Court Opinion

ID: 9903807
Source: CourtListenerOpinion
Date Created: 2023-11-27 16:04:59.72072+00
Date Added: 2024-06-11T09:22:48.902721
License: Public Domain

2023 IL App (1st) 221804
                                     No. 1-22-1804

                                                             FIRST DIVISION
                                                        ____November 27, 2023
____________________________________________________________________________

                                   IN THE
                       APPELLATE COURT OF ILLINOIS
                          FIRST JUDICIAL DISTRICT
____________________________________________________________________________

OVERLAND BOND & INVESTMENT                         )     Appeal from the Circuit Court
CORPORATION,                                       )     of Cook County.
                                                   )
                                                   )
      Plaintiff-Appellant,                         )
                                                   )     Nos. 21-M1-108114 and 21-M1-
v.                                                 )     108128 (Consolidated)
                                                   )
TRACEY CALHOUN,                                    )
                                                   )
      Defendant-Appellee.                          )         The Honorable
                                                   )         John A. Simon,
________________________________________           )         Judge Presiding.
OVERLAND BOND & INVESTMENT                         )
CORPORATION,                                       )
                                                   )
                                                   )
      Plaintiff-Appellant,                         )
                                                   )
v.                                                 )
                                                   )
VENANCIO J. OROZCO, JR.,                           )
                                                   )
      Defendant-Appellee.                          )

____________________________________________________________________________

      JUSTICE PUCINSKI delivered the judgment of the court, with opinion.
      Presiding Justice Fitzgerald Smith and Justice Lavin concurred in the judgment and
      opinion.
     1-22-1804

                                                OPINION

¶1          In this interlocutory appeal under Illinois Supreme Court Rule 307(a)(1) (eff. Nov. 1,

     2017), plaintiff-appellant Overland Bond & Investment Corp. (Overland) appeals from the circuit

     court order denying its motion to compel arbitration with respect to the counterclaims asserted

     against it by defendants-appellees Tracey Calhoun and Venancio J. Orozco, Jr. (defendants). For

     the following reasons, we agree with the trial court that Overland exercised its contractual choice

     to litigate the relevant disputes against defendants and that its choice to litigate extends to

     defendants’ counterclaims. Thus, we affirm.

¶2                                          I. BACKGROUND

¶3          Although this interlocutory appeal centers on interpretation of an arbitration provision, the

     underlying lawsuits arise from defendants’ alleged default of their payment obligations under

     automobile sales contracts. Defendants Calhoun and Orozco entered into separate retail installment

     contracts for the purchase of automobiles with Car Credit Center Corp. (Car Credit), an affiliate

     of Overland. Both contracts were subsequently assigned to Overland.

¶4          Relevant to this appeal, both contracts contained an identical arbitration provision that

     consisted of nine separate enumerated sections. Section 1 provided that by entering into the

     contract, the automobile buyer “agree[s] to all Sections of this Arbitration Provision.” Section 2

     set forth the scope of the arbitration provision as follows:

                    “SECTION 2. MATTERS SUBJECT TO ARBITRATION. Any

                    and all arbitrable claims and counterclaims, except as provided

                    below in Section 3 of this Arbitration Provision, relating to any

                    aspect of this Contract or any relationship arising out of this

                                                      -2-
     1-22-1804

                       Contract (including, to the full extent permitted by law, relationships

                       with third-parties who are not signatories to this Contract or

                       Arbitration Provision), shall be resolved by final and binding

                       arbitration.”

¶5          In turn, section 3 provided:

                       “SECTION 3. EXCLUSIONS AND LIMITATIONS. Seller [Car

                       Credit] and its assignee [Overland] reserve under this Arbitration

                       Provision their right to choose between arbitration and other legal or

                       equitable proceedings (such as an action commenced in a court of

                       law) for the resolution of their disputes arising out of this Contract

                       and buyer’s default thereunder, including collection of any amounts

                       due thereunder. In addition, to the extent permitted by law, Buyer

                       may not be able to participate as either a representative or member

                       of a class of claimants, and there is expressly no authority for any

                       claims or counterclaims to be arbitrated on a class action basis.”

¶6                     A. Overland Sues Defendants and Defendants File Counterclaims

¶7          On April 19, 2021, Overland filed two complaints initiating separate lawsuits against

     Calhoun and Orozco for failing to make payments due under their contracts. In those complaints,

     Overland pleaded that it had “performed all of the conditions and duties on [its] part” and that

     defendants breached the contracts through nonpayment. Overland sought judgments against

     defendants in the amount of unpaid balances due under the contracts, plus reasonable attorney’s

     fees and costs.

                                                        -3-
     1-22-1804

¶8           Calhoun filed her answer, affirmative defense, and counterclaims on November 3, 2021.

     Orozco filed his answer, affirmative defenses, and counterclaims on March 22, 2022. In these

     pleadings, both Calhoun and Orozco asserted that Overland used a starter interrupter device, also

     known as a “kill switch,” to remotely disable the vehicles they purchased. They alleged that by

     doing so, Overland unlawfully constructively repossessed defendants’ vehicles. Both Calhoun and

     Orozco pleaded as an affirmative defense that Overland’s use of a kill switch violated section 9-

     610 of the Uniform Commercial Code (UCC) (810 ILCS 5/9-610 (West 2022)), insofar as it

     requires a secured party to sell or dispose of collateral in a “commercially reasonable” manner

     after default. 1 Both Calhoun and Orozco also pleaded a counterclaim premised on this violation of

     the UCC, in conjunction with the Motor Vehicle Retail Installment Sales Act (815 ILCS 375/1

     et seq. (West 2022)). 2 Orozco additionally asserted counterclaims based on the Consumer Fraud

     and Deceptive Business Practices Act (815 ILCS 505/1 et seq. (West 2022)).

¶9           In July 2022, defendants (who were represented by the same counsel) jointly filed a

     “Motion for Leave to Consolidate Cases, File an Amended Answer and Transfer Cases.” In that

     motion, defendants sought (1) leave to consolidate their cases, (2) leave to file a single amended

     answer asserting class action counterclaims against both Overland and Car Credit, and (3) transfer

     of the action to the Chancery Division. In that motion, defendants claimed they discovered that

     Overland regularly used kill switches to disable their customers’ vehicles “without making any

             1
               Under section 9-610 of the UCC, “[a]fter default, a secured party may sell, lease, license, or
     otherwise dispose of any or all of the collateral in its present condition or following any commercially
     reasonable preparation or processing.” 810 ILCS 5/9-610(a) (West 2022). “Every aspect of a disposition
     of collateral *** must be commercially reasonable.” Id. § 9-610(b).
             2
               The Motor Vehicle Retail Installment Sales Act provides: “Unless otherwise limited by this Act,
     the parties shall have the rights and remedies provided in Article 9 of the Uniform Commercial Code with
     respect to default and disposition and redemption of collateral.” 815 ILCS 375/20 (West 2022).
                                                        -4-
       1-22-1804

       effort to physically retrieve” the vehicles. They further stated that their investigation revealed that

       Car Credit “knew of and participated in the illegal use of the kill switch devices.”

¶ 10          Defendants’ motion attached a proposed consolidated answer setting forth affirmative

       defenses and class action counterclaims against Overland and Car Credit. In those counterclaims,

       defendants sought to represent Illinois consumers who bought vehicles with kill switches from Car

       Credit under retail installment contracts assigned to Overland. Defendants alleged that when

       consumers fell behind on their car payments, Car Credit and Overland unlawfully used kill

       switches to disable vehicles for months or years, allowing the vehicles to deteriorate and lose value.

       According to defendants, Overland’s practice was to file suit against consumers for the entire

       amounts due under the contract after “rendering the collateral useless” and failing to mitigate

       damages through timely repossession and resale. The proposed class action counterclaims included

       four counts alleging that Car Credit and Overland’s use of kill switches constituted unlawful

       repossession and an unfair business practice, violated section 9-610 of the UCC because it was not

       a commercially reasonable disposition of collateral, and violated the Consumer Fraud and

       Deceptive Business Practices Act.

¶ 11          The record reflects that the trial court granted defendants’ request to consolidate their cases

       before deciding the remainder of the motion.

¶ 12                  B. Overland’s Motion to Compel Arbitration of the Counterclaims

¶ 13          On July 22, 2022 (three days after defendants’ motion for leave to file the amended

       pleading with class action counterclaims), Overland filed a “Motion to Dismiss and Compel

       Arbitration or to Stay Proceedings Pending Arbitration.” Relying on the language of the arbitration

       provision and the Uniform Arbitration Act (710 ILCS 5/1 et seq. (West 2022)), Overland asked

       the court to compel defendants to proceed on their counterclaims in arbitration or, alternatively, to

                                                        -5-
       1-22-1804

       stay all proceeding in the circuit court pending resolution of their counterclaims through

       arbitration.

¶ 14           Defendants’ brief in opposition to the motion first argued that, by choosing to sue them in

       court, Overland “expressly waived” any right to resolve the counterclaims through arbitration.

       Defendants argued that under section 3 of the arbitration provision, Overland “had the option to

       arbitrate but forewent that choice in favor [of] resolving its claims in court.” They argued that

       Overland should not be able to “forum shop just because its dispute now includes related

       counterclaims.” Defendants maintained that, by filing suit, Overland waived “not only its right to

       arbitrate its affirmative claim[s]” but also defendants’ counterclaims, which “relate to the same

       contract and arise out of the same underlying facts.”

¶ 15           Defendants otherwise argued that Overland’s “dilatory conduct” waived any right to

       arbitrate, noting Overland failed to request arbitration until 16 months after filing suit. They also

       claimed that Overland had ignored court-imposed deadlines to respond to their counterclaims. 3

       Defendants further argued that Overland never previously indicated any intent to invoke the

       arbitration provision and that they were prejudiced because they had “prepared for months” for

       litigation. Separate from their waiver argument, defendants asserted that the arbitration provision

       was procedurally and substantively unconscionable, for reasons not germane to the instant

       interlocutory appeal.

¶ 16           In a reply brief, Overland denied any waiver, asserting it had not acted inconsistently with

       its right to arbitrate. Overland argued that, under section 3, it had the option to decide between

       litigation or arbitration, both when it initially sued defendants for nonpayment, and again when

               3
                Defendants claimed that Overland failed to comply with orders from November 4, 2021, April
       22, 2022, and June 25, 2022 directing it to respond to Calhoun’s counterclaims, as well as an order
       directing it to respond to Orozco’s counterclaims by June 15, 2022.
                                                        -6-
       1-22-1804

       defendants filed counterclaims. Overland otherwise asserted that the counterclaims were subject

       to arbitration because they were unrelated to the collection action, citing Liberty Chevrolet, Inc. v.

       Rainey, 339 Ill. App. 3d. 949 (2003). Overland argued that the counterclaims regarding the use of

       kill switches “drastically altered” the nature of the litigation and that they “could not have been

       foreseen” by Overland. Overland otherwise maintained it had not engaged in conduct waiving the

       right to arbitration, pointing out that it did not answer the counterclaims or engage in discovery.

¶ 17               C. The Trial Court Denies Overland’s Motion to Compel Arbitration

¶ 18          On November 3, 2022, the trial court heard argument and denied Overland’s motion to

       compel arbitration of defendants’ counterclaims. The trial court reasoned that under section 3,

       Overland had a single choice to either arbitrate or litigate its dispute with defendants, and that its

       choice to litigate its affirmative claims also applied to defendants’ counterclaims:

                      “[Section 3] says that the seller and the [assignee] reserve *** their

                      right to choose between arbitration and other legal or equitable

                      proceedings. So the clause indicates a choice between the two, and

                      I believe that by choosing the litigation that *** Overland Bond

                      exercised its right to choose for litigation. The concept here that

                      Overland Bond then say[s] but we only chose to do that for what we

                      filed and not for the matters that were raised in the counterclaim ***

                      would be understandable, but the language of the clause says ***

                      for the resolution of their disputes arising out of this contract. So the

                      choice is for the resolution of disputes that arise out of the contract

                      and the buyers’ default thereunder. It’s for everything.”

                                                        -7-
       1-22-1804

¶ 19            The trial court further noted that it was not finding that Overland had waived the right to

       arbitration. Rather, the court explained that Overland had a choice to exercise a “contractual option

       *** and it was exercised here by the lawsuit in the court and that exercised that option under the

       arbitration clause *** for the entire dispute between the parties.” The court found that section 3

       did not give Overland the option to sue first and “then elect to arbitrate other parts of the disputes,”

       that is, the “splitting of claims” in the dispute. The court noted that it did not need to reach any

       argument as to whether the arbitration provision was unconscionable because it found that

       Overland “exercised its choice in this case and it chose litigation.”

¶ 20            After the court issued its ruling, Overland’s counsel informed the court of its intent to

       appeal. On December 2, 2022, Overland filed a notice of interlocutory appeal pursuant to Rule

       307(a)(1) from denial of its motion to compel arbitration. Ill. S. Ct. R. 307(a)(1) (eff. Nov. 1,

       2017).

¶ 21                                              II. ANALYSIS

¶ 22            On appeal from the denial of its motion to compel arbitration, Overland contends that the

       trial court erred in construing the arbitration provision to mean that, by “choosing to file suit to

       collect balances due ***, Overland agreed to resolve all disputes between the parties through

       litigation.” According to Overland, although section 3 of the arbitration provision permitted it to

       sue defendants for amounts due under the contracts, defendants’ counterclaims remained subject

       to arbitration. That is, Overland maintains that defendants’ counterclaims are arbitrable under

       Section 2, regardless of Overland’s prior choice to litigate its affirmative claims against defendants

       pursuant to section 3. Overland urges that this interpretation follows from the “clear and

       unambiguous” language of the arbitration provision.

                                                         -8-
       1-22-1804

¶ 23           Alternatively, Overland contends that regardless of its contractual right to “choose to

       litigate its [payment] default claims against defendants,” it still had the right to demand arbitration

       of the counterclaims because they were unrelated to Overland’s affirmative claims for

       nonpayment. Overland avers that when it filed “simple collection suits” against defendants, it had

       “no idea” that defendants would file “unrelated counterclaims seeking class action status” alleging

       that Overland unlawfully disabled the vehicles with kill switches. Overland contends that it had

       the right to seek arbitration of such counterclaims because they “drastically altered” the nature of

       the litigation.

¶ 24           Defendants respond that the trial court correctly determined that section 3 of the arbitration

       provision allowed Overland a single chance to choose a forum for its “disputes arising out of this

       Contract,” including with respect to any counterclaims. By electing to sue in court, defendants

       contend, Overland exercised that choice in favor of litigation. Defendants suggest that the contract

       could have been more narrowly worded to allow Overland to choose between litigation or

       arbitration for each set of “claims” or “causes of action,” but the drafter of the contract did not

       make this distinction.

¶ 25           In a separate but related argument, defendants claim that Overland waived any right to

       arbitrate by electing to litigate its claims against defendants. Defendants contend that when

       Overland sued them, it chose to submit arbitrable issues to the circuit court, constituting waiver.

       Defendants otherwise suggest we should find waiver due to Overland’s “dilatory conduct” in

       waiting until July 2022 to seek arbitration. Defendants also dispute Overland’s suggestion that the

       counterclaims are unrelated to Overland’s initial claims, arguing that they relate to the same

       contracts and arise out of the same underlying facts.

                                                        -9-
       1-22-1804

¶ 26          For the following reasons, we agree with the trial court that, under the arbitration provision

       at issue, Overland had a choice to select litigation or arbitration for any given “dispute” with

       defendants. When it sued defendants, Overland invoked its contractual right to litigate its disputes

       with defendants, which encompassed both Overland’s affirmative claims and defendants’

       counterclaims. The contractual language could have, but did not, specify that Overland retained

       the right to decide whether any counterclaims in a given “dispute” would be arbitrated. Having

       invoked its contractual right to select litigation for the entire dispute at issue, Overland could not

       change course once counterclaims were filed. Thus, the trial court correctly denied Overland’s

       motion to compel arbitration of the counterclaims.

¶ 27                                         A. Standard of Review

¶ 28          De novo review applies to an order denying a motion to compel arbitration that was made

       without an evidentiary hearing and which concerns only legal issues. Guarantee Trust Life

       Insurance Co. v. Platinum Supplemental Insurance, Inc., 2016 IL App (1st) 161612, ¶ 25. Further,

       “the scope of [an] arbitration provision presents a question of contract interpretation,” which is

       reviewed de novo. Fiala v. Bickford Senior Living Group, LLC, 2015 IL App (2d) 141160, ¶ 17.

       Here, no evidentiary hearing was held, and the circuit court’s decision was based solely on legal

       analysis and contractual interpretation. Thus, de novo review applies.

¶ 29          “A motion to compel raises a sole and narrow issue—whether there is an agreement

       between the parties to arbitrate the dispute at issue. [Citation.]” Guarantee Trust Life Insurance

       Co., 2016 IL App (1st) 161612, ¶ 26. Our court has held that a three-pronged approach applies:

                      “(1) if it is clear that the dispute falls within the scope of the arbitration clause or

                      agreement, the court must compel arbitration; (2) if it is clear that the dispute does

                      not fall within the arbitration clause or agreement, the court must deny the motion

                                                       -10-
       1-22-1804

                       to compel; and (3) if it unclear or ambiguous whether the dispute falls within the

                       scope of the arbitration clause, the matter should be referred to the arbitrator to

                       deicide arbitrability.” Id. (citing Donaldson, Lufkin & Jenrette Futures, Inc. v. Barr,

                       124 Ill. 2d 435, 443-50 (1988)).

¶ 30           “While public policy favors arbitration as a method of dispute resolution, an agreement to

       arbitrate is nevertheless a matter of contract.” Clanton v. Oakbrook Healthcare Centre, Ltd., 2023

       IL 129067, ¶ 29. “The terms of an agreement to arbitrate are determined using ordinary contract

       principles.” Id. ¶ 30.

¶ 31           The primary objective in interpreting any contract is to give effect to the intent of the

       parties. Gallagher v. Lenart, 226 Ill. 2d 208, 232 (2007). The best indication of the parties’ intent

       is the contractual language, given its plain and ordinary meaning. Id. at 233. Thus, “[t]he first place

       a court looks to determine the parties’ intent is the language of the contract, considering the whole

       contract, not just a provision in isolation.” Clanton, 2023 IL 129067, ¶ 30. That is, “a contract must

       be construed as a whole, viewing each part in light of the others.” Gallagher, 226 Ill. 2d at 233.

       Arbitration agreements “ ‘cannot be extended by construction or implication.’ ” Clanton, 2023 IL

       129067, ¶ 29 (quoting Rauh v. Rockford Products Corp., 143 Ill. 2d 377, 387 (1991)). In sum, 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.’ ” Id. (quoting Rauh,

       143 Ill. 2d at 387).

¶ 32           With these principles in mind, we turn to the contract provisions at issue. Although the

       arbitration provision contains nine separate sections, this appeal centers on interpretation of

       Sections 2 and 3. Section 2 broadly sets forth the scope of the matters subject to arbitration, except

       for matters encompassed by section 3.

                                                        -11-
       1-22-1804

¶ 33           Section 2 provides:

                       “SECTION 2. MATTERS SUBJECT TO ARBITRATION. Any

                       and all arbitrable claims and counterclaims, except as provided

                       below in Section 3 of this Arbitration Provision, relating to any

                       aspect of this Contract or any relationship arising out of this

                       Contract *** shall be resolved by final and binding arbitration.”

¶ 34           Section 2 thus uses broad language to mandate arbitration of “any and all” claims and

       counterclaims “relating to any aspect of” the contracts, except as provided in section 3. In other

       words, any “claims and counterclaims” relating to the contracts will be subject to arbitration,

       unless such claims or counterclaim fall within the scope of section 3.

¶ 35           There is apparently no question that, but for the existence of section 3, both Overland’s

       initial claims and defendants’ counterclaims would be subject to arbitration under the broad scope

       of section 2. Thus, the appeal concerns application of the exception in section 3. Notably, whereas

       section 2 explicitly refers to “claims and counterclaims,” section 3 refers to “disputes.” Section 3

       states, in relevant part:

                       “SECTION 3. EXCLUSIONS AND LIMITATIONS. Seller [Car

                       Credit] and its assignee [Overland] reserve under this Arbitration

                       Provision their right to choose between arbitration and other legal or

                       equitable proceedings (such as an action commenced in a court of

                       law) for the resolution of their disputes arising out of this Contract

                       and buyer’s default thereunder, including collection of any amounts

                       due thereunder.” (Emphasis added).

¶ 36           B. Section 3 Gave Overland A Single Chance to Litigate or Arbitrate Any “Dispute”

                                                       -12-
       1-22-1804

¶ 37          In denying the motion to compel arbitration, the trial court reasoned that section 3 afforded

       Overland a single chance to decide whether to litigate or arbitrate its claims against defendants.

       The trial court concluded that, since Overland had elected to sue defendants in court, it had made

       its decision to litigate “everything”, i.e., any claims and counterclaims in the lawsuit. That is, the

       trial court did not interpret section 3 to give Overland the right to invoke the arbitration provision

       with respect to counterclaims in the same litigation that Overland initiated. Insofar as section 3

       gave Overland the choice to arbitrate or litigate “their disputes”, the trial court apparently

       interpreted “disputes” to encompass not only Overland’s affirmative claims for nonpayment

       against defendants, but also the defendants’ counterclaims later raised in the same action.

¶ 38          On appeal, Overland primarily argues that the trial court’s reasoning is incorrect because

       “[u]nder Section 2, all counterclaims are subject to arbitration regardless of any choices made by

       Overland under Section 3.” Overland thus urges that its decision under section 3 to exercise its

       right to litigate its affirmative claims against defendants had no effect on the arbitrability of

       defendants’ counterclaims asserted in the very same lawsuit. Overland asserts that there is nothing

       in the arbitration provision to suggest that, once it chose to sue defendants in court, it was bound

       to litigate “the entire dispute between the parties.”

¶ 39          Notably, Overland does not offer an explanation as to the precise meaning of the term

       “disputes,” as used in section 3. Overland’s argument implicitly assumes that, insofar as section 3

       reserves Overland and Car Center’s right to choose arbitration for resolution of “their disputes”

       arising out of a car buyer’s default, that right applies only to affirmative claims for non-payment.

       That is, Overland suggests that defendants’ counterclaims necessarily fall outside the scope of the

       “disputes” referenced in section 3. In other words, Overland’s position is that defendants’

       counterclaims are not within the same “dispute” as its affirmative claims.

                                                        -13-
       1-22-1804

¶ 40          We are not persuaded by Overland’s argument, insofar as it invites us to read into the

       arbitration provision an intent to apply a narrower meaning of a “dispute” than is commonly

       understood. First, we note that the contract does not purport to define the scope of a “dispute”, i.e.,

       whether a “dispute” includes counterclaims. Moreover, as defendants point out, section 3 certainly

       could have been drafted more carefully to indicate the intent that Overland now ascribes to it. That

       is, section 3 could have been worded to explicitly state that Car Credit and Overland’s option to

       litigate applied only to their affirmative claims for relief arising from non-payment, but that its

       choice to litigate would not extend to any counterclaims asserted in response. Notably, section 2

       of the same arbitration provision specifically refers to both “claims and counterclaims.” Clearly,

       the drafter of section 3 could have, but chose not to, delineate whether both “claims” and

       “counterclaims” are included in a “dispute.”

¶ 41          Overland’s position is that, insofar as section 3 allows Car Credit and Overland a choice to

       litigate “their disputes,” a “dispute” is limited to Overland’s affirmative claims for nonpayment,

       but the “dispute” does not include counterclaims in the same lawsuit. Yet the plain meaning of the

       term “dispute” does not support the limited interpretation that Overland ascribes to it.

¶ 42          Simply put, the term “dispute” is not generally understood to be limited to the claims of

       one side. Rather, a “dispute” ordinarily encompasses the entire controversy, including the claims

       of all parties. Merriam-Webster’s primary definition of the noun “dispute” is a “verbal

       controversy: DEBATE,” and the secondary definition is a “QUARREL.” Merriam Webster Online

       Dictionary, https://www.merriam-webster.com/dictionary/dispute (last visited Nov. 13, 2023)

       [https://perma.cc/4BJM-R458]. Legal resources similarly indicate that a dispute refers to an entire

       controversy,    not   just   the   assertions   of      one   party.   See   Cornell   Law     School,

       https://www.law.cornell.edu/wex/dispute (last visited Nov. 13, 2023) [https://perma.cc/6K3J-

                                                        -14-
       1-22-1804

       TVZ3] (“A dispute is a disagreement, argument, or controversy—often one that gives rise to a

       legal proceeding (such as arbitration, mediation, or a lawsuit).”); Law Dictionary,

       https://thelawdictionary.org/dispute/ (last visited Nov. 13, 2023) [https://perma.cc/ZHU7-XHLA]

       (defining “dispute” to mean “[a] conflict or controversy; a conflict of claims or rights; an assertion

       of a right, claim, or demand on one side, met by contrary claims or allegations on the other”).

¶ 43          Notably, Overland does not cite any dictionary definition, case law, or other authority to

       suggest that “dispute” should be understood to refer to the claim or assertion of only one of the

       parties, rather than including conflicting claims and counterclaims of all parties. We conclude that

       Overland’s interpretation conflicts with the plain and commonly understood meaning of a

       “dispute.”

¶ 44          We acknowledge, as Overland emphasized in its reply brief and at oral argument, that

       section 3 uses the phrase “their disputes,” with the possessive pronoun “their” referring to

       Overland and Car Credit. Overland urges that because section 3 says Overland and Car Credit may

       choose litigation for “their disputes” rather than “all disputes”, it cannot be read to extend to

       defendants’ counterclaims. The problem with Overland’s argument is that it assumes that the term

       “disputes” is interchangeable with “claims.” As discussed, the plain meaning of “dispute” extends

       beyond the claims of a single party and encompasses the whole controversy. We must apply the

       plain meaning of the provision, even if Overland suggests that the intended meaning was

       otherwise. See St. Paul Mercury Insurance v. Aargus Security Systems, Inc., 2013 IL App (1st)

       120784, ¶ 59 (the best indication of the parties’ intent is the “plain and ordinary meaning” of the

       contract language, and we will not “alter, change or modify existing terms” of a contract (internal

       quotation marks omitted)). Applying the plain meaning of the term “their disputes,” we find the

                                                       -15-
       1-22-1804

       phrase simply refers to the controversies between Overland or Car Credit and their customers,

       including both claims and any counterclaims.

¶ 45           Again, we note that the drafters of section 3 could have easily specified that Overland and

       Car Credit reserved the right to litigate their “claims” or their “causes of action” against buyers for

       nonpayment, rather than using the broader term “their disputes.” Indeed, Overland cited a case

       involving such a provision in its argument before our court. See Tortoriello v. Gerald Nissan of

       North Aurora, Inc., 379 Ill. App. 3d 214, 236-37 (2008) (rejecting challenge to arbitration clause

       specifically exempting from arbitration “a cause of action or claim by Dealer to recover full

       payment of the purchase price” or claim involving the breach of any retail installment contract).

       Here, the drafters of the arbitration provision could have included language specifically excluding

       purchasers’ “counterclaims” from the scope of section 3. 4 Had they done so, then Overland would

       have a much stronger argument that its election to litigate its affirmative claims for nonpayment

       had no effect on the arbitrability of defendants’ counterclaims. Instead, the drafters of section 3—

       despite recognizing the distinction between “claims” and “counterclaims” in section 2—specified

       in section 3 that Overland could elect to litigate or arbitrate “disputes” arising from nonpayment.

       We think this indicates a recognition that the same “dispute” includes affirmative claims as well

       as responding counterclaims.

¶ 46           Applying this reasoning, we reach the same conclusion as the trial court. That is, section 3

       reserved the right of Car Credit and Overland to choose to litigate any given “dispute” they had

       with a buyer relating to the buyer’s payment default. Overland made that choice for its disputes

               4
                We do not purport to decide whether such a clause would be legally enforceable. Rather, we
       point out that the drafters could have easily used different language, had they intended the more limited
       meaning urged by Overland in this appeal.

                                                          -16-
       1-22-1804

       with defendants when it sued them in the circuit court. When defendants asserted counterclaims,

       those counterclaims were part of the same “disputes” that Overland initiated and elected to litigate.

¶ 47           We recognize that, in its reply brief and at oral argument, Overland referenced case law for

       the proposition that a counterclaim functions as an independent complaint. See Liberty Chevrolet,

       339 Ill. App. 3d at 953 (“[L]ike a complaint, a counterclaim is a separate, independent cause of

       action.”); Household Finance Corp. v. Buber, 351 Ill. App. 3d 550, 554 (2004) (recognizing that

       “the counterclaim is itself a complaint”). Yet the mere fact that a counterclaim is an independent

       pleading does not mean that it constitutes a different dispute from that initiated by the plaintiff’s

       complaint. Clearly, the same dispute may encompass opposing causes of action that are pleaded

       in the same action. Indeed, our supreme court has “defined a counterclaim as an independent cause

       of action in favor of the defendant against the plaintiff, which the defendant is authorized to litigate

       in opposition to the plaintiff’s claim in the same action.” (Emphasis added and internal quotation

       marks omitted.) Carmichael v. Union Pacific R.R. Co., 2019 IL 123853, ¶ 26. Simply put,

       opposing pleadings in the same action are part of the same overall dispute. This is true, regardless

       of whether Overland anticipated the precise nature of the counterclaims.

¶ 48           Moreover, we briefly note our disagreement with Overland’s suggestions, in briefing and

       at oral argument, that the counterclaims concerning the use of kill switches should not be arbitrable

       because they are irrelevant to Overland’s affirmative claims for failure to pay amounts due under

       the contracts. This is disingenuous, insofar as both the claims and counterclaims clearly arise from

       the same contracts, and the counterclaims stem directly from Overland’s conduct in response to

       defendants’ payment default under those contracts.

¶ 49           The counterclaims clearly allege (and Overland has not denied) that Overland used kill

       switches to disable the vehicles purchased by defendants, after defendants failed to make

                                                        -17-
       1-22-1804

       installment payments due on the contracts at issue. The legal theory underlying the counterclaims

       is clearly relevant to the affirmative claims of nonpayment, insofar as they allege that Overland’s

       use of “kill switches” constituted an unlawful remedy to defendants’ payment default. As stated in

       defendants’ pleadings, the Motor Vehicle Retail Installment Sales Act provides that the UCC

       governs a seller’s remedies after a default under a retail installment transaction. 815 ILCS 375/20

       (West 2022) (“Unless otherwise limited by this Act, the parties shall have the rights and remedies

       provided in Article 9 of the Uniform Commercial Code with respect to default and disposition and

       redemption of collateral.”).

¶ 50           In turn, section 9-610 of the UCC provides that “[a]fter default, a secured party may sell

       *** or otherwise dispose of any or all of the collateral in its present condition or following any

       commercially reasonable preparation or processing.” 810 ILCS 5/9-610(a) (West 2022). “Every

       aspect of a disposition of collateral *** must be commercially reasonable.” Id. § 9-610(b). While

       a debtor is generally “liable for any deficiency that results” following the sale of the collateral, this

       is true only if the sale was commercially reasonable. See General Motors Acceptance Corp. v.

       Stoval, 374 Ill. App. 3d 1064, 1074 (2007) (absent an agreement to the contrary, “the only defenses

       available to a debtor against a deficiency judgment are lack of reasonable notice of the sale and

       commercial unreasonableness of the sale” (internal quotation marks omitted)).

¶ 51           Defendants have raised affirmative defenses and counterclaims under the theory that use

       of a kill switch to deactivate a vehicle is a commercially unreasonable manner of disposition, in

       violation of section 9-610 of the UCC. Both Calhoun and Orozco pleaded violation of section 9-

       610’s commercial reasonableness requirement as an affirmative defense, as well as the basis for

       counterclaims. Likewise, their proposed consolidated amended pleading includes, as affirmative

       defenses, that Overland’s failure to comply with section 9-610 constitutes a “complete defense” to

                                                         -18-
       1-22-1804

       Overland’s claims for amounts due. And their proposed class action counterclaims are premised

       on the same conduct. In short, there is a clear relationship between the affirmative claims in

       Overland’s complaints and the defendants’ counterclaims. Overland initiated these actions by

       alleging defendants’ nonpayment under their contracts. The counterclaims allege that Overland

       unlawfully used kill switches as a remedy for the very same alleged breaches. Overland does not

       persuade us that the counterclaims are unrelated.

¶ 52          As the trial court stated, Overland exercised its choice under section 3 to litigate its disputes

       with defendants. Overland cannot escape the consequences of that decision merely because it did

       not expect the precise nature of the counterclaims pleaded in the disputes that it initiated. We find

       that, pursuant to section 3 of the arbitration provision, Overland elected to litigate its disputes with

       defendants relating to their alleged failure to pay amounts due under the contracts. That choice

       extended to the counterclaims, which were part of the same disputes. Thus, the counterclaims fall

       within section 3’s exception to the arbitration provision.

¶ 53          We note that, since we conclude that Overland’s decision to litigate its disputes against

       defendants encompassed defendants’ counterclaims, we need not discuss the merits of the parties’

       contentions as to whether Overland’s conduct waived its contractual right to arbitrate the

       counterclaims. See Koehler v. The Packer Group, Inc., 2016 IL App (1st) 142767, ¶ 22 (“Although

       disfavored, waiver will be found where a party conducts itself in a manner inconsistent with the

       arbitration clause, thereby demonstrating an abandonment of that right.” (Internal quotation marks

       omitted.)). Rather, as the trial court concluded, we simply find that Overland exercised its

       contractual right to litigate its disputes with defendants under section 3 and that choice also applied

       to the counterclaims in the same disputes.

                                                        -19-
       1-22-1804

¶ 54          C. The Authority Cited by Overland Regarding the Nature of the Counterclaims Concerns

       Waiver and Is Irrelevant to Its Choice to Litigate the Instant Disputes

¶ 55          We turn to Overland’s remaining contention that, even if it “did not have a contractual right

       to choose to litigate” its claims against defendants under section 3, it “still had the right to demand

       arbitration of defendants’ counterclaims.” Overland cites precedent from the Second District for

       the proposition that “unrelated matters raised for the first time in a counterclaim are eligible for

       arbitration,” citing Liberty Chevrolet, 339 Ill. App. 3d 949, and Household Finance Corp., 351 Ill.

       App. 3d 550. The cited precedent is unavailing.

¶ 56          In Liberty Chevrolet, the plaintiff automobile dealer and the defendant purchaser entered

       into a contract that stated that “[a]ll disputes and controversies of every kind” arising out of the

       purchase “will be at the option of either party submitted to arbitration.” (Internal quotation marks

       omitted.) 339 Ill. App. at 951. The contract further specified that either party could demand

       arbitration “not more than 30 days following being served with a complaint in any litigation.”

       (Internal quotation marks omitted.) Id.

¶ 57          After the dealer filed a complaint for replevin against the purchaser defendant, the

       purchaser filed a counterclaim alleging that the dealer violated various statutes, including the

       Consumer Fraud and Deceptive Business Practices Act, when it induced defendant to sign the

       purchase contract and corresponding financing agreement. Id. at 950-51. The dealer then moved

       to compel arbitration of the counterclaim. Id. at 951. In the trial court, the dealer argued that even

       assuming that it had waived the right to arbitrate, the purchaser’s “counterclaim was a substantial

       change of circumstances that entitled [it] to rescind its waiver.” Id. The trial court granted the

       motion to compel arbitration of the counterclaim, rejecting the purchaser’s argument that the dealer

       waived its right to arbitrate when it commenced the action. Id. at 952.

                                                        -20-
       1-22-1804

¶ 58           On appeal, the Second District again rejected the purchaser’s waiver argument. Id. at 953-

       54 (finding “no bright-line rule” that a party waives the right to arbitrate merely by filing a

       complaint). Further, the court found that, “[e]ven if plaintiff initially waived its right to arbitration,

       the counterclaim drastically altered the nature of the litigation, and plaintiff moved promptly to

       resuscitate its rights under the Agreement.” Id. at 954. In so doing, the Second District approvingly

       cited the reasoning of a federal case finding that, “even had the plaintiff presumptively waived its

       right to arbitration, the counterclaim so altered the litigation that, absent prejudice to the

       defendants, the plaintiff could rescind its waiver.” Id. at 955 (citing Design Benefit Plans, Inc. v.

       Enright, 940 F. Supp. 200, 203 (N.D. Ill. 1996)).

¶ 59           Thus, the portion of Liberty Chevrolet relied on by Overland concerned the specific issue

       of whether a contractual right to arbitrate may be revived after a waiver. However, as the trial

       court explained, resolution of the instant case does not turn on a finding that Overland waived the

       right to arbitrate. Instead, under the plain language of the contract, Overland simply exercised its

       choice to litigate its disputes with defendants. As our decision does not depend upon a finding of

       waiver, Liberty Chevrolet’s discussion of how counterclaims may rescind a waiver is irrelevant.

¶ 60           Overland’s reliance on Household Finance Corp., 351 Ill. App. 3d 550, another waiver

       case, is similarly unavailing. That case involved a mortgage foreclosure action, in which the

       underlying loans contained an arbitration rider providing that “either party could elect to submit

       to binding arbitration any dispute arising from the loans.” Id. at 551.

¶ 61           After the plaintiff mortgagee filed a foreclosure action, defendants filed a counterclaim

       alleging, inter alia, that plaintiff repeatedly provided them refinancing when it knew that they

       lacked sufficient income to make the monthly payments. Id. at 551-52. The five-count

       counterclaim sought rescission of the mortgages and a declaration that they were void. Id. at 552.

                                                         -21-
       1-22-1804

       Following additional rulings and related proceedings in defendants’ bankruptcy court case, the

       trial court granted plaintiff’s motion to stay the matter pending arbitration. Id.

¶ 62           On appeal from that ruling, defendant contended that plaintiff waived its right to arbitrate

       the counterclaim. Id. The Second District disagreed, concluding that plaintiff “timely exercised its

       right to invoke arbitration.” Id. at 554 (citing Liberty Chevrolet for the proposition that there is no

       “bright-line rule” that filing a complaint constitutes waiver). In addition, the court pointed out that

       the arbitration rider at issue specifically provided that the “ ‘use of the courts shall not constitute a

       waiver of the right of any party *** to submit any [c]laim to arbitration.’ ” Id.

¶ 63           Furthermore, the Household Finance Corp. decision noted that “defendants’ counterclaim

       raised a number of issues significantly far afield from the issues raised in plaintiff’s foreclosure

       complaint.” Id. The Second District affirmed the motion to compel arbitration, after rejecting

       defendants’ remaining contentions that plaintiff submitted arbitrable issues to the court or

       otherwise acted inconsistent with the right to arbitrate. Id. at 554-56.

¶ 64           As with Liberty Chevrolet, Household Finance Corp. is plainly irrelevant to Overland’s

       argument, insofar as it mentioned the nature of the counterclaim only in the context of refuting the

       suggestion that the plaintiff waived its contractual right to arbitrate. Id. at 554. Neither of these

       Second District decisions suggests that Overland’s election to litigate its “dispute” with defendants

       under section 3 can be ignored or rescinded simply because the nature of the counterclaims is

       different from what Overland anticipated. Again, our decision to affirm is not based on waiver.

       Rather, we agree with the trial court that Overland simply exercised its option to litigate its disputes

       with defendants and the “disputes” at issue encompassed the counterclaims.

¶ 65           In short, we conclude that the plain language of the arbitration provision afforded Overland

       a choice to litigate or arbitrate any particular “dispute.” The contract could have, but did not,

                                                         -22-
       1-22-1804

       specify that Overland retained a right to arbitrate any counterclaim raised in a dispute. Overland

       made a decision to litigate the instant disputes when it filed suit against defendants. Defendants’

       counterclaims were part of the same “disputes” under the plain meaning of that term. Thus,

       Overland must act in accordance with its contractual language and its decision to litigate the entire

       dispute, including the counterclaims. Its motion to compel arbitration was correctly denied.

¶ 66                                          III. CONCLUSION

¶ 67          For the foregoing reasons, we affirm the judgment of the circuit court.

¶ 68          Affirmed.

                                                       -23-
1-22-1804

        Overland Bond & Investment Corp. v. Calhoun, 2023 IL App (1st) 221804

Decision Under Review:      Appeal from the Circuit Court of Cook County, Nos. 21-M1-
                            108114, 21-M1-108128; the Hon. John A. Simon, Judge,
                            presiding.

Attorneys                   Michael H. Moirano, of Moirano Gorman Kenny, LLC, of
for                         Chicago, for appellant.
Appellant:

Attorneys                   John Bouman, Lawrence Wood, and Daniel Schneider, of Legal
for                         Action Chicago, and David J. Chizewer, William C. Meyers,
Appellee:                   and Harleen Kaur, of Goldberg Kohn Ltd., both of Chicago, for
                            appellees.

                                         -24-