FIRST DIVISION
June 16, 2008
No. 1-07-2349
NICHOLAS ANDERSON, ) Appeal from the
) Circuit Court of
Plaintiff-Appellant, ) Cook County.
)
v. )
)
GOLF MILL FORD, INC., n/k/a AN/GMF, )
INC., ) Honorable
) Richard J. Billik,
Defendant-Appellee. ) Judge Presiding.
JUSTICE WOLFSON delivered the opinion of the court:
Plaintiff Nicholas Anderson filed a federal lawsuit against
defendant Golf Mill Ford, Inc. ("Golf Mill") based on his
purchase of an SUV in 2003. Following arbitration of the suit,
Anderson filed a lawsuit in Cook County Circuit Court to vacate
the arbitrator’s award. Anderson appeals the circuit court’s
order entering judgment for Golf Mill on his claim and on Golf
Mill’s counterclaim to confirm the award. We affirm.
FACTS
Anderson purchased a used 2001 GMC Jimmy ("SUV") from Golf
Mill on or about April 21-23, 2003. According to Anderson, the
salesperson at Golf Mill told him he was financed. Anderson
signed a retail installment contract dated April 21, 2003 (the
"First RIC") for a cash price of $20,324.30. It provided for
$19,356.87, to be financed over 60 monthly payments of $463.04 at
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an annual percentage rate ("APR") of 14.99%.
Golf Mill was unable to obtain financing for Anderson
pursuant to the terms of the First RIC. Golf Mill executed
another retail installment contract (the "Second RIC") dated
April 21, 2003. On the Second RIC, the purchase price was
reduced to $18,150 and the amount financed reduced to $17,983.55.
The monthly payments were increased to $489.39, and the APR was
increased to 20.9%. Golf Mill assigned its rights to Household
Automotive Finance Corporation ("Household"). Anderson made
payments under the Second RIC totaling about $6,791. He stopped
making payments after September 2004. He kept the SUV.
Anderson alleged Golf Mill never told him he was not
financed under the First RIC. He said he never saw the Second
RIC until he received it in the mail. He denied signing the
Second RIC. The First RIC contained an arbitration provision.
The Second RIC did not.
The arbitration clause in the First RIC allows either party
to choose "to have any Claim related to this contract decided by
arbitration." Such claims include: "Claims regarding the
interpretation, scope, or validity of this clause, or
arbitrability of any issue;" "Claims between you and us, our
employees, agents, successors, assigns, subsidiaries, or
affiliates;" and "Claims arising out of or relating to your
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application for credit, this contract, or any resulting
transaction or relationship, including that with the dealer, or
any such relationship with third parties who do not sign this
contract." The paragraph also provides, "[t]he arbitration
decision shall be in writing with a supporting opinion."
Anderson sued Golf Mill in federal district court claiming
violations of the Federal Equal Credit Opportunity Act, 15 U.S.C.
§ 1691 (1991), the Fair Credit Reporting Act, 15 U.S.C. § 1681
(1970), and the Illinois Consumer Fraud and Deceptive Business
Practices Act, 815 ILCS 505/1 et seq. (West 2006) (Consumer Fraud
Act). In the federal law counts, Anderson alleged Golf Mill
failed to inform him that financing under the First RIC had been
rejected. In the Consumer Fraud Act counts, Anderson alleged
Golf Mill forged his name to the Second RIC and failed to offer
him an opportunity to rescind his purchase of the SUV after he
was rejected for financing under the First RIC. He contended the
payments were $26 a month more than he contracted for, resulting
in additional finance charges of about $2,000 over the life of
the loan.
Golf Mill filed a motion to compel arbitration based on the
arbitration clause in the First RIC. The parties entered into a
stipulation with respect to the motion. It states, in part:
"Anderson hereby withdraws all objections to
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arbitrating the disputes between himself and
Golf Mill arising out of or relating to the
claims asserted by him in the Complaint in
this matter. Anderson shall proceed to
initiate an arbitration of such disputes in
accordance with the provisions of the
arbitration agreement, which is contained
within the contract attached as Exhibit 3 to
Golf Mill’s pending motion to compel
arbitration."
The federal court entered an order granting the agreed
motion and stipulation and stayed the litigation. The federal
lawsuit was dismissed on November 30, 2004.
The arbitration clause in the First RIC allows either party
to choose between three organizations to conduct the arbitration.
Anderson selected the American Arbitration Association ("AAA")
and submitted a written demand for arbitration.
Golf Mill repurchased the rights under the Second RIC from
Household and filed a counterclaim arising from Anderson’s
default on his payments to purchase the SUV. In his answer,
Anderson denied owing any amount to Golf Mill. He did not
challenge the arbitrability of Golf Mill’s counterclaim.
At the arbitration hearing, Anderson’s counsel for the first
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time raised an objection to the arbitrability of the
counterclaim. The arbitrator overruled the objection and held
the counterclaim was arbitrable. Golf Mill called a certified
forensic document examiner, who testified to the authenticity of
Anderson’s signature on the Second RIC. Anderson testified and
presented no expert testimony.
With respect to Anderson’s claim, the arbitrator awarded
Anderson $405.16 in actual damages, $5,000 in punitive damages,
and $3,000 in attorney’s fees and costs. With respect to the
counterclaim, the arbitrator awarded Golf Mill $17,770.32, which
included interest on the unpaid contract, and $3,000 in
attorney’s fees and costs. Post-judgment interest was awarded to
both parties.
Anderson filed suit in the circuit court to vacate the
arbitrator’s award. Golf Mill filed a counterclaim to confirm
the award. Anderson named the AAA as a "Respondent in Discovery"
and served the AAA with discovery requests. Anderson later
voluntarily dismissed the AAA and withdrew as moot all discovery
requests to the AAA. The circuit court ruled against Anderson on
his complaint and entered judgment for Golf Mill on its
counterclaim to confirm the award. Judgment was entered in the
amount of $12,365.16 plus interest at 9% per annum accruing since
the award date of June 17, 2005.
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DECISION
I. Supporting Opinion
Anderson contends the circuit court erred in refusing to
vacate the arbitrator’s decision where the arbitrator failed to
issue a supporting opinion. He relies on the provision in the
arbitration agreement expressly requiring the arbitrator to issue
a written opinion supporting the decision. Whether an arbitrator
exceeded his or her authority is a question of law, which we
review de novo. Truserv Corp. v. Ernst & Young, LLP, 376 Ill.
App. 3d 218, 222, 876 N.E.2d 77 (2007).
Anderson chose the AAA to arbitrate the dispute and agreed
to abide by AAA rules. AAA Rule R-42(b) provides, "[t]he
arbitrator need not render a reasoned award unless the parties
request such an award in writing prior to appointment of the
arbitrator or unless the arbitrator determines that a reasoned
award is appropriate." As a contractual right, the right to a
supporting opinion is subject to waiver by the parties. See
Brookfield-North Riverside Water Comm’n v. Abbot Contractors,
Inc., 250 Ill. App. 3d 588, 595, 621 N.E.2d 153 (1993). Waiver
may be inferred where a party intentionally relinquishes a known
right, either expressly or by conduct inconsistent with an intent
to enforce that right. Quick & Reilly, Inc. v. Zielinski, 306
Ill. App. 3d 93, 99, 713 N.E.2d 739 (1999). Anderson waived his
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right to a supporting opinion by failing to request a written
opinion pursuant to AAA rules.
Anderson’s due process argument is similarly unavailing.
Arbitrators have no obligation to explain their decisions in
writing. In re Liquidation of Inter-American Insurance Co. of
Illinois, 303 Ill. App. 3d 95, 104, 707 N.E.2d 617 (1999).
II. Arbitrability of Counterclaim
Anderson contends the arbitrator’s decision on the issue of
arbitrability is ultra vires and void because Golf Mill’s
counterclaim was premised on the Second RIC, which did not
contain an arbitration clause.
Where an arbitrator decides the question of arbitrability in
the first instance, a court ordinarily reviews the arbitrator’s
decision de novo. Salsitz v. Kreiss, 198 Ill. 2d 1, 13-14, 761
N.E.2d 724 (2001). However, where the parties agree to submit
the question of arbitrability itself to arbitration, the court
should review the decision deferentially. Salsitz, 198 Ill. 2d
at 14-15.
According to the provision in the First RIC, the parties
clearly agreed to submit the issue of arbitrability to
arbitration. Anderson admits signing the First RIC. The
arbitration provision applies to "Claims arising out of or
relating to your application for credit, this contract, or any
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resulting transaction or relationship***." Anderson also agreed
to a stipulation withdrawing "all objections to arbitrating the
disputes between himself and Golf Mill arising out of or relating
to the claims asserted by him in the Complaint in this matter."
The counterclaim arose out of both the sales transaction between
the parties and the claims asserted by Anderson in his complaint.
In the counterclaim, Golf Mill sought to collect payment on the
SUV pursuant to its contract with Anderson.
Anderson waived any argument related to arbitrability of the
counterclaim by signing the First RIC with the arbitration
provision and by entering into the stipulation. Anderson also
placed the Second RIC at issue through his federal lawsuit claims
alleging forgery and invalidity of the Second RIC.
Moreover, Anderson failed to object to arbitrability of the
counterclaim until the time of the hearing. AAA Rule R-7(c)
requires a party to object to arbitrability of a counterclaim no
later than the filing of the answer to the counterclaim that gave
rise to the objection. Anderson did not challenge the
arbitrability of Golf Mill’s counterclaim in his answer. We
affirm the arbitrator’s decision regarding arbitrability of the
counterclaim.
III. Inconsistent Decision
Anderson contends the arbitrator’s decision was inconsistent
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and demonstrated manifest disregard of the law. He contends the
arbitrator’s award of punitive damages demonstrates a finding of
wanton and willful conduct on the part of Golf Mill, inconsistent
with allowing Golf Mill to recover on its contract.
Judicial review of an arbitrator’s award is extremely
limited, more limited than appellate review of a trial court’s
decision. Yorulmazoglu v. Lake Forest Hospital, 359 Ill. App. 3d
554, 564, 834 N.E.2d 468 (2005); Quick & Reilly, 306 Ill. App. 3d
at 97. Courts must construe awards, wherever possible, to uphold
their validity. Yorulmazoglu, 359 Ill. App. 3d at 364. A court
may vacate an award where a gross error of law or fact appears on
the face of the award. Yorulmazoglu, 359 Ill. App. 3d at 365.
Review under the "manifest disregard of the law" standard
requires that the arbitrators deliberately disregarded what they
knew to be the law. Quick & Reilly, 306 Ill. App. 3d at 99.
We agree with the trial court that the arbitrator’s decision
was not inconsistent. It is reasonable to infer the arbitrator
awarded Anderson actual and punitive damages on the federal
statutory claims for Golf Mill’s failure to notify and/or
disclose the adverse credit action on the First RIC. We also
infer that plaintiff did not prevail on his forgery and
misrepresentation claims. The arbitrator granted relief to Golf
Mill on its counterclaim for the balance owed by Anderson under
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the Second RIC. The arbitrator likely credited the testimony of
Golf Mill’s forensic document expert, who testified to the
authenticity of Anderson’s signature on the Second RIC.
Anderson did not present expert testimony to contradict Golf
Mill’s expert. Anderson has not shown the award was inconsistent
or in manifest disregard of the law.
IV. Discovery on AAA Bias
Anderson contends he was entitled to discovery on the issue
of AAA bias. A circuit court has wide latitude in ruling on
discovery motions, and a reviewing court will not disturb such a
ruling unless it constitutes a manifest abuse of discretion.
Truserv, 376 Ill. App. 3d at 227. To obtain discovery in an
action to overturn an arbitral decision, a party must show some
fundamental defect, such as partiality of the arbitrator. A
party who fails to provide clear evidence of impropriety will not
be permitted additional discovery. Truserv, 376 Ill. App. 3d at
227-28.
We find Anderson failed to make the requisite showing of
bias on the part of the individual arbitrator to justify the
allowance of discovery. Furthermore, Anderson made no attempt in
the circuit court to obtain discovery following the AAA’s motion
to quash. Instead, Anderson voluntarily dismissed the AAA as a
respondent-in-discovery and withdrew all discovery requests.
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Anderson has waived the issue by failing to pursue it in the
circuit court.
V. Unconscionability
Anderson challenges the arbitration as unconscionable in
light of the supreme court’s opinion in Razor v. Hyundai Motor
Am, 222 Ill. 2d 75, 854 N.E.2d 607 (2006) and the appellate
court’s opinion in Bess v. DirecTV, Inc., 381 Ill. App. 3d 229,
885 N.E.2d 488 (2008).
We find Anderson forfeited the issue by failing to argue any
reason why the agreement was unconscionable. See 210 Ill. 2d R.
341(h)(7) (argument portion of brief shall contain the
contentions of the appellant and the reasons therefore, with
citation of the authorities and the pages of the record relied
on, and points not argued are waived); People v. Lantz, 186 Ill.
2d 243, 261-62, 712 N.E.2d 314 (1999). Anderson merely states
the arbitration was unconscionable under the standards
articulated in Razor and Bess. He provides no further argument
on the issue.
VI. Circuit Court Jurisdiction
Anderson contends the trial court lacked jurisdiction over
the defendant’s counter-claim, relying on section 9 of the
Federal Arbitration Act (FAA). Under section 9, if the parties
in their agreement do not specify a court to confirm the award,
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"such application may be made to the United States court in and
for the district within which such award was made." (Emphasis
added.) 9 U.S.C. § 9 (1947). Anderson relies on the statute to
argue exclusive jurisdiction lies in federal court.
Anderson’s contention regarding the circuit court’s
jurisdiction is without merit. Section 9 allows a party to
confirm an award in federal court; it does not require it. The
arbitration clause in the First RIC gives the parties the
"[r]ight to take legal action to enforce the arbitrator’s
decision." Jurisdiction was proper in the circuit court,
pursuant to section 16 of the Illinois Uniform Arbitration Act.
710 ILCS 5/16 (West 1976).
CONCLUSION
We affirm the judgment and rulings of the circuit court.
Affirmed.
GARCIA, and R. GORDON, JJ., concur.
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REPORTER OF DECISIONS - ILLINOIS APPELLATE COURT
(Front Sheet to be Attached to Each Case)
Please use NICHOLAS ANDERSON,
following form:
Plaintiff-Appellant,
Complete v.
TITLE
of Case GOLF MILL FORD, INC., n/k/a AN/GMF, INC.,
Defendant-Appellee.
Docket Nos. No. 1-07-2349
COURT Appellate Court of Illinois
First District, 1st Division
Opinion
Filed June 16, 2008
(Give month, day and year)
JUSTICES JUSTICE WOLFSON delivered the opinion of the court:
GARCIA, and R. GORDON, JJ., concur.
APPEAL from the Lower Court and Trial Judge(s) in form indicated in margin:
Circuit Court of
Cook County; the Appeal from the Circuit Court of Cook County.
Hon.___________,
Judge Presiding. The Hon. Richard J. Billik, Judge Presiding.
For APPELLANTS, Indicate if attorney represents APPELLANTS or APPELLEES and
John Doe, of include attorneys of counsel. Indicate the word NONE if
Chicago. not represented.
For APPELLEES, For Appellant, Christopher Langone, of Chicago.
Smith and Smith,
of Chicago
For Appellee, Marion B. Adler and Michael Rachlis,
Joseph Brown, RACHLIS DURHAM DUFF & ADLER, LLC, of Chicago.
of counsel).
Also add attor-
neys for third-
party appellants
and/or appellees.
(USE REVERSE SIDE IF NEEDED)
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