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Kim v. Alvey

March 30, 2001

LANNIE C. KIM, INDIVIDUALLY AND AS SPECIAL ADMINISTRATOR OF THE ESTATE OF JOHN PAUL KIM, DECEASED, PLAINTIFF-APPELLEE,
v.
ALVEY, INC., A CORPORATION, DEFENDANT AND THIRD-PARTY PLAINTIFF-APPELLANT,
v.
KRAFT FOODS, INC., THIRD-PARTY DEFENDANT-APPELLEE,
(AND SVERDRUP CORPORATION, DEFENDANT).



The opinion of the court was delivered by: Justice Burke

Not Released For Publication

LANNIE C. KIM, INDIVIDUALLY AND AS SPECIAL ADMINISTRATOR OF THE ESTATE OF JOHN PAUL KIM, DECEASED, PLAINTIFF-APPELLEE,
v.
ALVEY, INC., A CORPORATION, DEFENDANT AND THIRD-PARTY PLAINTIFF-APPELLANT,
v.
KRAFT FOODS, INC., THIRD-PARTY DEFENDANT-APPELLEE,
(AND SVERDRUP CORPORATION, DEFENDANT).

The opinion of the court was delivered by: Justice Burke

Appeal from the Circuit Court of Cook County.

Honorable Richard B. Berland, Judge Presiding.

 Defendant and third-party plaintiff Alvey, Inc. (Alvey) appeals from orders of the circuit court: (1) entering judgment on a jury verdict in favor of plaintiff Lannie Kim; (2) finding, on plaintiff's motion to enforce settlement agreement between plaintiff and Alvey, a binding settlement and enforcing that agreement; (3) approving the distribution of settlement proceeds; and (4) allowing third-party defendant Kraft Foods, Inc. (Kraft) to waive its workers' compensation lien, granting Kraft's motion to dismiss Alvey's third-party complaint, and dismissing Alvey's posttrial motion seeking a directed verdict, judgment notwithstanding the verdict, vacatur of the jury verdict and entry of judgment in its favor, or a new trial, as moot. On appeal, Alvey contends that the trial court erred in considering Kraft's posttrial motion seeking to dismiss Alvey's third-party complaint because the motion was untimely, and the trial court erred in dismissing Alvey's third-party complaint without awarding Alvey a credit for Kraft's liability. Alternatively, Alvey contends that the trial court erred in finding that the parties had reached a binding oral settlement agreement, or that the trial court erred in denying as moot Alvey's posttrial motion, or that the trial court erred in determining that Alvey was not entitled to a credit in the amount of Kraft's workers' compensation lien against the jury verdict. For the reasons set forth below, we affirm.

STATEMENT OF FACTS

While working at a Nabisco plant (now Kraft), John Paul Kim's neck was crushed in a pinch-point on a palletizing machine manufactured by Alvey. Plaintiff Lannie Kim (Kim), John's wife, filed a complaint against Alvey and Sverdrup Corporation, *fn1 also involved in the manufacture of the machine, on behalf of herself individually and as special administrator of the estate of her husband, alleging wrongful death and survival actions on the bases of negligence and products liability. Alvey, in turn, filed a third-party complaint against Kraft, John's employer, for contribution.

Following a trial on plaintiff's complaint, the jury returned a verdict on January 27, 1999, finding for Kim against Alvey, and for Alvey against Kraft. The jury awarded Kim $2,250,000. The jury apportioned liability as follows: John, 25% negligent; Alvey, 25% negligent; and Kraft, 50% negligent. The trial court entered judgment on the jury verdict the same day. The trial court also entered an order amending the verdict, adding $28,884 *fn2 for medical and funeral expenses. Based on the jury apportionment of liability, Kraft was obligated to pay $854,581 under the jury verdict. Kraft's workers' compensation lien, *fn3 although not finally determined, was alleged to be approximately $396,000.

On January 28, 1999, Alvey's attorney, Thomas Doell, offered $1.5 million to plaintiff's attorney, Shawn Kasserman, to settle the matter. To that end, correspondence was exchanged on January 29. Kasserman wrote to Alvey's insurance adjuster, Laurie Sacchitella, confirming the settlement for $1.5 million and requesting a check by February 2. Deborah Nico, Kraft's counsel, advised Sacchitella that Kraft did not want its name on the settlement draft. A dispute subsequently arose between Kasserman and Doell as to the settlement. It was Doell's belief that the amount of Kraft's workers' compensation lien would be set off from the $1.5 million settlement amount. Kasserman did not agree.

On February 2, plaintiff filed an emergency motion to enforce the settlement. At the hearing on the motion on the same day, Alvey argued that the settlement amount was gross, not net, and that the parties agreed to work out the workers' compensation lien later. Kraft's counsel argued that Kraft could waive its workers' compensation lien at any time which would satisfy its obligation and extinguish its liability on the contribution claim. Following the hearing, the trial court entered an order requiring Alvey's insurance carrier to deposit its check with the clerk of the court, and continued the case.

On February 26, Alvey filed a posttrial motion seeking a directed verdict or judgment notwithstanding the verdict in its favor, vacatur of the jury verdict and entry of judgment in its favor, or a new trial. On March 2, Kraft filed a motion, requesting that the court dismiss Alvey's third-party complaint and accept a waiver of its workers' compensation lien. On March 11, Alvey filed a motion to dismiss plaintiff's motion to enforce the settlement. On the same day, Alvey also filed its response to Kraft's motion in which it contended that Kraft's motion was untimely, that Kraft failed to raise the lien issue before, and that Kraft never timely raised its alleged affirmative defense to limit the amount of setoff to its workers' compensation lien as required pursuant to Kotecki v. Cyclops Welding Corp., 146 Ill. 2d 155, 165, 585 N.E.2d 1023 (1991), and, therefore, waived it.

On March 24, the trial court denied Alvey's motion to dismiss Kraft's motion and ordered that an evidentiary hearing be held on plaintiff's motion to enforce settlement. On the same day, plaintiff filed a petition to approve distribution of the settlement proceeds. This motion was later granted, on May 25, at which time the trial court dismissed plaintiff's complaint against Alvey.

On April 9, after a series of continuances, an evidentiary hearing was held on plaintiff's motion to enforce the settlement. The parties first agreed that the depositions that had been taken of Sacchitella, Kasserman, and Nico would stand as evidentiary depositions. *fn4 Alvey then presented its arguments to the court, contending that Kasserman negotiated with its adjuster (Sacchitella) who was unrepresented by counsel and who did not know the mechanics of liens, and arguing that Kraft could not waive its lien because it did not know the amount of the lien and it had failed to file a timely posttrial motion. Doell, Kasserman, and Sacchitella also testified at the hearing. Kasserman's and Sacchitella's testimony was consistent with that given in their respective depositions, although the deposition testimony provided greater detail.

Doell's testimony at the hearing was basically that there was more to the agreement than payment of $1.5 million "flat." According to Doell, the offer was dependent upon recovering the amount of Kraft's workers' compensation lien.

In substance, Kasserman's testimony was that the offer and agreement was $1.5 million with no credit or set off. Kasserman stated that there were no discussions between either him and Doell or him and Sacchitella concerning the lien, a setoff, or paying the money back. He did state, however, that prior to beginning settlement negotiations with Doell, the lien was mentioned. Specifically, Kasserman stated that he asked Doell if Doell was concerned that Kraft might waive the lien out from under Doell, and Doell stated that Kraft could not do that because Alvey had a judgment against Kraft. According to Kasserman, the only terms of the settlement were that Alvey would pay $1.5 million and the check would be delivered to Kasserman's office by the end of the business day on Tuesday, February 2.

Sacchitella, Alvey's insurance adjuster, testified, in summary, that when she and Doell discussed the settlement on Thursday January 28, it was $1.5 million gross, that Doell advised her not to worry about the lien, and that Doell told her the lien was to be worked out the next week either via a credit or payment from Kraft. Sacchitella stated that she did not know how she was to get the money back but "always expected to" to get it back. According to her, recovery of the amount of the workers' compensation lien was very important.

Pursuant to the parties' agreement, the trial court, prior to ruling on plaintiff's motion to enforce the settlement agreement, considered both Kasserman's and Sacchitella's deposition testimony, which again was consistent with the above summarized testimony, along with the deposition testimony of Deborah Nico, Kraft's attorney. Nico testified at her deposition that she spoke with both Doell and Kasserman on Friday, January 29. Nico believed she first told both Doell and Kasserman that Kraft would waive its lien and thereafter both stated that they were trying to settle the case. Nico stated that she specifically told Doell that Kraft was going to waive its lien and he replied, "Fine. No problem." On Monday, February 1, Nico received a call from Doell. She got the idea that Doell wanted a check from Kraft in the amount of its workers' compensation lien, but advised Doell that Kraft had waived its lien and that was the extent of Kraft's obligation. Nico further stated that she got the impression that Doell was not familiar with the effect of a lien waiver and that Doell realized, for the first time in his conversation with her on Monday, what had happened regarding the issue of a setoff of Kraft's lien, e.g., there would be no credit or set off from the $1.5 million settlement.

On April 12, the trial court issued its decision, finding that there was a meeting of the minds and it was not of the opinion that the settlement offer was conditioned upon Alvey receiving a credit or setoff of Kraft's lien. Accordingly, the court ordered ...


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