Lloyd A. Karmeier
Lloyd A. Karmeier

SPRINGFIELD — Likening a lower court’s logic to a “lottery” for drivers, the state’s top court today reversed a $600,000 judgment against Enterprise Rent-A-Car’s Chicago area subsidiary.

The Illinois Supreme Court this morning ruled self-insured rental car companies are liable for a maximum of $100,000 toward all injured parties in a collision.

A unanimous decision authored by Justice Lloyd A. Karmeier stemmed from a 2007 crash in which Enterprise paid out $75,000 to two of the people involved in the crash and argued it owed only the remaining $25,000 allowed under the cap to the plaintiff.

The ruling overturns a 1st District Appellate Court decision authored by Justice John B. Simon in June 2014. It essentially restores the judgment given in the circuit court in May 2010.

The 2007 accident involved Deshaw Nelson and Donald Artley. Artley was driving an Enterprise vehicle rented by another person.

Nelson filed his complaint against Artley in Cook County Circuit Court in January 2010 alleging the crash caused his right femur to fracture. During a May 2010 prove-up hearing, Circuit Judge James P. Flannery Jr. entered a $600,000 default judgment against Artley.

One month, later, Nelson initiated citation proceedings against Enterprise to collect on the judgment.

Enterprise originally argued it was not responsible for any payments after the crash, arguing that Artley had actually stolen the vehicle from the woman who was the authorized renter. It ultimately waived that defense.

The company instead asserted it was only responsible for $100,000 per occurrence under state law. Since at the time Enterprise had already paid $75,000 to other people in the same occurrence, it argued only $25,000 remained for Nelson to collect.

In September 2011, Nelson petitioned the court for a turnover order for the full $600,000 plus interest and costs. He argued that Enterprise retained a risk up to $2 million in third-party liability per occurrence because it opted to self-insure under state regulations.

In the 11-page decision, the high court noted there are three ways for rental-car companies to satisfy proof-of-insurance requirements under the Vehicle Code. They can file motor vehicle liability bonds with the secretary of state, file certain insurance forms provided by that office or get a certificate of self-insurance issued by the state’s Department of Insurance.

The former two options, under Sections 9-103 and 9-105 of the code, require the company to be able to pay at least $100,000 in collisions. But the Vehicle Code doesn’t specify the amount required for self-insured companies under Section 9-102.

Specifications for that situation came from a 2005 decision by the 3rd District Appellate Court in Fellhauer v. Alhorn.

In that case, the majority held that self-insurers are subject to the same upper limits on liability as those who get their proof-of-insurance in the other two ways — $100,000.

Cook County Circuit Judge Alexander P. White, following Fellhauer, granted the turnover petition in May 2010, but limited the amount to $25,000.

The Fellhauer decision has been in place for a decade, Karmeier wrote, without any modifications by the legislature.

Fellhauer stood unquestioned, and the legislature allowed the relevant provisions of the Vehicle Code to remain in effect, as written, without change throughout this period,” he wrote. Thus, it’s presumed the legislature acquiesced to the court’s interpretation, the high court stated.

The majority added that the purpose of the three “proof of financial responsibility” options under the Vehicle Code is not to prove the ability to fully satisfy judgments.

“Rather, it is merely proof of ability to provide some base level of financial coverage where otherwise there would be none. That base-level coverage is therefore the standard by which self-insurers’ liability must be gauged.”

Construing the self-insured provision to expose companies to more than the same base levels laid out in the other two options would render that provision meaningless, Karmeier wrote, calling it “a deal no rational economic actor would be likely to take.”

He added that the 1st District panel’s decision in this case, which veered away from Fellhauer, would have “random and inconsistent consequences” for drivers.

“Under the result reached by the appellate court, the ability of persons injured in accidents involving rental cars to recover from the cars’ owners would become a lottery,” Karmeier wrote, adding that motorists would be subject to the whim of companies and which policy they had chosen to satisfy the state’s laws on proving insurance.

“Two otherwise identical injured parties could thus face substantially different recovery prospects based solely on the fortuity of which option the rental car company had chosen to satisfy our state’s proof of financial responsibility requirements,” the opinion stated.

“This could be a boon for a person injured in an accident which happened to involve a self-insured rental car. For all other injured parties, however, the inequity is manifest.”

Finally, the high court found troubling the appellate panel in this case for disparaging the majority in Fellhauer and its use of “common sense.” The panel’s comments matched the dissent in Fellhauer, which wrote that the “court should not rewrite statutes with its own ‘common sense.’ ”

“With due respect to the appellate court panel in this case and the dissenting justice in Fellhauer, we do not believe this criticism is valid,” Karmeier wrote.

He added that the high court endorses using common sense to construe statutes, and more importantly, the use of the phrase in the Fellhauer decision was not a substitute for disciplined, legal reasoning. Rather, it was shorthand for such an analysis.

“The conclusion it reached was properly followed by the circuit court in this case. It should have been followed by the appellate court as well,” Karmeier wrote.

Chicago sole practitioner Lisa K. Lange represented Nelson. She said she was still reviewing the decision.

Hugh C. Griffin, of counsel at Hall, Prangle and Schoonveld LLC, argued for Enterprise.

"Enterprise is pleased with the decision and its recognition of the correctness of the 4th District's prior decision in Fellhauer, which Enterprise always believed was the correct statutory interpretation," Griffin said in a statement.

The case is Nelson v. Artley, No. 118058.