A unanimous panel decision in Illinois' Second DCA provides two examples of "Doctrines" at work.
First, the decision has an interesting twist on equitable subrogation when it is sought by an Insurance Company. In Iliniois, the Second District held, equitable subrogation generally arises when one party pays a debt for which another party is primarily liable and seeks to be repaid, the debt being one which "in equity and good conscience" should have been paid by the latter party. Except when it comes to Plaintiff Insurance Companies claiming equitable subrogation, apparently:
A plaintiff insurance carrier claiming a right to equitable subrogation must establish that: (1) the defendant carrier is primarily liable to the insured for a loss under a policy of insurance; (2) the plaintiff carrier is secondarily liable to the insured for the same loss under its policy; and (3) the plaintiff carrier discharged its liability to the insured and, at the same time, extinguished the liability of the defendant carrier.
Download State Farm Mut. Auto. Ins. Co. v. DuPage County (Ill. 2d DCA Case No. 2.10.0580, Opinion Filed June 16, 2011) PUBLIC ACCESS, also published as State Farm Mutual Auto. Insurance Co. v. DuPage County, 2011 WL 3422800 *5 ¶ 34 (Ill. 2d DCA June 16, 2011)(authorized password required to access Westlaw). [Emphasis added.] The emphasized word, "carrier," was essential to the panel's decision in this case. Among other things, the Court held that a self-insured municipality like the Defendant in this case could not be a "defendant carrier," and so there could be no equitable subrogation available to the Plaintiff Insurance Carrier.
The panel's equitable subrogation decision may or may not be appropriately based on an apparent Illinois "Doctrine" of equitable subrogation in cases in which it is invoked by Plaintiff Insurance Carriers. However, most if not all other jurisdictions follow the view that Equitable Subrogation applies in cases in which the facts show a primary liability on the part of the Defendant who (or which) in equity and good conscience should have paid the debt which in reality was paid by the Plaintiff -- regardless of who or what the Plaintiff is, and regardless too of who or what the Defendant is. Courts in other jurisdictions accordingly do not discriminate among either Plaintiffs or Defendants whenever Plaintiffs seek the remedy of equitable subrogation, even if at least one of them is an Insurance Carrier. See generally Dennis J. Wall, "Litigation and Prevention of Insurer Bad Faith § 7:9, "Actions by Excess Carriers--Subrogation" (West Publishing Third Edition 2011).
The Illinois Second DCA's decision in this case reads more like a "Doctrine of Insurer Contribution," see generally id. § 7:14, "Actions by Excess Carriers--Doctrine of Insurer Contribution," or perhaps "Equitable Indemnity" which is a specific remedy recognized in Illinois and perhaps nowhere else.
There is not enough time or room here to mention the panel's second invocation of a "Doctrine" in this decision. It involves relationships and ordering of Coverages between Primary Carriers and Excess Carriers, and it is a doozy. To be continued on the next post .......
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