Five-Year Statute of Limitations Applies to Enforcement of Arbitration Award, First District Finds

As Illinois arbitration lawyers, we were interested to see a ruling on the statute of limitations for enforcing an award won in private arbitration. Peregrine Financial Group Inc. v. Futronix Trading, Ltd. No. 1-09-2293 (Ill. 1st May 21, 210) pits Peregrine, a commodities brokerage firm, against Futronix, a client that became delinquent in its accounts with Peregrine. The plaintiff took the defendant to arbitration and won an award of the delinquent amount plus interest. However, that was in August of 2003, and the plaintiff waited until November of 2008 to file in court to enforce the award. The defendant successfully moved to dismiss on the grounds that the statute of limitations had passed, under Illinois Code of Civil Procedure sec. 13-205. The plaintiff moved to reconsider but was denied, and appealed both decisions to the First District Court of Appeal.

Defendants hired plaintiffs to act as their agent in commodities futures purchasing. However, the defendants did not maintain enough money in its account to cover its losses, causing it to go delinquent in the amount of $115,512.64. The plaintiff filed an arbitration action with the National Futures Association and won that amount plus costs. The defendants then moved and did not pay the award. Five years and three months later, the plaintiffs filed in Cook County court to confirm the award. Defendants moved to dismiss on several grounds, including the statute of limitations. The plaintiff argued that there is no statute of limitation on an arbitration award, but the trial court was unmoved. Plaintiff appealed.

On appeal, the First noted that sec. 13-205 of the Code of Civil Procedure explicitly includes “awards of arbitration” among the types of actions to which it applies. Nonetheless, the plaintiff cited a federal case, United Steelworkers of America v. Danly Machine Corp., 658 F. Supp. 736 (N.D. Ill. 1987), in support of its argument. In that case, the district court for northern Illinois specifically said Illinois law does not impose a statute of limitations on arbitration awards. However, the First said, the district court gave no support or reasoning for its statement, and federal law is not binding on state courts.

The First also rejected an argument that if a statute of limitations applies, it should be sec. 13-206 of the Code, which gives a 10-year statute of limitations for actions arising from “written evidence of indebtedness” such as written contracts and promissory notes. In support, the plaintiff cited Blacke v. Industrial Comm’n, 268 Ill. App. 3d 26, 644 N.E.2d 23 (1994), a case about whether sec. 13-205 applied to collection actions under the Workers’ Compensation Act. That court decided that 13-205 applies to all statutory rights of action unless the legislature specifically intended otherwise, and rejected the argument that sec. 13-206 applied to the Workers’ Compensation Act or any other statute. The plaintiff argued the inverse: that the 10-year statute of limitations applies because its cause of action was based on a contract. However, the First said, that’s not quite true — the arbitration was based on a contract, but the suit seeking to enforce the arbitration award was not.

Finally, the court rejected three more arguments. One was based on public policy — that applying the five-year statute of limitations would run counter to Illinois public policy of enforcing arbitration awards. While it’s true that Illinois has such a public policy, the court said, it also has a public policy to enforce statutes of limitations. The plaintiff then argued that the statute of limitations should have been tolled when the defendants moved without paying. But this did not prevent the plaintiff from filing, the court noted, although it would have required the plaintiff to serve notice of the claim by publication. The last argument plaintiff made was that fundamental fairness should require the court to allow the case to go forward. The First rejected this, saying the plaintiff hadn’t shown any good reason for its five-year delay in filing. Thus, it upheld both the original judgment of the trial court and its denial of plaintiff’s motion to reconsider.

Lubin Austermuehle is a Chicago business law firm proud to offer its services to individuals and businesses of all sizes that are involved in arbitration and mediation, or expect to be soon.

If you’re looking for a way to settle your business dispute without the delay, expense, and publicity of a courtroom trial, our Chicago arbitration attorneys can help. To set up a consultation, you can reach us toll-free at 630-333-0333 or send us a message online.

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