Court Opinion

ID: 9516834
Source: CourtListenerOpinion
Date Created: 2023-08-06 23:53:38.816613+00
Date Added: 2024-06-11T09:39:28.772362
License: Public Domain

JUSTICE HEIPLE delivered the opinion of the court: This appeal arises from the dismissal of an assigned third-party complaint for contribution. Plaintiff, Barbara Claudy, filed a wrongful death action in the circuit court of Cook County against Commonwealth Edison and the City of Sycamore. Plaintiff and the City of Sycamore later settled the suit. As part of the settlement, the City of Sycamore assigned to the plaintiff its right of contribution against Larry Jones, the decedent’s employer. When plaintiff sought to exercise this right of contribution, the circuit court held that the purported assignment was invalid and dismissed the third-party contribution complaint. The appellate court reversed the circuit court, reinstated the third-party complaint, and issued a certificate of importance. (255 Ill. App. 3d 714.) This court has jurisdiction pursuant to Supreme Court Rule 316 (134 Ill. 2d R. 316). We reverse. FACTUAL AND PROCEDURAL HISTORY On July 24, 1979, plaintiff’s husband, Keith Claudy, was electrocuted while removing a tree located near some power lines within the confines of the City of Sycamore (hereinafter, the city). At the time, Keith Claudy vzas working for Larry Jones (hereinafter, the employer), whom the city had engaged to remove the tree. After her husband’s death, plaintiff filed a wrongful death action against the city and Commonwealth Edison. In response to plaintiff’s suit, the city filed an amended third-party complaint for contribution against the employer, individually and doing business as AAA Tree Service. Plaintiff also filed a workers’ compensation claim against the employer. The employer was insured by American Mutual Liability Insurance Company, and American Mutual paid $102,876.09 in satisfaction of the plaintiffs workers’ compensation claim. Based on this payment, American Mutual acquired a potential workers’ compensation lien against any settlement proceeds received by plaintiff from a third party. Subsequently, on March 9, 1989, American Mutual was declared insolvent, and the Illinois Insurance Guaranty Fund was substituted for American Mutual pursuant to statute. See 215 ILCS 5/532 et seq. (West 1992). In 1989, plaintiff and the city agreed that $500,000 represented the damages suffered by the plaintiff and, based upon this figure, settled the wrongful death suit. By the terms of a subsequently amended settlement agreement, plaintiff released all direct claims she had against any party in connection with her husband’s death, including the city, Commonwealth Edison and the employer. (Insofar as no third-party complaint for contribution had been filed against Commonwealth Edison, it was released from tort liability and dismissed from the action with prejudice after the settlement.) In return, the city paid plaintiff $400,000 and, additionally, assigned to the plaintiff its right of contribution against the employer. American Mutual’s workers’ compensation lien of $102,876.09, minus attorney fees, was satisfied from the $400,000 settlement amount. On November 29, 1990, the employer moved to dismiss the third-party complaint for contribution and this motion was granted. On March 5, 1991, plaintiff filed a motion for reconsideration but that motion was denied. In denying the motion for reconsideration, the trial judge stated: "In the instant case the purported assignment allows the plaintiff to retain the proceeds of a successful prosecution of the contribution action, thus increasing her total recovery. In the opinion of this court, this amounts to a perversion of the intent and purpose of the Contribution Act which was designed to apportion damages among the tortfeasors based upon relative degree of culpability, not to increase the total damages available to plaintiff.” The appellate court reversed and reinstated the third-party complaint for contribution, ruling that the assignment at issue did not violate the Joint Tortfeasor Contribution Act, the Workers’ Compensation Act or the Illinois Insurance Code. (255 Ill. App. 3d 714.) Arguing that the assignment violates all three of these acts, the employer now appeals to this court. ANALYSIS The Joint Tortfeasor Contribution Act (Contribution Act) provides, in pertinent part: '"§ 2. Right of Contribution, (a) Except as otherwise provided in this Act, where 2 or more persons are subject to liability in tort arising out of the same injury to person or property, or the same wrongful death, there is a right of contribution among them, even though judgment has not been entered against any or all of them. (b) 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 pro rata share of the common liability.” (Emphasis added.) (740 ILCS 100/2 (West 1992).) The employer argues that the plain language of the statute provides that a right of contribution exists only in favor of a tortfeasor. Because the Contribution Act makes no provision for assignment of a tortfeasor’s right of contribution, the employer concludes that the statutory language prohibits a tortfeasor from assigning a contribution action, especially to the plaintiff who, by definition, is not a tortfeasor. Plaintiff counters that the statutory language does not explicitly prohibit a tortfeasor from assigning a right of contribution. Rather, the statute provides only that a right of contribution exists when' a tortfeasor pays more than his pro rata share. "While no right of contribution exists when a tortfeasor pays only or less than his pro rata share, the statute is silent as to whether a right of contribution that otherwise exists can be assigned. Under the particular facts of this case, however, we need not decide the propriety of an assignment of the right of contribution because we find that the city did not pay in excess of its effective pro rata share of the common liability. (740 ILCS 100/2(b) (West 1992) ("right of contribution exists only in favor of a tortfeasor who has paid more than his pro rata share of the common liability”).) This conclusion is premised upon the economic realities underlying the settlement agreement. Specifically, we observe that the record discloses that in reaching a settlement agreement the city and plaintiff agreed that $500,000 represented the plaintiff’s damages. Thus, it necessarily follows that $500,000 is the common liability for purposes of the Contribution Act. 740 ILCS 100/2(b) (West 1992). Rather than following the straightforward practice of paying plaintiff the entire $500,000 common liability amount and seeking contribution from the employer, the city instead paid plaintiff $400,000 and further assigned its right of contribution to the plaintiff. The basis for the $400,000 figure, however, is readily apparent upon considering that the workers’ compensation awarded to plaintiff in this case was just over $100,000. Significantly, an employer’s liability in any subsequent contribution action is limited to the amount awarded in the workers’ compensation action. Kotecki v. Cyclops Welding Corp. (1991), 146 Ill. 2d 155, 165 (holding that contribution plaintiff’s maximum recovery from a plaintiff’s employer is the amount of the workers’ compensation award); see also Bilandic, Workers’ Compensation, Strict Liability, and Contribution in Illinois: A Century of Legal Progress?, 83 Ill. B.J. 292 (1995) (insightful discussion of the interplay between the Contribution Act and the Workers’ Compensation Act as well as the impact of the 1995 tort reform legislation). Had the city paid plaintiff the entire $500,000 common liability and then pursued its contribution action against the employer, the most the city could have hoped to recover from the employer in its contribution action would be $100,000, the amount of the workers’ compensation award.1 In light of the contribution limitations of Kotecki, $500,000 less the maximum contribution amount of $100,000 from the employer thus constitutes the city’s effective pro rata share. (Kotecki, 146 Ill. 2d at 165.) Of course, $500,000 less the anticipated contribution amount of $100,000 equals $400,000, the amount paid by the city to the plaintiff in full settlement of plaintiffs suit against the city. Insofar as the city did not pay in excess of its effective pro rata share, it necessarily follows that it had no right to contribution to assign in the first place. (740 ILCS 100/2(b) (West 1992) ("right of contribution exists only in favor of a tortfeasor who has paid more than his pro rata share of the common liability”).) Because the city had no right to contribution to assign, the purported assignment in the settlement agreement was void a b initio. In further support, we observe that the city is not a philanthropic organization and, indeed, were it to pay any more than necessary in settling plaintiff’s claims it would violate the public trust under which it spends the monies it collects from its taxpayers. The Illinois Constitution of 1970, article VII, section 6(a), provides that public funds shall be used only for public purposes which, contrary to the arguments of the instant plaintiff, precludes giving the plaintiff a "windfall” in the form of an assignment of funds to which plaintiff is not legally entitled. The assumption that the city’s assignment of its contribution action to the plaintiff was not a gift, but instead represented an economically rational act on the part of the city, further bolsters the conclusion that the $400,000 paid by the city constitutes no more than its effective pro rata share of the common liability in light of the Kotecki limitations. CONCLUSION In conclusion we hold that the city did not pay in excess of its effective pro rata share and thus that the city had no right to contribution to assign, rendering that portion of the settlement agreement a nullity. Accordingly, we reverse the judgment of the appellate court and reinstate the trial court’s dismissal of the assigned contribution action against the employer. Appellate court reversed; circuit court affirmed.  If the city had paid plaintiff the whole $500,000 and then sought contribution from the employer, it would have been entitled to $100,000, but no more, so long as the contribution jury determined that the employer was at least 20% responsible for plaintiff’s injuries, an assumption both plaintiff and the city shared in their negotiations. Indeed, while the city might ultimately be liable for in excess of $400,000 under this scenario, under no circumstances would its effective pro rata share be less than $400,000. Thus, by obtaining a general release from the plaintiff in'return for the payment of $400,000 and the purported assignment, the city guaranteed that it would pay the least possible amount of the $500,000 common liability.