No. 1-02-3169

STATE FARM MUTUAL INSURANCE COMPANY,	)	Appeal from the

as Subrogee of Shari Spraker and 		)  	Circuit Court of

Matthew Spraker,					)	Cook County.

								)

		Plaintiff-Appellant,		)

								)

			v.					)	 No. 01 M1 22553

								)

ORLANDO M. SANTIAGO,				)	Honorable

								)	John G. Laurie,

		Defendant-Appellee.			)	Judge Presiding.

	JUSTICE REID delivered the opinion of the court:

	Following a mandatory arbitration hearing in this

subrogation action for damages to the vehicle of plaintiff's

insureds, the arbitration panel awarded plaintiff State Farm

Mutual Insurance Company $1,770.57 against defendant Orlando

Santiago.  Defendant apparently rejected the award, then

subsequently moved to bar plaintiff from presenting testimony or

evidence at trial as a sanction for failure to produce the

insureds at the arbitration hearing and for summary judgment. 

The circuit court granted both motions and entered judgment for

defendant.  On appeal, plaintiff contends that the circuit court

abused its discretion in finding that plaintiff failed to

participate in the arbitration proceedings in good faith, in

imposing sanctions against plaintiff, and in finding that

plaintiff violated Supreme Court Rule 237(b) (166 Ill. 2d R.

237(b)).  For the reasons set forth below, we vacate said orders of the circuit court and remand this cause for further

proceedings.

BACKGROUND

	On November 6, 2001, plaintiff filed this subrogation action

against defendant for allegedly damaging the vehicle of its

insured, Shari Spraker.  The case was assigned to mandatory

arbitration, and a hearing was scheduled for July 17, 2002. 

Defendant filed a notice to produce pursuant to Supreme Court

Rule 237(b), requiring plaintiff, Shari Spraker, and her husband

Matthew Spraker to appear at the arbitration hearing. 

Defendant's notice to produce did not require the presence of any

particular employee of plaintiff's or even an employee with

direct knowledge of the insureds' claim involving defendant.

	The hearing was attended by counsel for both parties, an

adjuster employed by plaintiff, and by defendant.  Plaintiff's

insureds were not present.  Plaintiff called defendant as an

adverse witness.  Defendant testified that he was involved in a

collision with the insured vehicle on May 3, 2001.  Defendant

stated that he was driving approximately 40 miles per hour and

that traffic was heavy.  He saw that traffic in front of him was

stopped and applied his vehicle's brakes, but his vehicle failed

to stop and collided with the rear of the insured vehicle.  After

the collision, he saw that there was damage to the insured vehicle's rear bumper, muffler, exhaust pipe, and shock

absorbers.  As a result of the accident, defendant was cited for

failure to maintain a safe distance, a charge to which he pled

guilty.

	Plaintiff then called its adjuster, Vali Michael Witz, who

testified that plaintiff paid for the damage to the insured

vehicle after the collision with defendant's vehicle.  She stated

that plaintiff inspected the damage and found no prior or

unrelated damage before commencing repairs.  On cross-

examination, Witz stated that she did not personally examine the

insured vehicle, that she had not inspected the vehicle prior to

the date of the accident, and that she had no knowledge of the

vehicle's condition prior to that date.  She also stated that

none of plaintiff's other employees would know the exact

condition of the vehicle before the collision.

	Defendant testified again on his own behalf and stated that

he had never seen the insured vehicle before he collided with it. 

Plaintiff also submitted evidence of vehicle damages through a

Supreme Court Rule 90(c) package (166 Ill. 2d R. 90(c)).

	The arbitration panel awarded $1,770.57 and costs in favor

of plaintiff and against defendant.  The award did not include a

finding of bad faith or a finding of noncompliance with Rule

237(b).

	Defendant moved to bar plaintiff from presenting testimony

or other evidence at trial and for summary judgment against

plaintiff because plaintiff failed to produce its insureds,

Matthew and Shari Spraker, or an adjuster with personal knowledge

of damages to the Sprakers' vehicle at the arbitration hearing,

and thus failed to participate in good faith and in a meaningful

manner.  Defendant pointed out that plaintiff brought no motion

pursuant to Rule 90(g) to excuse the appearance of its insureds

or to strike defendant's notice to produce.  Defendant also

argued that plaintiff failed to prove the element of proximate

cause in that plaintiff presented no evidence as to the condition

of the Sprakers' vehicle before the time of the accident. 

Plaintiff responded that it complied with Rule 237(b) by

producing its adjuster at the hearing and that Rule 237(b) did

not apply to the Sprakers since they were not parties to the

case.

	The circuit court granted defendant's motion to bar pursuant

to Rule 91(b) (145 Ill. 2d R. 91(b)) and entered summary judgment

for defendant, finding that the testimony of plaintiff's insureds

was essential to presenting good-faith evidence of the element of

proximate cause. The court also found that plaintiff did not

fully comply with defendant's Rule 237(b) notice to produce

because it did not present an employee with direct knowledge of proximate causation of the claimed damages nor did it secure the

presence of the insureds, as defendant had requested.

	On appeal, plaintiff contends that it did participate in the

arbitration proceedings in good faith and that the circuit court

abused its discretion in finding to the contrary.  Plaintiff

further contends that the sanctions levied by the circuit court

exceed the bounds of reason and that defendant's Rule 237(b)

notice to produce does not apply to plaintiff or plaintiff's

insureds.

ANALYSIS

	A circuit court's decision barring a party from presenting

evidence at trial and imposing sanctions is subject to an abuse

of discretion standard of review.  Pickering v. Owens-Corning Fiberglas Corp., 265 Ill. App. 3d 806, 820 (1994).  An abuse of discretion occurs when the court's ruling is arbitrary or exceeds

the bounds of reason.  Williams v. Dorsey, 273 Ill. App. 3d 893, 901 (1995).

	Rule 91(b) provides that parties to an arbitration must

participate in the proceedings in good faith and in a meaningful

manner.  145 Ill. 2d R. 91(b).  Failure by a party to do so may

result in sanctions as provided in Supreme Court Rule 219(c),

including barring the losing party from rejecting an award or

from presenting evidence or testimony at trial.  145 Ill. 2d R. 91(b); 166 Ill. 2d R. 219(c).  Parties to an arbitration must

subject the case to the same type of adversarial testing expected

at trial.  Failure to prepare or intentional disregard for the

arbitration process may result in a finding of bad faith.  A

party acts in bad faith when it demonstrates a deliberate and

pronounced disregard for the rules of the court.  Schmidt v. Joseph, 315 Ill. App. 3d 77, 83-85 (2000).  The burden is on the offending party to show that its noncompliance with the rules at

arbitration was reasonable or the result of extenuating

circumstances.  Kubian v. Labinksy, 178 Ill. App. 3d 191, 197 (1988).

	In support of its contention that it acted in good faith and

in a meaningful manner, plaintiff relies upon State Farm Insurance Co. v. Harmon, 335 Ill. App. 3d 687 (2002), for the proposition that a plaintiff in arbitration shows good faith and

participates in meaningful manner when plaintiff's counsel

appears, when an agent of the plaintiff corporation appears, when

the plaintiff presents evidence of damages via a Rule 90(c)

packet, when the plaintiff elicits testimony from the defendant

establishing liability, and when the arbitration panel makes no

finding that the plaintiff participated in the proceedings in bad

faith.  Plaintiff also contends that it did not fail to comply

with defendant's Rule 237(b) notice to produce because the notice did not apply to plaintiff's insureds.

	We believe that our holding in State Farm Mutual Insurance Co. v. Nasser, 337 Ill. App. 3d 362 (2003), is instructive.  In that case, as here, the circuit court granted the defendant's

motion to bar the plaintiff from presenting evidence at trial

because it determined that the plaintiff had not participated in

good faith when the plaintiff failed to produce its insured at

the arbitration hearing.  We vacated the circuit court's order,

holding that the plaintiff did not conduct itself in bad faith

when it appeared through counsel, presented a Rule 90(c) package,

and was not found to have participated in bad faith by the

arbitration panel.  We further held that Rule 237(b) did not

reach the insured because the insured was not a party to the

lawsuit, and that the proper means of securing the insured's

presence would have been to serve the insured with a subpoena. 

Finally, we stated that the defendant bore the responsibility for

any alleged insufficiency in adversarial testing by failing to

secure evidence in the appropriate manner.  Nasser, 337 Ill. App. 3d at 367-68; Harmon, 335 Ill. App. 3d at 692.

	In this case, plaintiff presented evidence of damages to the

insured vehicle through a Rule 90(c) package, appeared at the

arbitration hearing through counsel and through its adjuster, and

called defendant as an adverse witness to establish his negligence.  The arbitrators did not find that plaintiff failed

to participate in good faith or to comply with defendant's Rule

237(b) notice to produce.

	We note that plaintiff offered no explanation either in its

response to defendant's motion or in its brief that its failure

to produce the insureds at the arbitration hearing was reasonable

or due to extenuating circumstances, and that there is no

indication from the record that plaintiff made reasonable efforts

to procure the insureds as witnesses.  However, the insureds

should have been subpoenaed.  Nasser, 337 Ill. App. 3d 362.  In accordance with our holding in Nasser, we see no indication that plaintiff's conduct amounted to a deliberate or pronounced

disregard for the rules of arbitration.  Plaintiff substantially

complied with defendant's Rule 237(b) notice to produce when it

appeared through counsel and presented the testimony of its

adjustor.  Defendant bore the responsibility for securing the

presence of the insureds by means of subpoena.  Therefore, we

conclude that the trial court improperly sanctioned plaintiff for

failing to produce the Sprakers pursuant to Rule 237(b).

	We are aware of our recent decision in State Farm Mutual Insurance Co. v. Koscelnik, 342 Ill. App. 3d 808 (2003), in which we held that the plaintiff in a subrogation action could not

prove its claim of negligence by the defendant where neither the plaintiff's insured, the defendant, nor any other eyewitness

testified at the arbitration hearing as to who caused the

accident for which the plaintiff was seeking recovery.  In the

case before us, defendant made a similar contention in his motion

to bar, alleging that plaintiff failed to prove the proximate

cause of the damage to the insured vehicle when it failed to call

its insureds and the adjustor who personally handled the

insureds' claim.  Defendant argued that plaintiff's failure to

present evidence establishing that all of the repairs for which

plaintiff paid were necessitated by defendant's negligence

amounted to participation in bad faith and warranted the

sanctions imposed by the circuit court.  We disagree.

	We find the facts of Koscelnik and the case now before us distinguishable.  In Koscelnik, the plaintiff presented only its Rule 90(c) package and the testimony of one of its adjustors at

the arbitration hearing.  The parties contested liability. 

Neither the plaintiff's insureds nor the defendant testified. 

The arbitration panel entered an award for defendant, who

subsequently moved to bar plaintiff from rejecting the award. 

The circuit court granted the defendant's motion, finding that

the plaintiff had failed to participate in the arbitration

hearing in good faith.  We affirmed the circuit court's order,

stating that, without any evidence to establish liability on the part of the defendant, the plaintiff failed to meet the standard

of adversarial testing expected at trial.

	In this case, plaintiff examined defendant as an adverse

witness, and defendant admitted his liability for the accident

and that he noticed damage to the insured vehicle after his

vehicle collided with it.  Also, there was testimony by the

claims adjuster that the insured vehicle was examined and that

there was no preexisting damage.  Plaintiff did in fact present

evidence that defendant's negligence proximately caused the

damage to the insured vehicle, and the arbitrators found that

evidence persuasive in entering an award for plaintiff in the

amount sought.  Defendant speculates that if he had been allowed

to examine the insureds, he may have been able to refute

plaintiff's evidence of proximate cause.  Under these

circumstances, it was defendant's responsibility to subject the

element of proximate cause to adversarial testing, either by

issuing subpoenas to the Sprakers or specifying an agent of

plaintiff's with specific knowledge of the insured vehicle in his

Rule 237(b) notice to produce.

CONCLUSION

	For the foregoing reasons, we vacate the orders of the

circuit court that found plaintiff to have failed to participate

in the aribbitration proceedings in good faither, that imposed sanctions against plaintiff, and that entered judgment for

defendant and remanrationd this cause for further proceedings.

	Vacated and remanded.

	CAM PBLELL, P.J. and HARTIGAN, J., concur.P