Government Employees Insurance Co. v. Campbell

Case Date: 11/27/2002
Court: 1st District Appellate
Docket No: 1-02-0748 Rel

FOURTH DIVISION

November 27, 200





No. 1-02-0748

 

GOVERNMENT EMPLOYEES INSURANCE ) Appeal from the
COMPANY, a/s/o Millie Booker, ) Circuit Court of
) Cook County
                             Plaintiff-Appellant, )
)
v. )
)
BERNADETTE CAMPBELL, ) Honorable
) James P. McCarthy,
                             Defendant-Appellee. ) Judge Presiding.

 

 

JUSTICE KARNEZIS delivered the opinion of the court:

Following mandatory arbitration in this subrogation action involving damagessustained in a vehicle collision by plaintiff's subrogor, judgment on liability was enteredin favor of plaintiff, Government Employees Insurance Company (hereinafter, GEICO),and against defendant, Bernadette Campbell. However, the arbitrators awardedGEICO $0 in damages as they found that GEICO had violated defendant's Rule 237(b)(166 Ill. 2d R. 237(b)) notice to produce by failing to produce the "adjuster with theentire claim file." GEICO attempted to reject the award, but the trial court entered anorder debarring it from doing so as a sanction for its Rule 237 violation. GEICO nowappeals from that order and claims that the trial court erred in barring it from rejectingthe arbitration award as it complied with Supreme Court Rule 237. GEICO also arguesthat even if it violated Rule 237, the sanction of debarment was too harsh. In addition, itmaintains that the trial court's reliance upon a written set of "proposed arbitrationguidelines" in barring plaintiff's rejection of the arbitration award was improper. Finally,GEICO contends that the trial court improperly considered good faith and meaningfulparticipation under Supreme Court Rule 91(b) (166 Ill. 2d R. 91(b)) as a basis fordebarring its rejection of the arbitration award, as defendant waived this argument byfailing to raise it in her motion to debar. We affirm.

GEICO filed a subrogation action to recover damages in the amount of$17,081.70 as a result of a vehicle collision between it's subrogor, Millie Booker, andthe defendant, Bernadette Campbell.

Defendant served a notice to produce, pursuant to Supreme Court Rule 237(b)(166 Ill. 2d R. 237(b)), on GEICO demanding that, among other things, GEICO produce"[p]laintiff(s) and [c]o-defendant(s) at the commencement of the case in chief ofdefendant Bernadette Campbell" and, "[i]f the [p]laintiff and/or the [c]o-defendant is acorporation (including an Insurance Company), the claims adjuster with the entire claimfile."

A mandatory arbitration hearing was held on November 19, 2001. Counsel forGEICO appeared at the hearing, as did it's subrogor, Millie Booker. Neither the claimsadjuster nor the claim file was produced. The arbitrators entered an award in favor ofGEICO with respect to liability but awarded GEICO $0 in damages as GEICO "failed toproduce file and agent pursuant to Rule 237."

On November 27, 2001, GEICO filed a notice of rejection of the award in thecircuit court. In response, defendant filed a motion to debar GEICO's rejection of theaward on the basis that GEICO failed to comply with defendant's Rule 237 notice. OnJanuary 8, 2002, the court granted defendant's motion to debar. Thereafter, the courtentered judgment on the arbitration award in favor of GEICO and against defendant inthe amount of $0.

GEICO then filed a motion to reconsider the court's debarment of GEICO'srejection and judgment on the award. A hearing was held on the motion to reconsiderand the court denied GEICO's motion.

Plaintiff first claims that it should not have been debarred from rejecting thearbitration award because it substantially complied with Supreme Court Rule 237. While plaintiff did not bring it's "claim adjuster with the entire claim file" to the hearing asrequired by defendant's notice, GEICO asserts that "the circumstances of this case donot warrant such a [sic] extreme result- in essence, a $17,081.70 sanction-merelybecause GEICO did not bring a total loss adjuster to testify on its behalf at arbitration,while both counsel and subrogor did appear."

Supreme Court Rule 237(b) states in pertinent part:

"The appearance at the trial of a party or a person who at the time of trial is an officer, director, or employee of a party may be required by serving theparty with a notice designating the person who is required to appear. The noticealso may require the production at the trial of the original of those documents ortangible things * * *. Upon a failure to comply with the notice, the court mayenter any order that is just, including any order provided for in Rule 219(c) thatmay be appropriate." 166 Ill. 2d R. 237(b).

Supreme Court Rule 90(g) provides that Rule 237 is equally applicable toarbitration hearings as to trials and also provides that failure to comply with a Rule237(b) notice may include an order debarring that party from rejecting the arbitrationaward. 166 Ill. 2d R. 90(g).

Sanctions for failing to comply with a Rule 237 notice are to be imposed whenfailure to comply is determined to be unreasonable. Hawkins v. Wiggins, 92 Ill. App. 3d278, 282, 415 N.E.2d 1179 (1980). The trial court's decision to bar a party fromrejecting an arbitration award is within the sound discretion of the trial court and will notbe disturbed on review absent an abuse of discretion. Williams v. Dorsey, 273 Ill. App.3d 893, 901, 652 N.E.2d 1286 (1995). An abuse of discretion "occurs when the courtrules arbitrarily or when its ruling 'exceed[s] the bounds of reason.' " Williams, 273 Ill.App. 3d at 901 quoting In re Marriage of Malters, 133 Ill. App. 3d 168, 180, 478 N.E.2d1068, 1076 (1985). In addition, the burden is on the offending party to show that itsnoncompliance with a Rule 237 notice was reasonable or the result of extenuatingcircumstances. Kubian v. Labinsky, 178 Ill. App. 3d 191, 197, 533 N.E.2d 22 (1988).

Plaintiff argues that the ruling in State Farm Insurance Co., v. Rodrigues, 324 Ill.App. 3d 736, 756 N.E.2d 359 (2001), is dispositive of it's claim that the failure to complywith a Rule 237(b) notice was not unreasonable. In that case, State Farm filed asubrogation action against defendant Rodrigues for damaging the vehicle of it's insured,Pisarski. It was alleged that defendant struck and damaged Pisarski's parked andunoccupied vehicle. Counsel for State Farm appeared at the arbitration hearing butPisarski did not and the hearing proceeded without her. The arbitrators entered anaward for plaintiff and against defendant, but did not make a finding that plaintiff hadfailed to participate in good faith. Thereafter, defendant rejected the arbitration award. Subsequently, the trial court entered judgment for defendant and an order barringplaintiff from presenting evidence at trial as plaintiff had not arbitrated in good faith. Plaintiff appealed and argued that the trial court abused its discretion in finding thatplaintiff failed to arbitrate in good faith and in entering an order based on that findingbarring plaintiff from presenting evidence at trial. State Farm, 324 Ill. App. 3d at 737-40.

GEICO confuses Supreme Court Rules 237(b) and 90(g) with Rule 91 (145 Ill. 2dR. 91), and therefore its reliance on State Farm is misplaced. In State Farm, the courtbarred plaintiff from presenting evidence at trial as a sanction for plaintiff's failure toarbitrate in good faith, in accordance with Supreme Court Rule 91, which requires that aparty or a party's attorney appear at the arbitration hearing and participate meaningfullyand in good faith, after plaintiffs' subrogor, Pisarski, failed to appear at the arbitrationhearing. State Farm, 324 Ill. App. 3d at 738; 145 Ill. 2d Rs. 91(a), (b). The court'sorder finding bad faith was based on defendant's argument that Pisarki's presence atthe arbitration hearing was necessary as her testimony was needed to submit plaintiff'scase to sufficient adversarial testing and to reveal whether she actually had aninsurance policy and whether there was preexisting damage to her vehicle. StateFarm, 324 Ill. App. 3d at 742.

Contrary to the facts of the instant case, the court in State Farm found that therecould be no Rule 237 violation as there was no indication that defendant ever filed thenecessary notice with plaintiff to produce subrogor or any of plaintiff's representatives. As a result, the court could not impose sanctions under Supreme Court Rule 90(g).State Farm, 324 Ill. App. 3d at 741-42.

In the instant case, defendant filed a proper Rule 237 notice that included,among other things, that plaintiff bring the "adjuster with the entire claim file" to thearbitration hearing. GEICO did not do so and now attempts to make light of itsnoncompliance by referring to its "mere failure." Moreover, GEICO has failed to provideany explanation for its noncompliance, other than it was "an oversight."

"A consistent theme throughout the rules governing mandatory arbitration is theneed for parties and their counsel to take these proceedings seriously;specifically, the concern is that no party make a 'mockery of this deliberate efforton behalf of the public, the bar and judiciary to attempt to achieve an expeditiousand less costly resolution to private controversies' and to avoid allowing thearbitration process to be reduced to merely 'another hurdle to be crossed ingetting the case to trial.' " Williams, 273 Ill. App. 3d at 900, 652 N.E.2d 1286quoting 145 Ill. 2d Rs. 91(a), (b), Committee Comments.

See also 166 Ill. 2d Rs. 90(g), 93.

In accordance with the aforementioned "theme," we find that the sanctionimposed by the trial court was not an abuse of discretion, nor was the sanction undulyharsh in light of the circumstances. Basic tort law mandates that to establish a primafacie case of negligence a plaintiff must show that a duty was owed, defendantbreached that duty, the breach proximately caused plaintiff's injury and plaintiffsustained damages. Nunez v. Horwitz, 205 Ill. App. 3d 976, 981, 563 N.E.2d 946(1990) citing W. Prosser, Prosser & Keeton: On Torts