Illinois Supreme Court Denies PLA in "Carollo v. Al Warren Oil Co., Inc.; Fourth District Holds Settling Defendants' Fault Must Be Considered
January, 2005
Carollo Stands
In Volume 4 of the 2004 CM Report, we advised of a recent CM Appellate Department victory in Carollo v. Al Warren Oil Co., Inc., in which the Illinois Appellate Court, First District held in a case of first impression that the June 4, 2003 amendment to Illinois' joint and several liability statute (735 ILCS 5/2-1117), which provides that a plaintiff's employer should not be considered in the allocation of total fault, cannot be retroactively applied. On January 26, 2005 the Illinois Supreme Court denied plaintiff's petition for leave to appeal. Thus, Carollo will not be considered by the Illinois Supreme Court and the First District opinion remains the law on this point. The First District opinion can now be found in the Northeastern Reporter at 820 N.E.2d 994.
Illinois Appellate Court, Fourth District: Trier of Fact to Consider the Fault of Settling Defendants for Purposes of § 2-1117
One issue at the forefront of § 2-1117 jurisprudence is whether former parties to a lawsuit, including settling defendants, should be kept on the verdict forms so that the jury has the opportunity to consider the fault of, and apportion liability to, those entities for purposes of § 2-1117. In Skaggs v. Senior Services of Central Illinois, Inc., 2005 WL 245758 (Ill. App. Jan. 27, 2005), the Illinois Appellate Court, Fourth District held that “section 2-1117 requires the trier of fact to consider the percentage of fault of settling defendants.”
Facts
Plaintiff hired defendant Help at Home, Inc. to drive her to a building occupied by defendant Senior Services of Central Illinois, Inc. (Senior Services).
Help at Home's employee drove plaintiff to Senior Services and parked the van near a depression in the parking lot. When returning to the van plaintiff fell in the parking lot. Plaintiff sued Help at Home and Senior Services, among others, alleging negligence against both parties. Senior Services counterclaimed against Help at Home “seeking contribution and a reduction in fault should any finding of liability be made against Senior Services.”
Help at Home, however, had filed a petition in bankruptcy prior to plaintiff filing her personal injury complaint. In the bankruptcy proceeding plaintiff and Help at Home resolved plaintiff's claim, and the bankruptcy court approved plaintiff's claim (as an unsecured creditor) for $100,000. In the state court tort case, plaintiff and Help at Home moved for a “good faith” finding on the settlement under the Contribution Act, which the trial court granted over Senior Services' opposition. The trial court ordered plaintiff to release Help at Home for any liability for her injuries; that Help at Home be discharged from any and all liability to any other joint tortfeasor (i.e. Senior Services); and that any amounts received by plaintiff under the settlement would be credited against any judgment that may be entered against Senior Services. Senior Services appealed.
Analysis
On appeal, Senior Services argued that “if the settlement is approved and Help at Home dismissed as a defendant, Senior Services . . . may not request the trier of fact to apportion liability by including Help at Home. This could jeopardize Senior Services' right under section 2-1117 . . . to be only severally liable for damages other than medical expenses if it was less than 25% at fault.” The Fourth District's opinion hinged on the “question of whether, after the settlement, Help at Home's fault may be considered in apportioning liability under section 2-1117..."
The amended version of § 2-1117 provides that “[a]ny defendant whose fault, as determined by the trier of fact, is less than 25% of the total fault attributable to the plaintiff, the defendants sued by the plaintiff, and any third party defendant except the plaintiff's employer, shall be severally liable for [non-economic damages].” (emphasis added) In analyzing the pre-amended version of 2-1117 (which did not contain the phrase “except the plaintiff's employer”) the Illinois Supreme Court in Unzicker v. Kraft Food Ingredients Corp., 783 N.E.2d 1024 (2002), concluded “the clear legislative intent behind section 2-1117 is that minimally responsible defendants should not have to pay entire damage awards.” The legislature's amendment to 2-1117 did not change the legislative intent with regard to minimally culpable defendants. This mantra provided the backdrop for the Fourth District's holding that “section 2-1117 requires the trier of fact to consider the percentage of fault of settling defendants. Since section 2-1117 allows the trier of fact to consider Help at Home's percentage of fault, the trial court did not abuse its discretion in finding a good-faith settlement.”
The Skaggs court concluded that a “defendant sued by the plaintiff” includes settling defendants that “had actually been sued.” “If a settling defendant may not be included under section 2-1117, a plaintiff could sue two defendants, one who is primarily at fault but indigent and one who is minimally at fault but wealthy. By settling with the indigent defendant, the plaintiff could circumvent the application of section 2-1117, leaving the wealthy defendant, even though minimally liable, jointly liable for all damages because the settling defendant's portion of fault can no longer be considered. Such an arrangement, like [a] loan-receipt [agreement] . . . would constitute bad faith and collusion as the parties to the settlement would be acting to deprive the nonsettling party of its statutory right to several liability for nonmedical expenses. . . . Forcing a minimally responsible defendant to shoulder the nonmedical expenses only because the more culpable defendant settled would allow plaintiffs to circumvent the purposes of [2-1117].”
The problem with trying to determine whether the settlement between plaintiff and Help at Home was in “good faith” was that since the settlement took place prior to trial and therefore prior to the jury's determination of fault, it was impossible to determine whether Senior Services was more or less than 25% at fault. “[T]o require a trial court to conduct a full-blown pretrial hearing to apportion liability before making a good-faith determination would be nigh impossible and burdensome. By interpreting section 2-1117 to include settling defendants, such a requirement can be avoided.” The Fourth District summarized: “Only by interpreting section 2-1117 to include settling defendants can section 2-1117 reinforce the policies of the Contribution Act. Including settling defendants in apportioning liability does not discourage settlements, but it certainly better promotes equitable apportionment of damages according to relative fault.”
A petition for rehearing in Skaggs was denied on April 7, 2005.
Learning Point:
In multiple-tortfeasor cases counsel should bring § 2-1117 to the attention of the court from the outset. Under § 2-1117 and Skaggs, counsel should put into evidence the negligence of settled defendants/third-party defendants, and argue that fault should be allocated to those entities for purposes of § 2-1117 (and not for purposes of rendering judgments against those entities). If the court refuses to allow counsel to put on such evidence/arguments, an offer of proof of those parties' negligence should be made for purposes of preserving error on appeal. Counsel should also tender jury verdict forms naming the settled parties for purposes of allocation of fault, and object to verdict forms tendered by opposing counsel which do not include the settled parties.
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