Appeal from the Circuit Court of Cook County. No. 94 L 12671, No. 94 L 13480. Honorable Michael J. Hogan, Judge Presiding.
Released for Publication September 16, 1996.
The Honorable Justice Greiman delivered the opinion of the court. Rizzi *fn1 and Cerda, JJ., concur.
The opinion of the court was delivered by: Greiman
JUSTICE GREIMAN delivered the opinion of the court:
This appeal arises from circuit court orders that dismissed with prejudice a cause of action against one tortfeasor after approving a settlement and sustaining a motion for a good-faith settlement finding (case No. 94 L 12671). A second tortfeasor (case No. 94 L 13480) now contests the orders, asserting that the circuit court abused its discretion in finding a good-faith settlement because the settlement agreement included a loan-receipt provision. A loan-receipt agreement typically provides that settlement money received by the plaintiff from the settling tortfeasor operates as a loan that must be repaid to the settling tortfeasor out of proceeds obtained later from other nonsettling tortfeasors.
We reverse and remand, finding that the loan-receipt provision in the settlement agreement precluded a good-faith finding.
Plaintiffs Arthur Evans and Gregory Brown were injured when they fell from a platform while erecting an outdoor lighting apparatus in a parking lot on October 13, 1992. On October 25, 1992, Arthur Evans, while hospitalized for treatment of the injuries sustained in the fall, developed respiratory distress and suffered permanent brain damage.
On October 7, 1994, plaintiffs Evans, Brown and their respective spouses (Eva Evans and Lela M. Brown) filed a cause of action against defendants Tabernacle No. 1 God's Church of Holiness in Christ and Reverend Silas Watson (hereinafter the church defendants) based on alleged violations of the Illinois Structural Work Act (740 ILCS 150/1 et seq. (West 1992) (repealed by Pub. Act 89-2, eff. February 14, 1995)) (case No. 94 L 12671). When Arthur Evans fell, he was assembling the lighting equipment for the church defendants. Plaintiffs Gregory and Lela Brown entered into a separate settlement with the church defendants and are not a part of the present appeal.
On October 25, 1994, a second cause of action was filed by plaintiff Eva Evans as guardian of her husband Arthur Evans, a disabled person (hereinafter the Evans plaintiffs), against defendants EHS Christ Hospital and Medical Center and Doctors Richard P. Gonzalez, Gerald Lynch, and Tai-Min Lai (hereinafter the hospital defendants) (case No. 94 L 13480) based on allegations of medical malpractice for their treatment of Arthur Evans.
On May 16, 1995, the Evans plaintiffs filed a motion to approve a proposed settlement that they had reached with the church defendants and to enter a finding that the settlement was made in good faith as required by the Joint Tortfeasor Contribution Act (Contribution Act) (740 ILCS 100/0.01 et seq. (West 1992)). Defendant EHS Christ Hospital and Medical Center objected to the motion for a good-faith finding regarding the settlement agreement and argued that the proposed settlement contained an improper loan-receipt agreement.
The settlement agreement at issue provides in part that the church defendants would pay $275,000 to the Evans plaintiffs, who in turn would release the church defendants
"from any and all actions *** [and] third-party claims *** arising out of, foreseen and unforeseen, bodily and personal injuries, and/or death and the consequences thereof, resulting or to result from a certain incident or occurrence on or about October 13, 1992, as set forth in *** Case No. 94 L 12671 *** including but not limited to any claims, counterclaim and third-party claims in any way growing out of the subject matter of this action, which claims, counterclaim and third-party claims were, might or could have been raised in said cause.
In further consideration *** Eva Evans *** guarantees to reimburse Church Mutual Insurance Company, insurer for the parties released herein, from any cash and payments received in settlement or by way of judgment from the case [against the hospital defendants] *** up to but not to exceed $100,000. *** It is understood that the cash and payments up to $100,000 received in the settlement of the suit against the parties released by this release and settlement agreement are[,] therefore, a loan, and said loan remains a debt of the Estate of Arthur Evans to Church Mutual Insurance Company to be satisfied by the Estate of Arthur Evans as provided herein."
On August 2, 1995, a hearing was held on the Evans plaintiffs' motion to approve the settlement and enter a good-faith finding. The circuit court took the matter under advisement and, thereafter, by orders dated August 10 and 15, 1995, approved the settlement between the Evans plaintiffs and the church defendants and entered a good-faith settlement finding. On August 22, 1995, the circuit court entered an order dismissing with prejudice the complaint against the church defendants pursuant to the settlement.
On September 6, 1995, the hospital defendants filed a motion for clarification of the circuit court's orders entered on August 10 and 15, 1995. The parties now maintain that the circuit court later denied the motion for clarification. The record on appeal, however, does not so clearly reveal such an order. The record includes an order dated September 27, 1995, as referenced by the hospital defendants. This order, however, does not deny the hospital defendants' motion for clarification but rather grants said defendants leave to file their motions under the correct case number nunc pro tunc.
The supplemental record, however, includes a transcript of a September 27, 1995, hearing at which the clarification motion was addressed. At the hearing, the circuit court observed that it had entered a one-sentence order in August 1995 when it sustained the Evans plaintiffs' motion for a good-faith settlement finding and approved the settlement. The circuit court then explained:
"I felt this was different than in the [Babb] case. The main reason it seems to me, I felt there were two distinct separate cases. One was the Structural Work Act case, and one was the medical negligence case. Two distinct injuries and two separate facts, and I think that the settlement here was for the Structural Work Act case. I thought it was distinct. It ...