Posted February 6, 2014
In RJW Williams
Farms, Inc. v. Topflight Grain Co-op., Inc., No. 4-13-0220, 2014 Ill. App.,
130220-U, (4th Jan. 23, 2014), the Illinois Court of Appeals affirmed a trial
court’s decision that when arbitration contracts are valid and binding, any
dispute arising under the contracts must be heard in arbitration. The court also sanctioned the
plaintiff-appellant for naming the arbitrator as a party to the suit. For a copy of the decision, please contact
the National Agricultural Law Center at nataglaw@uark.edu.
For more information on arbitration or crop insurance, please
visit the Center’s Reading Rooms here
and here.
Background
This case involves a dispute over ten contracts for the
sale of grain between the plaintiff-appellant, RJW Williams Farms (grain
seller) (RJW) and defendant-appellee, Topflight Grain Cooperative, Inc. (grain
purchaser) (Topflight). Id. at 1. Each contract included a provision for
dispute resolution through arbitration by the National Grain and Feed
Association (NFGA). Id. A dispute arose,
Topflight filed for arbitration and a default judgment of $2.5 million was
entered against RJW. Id. at *2. RJW filed a “Motion to Set Aside Default
Judgment with NFGA” and NFGA granted the request, provided that RJW sign 3
arbitration services contracts, collectively covering all ten grain contracts. Id. RJW signed the agreements. Id.
While the arbitration cases were still open and pending
with NFGA, RJW filed a complaint for declaratory and injunctive relief in the
trial court to stop the arbitration process, naming both Topflight and NGFA as
defendants. Id. at *3. RJW appealed,
arguing that it cannot be compelled to submit to arbitration when there are
questions about the validity of the underlying contracts and that NGFA does not
have jurisdiction to arbitrate the dispute.
Id.
Analysis and Holding
The appeals court disagreed with RJW, affirming the
trial court’s dismissal. Id. at *6. The court stated that “the controlling issue”
was whether Topflight and RJW agreed to arbitrate their dispute. Id.
at *4. Since it was undisputed that RJW
signed the three arbitration contracts, the agreement to arbitrate was
valid. Id. The court rejected RJW’s
argument that it only signed the arbitration contracts under duress because
“the defense of duress requires a wrongful act, which was not alleged
here.” Id. The court stated that
RJW’s arguments on the validity of the underlying contracts can be made in
arbitration. Id. at *5.
Granting NGFA’s motion for sanctions against RJW for
naming NGFA as a party to the lawsuit, the court stated it is “well established
that an arbitrator is immune from suit for all acts which he performs in his
capacity as an arbitrator.” Id. at *6. An arbitrator is also immune to “challenges
to his authority or jurisdiction to arbitrate.”
Id.
