Illinois Fault Allocation Tale Of Two Statutes: A Balancing Test Gone Wrong

Once upon a time, Illinois had two statutes designed to equitably apportion fault and so protect minimally responsible defendants from mega-dollar judgments.  Though the statutes still stand, they don’t provide defendants in personal injury cases near the protection they were intended to give.

The first statute, §2-1117 of the Code of Civil Procedure, states that a defendant with less than 25% of “total fault” has only several liability.  It was designed to protect defendants with little fault—but sometimes lots of money—from being forced to pay the entire amount of a judgment.

The second statute, the Contribution Act, encourages the equitable allocation of damages among tortfeasors.  A defendant paying more than its pro rata share of a judgment may recover the excess from co-defendants.  The statute encourages “good faith” settlements by authorizing the dismissal of contribution claims brought against a settling defendant.

So what happens to a defendant’s rights under §2-1117 when a plaintiff accepts a pre-trial, low-dollar offer from a financially broke, very negligent defendant?  Based on a sharply-divided Supreme Court decision, those rights are at great risk.  Antonicelli v. Rodriguez, 2018 IL 121943.

Facts

Angela Antonicelli was driving on a tollway when Daniel Rodriguez, high on cocaine, made an illegal U-turn and hit her car.  Karl Browder, a trucker behind Antonicelli, could not avoid it.  She was severely injured.  Antonicelli sued Rodriguez, Browder, and Browder’s employer.  The Browder defendants filed a contribution claim against Rodriguez.  Antonicelli agreed to settle with the otherwise penniless Rodriguez for $20,000, the limits of his insurance.  The trial court found that the settlement was in good faith under the Contribution Act and so dismissed the action against Rodriguez.  The court rejected Browder’s argument that it should have considered Browder’s rights under §2-1117.

Analysis

The majority opinion

In a split decision, the Supreme Court affirmed.  The majority recognized that the Contribution Act promotes the dual policies of encouraging settlements and equitably allocating damages among defendants. Whether a settlement is in “good faith” depends on whether it was reached without fraud or collusion and is consistent with the Act’s twin policies.  A trial court’s job is to balance those policies based on the facts of each case.

A trial court has discretion in determining “good faith,” and the majority found no abuse of it.  There had been no fraud or collusion in reaching the settlement, Rodriguez had paid his policy limit, and keeping him in the case would have increased defense costs.  The majority ruled that a court need not consider the relative liabilities of the parties pursuant to §2-1117 in deciding whether a settlement equitably allocates damages. Doing so would be “impractical” and would defeat the Contribution Act’s purpose “of encouraging settlement in the absence of bad faith, fraud, or collusion.” For the majority, equitable apportionment would be achieved because Browder would get a $20,000 settlement credit against any judgment.

The splits

The opinion drew two special concurrences and a dissent, all three centering on a decision not mentioned by the majority.  In Ready v. United Goedecke Services, Inc., 232 Ill. 2d 369 (2008), (a case Clausen Miller handled on appeal), the Court ruled that under §2-1117, a jury should not consider the fault of settling tortfeasors in determining “total fault.”  For example, if Rodriguez was actually 99% at fault, a jury could not allocate that fault to him.  Browder’s 1% fault would translate into 100% fault for purposes of joint and several liability.  Given the ten years of legislative silence after Ready, one concurring justice asked the legislature to clarify its original intent.  Another concurring justice did not seek clarification.  She had dissented in Ready and remained convinced that Ready misinterpreted §2-1117.

Going further, the dissenting justice described the problems that Ready created.  Because Ready barred consideration of a settling party’s fault, Browder was forced to challenge “good faith” in hopes of keeping Rodriguez in the case.  Rodriguez may have been largely, if not totally, at fault for injuring Antonicelli.  His $20,000 payment was a drop in a bucket compared to Antonicelli’s potential damages. Yet because of Ready, Rodriguez’s name would not appear on the jury verdict form for purposes of setting his percentage of fault.  So in deciding the issue of “good faith,” the trial court should have fully considered the Contribution Act’s purpose of equitably apportioning damages.  It did not.  It approved a pre-trial $20,000 settlement because without fraud or collusion, Rodriquez surrendered his policy limits and his settlement saved defense costs.  There was no real balancing of the dual purposes of the Act.

Learning Point:

Antonicelli compounds the problems Ready created ten years ago as to the equitable allocation fault and damages under §2-1117.  Defendants will have a tough time proving the inequities of a settlement when a very negligent co-defendant settles for short money.  A clarification of §2-1117 could help, but in the current legislative atmosphere it is unlikely.  And though the dissent makes a great case for reconsidering Ready, that’s also unlikely right now.

But the dissent’s citation to Yoder v. Ferguson, 381 Ill. App. 3d 353 (2008), (another case Clausen Miller handled on appeal), raises the possibility of an equal-protection challenge to Ready’s exclusion of settling defendants from verdict forms.  Ready creates unequal classifications of defendants.  Those standing trial altogether have their fault allocated differently than when one or more, but less than all of them, have settled.  There should be no difference in the allocation process.  After all, “total fault” was established at the time of the accident.  It does not change when a defendant settles.  Under Ready’s interpretation of §2-1117, a remaining defendant’s percentage of fault can increase with each new settlement. The Supreme Court has never passed on the constitutional issue.  Practitioners should raise it when a motion for a “good faith” finding is presented and when a case involving a settled defendant goes to trial.

At this point, it may be only way to correct a balancing test gone wrong.