Court of Appeal of Illinois, First District, First Division
[Copyrighted Material Omitted]
Busse, Busse & Grassé, P.C., of Chicago (Edward K. Grass$21e, Troy S. Radunsky, and Michael T. Peterson, of counsel), for appellant.
Cassiday Schade, LLP, of Chicago (Thomas P. Boylan and Matthew S. Sims, of counsel), for appellee.
[376 Ill.Dec. 333] ¶ 1 This appeal arises from the December 21, 2011, February 27, 2102 and May 11, 2012 orders entered by the circuit court of Cook County, which collectively dismissed with prejudice a third-party action filed by third-party plaintiff Welch Brothers, Inc. (Welch), against third-party defendant Neptune Construction Company (Neptune). On appeal, Welch argues that: (1) the circuit court erred in dismissing with prejudice the contribution count of the third-party complaint; and (2) the circuit court erred in dismissing with prejudice the indemnification count of the third-party complaint. For the following reasons, we affirm the judgment of the circuit court of Cook County.
¶ 2 BACKGROUND
¶ 3 In January 2006, Michael Camper (Camper), an employee of Neptune, fell and sustained injuries while working in a sanitary manhole on a construction site in Elgin, Illinois. On January 16, 2007, Camper filed a four-count complaint against general contractors Burnside Construction Company and Burnside Construction Management Company (collectively, Burnside), and Welch (case No. 07 L 0517) ( Camper I ). In Camper I, Camper alleged causes of action for construction negligence (count I) and premises liability (count II) against Burnside, and alleged two counts of product liability against Welch, as manufacturer of the manhole, under the theories of strict liability (count III) and negligence (count IV).
¶ 4 On December 3, 2007, Welch filed a third-party action for contribution against Neptune under the Joint Tortfeasor Contribution Act (740 ILCS 100/0.01 et seq. (West 2008)), alleging that, in the event that Welch is found liable to Camper, Welch is entitled to contribution from Neptune for its negligent actions. The Camper I third-party action did not allege an indemnification claim or breach of contract claim against Neptune. Thereafter, Welch also filed a counterclaim for contribution against Burnside.
¶ 5 On November 20, 2008, Camper settled his claims against Burnside and Neptune for a total of $550,000. The settlement agreement stated that Neptune agreed to waive its claim for reimbursement under the Workers' Compensation Act (820 ILCS 305/5(b) (West 1994)).
[376 Ill.Dec. 334] ¶ 6 On December 12, 2008, Burnside filed a motion for a good-faith finding, requesting the court to find that the settlement agreement was made in good faith and to bar or dismiss any actions of contribution against the settling tortfeasors. On February 10, 2009, Welch filed a motion to conduct an evidentiary hearing prior to the court's ruling on Burnside's motion for a good-faith finding, in order to determine whether wrongful conduct occurred during the settlement process and whether there was a basis to enter a good-faith finding in favor of Burnside.
¶ 7 On February 13, 2009, following a hearing on the parties' arguments, the circuit court denied Welch's motion to conduct an evidentiary hearing and, over Welch's objection, granted Burnside's motion for a good-faith finding. The court's February 13, 2009 order expressly stated that the settlement between Camper, Burnside, and Neptune was made in good faith pursuant to the Joint Tortfeasor Contribution Act; that Camper's action against Burnside, and Welch's third-party action against Neptune, are dismissed with prejudice; and that the court " bars any actions for contribution by any other defendants or tortfeasors against Burnside or Neptune." The court further denied Welch's motion to amend its pleadings against Neptune to include other causes of action, and stated that Camper's cause of action shall continue against Welch as the sole nonsettling defendant in Camper I. No Supreme Court Rule 304(a) language (Ill. S.Ct. R. 304(a) (eff. Jan. 1, 2006)) was included in the order.
¶ 8 On April 22, 2009, Camper voluntarily dismissed his complaint against Welch without prejudice (735 ILCS 5/2-1009 (West 2008)). The circuit court's order voluntarily dismissing Camper's action against Welch expressly stated that Camper had reserved his right to maintain his cause of action " upon refiling of this matter in accordance with [s]ection 13-217 of the Illinois Code of Civil Procedure (735 ILCS 5/13-217) and there shall be no res judicata effect upon any claim."
¶ 9 On February 5, 2010, within one year of the April 22, 2009 voluntary dismissal of Camper I, Camper refiled his cause of action against Welch only, by alleging the same two counts of product liability based on strict liability (count I) and negligence (count II) (case No. 10 L 01656) ( Camper II ). The Camper II complaint contained nearly identical allegations against Welch as in the Camper I complaint. The Camper II complaint alleged that Camper was employed by Neptune when he fell and sustained injuries while working in a manhole in 2006; that the rungs used to ascend and descend the manhole were improperly or negligently designed, manufactured and assembled; that one or more rungs were missing or inadequately secured; and that Welch failed to warn of the dangers associated with these defects.
¶ 10 On May 19, 2010, Welch filed a two-count third-party action, seeking contribution (count I) and " indemnification/breach of contract" (indemnification claim) (count II) against Neptune. Count I alleged that Neptune, as Camper's employer, owed Camper a duty to provide a safe work environment, adequately inspect manholes used by its employees, and train its employees on the proper use of manholes. Count II alleged that Neptune and Welch entered into a purchase order agreement pursuant to which Neptune agreed to indemnify Welch. Specifically, count II alleged that " [i]f Welch is found partly or wholly responsible for any of the injuries alleged in [Camper's] complaint, which liability Welch denies and does not hereby waive its denial, Neptune should indemnify and hold harmless Welch pursuant to the [376 Ill.Dec. 335]
terms of the [a]greement set forth herein." The relevant language of the purchase order agreement is set forth as follows:
" [Neptune] shall indemnify and hold [Welch] harmless against any and all claims, demands, liabilities, losses, damages and injuries of whatsoever kind or nature, and all attorneys fees, costs and expenses relating to, or in any way arising out of the ordering, acquisition, delivery, installation, possession, maintenance, use, operation, control, loss, damage, destruction, return or surrender, sale or other disposition of any material supplied by [Welch]. This indemnity shall not be affected by any termination of this [a]greement with respect to said materials."
¶ 11 On November 5, 2010, Camper settled his claims against Welch in Camper II, and a court order was entered dismissing Camper's action against Welch with prejudice. The general release form signed by Camper contained language that Welch " reserves and retains all claims, demands, causes of action, defenses, counter-claims, third party claims including [Welch's] third party complaint against [Neptune], motions, pending or otherwise and damages, including attorneys fees and costs, consultants' fees and costs relating to any remaining claim raised in the [l]awsuit against any remaining [p]arty."
¶ 12 Subsequently, Welch filed a motion to modify the court's November 5, 2010 dismissal order, requesting a modification of the order to reflect that Welch's third-party complaint against Neptune remained pending.
¶ 13 On December 6, 2010, the circuit court entered an agreed order, which vacated the November 5, 2010 dismissal order and ordered Welch's third-party complaint against Neptune for contribution and indemnification to remain pending and not be dismissed.
¶ 14 On March 1, 2011, Welch filed a motion for a good-faith finding, requesting, inter alia, that the court enter an order finding that the settlement agreement between Camper and Welch was made in good faith, that all claims against Camper  be dismissed with prejudice, and that, pursuant to the court's December 6, 2010 order, Welch's third-party complaint against Neptune remain pending and not dismissed.
¶ 15 On April 12, 2011, Neptune filed a section 2-619 motion to dismiss Welch's third-party complaint for contribution and indemnification on the basis that the claims were barred by res judicata, and filed an objection to Welch's March 1, 2011 motion for a good-faith finding.
¶ 16 On June 2, 2011, Welch filed a response to Neptune's motion to dismiss and objection to Welch's motion for a good-faith finding, arguing that, inter alia, its third-party claims against Neptune for contribution and indemnification were not barred by res judicata. Attached to the response as Exhibit B was a May 19, 2011 bystander's report filed by Welch's counsel, Troy Radunsky (Attorney Radunsky), which stated that during the February 13, 2009 hearing in Camper I, the court purportedly informed him that Welch was free to file a claim of indemnification or breach of contract against Neptune in a separate lawsuit and that such a claim was not barred by res judicata.
¶ 17 On July 15, 2011, Neptune filed a motion to strike Attorney Radunsky's bystander's report (motion to strike), arguing [376 Ill.Dec. 336]
that the bystander's report " [stood] in sharp contrast to both [the court's] February 13, 2009 [o]rder in the underlying Camper I action and the transcript of the proceedings created at Welch's request." On that same day, July 15, 2011, Neptune also filed a reply in support of its motion to dismiss the third-party ...