{ "id": 4285119, "name": "REXNORD INDUSTRIES, LLC, Plaintiff-Appellee, v. RHI HOLDINGS, INC., et al., Defendants-Appellants", "name_abbreviation": "Rexnord Industries, LLC v. RHI Holdings, Inc.", "decision_date": "2009-03-31", "docket_number": "No. 1-08-0562", "first_page": "393", "last_page": "398", "citations": [ { "type": "official", "cite": "389 Ill. App. 3d 393" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "143 Ill. 2d 377", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 5591736 ], "weight": 2, "year": 1991, "pin_cites": [ { "page": "391" }, { "page": "391-92" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/143/0377-01" ] }, { "cite": "229 Ill. App. 3d 89", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 5216589 ], "year": 1992, "pin_cites": [ { "page": "103" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/229/0089-01" ] }, { "cite": "185 F.3d 832", "category": "reporters:federal", "reporter": "F.3d", "case_ids": [ 11585996 ], "year": 1999, "pin_cites": [ { "page": "835-36" } ], "opinion_index": 0, "case_paths": [ "/f3d/185/0832-01" ] }, { "cite": "14 F.3d 1250", "category": "reporters:federal", "reporter": "F.3d", "case_ids": [ 10532600 ], "year": 1994, "opinion_index": 0, "case_paths": [ "/f3d/14/1250-01" ] }, { "cite": "573 F.2d 739", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 913988 ], "weight": 2, "year": 1978, "pin_cites": [ { "page": "741" }, { "page": "741" } ], "opinion_index": 0, "case_paths": [ "/f2d/573/0739-01" ] }, { "cite": "119 Ill. App. 3d 663", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 3629363 ], "year": 1983, "pin_cites": [ { "page": "668" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/119/0665-01" ] }, { "cite": "9 U.S.C. \u00a71", "category": "laws:leg_statute", "reporter": "U.S.C.", "year": 2006, "pin_cites": [ { "page": "et seq." } ], "opinion_index": 0 }, { "cite": "04 C 4205", "category": "reporters:state", "reporter": "Cow.", "year": 2004, "opinion_index": 0 } ], "analysis": { "cardinality": 625, "char_count": 11491, "ocr_confidence": 0.769, "pagerank": { "raw": 5.12982294956584e-08, "percentile": 0.3230134266515152 }, "sha256": "da05e51946edd980e543a123382c1f32e1b707b4eeea025334437f6fbd923b14", "simhash": "1:bbf662aea352b2c4", "word_count": 1813 }, "last_updated": "2023-07-14T20:37:38.013620+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "REXNORD INDUSTRIES, LLC, Plaintiff-Appellee, v. RHI HOLDINGS, INC., et al., Defendants-Appellants." ], "opinions": [ { "text": "JUSTICE COLEMAN\ndelivered the opinion of the court:\nCodefendants RHI Holdings, Inc., and the Fairchild Corporation appeal an order confirming an arbitration award of approximately $1 million to plaintiff Rexnord Industries, LLC. They contend that the circuit court\u2019s confirmation of the award was improper because the arbitrator exceeded his authority under their arbitration agreement with Rexnord by granting relief to a nonparty. They also contend that because the arbitration confirmation proceeding raised contested issues of fact, the court erred in entering judgment for Rexnord on the pleadings. We affirm.\nThe facts underlying this appeal are largely undisputed. RHI Holdings, Inc., and the Fairchild Corporation (collectively RHI) owned property in the Ellsworth Industrial Park in Downers Grove until 1988. In August 1988, RHI transferred the property, along with one of its business divisions, to a subsidiary, Rexnord Industries, LLC. RHI sold Rexnord and the Ellsworth property to BTR Dunlop Holdings, Inc., in 1993. In a 1999 merger, Invensys pic, the British parent of the Invensys group of companies, acquired ownership of BTR through an American subsidiary, Invensys, Inc.\nA 2004 class action, Muniz v. Rexnord, No. 04 C 4205 (N.D. Ill. September 3, 2004), sought damages from Rexnord and other Ellsworth Park property owners for contamination of the area surrounding the park. RHI and Rexnord joined the other Ellsworth Park defendants in settling the Muniz litigation for approximately $15.75 million. The defendants agreed that $1.8 million of the settlement total was attributable to the RHI/Rexnord property, and RHI and Rexnord agreed to allow an arbitrator to decide each company\u2019s share of that amount.\nThe parties presented evidence and argument to arbitrator Joseph Manko over a three-day period in June 2007. Invensys sought to intervene in the proceeding, but Manko rejected its request, ruling that it was not a party to the RHI/Rexnord agreement to arbitrate their dispute. In September 2007, Manko made extensive written findings regarding the amount and timing of the contamination found in the RHI/Rexnord property and determined that 90% of the contamination at issue occurred before RHI\u2019s August 1988 spinoff of Rexnord.\nThe parties agreed that RHI\u2019s 1993 agreement for the sale of Rex-nord to BTR obliged it to indemnify BTR, its affiliates, subsidiaries, successors and assigns from \u201cany and all losses, liabilities, claims, damages, *** costs, etc.,\u201d relating to RHI\u2019s ownership and operation of the property before the spinoff date, \u201cso long as these \u2018Losses\u2019 arise out of or are in any way related or connected to any Environmental Law; result from any claim by any governmental or private party arising out of or in any way related or connected to any Environmental Law; or result from the generation, use, handling, storage, transport, disposal, release or threatened release of any Materials of Environmental Concern.\u201d The indemnity obligation created by the agreement applied \u201conly to the excess of (x) Losses over (y) the sum of amounts collected by Purchaser or Rexnord from third parties.\u201d\nRHI asserted that approximately $1.9 million of Rexnord\u2019s claimed losses were paid directly by Invensys. RHI argued that these sums were amounts collected \u201cfrom third parties\u201d under the 1993 agreement, and therefore, not subject to the agreement\u2019s indemnity obligation. Manko rejected this assertion. He found that Invensys was entitled to indemnification under the 1993 agreement, that it was both an \u201caffiliate\u201d and \u201csuccessor\u201d or the purchaser under the agreement, and that it was therefore not a \u201cthird party\u201d whose payments were deductible from the category of \u201closses.\u201d\nAfter accounting for credits resulting from prior payments, Manko directed RHI to pay Rexnord $872,545.67 in losses, including the Mu-niz settlement share and related costs, plus $145,000 in prejudgment interest. Manko also determined that RHI was obliged to reimburse Rexnord for 90% of any amounts drawn against a $306,500 letter of credit issued by Rexnord. The terms governing the letter of credit and defining its possible beneficiaries are not apparent from Manko\u2019s disposition or the appellate record.\nRexnord filed a complaint in the circuit court of Cook County for confirmation of the arbitration award. RHI filed a counterclaim which sought vacation of the award. The circuit court entered judgment for Rexnord on the pleadings. This appeal followed.\nRHI contends that the Uniform Arbitration Act required the circuit court to vacate the arbitrator\u2019s award. The Act provides that \u201c[u]pon application of a party, the court shall confirm an award, unless within the time limits hereinafter imposed grounds are urged for vacating or modifying or correcting the award, in which case the court shall proceed as provided in Sections 12 and 13.\u201d 710 ILCS 5/11 (West 2004). The Act further provides that \u201c[u]pon application of a party, the court shall vacate an award where: *** (3) the arbitrators exceeded their powers.\u201d 710 ILCS 5/12(a)(3) (West 2004). Since the Uniform Act\u2019s terms and origins parallel those of the Federal Arbitration Act (9 U.S.C. \u00a71 et seq. (2006)), federal court interpretations of the federal statute are persuasive aids in construction of the Uniform Act\u2019s provisions. J&K Cement Construction, Inc. v. Montalbano Builders, Inc., 119 Ill. App. 3d 663, 668 (1983).\nRHI argues that the arbitrator exceeded his authority under the parties\u2019 arbitration agreement by adjudicating the claims of a nonparty, Invensys. This argument is contradicted by the plain language of the arbitration award. The award did not grant relief to Invensys. The arbitrator explicitly acknowledged that his ruling could not bind Invensys because that entity was not a party to the RHI/ Rexnord agreement to arbitrate. His award directed RHI to make payments to Rexnord, not Invensys, and RHI concedes that its response to the award was to make payment of the specified amounts only to Rexnord.\nDespite these facts, RHI argues that the award must be viewed as adjudicating the claims of Invensys because the losses at issue were paid by Invensys, not Rexnord. RHI cites no authority in support of its position, and its argument was rejected in the single analogous precedent revealed by our research. In Kurt Orban Co. v. Angeles Metal Systems, 573 F.2d 739, 741 (2d Cir. 1978), a party appealing an award argued that the arbitration panel had \u201cin reality\u201d determined the claim of a nonparty and exceeded its authority because the prevailing party had agreed to pay proceeds of the award to the nonparty. The Court of Appeals for the Second Circuit disagreed. It noted that the nonparty had raised no claim in the arbitration, held that the principle denying arbitrators\u2019 authority to bind nonparties was \u201cinapplicable to the facts of this case,\u201d and affirmed the judicial confirmation of the arbitration award. 573 F.2d at 741.\nRHI\u2019s characterization of the arbitrator\u2019s award as an adjudication of the claims of Invensys rather than Rexnord is similarly unsupported by the terms of the agreement for the sale of Rexnord. That agreement requires RHI to indemnify Rexnord for \u201closses,\u201d a term including \u201cliabilities,\u201d \u201cclaims,\u201d \u201ccosts,\u201d and \u201cexpenses\u201d that are \u201cdue and payable.\u201d RHI does not dispute that Rexnord became liable for a portion of the Ellsworth defendants\u2019 settlement and for related costs of defense of the Muniz litigation. The agreement does not exclude from the definition of \u201closses\u201d amounts paid or reimbursed by Rexnord\u2019s owners or affiliates. We accordingly conclude that the \u201closses\u201d for which the arbitrator ordered compensation were those due to Rexnord under the sale agreement and were not the claims of Invensys. For this reason, we also conclude that the precedents cited by RHI as disapproval of arbitration awards for parties having no claim to the awarded damages, such as Eljer Manufacturing, Inc. v. Kowin Development Corp., 14 F.3d 1250 (7th Cir. 1994), are distinguishable from the case at bar.\nIn further support of its claim that the arbitrator exceeded his authority, RHI contends that the award improperly considered the issue of Invensys\u2019 status as an indemnitee under the 1993 agreement. The issue was raised as a direct result of the arbitrator\u2019s examination of a subject willingly submitted by the parties: whether Invensys was a \u201cthird party\u201d under the 1993 agreement, making its payments on behalf of Rexnord deductible from the defined category of \u201closses.\u201d An arbitrator\u2019s consideration of an issue is not beyond the scope of his authority if that issue is rationally derived from the matters submitted by the parties. American Postal Workers Union v. Runyon, 185 F.3d 832, 835-36 (7th Cir. 1999). \u201c[I]n the absence of an express reservation, the parties are presumed to agree that everything, both as to law and fact, which is necessary to the ultimate decision, is included in the authority of the arbitrators.\u201d Edward Electric Co. v. Automation, Inc., 229 Ill. App. 3d 89, 103 (1992). We hold that Invensys\u2019 indemnitee status was an issue rationally derived from the parties\u2019 submission of the 1993 agreement\u2019s interpretation to the arbitrator. As a result, we also hold that the arbitrator\u2019s consideration of the issue did not exceed his authority.\nIn addition to its assertion that the arbitrator should not have addressed the issue of Invensys\u2019 indemnitee status, RHI also argues that the award resolved the question incorrectly, and that Invensys lost its claim to indemnitee status by selling its Rexnord interests prior to the arbitration. This argument is an assertion of a mistake of law, which is an insufficient basis for setting aside an arbitrator\u2019s interpretation of an agreement. Rauh v. Rockford Products Corp., 143 Ill. 2d 377, 391 (1991). If any fair and reasonable mind would consider the arbitrator\u2019s interpretation to be a possible construction of a contract\u2019s terms, his ruling will be upheld on judicial review. Rauh, 143 Ill. 2d at 391-92. We believe that the 1993 agreement\u2019s extension of indemnitee status to Rexnord\u2019s buyer and the buyer\u2019s \u201csuccessors\u201d may be reasonably interpreted to include those buyers even after their subsequent sales of Rexnord\u2019s interests.\nFinally, RHI contends that the confirmation action raised issues of fact which precluded judgment on the pleadings. But the claimed disputes relate only to RHI\u2019s allegation that Rexnord\u2019s claimed losses were paid by Invensys. These allegations were presented to the arbitrator and rendered immaterial by his ruling that payments by Invensys did not impact RHI\u2019s obligation to indemnify Rexnord for liabilities that had become due. Since RHI\u2019s allegations, even if true, established no basis for vacation of the arbitration award or for denial of its confirmation, they did not prevent the circuit court\u2019s entry of judgment on the pleadings for Rexnord.\nFor the foregoing reasons, we affirm the judgment of the circuit court of Cook County.\nAffirmed.\nMURPHY, P.J., and QUINN, J., concur.", "type": "majority", "author": "JUSTICE COLEMAN" } ], "attorneys": [ "Schopf & Weiss LLR of Chicago (Peter V. Baugher, Patrick J. Heneghan, and Joseph J. Siprut, of counsel), for appellants.", "McDermott Will & Emery LLP of Chicago (Stephen E Handler, P.C., Todd R. Weiner, Mark A. Bilut, and David J. Schriven-Young, of counsel), for appellee." ], "corrections": "", "head_matter": "REXNORD INDUSTRIES, LLC, Plaintiff-Appellee, v. RHI HOLDINGS, INC., et al., Defendants-Appellants.\nFirst District (3rd Division)\nNo. 1\u201408\u20140562\nOpinion filed March 31, 2009.\nSchopf & Weiss LLR of Chicago (Peter V. Baugher, Patrick J. Heneghan, and Joseph J. Siprut, of counsel), for appellants.\nMcDermott Will & Emery LLP of Chicago (Stephen E Handler, P.C., Todd R. Weiner, Mark A. Bilut, and David J. Schriven-Young, of counsel), for appellee." }, "file_name": "0393-01", "first_page_order": 409, "last_page_order": 414 }