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10/25/89 Scott Wilson, v. the Hoffman Group

October 25, 1989





546 N.E.2d 524, 131 Ill. 2d 308, 137 Ill. Dec. 579 1989.IL.1688

Appeal from the Appellate Court for the Second District; heard in that court on appeal from the Circuit Court of Du Page County, the Hon. Robert C. McLaren, Judge, presiding.


JUSTICE CLARK delivered the opinion of the court. JUSTICE RYAN, Dissenting.


Plaintiff, Scott Wilson, was injured in a roofing accident. He filed a two-count complaint, in the circuit court of Du Page County, against the general contractor of the project, The Hoffman Group, Inc. (Hoffman), alleging violations of the Structural Work Act (Ill. Rev. Stat. 1983, ch. 48, par. 60 et seq.) and negligence. Thereafter, Hoffman filed a six-count third-party complaint against Wilson's employer, Ideal Roofing, Inc., Popko Management, Inc., and Popko Roofing and Insulation, Inc. (Ideal-Popko), seeking contribution for Ideal-Popko's negligence and their violation of the Structural Work Act under "An Act in relation to contribution among joint tortfeasors" (Ill. Rev. Stat. 1983, ch. 70, par. 301 et seq.) (the Contribution Act) and indemnity for Ideal-Popko's breach of a contract to obtain insurance.

Wilson and Ideal-Popko entered into a settlement agreement whereby Ideal-Popko agreed to pay $24,000 in cash and waive their $149,737 statutory workers' compensation lien in exchange for a release from liability from Wilson. The lien in question is statutorily imposed by section 5(b) of the Workers' Compensation Act (Ill. Rev. Stat. 1983, ch. 48, par. 138.5(b)). Under section 5(b), an employee who has received workers' compensation benefits is required to reimburse the employer for the full amount of benefits paid or payable by the employer from any recovery the employee receives from a third party legally responsible for the employee's injuries. Ullman v. Wolverine Insurance Co. (1970), 48 Ill. 2d 1, 7.

The settlement agreement and release were conditioned upon a finding by the trial court that the settlement was in good faith within the meaning of section 2(c) of the Contribution Act. Hoffman objected to the settlement, arguing that (1) a plaintiff/employee could not settle directly with a third-party defendant/employer, (2) the consideration was inadequate for the release, and (3) if the settlement was valid, Hoffman is entitled to a setoff for both the $24,000 cash and the amount of the workers' compensation lien against any judgment obtained against it by Wilson.

Wilson maintained the position that while the value of the workers' compensation lien was sufficient consideration for purposes of the settlement agreement, it should not be considered as a setoff under section 2(c) of the Contribution Act. The trial court found that the plaintiff's position was contrary to law and evidenced a lack of good faith on the part of the plaintiff, and refused to certify the settlement as being in good faith.

Subsequently, Wilson and Ideal-Popko waived the condition that a good-faith finding be entered, and consummated the settlement. The trial court refused to dismiss the third-party complaint pursuant to section 2(d) of the Contribution Act. However, the court found that the order involved a question of law as to which there was a substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation (107 Ill. 2d R. 308(a)) and entered an order identifying and certifying the following questions of law for interlocutory review pursuant to Supreme Court Rule 308 (107 Ill. 2d R. 308):

"1. Whether the settlement agreement entered into between the plaintiff and the third party defendant, the terms of which were specified in the release documents considered by this court, was in good faith?

2. Whether, when the plaintiff contends the amount of the workmen's compensation lien release should be considered by the court as consideration under the Contribution Act; should not the amount of said workmen's compensation lien release have to also be considered under 2 -- C of the Contribution Act as a set-off against any judgment entered in favor of plaintiff?

3. Whether plaintiff should be allowed a double recovery in that the third party defendant employers' reimbursement will not diminish the sums to be collected under the judgment and plaintiff will enjoy collection of the judgment without giving the objecting non-settling defendants the right to any set-off as to said third party defendant employer's reimbursement?

4. Should the waiver of the Workmen's Compensation lien be considered in addition to the $24,000 new money as a set-off, if there should be a judgment against the remaining defendants?

5. Is the plaintiff's position correct that only the 'new money' should be determinative as to what the amount of the set-off should be?"

Ideal-Popko's Rule 308 application for interlocutory appeal was denied by the appellate court. We granted review pursuant to Supreme Court Rule 315(a) (107 Ill. 2d R. 315(a)).

We believe the five questions certified for appeal can be consolidated into two basic questions: (1) whether the settlement between the plaintiff and Ideal-Popko was in good faith pursuant to section 2(c) of the Contribution Act, and (2) whether the amount of the workers' compensation lien should be set off against any subsequent judgment obtained by the plaintiff in accordance with section 2(c) of the Contribution Act. We answer both questions in the affirmative.

We begin by examining the relevant provisions of the Contribution Act. Section 2 of the Act provides in part:

"Right of Contribution. (a) Except as otherwise provided in this Act, where 2 or more persons are subject to liability in tort arising out of the same injury to person or property, or the same wrongful death, there is a right of contribution among them, ...

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