An Arbitration Award Must Be Vacated When an Arbitrator Exceeds Their Authority
Clanton was involved in two separate and independent car crashes, one with Ray and one with Raina. He filed two separate suits which were later consolidated. The parties agreed to voluntary and binding arbitration. In their arbitration agreement, they agreed to limit Ray’s liability as the award would be no less than $250,000 and no more than $600,000 while Raina’s liability would be fixed at $90,250. The parties specifically agreed that the “high/low” agreement would not be disclosed to the arbitrator. The arbitrator awarded Clanton $550,000 and said that each Defendant was liable for fifty percent.
A dispute arose about how much Ray had to pay and a motion was filed to clarify. The arbitrator issued a new clarified award which said that the doctrine of joint and several liability would not apply due to the high/low limits for each defendant. It stated that Ray would pay fifty percent of the final award at $275,000 and Raina would pay his maximum of $90,250. At some point, the arbitrator received a copy of the high/low agreement before making this clarified award. It was not revealed who disclosed the agreement, but Clanton urged that the clarified award was improper and the original one be enforced, which he believed held Ray liable in the amount of $459,750.
On appeal, the court determined that it was not inappropriate for the trial court to remand the arbitration award back to the arbitrator for clarification because his opinion was ambiguous as to how the liability was to be divided. Because the arbitrator wrote that Plaintiff’s injuries were “indivisible,” the Defendants were jointly and severally liable. The arbitrator wrote that each defendant was “liable at 50%,” creating an ambiguity, and it was therefore proper to remand back to him for clarification.
Under certain circumstances an award by an arbitrator may be vacated. The Illinois Uniform Arbitration Act lists five: (1) The award was procured by corruption or fraud, (2) there was evident partiality by an arbitrator appointed as a neutral party, or corruption in any arbitrator, (3) the arbitrators exceeded their powers, (4) the arbitrators refused to postpone the hearing upon a showing of sufficient cause, or refused to hear evidence material to the controversy, or (5) there was no arbitration agreement between the parties. The court held that the arbitrator exceeded his authority by possibly considering and basing his clarification on the high/low agreement when the arbitration agreement said the arbitrator was not authorized to know about it. Since it was impossible to know whether the arbitrator was prejudiced in his decision, number three applied in this case and the arbitration award was vacated.
The ambiguity of the first decision made it impossible to determine whether the arbitrator’s illicit knowledge caused any prejudice; therefore the court vacated the arbitration award and ordered a new arbitration with a new arbitrator.
Clanton v. Ray, 2011 WL 6945665, —N.E.2d —- (Ill.App. 1 Dist., 2011), No. 1-10-1894
