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09/08/95 LOUISE MALATESTA v. MITSUBISHI AIRCRAFT

September 8, 1995

LOUISE MALATESTA, AS ADMINISTRATRIX OF THE ESTATE OF DONALD C. MALATESTA, SR., DECEASED, PLAINTIFF,
v.
MITSUBISHI AIRCRAFT INTERNATIONAL, INC., ET AL., DEFENDANTS. HARTFORD INSURANCE CO., PLAINTIFF IN INTERVENTION-APPELLANT, V. LOUISE MALATESTA, AS ADMINISTRATRIX OF THE ESTATE OF DONALD C. MALATESTA, SR., DECEASED, DEFENDANT IN INTERVENTION-APPELLEE.



Appeal from the Circuit Court of Cook County. The Honorable William Maddux, Judge Presiding.

The Honorable Justice Egan delivered the opinion of the court: McNAMARA, P.j., and Rakowski, J., concur.

The opinion of the court was delivered by: Egan

JUSTICE EGAN delivered the opinion of the court:

On February 25, 1988, the plaintiff, Louise Malatesta, filed a wrongful death and survival action in Cook County against the defendants, Mitsubishi Aircraft International, Inc., Mitsubishi Heavy Industries, Ltd., and Sperry International, for their involvement in the plane crash that killed her husband. On December 16, 1988, Hartford Insurance Company ("Hartford"), the decedent's employer's workers' compensation insurance carrier, was permitted to intervene to enforce its lien. The day before the trial was to begin, the plaintiff settled her suit with the defendants for $375,000. She filed a motion for summary judgment against Hartford, asserting that Hartford had no right to any part of the settlement proceeds. The trial judge granted this motion, and Hartford appeals.

In her complaint, the plaintiff asserted wrongful death and survivalactions against Mitsubishi Aircraft, Mitsubishi Heavy Industries and Sperry International. She alleged that these defendants were liable, based on strict liability in tort and negligence, for product defects that caused her husband's death.

According to the complaint, on March 5, 1986, the plaintiff's husband was flying from Meigs Field in Chicago to the DuPage County Airport. He was aboard a plane manufactured, distributed and sold by Mitsubishi Aircraft and Mitsubishi Heavy Industries. The plane contained an autopilot system that Sperry International had designed, manufactured and distributed. The plane crashed near Eola, Illinois, killing the plaintiff's husband. The plaintiff alleged that the crash resulted from defects in the plane and autopilot system.

The parties disagree as to whether the decedent's employer was Connecticut Coke Company or D'Addario Industries. It is undisputed, however, that he began working for his employer in 1966 and that both Connecticut Coke and D'Addario were Connecticut corporations. Other facts surrounding the accident are also undisputed. The decedent was killed during the course of his employment as an aircraft pilot. He was a resident of Connecticut, as is the plaintiff. The plaintiff applied for workers' compensation benefits under the Connecticut statute, and, as of the date of settlement, she had received approximately $177,000 in benefits. The parties agree that Hartford has now paid her over $200,000 in benefits and continues to pay her approximately $500 per week.

When Hartford filed its petition to intervene, the plaintiff opposed Hartford's motion on the sole basis that it was not timely under Connecticut law. She conceded that the petition would be timely under Illinois law but contended that Connecticut law applied. In the proceedings on the petition to intervene, the motion judge stated that he did not think it was necessary to reach the conflict issue; the issue was whether giving notice of a routine motion was equivalent to filing it. He decided that such notice was equivalent to filing, and, therefore, the petition was timely under either Connecticut or Illinois law. He granted Hartford's petition to intervene and overruled the plaintiff's objections to the petition.

In her motion for summary judgment, the plaintiff asserted that (1) under Connecticut law, a workers' compensation insurance carrier had no right to a lien on an employee's recovery from a third party for a product liability claim, and (2) Connecticut law should apply because the only connection the suit had to Illinois was that the plane crash had occurred in Illinois.

Hartford responded that Illinois law, under which it would havea valid lien claim, should apply. Furthermore, equitable estoppel and laches should bar the plaintiff from asserting the Connecticut lien statute because she failed to assert it in contesting Hartford's petition to intervene.

The trial judge granted the plaintiff's motion. He found that there was a conflict between Illinois law, under which Hartford would have a lien against the settlement proceeds, and Connecticut law, under which Hartford would have no lien. Under Illinois choice of law rules, Connecticut law should apply because the only contact Illinois had with the case was the fact it was the situs of the injury and because application of Illinois law would undermine the Connecticut statute.

The judge rejected Hartford's laches argument because it was only available as an affirmative defense. He also rejected Hartford's equitable estoppel argument because he decided that Hartford was well aware that the choice of law question had been reserved and would determine the validity of its lien. Our review of the summary judgment is de novo. LaSalle National Bank v. Skidmore, Owings & Merrill (1994), 262 Ill. App. 3d 899, 635 N.E.2d 564, 200 Ill. Dec. 225, citing Outboard Marine Corp. v. Liberty Mutual Ins. Co. (1992), 154 Ill. 2d 90, 607 N.E.2d 1204, 180 Ill. Dec. 691.

We first address Hartford's argument that the judge erred in applying Connecticut law to Hartford's lien claim. Before we can apply a choice of law analysis to determine whether Illinois or Connecticut law governs Hartford's lien claim, we must determine whether there is a conflict in the laws of the two states. ( Kramer v. Weedhopper of Utah, Inc. (1990), 204 Ill. App. 3d 469, 562 N.E.2d 271, 149 Ill. Dec. 807.) There is a conflict if the difference in laws will result in a difference in outcome. Kramer, 204 Ill. App. 3d at 474.

Under Illinois law, a workers' compensation insurance carrier may intervene to protect its right to a lien against the proceeds from an employee's settlement with a third-party tortfeasor. Section 5 of the Illinois Workers' Compensation Act provides:

"If the injured employee or his personal representative agrees to receive compensation from the employer *** the employer may have or claim a lien upon any award, judgment or fund out of which such employee might be compensated from [a] third-party [tortfeasor]." (Ill. Rev. Stat. 1985, ch. 48, par. 138.5 (b) (now 820 ILCS 305/5(b) (West 1992)).)

Under this statute, Illinois courts have held that either an employer or a workers' compensation insurer may intervene in an employee's suit against a third-party tortfeasor in order to protect its lien interest in the employee's recovery. See, e.g, Brandt v. John S. Tilley Ladders Co. (1986), 145 Ill. App. 3d 304, 495 N.E.2d 1269, 99 Ill. Dec. 534.

Connecticut law also permits an employer who has become obligated to pay workers' compensation benefits to intervene in an employee's suit against a third-party tortfeasor:

"Any employer having paid, or having become obligated to pay, [workers'] compensation *** may bring an action against [a third-party tortfeasor] to recover any amount that he has paid or has become obligated to pay as compensation to such injured employee. If either such employee or such employer brings such action against such third person *** [the employee or the employer] may join as a party plaintiff in such action. (Conn. Gen. Stat. Ann. ยง 31-293 (West 1987).)

Hartford correctly asserts that the laws of both Connecticut and Illinois permit an employer to intervene in an employee's suit against a third-party tortfeasor in order to recover benefits it has paid to the employee. *fn1 A provision of the Connecticut Products Liability Act that was in effect at the time of the decedent's accident, however, expressly prohibited an employer or its workers' compensation insurer from obtaining a lien against an employee's recovery from a product liability claim against a third party:

"(c) Neither an employer nor, in the event the employer is insured against liability under [the Connecticut Workers' Compensation Act], the insurer of such employer, shall have any lien upon any judgment received in any product liability claim, or any right of subrogation if the claim against the third party ...


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