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Plaintiff, Equity Insurance Managers of Illinois (Equity),obtained a $91,000 arbitration award against defendant, Mary KayMcNichols, following defendant's breach of an employment contract. The circuit court confirmed the award and defendant appeals,alleging (1) the court erred in not vacating the award because theemployment contract violated public policy and (2) the amount ofthe award was miscalculated.

In March 1985, McNichols began her employment at Irland &Rogers, Inc. (Irland), an insurance wholesaler. In 1996, CharleyRogers, the president and principal shareholder of Irland, soldIrland's book of business and name to Equity. During the salenegotiations, Rogers requested that several Irland employees,including McNichols, be provided with employment contracts toprotect their employment after the sale.

About December 10, 1996, James Skelton, Sr. (Skelton, Sr.),the managing director of Equity, presented McNichols with anemployment contract. McNichols returned the employment contract toSkelton, Sr., unsigned, because she objected to a non-competeclause in the contract and the amount of salary. Shortlythereafter, a second employment contract was tendered. McNicholsagain refused to sign the contract because it still contained anon-compete clause. On December 30, 1996, Skelton, Sr. providedMcNichols with a final draft of the contract. McNichols testifiedthat Skelton, Sr. told her she needed to sign the contract in orderto complete the sale the following day. McNichols reviewed thecontract, identified a typographical error in the salary, andquestioned a non-compete clause. Skelton, Sr. informed her thenon-compete clause did not allow her to compete with Equity whileemployed by Equity.

The corrected contract included a salary of $68,500, a bonusbased on 2% of Equity's profit, a clause stating McNichols agreedto remain an employee of Equity from January 1, 1997 throughDecember 31, 1999, and a clause stating any dispute with respect tothe construction or interpretation of the contract which could notbe settled by the parties would be decided by a single arbitrator.Equity retained the right to terminate McNichols' employment "forcause." The contract did not include any language allowingMcNichols to leave Equity before December 31, 1999. McNicholstestified that during the final negotiations, she indicated toSkelton, Sr. that she understood she could leave for any reason orbe fired for any reason and Skelton, Sr. responded, "that's right." Skelton, Sr. testified he did not recall responding to McNichols'comment during their discussion in light of the language of thecontract. McNichols signed the contract on either December 30 orDecember 31, 1996. McNichols admits she read the contract but didnot spend a great deal of time addressing it and did not consult anattorney because December is a very busy time of the year.

Following the acquisition, Equity began marketing itself bothas an insurance wholesale broker and as a managing general agent. Skelton, Sr. and James Skelton, Jr. (Skelton, Jr.), the assistantmanaging director, did not have substantial wholesale broker orunderwriting experience. McNichols spent a good deal of timeproviding training to both Skeltons. During the first year, Equityfinanced marketing efforts to increase business, but did not makea profit in 1997 due to ineffective marketing efforts and theaccrual of extraordinary expenses including the installation of anew computer system and a copy machine.

McNichols became disenchanted with Equity for several reasons,including: the work day hours changed from 8:30 a.m. - 4:30 p.m. to8:30 a.m. - 5:00 p.m.; she was required to attend a weekly morningmeeting that necessitated leaving her home early in the morning;she took work home with her; she worked several Sundays; sheendured a long commute from her home; she did not receiveadditional staff to assist her as promised; she believed Equity wasillegally charging customers an assembly fee; she perceivedindividuals at Equity Kentucky, a major shareholder of Equity, assexist; she could not communicate with Equity Kentucky employeesdirectly; she believed she did not receive some of the perksenjoyed by the Skeltons, such as trips to conventions with spouses;and she believed Equity had financial problems.

In January 1998, William Yurek of AVRECO, Inc. (AVRECO), adirect competitor of Equity, contacted McNichols about possibleemployment with AVRECO. McNichols and Yurek met for lunch anddiscussed the possibility of her employment with AVRECO. A fewdays later, McNichols met with Yurek at AVRECO's offices, presentedher salary requirements, toured the offices, and reviewed AVRECO'sclient list. Later that day, Yurek telephoned McNichols andoffered her a position, including a salary of $85,000 per year,profit sharing, and additional vacation time and holidays.

The next morning, McNichols informed Skelton, Sr. aboutAVRECO's offer. McNichols was hurt that he did not make a counteroffer or attempt to convince her to stay. McNichols continuedworking for Equity for two weeks, during which time she continuedto perform her normal work, prepared her work for the transition toother employees at Equity, and cleaned out her office. On her lastday, Skelton, Sr. asked McNichols to sign a termination agreement. McNichols refused, testifying she believed that the terms of theagreement differed from her understanding that she could leaveEquity at any time and there would not be a non-compete clause. McNichols testified she resigned from Equity because "a betteroffer had come along, and it seemed *** ideal. I was overworked[and] considerably underpaid." She agreed she resigned for abetter opportunity.

In May 1998, Equity hired David Russow at a salary of $55,000per year with no benefits to replace McNichols. Russow had about20 years of insurance experience, but limited underwriting andbrokerage experience. Russow needed a substantial amount of timeto understand Equity's business and meet its clients. He generated substantially less business than did McNichols. Equity'sbusiness declined and Skelton, Sr., Skelton, Jr., and anotherEquity employee spent about 10% of their time attempting to renewbusiness previously serviced by McNichols.

In May 1998, Equity initiated arbitration proceedings againstMcNichols, alleging she breached her employment contract by leavingbefore December 31, 1999, and breached the non-compete clause. Anarbitrator heard extensive testimony concerning Equity's claimsand, in December 1998, found McNichols did not breach the non-compete clause of the contract because the clause was only ineffect while she was employed by Equity; but did breach thecontract by "accepting a better opportunity with AVRECO" before thecontract's expiration; and found no record evidence of intolerableworking conditions that would rise to the level of a constructivedischarge. The arbitrator assessed Equity's damages at $91,000based on the cost of replacing McNichols, foreseeable consequentialdamages, and Equity's duty to mitigate damages. The arbitratorfound that Equity saved approximately $17,000 in salary paymentsbecause McNichols was not replaced for three months andapproximately $29,000 in salary and benefits from the date Russowwas hired because of the difference in McNichols' and Russow'ssalary, for a total savings of $46,000 in personnel costs. Thearbitrator offset the amount saved by $28,000 to account for the10% of time the Skeltons and another employee had to spendadministering and reviewing McNichols' accounts, assuming thedisruption was over by the end of 1998. Therefore, Equity savedapproximately $18,000 in personnel costs through December 31, 1999.

The arbitrator also found that a loss in new business andrenewal commissions was foreseeable based on both partiestestifying that personal relationships are very important in thewholesale broker business. The arbitrator found McNichols' streamof new and renewal business commissions could be projected with areasonable degree of certainty based upon her prior production. Based on McNichols' past production, the arbitrator determined shewould have generated approximately $150,000 in commissions for theremainder of 1998 and $170,000 in 1999. The arbitrator thenadjusted the amounts because of Equity's duty to find a suitablereplacement for McNichols and to otherwise exercise reasonablediligence to minimize its losses. Based on the testimony andexhibits, the arbitrator found Equity's actual loss of commissionin 1998 was $75,000 (50% of McNichols' calculated commissions) and$34,000 for 1999 (20% of McNichols' calculated commissions), for atotal of $109,000. Subtracting the $18,000 saved in personnelcosts, the arbitrator awarded Equity $91,000 plus costs.

In February 1999, Equity moved to confirm the arbitrator'saward. The next day, McNichols filed a petition to vacate theaward and a multi-count complaint at law against Equity. Thecircuit court consolidated the two actions. In April 1999, thecourt granted Equity's petition to confirm the award, deniedMcNichols' petition to modify or vacate the award, and transferredher complaint to the Law Division. In May 1999, McNicholsunsuccessfully moved for reconsideration of the court's order. Subsequently, McNichols' filed a voluntary petition in bankruptcyand this appeal.⁽¹⁾

McNichols initially asserts that the circuit court should havevacated the arbitration award because it violates the public policyof protecting employees from "unchecked employer power."⁽²⁾

Judicial review of an arbitration award is more limited thanthe review of a trial court's decision. Klatz v. Western StatesInsurance Co., 298 Ill. App. 3d 815, 701 N.E.2d 1135 (1998)(Klatz). Whenever possible, a court must construe an arbitrationaward so as to uphold its validity and all reasonable presumptionsare to be indulged in favor of the award. Klatz, 298 Ill. App. 3dat 818. An award may be set aside if it violates some explicitpublic policy. Illinois public policy is found in itsconstitution, statutes, and judicial decisions. County of De Wittv. American Federation of State, County and Municipal Employees,Council 31, 298 Ill. App. 3d 634, 699 N.E.2d 163 (1998) (County ofDe Witt).

In the instant case, McNichols contends that the employmentcontract violated public policy disfavoring "unchecked employerpower." She argues that Equity's ability to terminate heremployment while she could not terminate her employment for anyreason under the contract, and the conditions of her employment,i.e., unreasonable hours, taking work home, working Sundays, sexisttreatment, and separation from her husband and children, evinceunchecked employer power.

McNichols cites Palmateer v. International Harvester Co., 85Ill. 2d 124, 421 N.E.2d 876 (1981) (Palmateer), County of De Witt,and several sections of the Illinois Administrative Code in supportof her argument; however, these authorities do not support herargument. Palmateer found that an employer may be liable forretaliatory discharge because public policy favors theinvestigation and prosecution of crimes. Palmateer, 85 Ill. 2d at133. County of De Witt held that an arbitrator erred inreinstating a nurse who struck a patient because reinstatementimplicated and violated the public policy against mistreatment ofthe elderly. County of De Witt, 298 Ill. App. 3d at 640. Theinstant three-year employment contract is inapposite to thesecases.

Furthermore, the sections of the Illinois Administrative Codecited by McNichols, including in part, the minimum wage law (56Ill. Admin. Code