CHICAGO — A state appeals panel ruled a couple can’t force an insurer to cover $6.6 million in interest on a $26 million judgement against Yellow Cab stemming from a 2005 vehicle crash — but that doesn’t mean a payout is foreclosed.
Marc M. Jacobs was real estate partner at Barrack Ferranzzano Kirschbaum & Nabelberg in Chicago when the cab he was riding in crashed, leaving him with permanent brain damage. A decade later, a Cook County jury entered a verdict in favor of Jacobs and his wife. Yellow Cab Affiliation, the defendant’s Chicago-based parent company, filed for bankruptcy a few hours later.
Cab driver Cornelius Ezeagu picked up Jacobs from a River North taxi stand on Aug. 31, 2005. While driving Jacobs to his Hinsdale home, Ezeagu’s minivan left a curved Interstate 294 ramp, “went airborne for 32 feet, struck the ground and continued forward over a grassy drainage area, and then crashed into a concrete retention wall,” according to court documents.
Illinois First District Appellate Court Justice David W. Ellis
| illinoiscourts.gov
An American Country Insurance Company policy covered Yellow Cab and Ezeagu. A week after Yellow Cab filed for bankruptcy, American filed a bankruptcy court motion to lift a stay so it could deposit $350,000 with the court — the policy’s maximum liability coverage — as well as interest on the entire judgment. When allowed to deposit, on March 27, 2015, the 10 days of interest was worth $77,319.
Ezeagu filed for Chapter 7 bankruptcy in June 2017. In January 2018, American denied it had any assets for Ezeagu or Yellow Cab. That prompted a July 2018 filing in which the Jacobses sought a turnover order, claiming the interest had accrued to another $6.6 million. Cook County Judge Thomas Donnelly dismissed the proceeding and the plaintiffs appealed to the First District Appellate Court.
Justice David Ellis wrote the panel’s opinion, issued Dec. 9. Justices Robert Gordon and Maureen Connors concurred.
On appeal, the Jacobses argued American’s deposit does not constitute a tender — complete payment of judgment, costs and accrued interest — under the state’s postjudgment interest law, and that if its policy language allows it to subvert that legal requirement, the clause should be deemed void as it violates public policy.
The panel said American’s decision to make a deposit instead of directly paying its clients, while atypical, was proper.
“It appears from the bankruptcy filings in the record that American chose that option because each of its insureds was under federal bankruptcy protection, and thus plaintiffs’ claim to the money might be subject to competing claims of other creditors,” Ellis wrote. “American presumably thought it wiser to stay out of that fight, deposit the money with the court clerk, and let a bankruptcy judge sort out any competing claims.”
Furthermore, the panel said, it is Yellow Cab and Ezeagu who lost at trial, not American. The law under which the Jacobses seek interest doesn’t include a cause concerning insurers of judgment debtors.
“And there is no reason why it would,” Ellis wrote. “An insurer of a defendant owes no duty to, and has no direct relationship with, that lawsuit’s plaintiff.”
The panel said “there is no real dispute” American satisfied its policy terms. It also rejected the argument the insurance contract language violates public policy, explaining the statute establishing a judgment plaintiff’s right to postjudgment interest “are intended to protect the insured from delays in indemnification.” The provisions therefore incentivize insurers to quickly pay judgments.
“Yellow Cab and Ezeagu still owe plaintiffs postjudgment interest and will continue to do so until they tender the full judgment or, as may be true here, the matter is resolved in a bankruptcy court,” Ellis wrote. “Either way, plaintiffs’ right to statutory interest remains, irrespective of whether American has or has not fulfilled its own contractual duties to the insured.”
The panel affirmed Donnelly’s ruling “in all respects.”
The Jacobses were represented in the action by the firm of Tomasik Kotin Kasserman, of Chicago.
YCA was represented in the litigation by the firm of McKnight Kitzinger & Pravdic, of Chicago.
According to federal court records, YCA is represented in the bankruptcy by attorneys with the firms of Gensburg Calandriello & Kanter, P.C. and Greenberg Traurig LLP, each of Chicago.