Radiant Star Enterprises, L.L.C. v. Metropolis Condominium Association

2018 IL App (1st) 171844
No. 1-17-1844
Fourth Division
June 7, 2018
______________________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
FIRST DISTRICT
______________________________________________________________________________
)
RADIANT STAR ENTERPRISES, L.L.C., ) Appeal from the Circuit Court
) of Cook County.
Plaintiff-Appellee, )
) No. 15 CH 15357
v. )
) The Honorable
METROPOLIS CONDOMINIUM ASSOCIATION, ) Michael T. Mullen,
) Judge Presiding.
Defendant-Appellant. )
)
______________________________________________________________________________
JUSTICE GORDON delivered the judgment of the court, with opinion.
Presiding Justice Burke and Justice McBride concurred in the judgment and opinion.
OPINION
¶1 The instant appeal arises from cross-motions for summary judgment filed by plaintiff
Radiant Star Enterprises, L.L.C., and defendant Metropolis Condominium Association and
involves a single question: if a party has allegedly breached an arbitration clause with respect
to one dispute, may that same party nevertheless demand arbitration on a different, unrelated,
dispute? The trial court determined that it could under the language of the parties’ arbitration
agreement, granting summary judgment in favor of plaintiff and denying defendant’s cross-
motion for summary judgment. For the reasons that follow, we affirm the trial court’s
judgment.
No. 1-17-1844
¶2 BACKGROUND
¶3 I. Complaint
¶4 On October 19, 2015, plaintiff filed a complaint for declaratory judgment to enforce an
arbitration clause, seeking a ruling that defendant was required to arbitrate a particular
dispute between plaintiff and defendant. The complaint alleges that plaintiff and defendant
were owners of portions of the building located at 8 West Monroe Street 1 in Chicago. The
building was divided into three zones—the “Residential Parcel,” the “Retail Parcel,” and the
“Office Parcel.” Plaintiff owned the Office Parcel, while defendant represented the owners of
the Residential Parcel, which was comprised of condominium units.2 The Retail Parcel
consisted of the first two floors of the building, the Office Parcel consisted of the third floor,
and the Residential Parcel consisted of all floors from the fourth floor to the top of the
building. The relationship between the respective owners was governed by a document
entitled the “Reciprocal Easement and Operating Agreement” (REA). The complaint alleges
that “[t]he Retail Owner and the Office Owner own their respective portions of the Building,
but they are not members of the Defendant. Because it owns a large majority of the Building
and controls most of the common elements and building systems, as a practical matter the
Residential Owner, embodied in and represented by the Defendant, has more power and
more responsibilities pursuant to the REA.” The complaint alleges that plaintiff began its
efforts to build out the Office Parcel for its business use in January 2013 and that the dispute
between the parties was the result of defendant’s interference with deliveries of mail,
packages, and materials to the Office Parcel; access to the building’s utilities and systems;
and electronic access to the building’s elevator systems.
1
The record reflects that the building is also known by the address of 36 South State Street.
2
The Retail Parcel is not at issue on appeal, and its owner is not a party to the instant litigation.
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No. 1-17-1844
¶5 The complaint alleges that the REA required mandatory arbitration to resolve disputes
between the parties, and on July 27, 2015, plaintiff made a formal demand for arbitration.
However, on August 12, 2015, defendant responded, stating that it “reject[ed]” plaintiff’s
demand for arbitration. The sole count of the complaint was for declaratory judgment and
sought a finding that the parties were bound by the terms of the REA and that defendant was
obligated to arbitrate the dispute.
¶6 Attached to the complaint were excerpts from the REA, including article 13, which was
entitled “Arbitration.” Section 13.1 was entitled “Disputes Subject to Arbitration” and
provided:
“Each of the questions, differences, disputes, claims or controversies arising among
or between Owners under this Agreement which shall not be resolved within forty
five (45) days after it shall arise (or other such shorter or longer time period expressly
provided herein), shall be submitted for arbitration (including, without limitation, any
matter expressly made an Arbitrable Dispute or subject to arbitration under this
ARTICLE 13 by the terms of this Agreement). Notwithstanding anything to the
contrary herein, in no event shall any arbitration under this ARTICLE 13 result in the
change in the respective cost sharing percentages set forth in this Agreement.”
¶7 Section 13.2 was entitled “Arbitration Procedure” and set forth the procedure for
arbitration proceedings. Under this section, “[i]n the event of an Arbitrable Dispute, any
Owner involved in the Arbitrable Dispute shall have the right to commence arbitration by
written notice to the other Owners.” Within seven days of the delivery of the notice, each of
the owners involved in the arbitration was required to appoint one attorney to represent the
owner in connection with the dispute; the two owner attorneys then collectively appointed
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one independent attorney and the three appointed attorneys comprised the arbitration panel.
Within 30 days of the appointment of the third attorney, the arbitration panel was required to
render its decision regarding the dispute. Section 13.2 also provided that “Owners may not
seek injunctive relief in the arbitration.” More importantly, section 13.2(f) provided:
“The decision of the Panel, and any award of the Panel, shall be final, binding upon
the Owners and unappealable, and judgment thereon shall be entered by any court of
competent jurisdiction. Failure to comply with the decision of the Panel shall be
deemed a default under this Agreement. Any award including payment of delinquent
amounts shall include interest on such delinquent accounts at the rate set forth in
Section 12.4.”
¶8 Also attached to the complaint was a letter dated July 27, 2015, from plaintiff to
defendant, exercising plaintiff’s right to arbitration with respect to disputes concerning access
to utilities, mail and package delivery, and elevator access. The letter also contained a copy
of an airbill from FedEx, showing that the letter had been sent via overnight delivery on July
27, 2015.
¶9 II. Motion to Dismiss
¶ 10 On November 16, 2015, defendant filed a motion to dismiss the complaint pursuant to
section 2-619(a)(9) of the Code of Civil Procedure (Code) (735 ILCS 5/2-619(a)(9) (West
2014)), arguing that plaintiff had forfeited its right to rely on the REA’s arbitration provision
because plaintiff had failed to comply with a recent arbitration award, thereby expressly
breaching the arbitration provision. Defendant argued that “[plaintiff’s] breach constitutes a
repudiation and default of that provision. As a result, [plaintiff] cannot enforce the arbitration
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No. 1-17-1844
provision of the REA to compel arbitration of a new dispute. Therefore, its complaint to
compel arbitration should be dismissed.”
¶ 11 Defendant claimed that plaintiff and defendant had engaged in arbitration in March 2015
with respect to disputes concerning plaintiff’s buildout of the Office Parcel and that an
arbitration award had been entered on April 8, 2015. According to defendant, while
defendant complied with the award, plaintiff did not. Instead, plaintiff filed a petition to
vacate the award in federal district court and, when the district court confirmed the award,
plaintiff filed an appeal to the Seventh Circuit Court of Appeals. When plaintiff sent a
demand to arbitrate the new disputes, defendant advised plaintiff that plaintiff’s refusal to
comply with the earlier arbitration award was a breach of the arbitration provision and that
defendant would not participate in any further arbitration proceedings until plaintiff complied
with the earlier award.
¶ 12 Attached to the motion to dismiss was a copy of an arbitration award, dated April 6,
2015. 3 The award indicated that the panel considered four categories of potential breaches:
(1) the sewer pipes; (2) the heating, ventilation, and air conditioning (HVAC) system; (3) the
third-floor windows; and (4) ingress/egress. With respect to the issue of sewer pipes, the
panel ordered that defendant was to obtain “a complete survey of all the ceiling pipes
existing on the third floor, at [defendant’s] own expense, and to provide the same to
[plaintiff]. Then [defendant] must pay for the cost of any necessary repairs.” With respect to
the issue of the HVAC system, the panel found that defendant had no obligation to supply the
3
The parties refer to the arbitration award throughout the litigation as being issued on April 8, as
did the trial court below. However, the copy of the award contained in the record on appeal lists the date
as April 6. As this is clearly the same arbitration award referenced by the parties, the slight discrepancy
between the dates does not appear important.
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No. 1-17-1844
Office Parcel with an HVAC system and that the cost of improvements to the Office Parcel
belonged exclusively to plaintiff.
¶ 13 With respect to the issue of the windows, the panel noted that the REA “is not a drafting
masterpiece” but that, pursuant to its terms, plaintiff bore the cost of repairing and replacing
the windows and “the evidence is undisputed that the remaining not yet replaced third floor
windows are hazardous and must be immediately replaced.” Finally, with respect to the issue
of ingress and egress, the panel found that defendant “failed to reasonably cooperate with
[plaintiff] in developing an appropriate scaffolding and Traffic Plan, as required by both
Articles 16.1(b)(viii) and 16.1(b)(ix) and Article 3.3. [Defendant] was obligated to cooperate
pursuant to the REA as well as under the common law doctrine of good faith and fair dealing
implied in any contract.” The panel continued: “The panel thus orders that Metropolis
Exhibit 24 is to be executed by both parties within seven (7) calendar days, from the date of
the entry of this Award, and will be the Traffic Plan adopted for the remainder of the
construction of the project.” 4
¶ 14 The panel also ordered defendant to “immediately send notice to the Alderman that
[defendant] withdraws its objections to any of [plaintiff’s] permits.” Finally, the panel
ordered that plaintiff “must commence to immediately thereafter, construct scaffolding on
Monroe Street and then, replace the third floor windows, to provide safety to the public, as
well as residents of the [building] and workers and delivery persons to this building. If
[plaintiff] fails, for any reason, to complete this replacement of the windows, [defendant]
shall do so and shall be entitled to payment by [plaintiff] pursuant to Exhibit 7.6(cc), plus
4
“Metropolis Exhibit 24” is not included in the record on appeal.
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No. 1-17-1844
interest accruing thereon.” As a final matter, the panel found that both parties failed to
establish any damages and declined to enter a monetary award to either party.
¶ 15 Also attached to the motion to dismiss was a copy of an August 24, 2015, order from the
federal district court, denying plaintiff’s petition to vacate the arbitration award and granting
defendant’s cross-motion to confirm the award, and a September 21, 2015, notice of appeal
to the Seventh Circuit Court of Appeals.
¶ 16 In response to the motion to dismiss, plaintiff claimed that it had complied with the
earlier arbitration award. It claimed that it replaced the third floor windows, installed its own
HVAC system, and bore the costs of those improvements. Plaintiff further claimed that “[i]n
the course of the project, deliveries were made in accordance with the City-issued permits
and the essential terms of the Traffic Management Plan were followed, although [plaintiff]
did not formally sign off on it.” Plaintiff claimed that “[w]hether this compliance was
sufficiently strict is beside the point, because with construction complete, the Award’s
requirement that ‘the parties’ ‘sign and implement’ the Traffic Management Plan ‘for the
remainder of the construction project’ became moot.” Furthermore, plaintiff claimed that
defendant had actually failed to comply with the arbitration award because defendant had
failed to properly repair the sewer lines, as it was required to do under the award. Finally,
plaintiff claimed that its seeking judicial review of the arbitration award did not violate the
REA and did not preclude further arbitrations because both Illinois and federal law permitted
judicial review of “final and unappealable” arbitration awards. Plaintiff also claimed that any
issues concerning the appealability of the award was nevertheless moot, because it had
chosen to dismiss the federal appeal.
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¶ 17 Attached to the response was the affidavit of Duane Varan, plaintiff’s principal, who
averred that plaintiff complied with the arbitration award by replacing the third floor
windows and installing its own HVAC system, both at its own expense. Varan averred that,
with respect to the traffic management plan, “the Award required that [plaintiff] adopt the
Traffic Management Plan ‘for the remainder of the construction project.’ [Plaintiff’s]
construction project is now complete, and there is no longer any need for a TMP. The
proposed TMP was designed to address situations wherein construction deliveries would
temporarily block access to the building’s parking garage. The TMP issue has been mooted
by the completion of [the] third floor build out.” Varan further averred that the award
required defendant to repair the sewer piping for the building, which it had not done. Varan
averred that “[plaintiff] has registered complaints to [defendant] that the repairs undertaken
by [defendant] to repair the sewer lines are shoddy, and that the [defendant’s] sewer lines
continue to leak. Despite these complaints, [defendant] has refused to repair the sewer lines,
as ordered by the Award, at a time or times that do not interfere with [plaintiff’s] business.”
¶ 18 In its reply in support of the motion to dismiss, defendant claimed, inter alia, that
plaintiff had not replaced the windows as plaintiff claimed but “has replaced only the glass
window panes in the Office Parcel. [Citation.] It has not replaced any of the other dilapidated
window components as required by the April 8th award. [Citation.] Indeed, the failing
frames, systems, joints, and seals remain on windows throughout the Office Parcel.”
Defendant also clarified that “[plaintiff’s] appeal to the Seventh Circuit was precluded by the
REA and therefore a material breach. [Citation.] [Defendant] does not argue that the REA’s
arbitration provision precludes all judicial review, as [plaintiff] suggests.” (Emphasis in
original.)
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¶ 19 On May 26, 2016, the trial court denied defendant’s motion to dismiss.
¶ 20 III. Answer and Affirmative Defenses
¶ 21 On June 30, 2016, defendant filed its answer and affirmative defenses. Defendant raised
three affirmative defenses. The first was for material breach and alleged that “[t]o date,
[plaintiff] has failed to fully replace the Office Parcel Window Systems, as instructed by the
arbitrators’ April 8th award. It has thus failed to comply with that award and is in material
breach of the REA’s arbitration provision.” Thus, defendant alleged that plaintiff was
“precluded from invoking the arbitration provision of the REA to compel arbitration of new
disputes while it materially breaches that provision.” The second affirmative defense was for
default and alleged that plaintiff had failed to comply with the arbitration award and
“[i]nstead, [plaintiff] filed a petition to vacate the April 8th award in federal court,” where
the arbitration award was confirmed. Defendant alleged that plaintiff “cannot enforce the
arbitration provision of the REA now to compel arbitration of new disputes while it is in
default.” The third affirmative defense was for estoppel and alleged that on February 19,
2016, plaintiff filed a lawsuit in the circuit court of Cook County, in which it requested the
court to resolve certain disputes for which it had not sought arbitration. Defendant thus
alleged that plaintiff was “estopped from asserting that the arbitration provision of the REA
requires arbitration of all disputes between Building Owners.”
¶ 22 On July 15, 2016, plaintiff filed an answer to defendant’s affirmative defenses, in which
it alleged that the arbitration award required plaintiff to replace the “windows,” not the
“window systems,” as defendant alleged. Plaintiff also alleged that it had replaced the
windows as required by the arbitration award. Plaintiff admitted that it had filed a lawsuit in
the circuit court of Cook County, which sought a temporary restraining order with respect to
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No. 1-17-1844
the issue of access to satellite TV facilities, and pointed to a provision in the REA indicating
that owners were not permitted to seek injunctive relief in arbitration. Plaintiff further alleged
that defendant consented to the jurisdiction of the court and that the case was resolved by the
entry of an order negotiated between plaintiff and defendant, which occurred after the court
had “specifically rejected [defendant’s] argument that [plaintiff] was required to seek
arbitration.”
¶ 23 IV. Motions for Summary Judgment
¶ 24 A. Plaintiff’s Motion
¶ 25 On August 3, 2016, plaintiff filed a motion for summary judgment, claiming that the
instant dispute was arbitrable under the language of the REA, that plaintiff had
“undisputedly” satisfied the conditions in the REA for arbitrating a dispute, and that
defendant’s affirmative defenses “have no factual or legal merit, and they are essentially the
same as the arguments rejected by [the trial court] in denying the Motion to Dismiss.”
¶ 26 Attached to the motion for summary judgment were a number of exhibits, including the
report of Lyle Hill, the managing director of Keytech North America, a company that
provided research and technical services focusing on the glass and metal industry. Hill’s
report was in the form of a December 16, 2014, letter to Adam Zarafshani of Panache
Development & Construction, Inc. (Panache), plaintiff’s general contractor, and provided:
“In follow up of our meeting yesterday at the above referenced site, I want to go
on record as stating that I feel the glass condition on the south elevation overlooking
Monroe Street is extremely hazardous. I put a thickness meter on all of the glass that I
could reach and the thickest of the readings that I got indicated that the glass is ¼-
inch thick. None of the glass was labeled as being safety glass of any type and should
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No. 1-17-1844
one of these lites break, anyone walking below at the time could potentially be
seriously hurt. Minimally, a safety film should be applied to these pieces of glass as
soon as possible. Ideally, a new framing system with safety glass would be installed
providing both increased energy efficiencies as well as a much safer situation.
The fifth opening from the west on the south elevation (which has not been split
with a division bar) is of primary concern to me. This piece of glass is approximately
122” wide by 129” in height and is a ¼-inch piece of monolithic annealed plate glass
which doesn’t even come close to complying with wind load requirements as per city
code. While none of the glazed openings are adequately secure, this particular lite of
glass which is over 100 square feet truly concerns me.
These glazed openings are simply not safe. My recommendation is that all of
them be replaced with proper framing and glass that is in compliance with city code
and common sense safety requirements.
Please feel free to contact me for further discussion on this or any other matter.”
(Emphasis in original.)
¶ 27 Also attached to the motion for summary judgment was a complete copy of the REA,
several provisions of which are relevant to the case at bar. Article 1 of the REA contained
definitions, and section 1.1(ff) defined the term “façade” as follows:
“The exterior walls of the Residential Parcel Improvements, the Office Parcel
Improvements and/or the Retail Parcel Improvements, as the context may dictate,
from the street level up to the Building roof, consisting of the terra cotta, pre-case
cement materials and other facing materials, colonnades and the cornice at the top of
the Building covering or attached to the concrete or steel structural supports forming
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No. 1-17-1844
the curtain wall of the Building, window frames, window systems, joints and seals,
but excluding (i) the Building roof and the roof structure, membrane, flashings and
seals over the cornice; and (ii) the structural supports for the exterior wall of the
Building.”
¶ 28 Article 3 of the REA concerned easements burdening the Residential Parcel and provided
that “[a]ny disputes concerning the existence, location, nature, use and scope of any of the
Easements granted under this ARTICLE 3 shall constitute Arbitrable Disputes.” Section 3.3
specifically concerned the grant of easements in favor of the Office Parcel. Section 3.3(a)
granted:
“Ingress and Egress. A non-exclusive easement for ingress and egress only for
Persons, vehicles, material and equipment in, over, on, across and through such
portions of the Residential Parcel as are reasonably necessary to: (i) permit the use,
operation and Maintenance (but only if and when such Maintenance is required or
permitted under this Agreement) of the Office Parcel, including, without limitation,
the Office Owned Facilities and those portions of the Residential Parcel containing
the access pathways to and from the Office Parcel and the loading dock, freight
elevator, Trash Room and garbage dumpster referenced in Section 3.3(d) below, or
(ii) perform (y) Alterations, pursuant to Article 16 hereof, and (z) restoration after
damage or destruction, pursuant to Article 11 hereof, or condemnation, pursuant to
Article 15 hereof.”
Section 3.3(i) granted:
“Lobby, Elevators and Stairwells. A non-exclusive easement for the Office Owners
and its Permittees for the use of the elevators and stairwells located within the
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No. 1-17-1844
Residential Parcel and for pedestrian ingress and egress over, upon, across and
through the lobby for the Residential Parcel to and from the Monroe Street entrance
to the Building from and to the Office Parcel.”
¶ 29 Article 7 of the REA concerned “Services to Other Owners.” Section 7.1 set forth
“Services to the Office Owner by Residential Owner” and provided that:
“From and after the substantial completion of the Office Parcel Improvements, the
Residential Owner shall furnish or cause to be furnished the following services to the
Office Owner when, as, and if required or requested by the Office Owner:
***
(i) Façade. Maintenance of the Façade constituting a portion of the Office Parcel
Improvements and washing of the exterior windows within the Office Parcel not
fewer than three (3) times annually.”
¶ 30 Article 11 of the REA concerned “Maintenance and Repair.” Section 11.1 concerned
“Maintenance of Residential Parcel Improvements, Office Parcel Improvements and Retail
Parcel Improvements; [and] Restoration,” and provided, in relevant part:
“Except as expressly provided in ARTICLE 7 hereof (and related Exhibits) relating to
Maintenance of certain Facilities and areas of the Residential Parcel, Retail Parcel
and Office Parcel, or hereinafter in this ARTICLE 11, the Residential Owner, Retail
Owner and Office Owner shall, at their respective sole cost and expense, maintain
and keep their respective Parcels and Improvements, including all Facilities located in
their respective Parcels and Improvements and all Owned Facilities owned by such
Owners, respectively, in good order and condition, comparable to other Class A ‘first
class’ mixed-use residential condominium projects with associated parking in
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No. 1-17-1844
downtown Chicago, and shall make all repairs or replacements of, in, on, under,
within, upon or about such property, whether said repairs or replacements are to the
interior or exterior thereof (including, without limitation, the Façade and the party
wall (the ‘Party Wall’) located between the Property and the property located at 26-34
South State Street located adjacent to the Property to the north), or structural or non­
structural components thereof, or involve ordinary or extraordinary repairs or
replacements, necessary to keep the same in Class A ‘first class’ order and condition,
howsoever the necessity or desirability thereof may arise, and whether or not
necessitated by wear, tear, obsolescence, defects or otherwise.”
¶ 31 Article 22 set forth a number of “General” provisions. Section 22.1 was entitled
“Cooperation of Owners” and provided:
“In fulfilling obligations and exercising rights under this Agreement, each Owner
shall cooperate with the other Owners to promote the efficient operation of each
respective portion of the Improvements and the harmonious relationship among the
Owners and to protect the value of each Owner’s respective portion, estate or interest
in the Land and Improvements. To that end, each Owner shall share information
which it possesses relating to matters which are the subject of this Agreement, except
such information as an Owner may reasonably deem confidential or privileged or
which may be the subject of litigation or which such Owner is prohibited from
revealing pursuant to court order. From time to time after the date hereof, each Owner
shall furnish, execute and acknowledge, without charge (except where elsewhere
provided herein) such other instruments, documents, materials and information as
another Owner may reasonably request in order to confirm to such Requesting Owner
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No. 1-17-1844
the benefits contemplated hereby, but only so long as any such request does not
restrict or abridge the benefits granted the other Owners hereunder.”
Section 22.17 was entitled “Default Shall Not Permit Termination of Agreement; No
Rescission Without Unanimous Consent” and provided:
“No default under this Agreement shall entitle any party hereto to terminate, cancel or
otherwise rescind this Agreement or any of the easements, terms or conditions set
forth herein; provided, however, that this limitation shall not affect any other rights or
remedies the parties hereto may have by reason of any default under this Agreement
or any written amendment or supplement hereto. No party hereto may rescind this
Agreement without the written consent of all of the Owners.”
¶ 32 On August 9, 2016, defendant filed a request for discovery in connection with plaintiff’s
motion for summary judgment, requesting to depose Lyle Hill, plaintiff’s window
replacement expert, and to inspect the Office Parcel to determine what components of the
window systems had been replaced. On August 11, 2016, the trial court entered and
continued plaintiff’s motion for summary judgment and defendant’s motion for discovery,
but ordered inspection of the Office Parcel windows to take place within 30 days. The record
reflects that this inspection occurred on August 24, 2016.
¶ 33 B. Defendant’s Response/Cross-Motion
¶ 34 On March 22, 2017, defendant filed a combined cross-motion for summary judgment and
response to plaintiff’s motion for summary judgment, 5 in which defendant claimed that
plaintiff had forfeited its right to invoke the arbitration provision of the REA because of its
5
We note that defendant’s motion for summary judgment does not appear in the record on appeal;
the record only contains a “combined memorandum in support of its motion for summary judgment and
in opposition to plaintiff’s motion for summary judgment.”
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No. 1-17-1844
failure to comply with the earlier arbitration award. As a result, defendant sought “an order
declaring that: 1) [plaintiff] has materially breached and repudiated the arbitration provision
of the REA; 2) [plaintiff] is in default under the arbitration provision of the REA; and 3)
[plaintiff] cannot enforce the arbitration provision of the REA now to compel [defendant] to
arbitrate alleged new disputes.” In its memorandum, with respect to the windows, defendant
focused on black metal “jambs” that were located on the exterior of the building and were
“rusted and corroded.” Defendant claimed that plaintiff “has not fully replaced the Office
Panel Window Systems, as required by the award. It has not replaced the window jambs that
are a key component of the Office Parcel Window Systems.” Defendant also claimed that
plaintiff never signed or implemented the traffic management plan, as required by the award,
and impermissibly appealed the arbitration award to the Seventh Circuit.
¶ 35 Attached to defendant’s cross-motion for summary judgment were excerpts from the
discovery deposition of Duane Varan, plaintiff’s principal, who testified that “of course”
plaintiff replaced the windows in the Office Parcel. Varan testified that plaintiff did so
“[v]ery soon after the arbitration. We started the process for replacing the windows
immediately after the arbitration.” Varan admitted, however, that plaintiff never executed the
traffic management plan.
¶ 36 Also attached to defendant’s cross-motion for summary judgment were excerpts from the
discovery deposition of Lyle Hill, plaintiff’s window replacement expert, who testified that
he had testified at the earlier arbitration hearing. Hill testified that a “mullion” was “part of
the frame system,” and, looking at a photograph, 6 testified that “[t]he frame system here is
6
The photographs attached to defendant’s cross-motion for summary judgment appear to be poor-
quality photocopies. The photos contain a marking that Hill placed to identify the “right jamb.” Hill does
not appear to have made any markings when testifying that “[t]his would be considered a mullion.” The
“right jamb” appears to be a pillar on the side of the window extending the height of the window.
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No. 1-17-1844
anything that’s not a piece of glass, theoretically. So this would be a jamb. This would be
considered a mullion.” Hill testified:
“Typically, a mullion divides two pieces of glass.
This is the original system. So this is actually—at one time this was probably an
operating window. I’m guessing this was a double-hung of some type because further
down when I looked at this there were some double-hungs. The frames you could still
see at one time were double-hung window.
So this would probably be looked at by most people as just a single wood window
opening. And then this would become then the right jamb for this very large opening.
And this piece that’s in here now in this picture was actually called a division bar.
This would not be, for anyone from my era, called a mullion. It acts as a mullion kind
of.”
Hill marked the photo with a “DB” to mark the division bar, which appears to be a narrower
vertical piece extending the height of the window. Hill further testified:
“I’m going to put DB with an arrow to the center member of this opening and that
would be a light weight division bar. Not a—again, there’s these little nomenclature
things. That’s not a mullion.
***
And there’s an argument that would say there are no mullions in this opening
because these are actually solid wood jambs with a header and a sill and the openings
have been split in half with this division bar.”
When asked whether the jambs “are part of the window system?” Hill testified that “[t]hey
are in this application, yes.”
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No. 1-17-1844
¶ 37 Also attached to the cross-motion for summary judgment were excerpts from the
discovery deposition of Zarafshani, who testified that there had been materials delivered to
complete the window replacement. Zarafshani identified a traffic management plan that the
arbitrators had ordered the parties to use, but disagreed with counsel’s characterization of the
plan as applying to more than simply addressing of scaffolding issues during the construction
buildout. With respect to the windows, Zarafshani testified that his “layman’s interpretation”
of the arbitration award “would be that they wanted the windows, meaning the framing, and
the glass replaced.”
¶ 38 Also attached to the cross-motion for summary judgment was a “Declaration,” certified
under section 1-109 of the Code (735 ILCS 5/1-109 (West 2014)), from James Erickson, a
licensed architect and registered energy professional who was also principal and president of
Kellenmeyer Godfryt Hart, P.C., where his responsibilities included “investigating
performance problems in distressed and deteriorated buildings; evaluating the performance of
curtain walls, terra cotta, and window systems in existing and newly constructed residential
and commercial buildings; and serving as a consultant during façade and window
replacement projects.” Erickson stated that he was familiar with the building at issue and
“ha[d] performed numerous inspections of the exterior of that Building,” during which he
examined the façade and window systems of various floors, including the third floor.
Erickson further stated:
“6. My experience evaluating window systems has made me familiar with the
different components of a window system. One of the components of a window
system is the main window frame. The window frame consists of but is not limited to
the side vertical jambs, the head and sill members. Additionally, in large window
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No. 1-17-1844
openings vertical mullions supplement the framing system. They provide structural
support for the window system.
7. The window systems on the third floor of the Building contain the members as
itemized above. The frame members in the third floor window systems are metal,
painted black, and located on the exterior of the building.
8. They provide structural support (i.e. wind loading), and are a key component of
those window systems.
9. The window framing members on the third floor are original to the Building.
They are rusted and corroded and the applied paint coating is peeling and failed. Rust
and corrosion can compromise the structural integrity of the jambs.”
Erickson stated that photographs attached to his declaration were taken by a colleague on
February 20, 2017, and “depict[ed] the current condition of the third floor window jambs.”
The photographs are color photographs of the windows, taken from the building’s exterior,
that depict black vertical pillars on each side of the windows, extending the height of the
window. The pillars appear to have either rust or paint chipped from them, as they are not
smooth black.
¶ 39 Also attached to the cross-motion for summary judgment was the affidavit of Kim
Wenkus, defendant’s property manager, who averred that defendant had inspected, surveyed,
and repaired the sewer pipes located in the Office Parcel; that defendant had contacted the
alderman’s office, requesting that the office remove the freeze placed on plaintiff’s building
and delivery permits; and that defendant executed the traffic management plan on April 15,
2015. Wenkus further averred that plaintiff had not returned a copy of the traffic
management plan bearing its signature to defendant.
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No. 1-17-1844
¶ 40 C. Plaintiff’s Reply/Response to Cross-Motion
¶ 41 In its combined reply in support of its motion for summary judgment and response to
defendant’s cross-motion for summary judgment, plaintiff argued that the ornamental iron
pillars were not part of the windows and that an earlier expert on behalf of defendant had
agreed with that assessment. Plaintiff also argued that the traffic management plan was
intended to address closure of the alley as a result of the use of a scaffold for deliveries, and
that the scaffolding system was never used. Finally, plaintiff argued that the law provided for
judicial review of arbitration awards and that “judicial review” necessarily included appeals.
¶ 42 Attached to plaintiff’s reply was an e-mail chain consisting of two e-mails between
plaintiff’s counsel and defendant’s counsel. The first, dated August 24, 2016, was from
plaintiff’s counsel and stated:
“Pat, just to confirm—about half an hour ago we (you, me, Adam, Kim, Marv
Levin and Lyle Hill) met in the third floor space. Marv inspected the windows from
the inside, spoke to Lyle, and acknowledged that the entire window systems were
replaced, not just the panes. Marv also agreed that the decorative cast iron ‘columns’
on the outside, which are part of the original exterior and can’t be removed for
historical preservation reasons, are not part of the window systems. There is therefore
no dispute that in this regard, we have followed the Arbitrators’ instructions.”
The second e-mail, in response to the first, was dated August 26, 2016, and was from
defendant’s counsel. The e-mail stated:
“This email confirms that on August 24th we met in the third floor space. Marvin
Levine spoke to Lyle Hill about the windows. He inspected the windows from inside
that space. Mr. Levine noted that new aluminum window frames had been installed in
20
No. 1-17-1844
addition to the new glass windows. He also agreed that the case iron columns were
not part of the window system and could not be replaced.”
¶ 43 D. Defendant’s Reply to Cross-Motion
¶ 44 In its reply in support of its cross-motion for summary judgment, defendant stated that
Levine had not been retained as defendant’s “window expert” and so the court “should ignore
[plaintiff’s] attempt to argue that [defendant] is somehow bound by Mr. Levine’s
unsupported opinion.”
¶ 45 E. Trial Court Ruling
¶ 46 On July 13, 2017, the trial court entered an order granting plaintiff’s motion for summary
judgment and denying defendant’s cross-motion for summary judgment. The trial court first
found that the arbitration clause of the REA unambiguously required arbitration of the instant
dispute and that the parties essentially conceded this fact. Additionally, the trial court found
that defendant “ha[d] failed to plead and prove that any meritorious defenses preclude
enforcement of the REA Arbitration Clause.” The court disagreed with defendant’s
contention that any contract defenses could operate to invalidate the arbitration clause but
instead found that the case law provided that only defenses that rendered a contract void from
its inception would have such an effect, and that there was no such defense here. The court
also pointed to the language of section 22.17 of the REA, which it found “could not be more
clear as to the effect of a default under any provision of the REA. The remedy of rescission is
not available to either a defaulting or non-defaulting party, and the REA may not be
rescinded in any manner ‘without the written consent of all owners.’ ” (Emphasis in original.)
The court found:
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No. 1-17-1844
“Whether Plaintiff is in default of the REA related to a prior arbitration dispute is
irrelevant to this cause of action, as a matter of law. Defendant makes no allegations
that invoke a cognizable, general defense to enforcement of the Arbitration Clause.
The Contract expressly precludes the remedy sought by Defendant. Although
Defendant styles its defenses as material breach, default, and estoppel, the remedy
provided in holding in favor of Defendant would amount to a rescission of the
Arbitration Clause based upon Plaintiff’s prior conduct.”
Accordingly, the trial court granted plaintiff’s motion for summary judgment, denied
defendant’s cross-motion for summary judgment, and ordered the parties to submit the matter
for arbitration under the process set forth in the REA.
¶ 47 Defendant timely filed a notice of appeal, and this appeal follows. 7
¶ 48 ANALYSIS
¶ 49 On appeal, defendant claims that the trial court erred in granting summary judgment in
plaintiff’s favor because plaintiff’s failure to comply with the earlier arbitration award
precluded plaintiff from relying on the arbitration clause with respect to new disputes. A trial
court is permitted to grant summary judgment only “if the pleadings, depositions, and
admissions on file, together with the affidavits, if any, show that there is no genuine issue as
to any material fact and that the moving party is entitled to a judgment as a matter of law.”
735 ILCS 5/2-1005(c) (West 2014). The trial court must view these documents and exhibits
in the light most favorable to the nonmoving party. Home Insurance Co. v. Cincinnati
Insurance Co., 213 Ill. 2d 307, 315 (2004). We review a trial court’s decision to grant a
motion for summary judgment de novo. Outboard Marine Corp. v. Liberty Mutual Insurance
7
On August 1, 2017, the trial court entered an order staying enforcement of the July 13, 2017,
order pending appeal.
22
No. 1-17-1844
Co., 154 Ill. 2d 90, 102 (1992). De novo consideration means we perform the same analysis
that a trial judge would perform. Khan v. BDO Seidman, LLP, 408 Ill. App. 3d 564, 578
(2011).
¶ 50 “Summary judgment is a drastic measure and should only be granted if the movant’s right
to judgment is clear and free from doubt.” Outboard Marine Corp., 154 Ill. 2d at 102.
However, “[m]ere speculation, conjecture, or guess is insufficient to withstand summary
judgment.” Sorce v. Naperville Jeep Eagle, Inc., 309 Ill. App. 3d 313, 328 (1999). The party
moving for summary judgment bears the initial burden of proof. Nedzvekas v. Fung, 374 Ill.
App. 3d 618, 624 (2007). The movant may meet his burden of proof either by affirmatively
showing that some element of the case must be resolved in his favor or by establishing “ ‘that
there is an absence of evidence to support the nonmoving party’s case.’ ” Nedzvekas, 374 Ill.
App. 3d at 624 (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986)). When parties
file cross-motions for summary judgment, as was the case here, “they agree that only a
question of law is involved and invite the court to decide the issues based on the record.”
Pielet v. Pielet, 2012 IL 112064, ¶ 28 (citing Allen v. Meyer, 14 Ill. 2d 284 (1958)); Ruby v.
Ruby, 2012 IL App (1st) 103210, ¶ 13. However, the filing of cross-motions does not
necessarily mean there is not an issue of material fact, nor does it obligate a court to render
summary judgment. Pielet, 2012 IL 112064, ¶ 28. “ ‘The purpose of summary judgment is
not to try an issue of fact but *** to determine whether a triable issue of fact exists.’ ”
Schrager v. North Community Bank, 328 Ill. App. 3d 696, 708 (2002) (quoting Luu v. Kim,
323 Ill. App. 3d 946, 952 (2001)). We may affirm on any basis appearing in the record,
whether or not the trial court relied on that basis or its reasoning was correct. Ray Dancer,
Inc. v. DMC Corp., 230 Ill. App. 3d 40, 50 (1992).
23
No. 1-17-1844
¶ 51 In the case at bar, defendant asks us to find that a prior breach of the arbitration clause
precludes plaintiff from later taking advantage of the arbitration clause with respect to new
disputes. However, we agree with the trial court that defendant has identified nothing that
would prevent enforcement of the arbitration clause in the instant case.
¶ 52 The Uniform Arbitration Act (Arbitration Act) (710 ILCS 5/1 et seq. (West 2014))
“embodies a legislative policy favoring enforcement of agreements to arbitrate future
disputes.” Village of Bartonville v. Lopez, 2017 IL 120643, ¶ 37. Thus, “[o]n application of a
party showing an agreement [to arbitrate a dispute], and the opposing party’s refusal to
arbitrate, the court shall order the parties to proceed with arbitration” or, if the opposing party
denies the existence of an agreement to arbitrate, “the court shall proceed summarily to the
determination of the issue so raised and shall order arbitration if found for the moving party.”
710 ILCS 5/2(a) (West 2014). “In making that determination, a three-pronged approach is
used: (1) if it is clear that the dispute falls within the scope of the arbitration clause or
agreement, the court must compel arbitration; (2) if it is clear that the dispute does not fall
within the arbitration clause or agreement, the court must deny the motion to compel; and (3)
if it is unclear or ambiguous whether the dispute falls within the scope of the arbitration
clause, the matter should be referred to the arbitrator to decide arbitrability.” Guarantee Trust
Life Insurance Co. v. Platinum Supplemental Insurance, Inc., 2016 IL App (1st) 161612,
¶ 26 (citing Donaldson, Lufkin & Jenrette Futures, Inc. v. Barr, 124 Ill. 2d 435, 443-50
(1988)). “[A]t a hearing to stay a judicial proceeding and to compel arbitration, the trial court
should concern itself solely with whether an agreement exists to arbitrate the dispute in
question.” Board of Managers of the Courtyards at the Woodlands Condominium Ass’n v.
IKO Chicago, Inc., 183 Ill. 2d 66, 71 (1998).
24
No. 1-17-1844
¶ 53 In the case at bar, as noted, there is no real dispute as to whether the arbitration clause
governs the instant dispute. Instead, defendant’s argument is that plaintiff is precluded from
seeking arbitration due to its alleged failure to comply with the prior arbitration award. Under
the Arbitration Act, “[a] written agreement to submit any existing controversy to arbitration
or a provision in a written contract to submit to arbitration any controversy thereafter arising
between the parties is valid, enforceable and irrevocable save upon such grounds as exist for
the revocation of any contract.” 710 ILCS 5/1 (West 2014). “In essence, once a contract
containing a valid arbitration clause has been executed, the parties are irrevocably committed
to arbitrate all disputes arising under the agreement.” Woodlands Condominium Ass’n, 183
Ill. 2d at 74. Thus, the parties would be obligated to arbitrate the instant dispute unless there
are “grounds as exist for the revocation of any contract.” 710 ILCS 5/1 (West 2014).
However, defendant claims that plaintiff’s prior breach operates to invalidate the arbitration
clause until that breach has been cured.
¶ 54 Defendant’s argument rests on the theory that what it calls the “ ‘prior breach’ doctrine”
applies to enforcement of an otherwise valid arbitration clause. Defendant points to the
Restatement (Second) of Contracts, which provides that “it is a condition of each party’s
remaining duties to render performances to be exchanged under an exchange of promises that
there be no uncured material failure by the other party to render any such performance due at
an earlier time.” Restatement (Second) of Contracts § 237 (1981). The comment to that
section provides that “[a] material failure of performance has *** these effects on the other
party’s remaining duties of performance with respect to the exchange. It prevents
performance of those duties from becoming due, at least temporarily, and it discharges those
duties if it has not been cured during the time in which performance can occur.” Restatement
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No. 1-17-1844
(Second) of Contracts § 237 cmt. a (1981). Under defendant’s argument, if plaintiff
“material[ly] fail[ed]” to perform by failing to comply with the prior arbitration award,
defendant is under no duty to arbitrate future disputes until that failure has been cured. We do
not find this argument persuasive for a number of reasons.
¶ 55 First, defendant’s argument presupposes that there has been a default under the REA.
However, the question of whether the contract has been breached is itself an issue that must
be decided by the arbitrator in the first instance, as the arbitration clause in the REA provides
that “[e]ach of the questions, differences, disputes, claims or controversies arising among or
between Owners under this Agreement which shall not be resolved within forty five (45)
days after it shall arise *** shall be submitted for arbitration.” See Stuart-Dean Co. v. Lurie,
69 Ill. App. 3d 844, 846 (1979) (“[w]hether the alleged breach of the agreement and the
resulting damages are within the scope of the arbitration clause is for the arbitrator to
decide”; otherwise, “one could avoid complying with arbitration clauses by merely alleging
that the other party breached or repudiated the contract”); Jensen v. Quik International, 213
Ill. 2d 119, 129 (2004) (finding that the question of whether the plaintiff was entitled to
rescission of the agreement due to violations of statutory requirements was arbitrable under
the arbitration clause); Garver v. Ferguson, 76 Ill. 2d 1, 10 (1979) (deferring to arbitrators’
decision as to whether contract was properly terminated due to breach by opposing party).
¶ 56 Additionally, defendant’s argument is internally inconsistent. Defendant’s argument
presupposes that if there was a default, it was of such magnitude that it would excuse
defendant from performance. However, defendant also repeatedly insists that it is not arguing
that it is entitled to revocation of the REA or arbitration clause and is not seeking such a
revocation. But “[u]nder general contract principles, only a material breach of a contract
26
No. 1-17-1844
provision by one party will justify nonperformance by the other.” William Blair & Co. v. FI
Liquidation Corp., 358 Ill. App. 3d 324, 346 (2005); see also Mohanty v. St. John Heart
Clinic, S.C., 225 Ill. 2d 52, 70 (2006) (“Under general contract principles, a material breach
of a contract provision by one party may be grounds for releasing the other party from his
contractual obligations.”). “The test of whether a breach is ‘material’ is whether it is ‘so
substantial and fundamental as to defeat the objects of the parties in making the agreement,
or whether the failure to perform renders performance of the rest of the contract different in
substance from the original agreement.’ ” InsureOne Independent Insurance Agency, LLC v.
Hallberg, 2012 IL App (1st) 092385, ¶ 43 (quoting Village of Fox Lake v. Aetna Casualty &
Surety Co., 178 Ill. App. 3d 887, 900-01 (1989)). “ ‘The breach must be so material and
important to justify the injured party in regarding the whole transaction at an end.’ ”
InsureOne, 2012 IL App (1st) 092385, ¶ 43 (quoting Village of Fox Lake, 178 Ill. App. 3d at
901). “[A]ny contract is terminable upon the occurrence of a material breach.” (Emphasis in
original.) Jespersen v. Minnesota Mining & Manufacturing Co., 183 Ill. 2d 290, 294 (1998).
Thus, in order for defendant’s argument to have any merit, it must be the case that an alleged
failure to comply with a prior arbitration award is such an egregious breach of the arbitration
agreement that no future arbitration on unrelated issues is required—i.e., the arbitration
clause is terminated in its entirety. But defendant affirmatively states that it is not seeking to
terminate the arbitration clause and seeks only to pause it temporarily until compliance with
the earlier award is achieved, suggesting that defendant believes that some lesser level of
“material breach” would suffice to temporarily excuse its performance.
¶ 57 However, defendant has pointed to no authority in which an arbitration clause has been
interpreted in this way. Defendant broadly claims that “[t]he United States Supreme Court
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No. 1-17-1844
has ruled that a party may assert such general contract defenses to ‘avoid enforcement of an
arbitration agreement’ ” (quoting Southland Corp. v. Keating, 465 U.S. 1, 16 n.11 (1984)).
However, the expansive meaning defendant ascribes to this statement of the law has no basis
in the actual language used by the Supreme Court, which is limited to contract defenses that
would lead to revocation of a contract.
¶ 58 Like the Arbitration Act, the Federal Arbitration Act (FAA) 8 provides that a written
arbitration agreement “shall be valid, irrevocable, and enforceable, save upon such grounds
as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2 (2012). The
Supreme Court has explained that “the text of § 2 declares that state law may be applied ‘if
that law arose to govern issues concerning the validity, revocability, and enforceability of
contracts generally.’ [Citation.] Thus, generally applicable contract defenses, such as fraud,
duress, or unconscionability, may be applied to invalidate arbitration agreements without
contravening § 2.” (Emphasis in original.) Doctor’s Associates, Inc. v. Casarotto, 517 U.S.
681, 686-87 (1996). This is in contrast to the situation in which a state law is specifically
targeted toward arbitration contracts, in which case such a limitation is preempted by the
FAA. See Doctor’s Associates, 517 U.S. at 687 (“Courts may not, however, invalidate
arbitration agreements under state laws applicable only to arbitration provisions. [Citations.]
8
“Given the common origins of the Federal and uniform statutes, courts interpreting State
arbitration statutes patterned after the Uniform Arbitration Act look for guidance to Federal court
decisions interpreting similar provision[s] of the Federal Arbitration Act. [Citations.] Similarly, the
Illinois Supreme Court has stated that judicial opinions from other jurisdictions are given greater than
usual deference in construing the Uniform Arbitration Act since the purpose of the act is to make uniform
the laws of those States which enact it. [Citation.]” J&K Cement Construction, Inc. v. Montalbano
Builders, Inc., 119 Ill. App. 3d 663, 668 (1983). See Garver, 76 Ill. 2d at 8 (“The Act is to be construed
so as ‘to make uniform the law of those states which enact it.’ [Citation.] Opinions of the courts of other
jurisdictions are therefore shown greater than usual deference.” (quoting Ill. Rev. Stat. 1975, ch. 10, ¶
120)); see also Heider v. Knautz, 396 Ill. App. 3d 553, 559 (2009) (relying on J&K Cement in discussing
case law from other jurisdictions); City of Des Plaines v. Metropolitan Alliance of Police, Chapter No.
240, 2015 IL App (1st) 140957, ¶ 38 (noting that federal court decisions “can aid our interpretation of the
Act”).
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No. 1-17-1844
By enacting § 2, we have several times said, Congress precluded States from singling out
arbitration provisions for suspect status, requiring instead that such provisions be placed
‘upon the same footing as other contracts.’ ” (Emphasis in original.) (quoting Scherk v.
Alberto-Culver Co., 417 U.S. 506, 511 (1974))). Thus, this statement of the law does not
suggest that anything less than grounds for revocation of any contract can operate to
invalidate an arbitration clause.
¶ 59 Indeed, even the case cited by defendant shows the limitations of the language relied
upon by defendant. There, the Supreme Court noted, in the context of the FAA:
“We discern only two limitations on the enforceability of arbitration provisions
governed by the Federal Arbitration Act: they must be part of a written maritime
contract or a contract ‘evidencing a transaction involving commerce’ and such
clauses may be revoked upon ‘grounds as exist at law or in equity for the revocation
of any contract.’ We see nothing in the Act indicating that the broad principle of
enforceability is subject to any additional limitations under state law.” Southland
Corp., 465 U.S. at 10-11.
In the Supreme Court’s discussion, it is thus clear that the “generally applicable contract
defenses” referred to by the Supreme Court are defenses that would lead to the revocation of
the contract in its entirety, such as fraud. See Southland Corp., 465 U.S. at 16 n.11 (listing
“fraud” as a “general contract defense[ ]” that would permit a party to avoid enforcement of
an arbitration clause). Defendant has not identified any cases in which the United States
Supreme Court has found that a party may be relieved of its obligation to arbitrate because
the other party has previously breached the arbitration clause, nor does defendant argue that
29
No. 1-17-1844
the alleged breach of the arbitration clause in the instant case rises to the level of permitting
revocation of the contract in its entirety.
¶ 60 Similarly, defendant’s claim that the facts of Mayfair Construction Co. v. Waveland
Associates Phase I Ltd. Partnership, 249 Ill. App. 3d 188 (1993), “are directly analogous to
those in this case” is equally unavailing. There, the defendant refused to participate in
nonbinding arbitration before the parties’ architect and even threatened to fire the architect if
he decided any disputes between the parties. Mayfair Construction, 249 Ill. App. 3d at 193­
94. Accordingly, the plaintiff filed a declaratory judgment action, seeking a declaration of the
rights and obligations of the parties under their contract. Mayfair Construction, 249 Ill. App.
3d at 195. The trial court severed the claims concerning the dispute resolution procedure
from any construction defect and delay claims, “[i]n order to facilitate resolution of the crux
of the dispute.” Mayfair Construction, 249 Ill. App. 3d at 197. The portion of the matter
concerning the dispute resolution procedure proceeded to a jury trial, where the jury found
that the parties were required to submit disputes to the architect for resolution and that the
defendant had materially breached the parties’ contract by not permitting the architect to
make such decisions. Mayfair Construction, 249 Ill. App. 3d at 198. As a consequence, the
trial court found, inter alia, that the defendant was barred from asserting any defenses to the
plaintiff’s claims under the parties’ contract that were to have been initially decided by the
architect. Mayfair Construction, 249 Ill. App. 3d at 199. The appellate court affirmed this
decision, finding that “if a provision creating a condition precedent to litigation is shown, a
party refusing to comply with it may be barred from pursuing claims in court.” Mayfair
Construction, 249 Ill. App. 3d at 206. The court continued:
30
No. 1-17-1844
“There is no doubt that the construction contract in this case required submission
of the parties’ disputes to the architect as a condition precedent to litigating those
disputes. [The defendant] failed to fulfill this condition. As the foregoing makes clear,
such a failure can result in a complete bar to the right of a party to bring an action to
litigate its contractual claims. We see no reason why that party, which willingly
refused to abide by the contract’s dispute-resolution mechanism, should not similarly
lose its right to defend against claims asserted against it.” Mayfair Construction, 249
Ill. App. 3d at 206.
¶ 61 In the case at bar, in contrast to Mayfair Construction, there is no claim that plaintiff
failed to seek arbitration prior to seeking resolution of its claims before the court. Thus, there
is no “condition precedent” that plaintiff failed to satisfy. Indeed, plaintiff affirmatively
sought arbitration, and defendant is the one preventing it. Defendant claims that plaintiff’s
alleged failure to comply with the prior arbitration award is somehow analogous to the facts
present in Mayfair Construction, but there is no similarity whatsoever between the two cases
and Mayfair Construction does not stand for the proposition that an arbitration provision can
be avoided based on an alleged previous, unrelated breach of that provision. At most,
Mayfair Construction stands for the proposition that a party may not later raise claims in the
circuit court that should have first been raised before an arbitrator. That situation is not
present in the instant case and, therefore, Mayfair Construction provides no support for
defendant’s argument.
¶ 62 This same flaw appears in the other cases cited by defendant in support of its argument—
they all involve cases in which a party has somehow failed or defaulted with respect to the
arbitration of particular claims and the question is whether arbitration is required on those
31
No. 1-17-1844
same claims. See, e.g., Sink v. Aden Enterprises, Inc., 352 F.3d 1197, 1201 (9th Cir. 2003)
(“a party to an arbitration agreement may not compel arbitration of claims under FAA § 4
where a prior default in arbitration of those claims precludes that party from obtaining a stay
of litigation pending arbitration under § 3” (emphasis added)); Brown v. Dillard’s, Inc., 430
F.3d 1004, 1010 (9th Cir. 2005) (finding that after an employer had refused to arbitrate an
employee’s termination, the employer could not later seek to compel arbitration of that same
claim after the employee filed suit in federal court); Nadeau v. Equity Residential Properties
Management Corp., 251 F. Supp. 3d 637, 641 (S.D.N.Y. 2017) (whether an employer refused
to arbitrate an employee’s termination, the employer breached the arbitration agreement and
could not later seek to compel arbitration after the employee filed suit in federal court). None
of defendant’s cases involves the situation present in the instant case, namely, whether an
alleged prior default with respect to an arbitration precludes arbitration of new claims
unrelated to the prior default. The case that is closest factually to dealing with such a
situation, Tri-Star Petroleum Co. v. Tipperary Corp., 107 S.W.3d 607, 613 (Tex. App. 2003),
involves a situation in which one party’s misconduct in the arbitration process itself was held
to constitute a material breach of the arbitration agreement; there, the Texas Court of Appeals
found that “because material breach is a ground for revoking a contract, it should be a ground
for revoking an arbitration agreement.” However, as noted, defendant does not argue that
plaintiff’s alleged breach constitutes grounds for revoking the arbitration clause in its
entirety.
¶ 63 Finally, defendant’s argument is unavailing because section 22.17 of the REA expressly
provides that “[n]o default under this Agreement shall entitle any party hereto to terminate,
cancel or otherwise rescind this Agreement or any of the easements, terms or conditions set
32
No. 1-17-1844
forth herein ***.” Thus, even if defendant was correct and the REA had been breached by
plaintiff’s failure to comply with the prior arbitration award, such a default would not entitle
either party to terminate or rescind the REA. As noted, the Arbitration Act provides that “[a]
written agreement to submit any existing controversy to arbitration or a provision in a written
contract to submit to arbitration any controversy thereafter arising between the parties is
valid, enforceable and irrevocable save upon such grounds as exist for the revocation of any
contract.” (Emphasis added.) 710 ILCS 5/1 (West 2014). Since the alleged default in the
instant case is expressly not grounds for termination of the contract, there is no basis for
finding the clause anything other than “valid, enforceable and irrevocable.” 710 ILCS 5/1
(West 2014). Defendant points to the caveat in section 22.17 that provides that “this
limitation shall not affect any other rights or remedies the parties hereto may have by reason
of any default under this Agreement or any written amendment or supplement hereto” and
argues that precluding plaintiff from engaging in arbitration until the alleged default has been
cured is merely an “other right[ ] or remed[y]” to which defendant is entitled. However, this
argument ignores the language of the Arbitration Act quoted above, in which it is clear that
only grounds that permit revocation of the contract would operate to render the clause
anything other than “valid, enforceable and irrevocable.” 9 710 ILCS 5/1 (West 2014).
Defendant dismisses as “[n]onsense” the suggestion that it is attempting to terminate the
arbitration provision, claiming that both the REA and arbitration provision “remain
completely alive and in existence.” However, we agree with the trial court that, in practical
effect, defendant’s proposed “remedy” would result in the termination of the arbitration
clause based on plaintiff’s alleged failure to comply with the prior, unrelated, arbitration
9
We note, of course, that this presupposes that the contract as a whole was valid and enforceable
when it was executed. There has been no argument that the contract is invalid or unenforceable in the case
at bar.
33
No. 1-17-1844
award. Defendant’s argument is particularly disingenuous when defendant’s response to
plaintiff’s arguments about the traffic management plan is that “[u]nder the law, [plaintiff’s]
persistent failure to perform until it could no longer perform did not serve to render its
admitted breach moot but rather served to discharge completely any duty [defendant] had to
arbitrate.” Thus, defendant both argues that the arbitration clause “remain[s] completely alive
and in existence” while simultaneously claiming that defendant no longer had “any duty ***
to arbitrate.”
¶ 64 As a final matter, we note that, as defendant has pointed out throughout this litigation,
plaintiff appealed the earlier arbitration award to the federal district court, which confirmed
the award and entered judgment on the award. Under the Arbitration Act, “[u]pon the
granting of an order confirming, modifying or correcting an award, judgment shall be entered
in conformity therewith and be enforced as any other judgment.” 710 ILCS 5/14 (West
2014). Similarly, under the FAA, when a judgment is entered after an order confirming,
modifying, or correcting an arbitration award, “[t]he judgment so entered shall have the same
force and effect, in all respects, as, and be subject to all the provisions of law relating to, a
judgment in an action; and it may be enforced as if it had been rendered in an action in the
court in which it is entered.” 9 U.S.C. § 13 (2012). Thus, if defendant was concerned that
plaintiff was not complying with a court’s judgment, the proper avenue would be to seek
recourse with that court in order for the judgment to “be enforced as any other judgment”
(710 ILCS 5/14 (West 2014)) instead of simply refusing to engage in arbitration until
defendant was satisfied with plaintiff’s compliance.
34
No. 1-17-1844
¶ 65 CONCLUSION
¶ 66 For the reasons set forth above, the trial court properly determined that plaintiff’s alleged
failure to comply with the prior arbitration award did not preclude plaintiff from seeking to
arbitrate the instant claims, which were unrelated to the prior arbitration.
¶ 67 Affirmed.
35