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 hereand 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.
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