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05/26/95 MELVIN FREMAREK v. JOHN HANCOCK MUTUAL

May 26, 1995

MELVIN FREMAREK, PLAINTIFF,
v.
JOHN HANCOCK MUTUAL LIFE INSURANCE CO., A MASSACHUSETTS CORPORATION; COLDWELL BANKER RESIDENTIAL REAL ESTATE, INC., A CALIFORNIA CORPORATION; MAYCO CRANE CORPORATION, A CORPORATION; SKIDMORE, OWINGS & MERRILL, A PARTNERSHIP; CHARLES KIRK JR., INDIVIDUALLY AND D/B/A SKYLINE MAINTENANCE & REPAIR SERVICE CO.; TISHMAN CONSTRUCTION CORPORATION OF ILLINOIS, A CORPORATION; TISHMAN MIDWEST MANAGEMENT CORPORATION, A CORPORATION; TISHMAN REALTY CORPORATION OF CHICAGO, A CORPORATION; TISHMAN REALTY CORPORATION OF ILLINOIS, A CORPORATION; TISHMAN SPEYER PROPERTIES, INC., A CORPORATION; AND HIELENKOTTER & RONSIECK CRANES, A CORPORATION, DEFENDANTS. MELVIN FREMAREK, THIRD-PARTY PLAINTIFF-APPELLANT AND CROSS-APPELLEE, V. LIBERTY MUTUAL INSURANCE CO., THIRD-PARTY DEFENDANT-APPELLEE AND CROSS-APPELLANT.



Appeal from the Circuit Court of Cook County. The Honorable Joseph N. Casciato, Judge Presiding.

The Honorable Justice T. O'brien delivered the opinion of the court: Cousins, P.j., and Gordon, J., concur.

The opinion of the court was delivered by: O'brien

JUSTICE T. O'BRIEN delivered the opinion of the court:

This appeal involves the humble issue of the adjudication of a statutory workers' compensation lien. Had appellant's counsel presented the issue to the trial court with the minimum investigation of the facts and the law, the issue would have been a visitor to the court house, but once. Instead, the controversy resulted in the entry of twenty-one (21) court orders over a 2 1/2 year period. At its conclusion, the trial courtentered judgment for the workers' compensation carrier for $9,425.75 and denied its Rule 137 petition for fees. (134 Ill. 2d R.137.) We affirm the judgment for a lien and reverse the denial of Rule 137 fees for the following reasons.

BACKGROUND

On January 19, 1987, Fremarek sustained injuries during the course of his employment while washing windows at the John Hancock Center in Chicago, Illinois. Fremarek later filed a workers' compensation claim before the Illinois Industrial Commission and received a lump sum settlement in the amount of $19,228.65. Liberty Mutual satisfied the claim pursuant to a workers' compensation policy issued to Fremarek's employer. A statutory lien on behalf of Liberty Mutual was then perfected by operation of the Workers' Compensation Act against any monies Fremarek might recover from third parties, subject to a pro rata reduction for attorney's fees and costs, if any. Ill. Rev. Stat. 1987, ch. 48, par. 138.5, now codified at 820 ILCS 305/5(b) (West 1992). *fn1

On January 18, 1989, Fremarek instituted a negligence action against several alleged tort-feasors. One of the defendants eventually agreed to settle the case for $21,000.00 and issued a draft in that amount to Fremarek's attorney.

Fremarek subsequently sent notice to all of the defendants in the negligence action that he intended to present a motion to adjudicate Liberty Mutual's lien on December 18, 1991. The motion itself was as unspecific as it was brief:

"Plaintiff, MELVIN FREMAREK, respectfully moves this Honorable Court for entry of an order adjudicating the lien of Liberty Mutual Insurance Company, the workmen's compensation carrier, in the above entitled cause, instanter."

Fremarek also sent notice of the motion to a claims adjuster at Liberty Mutual. However, Liberty Mutual was never joined as a party to the negligence action, nor was its legal counsel notified of the motion, and therefore it did not appear in court.

At the hearing, the circuit court inquired as to who represented the compensation carrier. Fremarek's attorney indicated that he had contacted the adjuster that morning. Counsel informed the court that the adjuster "was checking to see if somebody was going to be here. Apparently their file has been closed. But she doesn't really know the status * * *" (Emphasis added.)

The court thereafter proceeded to hear counsel's motion to adjudicate. Although the written motion did not set forth a precise figure to which the lien could be adjudicated, counsel orally made the following request: "I have a letter from [the adjuster] reflecting how much the lien is, $20,148.65. The amount available after fees in case expense (sic) in this case after the settlement is available to the plaintiff is $10,023.26. My request is to have this lien adjudicated to zero". (Emphasis added.)

The court inquired of counsel, "Under what authority can I do that? " Counsel responded, "I believe the Court has discretion to adjudicate a lien especially when the lien is twice the amount, more than twice the amount of the distribution to the plaintiff. I believe that liens can not (sic) exceed a third of the settlement that is going to be available to the plaintiff." The court summarily reduced the lien to $1,000.00 and entered an order to that effect.

Forty-one days later, Fremarek's attorney sent a draft in theamount of $1,000.00 to the claims adjuster at Liberty Mutual. A cover letter accompanying the draft indicated that the payment was in full and final satisfaction of Liberty Mutual's lien pursuant to the enclosed court order. Liberty Mutual endorsed and cashed the check in February 1992.

Seven months later, Liberty Mutual filed a motion to vacate the order on the grounds that the circuit court lacked personal and subject matter jurisdiction. Liberty Mutual apprised the court of the fact that it was never served with a summons and complaint in the negligence action. The court granted the motion.

Fremarek again moved to adjudicate the lien once the court had jurisdiction over Liberty Mutual. This time Fremarek argued that Liberty Mutual's acceptance of the $1,000.00 draft constituted an accord and satisfaction. The circuit court rejected that argument. The court then granted Liberty Mutual's cross motion to adjudicate and reduced the lien, in accordance the statutory guidelines set forth in section 305/5(b) of the Workers' Compensation Act, to $9,425.75.

Counsel for Fremarek further moved the court to adjudicate the lien for a third time by filing a motion to reconsider. That motion was summarily denied. The court also denied Liberty Mutual's motion for sanctions pursuant to Supreme Court Rule 137. This latter motion was based in part upon Fremarek's oral misrepresentation regarding the court's authority to completely extinguish the lien as well as the ...


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