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535 N. Mich. Condo. Ass'n v. Bjf Dev.

OPINION FILED MAY 12, 1986.

535 NORTH MICHIGAN CONDOMINIUM ASSOCIATION, PLAINTIFF-APPELLANT,

v.

BJF DEVELOPMENT, INC., ET AL., DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Cook County; the Hon. Lester D. Foreman, Judge, presiding.

JUSTICE O'CONNOR DELIVERED THE OPINION OF THE COURT:

This action arose out of an incident which occurred on the premises of plaintiff-appellant, 535 North Michigan Condominium Association, when a bar allegedly fell over on Shira Luft, a minor, causing her personal injuries. The parties subsequently settled for the sum of $55,000, and a release was executed on December 17, 1983. The release was approved by the Superior Court of St. Clair County, California, as being in the best interests of the minor claimant. Plaintiff-appellant then filed a two-count complaint against defendant-appellees, BJF Development, Inc., and Power Construction, Inc., based on contribution and indemnity for the defendant-appellees' alleged breach of their duty to properly install the bar. Defendant-appellees filed motions to dismiss both counts, which the trial court granted on May 29, 1984. We reverse in part, affirm in part and remand for further proceedings.

The language of the subject release stated as follows:

"For and in consideration of the payment to us at this time of the sum of FIFTY-FIVE THOUSAND ($55,000) DOLLARS, the receipt of which is hereby acknowledged, we, HAROLD LUFT, Individually and as Guardian of SHIRA LUFT, a minor, and LORRAINE LUFT, being of lawful age and proper appointment, do hereby agree to covenant and release, acquit, discharge, remise, and forever discharge 535 NORTH MICHIGAN AVENUE CONDOMINIUM ASSOCIATION located at 535 N. Michigan Avenue, Chicago, Illinois, and ADE REALTY COMPANY located at 221 N. La Salle Street, Chicago, Illinois, and their agents, officers, directors, managers, servants and employees, successors and assigns of and from all claims, debts, dues, obligations, damages, costs, loss of services, loss of consortium, expenses or compensation on account of, or in any way growing out of, any and all known or unknown personal injuries and property damage resulting from or which may have resulted from an accident, occurrence or event which occurred on the premises of 535 N. Michigan Avenue, Chicago, Illinois on or about June 27, 1983. * * *"

The document further stated:

"By this Release and indemnifying agreement, the undersigneds acknowledge that the sums herein paid are deemed to be full and complete compensation for all damages suffered in the aforementioned accident, occurrence and event." (Emphasis added.)

In addition, the release contained an indemnification provision under which the Lufts must indemnify the named releasees to the extent of $55,000 from suits by any other alleged tortfeasors, either known or unknown.

The trial court dismissed plaintiff's contribution count, relying on Alsup v. Firestone Tire & Rubber Co. (1984), 101 Ill.2d 196, 427 N.E.2d 1258, wherein our supreme court held that a broadly worded, general release executed under section 302(c) of the Contribution Among Joint Tortfeasors Act (Act) (Ill. Rev. Stat. 1983, ch. 70, par. 302(c)) will not discharge any parties other than those designated by name, or otherwise specifically identified. The trial court found that because under Alsup defendants' liability to the injured parties was not discharged by the release in question, plaintiff was not entitled to contribution under the Act. The Alsup court made its holding prospective to releases executed after January 20, 1984 (101 Ill.2d 196, 203, 427 N.E.2d 1258), however, and is therefore inapplicable by its terms to the release executed by plaintiffs in the instant action. Having so determined, we must now consider whether the language contained in the subject release was broad enough to extinguish all of the liability of the defendants herein to the injured parties. We believe that it was, and accordingly, we reverse that portion of the trial court's order dismissing plaintiff's count for contribution.

The court in Alsup placed great emphasis on the policy behind the Act, which is to protect the rights of injured claimants and to encourage settlements by abrogating the old common law rule that the release of one joint tortfeasor is a release of all joint tortfeasors, and by permitting partial settlements. (Alsup v. Firestone Tire & Rubber Co. (1984), 101 Ill.2d 196, 427 N.E.2d 1258; Ill. Rev. Stat. 1983, ch. 70, par. 302(c).) The Act permits a claimant to settle with a tortfeasor to the extent of the latter's pro rata share of liability without relinquishing the claimant's rights to proceed against any remaining tortfeasors to obtain full compensation for his damages. In addition, section 302(b) of the Act proportions liability and protects the interests of a tortfeasor who has paid more than his pro rata share of liability by endowing him with a right to contribution against any remaining tortfeasors, but only in those situations where the remaining tortfeasors are no longer subject to a direct action by the original claimant. Ill. Rev. Stat. 1983, ch. 70, pars. 302(b), (e); see Ragusa v. City of Streator (N.D. Ill. 1982), 95 F.R.D. 527 (stating that, under Illinois law, the right of contribution ripens into a cause of action when a tortfeasor pays more than his proportionate share of the underlying claim).

In order to determine the extent and scope of the release now before us, it is necessary to consider the language of the instrument itself, as well as the circumstances surrounding the transaction. (See Schrempf v. New England Mutual Life Insurance Co. (1982), 103 Ill. App.3d 408, appeal denied (1982), 91 Ill.2d 565, and Glandinus v. Laughlin (1977), 51 Ill. App.3d 694, 366 N.E.2d 430.) In considering the effect of a pre-Contribution Act release containing language similar to the one now before us, our supreme court held that a full or unqualified release as to one indivisible injury given to any of those concurring in its cause served to release both joint and independent concurrent tortfeasors. (Porter v. Ford Motor Co. (1983), 96 Ill.2d 190, 449 N.E.2d 827.) The court in Porter found that at least as of time the subject release had been executed, the original claimant had been willing to accept a certain specified sum from one tortfeasor in full settlement without any expectation of recovering an additional amount from a concurrent tortfeasor or any other. The court reasoned that the release, taken in full satisfaction, served as a bar to any further legal action "`because all of the plaintiff's injury is compensated for in the eyes of the law and, because of this, those tortfeasors paying for the satisfaction can be said to have paid as well for any damages, if any, caused by nonpaying negligent parties.'" (Porter v. Ford Motor Co. (1983), 96 Ill.2d 190, 196, 449 N.E.2d 827, quoting Alberstett v. Country Mutual Insurance Co. (1979), 79 Ill. App.3d 407, 410, 398 N.E.2d 611, (holding that where certain tortfeasors have effected a good-faith settlement with the plaintiff by means of a release intended to cover all injuries, those settling tortfeasors could maintain a third-party action to recover from subsequent allegedly malpracticing doctors).) See also Liberty v. J.A. Tobin Construction Co. (Mo. App. 1974), 512 S.W.2d 886.

• 1 In determining the parties intent, we cannot ignore the plain language of the release itself, in which the Lufts admitted that the specified sum was deemed "full and complete compensation for all damages suffered in the aforementioned accident, occurrence and event." In addition to this, the California court reviewed the amount tendered in relation to the damages claimed, and determined the proposed settlement to be in the best interests of the minor, Shira Luft. While the release here does not contain an all-inclusive designation as to the parties covered, neither does it contain any reservation of rights or specific words which would indicate a limited character to be attributed to it. Rather, it purports to cover, in most general terms, any and all injuries arising from the specific accident involved. (See Liberty v. J.A. Tobin Construction Co. (Mo. App. 1974), 512 S.W.2d 886, 891 (focusing the court's inquiry on what, not who, had been released by the subject document).) We therefore find that the subject release was intended to, and did dispose of the whole subject matter or cause of action involved, and effectively extinguish all liability of defendants here to the original claimants. Plaintiffs may therefore maintain a cause of action for contribution from defendants under the Act. We believe this holding to be consistent with the two major purposes of the Contribution Act, which are the equitable sharing of damages and the encouragement of settlement. See Heinrich v. Peabody International Corp. (1985), 139 Ill. App.3d 289, 296, 486 N.E.2d 1379, and cases cited therein.

We find little merit in defendants' argument that the indemnification provision contained in the release demonstrates a contrary intent on the part of the original claimants. Rather, we believe this to indicate only a means for the settling parties, 535 North Michigan Condominium Association and ADE Realty Company, to protect themselves against any eventual breach of the release agreement by the original claimants.

• 2 Plaintiff next contends that its complaint stated a cause of action under a traditional implied indemnity theory and that the trial court erred in holding that plaintiff was actively negligent as a matter of law and in dismissing plaintiff's indemnity count on the pleadings. On remand from the Illinois Supreme Court, this court recently addressed the question of whether implied indemnity exists in Illinois in view of the Contribution Act. In a lengthy and well-reasoned opinion, the court in Heinrich considered the historical relationship between indemnity and contribution, the policies supporting the adoption of contribution by our supreme court, the legislature's intent in passing the Contribution Act, the broad statutory scheme and the specific language of the Act setting forth the general application of contribution, and found each of these to weigh in favor of a finding that implied indemnity has been abolished. (Heinrich v. Peabody International Corp. (1985), 139 Ill. App.3d 289, 302, 486 N.E.2d 1379; see also Holmes v. Sahara Coal Co. (1985), 131 Ill. App.3d 666, 475 N.E.2d 1383 and Morizzo v. Laverdure (1984), ...


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