Givens v. Renteria

Case Date: 12/12/2003
Court: 1st District Appellate
Docket No: 1-02-1074 Rel

No. 1-02-1074


ROSIE GIVENS and TRENIKA SMITH,

                                    Plaintiffs-Appellees,

                      v.

ROSENDO RENTERIA, MARTIN RENTERIA,
and MARIA RENTERIA,

                                     Defendants-Appellants.

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Appeal from the
Circuit Court
of Cook County.

No. 01 M1 301166


Honorable
James P. McCarthy,
Judge Presiding.


JUSTICE REID delivered the opinion of the court:

Following the entry of an order by the trial court barring defendants from rejecting anarbitration award and the subsequent entry of judgment on that award, plaintiffs brought theinstant appeal. For the reasons that follow, we affirm the judgment of the trial court.

BACKGROUND

The underlying lawsuit in this matter is a personal injury and property damage actionrelating to a traffic accident. The matter was scheduled for arbitration. The parties appeared inperson and by counsel at the arbitration hearing.

Martin and Maria Renteria owned the vehicle being driven by Rosendo Renteria. Thecomplaint alleges that the Renteria vehicle hit both the rear of a vehicle owned and operated byRosie Givens and the rear of a vehicle owned and operated by Trenika Smith. The Renterias filedan appearance, answer and jury demand with leave of court.

On October 19, 2001, defense counsel received plaintiffs' Supreme Court Rule 90(c)documents. 166 Ill. 2d R. 90(c). Thereafter, plaintiffs received leave of court to supplement theSupreme Court. Rule 90(c) package. During the arbitration, when a dispute arose regardingdefense counsel's objection to the Rule 90(c) documents, the arbitrators indicated they wouldtake the objection under advisement. The arbitrators instructed the parties to proceed. Defensecounsel pressed the arbitrators for an immediate ruling on the objection. In an immediate ruling,the arbitrators overruled the objection, again ordering the parties to proceed. Defense counselrefused, despite indications that the arbitrators believed the defense's refusal was contumacious. Defense counsel was insistent upon learning the basis for the arbitrators' ruling.

There is some dispute as to what happened next. According to the defense, the arbitratorsthen announced they were adjourning the hearing. According to the plaintiffs, the arbitratorstemporarily recessed the hearing so they could consult with a circuit court judge. Plaintiffs arguethat at no time did the arbitrators terminate the hearing or instruct the parties to leave. Thearbitrators' award uses the word "adjourn" in the written document. The arbitrators thencontacted a circuit court judge for advice. When they returned, they discovered that thedefendants and their attorneys had left. The arbitrators then proceeded in the absence of thedefendants. Evidence was taken, followed by the issuance of an award and a unanimous writtenfinding that the defendants had failed to participate in the arbitration in a meaningful mannerbecause of both how they left and their conduct before they left.

The arbitrators entered an order containing the following language:

"We the undersigned arbitrators, having been duly appointed andsworn (or affirmed), make the following award: Award in favor ofTrenika Smith & against Defendants Rosendo Renteria, MariaRenteria & Martin Renteria for $10,000 plus costs. The panelunanimously finds that the defendants failed to arbitrate in goodfaith and a meaningful manner. Defense counsel (Parrillo, Weissper atty Fabrini) objected to certain Rule 90 materials & continuedto argue the objections after overruled. After defense counselrepeatedly refused the panels [sic] direction to proceed witharbitration, counsel became contemptuous to the panel yelling &continuing refusal to the panels [sic] direction to proceed. Counselfor defense was warned that the panel would contact the judgepresiding to report contempt of the panel. When the paneladjourned to call the presiding judge, defense counsel summarilyleft with defendants precluding any further participation bydefendants. Judge Laurie ordered the panel to proceed with theevidence of the plaintiff & a hearing was held."

The defendants paid the rejection fee within the statutory 30-day window and served anotice rejecting the arbitration award and requesting a trial. The plaintiffs moved to bar therejection of the award under Supreme Court Rule 91. 145 Ill. 2d R. 91. In that motion, theplaintiffs urged the trial court to consider defendants' departure before the introduction of anyarbitration testimony to be tantamount to a failure to be present at all.

The defendants filed a response supported by affidavits supporting their claim that thearbitrators had declared the arbitration adjourned and instructed all parties to leave the room. Allthree arbitrators then left the room. The plaintiffs admit the arbitrators did leave the room, butclaimed it was only to check a point of law with the trial court, not to end proceedings for theday. The plaintiffs claim the arbitrators did not adjourn the proceedings for the day. Thedefendants argued before the trial court that they believed the arbitration was over when they left. Additionally, defense counsel claims that at least one of the arbitrators was prejudiced against thedefense law firm. The defense further argued that Rule 91(b) states that a bad-faith finding is onlyprima facie evidence that a party has failed to participate in good faith, but it is not meant to bedispositive of the issue.

The trial court declined to take evidence when considering the motion to bar rejection ofthe award. The defense made an offer of proof as to what the witnesses present in court wouldhave testified. During the offer of proof, the following discussion took place:

"THE COURT: You can make your offer of proof.

[DEFENSE]: I will make my offer of proof as an officer ofthe court that I would call - then, I will ask them to step forward -

THE COURT: You may make your offer of proof.

[DEFENSE]: Okay. That Mr. Fabrini, as well as Maria andMartin Renteria, would testify that after the arbitrator stood up andwalked over - that they said it was over, which was one of theconclusions in the affidavits provided by all three of these people;that the further basis of the fact that it was over was the fact thatthey walked all the way over to the part in the Arbitration Centerwhere the arbitrators go when cases are over, and that the elevatorswere near there; that they saw them leave, and there was no attemptto say there was a temporary adjournment, and did nothing toindicate to them that it was not, in fact, over. So, I am justelaborating on that part of the affidavit.

THE COURT: That is your offer of proof?

[DEFENSE]: That is my offer of proof. Along with myargument, I think that it further -- there is further evidence that, infact, that the arbitrators gave every indication that the case wasover by the fact that all three of them got up and left the room; that,in fact, they were just making a phone call, as indicated, that itwould only have taken the chair arbitrator to walk out, but in fact,all of them left the room.

[PLAINTIFF]: Judge, I'm going to object to all of this. This is not part of the record. There is no way of proving that this-

[DEFENSE]: I also want the Court to consider the fact thatwithin the actual bad faith finding itself, that the arbitrators - theway that it is worded. And I would draw the Court's attention tothe last two paragraphs, where they indicate in here that, when thepanel adjourned, there is no indication in there that it was of atemporary basis, et cetera. And then, this is the interestingparagraph after that, that said that Judge Laurie ordered the panelto proceed with evidence. In other words, indicating that they werefully ready to have the arbitration over until Judge Laurie orderedthem to go back and proceed with the evidence. So, I think thatfurther illustrates my clients', as well as my attorney'sunderstanding that the arbitration was, in fact, over. I also believethat this Court should look at and consider the fact that - thefindings of the arbitrators, like I said, are only prima facie, and it istainted by a couple of things. It is tainted by two facts, inparticular, that are encompassed within our response; tainted by thefact that one of the arbitrators did not disclose, nor did he recusehimself from the hearing, despite the fact that he was prejudicedagainst the firm, that he has taken a member of our firm to theARDC, and basically he should have recused himself. And it taintsthis whole proceeding, and the whole way we were misled by thearbitrators into thinking that the case was over when, in fact, theyreconvened.

THE COURT: Was that the chairperson?

[DEFENSE]: No, that is one of the other arbitrators. Now, the chairperson, however, I believe that these findings aretainted by his words, which are encompassed in the affidavit. Thefindings of the arbitrator are tainted by the fact that the chairpersonthreatened my attorney who was there present, threatened him witha finding against this client if he continued to object. I think thatthreat, which is encompassed in my affidavit, taints the entirefinding of the arbitrators; which, again is only prima facie evidence. And so, the evidence that we put forth in terms of the affidavit istainted, taints this, and should not be then held up as prima facieevidence as well. Basically, Judge, you know, my clients werethere, our attorney was there. We were all ready to proceed ingood faith. There were some disputes over evidentiary rulingswhich, by the way, I feel they were well founded and I includedsome of those things. But anyway, despite that fact, the arbitratorused the word 'adjourned', and basically said that the case wasover. That was all their understanding: That the case was over,and that they were to leave. I want to call the Renterias to testify. They are here.

THE COURT: You had your opportunity to put this inyour affidavit.

[DEFENSE]: It is my understanding, Judge, that we shouldhave the opportunity to cross examine, because I have the makersof the affidavits here.

THE COURT: We had a briefing schedule set. Thisgentleman may be also wanted to put his own witness back on,since you feel you need to put your witness back on. There was abriefing schedule set. You had an opportunity to put informationin. This gentleman had his opportunity to reply. He chose to doso. He did so. This court is considering only that.

[DEFENSE]: Judge, I am confused. I don't understandwhy I can't offer an affidavit and then bring the person in live totestify.

THE COURT: Because there is no need for it. Don't try tosandbag people. Don't do that.

[DEFENSE]: Judge, I am not trying to sandbag people.

THE COURT: I know you are not, counsel. You aretrying to do a good job. You make an offer of proof as to yourclients Renteria. You make an offer of proof as to the attorney. You make an offer of proof as to those facts. Put it in the record. Move on." (Emphasis added.)

As the above excerpt indicates, the offer of proof was rejected by the trial court asunnecessary. The trial court granted the motion to bar rejection of the arbitration award andentered judgment on the award. The trial court also, after a hearing on defendants' motion tocertify a bystander's report of proceedings, entered an order providing that the "best evidence ofwhat took place at the arbitration hearing is the report of the arbitrators attached to the award,and said award and attached report is certified as the Bystander Report of Proceedings."

STANDARD OF REVIEW

There is no disagreement between the parties as to the appropriate standard of review tobe applied. An order barring rejection of an arbitration award is reviewed for an abuse ofdiscretion. State Farm Insurance Co. v. Harmon, 335 Ill. App. 3d 687, 690 (2002), citingGoldman v. Dhillon, 307 Ill. App. 3d 169, 172 (1999); Government Employees Insurance Co. v.Campbell, 335 Ill. App. 3d 930, 933 (2002) ("The trial court's decision to bar a party fromrejecting an arbitration award is within the sound discretion of the trial court and will not bedisturbed on review absent an abuse of discretion"), citing Williams v. Dorsey, 273 Ill. App. 3d893, 901(1995). "An abuse of discretion 'occurs when the court rules arbitrarily or when itsruling "exceed[s] the bounds of reason." ' " Campbell, 335 Ill. App. 3d at 933, quoting Williams,273 Ill. App. 3d at 901, quoting In re Marriage of Malters, 133 Ill. App. 3d 168, 180 (1985). However, where the propriety of a debarment sanction turns on a question of law, the order isreviewed de novo. S. B. Lexington, Inc. v. Near North Insurance Agency, Inc., 244 Ill. App. 3d1023, 1030 (1993), citing South Suburban Safeway Lines, Inc. v. Regional TransportationAuthority, 166 Ill. App. 3d 361, 365 (1988). Where the determination to impose sanctions ismade without an evidentiary hearing and is based upon papers in the record, the trial courtsdecision is not entitled to deference on review. Toland v. Davis, 295 Ill. App. 3d 652, 654(1998), citing North Shore Sign Co. v. Signature Design Group, Inc., 237 Ill. App. 3d 782, 790(1992). ("When a trial judge bases his decision solely on the same 'cold' record that is before thecourt of review, it is difficult to see why any deference should be afforded to that decision").

ANALYSIS

Defendants argue on appeal that the trial court erred in barring rejection of the arbitrationaward. They maintain that Supreme Court Rule 90(g) only allows the court to bar rejection of anarbitration award if a party has violated a Supreme Court Rule 237 (166 Ill. 2d R. 237) notice toappear. Because they did appear with counsel, they argue they did not violate Rule 237. Defendants also maintain they were misled into leaving the arbitration because the arbitrators usedthe word "adjourn" when they meant "recess." As they went to leave the building, nobodystopped them. Additionally, defendants claim they participated in a good-faith manner and thearbitrators' bad-faith finding should only have been treated as prima facie evidence of bad faith. Defendants point out that there is no case law covering a situation such as this where they showedup but then left when the arbitrator said "adjourn." "In the practice of courts, ['recess' is definedas] a short interval or period of time during which the court suspends business, but withoutadjourning. ['Recess' is also defined as] [t]he period between sessions of court. A temporaryadjournment of a trial or a hearing that occurs after a trial or hearing has commenced" Black'sLaw Dictionary 1269 (6th ed. 1990). "Adjournment" is defined as "[a] putting off or postponingof business or of a session until another time or place. The act of a court, legislative body, publicmeeting, or officer, by which the session or assembly is dissolved, either temporarily or finally,and the business in hand dismissed from consideration, either definitely or for an interval. If theadjournment is final, it is said to be sine die." (Emphasis added.) Black's Law Dictionary 42 (6thed. 1990). The defendants claim their actions did not constitute deliberate, contumacious orunwarranted disregard of the courts authority. The defendants also claim the actions of the courtviolated their constitutional rights.

The plaintiffs argue the bad-faith finding was appropriate because the arbitrator went tocall the presiding judge about the contumacious conduct when the defendants left. Contrary tothe defendants position, the plaintiffs stayed. As a result, the plaintiff s argue there is no way toconclude that it was clearly time to leave.

"Arbitration is not to be considered simply a hurdle to cross on the way to trial." Smith v.Gleash, 325 Ill. App. 3d 79, 83 (2001), citing Employer's Consortium, Inc. v. Aaron, 298 Ill.App. 3d 187, 189 (1998). "It is essential to the integrity of the mandatory arbitration process thatthe parties proceed at the arbitration hearing in good faith and subject their claims to the sort ofadversarial testing that would be expected at trial." Smith, 325 Ill. App. 3d at 83. To that end,the supreme court promulgated Rule 91(b), stating the following:

"All parties to the arbitration hearing must participate in thehearing in good faith and in a meaningful manner. If a panel ofarbitrators unanimously finds that a party has failed to participate inthe hearing in good faith and in a meaningful manner, the panel'sfinding and factual basis therefor shall be stated on the award. Suchaward shall be prima facie evidence that the party failed toparticipate in the arbitration hearing in good faith and in ameaningful manner and a court, when presented with a petition forsanctions or remedy therefor, may order sanctions as provided inRule 219(c), including, but not limited to, an order debarring thatparty from rejecting the award, and costs and attorney fees incurredfor the arbitration hearing and in the prosecution of the petition forsanctions, against that party." (Emphasis added.) 145 Ill. 2d R.91(b).

It has been determined that bad-faith participation in an arbitration hearing, for purposesof precluding a party from rejecting the decision of the panel, "may consist of 'inept preparation orintentional disregard for the process.' " Anderson v. Mercy, 338 Ill. App. 3d 685, 689 (2003),quoting Schmidt v. Joseph, 315 Ill. App. 3d 77, 83 (2000). "When the arbitrators unanimouslyfind that a party failed to participate in good faith, a court will treat their finding as prima facieevidence. ***" Smith, 325 Ill. App. 3d at 83, citing Goldman v. Dhillon, 307 Ill. App. 3d 169,172 (1999). Under these circumstances, "[t]he party subject to Rule 91(b) sanctions has theburden of presenting evidence to rebut the prima facie evidence." Smith, 325 Ill. App. 3d at 83-84, citing Eichler v. Record Copy Services, 318 Ill. App. 3d 790, 792-93 (2000).

The trial court entertained a motion to strike the rejection of the arbitration award, gavethe matter a full briefing schedule, followed by oral argument. After having considered all of theabove, and despite the trial court's reluctance to allow the defendants to put on live testimony, thetrial court granted the motion and barred rejection of the arbitration award. Though there aredifferences contained in the affidavits submitted in support of the parties' arguments, the findingsof the arbitration panel are unanimous, detailed and clearly articulated. We decline to substituteour judgment for that of the arbitration panel.

As to defendants' next claim, that to bar rejection of an arbitration award is only proper ifthere is a violation of Supreme Court Rule 237, defendants cite to State Farm Insurance Co. v.Kazakova, 299 Ill. App. 3d 1028 (1998). In Kazakova, this court reversed a trial court's decisionto bar a rejection of an arbitration. That case is somewhat fact-bound, because it turns on theKazakova defendant's failure to hire an interpreter in contemplation of the arbitration hearing. InKazakova, this court held that "[a]s defendant did not violated Supreme Court Rule 91(b) or Rule237, the trial court erred in barring her from rejecting the arbitration award." Kazakova, 299 Ill.App. 3d at 1034. In so ruling, the Kazakova court held as follows:

"[W]e believe that the standard to be applied in decidingwhether to bar defendant from rejecting the award is whether herconduct was characterized by a deliberate and pronounceddisregard for rules and the court." Kazakova, 299 Ill. App. 3d at1034, citing Walton v. Throgmorton, 273 Ill. App. 3d 353, 359(1995), and Valdivia v. Chicago & Northwestern TransportationCo., 87 Ill. App. 3d 1123, 1125 (1980).

Defendants would have this court extend Kazakova such that the violation of Rule 91(b)or Rule 237 is a prerequisite to barring a rejection of arbitration. We decline to adopt thischaracterization. While violations of those supreme court rules would be good evidence of the"deliberate and pronounced disregard for the rules and the court" necessary to justify barring therejection, the rule remains flexible in order to maintain the trial court's discretion. Additionally,we must reject the defendants' argument precisely because there was a violation of Rule 91(b) inthat they failed to participate in the arbitration in good faith and a meaningful manner. Thedefendants cannot claim the moral high ground if it was their conduct that caused the arbitratorsto stop the hearing in the first place.

As to defendants' argument that they were misled into leaving the arbitration such thatthere should be no consequences for leaving, that only tells part of the story. According to thearbitration panel's order, prior to leaving, the defendants were not participating in a good-faithand meaningful manner. The defendants were "refusing the panels [sic] direction to proceed,""warned that the panel would contact the judge presiding to report contempt," and generally"yelling." This all took place before defendants summarily left, thereby "precluding any furtherparticipation." Additionally, we cannot ignore the fact that the plaintiffs did not leave after thepanel made its allegedly misleading announcement of an adjournment.

Defendants also claim the sanction was too severe and their constitutional rights wereviolated by the trial court's denial of a jury trial and subsequent entry of judgment, as they put it,"simply because they followed the arbitrators' instructions to leave the room once the hearing wasadjourned." Again, this characterization of the record fails to take defendants' actions prior to the"adjournment" into account. The trial court, in barring rejection of the award of the arbitrators,considered everything contained in the record of proceedings. The trial court also entertainedoral arguments on the motion. In so ruling, the trial court rejected the defendants'characterization of the events. We similarly reject defendants' contentions because the burdenwas on them to demonstrate by the manifest weight of the evidence that the trial court abused itsdiscretion and that the sanction was too severe. "The sanctions of dismissal of a plaintiff's actionor entry of a judgment against a defendant is the most drastic of sanctions and should be imposedreluctantly and only as a last resort when all other enforcement powers at the court's disposalhave failed to advance the litigation. [Citation.] These drastic sanctions should not be invokedexcept in those cases where the actions of the party show a deliberate, contumacious andunwarranted disregard of the court's authority." (Emphasis added.) Easter Seal RehabiliationCenter for Will-Grundy Counties, Inc. v. Current Development Corp., 307 Ill. App. 3d 48, 51(1999), citing Wilkins v. T. Enterprises, Inc., 177 Ill. App. 3d 514 (1988). Contempt of thearbitrators' authority is precisely the issue in this case. The trial court felt that debarment of anotice of rejection of an arbitration is an appropriate sanction for what the arbitrators themselvesunanimously found to be deliberate, contumacious and unwarranted conduct. Such a conclusionis not unwarranted on this record.

The defendants next argue that the arbitrators' actions and the trial court's ruling resultedin the defense being subjected to two arbitration hearings, the second of which was held withoutnotice. The plaintiffs suggest there was only one hearing with a temporary recess to allow thearbitrators to consult with the presiding judge. The trial court, sub silencio, agreed with thatnotion. As a temporary recess, there would be no additional notice requirement. Because wereview the trial court's order for an abuse of discretion, we cannot say the decision exceeds thebounds of reason. We need not discuss the matter further.

Finally, defendants claim that because there were disputed facts in the conflicting affidavitspresented in the motion to strike the rejection of the arbitration, the trial court should haveconducted an evidentiary hearing. The defendants were given the opportunity to fully brief thearguments their counsel made orally. Defense counsel was also allowed to make an offer ofproof, even though the offer was ultimately rejected. The trial court decided that it was notnecessary, in light of the affidavits presented, to have live testimony from the affiants. The trialcourt explained to the defense counsel that the live testimony would not have added anysubstantial matters to the allegations contained in the affidavits, responses and argument. Insupport of their claim, defendants cite to In re Estate of Smith, 201 Ill. App. 3d 1005 (1990). InSmith, after a jury verdict in favor of the claimant, Gualarndri & Company, the claimant filed awritten motion seeking attorney fees and other expenses. The trial court denied that motion in anorder that, though it indicated the motion was fully briefed and argued, was silent as to whetherthe parties were given any opportunity to introduce evidence at the hearing. The Smith courtrecognized that "[t]he circuit court is in the best position to decide how [applicable] rules orstatutes should be applied in the cases before it, and for that reason its decisions are entitled toconsiderable deference upon review." Smith, 201 Ill. App. 3d at 1009. The Smith court alsoruled:

"[T]he predicate to such deference is that the circuit court make aninformed and reasoned decision. A hearing ought to be held to givethe parties involved an opportunity to present any evidence neededto substantiate or rebut the claim for sanctions and an opportunityto argue their positions. A hearing was held in this case on themotion for fees and expenses, but the order entered suggests thatno evidence was taken at that hearing. In the absence of findingswhich would justify foregoing an evidentiary hearing, the circuitcourt erred in not having such a hearing." Smith, 201 Ill. App. 3dat 1009, citing Beno v. McNew, 186 Ill. App. 3d 359 (1989).

The Smith case is inapposite to this one. First and foremost, Smith does not deal with thenecessity of an evidentiary hearing when a violation of Rule 91 is implicated. Second, Smithrecognizes the chance for circumstances when, as now, the trial court is sufficiently well informedso as to be able to render a proper decision. Third, Smith did not address the impact of an offerof proof on this type of case. Here the defendants were afforded the opportunity to fully brief thematter, orally argue it and make an offer of proof. The offer consisted of a narrative of theproposed testimony to be given by those persons whose affidavits were already before the trialcourt. The trial court considered all of those things yet did not see the necessity for live testimonyto repeat the information contained in the affidavits attached to the pleadings. Additionally, thetrial court was well aware of the supreme court rule stating that "[a]n arbitrator may not be calledto testify as to what transpired before the arbitrators and no reference to the fact of the conduct ofthe arbitration hearing may be made at trial." 166 Ill. 2d R. 93(b). Based upon our review of therecord in this case, we cannot say the trial court's decision or conduct was an abuse of discretion.

CONCLUSION

In light of the foregoing, the decision of the trial court is hereby affirmed.

Affirmed.

Campbell, P.J. and Hartigan, J., concur.