Employer's Consortium Inc. v. Aaron

No. 3--97--0393
_________________________________________________________________

IN THE

APPELLATE COURT OF ILLINOIS

SECOND DISTRICT
_________________________________________________________________

EMPLOYER'S CONSORTIUM, INC., ) Appeal from the Circuit Court
and CORY AND ASSOCIATES, INC., ) of Du Page County.
)
Plaintiffs-Appellants, ) No. 96--AR--977
)
v. )
)
CARRIE A. AARON, ) Honorable
) Richard A. Lucas,
Defendant-Appellee. ) Judge, Presiding.
_________________________________________________________________

JUSTICE DOYLE delivered the opinion of the court:
Plaintiffs, Employer's Consortium, Inc., and Cory &
Associates, Inc., sued to recover on promissory notes made by
defendant, Carrie A. Aaron. The case was referred to mandatory
arbitration. The arbitrators found the plaintiffs had not
participated in good faith and in a meaningful way pursuant to
Supreme Court Rule 91(b) (145 Ill. 2d R. 91(b)). Based on this
finding, the trial court debarred the plaintiffs from rejecting the
arbitrator's award. Plaintiffs appealed the trial court's ruling.
We affirm.
Plaintiffs' amended complaint alleged defendant owed
approximately $33,000 on 11 separate promissory notes. Defendant's
answer admitted making the notes but denied defaulting and asserted
several affirmative defenses. Defendant was present with her
attorney at the arbitration hearing on January 14, 1997.
Plaintiffs were represented by counsel.
Plaintiffs' attorney made an opening statement but did not
call any witnesses. The chairperson for the arbitrators offered
plaintiffs' attorney the opportunity to contact any potential
witnesses. Plaintiffs' attorney declined to call any witnesses and
did not request a continuance. Plaintiffs' attorney then rested
the case and submitted the unverified complaint along with the
attached copies of the promissory notes to the arbitration panel.
The arbitration panel made an award in favor of defendant. The
arbitration panel also entered a unanimous Rule 91(b) finding that
plaintiffs failed to participate in good faith and in a meaningful
manner and listed as the factual basis therefor "failure to present
any evidence."
On January 31, 1997, defendant filed a motion to bar rejection
of arbitration. Defendant attached the affidavit of her attorney
in support of the motion. Plaintiffs filed a written response
including affidavits from plaintiffs' counsel and Andrew Corey.
Plaintiffs' first affidavit stated inter alia that their counsel
was informed the night before the arbitration hearing that Andrew
Cory, president of the plaintiff corporations, would be unable to
attend. The affidavit of Andrew Cory stated that he "was outside
the State of Illinois and was unable to attend the arbitration."
Defendant's motion to bar rejection was granted on March 11, 1997.
Following denial of their motion for reconsideration, plaintiffs
appealed.
Plaintiffs present a single issue for review, namely, whether
the trial court properly debarred plaintiffs from rejecting the
arbitration award based on the panel's finding that the plaintiffs
failed to participate in good faith and in a meaningful manner as
is required by Rule 91(b).
This issue requires a two-part analysis. First, we must
consider whether the trial court's finding that plaintiffs failed
to participate in good faith and in a meaningful manner was against
the manifest weight of the evidence. Martinez v. Gaimari, 271 Ill.
App. 3d 879, 883 (1995). Second, we must consider whether
debarring plaintiffs from rejecting the award was an abuse of
discretion. Williams v. Dorsey, 273 Ill. App. 3d 893, 901 (1995).
The supreme court adopted Rule 91(b) requiring good faith
participation at mandatory arbitration hearings. That rule
provides in pertinent part:
"(b) Good-Faith Participation. All parties to the
arbitration hearing must participate in the hearing in good
faith and in a meaningful manner. If a panel of arbitrators
unanimously finds that a party has failed to participate in
the hearing in good faith and in a meaningful manner, the
panel's finding and factual basis therefor shall be stated on
the award. Such award shall be prima facie evidence that the
party failed to participate in the arbitration hearing in good
faith and in a meaningful manner and a court, when presented
with a petition for sanctions or remedy therefor, may order
sanctions as provided in Rule 219(c), including, but not
limited to, an order debarring that party from rejecting the
award, and costs and attorney fees incurred for the
arbitration hearing and in the prosecution of the petition for
sanctions, against that party." 145 Ill. 2d R. 91(b).
The committee comments to this rule indicate the intent of the
rule was to prevent parties and lawyers from abusing the
arbitration process by refusing to participate. 145 Ill. 2d R. 91,
Committee Comments. Arbitration is not to be considered simply a
hurdle to cross on the way to trial. 145 Ill. 2d R. 91, Committee
Comments. The purpose of mandatory arbitration is to subject a
case to the type of adversarial testing that would be expected at
trial. Martinez, 271 Ill. App. 3d at 883-84.
Supreme Court Rule 91(b) provides that the finding of an
arbitration panel that a party did not participate in good faith is
prima facie evidence of that fact. 145 Ill. 2d R. 91(b). The
party subject to sanctions of the Rule 91(b) has the burden of
presenting evidence sufficient to rebut the prima facie evidence.
Martinez, 271 Ill. App. 3d at 883.
Plaintiffs argue that less deference should be given to the
panel's finding when a report of proceedings exists. Plaintiffs
rely on Webber v. Bednarczyk, 287 Ill. App. 3d 458 (1997), and
Williams, 273 Ill. App. 3d at 896-97, in asserting that less
deference is due a Rule 91(b) finding when a report of proceedings
is available. Webber, however, is inapposite. Webber stands for
the contrary proposition that a trial court should not impose
sanctions under Rule 91(b) in the absence of a finding by the
arbitration panel without reviewing a transcript of the
proceedings. Webber, 287 Ill. App. 3d at 463. Similarly, Williams
does not provide guidance in this case, as it does not directly
discuss the deference due findings under Rule 91(b) but instead
discusses sanctions to be imposed for violations of Supreme Court
Rule 237 (166 Ill. 2d R. 237). Williams, 273 Ill. App. 3d at 898-
99. Therefore, we find no reason to reinterpret the clear language
of Rule 91(b) that the finding of the arbitration panel is prima
facie evidence of a failure to participate in good faith and in a
meaningful manner.
Here, the record does not provide sufficient evidence to rebut
this prima facie finding. On the date of the hearing, plaintiffs
counsel appeared before the arbitration panel. She made a brief
opening statement and submitted a copy of the unverified complaint
along with the attached exhibits to the arbitrators. The
chairperson of the arbitrators then offered plaintiffs counsel the
opportunity to contact any witnesses. Plaintiffs counsel did not
call any witnesses, nor did she request a continuance. The panel
then entered an award in favor of defendant and made the unanimous
finding that the plaintiffs had failed to participate in good faith
and in a meaningful manner as required by Rule 91(b).
Plaintiffs concede that their counsel's performance before the
panel was ineffective. Plaintiffs admit in their brief that
"[p]laintiffs counsel may have been unprepared or even inept" and
that plaintiffs' presentation "may have been considered sloppy and
unprepared participation." Plaintiffs' counsel had several
options. For example, she could have requested a continuance to
allow witnesses to appear. She could also have examined the
defendant, who was present, regarding the notes. Plaintiffs
counsel, however, did nothing and rested her case solely on the
complaint.
Plaintiffs did not present evidence to provide the arbitrators
with the basis for an award. Even if the unverified complaint and
attached exhibits had been accepted by the arbitration panel as
evidence, plaintiffs would not have presented a prima facie case.
The making of the notes was undisputed. The issues in dispute
centered around payment and other affirmative defenses raised by
defendant. Plaintiffs presented no evidence regarding payment of
the notes and did not address the affirmative defenses. It is
highly unlikely that plaintiffs would have proceeded in this manner
at trial. This was not the adversarial testing necessary to
maintain the integrity of the arbitration process. Martinez, 271
Ill. App. 3d at 883-84.
Plaintiffs also argue that their participation in the
arbitration process was in good faith regardless of its quality.
To prevent imposition of a sanction, plaintiffs have the burden of
demonstrating that their actions were reasonable or justified by
extenuating circumstances. Kubian v. Labinsky, 178 Ill. App. 3d
191, 197 (1988). The only evidence of extenuating circumstances
presented to the trial court was the affidavit of Andrew Corey.
The affidavit stated simply that Corey could not attend the
arbitration hearing because he was outside the state. Plaintiffs
presented no evidence that this was reasonable or the result of
extenuating circumstances. Plaintiffs also provided no explanation
for counsel's failure to request a continuance when confronted with
the absence of plaintiffs' primary witness. Plaintiffs argue that
a sanction under Rule 91(b) was inappropriate because although
"counsel may have been unprepared or even inept" she did not refuse
to participate. We disagree. Rule 91(b) requires parties to
participate "in good faith and in a meaningful manner." (Emphasis
added.) 145 Ill. 2d R. 91(b). A trial court need not find
intentional obstruction of the arbitration proceeding. The
purposes of Rule 91(b) are defeated whether a party's conduct is
the result of inept preparation or intentional disregard for the
process. See Martinez, 271 Ill. App. 3d at 883 (validity of excuse
held less important than failure to present evidence).
Finally, plaintiffs argue that the Rule 91(b) finding was
deficient because the panel stated as a basis for its findings only
the "failure to present any evidence." Without citation to
authority plaintiffs argue that the panel's finding failed to
provide a sufficient explanation and reasoning. We disagree.
Given these facts, the panel's explanation is sufficiently clear to
inform plaintiffs of the basis for its finding.
Therefore, after a thorough review of the record, we cannot
conclude that the trial court's finding that plaintiffs did not
participate in good faith was against the manifest weight of the
evidence.
The second step of the analysis requires us to determine
whether the trial court abused its discretion when it debarred
plaintiffs from rejecting the award. Williams, 273 Ill. App. 3d at
901. A court's decision is an abuse of discretion when it is
arbitrary or exceeds the bounds of reason. Kellett v. Roberts, 281
Ill. App. 3d 461, 466 (1996). It is essential to the integrity of
the mandatory arbitration process that the parties proceed at the
arbitration hearing in good faith and subject their claims to the
sort of adversarial testing that would be expected at trial.
Martinez, 271 Ill. App. 3d at 883-84. A trial court has discretion
to enforce supreme court rules and impose sanctions on the parties
as appropriate and necessary to promote the unimpeded flow of
litigation and maintain the integrity of our court system. Sander
v. Dow Chemical Co., 166 Ill. 2d 48, 68 (1995). More importantly,
Rule 91 specifically allows for an order debarring a party from
rejecting the award as a sanction for failure to participate in
good faith and in a meaningful manner. Here, having presented no
evidence, the plaintiffs failed to participate in the hearing in
good faith and in a meaningful manner. It is immaterial whether
plaintiffs' failure to participate was the result of lack of
preparation or an intentional disregard for the process. The trial
court concluded that plaintiffs' actions warranted debarment from
rejecting the award as a sanction. We cannot conclude that this
was an abuse of the trial court's discretion.
For the foregoing reasons, the judgment of the circuit court
of Du Page County is affirmed.
Affirmed.
INGLIS and BOWMAN, JJ., concur.