Appeal from the Circuit Court of Cook County, Illinois. No. 04 L 7549 cons. with No. 07 L 1748 Honorable Donald J. Suriano, Judge Presiding.
The opinion of the court was delivered by: Justice Joseph Gordon
JUSTICE JOSEPH GORDON delivered the judgment of the court, with opinion. Presiding Justice Epstein and Justice McBride concurred in the judgment and opinion.
¶ 1 Plaintiff Steven Clanton appeals from the circuit court's confirmation of an arbitration award.
¶ 2 Clanton was involved in two unrelated automobile accidents. The first was on November 9, 2001, with a vehicle driven by defendant-appellee Purnima Ray, and the second was on July 8, 2002, with a vehicle driven by defendant Mundeep Raina. Clanton filed separate suits against Ray and Raina seeking compensation for his injuries. The suits were subsequently consolidated into the present action.
¶ 3 The parties agreed to participate in voluntary binding arbitration. As part of their arbitration agreement, the parties agreed to limit defendants' liability as follows: Clanton's award against Ray would be no less than $250,000 and no more than $600,000, while Clanton's award against Raina would be fixed at $90,250. (It was understood by the parties that Raina had limited insurance coverage in the amount of $90,250, while Ray was insured by two insurance policies whose combined coverage was $1,250,000.) The arbitration agreement specifically barred the parties from disclosing these "high/low agreements" to the arbitrator.
¶ 4 On March 26, 2010, the arbitrator issued an opinion finding that Clanton suffered $550,000 in damages, that his damages were indivisible, and that "[e]ach defendant is liable at the percentage of 50%." Thereafter a dispute arose between Ray and Clanton as to the amount that Ray owed Clanton pursuant to the award. Ray contended that, under the plain text of the opinion, she owed only 50% of $550,000, that is, $275,000, notwithstanding the fact that Raina owed only $90,250 under the high/low agreement. Clanton contended that, under the doctrine of joint and several liability, Ray was liable for the entire balance of the $550,000 judgment not being paid by Raina, that is, $459,750. (The amount of Raina's liability is not in dispute.)
¶ 5 Ray filed a motion in the circuit court requesting that the court remand the case to the arbitrator for clarification of the award, and the circuit court granted her motion. On May 6, 2010, the arbitrator issued a new award entitled "Arbitration Award -- Clarified" in which he stated, "The doctrine of joint and several liability is not applicable due to the ADR Systems high/low limits for each defendant in the contract." (The record does not reveal who disclosed the high/low limits to the arbitrator despite the fact that such disclosure was forbidden under the terms of the arbitration agreement.) The arbitrator further stated that, "[p]ursuant to the agreed arbitration conditions," Ray was to pay $275,000 to Clanton.
¶ 6 Pursuant to this award, and over Clanton's objection, the circuit court entered judgment against Ray for $275,000 and against Raina for $90,250. Clanton now appeals. For the reasons that follow, we reverse and remand.
¶ 8 Because a detailed recitation of the facts in the underlying tort actions is not material to this appeal, we shall summarize those facts briefly.
¶ 9 On November 25, 2003, Clanton filed a negligence action against Ray in the circuit court of DuPage County, seeking damages for bodily injuries he allegedly sustained as a result of a collision between his automobile and Ray's automobile on November 9, 2001. Ray filed an answer denying all allegations of negligence. The parties proceeded to exchange discovery and litigate the lawsuit. On July 6, 2004, Clanton filed a negligence action against Raina in the circuit court of Cook County, seeking damages for bodily injuries he allegedly sustained as a result of a collision between his automobile and Raina's automobile on July 8, 2002. Raina filed an answer likewise denying all allegations of negligence. Both actions were subsequently consolidated in Cook County.
¶ 10 On October 21, 2009, all parties agreed to participate in voluntary binding arbitration to be conducted by ADR Systems of America, L.L.C. The parties executed an ADR Systems Binding Arbitration Agreement setting forth the terms of the arbitration. As part of this agreement, the parties agreed to limit defendants' liability as follows:
"The Parties agree that for insurance claim # 13-7558-442 [Clanton's claim against Ray] the minimum award to Steven Clanton will be $250,000.00. Also, the maximum award to Steven Clanton will be $600,000.00. These amounts represent the minimum and maximum amounts of money that State Farm Insurance shall be liable to pay to Steven Clanton.
The Parties agree that for Steven Clanton's claim against Dr. Mundeep Raina, the minimum and maximum award to be derived, inclusive of insurance claims, shall be $90,250.00." (Emphasis in original.)
The parties further agreed not to disclose this high/low agreement to the arbitrator:
"4. The Parties agree that they will not disclose any and all dollar figures, any settlement negotiations, the terms of any applicable insurance policy, high/low agreements between the Parties or any set-offs, whether they are MPC set-offs or set-offs from an underlying policy, orally or in writing, to the Arbitrator at any time before or during the Arbitration (including during any pre-hearing conference or at the hearing, or at any time prior to the Arbitrator's final decision).
a. Violation of the rule set forth in Paragraph (C)(4) shall constitute a material breach of the agreement."
¶ 11 As a result of the parties' agreement to enter into binding arbitration, the trial court entered an order on October 27, 2009, dismissing the consolidated cases with prejudice, with the court retaining jurisdiction to effectuate and enforce the settlement.
¶ 12 The parties proceeded to arbitration on November 3, 2009. Thereafter, on March 26, 2010, the arbitrator rendered an arbitration award (the March 26 award) which stated: "Finding in favor of: [Clanton]
Gross Award: $550,000 See opinion as to comparative percentage for the Defendants"
¶ 13 In the accompanying memorandum opinion, after summarizing the testimony of the parties, the testimony of the parties' medical experts, and Clanton's documentary evidence as to his medical expenses and lost wages, the arbitrator issued the following findings:
"1. The injuries suffered by plaintiff are indivisible.
2. The plaintiff is not contributory [sic] negligent from first motor vehicle accident of November 29, 2001 with defendant Ray.
3. The plaintiff did not mitigate his damages due to smoking. The smoking of the [plaintiff] was considered in entering the overall Award.
4. Each defendant is liable at the percentage of 50%. AWARD: 550,000.00"
¶ 14 On April 23, 2010, following the issuance of the March 26 award, Clanton filed a motion in the trial court entitled "Plaintiff's Motion to Enter Judgment and Enforce the Arbitration Award." In that motion, he contended, as he does in the instant appeal, that the March 26 award made Raina and Ray jointly and severally liable for the sum of $550,000, which would leave Ray liable for $459,750, representing that portion of the judgment not owed by Raina ...