Craig v. United Automobile Insurance Co.

• Court: Appellate Court of Illinois
• Decided: October 22, 2007
• Docket: 1-06-3636 Rel
• Status: Published

Opinion

FIRST DIVISION October 22, 2007

No. 1-06-3636

STANLEY CRAIG, SYBIL MASON, AND ) Appeal from the CYNTHIA MASON, ) Circuit Court of ) Cook County. Plaintiffs-Appellees, ) ) v. ) ) UNITED AUTOMOBILE INSURANCE COMPANY, ) Honorable ) Anthony L. Young, Defendant-Appellant. ) Judge Presiding.

JUSTICE WOLFSON delivered the opinion of the court:

The plaintiffs, Stanley Craig, Sybil Mason, and Cynthia

Mason, filed an uninsured motorist claim under an insurance

policy issued by defendant, United Automobile Insurance Company

(United). The claim proceeded to arbitration. After the

plaintiffs filed an action in the circuit court to confirm the

arbitration award, United filed a counterclaim for breach of

contract. United alleged plaintiff Craig made material

misrepresentations in his insurance application, failed to

cooperate with the investigation of the claim, and failed to make

the vehicle available for inspection.

The trial court dismissed the counterclaim because United

failed to raise the issues prior to arbitration. The court also

entered summary judgment for plaintiffs on their complaint.

United appeals. We affirm the trial court’s order. 1-06-3636

FACTS

Plaintiff Stanley Craig was insured under a personal

automobile insurance policy issued by United. The policy was in

effect from October 27, 2001, through October 27, 2002. On

August 19, 2002, plaintiffs notified United of an uninsured

motorist claim resulting from an accident on August 4, 2002.

On February 11, 2003, plaintiffs filed a written demand for

arbitration and served notice on United. An arbitration hearing

was held on November 13, 2003. At the hearing, counsel for

United stated his objection to the proceedings based on

plaintiff’s failure to provide the vehicle for inspection as

required by the policy and as requested by United. The

arbitrator overruled the objection, and the parties proceeded

with the arbitration. An award was entered in the amount of

$7,500 for Stanley Craig, $7,500 for Sybil Mason, and $4,000 for

Cynthia Mason.

On March 11, 2004, plaintiffs filed a two-count complaint in

the circuit court. Count I sought confirmation of the

arbitration award pursuant to section 11 of the Uniform

Arbitration Act (710 ILCS 5/11 (West 2004)). Count II requested

attorneys’ fees for unreasonable delay in settling a claim.

Plaintiffs later voluntarily dismissed Count II.

On January 27, 2005, United filed a counterclaim for breach

of contract. United alleged Craig made false statements about

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his ownership of the vehicle on his insurance application on

October 26, 2001, and in a sworn statement on August 6, 2003.

United had discovered through a vehicle records search that Craig

was not the owner of the vehicle. United also alleged Craig

failed to make the vehicle available for inspection as required

by the policy and failed to cooperate with the investigation by

refusing to allow United to examine his medical records.

On December 6, 2005, plaintiffs filed a motion to dismiss

the counterclaim pursuant to section 2-619 of the Code of Civil

Procedure (735 ILCS 5/2-619(a)(9) (West 2004)). They contended:

(1) United waived its issues by failing to raise them prior to

arbitration; and (2) United’s claims were precluded by res

judicata. Plaintiffs also filed a motion for summary judgment on

their complaint to confirm the arbitration award.

On May 9, 2006, the trial court dismissed United’s

counterclaim with prejudice and entered summary judgment on Count

I of plaintiffs’ complaint.

DECISION

A section 2-619(a)(9) motion to dismiss allows for dismissal

of a cause of action when "the claim asserted against the

defendant is barred by other affirmative matter avoiding the

legal effect of or defeating the claim." 735 ILCS 5/2-619(a)(9)

(West 2004). We must decide "whether the existence of a genuine

issue of material fact should have precluded the dismissal or,

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absent such an issue of fact, whether dismissal is proper as a

matter of law." Kedzie & 103rd Currency Exchange, Inc. v. Hodge,

156 Ill. 2d 112, 116-17, 619 N.E.2d 732 (1993). When deciding a

2-619 motion, a court takes all well-pleaded facts in the

complaint as true. Tkacz v. Weiner, 368 Ill. App. 3d 610, 612,

858 N.E.2d 514 (2006). We review the granting of a 2-619 motion

de novo. Tkacz, 368 Ill. App. 3d at 612.

Any issue regarding the nonarbitrability of a dispute is

waived by participation in the arbitration proceedings. Tri-City

Jewish Center v. Blass Riddick Chilcote, 159 Ill. App. 3d 436,

439, 512 N.E.2d 363 (1987).

"Through the operation of waiver, a party may

become bound by an award which otherwise

would be open to attack*** Waiver occurs

whenever a party intentionally relinquishes a

known right, either expressly or by conduct

inconsistent with an intent to enforce that

right." Tri-City, 159 Ill. App. 3d at 440.

United did not raise the issue of Craig’s false statements

of vehicle ownership until January 27, 2005. We hold United

waived the issue of plaintiffs’ misrepresentations by failing to

raise it until more than two years after receiving the claim, and

more than one year after the arbitration award.

United contends it requested that the court vacate the award

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within a week of United’s discovery of Craig’s misrepresentations

that he owned the vehicle. On January 21, 2005, United

discovered through a public records vehicle search that the

vehicle belonged to "Betty Mason" and not to Stanley Craig. It

then filed its counterclaim on January 27, 2005. There is no

reason why United could not have conducted a vehicle records

search prior to arbitration of the plaintiffs’ claim. United

provides no justification for waiting nearly two years after the

arbitration hearing to file its claim.

United contends section 12 of the Uniform Arbitration Act

precludes dismissal of its counterclaim. That section provides

that, upon application of a party, a court shall vacate an

arbitration award where the award was "procured by corruption,

fraud, or undue means." 710 ILCS 5/12(a)(1) (West 2004). An

application to vacate an award must be made within 90 days of the

award, or, if predicated on corruption, fraud, or other undue

means, within 90 days after such grounds are known or should have

been known. 710 ILCS 5/12(b) (West 2004).

We reject United’s contention. First, United never raised

section 12 of the Arbitration Act in the court below. It merely

filed a separate counterclaim for breach of contract against the

plaintiffs. Second, United’s counterclaim alleged the plaintiffs

breached their obligations under the insurance policy and alleged

United was not obligated to pay under the policy. There are no

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allegations that the arbitration award was procured by

"corruption, fraud, or other undue means." Third, United could

have raised the claim prior to arbitration had it conducted a

vehicle records search.

As for the other claims regarding the medical records and

vehicle inspection, those issues are not for this court to

decide. The judicial review of an arbitral award is extremely

limited. American Federation of State, County & Municipal

Employees, AFL-CIO v. Department of Central Management Services,

173 Ill. 2d 299, 304, 671 N.E.2d 668 (1996). The Illinois

Uniform Arbitration Act contemplates judicial disturbance of an

award only in instances of fraud, corruption, partiality,

misconduct, mistake, or failure to submit the question to

arbitration. American Federation, 173 Ill. 2d at 304. United’s

remaining claims do not allege any fraud, corruption or other

means to justify reversing the arbitration award.

CONCLUSION

We affirm the circuit court’s order dismissing United’s

counterclaim and entering summary judgment in favor of the

plaintiffs.

Affirmed.

HOFFMAN, P.J., and SOUTH, J., concur.