Illinois Supreme Court Decides “Unanswered Question” Under The Illinois Contribution Act
by Melinda S. Kollross
In Volume 3 of our 2020 CM Report, we reported on an order issued by the United States Court of Appeals for the Seventh Circuit in Roberts v. Alexandria Transp. Inc., 968 F.3d 794 (7th Cir. 2020), certifying to the Illinois Supreme Court an unanswered question arising under Section 3 the Illinois Contribution Act. Section 3 provides that each tortfeasor owes no more than his/her/its pro rata share of the common liability, except where the obligation of a tortfeasor is “uncollectable”. In that event, the remaining tortfeasors must share in the uncollectable obligation on a pro rata basis. The Seventh Circuit asked the Illinois Supreme Court to decide “whether the obligation of a settling party is uncollectable” under Section 3 of the Illinois Contribution Act.
The Supreme Court in a split 5-2 decision answered that question on June 17, 2021, holding that the obligation of a tortfeasor who settles is not “uncollectable” under the Contribution Act. Roberts v. Alexandria Transp. Inc., 2021 IL 126249.
Plaintiff Roberts was driving a truck through a construction zone. A flagger abruptly turned a flag from slow to stop. Roberts slammed on his brakes and was hit from behind by a driver working for the Alex Parties. Roberts sued the Alex Parties, and the Alex Parties sued EK (the general contractor) and Safety (a sub EK retained to manage the site worker safety program) for contribution.
Roberts settled with EK for $50K, and EK was dismissed from the suit. Roberts also settled with the Alex Parties for $1.85 million, and that settlement released claims against Safety as well. The settlement amounts established a total common liability of $1.9 million.
The Alex Parties continued their contribution claim against Safety. The trial court determined that the Alex parties, EK and Safety all had to be on the verdict form so that the jury could properly apportion fault. The trial court also determined, however, that any fault of EK would not be redistributed between the Alex Parties and Safety. Rather, Safety would just owe Alex its own share of fault and the Alex Parties would have to be liable for EK’s share along with its own.
At the end of the trial, the jury determined fault as follows: 10% Safety; 15% The Alex Parties; 75% EK.
On appeal in the Supreme Court, the Alex Parties argued that since a tortfeasor’s settlement with a plaintiff discharged the tortfeasor for all liability for any contribution to any other tortfeasor, it rendered the settling defendant’s obligation, such as EK’s, “uncollectable” in any future contribution action. Because EK’s 75% obligation of the total common liability was “uncollectable”, EK’s 75% obligation had to be reallocated between the Alex parties and Safety on a pro rata basis. In opposition, Safety contended that a good-faith settlement with a plaintiff did not render the settling party’s obligation “uncollectable” within the meaning of the Contribution Act. Therefore, the Contribution Act protected Safety from contributing more than its pro rata share of the common liability, and EK’s 75% share could not be reallocated between the Alex Parties and Safety.
The Supreme Court ruled that Safety had the better argument that EK’s settlement with plaintiff and discharge from further liability did not render EK’s obligation “uncollectable” as the word “uncollectable” was commonly viewed by the Court. “Uncollectable” meant “insolvency” or Immunity”, not a discharge from further liability because of a good faith settlement with the plaintiff. The Court approvingly cited the Seventh Circuit’s observation that discharged did not mean uncollectable.
Further, the Court found the plain language of Section 3 showed that the obligation of a settling defendant could not be considered unpaid because it was in fact paid to the plaintiff as part of the common liability:
The plain language of section 3 provides that, where ‘the obligation of one or more of the joint tortfeasors is uncollectable,’ ‘the remaining tortfeasors shall share the unpaid portions of the uncollectable obligation in accordance with their pro rata liability.’ (Emphasis in original.). 740 ILCS 100/3 (West 2018). The legislature could not have intended to include a settlement as an “uncollectable” obligation because there is no ‘unpaid portion’ of a settlement. Section 2(c) provides that, where a joint tortfeasor settles with a plaintiff, it reduces the recovery on any claim against the other joint tortfeasors to the extent of the amount stated in the settlement agreement or in the amount of the consideration actually paid for the settlement, whichever is greater. Id. § 2(c). In this case, for example, EK’s settlement payment of $50,000 contributed to the total common liability owed to plaintiffs. Safety accurately argues that EK’s obligation was not uncollectable—it was collected.
The Court also held that its decision was consistent with the public policy goal of equitably apportioning damages. According to the Court, the Alex Parties’ settlement established the common liability to the plaintiff knowing full well that the $50K EK paid was all it would ever pay towards the common liability. Further the Alex Parties knew that Safety would owe only its pro rata share, and Safety might be adjudged only a small percentage of the total common liability. The Court thus found it would be inequitable to require Safety to pay more than its pro rata share of the total common liability.
Justices Carter and Burke dissented contending that since a settling defendant was forever discharged for any further liability, the settling defendant’s share of the common liability should be deemed uncollectable under the Contribution Act. According to the dissent, establishing the settling defendant’s share of the common liability as “uncollectable” would foster the goal of achieving more settlements from all defendants in cases such as this one involving multiple defendants. The dissent stated that Safety could have protected itself from having to pay its share of EK’s adjudicated and “uncollectable” portion of the common liability by itself settling with plaintiffs, like everyone else.
Learning Point: We believe this was the right decision by the Illinois Supreme Court on the issue presented. The Court protected the non-settling defendant’s right to pay no more than its pro rata share of the common liability. We respectfully disagree with the dissent’s view that Safety should have settled with plaintiffs like everyone else to protect itself from future contribution liability over and above it own pro rata share. Safety’s adjudicated fault of only 10% showed that it had little to do with the accident and a strong case on liability. The dissent nonetheless would have counseled Safety to “throw substantial money” to the plaintiffs to avoid the risk of paying more than the adjudicated share of common liability. Although promoting settlement is a goal of the Contribution Act, the Supreme Court’s decision shows that the equitable apportionment of fault outweighs the goal of just settling cases.