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Father & Sons, Inc. v. Taylor

November 13, 1998


The opinion of the court was delivered by: Presiding Justice Campbell

Appeal from the Circuit Court of Cook County.

Honorable Albert Green, Judge Presiding.

Plaintiff, Father & Sons, Inc. (Father & Sons), an Illinois corporation, appeals from an order of the circuit court of Cook County denying its petition to vacate an arbitration award made in favor of defendants, Joseph and Christine Taylor (the Taylors), pursuant to section 12 of the Uniform Arbitration Act. 710 ILCS 5/12, et. seq. (West 1996). On appeal, Father & Sons contends that the trial court erred in denying its petition to vacate the arbitration award and in confirming the award in that: (1) the arbitrator improperly determined that Father & Sons violated the Illinois Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act) 815 ILCS 505/10a(e) (West 1996); (2) the arbitrator exceeded his authority in awarding attorney fees; and (3) the arbitrator violated both the rules of the American Arbitration Association and due process by barring crucial testimony at the arbitration hearing. For the following reasons, we affirm the judgment of the trial court.

The record reveals the following relevant facts. On December 21, 1990, the Taylors entered into a construction contract (contract) with Father & Sons to construct a room addition on their home located 1409 52nd Place, LaGrange Highlands, Illinois, for approximately $42,000. The contract contained the following arbitration provision: "Any controversy or claim arising out of or relating to this contract or the breach thereof shall be settled by arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association and judgment upon the award rendered by the Arbitrator(s) may be entered in any Court having jurisdiction thereof."

As of July 1991, the Taylors had paid Father & Sons approximately $24,000 on the contract price. Father & Sons failed to complete the work in accordance with the contract, and on February 18, 1992, the parties entered into a second contract. The second contract incorporated the first contract, and detailed numerous breaches of the first contract. The second contract required Father & Sons to complete the work for the remaining balance of $19,215.

On September 22, 1992, Father & Sons filed its first of three complaints against the Taylors in the Fifth Municipal District for their refusal to pay the balance allegedly due under the second contract. The trial court dismissed the complaint on Father & Sons motion for voluntary dismissal on November 16, 1992. *fn1 On June 29, 1993, Father & Sons filed its "First Amended Complaint" in the Fourth Municipal District for breach of contract and unjust enrichment. *fn2

On May 11, 1994, the Taylors filed a five-count counterclaim for breach of contract, breach of implied warranty, breach of express warranty, common law fraud and statutory fraud, all concerning Father & Sons' failure to properly complete the work for which the Taylors contracted. *fn3 The trial court dismissed Father & Sons ' first amended complaint with prejudice on July 8, 1994, while the Taylors' counterclaim remained pending.

On March 21, 1995, Father & Sons moved to compel arbitration of the pending matters, and the Taylors objected. On June 9, 1995, the Fourth Municipal District transferred all pending matters to the American Arbitration Association (AAA). The transfer order provided as follows: "[A]ll matters presently pending before this court will go to arbitration and this action is stayed pending resolution of the arbitration proceedings. If any matters are not resolved by the arbitrator in his final decision they can return to this court."

On December 18, 1995, prior to the commencement of the arbitration proceeding, the arbitrator, Harvey X. Koloms, ruled that he would not hear arguments relating to Father & Sons' previously dismissed complaint against the Taylors or relating to several pending motions for fees and costs concerning attorney conduct during discovery, as these matters were not the proper subject of the arbitration. On January 10, 1996, Father & Sons sought an order from the Fourth Municipal District requiring the arbitrator to hear Father & Sons' previously dismissed complaint. The trial court refused to rule on the motion, but the Taylors agreed to allow the arbitrator to hear Father & Sons' complaint in an effort to prevent further delay by the possibility of an interlocutory appeal.

The arbitration hearing proceeded on February 7, 1996, and concluded on March 5, 1996. On May 20, following the submission of post-trial memoranda the arbitrator returned an award in favor of the Taylors and against Father & Sons on all counts. The arbitrator made several special findings, including, inter alia, that Father & Sons failed to complete all the work required by the contracts with the Taylors in a good and workmanlike manner, and therefore materially breached the contracts; and that Father & Sons' work was so defective, deficient, incomplete, negligent and incompetent, that the construction materially decreased the fair value of the Taylors' home, resulting in the home becoming structurally unsound and dangerous.

The arbitrator further found that Father & Sons, by and through its agent, Ronald Kafka (Kafka), engaged in deceptive acts and practices in violation of the Consumer Fraud Act, and that the preponderance of the evidence proved that Kafka was not merely a sales representative, but rather exercised and maintained substantial control and direction over the affairs, policies, and operations of Father & Sons. The arbitrator therefore declared Kafka principally responsible for the deceptive acts and practices of Father & Sons found to be violations of the Consumer Fraud Act.

The arbitrator awarded the Taylors $40,000 to remedy the deficient design and defects in their home, and $22,006 in litigation costs for services rendered by architectural and construction engineering consultants for a total judgment to the Taylors of $62,006. The arbitrator also awarded $75,000 to the Taylors' attorneys for fees. In addition, the arbitrator ordered Father & Sons to bear the administrative fees and expenses of the AAA for a total of $1,400. The arbitrator further declared all mechanic liens filed against the home of the Taylors by Father & Sons to be null and void.

Father & Sons filed a petition to vacate the Arbitration Award in the Chancery Division of the Circuit Court of Cook County. On December 16, 1996, the circuit court entered an order denying Father & Sons' petition to vacate the order of the arbitrator, and confirmed all awards in addition to awarding the Taylors post judgment interest. The trial court entered a finding pursuant ...

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