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Federal Signal Corporation v. SLC Technologies

January 19, 2001

FEDERAL SIGNAL CORPORATION,
PLAINTIFF-APPELLEE,
V.
SLC TECHNOLOGIES, INC.
DEFENDANT-APPELLANT.



The opinion of the court was delivered by: Justice Gallagher

Appeal from the Circuit Court of Cook County

Honorable LESTER D. FOREMAN Judge Presiding.

On August 9, 1995, plaintiff, Federal Signal Corporation (Federal Signal), and defendant, SLC Technologies, Inc. (SLC), entered into a distributor agreement (the Agreement). The Agreement contains a broad arbitration clause which states, in pertinent part, as follows: "Any dispute arising out of or relating to this Agreement or its breach shall be settled by arbitration under and in accordance with the rules of the American Arbitration Association." The Agreement also contains the following provision: "If any litigation or arbitration is commenced by either party to enforce or interpret any of the provisions of this Agreement, the prevailing party shall be entitled to cover [sic] reasonable costs and attorneys' fees at trial, on appeal, and on any petition for review."

When a dispute arose between the parties regarding Federal Signal's alleged breach of the Agreement, SLC submitted a demand for arbitration with the American Arbitration Association, pursuant to the terms of the Agreement. The arbitrator presided over a full evidentiary hearing on November 16, 1999.

On February 2, 2000, the arbitrator issued his award, which stated it was "in full settlement of all claims submitted to this arbitration." SLC was awarded the sum of $230,750.37 plus interest. The award further provided that $1,750 for administrative fees and expenses was to be paid by Federal Signal to SLC. The award also provided that Federal Signal shall pay to SLC all reasonable attorney fees incurred by SLC on the resolution of this matter beginning on January 17, 1999, until the award entered shall have been paid. The award did not include the amount of attorney fees or expressly reserve jurisdiction to determine the amount.

On February 8, 2000, counsel for SLC wrote a letter to counsel for Federal Signal, noting that it was enclosing "a print-out of its fees and costs for this matter in order to permit your client to satisfy the Arbitrator's award." *fn1 Enclosed was a print-out for attorney fees from January 20, 1999, through January 11, 2000, in the amount of $105,636.30.

On or about February 9, 2000, Federal Signal paid SLC $230,750.37 (plus interest) to cover the damage portion of the award. On February 23, 2000, Federal Signal filed a complaint to vacate the arbitrator's award and later, on March 23, 2000, filed an amended complaint to vacate or modify the arbitrator's award.

On April 28, 2000, SLC filed a motion to dismiss, a motion to compel arbitration and a motion to stay proceedings. On or about May 11, 2000, Federal Signal paid $1,750, which was the remaining portion of the award that covered its share of the American Arbitration Association's administrative fees.

On July 13, 2000, the circuit court heard oral argument on SLC's motions and, on the same date, entered an order denying both the motion to dismiss and the motion to compel. On July 31, 2000, SLC filed a motion for clarification to ascertain whether it should further defend the action in the circuit court or exercise its right to appellate review. In particular, SLC sought clarification of the following:

"What is the basis for the court's denial of SLC'S motion to compel arbitration and stay proceedings?

Did the Court determine that the arbitration award is subject to modification or vacation pursuant to 710 ILCS 5/12 or 710 ILCS 5/13?

If the court determined that the arbitration award was subject to modification or vacation, how has the court substantively modified or vacated the award?

If the Court has modified or vacated the arbitration award, what is the legal basis for that modification or vacation?"

The record before us contains no court orders subsequent to that of July 13, 1999. Thus, the motion for clarification apparently remains pending before the circuit court. On August 14, 2000, SLC filed this interlocutory appeal within the 30-day limit.

The denial of a motion to compel arbitration is analogous to a denial of injunctive relief and is appealable under Supreme Court Rule 307(a)(1)(166 Ill. 2d R. 307(a)(1)). Notaro v. Nor-Evan Corp., 98 Ill. 2d 268, 456 N.E.2d 93 (1983). Generally, the standard of review of an order granting or denying a motion to compel arbitration is whether the trial court abused its discretion. Brooks v. Cigna Property & Casualty Cos, 299 Ill. App. 3d 68, 71, 700 N.E.2d 1052, 1054 (1998). In the instant case, however, no evidentiary hearing was had or needed, since the facts were not in dispute. Our review of the record, including the transcript of the combined hearing on SLC's motion to dismiss and motion to compel arbitration, confirms that the decision denying SLC's motion to compel arbitration was made without making any findings as to any factual issues. The trial court's decision to deny SLC's motion to compel was made in conjunction with its decision to deny SLC's motion to dismiss pursuant to section 2-615 of the Code of Civil Procedure. 735 ILCS 5/2-615 (West 1998). Accordingly, the trial court's finding that the grievance at issue was not arbitrable was made as a matter of law and is reviewable de novo. Amalgamated Transit Union, Local 900 v. Suburban Bus Division of the Regional Transportation Authority, 262 Ill. App. 3d 334, 337, 634 N.E.2d 469, 472 (1994); see also In re Lawrence M., 172 Ill. 2d 523, 526, 670 N.E.2d 710, 712-13 (1996)(Although the scope of review in an interlocutory appeal "is normally limited to an examination of whether or not the trial court abused its discretion in granting or refusing the requested interlocutory relief,""where the question presented is one of law, a reviewing court determines it independently of the trial court's judgment"). Although Amalgamated Transit Union involved the review of an order granting a motion to compel arbitration and the present case involves the review of an order denying a motion to compel arbitration, we believe this is a distinction without a difference. But see Comdisco, Inc. v. Dun & Bradstreet Corp., 285 Ill. App. 3d 796, 800-01, 674 N.E.2d 902, 904 (1996). Nevertheless, even were we to accord the more deferential review required by an abuse of discretion standard of review, the result would be the same. We conclude that the trial court abused its discretion in denying SLC's motion to compel arbitration.

We recognize in this interlocutory appeal that the portion of the order denying SLC's motion to dismiss is not before us. The sole issue before a court in an interlocutory appeal such as this is "whether there was a showing sufficient to sustain the order of the trial court denying the motion to compel arbitration." See, e.g., Comdisco, Inc. v. Dun & Bradstreet Corp., 285 Ill. App. 3d 796, 799, 674 N.E.2d 902, 904 (1996). Nonetheless, as we have noted, both the motion to dismiss and the motion to compel were argued and decided during one combined hearing. As the transcript shows, the trial court stated that its order denying the motion to compel was based entirely upon its analysis and decision to deny SLC's motion to dismiss Federal Signal's complaint pursuant to section 2-615 of the Code of Civil Procedure. 735 ILCS 5/2-615 (West 1998). Thus, we must consider whether the reasoning there supports a determination that SLC failed to make a showing sufficient to compel arbitration.

Federal Signal's amended complaint to vacate or modify the arbitrator's award was brought pursuant to sections 12 and 13 of the Uniform Arbitration Act (the Act)(710 ILCS 5/12,13 (West 1998). Section 12 provides as follows:

"ยง 12. Vacating an award. (a) Upon application of a party, the court shall ...


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