Opinion ID: 2121973
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Heading Rank: 3

Heading: Common Liability Under the Contribution Act

Text: The parties also raise a second issue, regarding the proper meaning of the term common liability under section 2(b) of the Contribution Act. This section states in pertinent part: The right of contribution exists only in favor of a tortfeasor who has paid more than his pro rata share of the common liability, and his total recovery is limited to the amount paid by him in excess of his pro rata share. No tortfeasor is liable to make contribution beyond his own pro rata share of the common liability. 740 ILCS 100/2(b) (West 1992). The question presented by the parties is whether common liability in the instant cause is the amount of the jury verdict, approximately $7.1 million, or the amount agreed upon by Ziarko and Soo Line in their settlement, $6.65 million. Soo Line claims that common liability in the present case should be the amount in the settlement agreement, viz., $6.65 million. Soo Line notes that the jury assessed Milwaukee Motor's fault at 5%. On this basis, Soo Line claims that it is entitled to contribution from Milwaukee Motor for 5% of the settlement amount, viz., $332,500. Milwaukee Motor argues that common liability in the instant cause is the amount of the jury's verdict, approximately $7.1 million. The record reflects that the jury found Soo Line 95% at fault for Ziarko's injuries, which amounted to approximately $6.7 million. Consequently, Soo Line's settlement amount, $6.65 million, is less than the amount for which Soo Line was found liable by the jury. Milwaukee Motor argues that because Soo Line's settlement amount is less than the amount of the jury's verdict against Soo Line, Soo Line did not pay more than its pro rata share in the settlement agreement. For these reasons, Milwaukee Motor contends that Soo Line is not entitled to any funds in contribution from Milwaukee Motor. Generally, statutory provisions are to be given their plain and ordinary meaning in order to give effect to the objective of the legislation. ( DiFoggio v. Retirement Board of the County Employees Annuity & Benefit Fund (1993), 156 Ill.2d 377, 382-83, 189 Ill. Dec. 753, 620 N.E.2d 1070.) One of the fundamental goals of the Contribution Act is to encourage settlements that equitably apportion damages among the tortfeasors according to their relative fault. ( Wilson v. Hoffman Group, Inc. (1989), 131 Ill.2d 308, 137 Ill.Dec. 579, 546 N.E.2d 524.) As a general rule, a settlement agreement is considered valid and enforceable if the agreement was entered into in good faith. ( Wilson, 131 Ill.2d at 318, 137 Ill.Dec. 579, 546 N.E.2d 524.) To determine the validity of the settlement agreement, the court looks to the totality of the circumstances surrounding the making of the agreement. Wilson, 131 Ill.2d at 318, 137 Ill.Dec. 579, 546 N.E.2d 524. Our courts have consistently rejected arguments that the sole guidepost of the proper settlement amount for the injured plaintiff's damages must be the amount set by a jury in a trial on the merits of the plaintiff's claims against the defendants. It has been recognized that settlements may be substantially different from the results of litigation because damages are often speculative and the probability of liability uncertain. [Citation.] ( Smith v. Texaco, Inc. (1992), 232 Ill.App.3d 463, 469, 173 Ill.Dec. 776, 597 N.E.2d 750 (citing Ruffino v. Hinze (1989), 181 Ill.App.3d 827, 830-32, 130 Ill.Dec. 542, 537 N.E.2d 871, O'Connor v. Pinto Trucking Service, Inc. (1986), 149 Ill.App.3d 911, 916, 103 Ill.Dec. 242, 501 N.E.2d 263, Doellman v. Warner & Swasey Co. (1986), 147 Ill.App.3d 842, 848-49, 101 Ill.Dec. 366, 498 N.E.2d 690, Wasmund v. Metropolitan Sanitary District of Greater Chicago (1985), 135 Ill.App.3d 926, 929-30, 90 Ill.Dec. 532, 482 N.E.2d 351, and Lowe v. Norfolk & Western Ry. Co. (1984), 124 Ill.App.3d 80, 94-95, 79 Ill.Dec. 238, 463 N.E.2d 792).) A disparity between the value of the settlement and the amount of damages which the jury might have awarded does not render the settlement agreement invalid. The circumstance that the [defendant's] eventual liability pursuant to the jury's verdict would have been much greater does not void the [defendant's] settlement agreement with [the plaintiff], and our courts have declined to utilize a `proportionality' or `reasonable range' test in order to determine whether a defendant's settlement with a plaintiff, when compared to the jury's subsequent verdict, was made in good faith. [Citations.] McDermott v. Metropolitan Sanitary District (1992), 240 Ill.App.3d 1, 46, 180 Ill.Dec. 758, 607 N.E.2d 1271. This reasoning is reflected in Mallaney v. Dunaway (1988), 178 Ill.App.3d 827, 128 Ill. Dec. 26, 533 N.E.2d 1114, in which our appellate court considered a question similar to the issue raised in the present cause. The plaintiff in Mallaney settled all of her claims in an agreement with one of the defendants. The agreement also released the remaining defendants of their liability to the plaintiff. One of the defendants, who was not a party to the settlement agreement, argued that he should be permitted, in a trial of the contribution actions among the defendants, to contest the amount stated in the settlement. The question presented to the appellate court was whether `common liability' under the Contribution Act was limited to the amount the injured party has settled her entire cause of action for [in the settlement agreement]    or whether    [the] third-party defendant [was] entitled to establish in the trial of the contribution action that the injured party's damages exceeded that amount. ( Mallaney, 178 Ill.App.3d at 830, 128 Ill.Dec. 26, 533 N.E.2d 1114.) The observations of the court in Mallaney are equally applicable to the present cause, and bear repeating: The policy of the Contribution Act is to encourage compromise and settlement in the absence of bad faith, fraud or collusion. [Citation.] This policy is promoted by approving settlements that represent a fair compromise of the parties' interests, even though the dollar amount so given does not accurately represent the injured party's damages. A settlement given in good faith may be presumed reasonable in the absence of a timely objection in the trial court. And, the mere fact that an injured party's actual damages exceed the amount of the settlement does not prove that the settlement was unreasonable. [Citation.] Mallaney, 178 Ill.App.3d at 833, 128 Ill.Dec. 26, 533 N.E.2d 1114. In light of this reasoning, the court in Mallaney concluded that the parties' common liability was the amount stated in the settlement agreement, even if the nonsettling defendant might have been able to prove that actual damages exceeded or were less than the amount provided for in the settlement agreement. Mallaney, 178 Ill.App.3d at 832-33, 128 Ill.Dec. 26, 533 N.E.2d 1114. The appellate court in the instant cause found Mallaney distinguishable because the settlement agreement in that case was reached before the amount of the plaintiff's damages was decided by the jury, while the settlement agreement in the present case was entered into after the jury's verdict was returned. However, jury verdicts may be modified, reduced, or vacated on post-trial motion or on appeal. (See, e.g., Henry v. St. John's Hospital (1990), 138 Ill.2d 533, 150 Ill.Dec. 523, 563 N.E.2d 410 (jury verdict subject to trial court remittitur).) As a result, we do not believe that, once the jury's verdict is returned, the parties should be obligated to accept the verdict amount as the final determination of the defendants' common liability to the plaintiff to be reflected in a post-judgment settlement agreement. As the court noted in Jessee v. Amoco Oil Co. (1992), 230 Ill.App.3d 337, 171 Ill.Dec. 690, 594 N.E.2d 1210: [T]here exist several reasons why [a] plaintiff would settle with [a tortfeasor defendant] [for a lesser amount than the jury's verdict] subsequent to a judgment, none of which point to collusion or fraud. At the time of the settlement, post-trial motions were pending; a viable explanation for plaintiff's settlement is that she anticipated a lengthy appeal process which might have forestalled collection of her judgment, providing an impetus for her to settle. A further reason for settlement while post-trial motions were pending could be plaintiff's desire to settle in order to achieve some measure of certainty. Jessee, 230 Ill.App.3d at 348, 171 Ill.Dec. 690, 594 N.E.2d 1210. Consistent with this analysis, we believe that common liability in the case at bar means the good-faith amount stated in the settlement agreement between Ziarko and Soo Line, even though the evidence may have proven, to a reasonable jury, that the plaintiff's damages exceeded or were less than the sum stated in the settlement agreement. We believe that this conclusion is supported by the language of the Contribution Act. Nowhere in the Contribution Act does the legislature distinguish between pretrial or post-judgment settlements   . ( Jessee, 230 Ill.App.3d at 347, 171 Ill.Dec. 690, 594 N.E.2d 1210.) Under section 2(b) of the Act, both types of settlement agreements are treated identically, and both entitle the settling defendant to seek contribution from another tortfeasor whose liability to the injured plaintiff is also extinguished in the settlement agreement. We note that the explicit provisions of the settlement agreement between Soo Line and Ziarko specifically extinguished Milwaukee Motor's liability to Ziarko. Section 2(c) of the Contribution Act provides in pertinent part that a settlement agreement does not discharge any of the other tortfeasors from liability for the injury or wrongful death unless its terms so provide but it reduces the recovery on any claim against the others to the extent of any amount stated in the [agreement]. (740 ILCS 100/2(c) (West 1992).) If the settlement agreement had not extinguished Milwaukee Motor's liability to Ziarko, Ziarko could have pursued Milwaukee Motor for the full net amount due on the jury verdict, after crediting the settlement amount paid by Soo Line. See, e.g., Henry v. St. John's Hospital (1990), 138 Ill.2d 533, 150 Ill.Dec. 523, 563 N.E.2d 410. In our view, if Milwaukee Motor believed that the settlement agreement did not accurately reflect the parties' common liability to Ziarko, then Milwaukee Motor should have challenged the good-faith nature of the settlement agreement. (See Hall v. Archer-Daniels-Midland Co. (1988), 122 Ill.2d 448, 460-61, 120 Ill.Dec. 556, 524 N.E.2d 586.) In the context of a good-faith argument, Milwaukee Motor also could have presented its claim that Soo Line should not be permitted to retain the jury's determination as to the percentages of liability, and to then apply those percentages of Soo Line's own determination as to the amount of the plaintiff's damages. According to Milwaukee Motor, Soo Line cannot pick and choose those portions of the verdict it wishes to enforce, and those it wishes to ignore. However, Milwaukee Motor did not complain that the settlement agreement was entered into in bad faith, nor has Milwaukee Motor raised the argument that the percentages of fault as determined by the jury were inequitable or in error. Consequently, we find Milwaukee Motor's arguments on these matters an inadequate basis to sustain Milwaukee Motor's position in this appeal. The cases cited by Milwaukee Motor do not support the position it has taken in the instant cause. See Mason v. F. Lli Luigi & Franco Dal Maschio Fu G.B. (7th Cir.1987), 832 F.2d 383, 389-90 (right to contribution remains contingent, subordinate and inchoate until defendant makes payments in excess of his pro rata share of common liability); Verson Allsteel Press Co. v. Major Spring & Manufacturing Co. (1982), 105 Ill.App.3d 419, 61 Ill.Dec. 303, 434 N.E.2d 456 (contribution principles did not apply to cause of action that arose before date on which contribution rule went into effect; court rejected argument that a contribution cause of action accrued on date judgment paid, rather than date on which negligence cause of action arose). By reaching a settlement agreement with Ziarko, Soo Line was able to convince Ziarko to accept less money than the amount awarded by the jury. Moreover, because of Soo Line's efforts, Ziarko further agreed to extinguish the liability of both Soo Line and Milwaukee Motor. As a result, Milwaukee Motor was relieved of its liability to Ziarko, which amounted to approximately $353,000 under the jury's verdict. In light of these considerations, we conclude that the trial court was in error when it determined that the defendants' common liability in the present case was the amount reached in the jury's verdict. In our view, the court should have held that the parties' common liability to Ziarko which should be subject to contribution principles was the amount agreed upon in the settlement between Ziarko and Soo Line. The appellate court in the case at bar affirmed the trial court's denial of Soo Line's request for contribution. Because we conclude that Soo Line's status as a willful and wanton tortfeasor did not bar it from seeking contribution from Milwaukee Motor in the present cause, and because we find that the defendants' common liability in this case was the amount stated in the settlement agreement between Ziarko and Soo Line, we reverse the appellate and circuit courts' judgments and remand the matter for further proceedings consistent herewith. Appellate court reversed; circuit court reversed; cause remanded. Chief Justice BILANDIC took no part in the consideration or decision of this case.