Opinion ID: 2238845
Heading Depth: 2
Heading Rank: 1

Heading: Scope of Arbitrator's Award

Text: On appeal Rockford Products initially contends that the appellate court erred in holding that the arbitrator exceeded her powers in relying upon section 8.0 of the employment agreement. Rockford Products asserts that the issue before the arbitrator was whether Rauh's termination violated any section of the employment agreement. Further, since the parties' contract provides that any and all disputes arising out of the contract will be submitted to arbitration, the arbitrator was empowered to consider all issues before her and make an award which completely resolved the dispute before her. Sections 8.0 and 8.1 of the parties' agreement provide: 8.0 If Executive fails (for reasons other than disability, death, breach of this Agreement by Company, or other reason beyond his control) to perform any of his agreements herein provided and such failure continues for a period of 30 days after Company shall have notified him in writing of such failure, Company shall have the right to terminate this Agreement by written notice to Executive. 8.1 Company may also terminate this Agreement on 10 days' notice for cause, including without limitation disloyalty to Company, dishonesty in the conduct by Executive of his position hereunder, failure or refusal to perform any reasonable assignment properly given to him within the capacity in which he is employed hereunder, his violation of any agreement contained herein or his performance of any act which is contrary to the customary standards of conduct observed by employees of comparable status. It has long been the view of this court that arbitration awards should be construed, wherever possible, so as to uphold their validity. ( Merritt v. Merritt (1850), 11 Ill. 565.) Further, there is a presumption that the arbitrator did not exceed her authority. Darst v. Collier (1877), 86 Ill. 96; see also White Star Mining Co. v. Hultberg (1906), 220 Ill. 578, 77 N.E. 327. Section 12 of the Uniform Arbitration Act (Ill.Rev.Stat.1987, ch. 10, par. 112) sets forth the grounds for vacating an award. Section 12(a)(3), relied upon by Rauh, provides, in pertinent part: Vacating an award, (a) Upon application of a party, the court shall vacate an award where:       (3) The arbitrators exceeded their powers. Ill.Rev.Stat.1987, ch. 10, par. 112(a)(3). While the Act sets forth grounds and procedures for a court to vacate arbitrators' awards, the Act does not control which issues are subject to arbitration. Rather, the agreement of the parties governs which issues are subject to arbitration. ( Flood v. Country Mutual Insurance Co. (1968), 41 Ill.2d 91, 93, 242 N.E.2d 149.) The parties to an agreement are bound to arbitrate only those issues which by clear language and their intentions expressed in the language show they have agreed to arbitrate. ( Flood, 41 Ill.2d at 94, 242 N.E.2d 149; see Security Mutual Casualty Co. v. Harbor Insurance Co. (1979), 77 Ill.2d 446, 449-50, 34 Ill.Dec. 167, 397 N.E.2d 839.) That is, arbitration agreements cannot be extended by construction or implication. ( Flood, 41 Ill.2d at 94, 242 N.E.2d 149.) In construing instruments of submission to arbitration, courts always give as large a construction to them, as the words of the instrument and the intentions of the parties, drawn from their expressions, will warrant. Ross v. Watt (1854), 16 Ill. 99, 102; Security Mutual Casualty Co., 77 Ill.2d at 449-50, 34 Ill.Dec. 167, 397 N.E.2d 839. See also Podolsky v. Raskin (1920), 294 Ill. 443, 128 N.E. 534. Rockford Products points out that no agreed submission was presented to the arbitrator. However, the documents presented to the arbitrator indicate that consideration of section 8.0 of the agreement was properly before her. For example, Rauh's demand for arbitration states, This termination was without cause and violates the terms of the November 15, 1985, Employment Agreement. Further, Rauh's demand sought broad relief, including payment of salary and benefits, repurchase of his stock, cancellation of a covenant not to compete, attorney fees, and other relief pursuant to the Agreement. In addition, Rauh submitted an American Arbitration Association Demand for Arbitration form in which he did not cite specific sections of the employment agreement, but merely attached and incorporated his demand for arbitration. Finally, the arbitrator's statement of the issue was very broad: Was the termination of the employment of the Claimant by the Respondent a breach of the employment contract between them, and if so, what is the appropriate measure of damages? Rauh responds that the demand for arbitration made no mention of section 8.0 of the agreement and requested decision only of whether termination for cause was proper under section 8.1. Rauh also asserts that the minutes of the board meeting, submitted by Rockford Products, cite only section 8.1 of the agreement as the basis for termination. We find that the documents submitted by the parties and the parties' reliance on those documents at the hearing show their intent to submit for consideration the termination of Rauh pursuant not just to section 8.1, but to the agreement as a whole. First, the arbitration paragraph of the employment agreement provides, in pertinent part: 15.0 Any controversy or claim arising out of or relating to this Agreement or any alleged breach hereof shall, upon request by either party, be submitted to arbitration   . The award rendered by the arbitrator shall be conclusive and binding upon the parties. The arbitration provision is general, providing that all claims relating to a breach are subject to arbitration. This provision does not limit the issues submitted. In addition, Rauh's demand for arbitration fails to limit the arbitrator's consideration of the agreement only to section 8.1. The demand is drawn in 22 numbered paragraphs and describes in some detail the parties, background, the employment agreement, termination, and the prayer for relief. The demand cites nine particular sections of the employment agreement, in addition to sections 8.1 and 8.2 (regarding attorney fees). Thus the demand implies that Rauh intended that the arbitrator look to the agreement in its entirety to decide the issues before her. Further, as argued by Rockford Products, Rauh's demand seeks broad relief, and Rauh failed to limit the issue in his American Arbitration Association demand form to interpretation only of section 8.1. Additionally, extensive evidence was presented by the parties regarding the circumstances surrounding Rauh's employment history and termination. Sections 8.0 and 8.1 were the only sections of the parties' agreement regarding grounds for termination. It cannot be fairly said that the evidence presented was so narrowly tailored as to apply only to application of section 8.1 of the agreement, to the exclusion of section 8.0. Under the circumstances of the instant case, including the written submissions of the parties and the scope of evidence presented at the arbitration hearing, we find that the arbitrator did not exceed her powers in considering both sections 8.0 and 8.1 of the parties' agreement and determining the question of whether Rauh's termination violated section 8.0.