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State Farm Mutual Insurance Co. v. Nasser

February 10, 2003

STATE FARM MUTUAL INSURANCE COMPANY, PLAINTIFF-APPELLANT,
v.
IBRAHIM NASSER, DEFENDANT-APPELLEE.



Appeal from the Circuit Court of Cook County. Honorable James P. McCarthy, Judge Presiding.

The opinion of the court was delivered by: Justice O'malley

UNPUBLISHED

The plaintiff, State Farm Mutual Insurance Company filed this action against defendant, Ibrahim Nasser, alleging that his negligent driving caused an accident with its insured, Harivada Acharya. Following mandatory arbitration, an award was entered in favor of plaintiff. Defendant filed a timely notice of rejection of the award, which was allowed by the trial court. Defendant subsequently filed a motion to bar plaintiff from presenting any evidence or testimony at trial as a sanction under Supreme Court Rule 91(b) (145 Ill. 2d R. 91(b)) for its failure to participate in good faith at the arbitration hearing. After a hearing, the trial court found a Rule 219(c) (166 Ill. 2d R. 219(c)) sanction appropriate, and granted defendant's motion. Defendant subsequently filed a motion for summary judgment, which was also granted.

On appeal, plaintiff contends that the trial court abused its discretion in finding that it failed to participate in good faith at the arbitration hearing. Plaintiff also contends that the trial court abused its discretion in barring it from presenting evidence at trial. We agree and vacate the judgment of the circuit court and remand the cause for further proceedings.

On December 7, 1998, plaintiff filed a subrogation action seeking damages from defendant in connection with an automobile accident which occurred on September 14, 1997, in Chicago. According to the complaint, plaintiff's insured, Harivada Acharya, was "rear-ended" by defendant, and sustained injuries as well as property damage. Plaintiff sought $7,492.53 plus costs as reimbursement for amounts paid to its insured for property damage and medical bills as a result of the accident. On September 1, 2000, defendant filed his appearance and, inter alia, a notice to produce pursuant to Supreme Court Rule 237 (166 Ill. 2d R. 237) notifying plaintiff to produce at the mandatory arbitration hearing "Plaintiffs, Harivada Acharya, and Co-Defendant(s) at the commencement of the case in chief of Defendant Ibrahim Nasser."

The case was subsequently assigned to mandatory arbitration and the arbitration hearing was scheduled for June 26, 2001. On June 13, 2001, defendant moved to be excused from the arbitration hearing under Supreme Court Rule 90(g) (166 Ill. 2d R. 90(g)), because he was admitting negligence. On June 18, 2001, the trial court entered an order excusing defendant's presence at the arbitration hearing because he had admitted negligence and proximate cause, but the order stated that plaintiff's insured was not excused from the arbitration hearing because testimony was needed concerning medical payments.

On June 25, 2001, plaintiff filed an emergency motion for leave to take the telephone testimony of its insured at the arbitration hearing the next day because the insured had a heart condition and his leg had been amputated. Attached to the motion was an affidavit from the insured, dated August 8, 2000, averring to his medical condition. The trial court continued the motion until the next day for proof of the insured's medical condition. The trial court subsequently denied the motion.

On the same day, the arbitration hearing commenced as scheduled, and according to both parties, plaintiff's attorney was present but its insured was not. The arbitrators entered an award for plaintiff and against defendant in the amount of $5,699.12. Neither party was awarded costs and the award does not state that plaintiff acted in bad faith. The record does not contain a transcript of the arbitration hearing. Defendant filed a timely notice of rejection of the award and requested a trial.

Defendant then filed a motion for sanctions pursuant to Supreme Court Rules 91(b) (145 Ill. 2d R. 91(b)) and 219(c) (166 Ill. 2d R. 219(c)) seeking to bar plaintiff from presenting any evidence at trial. The motion alleged that plaintiff failed to participate in the arbitration hearing in good faith, and for violated Rule 237 (166 Ill. 2d R. 237) by not producing its insured or its adjuster at the arbitration hearing. Plaintiff did not file a written response to defendant's motion.

A hearing was held on defendant's motion on September 26, 2001, at which time plaintiff responded that "obviously [we] participated in a meaningful good faith manner because we prevailed at arbitration." Plaintiff also argued that nothing in the award suggested that it failed to participate in a meaningful manner and defendant's Rule 237 notice to produce was legally insufficient because it did not designate any particular representative of its company to appear. Plaintiff made no argument as to whether defendant's Rule 237 notice to produce was sufficient to compel the appearance of its insured at the arbitration hearing.

The trial court granted defendant's motion for sanctions, stating in part:

"The simple standard that has to apply is would you have tried a case in the same way that you approached this arbitration. And I don't believe that you go to a trial without bringing in a witness who could at least establish the basic elements of your case. I understand that there were certain admissions, and I understand there were certain stipulations based on other considerations here, but I don't believe you tried the case. That's the outline standard of 91B [sic]. Good faith participation requires you to do that.

[I]t's my understanding from everything that I've read that the parties belong there and that the case should be tried on the merits through proper methods of cross-examination and introduction of evidence, not by shuffling papers because that's all that we're accomplishing here.

So in answer to your question under 219C [sic], I believe that the sanction is appropriate in that you did not provide an opportunity for this case to be tried on the merits at the arbitration hearing. This was not meaningful participation bringing in paperwork, ...


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