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Onni v. Apartment Investment & Management Co.

Case Date: 12/10/2003
Court: 2nd District Appellate
Docket No: 2-03-0821 Rel

No. 2--03--0821


IN THE

APPELLATE COURT OF ILLINOIS

SECOND DISTRICT

RON ONNI and ANN LOUISE ONNI,

          Plaintiffs-Appellants,

v.

APARTMENT INVESTMENT AND
MANAGEMENT COMPANY and
CHESAPEAKE LANDING I, LP,

          Defendants-Appellees.

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)		 Appeal from the Circuit Court
of Du Page County.


No. 03--AR--693




Honorable John T. Elsner,
Judge, Presiding.


JUSTICE O'MALLEY delivered the opinion of the court:

Plaintiffs, Ron and Ann Louise Onni, appeal from the judgment of the circuit court orderingarbitration of the claims they brought against defendants, Apartment Investment and ManagementCompany and Chesapeake Landing I, LP. We reverse and remand.

Plaintiffs, who are tenants of properties owned by defendants, filed a class action on behalfof themselves and other tenants challenging defendants' practice of charging late fees on overdue rentpayments. Pursuant to the Illinois Uniform Arbitration Act (Act) (710 ILCS 5/1 et seq. (West2000)), defendants moved to compel arbitration of plaintiffs' claims and stay all court proceedings. Defendants relied on an arbitration clause in plaintiffs' lease that provides in relevant part:

"30. ARBITRATION. All disputes between the parties concerning the provisions of this Lease shall be submitted to arbitration pursuant to the procedures of the state in whichthe Apartment Community is located before a panel of three (3) independent third partyarbitrators ***. The arbitrators shall have no authority to award punitive, exemplary,consequential, special, indirect or incidental damages or attorneys' fees. The parties shallshare equally the fees and costs of the arbitrators and shall otherwise bear their own costs andexpenses of arbitration. *** Notwithstanding the preceding paragraph, LESSOR shall not berequired to submit to binding arbitration disputes arising from (1) the enforcement of rentalpayments; (2) the repossession of the premises; or (3) the termination of the Lease by reasonof a default by LESSEE under the Lease. LESSOR shall have all rights and remedies underlaw and equity with respect to any such disputes. LESSEE acknowledges and agrees that thisparagraph constitutes a waiver of all rights to civil court action for a dispute arising under theterms of this Lease, subject to the provisions hereof, and only the arbitrators, not a judge orjury, will decide the dispute."

In their reply to defendants' motion to compel, plaintiffs challenged the validity of thearbitration clause on several grounds. Plaintiffs argued that the clause is unconscionable both becauseit is hidden within fine print and was not recognized by plaintiffs before they signed the agreementand because it is fundamentally unfair in that it requires arbitration of any claim brought by a tenant,yet permits the landlord to bring most of its claims in court. Plaintiffs further argued that the clauseviolates public policy because its requirement that tenants pay one-half of the arbitrator's fees and beartheir own costs of arbitration deters tenants from bringing claims. In support of this argument,plaintiffs attached to their reply an affidavit from an official of the American Arbitration Associationwho estimated arbitration fees in the Chicago area. Lastly, plaintiffs argued that the arbitration clauseillegally seeks to deny tenants their statutory rights to attorney fees, punitive damages, and injunctiverelief.

The trial court held a hearing on the motion to compel. At the close of the parties' arguments,the trial court said the following:

"Okay. I have read the briefs. I have read the cases cited by the defendants, the Illinois cases,both the federal courts applying Illinois law, and the Illinois courts [that] have decided theissues in this case. The motion to compel arbitration is granted. The state lawsuit is stayed. Thank you for your patience."

Subsequently, the court issued an order consisting of one sentence: "Defendants' motion to compelarbitration is granted; all proceedings are stayed." Plaintiffs appealed.

In an appeal from an interlocutory order granting or denying a motion to compel arbitration,the only issue before the reviewing court is whether there was a showing sufficient to sustain theorder of the trial court granting or denying the motion. Travis v. American Manufacturers MutualInsurance Co., 335 Ill. App. 3d 1171, 1174 (2002). Plaintiffs argue that the trial court erred in failingto state the factual findings and legal conclusions supporting its rejection of their arguments attackingthe arbitration clause. The applicable statutory provision is section 2(a) of the Act (710 ILCS 5/2(a)(West 2000)), which provides:

"