State Farm Mutual Insurance v. Koscelnik

795 N.E.2d 1001, 342 Ill. App. 3d 808, 277 Ill. Dec. 333, 2003 Ill. App. LEXIS 1036
CourtAppellate Court of Illinois
DecidedAugust 19, 2003
Docket1-02-0478
StatusPublished
Cited by6 cases

This text of 795 N.E.2d 1001 (State Farm Mutual Insurance v. Koscelnik) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
State Farm Mutual Insurance v. Koscelnik, 795 N.E.2d 1001, 342 Ill. App. 3d 808, 277 Ill. Dec. 333, 2003 Ill. App. LEXIS 1036 (Ill. Ct. App. 2003).

Opinion

JUSTICE BURKE

delivered the opinion of the court:

Plaintiff State Farm Mutual Insurance Company appeals from an order of the circuit court debarring it from rejecting an arbitration award issued in favor of defendant Anton Koscelnik. On appeal, plaintiff contends that the trial court abused its discretion in finding that plaintiff failed to participate in the arbitration hearing in good faith and in barring plaintiff from rejecting the award. For the reasons set forth below, we affirm.

Plaintiff filed a subrogation action against defendant, alleging that defendant carelessly and negligently caused a collision between plaintiffs insured’s vehicle and defendant’s vehicle on June 1, 1996, which resulted in personal injury and property damage to plaintiffs insured. Pursuant to Illinois Supreme Court Rule 86 (155 Ill. 2d R. 86), the matter was set for arbitration on October 17, 2001.

Prior to the arbitration, both parties served Illinois Supreme Court Rule 237 (166 Ill. 2d R. 237) notices to produce. Plaintiff, in its notice to produce, specifically requested defendant’s presence at the arbitration. Defendant requested the presence of “plaintiff(s) or if the plaintiff is a corporation, then the employee of the plaintiff who is its designated representative, or if none named, the adjuster with the most knowledge of the claim.” Both plaintiff and defendant’s counsel appeared at the arbitration hearing. Plaintiffs representative, a claims adjuster, also appeared at the hearing. Neither defendant nor plaintiffs insured attended the arbitration.

The arbitration began at 8:45 a.m., and at 9 a.m., the arbitrators entered an award in favor of defendant. The arbitrators wrote only the following on the award: “Award for defendant. Defendant present through counsel only. Plaintiff present through counsel only. 237 notices were served on both parties.” The record on appeal does not contain a transcript of the hearing.

On October 31, plaintiff filed a notice of rejection of the arbitration award pursuant to Illinois Supreme Court Rule 93 (166 Ill. 2d R. 93). On December 18, pursuant to Illinois Supreme Court Rule 91 (145 Ill. 2d R. 91), defendant filed a motion to bar plaintiffs rejection of the award. Plaintiff filed a response to defendant’s motion and a motion for sanctions against defendant for failing to appear at the arbitration in violation of plaintiffs Rule 237 notice.

On January 17, 2002, the trial court heard both defendant’s motion to bar plaintiff from rejecting the arbitration award and plaintiffs motion for sanctions. Defendant argued that plaintiff failed to participate in the arbitration hearing in good faith and in a meaningful manner because it did not produce its insured and, therefore, it failed to present any evidence with regard to defendant’s liability. Plaintiff responded that the evidence it had intended to produce at the arbitration hearing — its claims adjuster’s testimony, an Illinois Supreme Court Rule 90(c) (166 Ill. 2d R. 90(c)) package which included pictures of the damage to plaintiffs insured’s vehicle and plaintiffs insured’s personal injury and property damage bills, and the adverse testimony of defendant — was sufficient to constitute good-faith participation. Plaintiff further argued that because defendant did not appear at the arbitration, in violation of plaintiffs Rule 237 notice, court-ordered sanctions were warranted. The trial court ruled in favor of defendant on both motions, finding that plaintiff failed to participate in the arbitration hearing in good faith and that the issue of plaintiffs motion for sanctions against defendant was “moot.” This appeal followed.

Plaintiff contends that the trial court abused its discretion in finding that plaintiff failed to participate in the arbitration hearing in good faith and in barring plaintiffs rejection of the arbitration award. Defendant contends that the trial court properly barred plaintiff from rejecting the award because plaintiff presented no evidence at the arbitration hearing with regard to liability for the accident.

A trial court’s imposition of sanctions pursuant to Supreme Court Rule 91 will be reversed only where the court’s decision was an abuse of discretion. Goldman v. Dhillon, 307 Ill. App. 3d 169, 172, 717 N.E.2d 474 (1999). An abuse of discretion will be found only if the trial court’s ruling was arbitrary or if it exceeded the bounds of reason. Schmidt v. Joseph, 315 Ill. App. 3d 77, 81, 733 N.E.2d 694 (2000). The supreme court rules regarding mandatory arbitration are designed to prevent abuse in, and to uphold the integrity of, the arbitration process. State Farm Insurance Co. v. Rodrigues, 324 Ill. App. 3d 736, 740, 756 N.E.2d 359 (2001).

Under Illinois Supreme Court Rule 91, a party waives the right to reject an arbitration award when the party fails: (1) to appear, either in person or by counsel, at the arbitration hearing; or (2) to participate in the arbitration hearing in good faith and in a meaningful manner. 145 Ill. 2d R. 91(a), (b). In the present case, the trial court debarred plaintiff from rejecting the arbitration award on the second ground, i.e., it found that plaintiff failed to participate in the arbitration hearing in good faith and in a meaningful manner.

Plaintiff first argues that because the arbitrators did not make an express written finding that plaintiff failed to participate in the arbitration hearing in good faith, the trial court abused its discretion in finding that plaintiff failed to participate in good faith and in debarring plaintiffs rejection of the award. Contrary to plaintiffs argument, however, it is well settled that even where the arbitrators do not include a written finding that the plaintiff failed to participate in good faith, the trial court may bar rejection of an award on the basis of lack of good faith. Goldman, 307 Ill. App. 3d at 172; Saldana v. Newmann, 318 Ill. App. 3d 1096, 1098, 743 N.E.2d 663 (2001).

Plaintiff next argues, citing West Bend Mutual Insurance Co. v. Herrera, 292 Ill. App. 3d 669, 686 N.E.2d 645 (1997), that because the arbitrators did not find that plaintiff failed to participate in good faith and because no transcript of the hearing existed, the trial court had no basis upon which to determine whether plaintiff participated in the hearing in good faith and, therefore, it abused its discretion in holding that plaintiff did not. In West Bend, one of the defendants appeared at the arbitration hearing pursuant to the plaintiffs Ride 237 notice, but he could not speak English and he had no translator. At the hearing, the defendants’ attorney made an opening statement, cross-examined the plaintiff, and made a closing argument in behalf of the defendants. The arbitrators ruled in favor of the plaintiff, but made no express finding that either of the defendants failed to participate in good faith.

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795 N.E.2d 1001, 342 Ill. App. 3d 808, 277 Ill. Dec. 333, 2003 Ill. App. LEXIS 1036, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-farm-mutual-insurance-v-koscelnik-illappct-2003.