ROSEMARY KEEFE, on Behalf of Herself and All Others Similarly Situated, Plaintiff-Appellant,
ALLIED HOME MORTGAGE CORPORATION and ALLIED HOME MORTGAGE CAPITAL CORPORATION, Defendants-Appellees.
from the Circuit Court of St. Clair County. No. 04-L-502
Honorable Vincent J. Lopinot, Judge, presiding.
Attorneys for Appellant Jeffrey J. Lowe, James J. Rosemergy,
Carey, Danis & Lowe
Attorney for Appellees Michael A. Brockland, Cosgrove Law
Group, LLC, Pierre Laclede Tower II
JUSTICE CATES delivered the judgment of the court, with
opinion. Justice Moore concurred in the judgment and opinion.
Presiding Justice Schwarm dissented, with opinion.
Honorable Judy L. Cates, Justices
1 The plaintiff, Rosemary Keefe, appeals from an order
granting a motion to compel arbitration filed by defendants,
Allied Home Mortgage Corporation and Allied Home Mortgage
Capital Corporation. The plaintiff contends that the circuit
court erred in finding that the parties' arbitration
agreement was enforceable where the designated arbitrator was
no longer able to conduct consumer arbitrations and where
there was no showing that the designated procedures governing
the arbitration agreement authorized the appointment of a
substitute arbitrator. For reasons that follow, we reverse
3 In 1999, the plaintiff, Rosemary Keefe, contacted the
defendants for assistance with the refinancing of a loan on
her property in Berwyn, Illinois. The defendants were in the
business of brokering mortgages and providing mortgage
related services in several states in the United States,
including Illinois. On May 18, 1999, the plaintiff signed
several refinancing documents, which included an arbitration
rider. Two months later, the parties closed on the loan.
4 On September 2, 2004, the plaintiff filed a class action
complaint against the defendants. The plaintiff alleged that
the defendants engaged third parties to provide certain
loan-related services, such as credit reports and appraisals,
and paid the fees charged for those services. The plaintiff
further alleged after payment of the third-party fees, the
defendants then charged the plaintiff, and similarly situated
borrowers, sums in excess of those fees
("upcharges"), and then concealed the
"upcharges" by failing to disclose the actual fees
that the defendants had paid to the third parties. The
plaintiff's complaint included counts asserting breach of
fiduciary duty, breach of the covenant of good faith and fair
dealing, unjust enrichment, and consumer fraud.
5 On December 15, 2004, the defendants filed a motion to
compel arbitration and stay judicial proceedings based upon
the arbitration rider. The plaintiff filed a memorandum in
opposition. The plaintiff asserted that the arbitration rider
was unenforceable because it was cost-prohibitive,
unsupported by consideration, against public policy, and
procedurally and substantively unconscionable. Over the next
several months, the parties submitted additional oral and
written arguments to the trial court. On July 18, 2007, the
trial court denied the defendants' motion to compel
arbitration. The court found that the arbitration rider was
illusory and procedurally and substantively unconscionable.
The defendants appealed. In an opinion issued on July 10,
2009, this court found that the arbitration rider was
supported by adequate consideration but that the provision
prohibiting class arbitrations was substantively
unconscionable. Keefe v. Allied Home Mortgage Corp.,
393 Ill.App.3d 226, 912 N.E.2d 310 (2009). This court also
determined that the provision prohibiting class arbitrations
was severable from the remainder of the arbitration rider,
leaving the agreement to arbitrate in place. Keefe,
393 Ill.App.3d at 236, 912 N.E.2d at 320. The case was
remanded to the circuit court with directions to sever the
provision prohibiting class actions and to enforce the
remainder of the arbitration clause.
6 Within days after the opinion was issued, the parties'
chosen arbitrator, the National Arbitration Forum (NAF),
became embroiled in a controversy. On July 14, 2009, the
Minnesota Attorney General filed a complaint against the NAF,
and alleged, among other things, that the NAF had
systematically used arbitrators with pro-business biases, and
thereby engaged in consumer fraud and deceptive trade
practices. On July 28, 2009, the NAF entered into a consent
decree with the Minnesota Attorney General, and agreed to
stop accepting all consumer cases for arbitration. See
Minnesota v. National Arbitration Forum, Inc., No.
27-CV-09-18550 (Minn. 4th Dist. Ct. July 17, 2009) (consent
decree); In re National Arbitration Forum Trade Practices
Litigation, 704 F.Supp.2d 832, 835 (D. Minn. 2010).
7 On September 23, 2009, the plaintiff filed a motion in the
circuit court, and argued that the arbitration rider was
unenforceable because the NAF was no longer able to arbitrate
this dispute. On October 27, 2009, the defendants filed a
memorandum in opposition. The defendants argued that the
unavailability of the NAF did not render the arbitration
rider unenforceable because the NAF was not designated as the
exclusive arbitral forum and because the circuit court was
authorized to appoint a substitute arbitrator under section 5
of the Federal Arbitration Act (FAA) (9 U.S.C. § 5
(Supp. III 2010)). On October 29, 2009, the plaintiff filed a
reply and argued that the arbitration rider effectively
designated the NAF as the exclusive arbitral forum and that
no other provision in the rider authorized the selection or
use of a substitute arbitrator. On January 7, 2011, the
defendants filed a second motion to compel arbitration. On
October 14, 2014, the circuit court granted the
defendants' motion to compel arbitration. This appeal
9 Agreements to arbitrate are favored as a matter of policy
in Illinois and federally. QuickClick Loans, LLC v.
Russell, 407 Ill.App.3d 46, 52, 943 N.E.2d 166, 172
(2011). Whenever possible, Illinois courts will construe
arbitration agreements to uphold their validity. Salsitz
v. Kreiss, 198 Ill.2d 1, 13, 761 N.E.2d 724, 731 (2001).
This pro-arbitration policy, however, is not intended to
render arbitration agreements more enforceable than other
contracts, and it does not operate in disregard of the intent
of the contracting parties. Carter v. SSC Odin Operating
Co., 2012 IL 113204, ¶ 55, 976 N.E.2d 344;
Ervin v. Nokia, Inc., 349 Ill.App.3d 508, 510, 812
N.E.2d 534, 537 (2004). Rather, arbitration agreements are to
be enforced according to their terms, including those
specifying the arbitral forum and the rules under which the
arbitration will be conducted. 9 U.S.C. § 4 (Supp. III
2010); American Express Co. v. Italian Colors
Restaurant, 570 U.S.,, 133 S.Ct. 2304, 2309 (2013).
10 Arbitration is consensual, and arbitration agreements, as
creatures of contract, are construed under ordinary
principles of contract law. Carr v. Gateway, Inc.,
241 Ill.2d 15, 20, 944 N.E.2d 327, 329 (2011). Under ordinary
contract principles, the primary objective is to give effect
to the intent of the parties. Thompson v. Gordon,
241 Ill.2d 428, 441, 948 N.E.2d 39, 47 (2011). A contract
must be construed as a whole, viewing each provision in light
of the other provisions, rather than in isolation.
Thompson, 241 Ill.2d at 441, 948 N.E.2d at 47. If
the words in the contract are clear and unambiguous, they
must be given their plain, ordinary and popular meaning.
Central Illinois Light Co. v. Home Insurance Co.,
213 Ill.2d 141, 153, 821 N.E.2d 206, 213 (2004). If the terms
of the contract are reasonably susceptible of more than one
meaning, they are ambiguous and will be strictly construed
against the drafter. Central Illinois Light Co., 213
Ill.2d at 153, 821 N.E.2d at 213. An arbitration agreement
will not be extended by ...