Almost three years after the accident, on September 17, 2017, State Farm filed a complaint seeking a declaration that Mr. Azar's claim was time barred. State Farm argued that Mr. Azar had exceeded the policy's two year time limit to file a suit or demand arbitration of his uninsured motorist claim.

State Farm alleged that, shortly after the accident, it received an attorney representation letter and an attorney lien letter from Mr. Azar's attorneys but that it received no additional correspondence until July 17, 2017, when his attorney sent a letter demanding arbitration of the claim.

Because that letter was more than two years after the accident, State Farm asked the trial court to find Mr. Azar's claim time-barred, and that State Farm had no obligation to arbitrate.

State Farm moved for summary judgment.

In response, Mr. Azar argued that he had complied with the policy by sending two letters demanding arbitration on April 13, 2016, less than two years after the accident. Mr. Azar provided copies of the letters, which were properly addressed to State Farm. He also provided an affidavit and discovery deposition from a case manager for his attorney stating that, at the attorney's direction, he sent the April 2016 letters to State Farm.

The trial court denied the summary judgment motion, finding that the letters created a question of fact as to whether Mr. Azar had made a timely demand for uninsured motorist arbitration.

At the beginning of the trial, the trial court informed the parties that Mr. Azar had the burden of proving that he had made a timely demand for arbitration.

Mr. Azar presented three witnesses: the case manager and two attorneys. The case manager testified that it was his custom and practice to draft arbitration demand letters using a template, sign and initial the letters, make copies, put them in regular first class mail, and place the copy in the case file. He said he followed this custom and practice when he sent two arbitration demand letters to State Farm in Mr. Azar's case on April 13, 2016. He acknowledged that he sent hundreds if not thousands of similar letters on behalf of other clients, but he said he had specific recall of printing and mailing those two letters.

On cross-examination, the case manager acknowledged that he could not remember anything else about other files he worked on that day.

One of Mr. Azar's attorneys testified that he handled pre-litigation matters and that it was his custom and practice to have his case manager send correspondence to insurers, including letters demanding arbitration for uninsured motorist claims. He said that he had directed the case manager to send the two letters to State Farm demanding arbitration of Mr. Azar's claim.

On cross-examination, however, the attorney acknowledged that he did not have any independent recollection of the Azar case or of instructing his case manager to send the April 13, 2016 letters to State Farm.

Mr. Azar's other attorney testified that he handled Mr. Azar's case once it reached the litigation stage. He said that he was not involved in drafting or sending the April 13, 2016 letters. He said that he had no independent recollection of the letters being in the case file, but presumed that they were there. He said that he sent the July 17, 2017 arbitration demand letter because there had been no responses from State Farm in the file regarding prior arbitration demands.

The State Farm claims specialist who worked on the Azar claim after the two years to demand arbitration had expired said that she had reviewed the file and did not find an arbitration demand letter, so she recommended closing the file. She said that the only arbitration demand letter in Mr. Azar's claim file was the July 17, 2017 letter. She acknowledged that the April 13, 2016 letters were not sent to her but testified that all correspondence on a claim ended up in the electronic claim file regardless of which office originally received it.

After hearing the evidence and closing arguments, the trial court found in favor of State Farm and against Mr. Azar. The trial court said that the case turned on the case manager's credibility and found his testimony "incredible." The trial court stated, "I cannot believe he remembered this particular document. That . . . out of all the things he mailed on April 13th, he remembers that particular one. So his . . . lack of credibility suggests that . . . the preponderance of the evidence is not met because the person who is testifying to having followed the procedures of [Mr. Azar's] law office is not credible in that way."

The trial court entered a written order finding Mr. Azar's uninsured motorist's claim was time barred and that State Farm had no duty to arbitrate the claim.

Mr. Azar appealed, contending that the trial court had erred in placing the burden on him to prove that he had timely requested arbitration.

The Appellate Court's Decision

The appellate court affirmed.

In its decision, the appellate court explained that Illinois courts had consistently held that the claimant under an insurance policy had the burden of proving that he or she came within the terms of coverage. It added that although Mr. Azar correctly pointed out that State Farm had the burden of establishing that a claim fell within a provision that limited or excluded coverage, the issue before the trial court was not whether Mr. Azar's claim fell within a policy limit or exclusion, but rather whether his demand for arbitration of his claim was time-barred.

Therefore, the appellate court ruled, as required by the policy, the trial court properly placed the burden on Mr. Azar to prove that he had demanded arbitration for his uninsured motorist claim within two years of the accident.

The appellate court next rejected Mr. Azar's contention that there was a presumption that State Farm had received the letters. The appellate court acknowledged that a letter appropriately addressed, stamped, and mailed was presumed to have been received but, it added, to be entitled to the presumption, the party had to present proof that the item was in a properly addressed envelope with adequate postage and deposited in the mail. The appellate court added that evidence of an office custom as to mailing constituted proof of the mailing when corroborating evidence established that the custom was followed in a particular case.

The appellate court, however, rejected Mr. Azar's contention that the presumption applied based on the case manager's testimony about his customary practice in handling arbitration letters. The appellate court reasoned that, in a bench trial, trial judges determined credibility of witnesses and the weight to be given their testimony, and a reviewing court would not substitute its judgment for that of the trial court unless the opposite conclusion was "plainly evident."

Here, the appellate court noted, the trial judge found the case manager's testimony about mailing the April 13, 2016 letters not credible and the appellate court said that it would "not substitute our judgment for hers." The appellate court also pointed out that Mr. Azar had presented no other evidence or witnesses establishing that the case manager had followed his customary practice here, because the attorney-witnesses either were not involved in or had no recollection about the mailing of the letters.

Accordingly, the appellate court concluded, the trial court had not erred in placing the burden on Mr. Azar to prove that he had made a timely demand for arbitration of his uninsured motorist claim and, because he had failed to do so, the trial court had not erred in entering judgment for State Farm.

The case is State Farm Mutual Ins. Co. v. Azar, No. 1-19-0575 (Ill. Ct. App. Nov. 12, 2019).