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Wreglesworth v. Arctco

November 14, 2000

NICHOLAS WREGLESWORTH, BY HIS MOTHER AND LEGAL GUARDIAN, BARBARA WREGLESWORTH, AND BARBARA WREGLESWORTH, INDIVIDUALLY, PLAINTIFFS,
v.
ARCTCO, INC. D/B/A TIGERSHARK WATERCRAFT, A MINNESOTA CORPORATION DOING BUSINESS IN ILLINOIS NOW KNOWN AS ARCTIC CAT, INC., A MINNESOTA CORPORATION, AND ARCTCO SALES, INC., A MINNESOTA CORPORATION DOING BUSINESS IN ILLINOIS, DEFENDANTS. ARCTIC CAT, INC., AND ARCTCO SALES, INC. (NOW KNOWN AS ARCTIC CAT SALES, INC.), THIRD-PARTY PLAINTIFFS-APPELLANTS,
v.
TIMOTHY LAWRENCE, PINE CREST MARINA, JAMES WREGLESWORTH AND THE ESTATE OF VERA ORTEGA, THIRD-PARTY DEFENDANTS, (PINE CREST, INC., INCORRECTLY SUED AS PINE CREST MARINA, APPELLEE).



APPEAL FROM THE CIRCUIT COURT OF COOK COUNTY. No. 97L 8603 HONORABLE MICHAEL J. HOGAN, JUDGE PRESIDING.

The opinion of the court was delivered by: Justice Gordon

Third-party plaintiffs Arctic Cat, Inc., and Arctic Cat Sales, Inc. (hereinafter referred to collectively as Arctic Cat), appeal from an order of the Cook County circuit court dismissing their claim for contribution against third-party defendant Pine Crest, Inc. (incorrectly sued as Pine Crest Marina), the owner of a pier in Cedar Lake, Indiana. The order was made appealable pursuant to Supreme Court Rule 304(a). This appeal is the second arising from a July 1995 accident in which Nicholas Wreglesworth (Nicholas), a minor, sustained a serious head injury when a Tigershark personal watercraft in which he was riding as a passenger collided with the pier owned by Pine Crest and proceeded underneath it. Nicholas and his mother, Barbara Wreglesworth (Barbara), filed suit against Arctic Cat, the manufacturer of the watercraft, alleging negligence, product liability and breach of warranty. Arctic Cat subsequently filed a third-party complaint for contribution against several other parties including Pine Crest. In its order dismissing the third-party complaint against Pine Crest, the trial court approved Pine Crest's proposed $5,000 settlement with Nicholas and Barbara, finding that the settlement was made in good faith within the meaning of the Joint Tortfeasor Contribution Act (the Act) (740 ILCS 100/0.01 et seq. (West 1993)). The trial court also held that Pine Crest owed no duty to plaintiffs Nicholas and Barbara. On appeal, Arctic Cat argues that the trial court erred (1) in holding that Pine Crest owed no duty to plaintiffs, and (2) in finding that the settlement was made in good faith. For the reasons set forth below, we affirm the trial court's order dismissing the third-party complaint against Pine Crest.

BACKGROUND

The underlying complaint against Arctic Cat was brought in July 1997 by Nicholas through Barbara, and by Barbara individually. According to the complaint, the accident occurred on July 22, 1995, while Nicholas and his father, James Wreglesworth, both Illinois residents, were vacationing at Cedar Lake, Indiana, with other Illinois residents including Vera Ortega. As noted, Nicholas was injured when a personal watercraft in which he was riding as a passenger collided with the pier owned by Pine Crest. At the time of the collision, the watercraft (also known as a jet-ski), which was owned by Indiana resident Timothy Lawrence, was being driven by Vera Ortega, who died as a result of the accident. Arctic Cat subsequently filed a counterclaim for indemnity based on a release that had been executed by Barbara. That agreement released Lawrence, Ortega and the Allstate insurance company (Lawrence's insurer) from liability in exchange for $100,000 (the limit of Lawrence's Allstate policy). The trial court granted plaintiffs' motion to dismiss Arctic Cat's counterclaim, and Arctic Cat appealed, arguing that under Indiana law Arctic Cat was included within the terms of the release.

In a separate appeal we affirmed the dismissal of Arctic Cat's counterclaim, holding that Illinois law applied. See Wreglesworth v. Arctco, Inc., No. 99-2662 (Ill. App. Ct. 2000). According to the stipulations of the parties, our decision in that case necessarily resolved any conflict of laws issues in the instant appeal. For that reason, we do not address choice-of-law issues here.

As noted, this appeal pertains only to a third-party complaint for contribution filed by Arctic Cat. Though Arctic Cat's second amended third-party complaint listed as defendants not only Pine Crest, the subject of count IV, but also Timothy Lawrence, James Wreglesworth and the estate of Vera Ortega, who were the subjects of counts I, II and III, we are concerned in this appeal only with the complaint as it applies to Pine Crest. Apparently the third-party action against Ortega's estate and James Wreglesworth is still ongoing. It was dismissed against Lawrence.

In count IV of its second amended third-party complaint, Arctic Cat alleged that Pine Crest "carelessly and negligently failed to make sure the pier was reasonably safe for operation in connection with the watercraft," and "carelessly and negligently fail[ed] to warn Vera Ortega and Nicholas Wreglesworth of the unreasonably dangerous condition the pier posed to the watercraft." Accordingly, Arctic Cat sought contribution from Pine Crest in an amount commensurate with its negligence, in the event that Arctic Cat was found liable to Nicholas and Barbara.

Pine Crest moved for a good-faith finding and resultant dismissal of the third-party complaint, asserting that it had reached a proposed settlement for $5,000 with plaintiffs Nicholas and Barbara, "subject to a finding that the settlement was entered into in good faith." Pine Crest noted that under the Act a tortfeasor who settles in good faith is discharged from liability for contribution to other tortfeasors. As to the settlement amount, Pine Crest stated at oral argument that the $5,000 figure was approximately equivalent to the legal fees it would have incurred if it had moved for summary judgment.

In its brief in opposition to Pine Crest's motion, Arctic Cat alleged "a long-standing prior relationship" between Pine Crest and the Wreglesworths. According to Arctic Cat, that relationship explained "the low settlement [amount]" and showed that the settlement was not made in good faith. In its reply in support of its motion, Pine Crest responded to that allegation, attaching an affidavit of Robert Gross indicating that there was no such relationship. According to Gross, whose family owns Pine Crest, there was no personal or contractual relationship between Pine Crest and the Wreglesworths or Vera Ortega on the date of the accident, and no member of the Gross family or owner of Pine Crest had developed a relationship with any of those parties since then. Neither the Wreglesworths nor the owner of the watercraft had docking privileges at Pine Crest.

At the hearing on Pine Crest's motion, the following undisputed evidence was adduced. The accident occurred in the middle of the day, shortly before 1 p.m., when Ortega got into the watercraft, went out some distance in the lake, came back and hit the pier at a high rate of speed. *fn1 As a result of this occurrence, Nicholas sustained, inter alia, a fractured skull. The pier is a fixed object along the shoreline and is clearly visible. Because it is fixed and not floating, the height of the pier varies depending on the water level of the lake. Rubber tires were positioned along certain portions of the pier to prevent boats from banging against the side.

Following the hearing, the trial court, as noted, granted Pine Crest's motion, finding that the settlement was entered into in good faith, and dismissing Pine Crest from the third-party suit "pursuant to the settlement." The court stated: "I've heard the arguments and don't see any duty on the part of the defendant. So based on that, I think the $5,000 settlement is okay." This appeal followed.

DISCUSSION

The Joint Tortfeasor Contribution Act (the Act) provides that a tortfeasor who settles in good faith with the injured party is discharged from contribution liability. See In re Guardianship of Babb, 162 Ill. 2d 153, 160, 642 N.E.2d 1195, 1199 (1994); Bowers v. Murphy & Miller, Inc., 272 Ill. App. 3d 606, 608, 650 N.E.2d 608, 610 (1995). The requirement that the settlement be made in good faith is contained in section 2(c) of the Act. 740 ILCS 100/2(c) (West 1993). Section 2(d) then provides that "[t]he tortfeasor who settles with a claimant pursuant to paragraph (c) is discharged from all liability for any contribution to any other tortfeasor." 740 ILCS 100/2(d) (West 1993). The term "good faith" is not defined in the Act, but a settlement is considered prima facie in good faith if the settling tortfeasor establishes that it was supported by consideration. Solimini v. Thomas, 293 Ill. App. 3d 430, 437, 688 N.E.2d 356, 361 (1997) (citing McDermott v. Metropolitan Sanitary District, 240 Ill. App. 3d 1, 44, 607 N.E.2d 1271, 1297 (1992)). The consideration does not have to be received; a mere promise to pay is sufficient to support a finding that the settlement was made in good faith. Solimini, 293 Ill. App. 3d at 437-39, 688 N.E.2d at 361-62. Once a prima facie showing of good faith is made, a presumption arises that the settlement is valid, and the burden shifts to the party challenging the settlement to show by a preponderance of the evidence that it was not made in good faith. Orejel v. York International Corp., 287 Ill. App. 3d 592, 599, 678 N.E.2d 683, 688 (1997); McDermott, 240 Ill. App. 3d at 44, 607 N.E.2d at 1297; Bowers, 272 Ill. App. 3d at 610, 650 N.E.2d at 611. Lack of good faith is generally considered to be "tortious or wrongful conduct on the part of the settling party that amounts to fraud or collusion." Alvarez v. Fred Hintze Construction, 247 Ill. App. 3d 811, 816, 617 N.E.2d 821, 824 (1993) (quoting McDermott, 240 Ill. App. 3d at 44, 607 N.E.2d at 1297).

Factors which have been considered in determining whether a settlement was made in good faith include: (1) "whether the amount paid by the settling tortfeasor was 'within a reasonable range of the settlor's fair share'" (Babb, 162 Ill. 2d at 161, 642 N.E.2d at 1199); (2) whether there was a close personal relationship between the settling parties (Warsing v. Material Handling Services, Inc., 271 Ill. App. 3d 556, 560, 648 N.E.2d 1126, 1129 (1995)); (3) whether the plaintiff sued the settlor (Warsing, 271 Ill. App. 3d at 560, 648 N.E.2d at 1129); and (4) whether a calculated effort was made to conceal information about the circumstances surrounding the settlement agreement (Babb, 162 Ill. 2d at 163, 642 N.E.2d at 1200). No single factor is seen as determinative. Babb, 162 Ill. 2d at 162, 642 N.E.2d at 1199. The trial court is to consider all of the surrounding circumstances in determining whether a settlement was made in good faith. Babb, 162 Ill. 2d at 162, 642 N.E.2d at 1199; Orejel, 287 Ill. App. 3d at 599, 678 N.E.2d at 688. A trial court's finding as to the good faith of a settlement is within the court's discretion, and it will be reversed on appeal only if there has been an abuse of discretion. Babb, 162 Ill. 2d at 162, 642 N.E.2d at 1200; Solimini, 293 Ill. App. 3d at 437, 688 N.E.2d at 361.

In the instant case, Pine Crest made a prima facie showing that the settlement was entered into in good faith. Under the terms of the settlement, Nicholas and Barbara were to discharge Pine Crest from liability in exchange for $5,000. Thus the agreement was supported by consideration, and the burden shifted to Arctic Cat to show that the ...


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