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Sobczak v. Whitten

OPINION FILED JULY 23, 1979.

JAMES SOBCZAK ET AL., PLAINTIFFS-APPELLEES,

v.

MICHAEL E. WHITTEN ET AL., D/B/A FREEBURG RECREATION PARK COMMITTEE, DEFENDANTS. — (GOVERNMENT EMPLOYEES INSURANCE COMPANY, INTERVENOR-APPELLANT.)



APPEAL from the Circuit Court of St. Clair County; the Hon. THOMAS P. O'DONNELL, Judge, presiding.

MR. PRESIDING JUSTICE GEORGE J. MORAN DELIVERED THE OPINION OF THE COURT:

This is an appeal from a judgment of the circuit court of St. Clair County, arising from the settlement of an automobile accident in which the plaintiffs, James Sobczak, Jan Sobczak, Bruce Shelton and John Miller, sustained personal injuries. James Sobczak, the driver of the automobile, was insured by Government Employees Insurance Company. Michael Whitten, the defendant driver of the other automobile involved in the collision, was insured by Dairyland Insurance Company. Government Employees Insurance Company, intervenor-appellant, hereinafter referred to as GEICO, appeals from an order granting plaintiffs' motion to reconsider an earlier order of the court which disbursed $20,000 previously deposited with the court by Dairyland without allocating any of that amount to plaintiffs as attorneys' fees. In granting the motion to reconsider, the court ordered a disbursement of $6,246.18 to be paid to plaintiffs' attorneys out of the $20,000 deposited with the court, thereby reversing its previous order. GEICO appeals, contending the trial court erred in granting plaintiffs' motion to reconsider, in applying the "fund doctrine" to award attorneys' fees, and awarding an excessive amount of attorneys' fees.

On September 22, 1976, plaintiffs, by their attorneys, filed a complaint for personal injuries against the defendant alleging that defendant negligently collided with plaintiffs' vehicle. Sometime between October 19, 1976, and November 11, 1976, intervenor-insurer GEICO sent subrogation notices to Dairyland. On December 20, 1976, the defendant filed a motion requesting leave to pay the monetary equivalent of the stated policy amounts into the court. In support of this motion, the defendant stated that counsel for plaintiffs and Dairyland had agreed that the monetary equivalent of the stated policy amounts should be paid into the court and the plaintiffs would then execute covenants not to sue and would agree to hold the defendant harmless for indemnity arising out of other suits which plaintiffs might file. That same day Dairyland deposited $20,000 into the court.

On March 14, 1977, plaintiffs filed a motion requesting a hearing to allow plaintiffs to prove their damages and to allow GEICO to present their claim to the proceeds. The motion further requested the court to disburse the proceeds.

On March 31, 1977, GEICO filed a petition to intervene and a motion for disbursement of the $20,000. This petition alleged that pursuant to an insurance contract, GEICO had paid $15,439.67 to the plaintiffs for medical expenses incurred because of the injuries sustained in the automobile accident with Whitten and that GEICO anticipated that it would incur an additional $6000 to $7000 in medical expenses. The petition further alleged that GEICO was plaintiffs' subrogee and had a right to the proceeds paid by Dairyland into the court. The motion for disbursement requested that all the proceeds be paid to GEICO in the amount of its present subrogation interest with the remainder held unpaid until it was determined whether further payments would be made by GEICO. On November 8, 1977, the court granted the motions to disburse filed by the plaintiffs and GEICO with a detailed order of distribution to follow with a stipulation of fact to be submitted by plaintiffs and GEICO on the issue of attorneys' fees.

On January 27, 1978, the plaintiffs filed an amended motion for disbursement, requesting an award of "appropriate fees" for plaintiffs' attorneys. The following stipulation of fact, supported by documentation, was filed simultaneously:

"STIPULATION OF FACT

Now come the plaintiffs, James Sobezak, Jan Sobezak, Bruce Shelton and John Miller, by their attorneys, * * *, and the intervenor insurer, Government Employees Insurance Company, a corporation by * * *, its attorneys, and stipulate to the following chronology and written communications which are attached and incorporated herein:

1. September 29, 1976. The Claims Adjuster for defendant's insurer acknowledged plaintiffs attorney's lien (Exhibit 1).

2. October 5, 1976. The Claims Adjuster of defendant's insurer acknowledged plaintiffs' attorney's lien and requested further medical in support of the plaintiffs' claim (Exhibit 2).

3. October 22, 1976. Plaintiffs' attorney asked for a statement from the defendant and requested defendant's insurer tender the policy into court (Exhibit 3).

4. October 29, 1976. The Claims Adjuster for defendant's insurer agreed to allow a statement from the defendant in return for a Covenant Not to Sue (Exhibit 4).

5. November 2, 1976. Plaintiffs' attorney forwarded supporting medical to the defendant's adjuster and again requested that the Twenty Thousand Dollar ($20,000.00) policy be tendered into court in return for a Covenant Not to Sue (Exhibit 5).

6. November 5, 1976. The Claims Adjuster for defendant's insurer again acknowledged the terms of the Covenant Not to Sue entered by the plaintiffs' attorney and the matter was being turned over to the law ...


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