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RELIANCE NATIONAL INS. CO. v. GREAT LAKES AVIATION

October 21, 2004.

RELIANCE NATIONAL INSURANCE COMPANY, a corporation, Plaintiff,
v.
GREAT LAKES AVIATION, LTD., d/b/a United Express, a corporation; AIR WISCONSIN, INC., a corporation; UNITED AIRLINES, INC., a corporation; RAYTHEON AIRCRAFT COMPANY, a corporation; CITY OF QUINCY, ILLINOIS, a municipal corporation; ARNY BERGER, as Personal Representative of the Estate of Jason Berger, Deceased; PATRICIA A. BEVILLE, as Personal Representative of the Estate of James Beville, Deceased; KETURA BRUECK, as Personal Representative of the Estate of Michael James Brueck, Deceased; VICKI L. CARLSON, as Personal Representative of the Estate of Leonard C. Carlson, Deceased; DEBORAH A. DESALLE, as Personal Representative of the Estate of Mark DeSalle, Deceased; PATRICIA DOWNING, as Personal Representative of the Estate of Larry Downing, Deceased; JEFF GATHJE, as Special Administrator of the Estate of Katherine Gathje, Deceased; DARL HEFFELBOWER, as Personal Representative of the Estate of Deborah D. Heffelbower, Deceased; LUANN JOHNSON, as Personal Representative of the Estate of William Johnson, Deceased; SANDRA McCOMBS, as Personal Representative of the Estate of Darrin McCombs, Deceased; KATHLEEN REED, as Personal Representative of the Estate of Dennis Reed, Deceased; KRISTEN M. FRIES, as Personal Representative of the Estate of Edward Schneggenburger, Deceased; JOAN M. REINWALD, as Personal Representative of the Estate of Neal Reinwald, Deceased; RITA WINKELMANN, as Personal Representative of the Estate of Laura Brooks, Deceased; ROBERT A. CLARKSON; and HARVEY L. IMBER, Defendants.



The opinion of the court was delivered by: RICHARD MILLS, Senior District Judge

OPINION

An interpleader action.*fn1

  This matter is before the Court regarding the allocation of funds. The Court duly held a hearing on the petitions for allocation on July 21, 2004.

  Pending before the Court are the following motions:
(1) the petition of Defendants Great Lakes Aviation, Ltd. and Raytheon Aircraft Company for an apportionment of the interpleader funds;
(2) the petition of Defendants Arny Berger, Patricia A. Beville, Ketura Brueck, Vicki L. Carlson, Deborah A. DeSalle, Patricia Downing, Darl Heffelbower, Louanne Johnson, Kathleen Reed, and Kristen M. Fries ("the Passenger Defendants")*fn2 to allocate the interpleader funds for the exclusive benefit of the Passenger Defendants; and
(3) the petition of Defendant Sandra McCombs to allocate the interpleader funds.
I. BACKGROUND
  On November 19, 1996, a Beech King Air aircraft and a Beech 1900C aircraft, operating as United Express Flight 5925/5926, collided on the runway at Quincy-Baldwin Field, an airport in Quincy, Illinois. The collision resulted in the deaths of both individuals on the Beech King Air aircraft and all twelve individuals on the Beech 1900C aircraft.

  On October 7, 1998, pursuant to a previous Order, Plaintiff Reliance National Insurance Company forwarded to the Clerk of this Court the sum of $1,000,000, which was invested in an insured, interest bearing strategic business savings account at First of America Bank, N.A.*fn3 Reliance had previously issued a liability insurance policy on the Beech King Air aircraft, wherein its owners, Robert Clarkson and Harvey Imber, were named as insureds. Previously, the Court determined that the instant interpleader action filed by Reliance was properly filed and that the Court has jurisdiction over the parties and the subject matter. Among the Defendants named in this interpleader action were: (1) the estates of the passengers on the United flight; (2) Clarkson and Imber; (3) Great Lakes;*fn4 (4) the City of Quincy, Illinois; (5) Raytheon Aircraft Company;*fn5 and (6) the estates of the pilots of each aircraft. The Court previously determined that the applicable limit of liability under the Reliance policy is $1,000,000. In an Order dated September 10, 1998, the Court concluded that upon its compliance with the previous Order to deposit $1,000,000, Reliance would be discharged from all further liability and from all further obligation to indemnify or defend any Defendant(s) under the aircraft hull and liability policy number NAB 2750561. On December 15, 1998, following its deposit of $1,000,000, Reliance National Insurance Company was dismissed from this action.*fn6

  The funds were to be held in the account at First of America pending further direction from the Court. Several underlying state court actions have delayed resolution of this action. On June 3, 2003, United States Magistrate Judge Byron G. Cudmore directed the parties to file supplemental status reports by August 1, 2003. Several of the parties then filed status reports, motions, and/or responses to other parties' status reports. On July 21, 2004, the Court held a hearing on the petitions for allocation.

  II. THE PARTIES' CLAIMS

  In a previous Order, the Court identified those parties which were claiming all or any portion of the interpleader funds. The Court directed any party claiming a portion of the funds to appear at the July 21 hearing. The following parties were represented at the hearing: (1) Great Lakes; (2) Raytheon; (3) the ten Passenger Defendants; and (4) Rita Winkelmann, the personal representative of the estate of Laura Brooks.*fn7 The interests of Great Lakes and Raytheon are similar. Great Lakes and Raytheon informed the Court that any award would be divided between them on a pro rata basis, based on the amounts those parties have paid in settlements. Moreover, the Passenger Defendants would also divide any proceeds among themselves.

  Great Lakes/Raytheon and the Passenger Defendants also acknowledge that Winkelmann is entitled to a share of the interpleader funds. At the hearing, the attorneys for Great Lakes and Raytheon stated they would not contest Winkelmann's claim for $100,000. Moreover, the Passenger Defendants acknowledged that Winkelmann is entitled to an equal share with them in the proceeds.*fn8 Accordingly, the only remaining dispute is between Great Lakes/Raytheon and the Passenger Defendants. Any other party which has previously sought a portion of the funds has either abandoned its claim or reached an agreement with another party to share in any recovery.

  Great Lakes and Raytheon's argument that they are entitled to the interpleader funds is based primarily on the fact those parties have incurred over $52,000,000 in damages, despite being found to be the least culpable of the parties that were determined to be negligent.*fn9 In an action filed by the Estates of Reinwald and Brooks in the Circuit Court of the Twentieth Judicial Circuit, St. Clair County, Illinois, a jury determined that Great Lakes was 15% liable for the crash. The jury also determined that Neal Reinwald, as the pilot in command of the Beech King Air aircraft, was 65% liable and Brooks was 20% liable.*fn10 Raytheon has not been adjudged to have any liability for the crash.*fn11

  Following the jury verdict of $3,500,000, Great Lakes received a judgment on its contribution claims against Defendants Clarkson and Imber, in an amount corresponding to 65% (the percentage of fault allocated by the jury to Reinwald) of all amounts paid by Great Lakes in settlement of the claims brought by the estates of passengers on the Great Lakes aircraft. Based on the judgment on its contribution claims against Defendants Clarkson and Imber, Great Lakes asserts that it is a judgment creditor against the interpleader funds in the amount of $28,600,000, which represents 65% of the $44,000,000 that it has paid in settlement of the claims. Pursuant to the same analysis, Raytheon contends it is a judgment creditor against the funds in the amount of $5,200,000, which represents 65% of the $8,000,000 it has paid. Neither Great Lakes nor Raytheon has received any amount in satisfaction of its judgment. Accordingly, those parties claim they are entitled to the interpleader funds.

  The Passenger Defendants contend that while there are several possible tortfeasor groups in this action, they are the only blameless group that is seeking a portion of the interpleader funds. They further assert that because Great Lakes' settlement agreement with Reliance did not release Reliance from liability, Great Lakes is not entitled to contribution from Reliance pursuant to the Illinois Joint Tortfeasor Contribution Act. Additionally, the Passenger Defendants assert that even if Great Lakes has a right to contribution, the state court judgment that it relies on is not binding on them. For these reasons and because they are the only blameless parties in this action, the Passenger Defendants contend that the interpleader funds should be divided among themselves.

  III. ANALYSIS

  The Court recognizes that no amount of money can compensate the Passenger Defendants for the loss of their loved ones in the tragedy which occurred on November 19, 1996. Similarly, there is no question that the families of the other individuals who died in the plane collision suffered an unimaginable loss. The Court is certainly mindful of the sense of loss of all of the families that lost loved ones. In ...


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