guaranty Fund, Statutory Interpretation, Set-Offs

Commentary:  Add this decision to the long list of reasons that Dram Shop cases are generally unappealing for plaintiffs.  Under the approach adopted by the plaintiff, and followed by the 5th District, the plaintiff would be able to try the case to a verdict and if the result were say $500,000, the $106,550 in other insurance would then be applied to that total, and the Guaranty Fund would be required to underwrite the entire statutory limit under the Dram Shop because the verdict was much higher than the “other insurance” set-off.  I certainly understand the logic of the plaintiff and the Fifth District here, and wish that the Supreme Court had followed it, but at the end of the day the statutory purpose of the Guaranty Fund is to be an insurer of last resort and not to make the plaintiff whole, or more whole in this case.