Illinois Appellate Court Requires Rental-Car Company to Pay $600,000 Default Judgment in Injury Case

Deshaw Nelson fractured his right femur in a car crash in 2007. The defendant in the case, Donald Artley, was driving an Enterprise Rent-A-Car vehicle. In January 2010, Nelson filed a lawsuit in the Circuit Court of Cook County alleging his injuries were caused by the negligence of the defendant Artley. On May 4, 2010, after Artley defaulted, a default judgment was entered against him in the amount of $600,000. Nelson then initiated citation proceedings against Enterprise Rent-A-Car in June 2010.

A month later, Enterprise answered and asserted that it was only responsible for $100,000 per occurrence for the liability for its cars’ drivers under the rental agreement and the Illinois Vehicle Code. Enterprise had already paid $75,000 to two other people injured in the same car accident. Enterprise argued that it was only required to pay Nelson the remaining $25,000.

In September 2011, Nelson filed a petition with the court against Enterprise for turnover order for the entire $600,000, plus interest and costs. Nelson argued that when Enterprise applied for a certificate of self-insurance with the state, it said it retained a risk of loss for third-party liability up to $2 million per occurrence.

In its response, Enterprise cited an Illinois Appellate Court 4th District opinion, Fellhauer v. Alhorn, 361 Ill.App.3d 792, in which that panel lent support to Enterprise’s argument that it was limited to $100,000 per incident under the Code despite the $450,000 default judgment against that defendant in Fellhauer.

In this case, in May 2012, a circuit court judge granted the turnover, but limited the amounts at $25,000 in accordance with the Fellhauer case opinion.

However, the Illinois Appellate court 1st District noted that it was not persuaded by the 4th District’s reasoning in the Fellhauer ruling.

In the Fellhauer case, it was determined that a self-insured rental car company should only be required to provide the same level of coverage that an insurance policy would require. Enterprise maintained that requiring self-insured companies to pay judgments fully would impose vicarious liability on them. The appellate court disagreed.

“In this case, we are not holding Enterprise vicariously liable for Artley’s actions, but only that it bears the responsibility to pay the default judgment against Artley because it has chosen to comply with the financial responsibility requirements in Chapter 9 of the Code by obtaining the certificate of self-insurance. If Enterprise wants to avoid the risks associated with self-insurance, it can chose to meet its financial responsibility obligations through bonds or insurance policies.”

Illinois law requires rental-car companies to demonstrate financial responsibility to the Illinois Secretary of State’s office. The law is designed to protect the public from negligent drivers of rental cars who are uninsured. Companies can prove their financial responsibility by filing a $100,000 bond, obtaining an insurance policy or receiving a certificate of self-insurance issued by the director of the state Insurance Department.

The Illinois Appellate Court for the 1st District reversed the Circuit Court’s order limiting the turnover amount to $25,000 and remands the case back for the entry of a new turnover order for the full amount of the default judgment against Artley, $600,000.

Deshaw Nelson v. Donald Artley, 2014 IL App (1st) 121681.

Kreisman Law Offices has been handling automobile accident cases, truck accident cases and bicycle accident cases for individuals and families who have been harmed, injured or died as a result of the carelessness or negligence of another for more than 38 years in and around Chicago, Cook County and its surrounding areas, including Melrose Park, Northlake, Oak Forest, Olympia Fields, Prospect Heights, Park Forest, Streamwood, South Holland, Blue Island, Chicago Ridge, Calumet City, Berwyn, Homewood, Hoffman Estates, Harvey, Niles, Chicago (Garfield Park, Forest Glen, Jefferson Park, Pill Hill, Pilsen, Roseland, South Shore), Alsip and Burbank, Ill.