Eastman v. Messner

• Citation: 721 N.E.2d 1154,242 Ill.Dec. 623,188 Ill.2d 404
• Decision Date: 02 December 1999
• Docket Number: No. 86857.,86857.
• Parties: Dennis EASTMAN, Appellee, v. Steven MESSNER, Appellee (Gates McDonald ex rel. Meyer Material Company, Appellant).
• Court: Supreme Court of Illinois

721 N.E.2d 1154

188 Ill.2d 404

242 Ill.Dec. 623

Dennis EASTMAN, Appellee, v. Steven MESSNER, Appellee (Gates McDonald ex rel. Meyer Material Company, Appellant).

No. 86857.

Supreme Court of Illinois.

December 2, 1999.

William J. Cook, William J. Cook & Associates, Chicago, for Gates McDonald.

Kevin J. O'Shea, Serpico, Novelle & Navigato, Ltd., Chicago, for Dennis Eastman.

William P. Hardy, Hinshaw & Culbertson, Springfield, for Amici Curiae, Warren E. Danz, P.C., Warren E. Danz.

Justice McMORROW delivered the opinion of the court:

The question presented in this appeal is whether, pursuant to section 5(b) of the Workers' Compensation Act (820 ILCS 305/5(b) (West 1996)), an employer who has paid workers' compensation benefits to an employee may assert a lien against the employee's recovery in a legal malpractice suit where that suit is based upon the failure of the employee's attorney to prosecute a personal injury action against a third-party tortfeasor allegedly responsible for the employee's injuries. The appellate court concluded that, under these circumstances, an employer could not assert a lien. 302 Ill.App.3d 526, 236 Ill.Dec. 204, 707 N.E.2d 49. For the reasons that follow, we affirm the judgment of the appellate court.

Background

On January 21, 1991, the plaintiff, Dennis Eastman, was injured in an accident which occurred during the course of his employment as a truck driver for Meyer Material Company. The accident took place while Eastman was driving his truck in the gravel pit of a third party, Vulcan Materials Company. Meyer Material's workers' compensation insurance administrator, Gates McDonald, has paid a total of $248,218.66 in workers' compensation benefits to Eastman as a result of the accident.

Following the accident, Eastman hired the defendant, attorney Steven Messner, for the purpose of filing a personal injury action against Vulcan Materials. After Messner allegedly failed to file the personal injury action within the applicable limitations period, Eastman filed a legal malpractice suit against Messner. On November 24, 1997, Gates McDonald filed a petition to intervene in the legal malpractice case on the behalf of Meyer Material, arguing that it had a right, pursuant to section 5(b) of the Workers' Compensation Act (820 ILCS 305/5(b) (West 1996)) to assert a lien against any damages which Eastman might recover from Messner. Following a hearing held on February 19, 1998, the circuit court of Cook County denied the petition to intervene. The appellate court, relying primarily on Woodward v. Pratt, Bradford & Tobin, P.C., 291 Ill.App.3d 807, 226 Ill.Dec. 32, 684 N.E.2d 1028 (1997), affirmed the judgment of the circuit court. 302 Ill.App.3d 526, 236 Ill.Dec. 204, 707 N.E.2d 49. We allowed Gates McDonald's petition for leave to appeal. 177 Ill.2d R. 315(a).

Analysis

A lien is defined generally as "a charge upon property, either real or personal, for the payment or discharge of a particular debt or duty in priority to the general debts or duties of the owner; an encumbrance upon property as security for the payment of a debt; or a hold or claim on another's property as security for the payment or performance of a debt, duty, or other obligation." Gaskill v. Robert E. Sanders Disposal Hauling, 249 Ill.App.3d 673, 676, 188 Ill.Dec. 871, 619 N.E.2d 235 (1993), citing 51 Am.Jur.2d Liens § 1 (1970). A lien cannot be created by a court "without an underlying explicit or implicit agreement between the parties or some fixed rule of law usually found in a statute." Freer v. Hysan Corp., 108 Ill.2d 421, 427, 92 Ill.Dec. 221, 484 N.E.2d 1076 (1985). As there was no agreement between the parties in the case at bar, the only issue presented is whether section 5(b) of the Workers' Compensation Act grants Gates McDonald the right to assert a lien against any proceeds which Eastman recovers in his malpractice action against Messner.

Section 5(b) of the Workers' Compensation Act provides, in pertinent part:

"Where the injury or death for which compensation is payable under this Act was caused under circumstances creating a legal liability for damages on the part of some person other than his employer to pay damages, then legal proceedings may be taken against such other person to recover damages notwithstanding such employer's payment of or liability to pay compensation under this Act. In such case, however, if the action against such other person is brought by the injured employee * * * and judgment is obtained and paid, or settlement is made with such other person, * * * then from the amount received by such employee * * * there shall be paid to the employer the amount of compensation paid or to be paid by him to such employee * * *. * * *

* * *

* * * [T]he employer may have or claim a lien upon any award, judgment or fund out of which such employee might be compensated from such third party.

* * * The employer may, at any time thereafter join in the action upon his motion so that all orders of court after hearing and judgment shall be made for his protection. * * *

In the event the employee or his personal representative fails to institute a proceeding against such third person at any time prior to 3 months before such action would be barred, the employer may in his own name or in the name of the employee, or his personal representative, commence a proceeding against such other person for the recovery of damages on account of such injury or death to the employee * * *." 820 ILCS 305/5(b) (West 1996).

In arguing that it has a right to assert a lien against Eastman's potential malpractice damages, Gates McDonald initially focuses on the first sentence of section 5(b). That sentence states that an employee who has received workers' compensation benefits may file a third-party action "[w]here the injury or death for which compensation is payable under this Act was caused under circumstances creating a legal liability for damages on the part of some person other than his employer to pay damages." (Emphasis added.) 820 ILCS 305/5(b) (West 1996). Citing to Williams v. Katz, 23 F.3d 190 (7th Cir.1994), Gates McDonald contends that, except for the employer, section 5(b) does not limit the definition of the "some person" or third party against whom action may be taken by the employee. See Katz, 23 F.3d at 192. Gates McDonald further observes that the third paragraph of section 5(b) allows the employer to assert a lien in the action brought by the employee against the "person" or third party defined in the first sentence of section 5(b). Thus, according to Gates McDonald, an employer who has paid workers' compensation benefits to an employee may assert a lien against any third-party recovery, including a legal malpractice recovery, that an employee obtains as a result of his injury. We disagree.

Both Gates McDonald and the decision in Katz fail to heed the clear language of section 5(b). As the appellate court in Woodward explained:

"Paragraph 1 of section 5(b) states that `[w]here the injury or death for which compensation is payable under this Act was caused under circumstances creating a legal liability for damages on the part of some person other than his employer to pay damages' (emphasis added) (820 ILCS 305/5(b) (West 1994)), a lien arises against any recovery from such other person. The plaintiff's allegedly negligent lawyers did not cause the injury that led to compensation payments. The third paragraph of section 5(b) states that `the employer may have or claim a lien upon any award * * * out of which such employee might be compensated from such third party.' (Emphasis added.) 820 ILCS 305/5(b) (West 1994). This third party is the `injurer' whose acts or omissions caused the expenditure of medical and hospital payments (Hartford Accident & Indemnity Co. v. Cummings, 66 Ill.App.3d 704, 707-08, 23 Ill.Dec. 483, 384 N.E.2d 119, 122 (1978)), not the lawyer who was allegedly negligent in failing to sue the injurer." Woodward, 291 Ill.App.3d at 814, 226 Ill.Dec. 32, 684 N.E.2d 1028.

Section 5(b) explicitly refers to the "injury or death" suffered by an employee that gives rise to payment of workers' compensation benefits. An attorney who commits malpractice cannot be considered the person liable for the employee's "injury or death." The attorney who commits malpractice is legally liable to the employee only because of his or her failure to prosecute the employee's third-party suit. Thus, section 5(b) cannot reasonably be interpreted to support Gates McDonald's position that it has a right to assert a lien against the proceeds of Eastman's legal malpractice case. Woodward, 291 Ill. App.3d 807, 226 Ill.Dec. 32, 684 N.E.2d 1028; Mosier v. Warren E. Danz, P.C., 302 Ill.App.3d 731, 235 Ill.Dec. 823, 706 N.E.2d 83 (1999); see also In re Worker's Compensation Lien, 231 Mich.App. 556, 562, 591 N.W.2d 221, 224-25 (1998) (construing statutory language similar to section 5(b) and holding that "[the employee's attorneys] did not cause the injury that led to the compensation payments. Put differently, the circumstances that allegedly caused plaintiff's injury did not `create' a legal liability in the defendant lawyers"); see generally 6 A. Larson, Workers' Compensation Law § 71.10, at 14-1 (1997) (explaining that third-party actions are permitted in workers' compensation situations because of the "moral idea that the ultimate loss from wrongdoing should fall upon the wrongdoer," i.e., the one who tortiously caused the employee's injury).

Gates McDonald further argues that section 5(b) must be construed so as to allow an employer to assert a lien against an employee's malpractice recovery because, otherwise, the employee would receive a double recovery for his injury, and a principal purpose of section 5(b) would thus be thwarted. See Scott v. Industrial Comm'n, 184 Ill.2d 202, 217, 234 Ill.Dec. 469, 703 N.E.2d 81 (1998) ("the general principle [is] that an employee is not entitled to a double recovery");...