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Kress Corp. v. Edw. C. Levy Co.

OPINION FILED DECEMBER 22, 1981.

KRESS CORPORATION, PLAINTIFF-APPELLEE,

v.

EDW. C. LEVY CO., DEFENDANT-APPELLANT



APPEAL from the Circuit Court of Peoria County; the Hon. ROBERT E. HUNT, Judge, presiding.

JUSTICE BARRY DELIVERED THE OPINION OF THE COURT:

This appeal arises from an order of the circuit court of Peoria County confirming an arbitration award upon application by Kress Corporation (Kress) and denying a motion to dismiss such application filed by Edw. C. Levy Co. (Levy).

Kress is an Illinois corporation in the business of building and selling slag pot carriers. Levy is a Michigan corporation which agreed in 1965 to assist in the development and marketing of certain slag pot carriers to be designed by Kress. The parties agreed that Levy would purchase one of the newly designed carriers at a price determined by a formula set forth in the agreement. The agreement further provided that Levy would be able to purchase additional carriers at a price determined by the greater of the formula for price specified for the initial unit or at "fabricator's actual cost plus 10%."

In 1978, Levy ordered four carriers from Kress and specified that it would pay "fabricator's actual cost plus 10%" based on the 1965 agreement. While these carriers were still in production, a dispute arose over the price to be paid by Levy. The parties thereafter agreed to submit the issue of the purchase price for these four carriers to an arbitrator. Their written submission agreement was addressed to the American Arbitration Association in Chicago, Illinois. It was signed by Kress in October 1979, and by Levy in March 1980, and specified that "the controversy shall be arbitrated in Peoria, Illinois."

An arbitration hearing was conducted in Peoria pursuant to the agreement, and the arbitrator's award notice was mailed to the parties on June 9, 1980. The total purchase price thus determined was $585,526.28, of which $496,000 had been paid previously by Levy. Since Kress had admitted that it still owed Levy $17,000 in royalties pursuant to a separate section of the 1965 agreement, the arbitrator determined that the balance then due Kress was $82,526.28.

On September 17, 1980, Kress filed an action for confirmation of the arbitrator's award. Levy responded by filing a statement of objections and motion to dismiss on December 5, 1980. The cause was heard on December 12, 1980, at which time the matter was taken under advisement. On January 27, 1981, the court entered an order confirming the arbitration award and denying Levy's objections and motion to dismiss. Judgment was entered accordingly. Levy has appealed this order.

On appeal, Levy presents five issues: (1) whether the Federal Arbitration Act (9 U.S.C. § 1 et seq. (1976)) or the Illinois Uniform Arbitration Act (Ill. Rev. Stat. 1979, ch. 10, par. 101 et seq.) governs the resolution of this case; (2) whether Levy is time-barred from asserting defenses to Kress' action for confirmation; (3) whether the parties' submission agreement is unenforceable for lack of certainty; (4) whether the arbitrator exceeded the scope of the submission agreement; and (5) whether the award is unenforceable as being contrary to public policy and in violation of the antitrust law of the United States.

We affirm the trial court's order. The parties' arguments and our reasons for affirmance follow.

Initially, Levy argues that the Federal Arbitration Act, rather than the Illinois Uniform Arbitration Act, governs because the transaction between the parties involves interstate commerce. (See Prima Paint Corp. v. Flood & Conklin Mfg. Co. (1967), 388 U.S. 395, 18 L.Ed.2d 1270, 87 S.Ct. 1801.) The relevant distinction between the two statutes, Levy's argument continues, is the manner in which the statute of limitations is applied against a party defending against confirmation of an arbitrator's award.

Under the Federal Act, the pertinent section reads as follows:

"Notice of a motion to vacate, modify, or correct an award must be served upon the adverse party or his attorney within three months after the award is filed or delivered." (9 U.S.C. § 12 (1976).)

Federal case law interpreting this section of the statute establishes, according to Levy, that a party is not time-barred from asserting Federal statutory grounds for vacatur as a defense to a motion for confirmation after the 3-month period, even though the same grounds would have been time-barred if set forth in an independent motion to vacate filed after the 3-month period. (See Riko Enterprises, Inc. v. Seattle Supersonics Corp. (S.D.N.Y. 1973), 357 F. Supp. 521.) Application of the Federal rule would, per cited case law, require that the trial court, whether State or Federal, consider the merits of Levy's defenses to Kress' application for confirmation of the arbitrator's award, despite the fact that such defenses were raised nearly six months after delivery of notice of the award.

Kress urges us to apply the law of the State of Illinois to the instant case. The pertinent section of the Illinois Uniform Arbitration Act reads as follows:

"An application under this Section shall be made within 90 days after delivery of a copy of the award to the applicant, except that if predicated upon corruption, fraud or other undue means, it shall be made within 90 days after such grounds are known or ...


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