No. 1-01-2838

Modified Upon Motion For Modification

JUSTICE REID delivered the opinion of the court:

Following mandatory arbitration in a subrogation action fordamage to the vehicle of plaintiff's insured, an award wasentered in favor of plaintiff State Farm Insurance Company andagainst defendant Robert L. Harmon. Defendant rejected theaward, and the circuit court subsequently barred plaintiff frompresenting testimony or evidence at trial and entered summaryjudgment for defendant Robert L. Harmon. On appeal, plaintiffcontends the trial court abused its discretion in finding thatplaintiff did not participate in the arbitration hearing in ameaningful manner. Plaintiff further contends that bothdefendant's notice to produce plaintiff and the trial court orderimposing sanctions were invalid for lack of specificity. For thefollowing reasons, the judgment of the circuit court is vacatedand the cause is remanded for further proceedings consistent withthis opinion.

THE FACTS

Plaintiff filed a subrogation action against defendant forallegedly damaging the vehicle of plaintiff's insured, GiovanniLicciardi. In its complaint, plaintiff alleged that on September30, 1996, defendant's motor vehicle struck and damagedLicciardi's vehicle on Montrose Avenue in Harwood Heights. Plaintiff sought $1,890.75 in damages to the vehicle, plus costs. There was no claim for damages relating to bodily injury.

Because the request for damages did not exceed $30,000, theparties were required to participate in mandatory arbitrationpursuant to Supreme Court Rule 86. 155 Ill. 2d R. 86. See also,Cook Co. Cir. Ct. R. 18.3 (eff. August 1, 2001). Defendant fileda notice to produce pursuant to Supreme Court Rule 237 notifyingplaintiff to produce at the mandatory arbitration hearing"Plaintiff(s) and Co-Defendant(s) at the commencement of the casein chief of Defendant(s) Robert L. Harmon." 166 Ill. 2d R. 237. Plaintiff's counsel was present at the arbitration hearing, butplaintiff's insured was not present. The arbitrators entered anaward for plaintiff and against defendant in the amount of$1,890.75. The record does not contain a transcript of thearbitration hearing. Defendant filed a timely notice ofrejection of the arbitration award and requested a trial.

Defendant then filed a motion for sanctions pursuant toIllinois Supreme Court Rules 237 and 91(b) (166 Ill. 2d R. 237;145 Ill. 2d R. 91(b)) seeking to bar plaintiff from testifying orproducing any evidence at trial. The motion alleged that"plaintiff" failed to appear despite a valid Rule 237 notice andproduced no other witness who could testify to the merits of "hisclaim for bodily injury."

Plaintiff filed a response, alleging that this was asubrogation action in which the plaintiff insurance companysought to recover $1,890.75 in property damage to its insured'svehicle caused when defendant "rear-ended" the vehicle. Plaintiff alleged that it appeared at the arbitration throughcounsel and participated in good faith as evidenced by the awardin its favor. Plaintiff's response further alleged thatdefendant's Rule 237 notice to produce did not apply toplaintiff's insured, who was not a party to the subrogation andwas not named in the notice. Finally, plaintiff alleged that theRule 237 notice did not designate any officer, director oremployee of plaintiff to appear at the hearing.

Defendant did not file any pleading rebutting plaintiff'sallegations.

On May 1, 2001, the circuit court entered an order grantingdefendant's motion for sanctions, stating in part, "Defendant'smotion to bar plaintiff from testifying or presenting evidenceis, under the circumstances and based on the evidence presentedto the court at hearing, granted in that plaintiff has failed toparticipate in the arbitration system in a meaningful mannerunder Supreme Court Rule 91(b)." The court did not base theimposition of sanctions on Rule 237(b).

Three days later, plaintiff filed a motion to reconsider orclarify the court's order of May 1, 2001. Plaintiff argued thatthe court's order did not comply with the specificity requirementof Supreme Court Rule 219(c) (166 Ill. 2d R. 219(c)) because itdid not state what "evidence" or "circumstances" it considered inimposing the sanction against plaintiff. Plaintiff again allegedthat it was present at the arbitration hearing through itsattorney, and defendant's Rule 237 notice did not validly requirethe presence of either plaintiff's insured or any officer oremployee of plaintiff. Plaintiff alleged that it presented atarbitration the adverse witness testimony of defendant as well asa Rule 90(c) (166 Ill. 2d R. 90(c)) package of documentspertaining to damages. The court denied plaintiff's motion toreconsider or clarify the order and subsequently granteddefendant's motion for summary judgment.

ANALYSIS

On appeal, plaintiff contends that the trial court abusedits discretion in barring it from testifying or presentingevidence at trial because the record fails to support the court'sfinding that plaintiff did not participate in the arbitration ingood faith and in a meaningful manner under Supreme Court Rule91(b).

Supreme Court Rule 91(b) states that all parties to the arbitration hearing must participate in the hearing in goodfaith and in a meaningful manner. 145 Ill. 2d R. 91(b). If anarbitration panel unanimously finds that a party has failed toparticipate in the hearing in good faith and in a meaningfulmanner, it should state its finding and factual basis on theaward. 145 Ill. 2d R. 91(b). Such a finding by an arbitrationpanel is considered prima facie evidence that the party failedto participate in the arbitration hearing in good faith. 145Ill. 2d R. 91(b). Possible sanctions for a violation of Rule91(b) may include barring the losing party from rejecting anaward or barring a party from presenting evidence or testimonyat trial. 145 Ill. 2d R. 91(b); 166 Ill. 2d R. 219(c).

A trial court's imposition of sanctions under Rule 91 willbe reversed only where the court's decision represents an abuseof discretion. Goldman v. Dhillon, 307 Ill. App. 3d 169, 172(1999). A party is required to participate in an arbitrationhearing in good faith by subjecting the case to the type ofadversarial testing expected at a trial. Martinez v. Gaimari,271 Ill. App. 3d 879, 883-84 (1995). A party has acted in badfaith where its actions amount to a deliberate and pronounceddisregard for the rules and the court. State Farm Insurance Co.v. Jacquez, 322 Ill. App. 3d 652, 655 (2001). Bad faith mayconsist of inept preparation or intentional disregard for theprocess. Schmidt v. Joseph, 315 Ill. App. 3d 77, 83 (2000).

The record before us does not contain transcripts of thearbitration hearing or the hearings on defendant's motion forsanctions and plaintiff's motion to reconsider. However, therecord does reveal the following facts. Plaintiff filed asubrogation action to recover property damages to its insured'svehicle allegedly sustained when defendant "rear-ended" thevehicle. Plaintiff's unrebutted pleadings showed that itappeared at the arbitration through counsel, presented defendantas an adverse witness, and presented evidence of damages througha Rule 90(c) package. Apparently, the arbitrators found thisevidence persuasive and awarded plaintiff the full amount ofdamages claimed. The arbitrators did not make a finding thatplaintiff failed to participate in good faith, nor does theaward indicate noncompliance with a Rule 237 notice to produce.

Defendant rejected the arbitration award, then filed amotion for sanctions in which he alleged that there was a bodilyinjury claim involved and that plaintiff's insured was thesubject of a notice to produce. Plaintiff filed a responsestating that both of defendant's allegations were false. Defendant did not file a reply. Following a hearing ondefendant's motion, the trial court found that based on the"circumstances" and "the evidence presented to the court at thehearing," plaintiff failed to participate in the arbitration ingood faith. Consequently, the court barred plaintiff frompresenting any testimony or other evidence at trial. Based onthis sanction, the court later granted defendant's motion forsummary judgment.

Plaintiff filed a motion asking the court to reconsider orclarify its order imposing sanctions. The motion asked thecourt to state specifically what "circumstances" and "evidence"it considered in finding that plaintiff failed to arbitrate ingood faith, where the arbitrators did not make such a findingand instead awarded plaintiff the full amount claimed. Thecourt denied the motion without comment. The parties disputewhether the court was required to state with specificity thereasons supporting its decision to impose sanctions. Regardlessof whether it was required to do so, the court's refusal tostate a basis for its decision left the record devoid of anyreasons supporting the imposition of sanctions againstplaintiff. Under these circumstances, we conclude that thecourt abused its discretion in barring plaintiff from presentingtestimony or other evidence in support of its claim at trial.

Our recent decision in State Farm Insurance Co. v.Rodrigues, 324 Ill. App. 3d 736 (2001), is on point. InRodrigues, a subrogation action in which the defendant struckthe parked and unoccupied vehicle of the plaintiff's insured,neither an employee of plaintiff nor plaintiff's insured waspresent at the arbitration. The plaintiff's counsel presentedboth the defendant's adverse testimony and an arbitrationpackage consisting of documentary evidence relating to damagesand repairs. The arbitrators entered an award for plaintiff forthe full amount of damages and did not make a finding that theplaintiff had failed to participate in good faith. We heldthat, under the particular facts of that case, the record didnot reflect that the plaintiff displayed a deliberate andpronounced disregard for the rules or the court, and the trialcourt abused its discretion in debarring the plaintiff frompresenting evidence at trial. Rodrigues, 324 Ill. App. 3d at742.

Defendant argues this case is distinguishable fromRodrigues in that here the insured witnessed the accident,whereas in Rodrigues the defendant struck the insured's parkedand unoccupied vehicle. Rodrigues, 324 Ill. App. 3d at 737. Therefore, defendant argues, the testimony of the insured isessential to the type of testing expected at trial. Nevertheless, defendant did not request the presence of theinsured in his notice to produce. Defendant cannot claim thathe was prejudiced by the absence of plaintiffs' insured since hewas responsible for requesting his appearance. Schmidt, 315Ill. App. 3d at 82.

A review of cases relied on by defendant reveals that,unlike this case, in each instance the losing party failed topresent any meaningful evidence at arbitration. In Schmidt, 315Ill. App. 3d at 84, where the plaintiff was barred fromrejecting the arbitration award, the record did not contain theplaintiff's Rule 90(c) information or show that the plaintiff'scounsel elicited any evidence from the defendant on liability. Here, the record supports plaintiff's claim that it presentedsufficient evidence at arbitration and did not disregard therules. See also Goldman, 307 Ill. App. 3d at 174 (defendant,though present, "did not participate in the hearing at anylevel"); Hinkle v. Womack, 303 Ill. App. 3d 105, 112 (1999)(defendant's counsel "did not test plaintiff's case at all" andadmitted negligence); Hill v. Joseph Behr & Sons, Inc., 293 Ill.App. 3d 814, 815 (1997) (plaintiff failed to submit any Rule90(c) documents and presented no liability testimony); Martinez,271 Ill. App. 3d at 883 (defendant failed to present anyevidence to rebut plaintiff's case in chief).

Plaintiff next contends that the trial court's impositionof sanctions cannot be upheld on the basis that plaintiffviolated Supreme Court Rule 237(b). We note that the trialcourt's order does not state Rule 237(b) as a basis for itsdecision to impose sanctions, nor does defendant seek to upholdthe court's order on that basis.

Supreme Court Rule 237(b) provides that, "[t]he appearanceat the trial of a party or a person who at the time of trial isan officer, director, or employee of a party may be required byserving the party with a notice designating the person who isrequired to appear." 166 Ill. 2d R. 237(b). The court mayorder sanctions upon a failure to comply with the notice. 166Ill. 2d R. 237(b). Rule 91(a) provides that a party who failsto be present, either in person or through counsel, waives hisright to reject an award. 145 Ill. 2d R. 91(a).

Because defendant's notice only requested "plaintiff(s)"and did not designate an employee to appear, plaintiff did notact in bad faith by appearing through its counsel. Furthermore,defendant did not request the appearance of plaintiff's insured. It should be noted, however, that Rule 237(b) would not reachplaintiff's insured because in this case the insured was not aparty to the lawsuit. Defendant bears the responsibility forany alleged insufficiency in adversarial testing because hefailed to secure evidence in the appropriate fashion. Rodrigues, 324 Ill. App. 3d at 742.

CONCLUSION

For the foregoing reasons, the judgment of the circuitcourt is vacated, and the cause is remanded.

Vacated and remanded.

CAMPBELL, P.J. and GREIMAN, J., concur.