GPS USA, Inc. v. Performance Powdercoating , 2015 IL App (2d) 131190 ( 2015 )

Illinois Official Reports
Appellate Court
GPS USA, Inc. v. Performance Powdercoating,
2015 IL App (2d) 131190Appellate Court GPS USA, INC., Petitioner-Appellant, v. PERFORMANCE
Caption POWDERCOATING, Respondent-Appellee.
District & No. Second District
Docket No. 2-13-1190
Filed January 28, 2015
Held The trial court’s vacatur of the arbitration award entered for petitioner
(Note: This syllabus based on the improper invalidation of the forum-selection provision in
constitutes no part of the the arbitration clause of the parties’ contract was reversible error,
opinion of the court but since respondent failed to establish any compelling or countervailing
has been prepared by the reason for upsetting the parties’ choice of Illinois as their arbitration
Reporter of Decisions forum, and in view of the trial court’s failure to address all of the
for the convenience of issues raised in respondent’s motion to vacate the award for petitioner,
the reader.) the trial court’s judgment was vacated and the cause was remanded for
further proceedings.
Decision Under Appeal from the Circuit Court of Lake County, No. 13-L-227; the
Review Hon. Michael B. Betar, Judge, presiding.
Judgment Vacated and remanded.
Counsel on Ryan D. Johnson, of Johnson & Harris, LLC, of Buffalo Grove, for
Appeal appellant.
No brief filed for appellee.
Panel JUSTICE BIRKETT delivered the judgment of the court, with
opinion.
Presiding Justice Schostok and Justice Burke concurred in the
judgment and opinion.
OPINION
¶1 Petitioner, GPC 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 (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 (citing Thomas v. Koe, 395 Ill. App. 3d 570, 577 (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
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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 (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
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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; see also Yamada Corp. v. Yasuda Fire & Marine Insurance Co., 305 Ill. App. 3d
362, 368 (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.
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¶ 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 affidavit.
¶ 12 In its reply, respondent made a new contention, namely, that the arbitrator’s award was
procured by fraud. In support, respondent submitted a second affidavit from Presley. She
identified several pages from the consulting reports submitted by petitioner with its pleadings
in the trial court. Presley implied that her initials and/or signatures on these pages were
forged.
¶ 13 On August 14, 2013, the trial court held a hearing on respondent’s motion (no transcript
of the hearing appears in the record). That same day, the court issued a written order
dismissing petitioner’s petition and vacating the arbitration award. The court found as
follows:
“1. The forum selection clause is unenforceable pursuant to the six factors cited in
Calanca;
2. Illinois does not have general jurisdiction over the [respondent] due to lack of
minimum contacts;
3. Illinois does not have specific jurisdiction over the [respondent] due to lack of
minimum contacts.”
The court appeared not to reach respondent’s claims that the arbitration award was obtained
by undue means and fraud.
¶ 14 The trial court denied petitioner’s motion to reconsider, and petitioner filed this timely
appeal.
¶ 15 II. ANALYSIS
¶ 16 Petitioner contends that the trial court erred in vacating the arbitration award. We agree.
¶ 17 “It is a well-established principle that arbitration is a favored alternative to litigation by
state, federal and common law because it is a speedy, informal, and relatively inexpensive
procedure for resolving controversies arising out of commercial transactions.” (Internal
quotation marks omitted.) Board of Managers of the Courtyards at the Woodlands
Condominium Ass’n v. IKO Chicago, Inc., 183 Ill. 2d 66, 71 (1998). “The Illinois Uniform
Arbitration Act embodies a legislative policy favoring enforcement of agreements to arbitrate
future disputes.” Salsitz v. Kreiss, 198 Ill. 2d 1, 13 (2001). “The courts of this state favor
arbitration as well.” Id.¶ 18 The favorability of arbitration is further reflected in the principles governing judicial
review of arbitration awards:
“[J]udicial review of an arbitrator’s award is extremely limited, more limited than
appellate review of a trial. [Citations.] Limited judicial review fosters the
long-accepted and encouraged principle that an arbitration award should be the end,
not the beginning of litigation. [Citation.] When parties agree to submit a dispute to
arbitration for a binding and nonappealable decision, they bargain for finality.
[Citation.] The point of arbitration is to provide a quick and economical alternative to
litigation, not to add yet another round before entering the district and appellate
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courts. [Citation.]” (Internal quotation marks omitted.) First Health Group Corp. v.
Ruddick, 393 Ill. App. 3d 40, 48 (2009).
¶ 19 Section 12 of the Uniform Arbitration Act (Act) (710 ILCS 5/12 (West 2012)) specifies
grounds for vacating an arbitration award, stating in relevant part:
“(a) Upon application of a party, the court shall vacate an award where:
(1) The award was procured by corruption, fraud or other undue means;
(2) There was evident partiality by an arbitrator appointed as a neutral or
corruption in any one of the arbitrators or misconduct prejudicing the rights of
any party;
(3) The arbitrators exceeded their powers;
(4) The arbitrators refused to postpone the hearing upon sufficient cause being
shown therefor or refused to hear evidence material to the controversy or
otherwise so conducted the hearing, contrary to the provisions of Section 5 [(710
ILCS 5/5 (West 2012))], as to prejudice substantially the rights of a party; or
(5) There was no arbitration agreement and the issue was not adversely
determined in proceedings under Section 2 [(710 ILCS 5/2 (West 2012))] and the
party did not participate in the arbitration hearing without raising the objection;
but the fact that the relief was such that it could not or would not be granted by
the circuit court is not ground for vacating or refusing to confirm the award.”
¶ 20 We turn to our standard of review. We have no transcript of the hearing on the motion to
vacate, but it appears that no testimony was offered and that the trial court made its decision
based on the pleadings, documentary exhibits, and Presley’s unrebutted affidavit.
Consequently, we are presented with a question of law and our review is de novo. See
Rosenthal-Collins Group, L.P. v. Reiff, 321 Ill. App. 3d 683, 687 (2001) (review of section 12
decision was de novo because “the trial court heard no testimony and ruled solely on the basis
of documentary evidence”); In re Estate of Funk, 221 Ill. 2d 30, 35 (2006) (citing Reiff and
applying the de novo standard because “[t]he issues presented *** turn[ed] on the
documentary evidence and on questions of law”).
¶ 21 Petitioner’s first contention on appeal is that respondent forfeited “its objections by
failing to file an initial motion with the circuit court and by refusing to participate in the
arbitration.” In fact, as we shall explain, it was by not participating in the arbitration that
respondent was able to preserve its challenge to the validity of the arbitration agreement.
¶ 22 Between its motion to vacate and its reply in support thereof, respondent made the
following four contentions. First, the arbitration award was obtained through undue means
because respondent would have participated in the arbitration in Illinois had it not posed such
a hardship. Second, the award was obtained by fraud because the documents on which
petitioner relied bore the forged signatures and initials of Presley, respondent’s president and
co-owner. Third, the forum-selection component of the arbitration clause was invalid. Fourth,
the arbitrator exceeded his powers because Illinois lacked personal jurisdiction over
respondent.
¶ 23 The trial court determined, first, that the forum-selection clause was invalid, and, second,
that Illinois lacked personal jurisdiction over respondent. The court appeared not to reach
respondent’s claims that the arbitration award was obtained by undue means and fraud.
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¶ 24 We address first the court’s ruling on the forum-selection clause, because if the clause
was valid the requirements of personal jurisdiction were met. “A forum selection clause in a
given agreement has been held sufficient to constitute consent to personal jurisdiction in a
foreign State.” ETA Trust v. Recht, 214 Ill. App. 3d 827, 834 (1991).
¶ 25 Petitioner claims, as it did below, that respondent forfeited its challenge to the
forum-selection clause by failing to raise it at any time before the award was entered.
Petitioner also challenges, as it did below, the merits of the trial court’s decision on the
forum-selection issue. However, petitioner has not questioned, in the trial court or before us,
that respondent’s challenge to the forum-selection clause was substantively cognizable in a
proceeding under section 12. While respondent did not invoke below a subsection of section
12 in challenging the clause, the substance of that contention fell under subsection (a)(5),
which permits, with certain procedural conditions, a claim that “[t]here was no arbitration
agreement” (710 ILCS 5/12(a)(5) (West 2012)). Respondent’s attack on the forum-selection
component implicated the arbitration clause as a whole, since respondent claimed, inter alia,
that the parties had unequal bargaining power in negotiating the Agreement and that the
terms regarding arbitration were hidden in fine print. We note that, in a section 12(a)(5)
proceeding, just as in a section 2 proceeding to compel or stay arbitration, the issue of
arbitrability extends not just to the bare existence of an agreement purporting to mandate
arbitration, but also to whether the agreement is valid and enforceable. IKO Chicago, Inc.,
183 Ill. 2d at 74 (under section 2, “once the trial court determines that a valid arbitration
agreement exists, the court must compel arbitration”); Best Coin-Op, Inc. v. Clementi, 120 Ill.
App. 3d 892, 897-98 (1983) (validity of lease containing an arbitration clause could be
contested under section 12(a)(5)).
¶ 26 Proceeding to the forfeiture issue, we reiterate that section 12(a)(5) permits a postaward
challenge that “[t]here was no arbitration agreement,” provided that the issue “was not
adversely determined in proceedings under Section 2 [(710 ILCS 5/2 (West 2012))] and the
party did not participate in the arbitration hearing without raising the objection” (710 ILCS
5/12(a)(5) (West 2012)).
¶ 27 The procedural conditions specified in section 2 were satisfied here. First, there was no
section 2 proceeding, or at least none appears of record. Second, respondent did not
participate in the arbitration.
¶ 28 The cases petitioner cites where forfeiture was found are distinguishable because the
party attacking the arbitration award had participated in the arbitration without raising the
particular objection. See Ruddick, 393 Ill. App. 3d at 48-49; Hamilton v. Williams, 214 Ill.
App. 3d 230, 247 (1991); Tri-City Jewish Center v. Blass Riddick Chilcote, 159 Ill. App. 3d
436, 439 (1987).
¶ 29 A more factually similar case is Mid-America Regional Bargaining Ass’n v. Modern
Builders Industrial Concrete Co., 101 Ill. App. 3d 83 (1981). The defendant in Mid-America
was a member of a contractors’ association that acted as the defendant’s representative for
collective bargaining. The association in turn signed a representation agreement with the
plaintiff. A dispute arose when the plaintiff accused the defendant of violating its bylaws.
The plaintiff notified the defendant that it was seeking arbitration pursuant to a clause in the
representation agreement. The defendant refused to attend the arbitration hearing but later
opposed confirmation of the award, on the ground that it had no agreement with the plaintiff
to arbitrate. The trial court declined to confirm the award, but the appellate court reversed.
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Commenting on the Act generally, the court remarked that “before there can be arbitration
there must be a valid arbitration agreement.” Id. at 86. Section 12(a)(5) clearly provided, said
the court, that “the question of arbitrability may be raised after the award is issued, if, as
here, it was not raised before the hearing.” Id. at 87. The court held that the defendant
forfeited his argument on arbitrability, but not because it failed to raise the issue before the
arbitration hearing. Rather, the defendant failed to challenge the arbitration award within the
time constraints of section 12(b) of the Act (710 ILCS 5/12(b) (West 2012) (“An application
under this Section shall be made within 90 days after delivery of a copy of the award of the
applicant, except that if predicated upon corruption, fraud or other undue means, it shall be
made within 90 days after such grounds are known or should have been known.”)). (In the
present case, there is no issue of timeliness under section 12(b).)
¶ 30 As in Mid-America, respondent here preserved the issue of arbitrability for a postaward
challenge because it “did not participate in the arbitration hearing without raising the
objection” (710 ILCS 5/12(a)(5) (West 2012)). Like the defendant in Mid-America,
respondent did not participate in the arbitration at all.
¶ 31 Anderson v. Golf Mill Ford, Inc., 383 Ill. App. 3d 474, 479 (2008), cited by petitioner,
deserves special comment because the appellate court found forfeiture of an arbitrability
issue even though the issue was not decided in a section 2 proceeding and the party raised the
arbitrability objection before the arbitrator. The parties in Anderson agreed to arbitrate
according to the rules of the American Arbitration Association (AAA rules). The plaintiff
filed a demand for arbitration, and the defendant filed a counterclaim. The plaintiff denied
the allegations of the counterclaim but did not challenge its arbitrability. Not until the
arbitration hearing did the plaintiff object that the counterclaim was not arbitrable. The
arbitrator overruled the objection and ruled on the merits of the counterclaim. The appellate
court agreed with the defendant that the plaintiff forfeited its arbitrability objection by not
raising it prior to the arbitration hearing. The court relied on the AAA rules, which required
that a party object to the arbitrability of a counterclaim no later than the party’s answer to the
counterclaim. Id. at 478-79.
¶ 32 Petitioner extrapolates from Anderson a general rule that a party must object to the
arbitrability of a claim no later than the filing of the answer. This is a flawed reading of
Anderson’s holding, which was based on the particular procedural rules that the parties
agreed would govern the arbitration. Petitioner cites no such rules here. We express no
comment on Anderson’s presumption that arbitration rules can override the conditions
specified in section 12(a)(5) for preserving an arbitrability objection for a postaward
challenge.
¶ 33 Petitioner also claims that the issue of the forum-selection clause’s validity pertained
merely to the venue for the arbitration, and therefore the issue was for the arbitrator, not the
court, to decide. According to petitioner, “it is for the court to determine whether a valid
arbitration clause exists,” and “[o]nce that determination has been made, the arbitrator
decides how and where the arbitration will be conducted” (emphasis added). Petitioner cites a
string of federal cases under the Federal Arbitration Act (9 U.S.C. § 1 et seq. (2012)) holding
that “disputes over the interpretation of forum selection clauses in arbitration agreements” are
procedural questions for the arbitrator to decide (UBS Financial Services, Inc. v. West
Virginia University Hospitals, Inc., 660 F.3d 643, 655 (2d Cir. 2011) (citing cases)).
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¶ 34 These decisions do not apply here. First, they involve a different arbitration statute than
what governs here. Section 12 of the Act specifies what avenues are permissible for attacking
an arbitration award. Respondent’s challenge to the forum-selection clause was substantively
cognizable in a postaward proceeding, as it challenged the validity of the arbitration clause.
Moreover, since respondent did not participate in the arbitration, it need not have raised the
issue before the trial court or the arbitrator. Second, respondent raised no question of the
interpretation of the forum-selection clause, but only a question of its validity. The validity of
an arbitration clause is determined by the court, not the arbitrator. See IKO Chicago, Inc.,
183 Ill. 2d at 74 (under section 2, “once the trial court determines that a valid arbitration
agreement exists, the court must compel arbitration”).
¶ 35 For the foregoing reasons, we hold that, according to the criteria of section 12(a)(5),
respondent preserved its challenge to the validity of the forum-selection clause.
¶ 36 We proceed to the merits of respondent’s challenge. At the outset, we note that the
arbitration clause in the Agreement reflects two choices by the parties: one, that the
arbitration will occur in Illinois, and, two, that Illinois law will apply. In the court below,
respondent made no direct attack on the choice-of-law provision, but did, in the course of
attacking the forum-selection provision, raise the matter of Illinois’s connection to the
underlying dispute.
¶ 37 “A forum selection clause in a contract is prima facie valid and should be enforced unless
the opposing party shows that enforcement would be unreasonable under the circumstances.”
(Internal quotation marks omitted.) Compass Environmental, Inc. v. Polu Kai Services, L.L.C.,
379 Ill. App. 3d 549, 554-55 (2008). “The burden of proving the unreasonableness of a
selected forum *** falls on the party opposing enforcement of the forum selection clause.”
Brandt v. MillerCoors, LLC, 2013 IL App (1st) 120431, ¶ 18. That party must show “that trial
in the contractual forum will be so gravely difficult and inconvenient that [the party] will for
all practical purposes be deprived of his day in court.” (Internal quotation marks omitted.)
Calanca, 157 Ill. App. 3d at 87-88. Courts are particularly reluctant to void a forum-selection
clause on inconvenience grounds where “both parties freely entered the agreement
contemplating such inconvenience should there be a dispute.” Id. at 88. “A forum selection
agreement reached through arm’s-length negotiation between experienced and sophisticated
businesspeople should be honored by them and enforced by the courts, absent some
compelling and countervailing reason for not enforcing it.” IFC Credit Corp. v. Rieker Shoe
Corp., 378 Ill. App. 3d 77, 86 (2007).
¶ 38 The factors from Calanca for determining the validity of a forum-selection clause 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.
Calanca, 157 Ill. App. 3d at 88.
¶ 39 We begin with factor (6), since if the Agreement’s forum-selection clause was the subject
of arm’s-length negotiation between parties with equal bargaining power, we are to enforce
the clause absent a compelling and countervailing reason to the contrary. IFC Credit Corp.,
378 Ill. App. 3d at 86. Respondent bore the burden of proving the clause unreasonable, but
respondent gave no indication that it lacked the necessary sophistication to negotiate a more
favorable forum. In her affidavit, Presley averred that no representative of respondent
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negotiated the terms of the Agreement, but rather Presley “just signed the form contract that
was provided for [her].” A failure to negotiate, however, does not equate to an inability to do
so. Nor does Presley’s assertion that respondent is “a small mom and pop company” reveal
anything about respondent’s capacity to bargain.
¶ 40 Respondent also claimed below that its disadvantage during the contract-formation
process was evident in the fact that the arbitration clause was in small print. We do not accept
this characterization. The copy of the Agreement in the record shows the arbitration clause
on the first page. The body of the text on that page is all the same, reasonable size. Also, the
arbitration clause is partly bolded. The ordinary reader would surely have noticed the clause.
¶ 41 Having no reason to doubt that the parties had equal bargaining power, we apply the
remaining factors with a view to whether respondent presented a compelling reason for
voiding the parties’ forum selection. Notably, since respondent had the burden to prove the
forum choice unreasonable, any factor that is even neutral on the forum question essentially
weighs in favor of the forum choice.
¶ 42 On factor (1), concerning which state’s law governs the formation and construction of the
contract, respondent asserted below that Arizona law governed because, as Presley averred,
she signed the Agreement last and did so from respondent’s Arizona’s office. “Therefore,”
respondent concluded, “the contract was formed in Arizona and any issues relating to
construction or formation would be governed by Arizona law.” Petitioner agrees that the
Agreement “was executed in Arizona,” but argues that factor (1) still favors an Illinois forum
because of the choice-of-law provision designating Illinois law to govern disputes arising
from the Agreement. We agree with this position. Where the parties choose a particular
state’s law, the sensible forum for adjudication is that state. See Brandt, 2013 IL App (1st)
120431, ¶ 14; Yamada, 305 Ill. App. 3d at 368; Calanca, 157 Ill. App. 3d at 88. In the court
below, respondent’s argument on factor (1) focused on signatures while utterly ignoring the
choice-of-law provision. Factor (1), we conclude, does not weigh against the parties’ forum
choice.
¶ 43 As for factor (2), the residency of the parties, respondent proposed that the factor was
neutral because petitioner is a Nevada company while respondent is an Arizona company.
See Yamada, 305 Ill. App. 3d at 368 (“A corporation is a resident of the state or country
under whose laws it was organized.”). Petitioner agrees that factor (2) is neutral, as do we.
However, since the factor is neutral, it does not weigh against the chosen forum.
¶ 44 On factor (3), the place of execution and/or performance of the contract, petitioner
concedes that, “[b]ecause the Agreement was executed in Arizona, [respondent’s] home state
does have some interest in resolving this dispute.” As for the place of performance, Presley
averred that “all the consulting work done pursuant to [the Agreement] was done at
[respondent’s] office in Arizona.” Petitioner did not rebut this averment. Nonetheless, the
fact that the parties freely chose Illinois law to govern diminishes the significance of
Arizona’s connection to this dispute. We conclude that factor (3) is neutral and, at best,
weighs only slightly against Illinois as forum.
¶ 45 On factor (4), the location of the parties and witnesses participating in the litigation,
respondent argued below that the factor was neutral because petitioner would have witnesses
in Illinois and respondent would have witnesses in Arizona. We disagree that the factor is
neutral. Respondent, which had the burden in its forum-selection challenge, did not
demonstrate the unavailability of alternatives to physical travel of witnesses, such as
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evidence depositions and videotaped testimony. See Brandt, 2013 IL App (1st) 120431, ¶ 17;
Calanca, 157 Ill. App. 3d at 89. Factor (4) does not weigh against the forum choice.
¶ 46 Factor (5) concerns the inconvenience to the parties of any particular location.
Respondent had a high burden in claiming inconvenience, particularly since, as we have
determined, the forum-selection clause was the product of free bargaining. Respondent
claimed that, because of financial constraints, it “would not be able to mount a defense in
Illinois.” Respondent relied on Presley’s averments that respondent (1) is a “small mom and
pop company”; (2) suffered a financial loss the prior year; (3) “cannot and could not afford
the $3000 fee required of the Arbitrator”; and (4) cannot “afford to fly [its] witnesses and
evidence to the State of Illinois for a [t]rial or arbitration.” We cannot assess respondent’s
fiscal condition, because the financial records Presley claimed to have attached to her
affidavit are not in the record. Also, it is not clear if the $3,000 fee relates to arbitration in
Illinois particularly. Moreover, respondent has failed, as we noted, to demonstrate that it
could not spare its witnesses travel to Illinois through use of alternatives like evidence
depositions and videotaped testimony. Finally, while respondent complained that transferring
its evidence to Illinois would have been a hardship, respondent was not specific about the
nature or quantity of evidence required for the arbitration.
¶ 47 Having applied the Calanca factors, we conclude that respondent did not establish any
compelling or countervailing reason for upsetting the parties’ choice of Illinois as their
arbitration forum. The only factor that potentially weighs against the choice of Illinois as
forum is that the Agreement was signed, and the contemplated services performed, in
Arizona. Depreciating the weight of this factor, however, is the fact that the parties agreed to
apply Illinois law to their dispute. Under our de novo standard of review, we hold that the
trial court committed prima facie reversible error in invalidating the forum-selection clause.
¶ 48 The valid forum-selection clause satisfies jurisdictional requisites. Consequently, we
need not address petitioner’s challenge to the trial court’s secondary finding that Illinois
lacked personal jurisdiction over respondent.
¶ 49 As the trial court apparently did not address all issues raised in respondent’s motion to
vacate the arbitrator’s award, we remand for further proceedings on the motion.
¶ 50 III. CONCLUSION
¶ 51 For the foregoing reasons, we vacate the judgment of the trial court and remand this
matter for further proceedings consistent with this opinion.
¶ 52 Vacated and remanded.
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