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Lemaster v. Amsted Industries

OPINION FILED NOVEMBER 10, 1982.

THOMAS LEMASTER, PLAINTIFF-APPELLEE,

v.

AMSTED INDUSTRIES, INC., DEFENDANT AND THIRD-PARTY PLAINTIFF-APPELLANT. — (WILLIAM R. MONTGOMERY & ASSOCIATES, INC., THIRD-PARTY DEFENDANT-APPELLEE.)



Appeal from the Circuit Court of Madison County; the Hon. William Johnson, Judge, presiding.

JUSTICE WELCH DELIVERED THE OPINION OF THE COURT:

On August 8, 1978, the plaintiff was injured when he fell from a roof at Amsted Industries' Granite City, Illinois, plant. He brought suit against Amsted in the circuit court of Madison County, alleging that his injuries had resulted from Amsted's violation of the Structural Work Act (Ill. Rev. Stat. 1981, ch. 48, par. 60 et seq.). Amsted, in turn, filed a third-party complaint against the plaintiff's employer, William R. Montgomery and Associates, with whom Amsted had contracted to perform roofing repair work at its plant. Count I of the complaint sought indemnity from Montgomery, while the second count requested contribution for an appropriate portion of the plaintiff's damages.

Prior to trial, counsel for Montgomery informed the court that his client had entered into a settlement agreement with the plaintiff. According to the terms of this agreement, which was conditioned upon the dismissal of Amsted's third-party action, the plaintiff released Montgomery from all liability in tort resulting from the August 8, 1978, fall, in return for Montgomery's waiver of its right to seek reimbursement for $28,347 in workers' compensation payments previously made to the plaintiff, plus an additional $35,000 in cash. Counsel for Montgomery argued that because section 2(d) of "An Act in relation to contribution among joint tortfeasors" (Ill. Rev. Stat. 1981, ch. 70, par. 302(d)) discharges a settling tortfeasor from liability for contribution to any other tortfeasor, Amsted's third-party action should be dismissed. The trial court agreed with this position, and dismissed Amsted's complaint.

The plaintiff's action proceeded to a jury trial against Amsted alone, following which he was awarded $100,000 in damages. The court granted Amsted a setoff in the amount of the $35,000 cash payment made by Montgomery, but did not allow Amsted any credit for the waiver of Montgomery's workers' compensation lien. Amsted has appealed from the dismissal of its third-party complaint, from the order denying it a setoff for the workers' compensation lien waiver and from the judgment in favor of the plaintiff in his original action.

APPEAL OF AMSTED AGAINST MONTGOMERY

In this court, Amsted asserts that the trial court erred in dismissing both the indemnity count and the contribution count of its third-party complaint. Alternatively, Amsted contends that it should have been given $63,347 credit against the $100,000 judgment in favor of the plaintiff. Because we agree that the third-party complaint should not have been dismissed, we need not consider the amount of the setoff. We will first discuss Amsted's indemnity count.

The parties do not dispute that Amsted's third-party complaint states a cause of action for indemnity under the Structural Work Act. That complaint alleged that Amsted had hired Montgomery to do the roofing work at its premises, that it was Montgomery's duty to supervise the work, and that Montgomery had violated the Structural Work Act by, inter alia, permitting its employees to use as a scaffold a roof which was not strong enough to support their weight, and failing to inspect that roof when Montgomery knew or should have known that the roof was unsafe. This complaint sufficiently alleges that Montgomery's conduct was "active" or "major fault" in comparison to the "passive" conduct or "minor fault" of Amsted. Lindsey v. Dean Evans Co. (1973), 11 Ill. App.3d 432, 297 N.E.2d 8; Rovekamp v. Central Construction Co. (1964), 45 Ill. App.2d 441, 195 N.E.2d 756.

The question presented by this appeal from the dismissal of Amsted's indemnity action is therefore whether an otherwise valid complaint for indemnity should be dismissed when the third-party defendant settles with the original plaintiff. Neither Montgomery nor Amsted has provided us with any direct authority on this question, and, in fact, the more common situation involves determination of the rights of a defendant/third-party plaintiff who settles the original action. (See Nogacz v. Procter & Gamble Manufacturing Co. (1975), 37 Ill. App.3d 636, 347 N.E.2d 112; Skezas v. Safeway Steel Products, Inc. (1967), 85 Ill. App.2d 295, 229 N.E.2d 781; Boston v. Old Orchard Business District, Inc. (1960), 26 Ill. App.2d 324, 168 N.E.2d 52.) In such a case, the third-party plaintiff is entitled to maintain his indemnity action for the full amount of the settlement, subject to proof that he was responding to a reasonable anticipation of personal liability rather than acting as a mere volunteer in entering into the settlement. St. Paul Fire & Marine Insurance Co. v. Michelin Tire Corp. (1973), 12 Ill. App.3d 165, 169, 298 N.E.2d 289, 292.

The purpose behind allowing a third-party plaintiff to seek indemnity for the full amount of the original claim, reached either by settlement or after adjudication, is to shift the entire responsibility for payment of damages from a party only technically liable for those damages to a party who is truly culpable in giving rise to the original claim. (Miller v. DeWitt (1967), 37 Ill.2d 273, 226 N.E.2d 630.) Indemnity, which rests upon the principle that everyone should be responsible for the consequences of his own acts, is distinguishable from contribution, which is an apportionment of liability among culpable parties. Van Jacobs v. Parikh (1981), 97 Ill. App.3d 610, 422 N.E.2d 979; Skinner v. Reed-Prentice Division Package Machinery Co. (1977), 70 Ill.2d 1, 374 N.E.2d 437, cert. denied sub nom. Hinckley Plastic, Inc. v. Reed-Prentice Division Package Machinery Co. (1978), 436 U.S. 946, 56 L.Ed.2d 787, 98 S.Ct. 2849.

In the case of an action which is settled by a defendant/third-party plaintiff, the purposes of indemnity are served by permitting the settling defendant to seek indemnity from the third-party defendant. There, the plaintiff's damages are established by the settlement (Gatto v. Walgreen Drug Co. (1975), 61 Ill.2d 513, 337 N.E.2d 23, cert. denied (1976), 425 U.S. 936, 48 L.Ed.2d 178, 96 S.Ct. 1669), and if that amount is not shown to be unrealistic or collusive, the defendant may shift the entire responsibility for those damages to the culpable party.

Were we to accept the dismissal of Amsted's indemnity action here, on the other hand, the purposes of an indemnity action would be defeated. When a third-party defendant settles a claim such as the plaintiff's, that settlement does not bar the action against the defendant/third-party plaintiff (see Kirkham v. Hickerson Brothers Truck Co. (1971), 29 Colo. App. 303, 485 P.2d 513; Turner v. Guiliano (1966), 350 Mass. 657, 216 N.E.2d 562) and is thus not conclusive as to the amount of the plaintiff's damages. After such a settlement is reached, the plaintiff would be well advised to pursue his claim in the original action, and if, as here, the judgment in that suit exceeds the amount of the settlement, that difference would be imposed on the defendant/third-party plaintiff, whose suit for indemnity would not have even been allowed to be litigated.

This result is patently inequitable. By allowing the indemnity action to be dismissed without trial, a party who is perhaps only technically liable to the plaintiff must shoulder that portion of the judgment which exceeds the amount of the settlement. Moreover, even if the evidence would show that the defendant/third-party plaintiff were partially at fault and would therefore be responsible for contribution, the fact remains that that party would have been denied the opportunity to present any evidence on that issue. Also, the apportionment of damages which would result from the procedure accepted by the trial court would not be based on any assessment of relative fault, but is only a product of the difference between the settlement and the judgment.

• 1 For these reasons, we cannot accept Montgomery's theory that a settlement between a third-party defendant and the original plaintiff bars any indemnity actions brought against the third-party defendant as a result of the plaintiff's claim. The trial court thus erred in dismissing the indemnity count of Amsted's third-party action against Montgomery.

• 2 Next, we consider Amsted's contribution count against Montgomery. The parties have assumed, without discussion, that contribution is available to a defendant found liable under the Structural Work Act. Our own research has not disclosed a reported case in Illinois involving contribution under that statute, but we believe that the assumption of the parties is correct. Although liability under the Structural Work Act is not based upon negligence, there can be degrees of fault among those who, under the Act, are accountable to an injured plaintiff (Rovekamp v. Central Construction Co. (1964), 45 Ill. App.2d 441, 449, 195 N.E.2d 756, 760), and as a result, indemnity actions, which require the trier of fact to determine which party is primarily at fault, are allowed under that enactment. (Miller v. DeWitt (1967), 37 Ill.2d 273, 226 N.E.2d 630.) A contribution action necessitates a similar weighing of fault, and as a Structural Work Act defendant may shift total responsibility for damages for which he is only technically liable, it would seem to be consistent to allow such a defendant to shift some of the responsibility for damages for which he is partially responsible. The New York courts>, in construing a statute (N.Y. Labor Law sec. 240 (McKinney Supp. 1981-1982)) similar to the Structural Work Act and therefore a source of persuasive authority in considering the Illinois Act (Bohannon v. Joseph T. Ryerson & Son, Inc. (1966), 72 Ill. App.2d 397, 219 N.E.2d 627), have not distinguished between contribution and indemnity and have allowed both types of actions in suits brought under section 240 of the Labor Law. (Kelly v. Diesel Construction Division of Carl A. Morse, Inc. (1974), 35 ...


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