Court Opinion

ID: 4636553
Source: CourtListenerOpinion
Date Created: 2020-11-24 22:38:06.502867+00
Date Added: 2024-06-11T07:58:33.588066
License: Public Domain

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                                    Appellate Court                           Date: 2020.06.01
                                                                              10:28:23 -05'00'

        United Services Auto Ass’n v. Gobenciong Selina, 2019 IL App (1st) 182275

Appellate Court          UNITED SERVICES AUTO ASSOCIATION, Plaintiff-Appellant, v.
Caption                  DAWN GOBENCIONG SELINA, Defendant-Appellee.

District & No.           First District, Fourth Division
                         No. 1-18-2275

Filed                    December 12, 2019

Decision Under           Appeal from the Circuit Court of Cook County, No. 16-M1-15375; the
Review                   Hon. Jim Ryan, Judge, presiding.

Judgment                 Reversed and remanded.

Counsel on               Jeffrey S. Deutschman, of Deutschman & Associates, P.C., of
Appeal                   Chicago, for appellant.

                         Samiha H. Yousuf and Faizan A. Khan, both of Chicago, for appellee.

Panel                    JUSTICE LAMPKIN delivered the judgment of the court, with
                         opinion.
                         Justices Reyes and Burke concurred in the judgment and opinion.
                                               OPINION

¶1        Plaintiff insurer United Services Auto Association (United) filed a subrogation action to
     recover property damages as a result of a vehicle collision between its insured and the
     defendant driver, Dawn Gobenciong Selina. At the mandatory arbitration hearing, United
     failed to comply with defendant’s request to produce United’s adjustor. The arbitration panel
     denied defendant’s request for a bad faith finding against United, found instead that all the
     parties had participated in the hearing in good faith, and issued an award in favor of United.
¶2        Defendant rejected the arbitration award, requested a hearing in the circuit court, and
     subsequently moved the court to bar United from presenting any evidence and testimony at
     trial as a sanction for United’s failure to produce its adjustor. The circuit court granted
     defendant’s motion and subsequently denied United’s motion to reconsider that ruling.
     Thereafter, the circuit court granted defendant’s motion for a directed verdict.
¶3        On appeal, United argues that the circuit court erred when it (1) barred United from
     introducing any evidence or testimony at trial as a sanction for United’s failure to produce its
     adjustor at the arbitration hearing where that failure was inadvertent and the arbitration panel
     found that United had participated in the hearing in good faith, (2) denied United’s motion for
     reconsideration based on the court’s erroneous application of existing law to the facts of this
     case, and (3) entered a directed verdict at trial as a result of these erroneous rulings.
¶4        For the reasons that follow, we hold that the circuit court abused its discretion when it
     barred United from presenting any evidence or testimony at the trial based on United’s failure
     to produce its adjuster at the prior mandatory arbitration hearing where the arbitration panel
     found that all the parties had participated in the hearing in good faith and the circuit court’s
     severe sanction extended to other issues in the case unrelated to the absence of the adjuster.
     Accordingly, we reverse the judgment of the circuit court and remand this matter for further
     proceedings. 1

¶5                                         I. BACKGROUND
¶6       On January 22, 2016, United’s insured, Darius Karalis, and defendant were in a vehicle
     collision on Interstate 55 in Hodgkins, Illinois. In November 2016, United filed its complaint
     for subrogation against defendant, alleging she negligently collided with the rear end of
     Karalis’s vehicle because she drove too closely behind it and failed to drive at a reasonable
     speed, keep a proper lookout, maintain control of her vehicle, and keep her braking mechanism
     in good working order. United requested $7079.62 in damages as the amount it was required
     to expend under the terms of the deductible collision clause of its insurance policy with Karalis.
     The case was ordered to mandatory arbitration to determine liability and damages.
¶7       During discovery, defendant, pursuant to Illinois Supreme Court Rule 237(b) (eff. July 1,
     2005), served United with a notice requiring the presence of Karalis and “an adjuster or
     representative from United who can competently testify regarding the alleged damages *** at
     the trial/arbitration in order that Defendant may call as witness.”

         In adherence with the requirements of Illinois Supreme Court Rule 352(a) (eff. July 1, 2018), this
         1

     appeal has been resolved without oral argument upon the entry of a separate written order.

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¶8          In June 2017, United filed a motion with the circuit court to excuse the adjustor from the
       arbitration. United argued that it would produce its insured driver; this was a property damage
       subrogation case rather than a total loss claim; the alleged damages were $7079.62 and the
       paid vehicle repair bill was a presumptively admissible document pursuant to Illinois Supreme
       Court Rule 90(c) (eff. July 1, 2008); and requiring an adjuster to testify at the arbitration would
       not further the case, add any additional pertinent testimony, or bolster defendant’s case. This
       motion was scheduled for hearing on July 12, 2017, but was stricken when United failed to
       appear.
¶9          Prior to the arbitration, United served on defendant its Rule 90(c) package, which consisted
       of photographs of Karalis’s damaged vehicle and one paid bill for $5079.62 for repairs to his
       vehicle.
¶ 10        The arbitration hearing commenced on December 13, 2017, at 10:30 a.m. and ended at
       11:25 a.m. That same day, the arbitration panel issued an award, which indicated that all the
       parties were present and had participated in good faith. The panel issued an award in favor of
       United and against defendant. The panel awarded United $5079.62 plus $878 for court costs.
       In January 2018, defendant timely rejected the arbitration award and requested a trial before
       the circuit court.
¶ 11        Defendant also moved the court to bar United from presenting any evidence or testimony
       at the trial as a sanction for failing to (1) comply with defendant’s Rule 237(b) request
       “demanding the presence of a representative” of United and (2) participate in the arbitration in
       good faith and in a meaningful manner pursuant to Illinois Supreme Court Rule 91(b) (eff.
       June 1, 1993).
¶ 12        Regarding her Rule 237(b) claim, defendant argued that United did not object to
       defendant’s Rule 237(b) request, the court did not excuse United’s adjuster from attending the
       arbitration, and United’s failure to comply with the Rule 237(b) request left defendant unable
       to cross-examine or call as an adverse witness a representative of United at the arbitration
       hearing on the issue of damages.
¶ 13        Regarding her Rule 91(b) claim, defendant argued that United was subject to sanctions for
       failing to participate in the arbitration hearing in good faith and in a meaningful manner.
       Specifically, defendant asserted that United’s failure to appear at the hearing through a
       representative frustrated the purpose of the arbitration hearing, failed to subject the case to the
       type of adversarial testing that is expected at trial, and “made a complete mockery of the
       arbitration process.” Defendant stated, “Through the absence of its only occurrence witness at
       the arbitration proceeding, [United] did not subject the arbitration to the type of adversarial
       testing expected at trial that the Supreme Court intended.” Defendant argued that
       (1) “[United’s] adjuster was an essential witness whose cross-examination was necessary for
       the purposes of both establishing and disputing damages from the estimate report,” (2) the
       adjuster’s absence prejudiced defendant by denying her the right to “cross-examine regarding
       the essential elements of [United’s] case,” and (3) no other witness presented by United “could
       testify regarding [United’s] estimate report.”
¶ 14        In response, United stated that the court routinely grants motions to excuse an adjuster from
       an arbitration hearing when a small claims property damage case involves a paid bill and that
       United’s counsel usually brings such motions at the court’s morning routine motion call but
       failed to do so in this case due to an “unintentional administrative error.” Furthermore, when
       defense counsel, who did not call a claims adjuster as a witness during defendant’s case-in-

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       chief, requested a bad faith finding during closing argument, the arbitration panel rejected that
       request, finding instead that all the parties had participated in the hearing in good faith. United
       also argued that defendant suffered no prejudice due to the absence of a claims adjuster because
       United submitted the paid vehicle repair bill to the defense prior to the hearing as United’s
       proof of damages, that adjusters are routinely excused from arbitration hearings, and that
       defense counsel did not attempt to call an adjuster as a witness during defendant’s case-in-
       chief.
¶ 15        In her reply, defendant asserted that (1) United did not object to defendant’s Rule 237(b)
       request regarding the adjuster, (2) United failed to provide an affidavit to establish a valid
       reason for the adjuster’s absence and that an administrative error had occurred, and
       (3) defendant would have objected to United’s motion to excuse the adjuster. Defendant asked
       the court to debar United from maintaining its claim or from testifying and presenting any
       evidence at future proceedings, enter a default judgment against United, dismiss its action with
       prejudice, strike United’s pleading, or enter judgment against United as to the issues in its
       pleading.
¶ 16        Defendant’s motion to bar evidence was set for hearing on March 21, 2018. On that date,
       the court issued a written order granting defendant’s motion barring United from introducing
       any evidence or testimony at trial. This order, however, did not set forth with specificity the
       reasons and basis of the imposed sanction. Furthermore, the record does not contain any
       transcript or bystander’s report of this proceeding.
¶ 17        On March 27, 2018, the court issued a case management order, which set the trial for July
       10, 2018. The order stated that (1) United’s claim for property damage totaled $5079.62 and
       the paid bill would be admitted pursuant to the rules, (2) the identified witnesses to be called
       at trial were Karalis, defendant, United’s adjuster, and the responding police officer, and (3) the
       ruling on motions in limine precluded any mention of liability insurance, traffic tickets issued
       (without a certified guilty plea), and lay witness medical testimony or opinions.
¶ 18        United moved the court to reconsider the sanction barring United from presenting evidence
       and testimony at the trial. First, United argued that the court applied the wrong legal standard
       when it sanctioned United under Rule 219(c) for failing to produce the claims adjuster at the
       arbitration hearing. According to United, the court incorrectly required United to “show
       extenuating circumstances” to avoid the imposition of the penalty when the correct standard
       required defendant to show that United’s failure was a deliberate and pronounced disregard for
       the discovery rules and the court. United argued that the harsh sanction denied United a trial
       on the merits and was not warranted because the undisputed facts showed that United did not
       deliberately disregard defendant’s Rule 237(b) notice, but rather unintentionally failed to
       present the routine motion to excuse the claims adjuster.
¶ 19        Second, United argued that the court misapplied existing law when it ruled that United
       failed to participate in the arbitration hearing in good faith pursuant to Rule 91(b) by failing to
       subject the case to the same adversarial testing that would be expected at a trial. United argued
       that the paid automobile repair bill was admissible as prima facie evidence of the necessity and
       reasonableness of the repairs and that United also presented photographs of Karalis’s damaged
       vehicle and his testimony regarding the facts of the collision and the damage his vehicle
       sustained. Contrary to defendant’s assertion that her cross-examination of the claims adjuster
       was necessary to establish damages, United stated that the paid repair bill established the

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       damages and the claims adjuster, who could only speak to the bill’s payment, would have had
       no knowledge of the reasonableness or necessity of the bill.
¶ 20       United supported its motion to reconsider with the affidavit of its attorney, who attested
       that (1) the circuit court routinely excused claims adjusters from appearing at arbitration
       hearings in small claims property damage cases involving paid bills, (2) the motion to excuse
       was not presented prior to the arbitration hearing due only to an administrative error, and
       (3) United presented at the arbitration hearing the paid repair bill, photographs of Karalis’s
       damaged vehicle, and Karalis, who testified about the facts of the accident and the damage his
       vehicle sustained.
¶ 21       In response, defendant asserted that (1) “a representative of [United] failed to appear at the
       arbitration hearing,” (2) United failed to present a legitimate reason for the adjuster’s failure
       to appear at the arbitration, (3) United failed to present new evidence to warrant
       reconsideration of the imposed sanction, (4) defendant had no notice that the adjuster would
       not appear at the arbitration hearing and was unfairly surprised, and (5) defendant suffered
       substantial prejudice because the adjuster’s absence prevented defendant from disputing the
       alleged damages from the “estimate report” and no other witness presented at the arbitration
       hearing “had the requisite knowledge to testify regarding [United’s] estimate report.”
¶ 22       In its reply, United argued that (1) the arbitration panel had denied defendant’s request for
       a bad faith finding against United, (2) the arbitrators’ finding that all the parties participated in
       the arbitration hearing in good faith was prima facie evidence, and (3) defendant failed to
       submit anything to refute the arbitrators’ carefully considered decision based on the evidence
       and testimony they heard. Furthermore, defendant’s assertion that the adjuster was an essential
       witness to establish the damages lacked merit because Rule 90(c) provides that certain
       documents, including paid bills, may be offered into evidence without foundation or other
       proof. Moreover, only the maker of the repair bill would have had personal knowledge
       concerning its reasonableness and necessity, but defendant failed to subpoena that witness,
       pursuant to Illinois Supreme Court Rule 90(e) (eff. July 1, 2017), to elicit that testimony.
¶ 23       On August 23, 2018, the trial court denied United’s motion to reconsider. The record does
       not contain any transcript or bystander’s report of this proceeding.
¶ 24       Thereafter, defendant moved for summary judgment, arguing that no genuine issues of
       material fact would be presented against defendant at the trial because United was barred from
       introducing any evidence. The court denied defendant’s motion for summary judgment. The
       court also denied United’s motion to continue the hearing, which argued that Karalis was a
       necessary witness but he would be in California on the scheduled hearing date.
¶ 25       At the trial on October 22, 2018, the jury was convened and all counsel and defendant were
       present. United presented no evidence, defendant moved for a directed verdict, and the court
       granted defendant’s motion.
¶ 26       United appealed the trial court’s (1) March 2018 order barring United from presenting
       testimony and evidence at the trial, (2) August 2018 order denying United’s motion to
       reconsider that sanction, and (3) October 2018 order granting defendant’s motion for the
       directed verdict against United.

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¶ 27                                           II. ANALYSIS
¶ 28       United argues that the trial court abused its discretion by barring United from presenting
       any testimony or evidence at the trial as a sanction for failing to comply with defendant’s
       request to produce United’s adjuster at the arbitration hearing. United contends that this drastic
       sanction deprived it of a hearing on the merits and was not warranted because (1) United’s
       error resulted from its inadvertent failure to re-spindle its routine motion to excuse the
       adjuster’s attendance, (2) United came to the arbitration having diligently filed its Rule 90(c)
       package, and (3) the arbitrators found that United participated in good faith at the arbitration
       where United presented photographs of Karalis’s damaged vehicle, the paid repair bill, and
       Karalis, who testified about the facts of the collision and the damage to his vehicle.
¶ 29       United contends that its unintentional error did not prejudice defendant’s case because it
       had no impact on the evidence in this straightforward subrogation action where the total
       damages consisted of the amount of the single repair bill United was required to pay under the
       terms of the deductible collision clause of its insurance policy with Karalis. Furthermore, the
       paid repair bill was prima facie evidence of United’s damages and was admissible at the
       arbitration hearing without foundation or other proof under Rule 90(c). In addition, the claims
       adjuster, who was not the maker of the repair bill, could have testified merely about the bill’s
       payment and would not have had knowledge about the reasonableness or necessity of the bill.
¶ 30       Defendant responds that the circuit court’s imposed sanction was proper because United
       did not show that its failure to produce its adjuster at the arbitration was reasonable or the result
       of extenuating circumstances. Defendant contends that she was prejudiced by the adjuster’s
       absence because she could not cross-examine the adjuster about the reasonableness of the paid
       repair bill. Defendant argues that United’s failure to renew its motion to excuse the adjuster
       from the arbitration was careless and indicative of United’s treatment of the arbitration process
       as a meaningless hurdle to cross before going to trial. Defendant asserts that United failed to
       participate in the arbitration hearing in good faith because the absence of the adjuster failed to
       subject this case to the type of adversarial testing expected at a trial.
¶ 31       Initially, we note that United did not provide this court with either a transcript or
       bystander’s report of the proceedings before the circuit court. See Ill. S. Ct. R. 323 (eff. July
       1, 2017); see also Foutch v. O’Bryant, 99 Ill. 2d 389, 391-92 (1984) (any doubts arising from
       the incompleteness of the record will be resolved against the appellant, who has the burden to
       present a sufficiently complete record of the proceedings to support a claim of error). However,
       the record is sufficient to address United’s claims of error; nothing in the record indicates that
       the circuit court considered any basis for the sanction other than United’s failure to comply
       with defendant’s Rule 237(b) notice requiring the appearance of United’s adjuster at the
       arbitration hearing.
¶ 32       Where a party to mandatory arbitration proceedings appeals from sanctions imposed, the
       standard of review is an abuse of discretion. State Farm Insurance Co. v. Kazakova, 299 Ill.
       App. 3d 1028, 1031 (1998). An abuse of discretion occurs when the trial court rules arbitrarily.
       Johnson v. Saenz, 311 Ill. App. 3d 693, 697 (2000).
¶ 33       A party may require the appearance at an arbitration hearing of a person who “is an officer,
       director, or employee of a party *** by serving the party with a notice designating the person
       who is required to appear.” Ill. S. Ct. R. 237(b) (eff. July 1, 2005). If a party fails to comply
       with this notice, “the court may enter any order that is just, including any sanction or remedy
       provided for in Rule 219(c) that may be appropriate.” Id. The sanctions and remedies listed in

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       Rule 219(c) include staying proceedings until the rule is complied with, barring the offending
       party from maintaining any particular claim or defense related to any issue to which the failure
       relates, barring a witness from testifying concerning that issue, and entering a judgment by
       default as to claims to which that issue is material. Ill. S. Ct. R. 219(c) (eff. July 1, 2002). “The
       sanctions imposed must relate to the issue to which the misconduct relates and may not extend
       to other issues in the case.” Ill. S. Ct. R. 219, Committee Comments (rev. June 1, 1995).
       “Where a sanction is imposed under this paragraph (c), the judge shall set forth with specificity
       the reasons and basis of any sanction so imposed either in the judgment order itself or in a
       separate written order.” Ill. S. Ct. R. 219(c) (eff. July 1, 2002).
¶ 34       Furthermore, if the arbitration panel unanimously finds that a party to the arbitration
       hearing failed to meet the requirement to participate in the hearing in good faith and in a
       meaningful manner, the panel shall state that finding and the factual basis therefor on the
       award. Ill. S. Ct. R. 91(b) (eff. June 1, 1993). Such an award shall be prima facie evidence of
       bad faith, and a court, when presented with a petition for sanctions, may order sanctions as
       provided in Rule 219(c) and costs and attorney fees. Id. “A party participates in the arbitration
       hearing in good faith and a meaningful manner *** by subjecting the case to the type of
       adversarial testing that would be expected at trial.” Nationwide Mutual Insurance Co. v. Kogut,
       354 Ill. App. 3d 1, 4 (2004).
¶ 35       Here, the parties agree that the arbitrators rejected defendant’s request, made during closing
       argument, for a bad faith finding against United based on the absence of its adjuster. Instead,
       the arbitration panel unanimously found that all the parties participated in the hearing in good
       faith and in a meaningful manner. This court also notes that nothing in the record indicates that
       the absence of the adjuster resulted in prejudice to defendant because the paid repair bill was
       admissible evidence at the arbitration hearing of damages without foundation or other proof
       pursuant to Rule 90(c) and the adjuster, who was not the maker of the repair bill, would not
       have been the appropriate witness for defendant to challenge the reasonableness and necessity
       of the vehicle repairs. Moreover, there is no indication in the record that defendant attempted
       to subpoena the maker of the repair bill pursuant to Rule 90(e).
¶ 36       In addition, the circuit court failed to specify the reasons and basis for imposing the severe
       sanction that deprived United of a trial on the merits even though United had appeared at the
       arbitration hearing with its insured and presented documents and testimony to support its claim.
       The court’s broad sanction, preventing United from presenting any evidence and testimony at
       the trial, was not related or confined to United’s failure to produce its adjuster and
       impermissibly extended to other issues in the case. This court can only speculate whether the
       circuit court was confused or misled by defendant’s inaccurate assertions in her motion for
       sanctions and responsive filings, which claimed that United failed to appear at the arbitration
       through a representative, failed to present “its only occurrence witness,” and did not object to
       defendant’s Rule 237(b) request to present the adjuster. Although defendant claimed that she
       would have objected if United had moved to excuse the adjuster, she never filed a written
       response when United filed such a motion. Moreover, defendant claimed that only United’s
       adjuster could testify regarding its “estimate report,” but this case was not a total loss claim
       and did not involve any estimate report. Rather, the damages in this case consisted of the
       $5079.62 paid repair bill that United was required to expend under the terms of the deductible
       collision clause of its insurance policy with Karalis.

                                                     -7-
¶ 37       The circuit court’s order preventing United from presenting any evidence or testimony at
       the trial impermissibly extended to other issues in the case far beyond any issue affected by
       United’s inadvertent failure to present its adjuster at the arbitration hearing. The circuit court’s
       order denying United a hearing on the merits of its claim in the absence of any indication of
       prejudice to defendant was arbitrary. Because the circuit court acted arbitrarily, we find that it
       abused its discretion by granting defendant’s motion to bar United from presenting evidence
       and testimony at the trial. Based on our analysis that the court’s sanction was an abuse of
       discretion, we also find that the court erred by denying United’s motion to reconsider the
       sanction and by awarding defendant the directed verdict that relied on the sanction.

¶ 38                                       III. CONCLUSION
¶ 39       The orders of the circuit court barring United from presenting testimony and evidence at
       the trial, denying United’s motion to reconsider that sanction, and granting defendant a directed
       verdict are reversed, and this matter is remanded for further proceedings consistent with this
       opinion.

¶ 40      Reversed and remanded.

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