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09/08/97 JAMES WOODWARD v. PRATT

September 8, 1997

JAMES WOODWARD, PLAINTIFF-APPELLEE,
v.
PRATT, BRADFORD & TOBIN, P.C., DEFENDANT-APPELLEE (THE HOME INSURANCE COMPANY, INTERVENOR-APPELLANT).



Appeal from the Circuit Court of Madison County. No. 95-L-190. Honorable Phillip J. Kardis, Judge, presiding.

The Honorable Justice Maag delivered the opinion of the court. Kuehn, P.j., and Rarick, J., concur.

The opinion of the court was delivered by: Maag

The Honorable Justice MAAG delivered the opinion of the court:

In October 1989, James Woodward, an employee of John Morrell & Company, was injured during the course of his employment. The injury occurred in St. Louis County, Missouri, allegedly as a result of a defective pallet truck manufactured by Crown Central Corporation (Crown).

In November 1989 Woodward retained the firm of Pratt, Bradford & Tobin, P.C. (Pratt), to represent him. A claim was filed on Woodward's behalf with the Illinois Industrial Commission. Illinois's jurisdiction over the workers' compensation claim was challenged by the employer, but for reasons not pertinent here, the commission found that it had jurisdiction and that Illinois law applied. As a result, the employer's insurance carrier, Home Insurance Company (Home), ultimately paid out benefits to Woodward in an amount exceeding $155,000.

On April 4, 1994, 4 1/2 years after the injury occurred, the Pratt firm filed suit on Woodward's behalf against Crown in the circuit court of Madison County, alleging theories of strict liability and negligence in the design and manufacture of a pallet truck being operated by Woodward. It was alleged that these design/manufacturing defects caused injuries to Woodward. The injuries that were the subject of the lawsuit against Crown were the same injuries for which Home had paid workers' compensation benefits.

On April 25, 1994, the law firm of Evans & Dixon (Home's attorneys) wrote to the Pratt office inquiring about the status of the case against Crown. On April 27, 1994, the Pratt firm mailed to Evans & Dixon a copy of the complaint that had been filed against Crown, along with a letter promising to keep Home updated on developments. On May 18, 1994, Evans & Dixon again wrote the Pratt firm. Receipt of a copy of the complaint was acknowledged, and a request to be kept advised of developments was reiterated.

As some point thereafter, the suit against Crown was removed to the United States District Court for the Southern District of Illinois. It was apparently contended in that case that Missouri's five-year limitation period should apply and not the two-year limitation period in Illinois. On January 17, 1995, the district court dismissed the case on statute of limitations grounds.

Following the dismissal of his case in federal court, Woodward filed suit against the Pratt firm on February 21, 1995, alleging legal malpractice. On May 18, 1995, Home moved to intervene and file its workers' compensation lien against any recovery Woodward might receive from his suit in the legal malpractice case. Leave to intervene was granted over Woodward's objection. Thereafter, Woodward moved to dismiss the claim filed by Home, alleging that any recovery in the attorney malpractice case was not subject to the workers' compensation lien. The circuit court granted the motion to dismiss, and Home appeals.

Home raises several issues on appeal. They will be considered in order. Because issues one and two are closely related, they will be discussed together.

Home states issues one and two as follows:

"1. Whether [section 5(b)] of the Illinois Workers' Compensation Act [(820 ILCS 305/5(b) (West 1994))] authorizes an employer's workers' compensation insurer, which has paid workers' compensation benefits to an injured employee, to attach its lien to the proceeds of the employee's pending legal malpractice action to recover damages from an attorney who failed to timely institute an action against a third-party tortfeasor responsible for the worker's injury.

2. Whether an employer or workers' compensation insurer forfeits its right to intervene and to file a lien on an injured employee's third[-]party suit if the attorney for the employer/insurer fails to ...


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