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Stickler v. American Augers Inc.

February 22, 1999


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

Appeal from the Circuit Court of Cook County.

No. 95 L 4123

Honorable Walter J. Kowalski, Judge Presiding.

Defendant, American Augers, Inc. (Augers), appeals a finding of the circuit court that a settlement agreement between plaintiff and all defendants but Augers was in good-faith and further appeals the calculation of the setoff afforded Augers pursuant to section 2(c) of the Joint Tortfeasor Contribution Act (Contribution Act) (740 ILCS 100/2(c)West 1996)). We reverse and remand.

Plaintiff, Donna Stickler, filed a wrongful death and survival action against Augers, the manufacturer of an auger that tipped over and crushed plaintiff's decedent, Harry D. Stickler. Plaintiff subsequently amended her complaint adding three other defendants, the Village of Schaumburg, Blackmore Construction, Inc. (Blackmore), and Pavia-Marting & Company (Pavia), all of which had some supervisory authority over the construction project where decedent's fatal accident occurred (collectively, the construction defendants). Augers and the construction defendants filed third-party complaints for contribution against the decedent's employer, Cee-Jay Contractors, Inc. (Cee-Jay). Plaintiff negotiated a settlement with the construction defendants and Cee-Jay wherein plaintiff would release her claims against the settling parties in exchange for Cee-Jay's waiver of its workers' compensation lien of $149,143.91 *fn1 and a combined, structured payment of $550,000. The agreement did not state a specific setoff amount for the non-settling defendant, Augers. The settlement was contingent upon a finding by the trial court that it was in good-faith within the meaning of section 2(c) of the Contribution Act (740 ILCS 100/2(c) (West 1996)).

Augers objected to the settlement, arguing it was in bad faith because it would dismiss all three of the construction defendants in exchange for payment by their common insurer, CNA, of what Cee-Jay was already obligated to pay plaintiff under the Workers' Compensation Act and because it would deprive Augers of its right to obtain contribution from those defendants for an amount commensurate with their liability. Following a hearing, the trial court found the settlement was made in good-faith and allowed Augers, as the non-settling party, a setoff equal to the $699,143.91 actually received.

Augers appeals the trial court's finding that the settlement agreement was in good-faith and its calculation of the setoff. This court has jurisdiction pursuant to Supreme Court Rule 304(a). 155 Ill. 2d R. 304(a).

Initially, we consider whether Augers has standing to appeal the trial court's finding as to the construction defendants. The failure to timely file a claim for contribution against a joint tortfeasor waives any right to object to a settlement by plaintiff. See Clay v. Pepper Construction Co., 205 Ill. App. 3d 1018, 1022-23, 563 N.E.2d 937 (1990). Here, Augers filed a contribution action against Cee-Jay only and not against the construction defendants. Thus, Augers is without standing to object to that portion of plaintiff's combined, structured settlement allocated to the Village of Schaumburg ($25,000), Blackmore ($350,000) or Pavia ($25,000).

Because Augers is without standing to object to plaintiff's settlement with the construction defendants, we consider only whether the trial court erred in finding that plaintiff's settlement with Cee-Jay was in good-faith within the meaning of the Contribution Act. In settling with Cee-Jay, plaintiff released her claim against Cee-Jay in exchange for Cee-Jay's waiver of its $149,143.91 workers' compensation lien and $150,000 in cash.

First, Augers contends the trial court's finding of good-faith must be reversed and remanded because the trial court did not conduct an evidentiary hearing to evaluate the settlement and apportionment. In support, Augers cites Muro v. Abel Freight Lines, Inc., 283 Ill. App. 3d 416, 669 N.E.2d 1217 (1996). Augers' argument is not well taken. In Muro, the trial court found that a settlement between Muro and a third-party defendant was in good-faith without conducting an evidentiary hearing. This court deemed the good-faith finding "premature" and reversed and remanded the matter "for an evidentiary hearing on the allocation of the settlement proceeds" between Muro's wrongful death and survival claims. 283 Ill. App. 3d at 420.

Here, however, petitions for a good-faith finding contained a detailed explanation of the settlement terms and a request for apportionment of the settlement funds in the ratio of 33.3% for plaintiff's wrongful death action and 66.6% for plaintiff's survival action. Augers objected to a good-faith finding. The trial court conducted a hearing, offered to hear Augers' evidence and allowed the parties to discuss the specifics of the settlement. The parties discussed the allocation of the settlement proceeds between plaintiff's wrongful death and plaintiff's survival actions. The trial court rejected the petitioners' proposed allocation of 66.6% of the settlement amount to plaintiff's survival action because plaintiff's decedent "survived approximately 24, 26 hours" during which time "he was either semi or unconscious, so the pain and suffering was questionable," and stated, "I have given it some thought. I'm not directly from heaven, fellows, I don't know what it would amount to, but I would recommend 75 percent for wrongful death and 25 percent for survival." The plaintiff agreed to this allocation. Accordingly, Augers' first argument is without merit.

Next, Augers contends the settlement was not in good-faith. A court of review may not reverse the trial court's good-faith determination absent an abuse of discretion. In re Guardianship of Babb, 162 Ill. 2d 153, 162, 642 N.E.2d 1195, 1200 (1994). The party challenging the settlement bears the burden of establishing it was made in bad faith by a preponderance of the evidence standard. Bowers v. Murphy & Miller, Inc., 272 Ill. App. 3d 606, 610, 650 N.E.2d 60 (1995).

The trial court should not equate the validity of the settlement as between plaintiff and the settling defendant with whether the settlement was in good-faith for purposes of the Contribution Act. Rather, the court should conduct a totality of circumstances analysis, considering the present cash value of the settling defendant's workers' compensation liability (Chaney v. National Steel Corp., 272 Ill. App. 3d 850, 651 N.E.2d 731 (1995)), the policy underlying the Contribution Act which encourages the equitable apportionment of damages (Bowers, 272 Ill. App. 3d at 610-11), and the relationship of the parties (Warsing v. Material Handling Services, Inc., 271 Ill. App. 3d 556, 648 N.E.2d 1126 (1995)). If, after considering all the circumstances, the court finds that plaintiff gave the settling defendant a release supported by some nominal consideration without regard to the settling defendant's potential liability or the relationship between the consideration received and the settling defendant's relative culpability, that settlement conflicts with the policy of the Contribution Act and does not satisfy the good-faith requirement of section 2(c). Bowers, 272 Ill. App. 3d at 610-11.

Here, the trial court found the settlement was in good-faith because Stickler had the right "to take the money up front rather than wait for it over an extended period of time"; however, the circumstances of the settlement preponderate against a good-faith finding. It is undisputed that Stickler was statutorily entitled to $735.41 per week in workers' compensation benefits from Cee-Jay, that she had already received $149,143.91 in workers' compensation payments from Cee-Jay, and that such payments would continue for the rest of her life. 820 ILCS 305/5(b) (West 1996). Based upon these undisputed facts, Louis P. Cain, a professor of economics at Loyola University, calculated the present value of Stickler's future workers' compensation benefits as $1,173,317.35 in an affidavit attached to Augers' motion to reconsider. In addition, the Occupational Safety and Health Agency (OSHA) conducted an investigation and placed full culpability for the ...

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