Anderson v. Golf Mill Ford

• Court: Appellate Court of Illinois
• Decided: June 16, 2008
• Docket: 1-07-2349 Rel
• Status: Published

Opinion

FIRST DIVISION June 16, 2008

No. 1-07-2349

NICHOLAS ANDERSON, ) Appeal from the ) Circuit Court of Plaintiff-Appellant, ) Cook County. ) v. ) ) GOLF MILL FORD, INC., n/k/a AN/GMF, ) INC., ) Honorable ) Richard J. Billik, Defendant-Appellee. ) Judge Presiding.

JUSTICE WOLFSON delivered the opinion of the court:

Plaintiff Nicholas Anderson filed a federal lawsuit against

defendant Golf Mill Ford, Inc. ("Golf Mill") based on his

purchase of an SUV in 2003. Following arbitration of the suit,

Anderson filed a lawsuit in Cook County Circuit Court to vacate

the arbitrator’s award. Anderson appeals the circuit court’s

order entering judgment for Golf Mill on his claim and on Golf

Mill’s counterclaim to confirm the award. We affirm.

FACTS

Anderson purchased a used 2001 GMC Jimmy ("SUV") from Golf

Mill on or about April 21-23, 2003. According to Anderson, the

salesperson at Golf Mill told him he was financed. Anderson

signed a retail installment contract dated April 21, 2003 (the

"First RIC") for a cash price of $20,324.30. It provided for

$19,356.87, to be financed over 60 monthly payments of $463.04 at 1-07-2349

an annual percentage rate ("APR") of 14.99%.

Golf Mill was unable to obtain financing for Anderson

pursuant to the terms of the First RIC. Golf Mill executed

another retail installment contract (the "Second RIC") dated

April 21, 2003. On the Second RIC, the purchase price was

reduced to $18,150 and the amount financed reduced to $17,983.55.

The monthly payments were increased to $489.39, and the APR was

increased to 20.9%. Golf Mill assigned its rights to Household

Automotive Finance Corporation ("Household"). Anderson made

payments under the Second RIC totaling about $6,791. He stopped

making payments after September 2004. He kept the SUV.

Anderson alleged Golf Mill never told him he was not

financed under the First RIC. He said he never saw the Second

RIC until he received it in the mail. He denied signing the

Second RIC. The First RIC contained an arbitration provision.

The Second RIC did not.

The arbitration clause in the First RIC allows either party

to choose "to have any Claim related to this contract decided by

arbitration." Such claims include: "Claims regarding the

interpretation, scope, or validity of this clause, or

arbitrability of any issue;" "Claims between you and us, our

employees, agents, successors, assigns, subsidiaries, or

affiliates;" and "Claims arising out of or relating to your

2 1-07-2349

application for credit, this contract, or any resulting

transaction or relationship, including that with the dealer, or

any such relationship with third parties who do not sign this

contract." The paragraph also provides, "[t]he arbitration

decision shall be in writing with a supporting opinion."

Anderson sued Golf Mill in federal district court claiming

violations of the Federal Equal Credit Opportunity Act, 15 U.S.C.

§ 1691 (1991), the Fair Credit Reporting Act, 15 U.S.C. § 1681

(1970), and the Illinois Consumer Fraud and Deceptive Business

Practices Act, 815 ILCS 505/1 et seq. (West 2006) (Consumer Fraud

Act). In the federal law counts, Anderson alleged Golf Mill

failed to inform him that financing under the First RIC had been

rejected. In the Consumer Fraud Act counts, Anderson alleged

Golf Mill forged his name to the Second RIC and failed to offer

him an opportunity to rescind his purchase of the SUV after he

was rejected for financing under the First RIC. He contended the

payments were $26 a month more than he contracted for, resulting

in additional finance charges of about $2,000 over the life of

the loan.

Golf Mill filed a motion to compel arbitration based on the

arbitration clause in the First RIC. The parties entered into a

stipulation with respect to the motion. It states, in part:

"Anderson hereby withdraws all objections to

3 1-07-2349

arbitrating the disputes between himself and

Golf Mill arising out of or relating to the

claims asserted by him in the Complaint in

this matter. Anderson shall proceed to

initiate an arbitration of such disputes in

accordance with the provisions of the

arbitration agreement, which is contained

within the contract attached as Exhibit 3 to

Golf Mill’s pending motion to compel

arbitration."

The federal court entered an order granting the agreed

motion and stipulation and stayed the litigation. The federal

lawsuit was dismissed on November 30, 2004.

to choose between three organizations to conduct the arbitration.

Anderson selected the American Arbitration Association ("AAA")

and submitted a written demand for arbitration.

Golf Mill repurchased the rights under the Second RIC from

Household and filed a counterclaim arising from Anderson’s

default on his payments to purchase the SUV. In his answer,

Anderson denied owing any amount to Golf Mill. He did not

challenge the arbitrability of Golf Mill’s counterclaim.

At the arbitration hearing, Anderson’s counsel for the first

4 1-07-2349

time raised an objection to the arbitrability of the

counterclaim. The arbitrator overruled the objection and held

the counterclaim was arbitrable. Golf Mill called a certified

forensic document examiner, who testified to the authenticity of

Anderson’s signature on the Second RIC. Anderson testified and

presented no expert testimony.

With respect to Anderson’s claim, the arbitrator awarded

Anderson $405.16 in actual damages, $5,000 in punitive damages,

and $3,000 in attorney’s fees and costs. With respect to the

counterclaim, the arbitrator awarded Golf Mill $17,770.32, which

included interest on the unpaid contract, and $3,000 in

attorney’s fees and costs. Post-judgment interest was awarded to

both parties.

Anderson filed suit in the circuit court to vacate the

arbitrator’s award. Golf Mill filed a counterclaim to confirm

the award. Anderson named the AAA as a "Respondent in Discovery"

and served the AAA with discovery requests. Anderson later

voluntarily dismissed the AAA and withdrew as moot all discovery

requests to the AAA. The circuit court ruled against Anderson on

his complaint and entered judgment for Golf Mill on its

counterclaim to confirm the award. Judgment was entered in the

amount of $12,365.16 plus interest at 9% per annum accruing since

the award date of June 17, 2005.

5 1-07-2349

DECISION

I. Supporting Opinion

Anderson contends the circuit court erred in refusing to

vacate the arbitrator’s decision where the arbitrator failed to

issue a supporting opinion. He relies on the provision in the

arbitration agreement expressly requiring the arbitrator to issue

a written opinion supporting the decision. Whether an arbitrator

exceeded his or her authority is a question of law, which we

review de novo. Truserv Corp. v. Ernst & Young, LLP, 376 Ill.

App. 3d 218, 222, 876 N.E.2d 77 (2007).

Anderson chose the AAA to arbitrate the dispute and agreed

to abide by AAA rules. AAA Rule R-42(b) provides, "[t]he

arbitrator need not render a reasoned award unless the parties

request such an award in writing prior to appointment of the

arbitrator or unless the arbitrator determines that a reasoned

award is appropriate." As a contractual right, the right to a

supporting opinion is subject to waiver by the parties. See

Brookfield-North Riverside Water Comm’n v. Abbot Contractors,

Inc., 250 Ill. App. 3d 588, 595, 621 N.E.2d 153 (1993). Waiver

may be inferred where a party intentionally relinquishes a known

right, either expressly or by conduct inconsistent with an intent

to enforce that right. Quick & Reilly, Inc. v. Zielinski, 306

Ill. App. 3d 93, 99, 713 N.E.2d 739 (1999). Anderson waived his

6 1-07-2349

right to a supporting opinion by failing to request a written

opinion pursuant to AAA rules.

Anderson’s due process argument is similarly unavailing.

Arbitrators have no obligation to explain their decisions in

writing. In re Liquidation of Inter-American Insurance Co. of

Illinois, 303 Ill. App. 3d 95, 104, 707 N.E.2d 617 (1999).

II. Arbitrability of Counterclaim

Anderson contends the arbitrator’s decision on the issue of

arbitrability is ultra vires and void because Golf Mill’s

counterclaim was premised on the Second RIC, which did not

contain an arbitration clause.

Where an arbitrator decides the question of arbitrability in

the first instance, a court ordinarily reviews the arbitrator’s

decision de novo. Salsitz v. Kreiss, 198 Ill. 2d 1, 13-14, 761

N.E.2d 724 (2001). However, where the parties agree to submit

the question of arbitrability itself to arbitration, the court

should review the decision deferentially. Salsitz, 198 Ill. 2d

at 14-15.

According to the provision in the First RIC, the parties

clearly agreed to submit the issue of arbitrability to

arbitration. Anderson admits signing the First RIC. The

arbitration provision applies to "Claims arising out of or

relating to your application for credit, this contract, or any

7 1-07-2349

resulting transaction or relationship***." Anderson also agreed

to a stipulation withdrawing "all objections to arbitrating the

disputes between himself and Golf Mill arising out of or relating

to the claims asserted by him in the Complaint in this matter."

The counterclaim arose out of both the sales transaction between

the parties and the claims asserted by Anderson in his complaint.

In the counterclaim, Golf Mill sought to collect payment on the

SUV pursuant to its contract with Anderson.

Anderson waived any argument related to arbitrability of the

counterclaim by signing the First RIC with the arbitration

provision and by entering into the stipulation. Anderson also

placed the Second RIC at issue through his federal lawsuit claims

alleging forgery and invalidity of the Second RIC.

Moreover, Anderson failed to object to arbitrability of the

counterclaim until the time of the hearing. AAA Rule R-7(c)

requires a party to object to arbitrability of a counterclaim no

later than the filing of the answer to the counterclaim that gave

rise to the objection. Anderson did not challenge the

arbitrability of Golf Mill’s counterclaim in his answer. We

affirm the arbitrator’s decision regarding arbitrability of the

counterclaim.

III. Inconsistent Decision

Anderson contends the arbitrator’s decision was inconsistent

8 1-07-2349

and demonstrated manifest disregard of the law. He contends the

arbitrator’s award of punitive damages demonstrates a finding of

wanton and willful conduct on the part of Golf Mill, inconsistent

with allowing Golf Mill to recover on its contract.

Judicial review of an arbitrator’s award is extremely

limited, more limited than appellate review of a trial court’s

decision. Yorulmazoglu v. Lake Forest Hospital, 359 Ill. App. 3d

554, 564, 834 N.E.2d 468 (2005); Quick & Reilly, 306 Ill. App. 3d

at 97. Courts must construe awards, wherever possible, to uphold

their validity. Yorulmazoglu, 359 Ill. App. 3d at 364. A court

may vacate an award where a gross error of law or fact appears on

the face of the award. Yorulmazoglu, 359 Ill. App. 3d at 365.

Review under the "manifest disregard of the law" standard

requires that the arbitrators deliberately disregarded what they

knew to be the law. Quick & Reilly, 306 Ill. App. 3d at 99.

We agree with the trial court that the arbitrator’s decision

was not inconsistent. It is reasonable to infer the arbitrator

awarded Anderson actual and punitive damages on the federal

statutory claims for Golf Mill’s failure to notify and/or

disclose the adverse credit action on the First RIC. We also

infer that plaintiff did not prevail on his forgery and

misrepresentation claims. The arbitrator granted relief to Golf

Mill on its counterclaim for the balance owed by Anderson under

9 1-07-2349

the Second RIC. The arbitrator likely credited the testimony of

Golf Mill’s forensic document expert, who testified to the

authenticity of Anderson’s signature on the Second RIC.

Anderson did not present expert testimony to contradict Golf

Mill’s expert. Anderson has not shown the award was inconsistent

or in manifest disregard of the law.

IV. Discovery on AAA Bias

Anderson contends he was entitled to discovery on the issue

of AAA bias. A circuit court has wide latitude in ruling on

discovery motions, and a reviewing court will not disturb such a

ruling unless it constitutes a manifest abuse of discretion.

Truserv, 376 Ill. App. 3d at 227. To obtain discovery in an

action to overturn an arbitral decision, a party must show some

fundamental defect, such as partiality of the arbitrator. A

party who fails to provide clear evidence of impropriety will not

be permitted additional discovery. Truserv, 376 Ill. App. 3d at

227-28.

We find Anderson failed to make the requisite showing of

bias on the part of the individual arbitrator to justify the

allowance of discovery. Furthermore, Anderson made no attempt in

the circuit court to obtain discovery following the AAA’s motion

to quash. Instead, Anderson voluntarily dismissed the AAA as a

respondent-in-discovery and withdrew all discovery requests.

10 1-07-2349

Anderson has waived the issue by failing to pursue it in the

circuit court.

V. Unconscionability

Anderson challenges the arbitration as unconscionable in

light of the supreme court’s opinion in Razor v. Hyundai Motor

Am, 222 Ill. 2d 75, 854 N.E.2d 607 (2006) and the appellate

court’s opinion in Bess v. DirecTV, Inc., 381 Ill. App. 3d 229,

885 N.E.2d 488 (2008).

We find Anderson forfeited the issue by failing to argue any

reason why the agreement was unconscionable. See 210 Ill. 2d R.

341(h)(7) (argument portion of brief shall contain the

contentions of the appellant and the reasons therefore, with

citation of the authorities and the pages of the record relied

on, and points not argued are waived); People v. Lantz, 186 Ill.

2d 243, 261-62, 712 N.E.2d 314 (1999). Anderson merely states

the arbitration was unconscionable under the standards

articulated in Razor and Bess. He provides no further argument

on the issue.

VI. Circuit Court Jurisdiction

Anderson contends the trial court lacked jurisdiction over

the defendant’s counter-claim, relying on section 9 of the

Federal Arbitration Act (FAA). Under section 9, if the parties

in their agreement do not specify a court to confirm the award,

11 1-07-2349

"such application may be made to the United States court in and

for the district within which such award was made." (Emphasis

added.) 9 U.S.C. § 9 (1947). Anderson relies on the statute to

argue exclusive jurisdiction lies in federal court.

Anderson’s contention regarding the circuit court’s

jurisdiction is without merit. Section 9 allows a party to

confirm an award in federal court; it does not require it. The

arbitration clause in the First RIC gives the parties the

"[r]ight to take legal action to enforce the arbitrator’s

decision." Jurisdiction was proper in the circuit court,

pursuant to section 16 of the Illinois Uniform Arbitration Act.

710 ILCS 5/16 (West 1976).

CONCLUSION

We affirm the judgment and rulings of the circuit court.

Affirmed.

GARCIA, and R. GORDON, JJ., concur.

12 1-07-2349 REPORTER OF DECISIONS - ILLINOIS APPELLATE COURT (Front Sheet to be Attached to Each Case)

Please use NICHOLAS ANDERSON, following form: Plaintiff-Appellant,

Complete v. TITLE of Case GOLF MILL FORD, INC., n/k/a AN/GMF, INC.,

Defendant-Appellee.

Docket Nos. No. 1-07-2349

COURT Appellate Court of Illinois First District, 1st Division Opinion Filed June 16, 2008

(Give month, day and year)

JUSTICES JUSTICE WOLFSON delivered the opinion of the court:

APPEAL from the Lower Court and Trial Judge(s) in form indicated in margin: Circuit Court of Cook County; the Appeal from the Circuit Court of Cook County. Hon.___________, Judge Presiding. The Hon. Richard J. Billik, Judge Presiding.

For APPELLANTS, Indicate if attorney represents APPELLANTS or APPELLEES and John Doe, of include attorneys of counsel. Indicate the word NONE if Chicago. not represented.

For APPELLEES, For Appellant, Christopher Langone, of Chicago. Smith and Smith, of Chicago For Appellee, Marion B. Adler and Michael Rachlis, Joseph Brown, RACHLIS DURHAM DUFF & ADLER, LLC, of Chicago. of counsel).

Also add attor- neys for third- party appellants and/or appellees. (USE REVERSE SIDE IF NEEDED)