Zurich, the workers’ compensation insurer for All American Roofing, filed arbitration for nearly $750,000 in unpaid deductibles and retrospective premiums. All American Roofing argued that the arbitration clauses in its 2001, 2002, 2003 and 2004 policies were unenforceable because Zurich did not notify All American Roofing of the clauses’ addition in 2001 or 2002 and All American Roofing did not sign the 2003 and 2004 policies. The trial court granted Zurich’s motion to dismiss and ordered the parties to arbitrate all disputes. All American Roofing appealed.
All American Roofing offered four grounds for its argument that the arbitration clause in its 2001 and 2002 insurance policies was unenforceable. First, All American Roofing argued that Zurich waived its right to arbitration by asking the district court to declare the NY choice-of-law and arbitration clauses enforceable. The appellate court held that since Zurich was the party demanding arbitration, its request did not amount to a waiver of its arbitration rights. Second, All American Roofing argued that because the inclusion of the choice-of-law and arbitration language clauses constituted a material alteration of coverage, they were unenforceable. Zurich failed to provide notice required by section 5/143.17a of the IL Ins. Code, in the event of “changes in deductibles or coverage that materially alter the policy.” 215 ILCS 5/143.17a. Disagreeing, the appeals court held that the language did not fit into the statutorily intended definition of “coverage” in the Illinois notice statute. 215 ILCS 5/143.17a. Additionally, the court cited well-established contract law principles holding both parties responsible for knowing the content of contracts that they sign.
The court also rejected All American Roofing’s argument that the choice-of-law provision was unenforceable based on an absence of consideration. Zurich’s list of the benefits obtained by All American Roofing through signing the new contracts established that there was sufficient consideration. Finally, the court rejected All American Roofing’s theories of fraud, affirmed the lower court’s grant of summary judgment based on insufficient evidence, and highlighted the reasonable length and high level of readability of the documents in question. Based on its rejection of All American Roofing’s four offered theories for unenforceability, the appellate court affirmed the lower court’s order to arbitrate disputes arising from the 2001 and 2002.
Regarding disputes arising out of the 2003 and 2004 polices, the appellate court reversed the lower court’s order to arbitrate based on All American Roofing’s failure to sign the program agreements for each year. Zurich argued that as a matter of contract law, All American Roofing should be bound by the arbitration agreements in its policies due to its acts and conduct, including testimony suggesting that the insured withheld its signature as leverage to secure a meeting with Zurich. Acknowledging this testimony and Zurich’s citation of “lack of signatures” as a reason for nonrenewal in 2005, the court held the 2003 and 2004 agreements were not ratified through All American Roofing’s conduct. Further, All American Roofing’s continued payment of its insurance premiums did not signify acceptance of the agreements containing the compelled arbitration clauses since they were separate documents requiring a signature to become effective.