AMF, Inc. v. Victor J. Andrew High School

• Decision Date: 30 June 1988
• Docket Number: No. 87-0510,87-0510
• Parties: , 122 Ill.Dec. 325, 48 Ed. Law Rep. 596 AMF, INC., Plaintiff-Appellant, v. VICTOR J. ANDREW HIGH SCHOOL and School District 230, Defendants-Appellees.
• Court: United States Appellate Court of Illinois

Page 584

526 N.E.2d 584

172 Ill.App.3d 337, 122 Ill.Dec. 325,

48 Ed. Law Rep. 596

AMF, INC., Plaintiff-Appellant, v. VICTOR J. ANDREW HIGH SCHOOL and School District 230 Defendants-Appellees.

No. 87-0510.

Appellate Court of Illinois,

First District, Fifth Division.

June 30, 1988.

Tressler, Soderstrom, Maloney & Priess (Shaun McParland, Jean Faulhaber, of counsel), Chicago, for plaintiff-appellant.

Baker & McKenzie (Francis D. Morrissey, Michael A. Pollard, of counsel), Chicago, for defendants-appellees.

Justice MURRAY delivered the opinion of the court:

Plaintiff, AMF, Inc., appeals from an order of the circuit court of Cook County dismissing its complaint against defendants, Victor J. Andrew High School and School District 230, for failure to state a cause of action based upon implied indemnity. For the reasons set forth below, we affirm.

On December 29, 1980, Marie Pell, a student at Victor J. Andrew High School and a participant in its gymnastic program, severed her spine after attempting to perform an aerial somersault off a mini-trampoline manufactured by AMF. (The mini-trampoline is a rebound devise set on an incline or slant designed to provide a gymnast with greater height in performing somersaults and other gymnastic feats.) Pell subsequently filed an action against Victor J. Andrew High School, School District 230, and AMF based upon theories of negligence and strict liability.

Prior to trial, the high school and school district entered into a $1.6 million settlement with Pell and they were dismissed as parties. At trial, Pell proceeded against AMF on a strict products liability theory and the jury rendered a $5 million verdict against AMF. The trial court then set off the $1.6 million settlement against the $5 million verdict and entered judgment against AMF for $3.4 million. On appeal to this court, we affirmed the trial court, finding, in pertinent part, that "there was sufficient evidence * * * from which the jury could conclude that AMF's warnings were ineffective * * * because their location was inconsistent with the equipment's use," that the settlement between Pell and the high school and school district was made in good faith, and that AMF was barred from seeking contribution from the high school and school district in light of their good faith settlement with Pell and AMF's failure to file a counterclaim for contribution in the original action as required by section 5 of the Contribution Among Joint Tortfeasors Act (Contribution Act) (Ill.Rev.Stat.1981, ch. 70, par. 305). Pell v. Victor J. Andrew High School (1984), 123 Ill.App.3d 423, 462 N.E.2d 858.

Thereafter, AMF filed an action in the circuit court seeking indemnification from the high school and school district (defendants) for the $3.4 million it paid to Pell as a result of the judgment entered against it in the original action filed by Pell. Defendants filed a motion to dismiss AMF's complaint, which the trial court granted. In addition, at the close of the hearing on defendants' motion to dismiss, the court also denied an oral motion made by AMF for leave to file an amended complaint. This appeal followed.

In arguing that the trial court erred in dismissing its complaint for indemnification for failure to state a cause of action, AMF contends that it sufficiently pleaded facts to support its action based on vicarious liability resulting from a pretort relationship between itself and defendants, i.e., a seller-buyer relationship or a relationship based upon defendants' role as "learned intermediaries." Alternatively, AMF argues that the trial court erred in denying its motion to amend its complaint to plead additional facts to support its vicarious liability theory. Defendants, on the other hand, contend that implied indemnity, based upon any theory, has been absolutely abolished by the enactment of the Contribution Act (Ill.Rev.Stat.1981, ch. 70, par. 301 et seq.), that no pretort relationship existed between them and AMF, that principles of res judicata and collateral estoppel barred AMF's action for indemnification, that AMF should have been required to file its indemnification action in the original action in order to achieve the purposes of the Contribution Act, and that AMF's motion for leave to amend its complaint was properly denied.

For purposes of ruling on a motion to dismiss, all well-pleaded facts contained in a complaint must be taken as true and all inferences therefrom must be drawn in favor of the nonmovant. A complaint should not be dismissed for failure to state a cause of action unless it clearly appears that no set of facts could be proved under the pleadings entitling a plaintiff to relief. Palatine National Bank v. Charles W. Greengard Associates, Inc. (1983), 119 Ill.App.3d 376, 74 Ill.Dec. 914, 456 N.E.2d 635.

We first observe that indemnification and contribution are distinct causes of action. Whereas contribution involves a sharing of payment of damage awards by those whose combined actions brought about a common injury, indemnity provides for the complete shifting of liability upon a showing of a pretort relationship between the guilty parties and a qualitative distinction between their conduct. (Heinrich v. Peabody International Corp. (1984), 99 Ill.2d 344, 348-50, 76 Ill.Dec. 800, 459 N.E.2d 935.) An indemnification claim may be filed in a pending action by third-party complaint or as a separate action after the original action is over and a judgment has been entered against a party or the party has settled a claim made against him. Anixter Brothers, Inc. v. Central Steel & Wire Co. (1984), 123 Ill.App.3d 947, 953, 79 Ill.Dec. 359, 463 N.E.2d 913.

In the instant case, the trial court first found that AMF's complaint failed to state a cause of action because it appeared to be improperly based on a theory of active/passive negligence, as evidenced by AMF's allegation in paragraph 30 of its complaint that "the injuries sustained by Lauren Marie Pell were proximately caused by the major fault of defendants, who had the primary responsibility to supervise, instruct and warn * * * Pell, and were not due to the minor fault, if any, of plaintiff AMF, who provided warnings on its mini-tramp and disseminated warnings and instructions to the defendants." (Emphasis added.) The court further found that AMF's indemnification claim based on a theory of vicarious liability arising from a pretort relationship failed to state a cause of action because this theory had not survived after enactment of the Contribution Act.

In Allison v. Shell Oil Co. (1986), 113 Ill.2d 26, 27, 99 Ill.Dec. 115, 495 N.E.2d 496, our supreme court held that in light of the policies underlying the Contribution Act, implied indemnity based on a theory of active/passive negligence "is no longer a viable doctrine for shifting the entire cost of tortious conduct from one tortfeasor to another." We therefore agree with the trial court in the present case that AMF's complaint failed to state a cause of action to the extent that it was based on a claim of active/passive negligence.

On the other hand, we cannot say with certainty that the trial court's second finding, that implied indemnity based on vicarious liability arising from a pretort relationship did not survive the Contribution Act, was correct. A number of cases in this court addressing this issue are conflicting and our supreme court has not yet decided the issue. For example, in Van Jacobs v. Parikh (1981), 97 Ill.App.3d 610, 613, 52 Ill.Dec. 770, 422 N.E.2d 979, this court held that "the contribution act has not extinguished indemnity" in cases involving some pretort relationship between the parties which give rise to a duty to indemnity, e.g., in cases involving vicarious liability (lessor-lessee; employer-employee; owner and lessee; master and servant). This court further held in Lowe v. Norfolk & Western Ry. Co. (1984), 124 Ill.App.3d 80, 97, 79 Ill.Dec. 238, 463 N.E.2d 792, that implied indemnity was still viable with respect to "upstream" claims in a strict liability action.

Conversely, in Morizzo v. Laverdure (1984), 127 Ill.App.3d 767, 774-75, 83 Ill.Dec. 46, 469 N.E.2d 653, although this court only determined in the majority opinion that the Contribution Act extinguished a cause of action for active/passive indemnity, the authoring justice also wrote a concurring opinion to his majority opinion stating that "with the passage of the Contribution Act, it is reasonable to conclude that the legislature intended that, without qualification, implied indemnity should no longer exist" and there is "no reason to distinguish between vicarious liability, indemnity in tort cases, or cases alleging 'upstream' strict liability." Approximately one year later, the concurring opinion in Morizzo was adopted in Heinrich v. Peabody International Corp. (1985), 139 Ill.App.3d 289, 302, 93 Ill.Dec. 544, 486 N.E.2d 1379, modified (1987), 117 Ill.2d 162, 109 Ill.Dec. 821, 510 N.E.2d 889 ¹; Heinrich held...