Illinois Supreme Court Vacates Appellate Ruling On Interlocutory Order.

In a battle between insurance company titans, State Farm sued Illinois Farmers for a declaration that the “step down” provisions in the Farmers’ automobile policies were unenforceable because they were against public policy. (“Step down” provisions allow the insurer to reduce policy limits when the driver of the insured vehicle is neither a family member nor a listed driver.) Farmers moved to dismiss the complaint, claiming the step down provisions were clear and unambiguous. State Farm moved for partial summary judgment, claiming that the step down provisions were against public policy.

The trial court denied Farmers’ motion to dismiss, and granted State Farm’s motion for partial summary judgment. So the judgment that was entered only concerned the public policy issue. The trial court also entered Rule 304(a) language, allowing an interlocutory appeal.

Farmers appealed the public policy ruling. In its brief, Farmers also advanced its ambiguity argument. The court of appeals reversed, ruling that the step down provisions were not contrary to public policy. Over objection by State Farm, the appellate court ruled that the ambiguity argument was properly before the court. The appellate court ruled that the Farmers policy was not ambiguous.

State Farm then appealed to the Illinois Supreme Court. The Supreme Court affirmed the public policy ruling. But the court vacated the ambiguity ruling because denying a motion to dismiss does not render a final judgment. “It is well established that the jurisdiction of appellate
courts is limited to reviewing appeals from final judgments, subject to
statutory or supreme court rule exceptions … none of which are present in
this case. It is also well settled in this state that a trial court’s denial of
a motion to dismiss is an interlocutory order that is not final and
appealable … Because the appellate court lacked jurisdiction to review the
ambiguity and direct action issues, those portions of the appellate
court’s decision are vacated.”

You can read the whole case, State Farm Mutual Automobile Ins. Co. v. Illinois Farmers Ins. Co., No. 103816 (9/20/07), by clicking here.