GPS USA, Inc. v. Performance Powdercoating

• Decision Date: 28 January 2015
• Docket Number: No. 2–13–1190.,2–13–1190.
• Citation: 26 N.E.3d 574
• Parties: GPS USA, INC., Petitioner–Appellant, v. PERFORMANCE POWDERCOATING, Respondent–Appellee.
• Court: United States Appellate Court of Illinois

26 N.E.3d 574

GPS USA, INC., Petitioner–Appellant

v.PERFORMANCE POWDERCOATING, Respondent–Appellee.

No. 2–13–1190.

Appellate Court of Illinois, Second District.

Jan. 28, 2015.

Ryan D. Johnson, of Johnson & Harris, LLC, of Buffalo Grove, for appellant.

No brief filed for appellee.

OPINION

Justice BIRKETT

delivered the judgment of the court, with opinion.

¶ 1 Petitioner, GPS USA, Inc., appeals the vacatur of an arbitration award entered in its favor against respondent, Performance Powdercoating. We hold that the trial court erred by invalidating the forum-selection provision in the arbitration clause of the parties' contract. Accordingly, we vacate the trial court's judgment and remand for further proceedings.

¶ 2 I. BACKGROUND

¶ 3 Respondent has filed no appellee's brief in this case. In First Capitol Mortgage Corp. v. Talandis Construction Corp., 63 Ill.2d 128, 133, 345 N.E.2d 493 (1976)

, the supreme court explained the avenues available to a reviewing court when an appellee fails to file a brief:

“We do not feel that a court of review should be compelled to serve as an advocate for the appellee or that it should be required to search the record for the purpose of sustaining the judgment of the trial court. It may, however, if justice requires, do so. Also, it seems that if the record is simple and the claimed errors are such that the court can easily decide them without the aid of an appellee's brief, the court of review should decide the merits of the appeal. In other cases if the appellant's brief demonstrates prima facie reversible error and the contentions of the brief find support in the record the judgment of the trial court may be reversed.”

Appellate courts have distilled from this language the following three options: (1) the court may serve as an advocate for the appellee and decide the case when the court determines that justice so requires; (2) the court may decide the merits of the case if the record is simple and the issues can be easily decided without the aid of an appellee's brief; or (3) the court may reverse the trial court when the appellant's brief demonstrates prima facie reversible error that is supported by the record. Village of Lake in the Hills v. Niklaus, 2014 IL App (2d) 130654, ¶ 14, 381 Ill.Dec. 663, 11 N.E.3d 26

(citing Thomas v. Koe, 395 Ill.App.3d 570, 577, 338 Ill.Dec. 567, 924 N.E.2d 1093 (2009) ). For the reasons set forth below, we find that petitioner's brief and the record demonstrate prima facie reversible error.

¶ 4 We base the following statement of facts on the pleadings and attachments filed below by the parties and on an unrebutted affidavit from Rebecca Presley, respondent's president and co-owner. Petitioner, which provides management consulting services, is a Nevada company with offices in Illinois. Respondent is an Arizona company. On March 14, 2012, the parties signed an “Agreement for Services” (Agreement) by which petitioner would provide respondent consulting services. Petitioner attached to its pleadings a series of consulting reports that it generated for respondent pursuant to the Agreement. The reports seem to suggest that petitioner's employees visited respondent's offices in Arizona for the purpose of evaluating its business. According to Presley's affidavit, all work under the Agreement was performed in Arizona.

¶ 5 On October 16, 2012, petitioner filed a demand for arbitration with the American Arbitration Association. Petitioner sought amounts owed under the Agreement. There is a copy of the Agreement in the record. Near the bottom of the first page appears the following clause in bold: “Client and Advisor(s) expressly agree that all disputes of any kind between the parties arising out of or in connection with this Agreement shall be submitted to binding arbitration which would be administered by the American Arbitration Association.” Immediately following in unbolded text is: “Exclusive jurisdiction and venue shall rest in Lake County, Illinois, Illinois law applying.” With the exception of a title and petitioner's company logo at the top of the page, the text is of uniform size. All of the text on the page is legible and of reasonable size.

¶ 6 The matter was set for arbitration, and respondent was served with notice of the date (February 12, 2013) and location (a law office in Buffalo Grove, Illinois) of the hearing. Respondent did not appear on the scheduled date and the arbitration hearing proceeded in its absence. On February 21, 2013, the arbitrator entered an award in petitioner's favor of $129,999.90 plus respondent's share of the arbitration fees and expenses.

¶ 7 On April 1, 2013, petitioner filed in the trial court a petition to confirm the arbitrator's award. Respondent responded in May 2013 with a motion to dismiss the petition and vacate the award. First, respondent contended that the award was obtained through undue means. See 710 ILCS 5/12(a)(1)

(West 2012) (“(a) Upon application of a party, the court shall vacate an award where: (1) The award was procured by * * * undue means[.]”). Respondent elaborated:

“4. The [respondent] * * * is an Arizona LLC which has nothing to do with the State of Illinois. None of the events arising out of the underlying contract took place in Illinois and the contract was not signed in Illinois. * * *

5. The only reason that the award was obtained was the [respondent] did not have the resources to defend an arbitration thousands of miles away in Illinois. The [respondent][ ] would have had to fly all [its] employees to Illinois to testify, would have had to pay to have [its] evidence transferred to Illinois, and hire Illinois lawyers to defend an arbitration which had absolutely no conceivable reason for being in Illinois other than the fact that the [petitioner's] main office is in Lake County, Illinois. * * *

6. Therefore, the arbitration was procured by undue means in that it was obtained solely because the burden to [respondent in] defending in Illinois made it impossible for [it] to do so.”

¶ 8 Second, respondent cited section 2–619 of the Code of Civil Procedure

(Code) (735 ILCS 5/2–619 (West 2012) (involuntary dismissal based on certain defects or defenses)) and section 2–301(a) of the Code (735 ILCS 5/2–301(a) (West 2012) (objection to personal jurisdiction)), contending that the clause designating Illinois as the arbitration forum was unreasonable as a matter of law. Respondent applied the six-factor test adopted by the appellate court in Calanca v. D & S Manufacturing Co., 157 Ill.App.3d 85, 87–88, 109 Ill.Dec. 400, 510 N.E.2d 21 (1987), for determining the reasonableness of a forum-selection clause. The Calanca factors are: (1) which law governs the formation and construction of the contract; (2) the residency of the parties involved; (3) the place of execution and/or performance of the contract; (4) the location of the parties and witnesses participating in the litigation; (5) the inconvenience to the parties of any particular location; and (6) whether the clause was equally bargained for. Id. at 88, 109 Ill.Dec. 400, 510 N.E.2d 21 ; see also Yamada Corp. v. Yasuda Fire & Marine Insurance Co., 305 Ill.App.3d 362, 368, 238 Ill.Dec. 822, 712 N.E.2d 926 (1999).

¶ 9 Third, and last, respondent asserted that the arbitrator lacked authority to decide the matter, because Illinois had no personal jurisdiction over respondent. See 710 ILCS 5/12(a)(3)

(West 2012) (“(a) Upon application of a party, the court shall vacate an award where * * * (3) The arbitrators exceeded their powers[.]”). There was no general jurisdiction, respondent claimed, because it had no business contacts with Illinois. Specific jurisdiction also was lacking because respondent “never set foot in Illinois and did nothing more than forward payment to the [petitioner].”

¶ 10 In her affidavit, Presley averred in relevant part:

“5. I signed [the Agreement], which is the subject matter of this litigation, after the [petitioner] signed it[,] and I signed it in the State of Arizona. * * *

6. [Respondent] is an Arizona Company.

7. [Respondent] does not do business in the State of Illinois.

8. All work performed under [the Agreement] was done at our office in Arizona.

9. All our witnesses for this matter reside in the State of Arizona.

10. There are only two owners of this business, my husband and myself.

11. We are a small mom and pop company[;] our financial records from last year are attached hereto.

12. Our company suffered a loss last year and[,] therefore, we cannot and could not afford the $3000 fee required of the Arbitrator.

13. We can also not afford to fly our witnesses and evidence to the State of Illinois for a [t]rial or arbitration.

14. When I signed [the Agreement], I did not know that if there was a dispute I would be forced to litigate in Illinois[,] as [the arbitration] clause was buried in the fine print.

15. [Respondent] does not transact any business in Illinois.

16. [Respondent] does not have any employees in Illinois.

17. [Respondent] does not have any property in Illinois.

18. None of [respondent's] employees ever visited Illinois.

19. * * * [M]y only contact with Illinois was sending payments to the [petitioner's] office in Illinois.

20. * * * [Respondent] does not have an office in Illinois.

21. * * * [N]o one at [respondent] negotiated any of the terms of the contract[;] I just signed the form contract that was provided for me.

22.* * * [A]ll consulting work done pursuant to the contract was done at our office in Arizona.”

Though Presley referenced an attachment regarding respondent's finances, no such document appears in the record.

¶ 11 Petitioner filed a response. Petitioner began by noting that respondent, though duly notified of petitioner's demand for arbitration and of the scheduling of the arbitration hearing, lodged no advance objection to the arbitration. Petitioner then proceeded to challenge the substance of respondent's arguments for vacating the arbitration award. Petitioner filed no affidavit in response to Presley's...