State Farm Mutual Insurance v. Santiago

801 N.E.2d 142, 344 Ill. App. 3d 1010, 279 Ill. Dec. 850, 2003 Ill. App. LEXIS 1397
CourtAppellate Court of Illinois
DecidedNovember 26, 2003
Docket1-02-3169
StatusPublished
Cited by4 cases

This text of 801 N.E.2d 142 (State Farm Mutual Insurance v. Santiago) 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. Santiago, 801 N.E.2d 142, 344 Ill. App. 3d 1010, 279 Ill. Dec. 850, 2003 Ill. App. LEXIS 1397 (Ill. Ct. App. 2003).

Opinion

JUSTICE REID

delivered the opinion of the court:

Following a mandatory arbitration hearing in this subrogation action for damages to the vehicle of plaintiffs insureds, the arbitration panel awarded plaintiff State Farm Mutual Insurance Company $1,770.57 against defendant Orlando Santiago. Defendant apparently rejected the award, then subsequently moved to bar plaintiff from presenting testimony or evidence at trial as a sanction for failure to produce the insureds at the arbitration hearing and for summary judgment. The circuit court granted both motions and entered judgment for defendant. On appeal, plaintiff contends that the circuit court abused its discretion in finding that plaintiff failed to participate in the arbitration proceedings in good faith, in imposing sanctions against plaintiff, and in finding that plaintiff violated Supreme Court Rule 237(b) (166 Ill. 2d R. 237(b)). For the reasons set forth below, we vacate said orders of the circuit court and remand this cause for further proceedings.

BACKGROUND

On November 6, 2001, plaintiff filed this subrogation action against defendant for allegedly damaging the vehicle of its insured, Shari Spraker. The case was assigned to mandatory arbitration, and a hearing was scheduled for July 17, 2002. Defendant filed a notice to produce pursuant to Supreme Court Rule 237(b), requiring plaintiff, Shari Spraker, and her husband Matthew Spraker to appear at the arbitration hearing. Defendant’s notice to produce did not require the presence of any particular employee of plaintiffs or even an employee with direct knowledge of the insureds’ claim involving defendant.

The hearing was attended by counsel for both parties, an adjuster employed by plaintiff, and by defendant. Plaintiffs insureds were not present. Plaintiff called defendant as an adverse witness. Defendant testified that he was involved in a collision with the insured vehicle on May 3, 2001. Defendant stated that he was driving approximately 40 miles per hour and that traffic was heavy. He saw that traffic in front of him was stopped and applied his vehicle’s brakes, but his vehicle failed to stop and collided with the rear of the insured vehicle. After the collision, he saw that there was damage to the insured vehicle’s rear bumper, muffler, exhaust pipe, and shock absorbers. As a result of the accident, defendant was cited for failure to maintain a safe distance, a charge to which he pled guilty.

Plaintiff then called its adjuster, Vali Michael Witz, who testified that plaintiff paid for the damage to the insured vehicle after the collision with defendant’s vehicle. She stated that plaintiff inspected the damage and found no prior or unrelated damage before commencing repairs. On cross-examination, Witz stated that she did not personally examine the insured vehicle, that she had not inspected the vehicle prior to the date of the accident, and that she had no knowledge of the vehicle’s condition prior to that date. She also stated that none of plaintiff’s other employees would know the exact condition of the vehicle before the collision.

Defendant testified again on his own behalf and stated that he had never seen the insured vehicle before he collided with it. Plaintiff also submitted evidence of vehicle damages through a Supreme Court Rule 90(c) package (166 Ill. 2d R. 90(c)).

The arbitration panel awarded $1,770.57 and costs in favor of plaintiff and against defendant. The award did not include a finding of bad faith or a finding of noncompliance with Rule 237(b).

Defendant moved to bar plaintiff from presenting testimony or other evidence at trial and for summary judgment against plaintiff because plaintiff failed to produce its insureds, Matthew and Shari Spraker, or an adjuster with personal knowledge of damages to the Sprakers’ vehicle at the arbitration hearing, and thus failed to participate in good faith and in a meaningful manner. Defendant pointed out that plaintiff brought no motion pursuant to Rule 90(g) to excuse the appearance of its insureds or to strike defendant’s notice to produce. Defendant also argued that plaintiff failed to prove the element of proximate cause in that plaintiff presented no evidence as to the condition of the Sprakers’ vehicle before the time of the accident. Plaintiff responded that it complied with Rule 237(b) by producing its adjuster at the hearing and that Rule 237(b) did not apply to the Sprakers since they were not parties to the case.

The circuit court granted defendant’s motion to bar pursuant to Rule 91(b) (145 Ill. 2d R. 91(b)) and entered summary judgment for defendant, finding that the testimony of plaintiffs insureds was essential to presenting good-faith evidence of the element of proximate cause. The court also found that plaintiff did not fully comply with defendant’s Rule 237(b) notice to produce because it did not present an employee with direct knowledge of proximate causation of the claimed damages nor did it secure the presence of the insureds, as defendant had requested.

On appeal, plaintiff contends that it did participate in the arbitration proceedings in good faith and that the circuit court abused its discretion in finding to the contrary. Plaintiff further contends that the sanctions levied by the circuit court exceed the bounds of reason and that defendant’s Rule 237(b) notice to produce does not apply to plaintiff or plaintiffs insureds.

ANALYSIS

A circuit court’s decision barring a party from presenting evidence at trial and imposing sanctions is subject to an abuse of discretion standard of review. Pickering v. Owens-Corning Fiberglas Corp., 265 Ill. App. 3d 806, 820 (1994). An abuse of discretion occurs when the court’s ruling is arbitrary or exceeds the bounds of reason. Williams v. Dorsey, 273 Ill. App. 3d 893, 901 (1995).

Rule 91(b) provides that parties to an arbitration must participate in the proceedings in good faith and in a meaningful manner. 145 Ill. 2d R. 91(b). Failure by a party to do so may result in sanctions as provided in Supreme Court Rule 219(c), including barring the losing party from rejecting an award or from presenting evidence or testimony at trial. 145 Ill. 2d R. 91(b); 166 Ill. 2d R. 219(c). Parties to an arbitration must subject the case to the same type of adversarial testing expected at trial. Failure to prepare or an intentional disregard for the arbitration process may result in a finding of bad faith. A party acts in bad faith when it demonstrates a deliberate and pronounced disregard for the rules of the court. Schmidt v. Joseph, 315 Ill. App. 3d 77, 83-85 (2000). The burden is on the offending party to show that its noncompliance with the rules at arbitration was reasonable or the result of extenuating circumstances. Kubian v. Labinksy, 178 Ill. App. 3d 191, 197 (1988).

In support of its contention that it acted in good faith and in a meaningful manner, plaintiff relies upon State Farm Insurance Co. v. Harmon, 335 Ill. App.

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Bluebook (online)
801 N.E.2d 142, 344 Ill. App. 3d 1010, 279 Ill. Dec. 850, 2003 Ill. App. LEXIS 1397, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-farm-mutual-insurance-v-santiago-illappct-2003.