2019 IL App (1st) 182275
Ill. App. Ct.2020Background
- Collision on Jan 22, 2016; United (insurer) sued defendant Selina for subrogation of $7,079.62 (claim limited to a $5,079.62 paid repair bill). Case sent to mandatory arbitration.
- Defendant served a Rule 237(b) notice requiring United to produce its adjuster at arbitration; United intended to move to excuse the adjuster but its motion was stricken after United’s counsel failed to appear on the motion call.
- At arbitration United presented a Rule 90(c) package (paid bill, photos) and its insured’s testimony; the panel found all parties had participated in good faith and awarded United $5,079.62 plus costs.
- Defendant rejected the award and moved in circuit court to bar United from presenting any evidence at trial as a sanction for failing to produce the adjuster and for not participating in good faith.
- The circuit court granted the broad sanction (without a specific written basis in the record), denied United’s motion to reconsider, and later granted defendant’s motion for a directed verdict at trial; United appealed.
- The appellate court reversed: sanction was an abuse of discretion because (1) arbitrators found United participated in good faith, (2) paid repair bill was admissible under Rule 90(c) so no demonstrated prejudice, and (3) the sanction improperly extended beyond the issue related to the adjuster and lacked specificity.
Issues
| Issue | United's Argument | Selina's Argument | Held |
|---|---|---|---|
| Whether barring United from presenting any evidence at trial was proper as a sanction for failing to produce its adjuster at arbitration | Failure to produce adjuster was inadvertent administrative error; United presented paid bill, photos, and insured; no prejudice because paid bill is prima facie evidence | United was prejudiced by not being able to cross-examine the adjuster; failure to renew motion to excuse was careless and showed lack of good faith | Reversed — court abused its discretion. Sanction was overbroad, not tied to the specific issue, and no record of prejudice; arbitrators had found good faith participation. |
| Whether the trial court misapplied the standard when it denied reconsideration of the sanction | Court applied wrong standard (required showing of extenuating circumstances); correct standard requires deliberate/disregard by offending party | The sanction was justified because United failed to show reasonableness for adjuster’s absence and prejudice resulted | Reversed — denial of reconsideration was erroneous because sanction itself was arbitrary and unsupported. |
| Whether directed verdict for defendant was proper given the sanction | Directed verdict followed from the erroneously imposed blanket sanction; United was entitled to have its evidence considered | With United barred from presenting evidence, directed verdict was appropriate | Reversed — directed verdict depended on the improper sanction; case remanded for further proceedings. |
Key Cases Cited
- State Farm Ins. Co. v. Kazakova, 299 Ill. App. 3d 1028 (1998) (standard of review for sanctions imposed after arbitration is abuse of discretion)
- Johnson v. Saenz, 311 Ill. App. 3d 693 (2000) (abuse of discretion occurs when a court acts arbitrarily)
- Foutch v. O’Bryant, 99 Ill. 2d 389 (1984) (appellant bears burden to present a sufficiently complete record; gaps are resolved against appellant)
- Nationwide Mut. Ins. Co. v. Kogut, 354 Ill. App. 3d 1 (2004) (participation in arbitration in good faith requires subjecting the case to adversarial testing expected at trial)