Klehr v. Illinois Farmers Ins. Co.
(Ill. Ct. App. Jan. 22, 2013)
In a matter of first impression in Illinois and nationally, an Illinois Appellate Court recently held that interlocutory rulings by arbitrators are not ripe for judicial review until the arbitration process is complete.
The plaintiff was injured in a hit-and-run accident. She filed a claim with her insurance carrier for uninsured motorist coverage and demanded arbitration under the arbitration provision in her insurance policy. The matter was referred to the American Arbitration Association for resolution.
After the arbitration process began, the insurer served several discovery requests on the plaintiff, including interrogatories, document requests, and a request to appear for a sworn statement. The plaintiff refused to comply, contending that discovery of the type sought by the insurer was not permissible under the terms of the arbitration clause and applicable Illinois law or, alternatively, that any discovery must be conducted within 180 days of the initiation of the claim. The plaintiff filed a motion with the arbitrators, asking for a declaration that the discovery period was closed and that the plaintiff was therefore not required to answer the insurer’s discovery requests. The arbitrators denied the motion and ordered the plaintiff to respond to the insurer’s discovery requests.
Instead of complying with the arbitrators’ order, the plaintiff filed a declaratory judgment action against the insurer, seeking a declaratory judgment that discovery should not be allowed or, alternatively, that the discovery period is limited to the 180 days after the claim was filed. The circuit court dismissed the complaint on the ground that it had no jurisdiction to review the arbitrators’ interlocutory discovery order, reasoning that it did not have subject matter jurisdiction. The appellate court affirmed, but on the ground that the matter was unripe for adjudication. Noting that the issue was one of first impression both locally and nationally, the court held that allowing courts to step into the arbitration process before it concluded was contrary to the clear intent of Illinois’ Uniform Arbitration. The appellate court stated that to hold otherwise would undermine the entire point of arbitration, which public policy favors because it promotes the economical and efficient resolution of disputes.