Cleeland v. Gilbert

Case Date: 05/31/2002
Court: 3rd District Appellate
Docket No: 3-01-0524 Rel

No. 3--01--0524



IN THE APPELLATE COURT OF ILLINOIS

THIRD DISTRICT

A.D., 2002

JOHN CLEELAND, 
            Plaintiff-Appellee, 


            v.

DARCIE GILBERT and BRET
GADBOIS, Defendants
(American Family Insurance
Group,
            Defendant-Appellant).

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Appeal from the Circuit Court
for the 21st Judicial Circuit,
Kankakee County, Illinois

No. 93--L--228

Honorable
Fred S. Carr, Jr.
Judge, Presiding


JUSTICE BRESLIN delivered the opinion of the court:



In this underinsured motorist action, defendant AmericanFamily Insurance Group appeals the trial court's decisionconfirming an arbitration award entered against it in favor ofplaintiff John Cleeland. American Family claims that the decisionwas void for lack of jurisdiction and that monetary relief wasinappropriate. While we conclude that jurisdiction was proper, wehold, inter alia, that the arbitration award must be vacatedbecause the trial court exceeded its authority when it entered a monetary judgment pursuant to an application to compel arbitrationin accordance with the Uniform Arbitration Act (Act) (710 ILCS 5/1 et seq. (West 2000)), without first making a finding of contempt ona rule to show cause. Accordingly, we affirm in part, vacate inpart and remand.

FACTS

In October of 1993, Cleeland filed a negligence action againsttwo defendants for injuries he sustained in a 1991 automobileaccident. The action was eventually settled, and the trial courtentered an order dismissing it with prejudice. Four years later,Cleeland's attorney sent American Family notice regarding hisintent to pursue an underinsured motorist claim. American Familyinformed Cleeland that it had no record of the accident or of hispolicy. Although Cleeland's attorney provided additional policyinformation to Kimberly Eastman, the American Family claimsadjuster, the insurance company continued to assert that it couldfind no information regarding a policy.

In October of 1998, Cleeland filed a "motion to compelarbitration" against American Family pursuant to section 2 of theAct (710 ILCS 5/2 (West 2000)). The motion was filed under thesame case number as the previously dismissed action. It claimedthat Cleeland was insured by American Family at the time of theaccident, that the policy of insurance provided him withunderinsured motorist benefits and contained a provision forarbitration, that Cleeland made a demand for arbitration, but that American Family failed to respond. American Family provided noresponse to the motion. Cleeland subsequently filed a motionrequesting that arbitrators be appointed. At a hearing, AmericanFamily failed to appear, and the trial court granted the motion tocompel arbitration and the motion appointing the arbitrators.

Over one year later, Cleeland filed a motion requesting thatthe court order the arbitration to proceed. Although AmericanFamily received notice, it did not appear at the hearing where themotion was granted and the arbitration hearing was scheduled. Thearbitration hearing proceeded as scheduled; at its conclusionCleeland was awarded $363,967. Afterwards, Cleeland filed a motionrequesting an order confirming the arbitration award. Again,American Family did not appear at the hearing on that motion, andit was granted by the court.

In January of 2001, Cleeland filed a citation to discoverassets, sending notice to American Family. Thereafter, AmericanFamily filed a special and limited appearance and a motion to quashservice of summons, vacate the arbitration award, and dismiss forwant of jurisdiction. After the motion was denied, American Familyappealed.

Additional facts will be provided as they become pertinent tothe analysis.

ANALYSIS

On appeal, American Family contends both that the trial courtlacked personal and subject matter jurisdiction and that the orderconfirming the arbitration award should be vacated because Cleelandwas not entitled to monetary relief on his application to compelarbitration. This court reviews issues of law de novo. Keller v.Walker, 319 Ill. App. 3d 67, 744 N.E.2d 381 (2001); Woods v. Cole,181 Ill. 2d 512, 693 N.E.2d 333 (1998).

The first issue regards personal jurisdiction. AmericanFamily claims that the motion to compel arbitration was erroneouslyserved on its employee in her individual capacity and not in herrole as an officer or agent of the company. Because AmericanFamily was improperly served, it claims it was not properly joinedas a party-defendant and all subsequent orders were void.

When serving a private corporation, a copy of the process maybe left with the corporation's registered agent or any of itsofficers or agents within the state. See 735 ILCS 5/2-204 (West2000); Megan v. L.B. Foster Co., 1 Ill. App. 3d 1036, 275 N.E.2d426 (1971) (finding that service upon an intelligent clerk whoacted as a receptionist and understood the purport of the serviceof summons was proper service upon an agent of the company). Service of summons, however, cannot be obtained upon a corporationby serving one of its purported agents personally or as anindividual. See First State Bank & Trust Co. of Hanover Park v.Winfrey, 165 Ill. App. 3d 767, 520 N.E.2d 763 (1987). If acorporation is not served with process, all subsequent judgmentsagainst the corporation are void because the court lacksjurisdiction to enter orders against it. See State Bank of LakeZurich v. Thill, 113 Ill. 2d 294, 497 N.E.2d 1156 (1986).

According to the record, Cleeland was listed as applicant andAmerican Family was listed as respondent on both the motion andsummons. The summons was addressed to "Kimberly Eastman CasualtyClaim Analyst 745 McClintock Drive Suite 100 Burr Ridge Illinois60521." The subsequent return of service showed that Eastman wasserved by "Personal Service: By leaving a copy of the summons andcomplaint with the named defendant personally." Although Eastmanprovided an affidavit stating that she had no recollection ofreceiving the summons, the affidavit failed to state that she hadnot been served. The affidavit did state, however, that on thedate of service Eastman was working as a casualty claims analystfor American Family at the office identified on the summons.

This evidence supports the conclusion that service wasproperly made on the corporation because the summons clearlyidentified American Family as the respondent and the person whoreceived the service was a responsible agent of the corporation. See United Bank of Loves Park v. Dohm, 115 Ill. App. 3d 286, 450N.E.2d 974 (1983) (finding that a clerk was a proper agent of abank for receipt of process). Therefore, we affirm. See Professional Therapy Services, Inc. v. Signature Corp., 223 Ill.App. 3d 902, 585 N.E.2d 1291 (1992) (affirming a lower court'sdecision that service was proper because defendant did not overcomeits burden showing otherwise).

The second issue is whether subject matter jurisdictionexisted. American Family claims that the order confirming theaward was void because the motion was filed in the same action thathad been previously dismissed with prejudice. American Familysuggests that Cleeland should have filed a new complaint andattached the contract of insurance or reopened the dismissed caseand sought leave of court to add it as a new defendant.

"Subject matter jurisdiction" refers to the power of a courtto hear and decide a particular case or controversy. Dahl v.Grenier, 126 Ill. App. 3d 891, 467 N.E.2d 992 (1984). The issue ofwhether a court has subject matter jurisdiction may be raised atany time. Automated Professional Tax Services, Inc. v. Departmentof Employment Security, 244 Ill. App. 3d 485, 612 N.E.2d 1008(1993). If a court does not have subject matter jurisdiction, ithas no authority to act and any subsequent action taken by thecourt is void. Bank of Viola v. Nestrick, 94 Ill. App. 3d 511, 418N.E.2d 515 (1981).

In this case, the trial court determined that when Cleelandfiled his motion to compel arbitration, it was a new cause ofaction, against a new defendant, seeking new relief. Because ithad no impact on the prior dismissed cause of action, Cleeland didnot have to file a motion to reopen the old case or add a partydefendant. According to the court, the placement of the old casenumber on the application and summons was a ministerial, record-keeping function of the court and had no impact on the cause ofaction or its outcome. We agree with the trial court.

A careful reading of Cleeland's motion clearly demonstratesthat substantively it is an application to compel arbitrationpursuant to the Act. See Sobczak v. Whitten, 75 Ill. App. 3d 208,393 N.E.2d 1080 (1979) (finding that the character of a pleading isdetermined from its content, not its label). Although Cleelandplaced an old case number on the application and summons, it didnot change the fact that he filed a new action against a newdefendant, requesting new relief. Cleeland's application to compelarbitration would have been better served by filing it under a newcase number, but we do not think that the procedure used was fatalto the trial court's subject matter jurisdiction under the Uniform Arbitration Act (710 ILCS 5/1et seq. (West 2000)). If AmericanFamily objected to the procedure used, it had notice and anopportunity to move for dismissal on procedural grounds. It failedto do so and should not be heard to complain now.(1)

Third, American Family asserts that the order affirming thearbitration award should be vacated because Cleeland was notentitled to receive monetary relief on an application to compelarbitration. We agree. In a proceeding to compel arbitration, thesole issue is whether there is an agreement to arbitrate. Nelson v. Roger J. Lange & Co., 229 Ill. App. 3d 909, 594 N.E.2d 391(1992). If a valid agreement is established, the trial court hasno discretion and must order arbitration. Contract DevelopmentCorp. v. Beck, 210 Ill. App. 3d 677, 569 N.E.2d 941 (1991). Although the court is compelled to order arbitration, the court'sauthority is limited to that alone. See 710 ILCS 5/2 (West 2000).

While the trial court in this case had the authority to compelthe parties to arbitrate, it exceeded its authority when it grantedCleeland's subsequent motions appointing arbitrators, setting thearbitration hearing, confirming the arbitration award, and enteringa monetary judgment. Cleeland was not entitled to such relief onan application to compel arbitration. Instead, once an order tocompel arbitration issued and American Family continued tostonewall on the matter, the proper procedure to compel arbitrationwould have been to file a rule to show cause why American Familyshould not be held in contempt for failure to proceed with thearbitration.(2) See generally Falcon, Ltd. v. Corr's NaturalBeverages, Inc., 173 Ill. App. 3d 291, 527 N.E.2d 504 (1988). Because continuing on to arbitration and then confirming a monetaryaward was beyond the court's authority at that point in theproceedings, the trial court's decision denying American Family'smotion to vacate the arbitration award is hereby vacated, and thisaction is remanded for further proceedings.

For the foregoing reasons, the judgment of the circuit courtof Kankakee County is affirmed in part, vacated in part andremanded.

Affirmed in part, vacated in part and remanded.

LYTTON, P.J., and McDADE, J., concurring.

 

1. It should be noted that the motion to compel arbitrationdid not include a copy of the policy upon which the action wasbased. That issue was not raised by American Family in the trialcourt and for that reason we do not address it. See Swift & Co.v. Dollahan, 2 Ill. App. 2d 574, 120 N.E.2d 249 (1954) (providingthat even though a plaintiff failed to attach to its complaint acopy of the written contract upon which the action was based, theissue was not raised prior to appeal and was thus waived).

2. This is not to say that a finding of contempt in a rule toshow cause proceeding could not then order that the arbitrationtake place.