Laatz v. Intergovernmental Risk Management Agency

Case Date: 02/04/2003
Court: 2nd District Appellate
Docket No: 2-01-1159 Rel

No. 2--01--1159


IN THE

APPELLATE COURT OF ILLINOIS

SECOND DISTRICT


ALAN LAATZ, ) Appeal from the Circuit Court
) of Du Page County.
              Plaintiff-Appellant, )
)

No. 01--MR--701

v. )
)
INTERGOVERNMENTAL RISK )
MANAGEMENT AGENCY, ) Honorable
) Ronald B. Mehling,
             Defendant-Appellee. ) Judge, Presiding.

PRESIDING JUSTICE HUTCHINSON delivered the opinion of thecourt:

Plaintiff, Alan Laatz, appeals from the circuit court's denialof his application to vacate an arbitration award rejecting hisclaim for uninsured motorist benefits against defendant,Intergovernmental Risk Management Agency. Plaintiff argues thatthe court erred by dismissing his application because thearbitration award was achieved through "undue means" contrary tosection 12(a)(1) of the Uniform Arbitration Act (the ArbitrationAct) (710 ILCS 5/12(a)(1) (West 2000)). More specifically, heargues that the arbitrator improperly considered the status of hisworker's compensation case in making the arbitration award. Weaffirm.

In accordance with defendant's coverage agreement, plaintiff'sclaim for uninsured motorist benefits against defendant wassubmitted to arbitration with the American Arbitration Association(AAA). On May 22, 2001, the arbitrator issued her award. Thearbitrator found that plaintiff's comparative negligence in a March10, 1997, auto collision was greater than 50% and deniedplaintiff's uninsured motorist claim.

On August 17, 2001, plaintiff filed with the circuit court an"Application to Vacate an Arbitration Award in an UninsuredMotorist Claim." Defendant moved to dismiss plaintiff'sapplication, contending that the application failed to state acause of action under section 12(a)(1) of the Arbitration Act. OnSeptember 19, 2001, the court granted defendant's motion withprejudice. Plaintiff timely appeals.

Plaintiff contends that, as demonstrated by the followingcolloquy, the arbitration award was achieved through undue meanscontrary to section 12(a)(1) of the Arbitration Act.

"MS. KELLY [the arbitrator]: *** This is the end of thisarbitration. I have 30 days in which to get the opinion in. Gentlemen, you're going to give me some sleepless nights. This is not an easy case. In fact, it's the most difficultarbitration I've had through [AAA], although I've been on someother panels where there were these kind of severe injuries.

You know, I've got a situation where we're not quibblingover 20- to 30-percent comparative here, but we're quibblingover whether or not if there's a verdict for or against. Idon't see where I have much of a choice, except for those twochoices.

Just one question: Is the [worker's compensation] casestill open?

MR. O'REILLY [defense attorney]: Yes.

***

MR. TURNER [plaintiff's attorney]: Counsel answered youin a very swift manner. Why is the comp case still open,counsel?

MR. O'REILLY: There's no PB in it. There's no lump.

MS. KELLY: No, there was no -- well --

MR. TURNER: That doesn't mean it's still open though.

MR. O'REILLY: I mean it's not closed."

According to plaintiff, by questioning the parties about thestatus of the worker's compensation case, the arbitrator clearlyindicated that she wanted to know if there was another sourceavailable to compensate plaintiff for his injuries if she found hiscomparative negligence to be 50% or greater. Plaintiff assertsthat the status of the worker's compensation case had no legitimateconnection to the negligence determination, and that the arbitratorshould not have been influenced by facts not germane to herdetermination.

Our review of an arbitration award is extremely limited. Chicago Fire Fighters Union Local No. 2 v. City of Chicago, 323Ill. App. 3d 168, 174 (2001). Section 12(a)(1) of the ArbitrationAct enumerates various grounds on which an arbitration award may bevacated by the court. That section provides that an arbitrationaward can be vacated where the award "was procured by corruption,fraud[,] or other undue means." 710 ILCS 5/12(a)(1) (West 2000). The party challenging the arbitration award carries the burden ofproving that the award is contrary to section 12(a)(1), and thecourt will grant "[e]very reasonable presumption *** in favor ofthe finality and validity of the award." Fredman Bros. FurnitureCo. v. Retail Store Employees Union, Local 575, 70 Ill. App. 3d518, 521 (1979).

The phrase "undue means" in section 12(a)(1) of theArbitration Act "has been interpreted as akin to fraud andcorruption; it refers to some aspect of the arbitrator's decisionor decision-making process which was obtained in an unfair mannerand beyond the normal processes contemplated by the act." Hahn v.A.G. Becker Paribas, Inc., 164 Ill. App. 3d 660, 667 (1987). Defendant argues that the arbitrator's inquiry concerning thestatus of the worker's compensation case was not prejudicial orpartial because defendant had already provided the arbitrator withthe amount of worker's compensation payments that had been paid toplaintiff so that it would receive a setoff against any potentialarbitration award. Moreover, defendant maintains that thearbitrator's question was proper because any arbitration award toplaintiff would be reduced by the total amount of worker'scompensation payments plaintiff had received, including anyreceived after the hearing was conducted. We agree withdefendant's contention.

A plaintiff's damages will be reduced to prevent duplicatepayments for the same injury. Greenawalt v. State Farm InsuranceCo., 210 Ill. App. 3d 543, 547 (1991), aff'd sub nom. Hoglund v.State Farm Mutual Automobile Insurance Co., 148 Ill. 2d 272 (1992). If an insurance company seeks a damages reduction for any priorcompensation paid to a plaintiff, it must submit the issue to thearbitrator or its setoff claim may be forfeited. Schutt v.Allstate Insurance Co., 135 Ill. App. 3d 136, 144 (1985). InSchutt, the insurance company defendant argued, like plaintiffhere, that informing an arbitrator of a setoff claim before thearbitrator made his or her damages determination "infuse[d]unwarranted and unnecessary prejudice into the proceedings." Schutt, 135 Ill. App. 3d at 143. The Schutt court concluded that,because the defendant's insurance policy provided for all disputesregarding the amount payable to be determined by arbitration, thepossibility of some prejudice resulting from the arbitrator'sknowledge of a setoff claim was unavoidable. Schutt, 135 Ill. App.3d at 144. Here, as in Schutt, defendant's coverage agreementrequired that an arbitrator resolve the amount of payment dueplaintiff for uninsured motorist benefits. For this reason,defendant's setoff claim was also at issue during the arbitration. Therefore, we conclude that the arbitrator's inquiry was notimproper because the arbitrator was aware of the information fromdefendant's request for a setoff. The inquiry certainly did notrise to the level of fraudulent or corrupt conduct prohibited bysection 12(a)(1) of the Arbitration Act. Accordingly, we agreewith the circuit court that plaintiff's application failed to statea cause of action under section 12(a)(1) of the Arbitration Act.

The judgment of the circuit court of Du Page County isaffirmed.

Affirmed.

BOWMAN and BYRNE, JJ., concur.