Illinois Supreme Court Civil Issues Pending: Arbitration

[UPDATED THROUGH March 13, 2014] 

Klehr v. Illinois Farmers Insurance Company

Supreme Court: 115693

Appellate Court: First District, Second Division

Appellate Court Case Number: 1-12-1843

Issue Presented: May one of the parties obtain judicial review of the arbitrator's interlocutory ruling on a discovery issue by filing a declaratory judgment action in the circuit court?

Summary: Plaintiff was a passenger in a car involved in a hit-and-run accident. She filed an uninsured motorist claim with the driver's insurance carrier. The insurer settled plaintiff's claim, but the settlement was insufficient to completely cover her injuries; so she filed an additional claim with her own insurance carrier. Not long after filing that claim, plaintiff demanded arbitration. Defendant served several discovery requests on plaintiff. Plaintiff refused to comply, arguing that the discovery was not permissible under the terms of the arbitration clause and applicable Illinois law, or alternatively, that any discovery must be conducted within 180 days of the initiation of the claim. Plaintiff filed a declaratory judgment action seeking a ruling that plaintiff had no obligation to answer the discovery. The circuit court dismissed the complaint, and the Appellate Court affirmed. The plaintiff then filed a motion with the arbitrators, seeking the same relief. The arbitrators denied the relief, ordering the plaintiff to respond to the discovery. Rather than responding, the plaintiff re-filed the same lawsuit, again arguing that the discovery was not permitted by the arbitration clause and/or was untimely. The circuit court dismissed this second action, holding that it had no jurisdiction to review the arbitrator's interlocutory order. The Appellate Court affirmed on different grounds. Plaintiff alleged a court order, and legal reasons why she should not have to comply; this was sufficient to allege the existence of an actual controversy between opposing interests sufficient to create declaratory judgment jurisdiction. However, the court pointed out that courts' role under the Uniform Arbitration Act is limited to confirming, modifying or vacating a final arbitration award. The question, the court found, was whether the issue was ripe for judicial decision now. Plaintiff claimed two hardships from postponing a decision: first, that the arbitrators' decision would be effectively unreviewable because of the limits on review of final decisions; and second, that plaintiff would be compelled, absent immediate review, to incur expenses and suffer delays by complying with the order. But the Appellate Court held that the purpose of the Uniform Act was served by postponing discovery until the arbitration award was entered. In closing, the Court summarized the dispute as the arbitrators having exercised their authority over discovery, and the plaintiff disagreeing with their decision. Rather than completing the proceeding, the plaintiff wanted the courts to immediately intervene. This was the sort of dispute which the legislature intended to be resolved after the arbitration was concluded. 



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