Trimble v. Graves

• Decision Date: 14 April 2011
• Docket Number: No. 5–10–0075.,5–10–0075.
• Parties: R. Joe TRIMBLE, Plaintiff–Appellant,v.Jim GRAVES, Jerry Graves, and Tony Graves, d/b/a Clover Farms, Defendants–Appellees.
• Court: United States Appellate Court of Illinois

409 Ill.App.3d 506

947 N.E.2d 885

349 Ill.Dec. 871

R. Joe TRIMBLE, Plaintiff–Appellant,

v.Jim GRAVES, Jerry Graves, and Tony Graves, d/b/a Clover Farms, Defendants–Appellees.

No. 5–10–0075.

Appellate Court of Illinois, Fifth District.

April 14, 2011.

Robert L. Douglas, Law Offices of Robert L. Douglas, Ltd., Robinson, IL, for Appellant.John A. Clark, Clark, Hough & Racklin, Ltd., Olney, IL, for Appellees.

OPINION

Justice GOLDENHERSH delivered the judgment of the court, with opinion.

Plaintiff, R. Joe Trimble, filed in the circuit court of Richland County a petition to vacate an award of arbitration (710 ILCS 5/ 12 (West 2008)). The circuit court denied the petition and plaintiff appealed. On appeal, the issue is whether the arbitrators exceeded their powers. We reverse and remand with directions.

FACTS

On December 10, 1998, defendants, Jim Graves, Jerry Graves, and Tony Graves, doing business as Clover Farms, entered into an agreement to lease registered Jersey cows from plaintiff and John S. Trimble, doing business as Trimble Farms. The terms of the lease were for one year beginning on December 10, 1998, and ending on December 10, 1999.

On May 4, 2006, the parties entered into an “Arbitration Agreement” (Agreement). The Agreement stated, “The purpose of this arbitration is to decide by three competent arbitrators that will be discussed later in this agreement[ ] the amount of money due, if any, from collectively the [defendants] to [plaintiff].” The Agreement provided that the parties were entering into binding arbitration to resolve issues which had arisen concerning the lease. The Agreement outlined the nature of the dispute:

“At the conclusion of the contract, [plaintiff] did not pick up the cows, but they remained in the possession of and under the responsibility of [defendants]. [Defendants] paid rent on said cows provided in the lease agreement until a time certain. [Plaintiff] ultimately picked up the remaining twelve (12) cows on or about September 23, 2005[,] and left four (4) cows due to the fact that they were not sound.”

Plaintiff nominated Tim Butikofer as his arbitrator. Defendants nominated Fred Kuenstler as their arbitrator. The Agreement provided that the two selected arbitrators would select a third, neutral arbitrator. Arbitrator Kertz was selected later. The Agreement set prehearing rules for discovery, including the disclosure of documents and expert and lay witnesses.

Paragraph 6 of the Agreement provided as follows:

“6. That once the arbitration is completed, the arbitrators will at that time start the deliberations and will not separate until the matter is resolved to their satisfaction and a written document prepared, which can be handwritten, making the award as them [ sic ] deem best supported by the evidence. At that same time, the arbitrators will fix the costs of the arbitration and the costs shall be shared 50% by each side to this dispute. This paragraph can be modified only by the acceptance of all three arbitrators and the parties.”

The Agreement established rules for the conduct of the arbitration hearing. The Agreement set forth an order of proof with plaintiff going first, followed by defendants and a rebuttal by plaintiff:

“12. Since this is an arbitration proceeding, the strict formal rules of evidence do not apply, but the arbitrators will have to determine whether the evidence is or is not credible. Either side can argue that the evidence is not credible.

13. That the attorneys who represent the parties will [be] the only persons who can speak on behalf of their client(s) and that would be Robert L. Douglas for [plaintiff] or a designee, but nobody other than one attorney per side

[349 Ill.Dec. 874 , 947 N.E.2d 888]

can address the arbitrators. For [defendants], Mr. John A. Clark of the law firm of Croegaert, Clark & Hough, Ltd., or a designee.”

The Agreement called for the arbitrators to select one among themselves to conduct the hearing to ensure proper decorum during the hearing. The Agreement also provided as follows:

“17. The arbitrators are by this agreement permitted to ask questions of any witness if they do not understand the answer or they want clarification for any purpose.”

The Agreement set forth the following provisions for the conclusion of the arbitration:

“20. The arbitration will close and the arbitrator conducting the proceedings will inquire of the parties through their counsel if they have any additional evidence. The arbitrator will then request final arguments and the parties will have the absolute right to argue their final arguments and the procedure will be the same as is in this agreement that [plaintiff's] attorney will go first, followed by the attorney for [defendants], but it will be limited to rebuttal argument only and not a rehash of all the proceedings.

21. When the proofs are closed and after final argument, the arbitrators will retire to a place certain and commence their arbitration and any two arbitrators can make the decision for the award. In other words, the majority rule applies in favor of or against [plaintiff], or in favor of or against [defendants]. Two of the three arbitrators will make the decision and that is all that is necessary by this Arbitration Agreement.”

The arbitration hearing was held on December 19, 2007. The transcript of the hearing shows that plaintiff testified on his own behalf and presented testimony from three other witnesses. Jerry Graves, Jim Graves, and Tony Graves testified for the defense. The end of the transcript describes that after counsel for both sides presented closing arguments, the parties agreed to leave the conference room and arbitrator Kertz stated he would let the parties know when the arbitrators reached an agreement.

The arbitrators issued a written award of $7,676 for plaintiff, signed by arbitrators Kertz and Kuenstler. At the bottom of the document, arbitrator Butikofer wrote that he dissented and would, in the future, send in an opinion letter.

On January 15, 2008, arbitrator Butikofer issued an opinion letter. Butikofer laid out what he labeled the “simple facts of this situation” and offered what he called a proposed fair settlement of $158,675. Butikofer concluded by describing the conference of the arbitrators:

“Alois Kertz led the discussion and started out by saying that he felt that [plaintiff] was deserving of nothing because he had not enforced the contract. Tim Butikofer tried for well over two hours to convince Alois that the damages exceeded $100,000.00 and that even [defendants] were convinced that they owed something to [plaintiff]. It was not necessary for Fred Kuenstler to say much of anything because Alois Kertz took such control.

It seemed Alois Kertz's focus was to punish [plaintiff] for not being more proactive in recovering his leased property after the lease had been completed. It became very evident there was not going to be an agreement that all of us could support. Finally Alois Kertz made a motion that we would let [defendants] decide on how much they owed and that would be the final amount of the settlement. Alois Kertz and Fred

[349 Ill.Dec. 875 , 947 N.E.2d 889]

Kuenstler voted ‘YES' and Tim Butikofer voted ‘NO’. Motion passed.

[Defendants], [plaintiff], and their attorneys were called back into the meeting room. Alois Kertz asked Tony Graves how much he thought would be fair for [defendants] to pay [plaintiff]. Tony responded that he felt that he would be happy to pay $7,000.00 and it would be fair. Then Alois Kertz declared that the settlement amount would be set at $7,000.00 that [defendants] owed [plaintiff]. Case closed.” Plaintiff filed a petition to vacate the award pursuant to the Uniform Arbitration Act

(710 ILCS 5/12 (West 2008)), in the circuit court of Richland County. After the petition was amended, defendants filed a motion to strike.

On January 26, 2010, the court entered an order denying the petition to vacate. The court found no evidence that the award was procured by corruption, fraud, or other undue influence. The court also found that there was no evident impartiality by the neutral arbitrator. The court found that plaintiff had stated a cause of action for the arbitrators exceeding their powers, but it also found that the arbitrators had not exceeded their authority. The court concluded as follows:

“H. This Court finds that the arbitrators did not exceed the powers set forth in paragraph 6 of the [Agreement] when they voted to and did ask Defendants what they thought they owed Plaintiff. The arbitrators did not separate, did reach a majority decision, and reduced it to writing.

I. This Court further finds that pursuant to paragraph 12 the parties had agreed to relax strict formal rules of evidence. This Court finds that this agreement permitted the arbitrators to re-open evidence in the manner they did when the majority voted to ask the Defendants what they thought they owed Plaintiff.

J. This Court further finds that pursuant to paragraph 17 the parties had agreed to allow the arbitrators to ask questions of any witness. This is exactly what the majority of the arbitrators voted to do when they determined to re-open the evidence and ask Defendants that [ sic ] they thought they owed Plaintiff.”

Plaintiff timely appealed.

ANALYSIS

In an apparent attempt to reach a diplomatic result, the arbitrators inquired into what defendants thought would be a fair result. This type of inquiry is perfectly acceptable in mediation. The difficulty with the present case is that the parties had entered into an agreement to arbitrate, not to mediate. The contrast between arbitration and mediation has been described concisely:

“Mediation is a form of alternative dispute resolution ‘in which a mediator facilitates communication and negotiation between parties to assist them in reaching a voluntary agreement’ about a dispute. Unlike arbitrators, mediators do not apply the law, resolve factual disputes, or adjudicate cas...