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Hawrelak v. Marine Bank

September 07, 2000


Appeal from Circuit Court of Sangamon County No. 99MR50 Honorable Stuart H. Shiffman, Judge Presiding.

The opinion of the court was delivered by: Justice Steigmann

In June 1995, plaintiff, Ronald M. Hawrelak, and defendant, Marine Bank, Springfield (the Bank), entered into an employment agreement (Agreement). Hawrelak eventually left the Bank's employment, and in June 1997, he sought arbitration on several compensation issues. In January 1999, following a hearing, the arbitrators awarded $64,893 to Hawrelak, who later filed a motion to vacate the award. In December 1999, the trial court granted Hawrelak's motion and vacated the arbitration award. The Bank appeals, and we reverse and remand.


Pursuant to the Agreement, Hawrelak served as president of the Bank's mortgage banking division from June 1995 until April 1997, when he resigned that position. The Agreement contained all of the terms of Hawrelak's compensation, including how the Bank would compensate him upon the termination of his employment. The Agreement also provided for arbitration in the event a dispute arose thereunder.

Following Hawrelak's resignation, he submitted for arbitration several compensation issues, including whether he was entitled to damages or compensation on a quantum meruit theory or whether there existed an enforceable contract under which the amounts payable to him were set forth. Pursuant to the terms of the Agreement, the Bank selected an arbitrator (Craig Lewis), Hawrelak selected an arbitrator (Roger Rutherford), and Lewis and Rutherford then selected a third, neutral arbitrator (retired circuit judge Richard Mann). In November 1998, the arbitrators conducted an eight-day hearing on the compensation issues. On November 30, 1998, the arbitrators met and reached a majority decision on all issues raised by Hawrelak in the arbitration. The next day, Mann drafted a letter, which enclosed the majority decision, and sent copies to Lewis and Rutherford.

Around December 2 or 3, 1998, Lewis spoke by telephone with the Bank's chief executive officer and informed him that Lewis and Mann had signed the majority decision. Lewis then sent a copy of the decision to the Bank, and someone at the Bank forwarded a copy to the Bank's attorney. The Bank's attorney, who was unaware that Hawrelak had not yet received the decision, then telephoned Hawrelak's counsel to inquire about payment of the award. Later during December 1998, Rutherford provided Hawrelak with a copy of the majority decision as well as memoranda prepared by Lewis and Rutherford during the deliberation process.

In January 1999, the American Arbitration Association (Association) issued the final award, which fully incorporated the November 1998 majority decision. In addition, the final award specified how the arbitration costs and fees would be divided between the parties.

In February 1999, Hawrelak filed a motion in the trial court, seeking to vacate the arbitration award on the grounds that (1) the award was procured by "undue means" under section 12(a)(1) of the Uniform Arbitration Act (Act) (710 ILCS 5/12(a)(1) (West 1998)) because (a) Lewis prematurely disclosed the arbitration decision to the Bank, and (b) during the arbitration panel's deliberations, Lewis submitted a memorandum containing arguments and data that had not been presented during the hearing; (2) the arbitrators exceeded their powers under section 12(a)(3) of the Act by not adhering to the language of the Agreement in awarding damages; and (3) the arbitrators violated section 12(a)(4) of the Act by refusing to postpone the hearing or exclude non-testifying witnesses. In response, the Bank filed a motion to confirm the award, pursuant to section 11 of the Act (710 ILCS 5/11 (West 1998)).

In May 1999, the trial court granted Hawrelak's request "to conduct limited discovery concerning the premature release of the decision and the contacts that may have occurred between the arbitrators and the parties." Hawrelak subsequently deposed Lewis and Mann, and the Bank deposed Rutherford. All three arbitrators were deposed regarding the premature disclosure of the decision, ex parte communications between the arbitrators and the parties, and the arbitral deliberation process. Following the depositions and further briefing by the parties, the court entered an order vacating the arbitration award in its entirety, remanding for a new arbitration hearing, and denying the Bank's motion to confirm the award. The court specifically found that Lewis' premature disclosure of the decision "prejudiced the rights of Mr. Hawrelak" and justified vacating the award.

This appeal followed.


The scope of judicial review of an arbitration award is nothing like the scope of an appellate court's review of a trial court's decision (see American Federation of State, County & Municipal Employees v. Department of Central Management Services, 173 Ill. 2d 299, 304, 671 N.E.2d 668, 672 (1996)) because the Act provides for very limited judicial review of an arbitrator's award. 710 ILCS 5/12, 13 (West 1998). In particular, the Act allows vacation of an award (1) procured by corruption, fraud, or other undue means, (2) where there was evident partiality or misconduct on the part of the arbitrators, (3) where the arbitrators exceeded their powers, or (4) where the arbitrators refused to postpone a hearing upon sufficient cause or to hear material evidence, so as to prejudice the rights of a party. See 710 ILCS 5/12(a)(1), (a)(2), (a)(3), (a)(4) (West 1998). If the arbitrators have acted in good faith, however, the award is conclusive upon the parties. Garver v. Ferguson, 76 Ill. 2d 1, 7-8, 389 N.E.2d 1181, 1183 (1979).

A presumption exists that the arbitrators did not exceed their authority. Moreover, arbitration awards should be construed, whenever possible, so as to uphold their validity. Rauh v. Rockford Products Corp., 143 Ill. 2d 377, 386, 574 N.E.2d 636, 641 (1991). Such deference is accorded because the parties have chosen in their contract how their dispute is to be decided, and judicial modification of an arbitrator's decision deprives the parties of that choice. Tim Huey Corp. v. Global Boiler & Mechanical, Inc., 272 Ill. App. 3d 100, 106, 649 N.E.2d 1358, 1362 (1995). "'A contrary course would be a substitution of the judgment of the Chancellor in place of the judges chosen by the parties, and would make an award the commencement, not the end, of litigation.'" Garver, 76 Ill. 2d at 9, 389 N.E.2d at 1184, quoting Burchell v. Marsh, 58 U.S. (17 How.) 344, 349, 15 L. Ed. 96, 99 (1854).

Because the parties to an arbitration did not bargain for a judicial determination, a reviewing court cannot set aside an arbitration award because of errors in judgment or mistakes of law or fact. Gross errors of judgment in law or gross mistakes of fact may be reviewable, but only if they are apparent upon the face of the award. Garver, 76 Ill. 2d at 7, 389 N.E.2d at 1183. A party seeking to vacate an arbitration award must provide clear, strong, and convincing evidence ...

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