State Farm Insurance Co. v. Jacquez

Case Date: 05/09/2001
Court: 1st District Appellate
Docket No: 1-99-1713 Rel

THIRD DIVISION
May 9, 2001
(NUNC PRO TUNC March 30, 2001)

No. 1--99--1713


STATE FARM INSURANCE CO., a/s/o
STELLA DORSEY,

                                   Plaintiff-Appellee,

                                         v.

JUAN JACQUEZ,

                                  Defendant-Appellant.

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Appeal from the
Circuit Court of
Cook County.




Honorable
James V. Murphy,
Judge Presiding.


JUSTICE BURKE delivered the opinion of the court:

Following mandatory arbitration in this negligence action, thecircuit court entered judgment on the arbitration award in favor ofplaintiff State Farm Insurance Co. and against defendant JuanJacquez. On appeal, defendant contends that the trial court erredin barring his rejection of the award and that plaintiff waived anyobjection to his rejection of the award. Defendant also contendsthat the court erred in entering judgment for damages in excess ofthe amount sought in plaintiff's complaint and by allowingplaintiff to amend its complaint after the arbitration hearing. Although plaintiff did not file an appellee's brief, we willconsider this appeal pursuant to the principles set forth in FirstCapitol Mortgage Corp. v. Talandis Construction Corp., 63 Ill. 2d128, 131-33, 345 N.E.2d 493 (1976).

In March 1998, plaintiff filed a negligence action againstdefendant alleging that his driving caused an automobile accidentwith Stella Dorsey, who was insured by plaintiff under a policythat provided coverage for "property damages ***, medical paymentsand uninsured motorists coverage." In the complaint, plaintiffalleged that the collision caused damages to Dorsey's car in theamount of $8,353.21. The complaint also alleged that plaintiff hadpaid "the sum of $8,799.50 in uninsured motorist benefits andmedical bills" to Dorsey and on her behalf. In both the caption ofthe complaint and the prayer for relief, plaintiff sought judgmentfor damages in the amount of $9,152.71, plus costs.

In August 1998, the trial court assigned the case to mandatoryarbitration. An arbitration hearing was held in October 1998. Thearbitration panel found in favor of plaintiff and awarded it$17,161.46 in damages. The award noted that defendant failed toappear at the hearing "pursuant to Plaintiff's Rule 237 Notice, andthere was no prejudice to Plaintiff." A court date for judgment onthe award was set for December 1998.

Defendant filed a timely notice of rejection of the award, andin December 1998 the court set a jury trial for March 1999. On thedate set for trial, plaintiff filed a motion to bar defendant'srejection of the award based solely on defendant's failure toappear at the arbitration hearing. In its motion, plaintiffalleged that defendant had been served with a Rule 237 notice toappear and that he failed to file a motion to excuse his appearanceor continue the hearing. In response, defendant alleged that hewas "present through counsel" at the hearing and his attorneyparticipated in good faith and in a meaningful manner. The trialcourt granted plaintiff's motion and entered judgment on the award.

Defendant filed a postjudgment motion seeking vacation orremittitur of the award. He argued that the award was almostdouble the amount sought in the complaint and exceeded the totalcontained in plaintiff's Rule 90(c) packet. Defendant furtherargued that the award was unreasonable because his request foradditional discovery had been denied and plaintiff had neveramended its complaint. In denying defendant's motion and upholdingthe arbitration award, the court entered an order finding that thecomplaint was "sufficient as to the amount sought in the paragraphs& body of the complaint," and granting plaintiff's oral motion toamend the complaint to match the proofs. The order further statedthat defendant had notice of the amount of damages sought and, "byanswering *** and exchanging discovery and pre-arbitrationmatters[,]" could not claim that he lacked notice.

On appeal, defendant contends that the trial court erred indebarring his rejection of the arbitration award. He contends thatsuch a drastic sanction was unwarranted because plaintiff sufferedno prejudice as a result of his absence from the hearing. Inconjunction with this argument, defendant contends that the courtcould have imposed alternative sanctions that would have been lessharsh, such as barring his testimony at trial or assessing fees andcosts.

Where a party to mandatory arbitration proceedings appealsfrom sanctions imposed, the standard of review is an abuse ofdiscretion. State Farm Insurance Co. v. Kazakova, 299 Ill. App. 3d1028, 1031, 702 N.E.2d 254 (1998). An abuse of discretion occurswhen the trial court rules arbitrarily. Johnson v. Saenz, 311 Ill.App. 3d 693, 697, 725 N.E.2d 774 (2000).

Supreme Court Rule 90 provides that a party may be debarredfrom rejecting an arbitration award for failing to comply with anotice pursuant to Rule 237(b). 166 Ill. 2d R. 90(g); 166 Ill. 2dR. 237(b). This sanction may be imposed when the party fails to bepresent either in person or by counsel at the arbitration hearing,and where the arbitration panel finds that the party failed toparticipate in good faith and in a meaningful manner. 145 Ill. 2dR. 91; see West Bend Mutual Insurance Co. v. Herrera, 292 Ill. App.3d 669, 674, 682 N.E.2d 645 (1997). A party who appears at thearbitration hearing through counsel, but not in person, may stillbe debarred from rejecting the award for failure to appear pursuantto a Rule 237 notice. Gore v. Martino, 312 Ill. App. 3d 701, 703,728 N.E.2d 495 (2000); Hinkle v. Womack, 303 Ill. App. 3d 105, 111,707 N.E.2d 705 (1999).

In reviewing the imposition of the sanction of debarment,courts have considered the circumstances of the case and thepurpose of the supreme court rules on the arbitration process,which is to prevent abuse and uphold the integrity of the process. See Johnson, 311 Ill. App. 3d at 697. Courts have also consideredwhether there was a "deliberate and pronounced disregard" for therules or the court. Gore, 312 Ill. App. 3d at 704. This court hasheld that the trial court abused its discretion in imposing thesanction of debarment where a party's failure to appear in personat the arbitration hearing was reasonable and not intended to makea mockery of the arbitration proceedings. Johnson, 311 Ill. App.3d at 698-99 (reversing debarment where the defendant, who did notappear pursuant to a Rule 237 notice, did not have a fluent commandof English and claimed to have been misdirected to the courthouse);see also Gore, 312 Ill. App. 3d at 704-05 (reversing debarmentwhere the plaintiffs appeared in person but arrived late at thehearing). Further, courts have reversed orders of debarment whereparties have appeared at the arbitration hearing, but were found tohave failed to participate in the hearing in good faith. StateFarm, 299 Ill. App. 3d at 1030-34 (reversing debarment where thearbitration panel had found that the defendant, who appeared butdid not speak English, failed to participate in good faith); WestBend, 292 Ill. App. 3d at 672-77 (reversing debarment where thetrial court had found bad faith participation of a non-English-speaking defendant who failed to testify or provide aninterpreter).

In the instant case, we note initially that defendant did notprovide this court with transcripts of either the arbitrationhearing or the trial court hearing on his postjudgment motion. SeeFoutch v. O'Bryant, 99 Ill. 2d 389, 391-92, 459 N.E.2d 958 (1984). However, the record is sufficient to address defendant's contentionof error.

The record shows that neither the arbitration panel, nor thetrial court, found defendant's failure to appear in person at thearbitration hearing constituted a failure to participate in goodfaith or a meaningful manner. However, such a finding is not aprerequisite to debarring rejection of the arbitration award. Hillv. Joseph Behr & Sons, Inc., 293 Ill. App. 3d 814, 817, 688 N.E.2d1226 (1997). Therefore, the mere absence of a bad faith finding isnot dispositive here.

However, the record here further shows that the arbitrationpanel made a specific finding in its award that "there was noprejudice to Plaintiff[,]" despite defendant's absence from thehearing. On this basis, the instant case is distinguishable fromHinkle. In Hinkle, the defendant's counsel appeared at thearbitration hearing, but the defendant did not. The Hinkle court,in affirming the trial court's sanction of debarment, found that"the fact that [the] defendant was not found to have participatedin the arbitration hearing in bad faith [did] not detract from[the] defendant's failure to participate [through her counsel] asan adverse party," i.e., "to test plaintiff's case at all." Hinkle, 303 Ill. App. 3d at 112. The Hinkle court also rejectedthe defendant's argument, as defendant argues here, that theplaintiffs were not prejudiced by the defendant's failure toappear. Hinkle, 303 Ill. App. 3d at 114. Unlike Hinkle, however,defendant's argument here is supported by more than the mereabsence of a bad faith finding by the arbitration panel; it issupported by the panel's explicit finding that plaintiff was notprejudiced by defendant's absence.

Further, nothing in the record indicates that the trial courtconsidered any basis for the sanction other than defendant'sfailure to appear pursuant to Rule 237. Although the trial courtis not generally required to state the basis of its ruling, sincethere was a specific finding of the absence of prejudice toplaintiff, the court's order imposing debarment disregarded theabsence of prejudice finding of the arbitration panel and,therefore, was arbitrary. Because the trial court actedarbitrarily, we find that it abused its discretion in debarringdefendant from rejecting the award. Accordingly, we reverse thetrial court's order imposing debarment. Based upon our holding, weneed not address defendant's remaining arguments.

For the reasons stated, we reverse the judgment of the circuitcourt and remand this cause for further proceedings.

Reversed and remanded.

HALL, P.J., and CERDA, J., concur.