Baier v. State Farm Ins. Co., 58174

• Decision Date: 09 May 1975
• Docket Number: No. 58174,58174
• Citation: 329 N.E.2d 543,28 Ill.App.3d 917
• Parties: Jay A. BAIER, Individually and on behalf of persons similarly situated, Plaintiffs-Appellants, v. STATE FARM INSURANCE COMPANY, a corporation, and Allstate Insurance Company, a corporation, Defendants-Appellees.
• Court: United States Appellate Court of Illinois

Page 543

329 N.E.2d 543

28 Ill.App.3d 917

Jay A. BAIER, Individually and on behalf of persons similarly situated, Plaintiffs-Appellants, v. STATE FARM INSURANCE COMPANY, a corporation, and Allstate Insurance Company, a corporation, Defendants-Appellees.

No. 58174.

Appellate Court of Illinois, First District, Fifth Division.

May 9, 1975.

John A. Doyle, William J. Harte, Ltd., and Keven M. Forde, Ltd., Chicago (William J. Harte and Keven M. Forde, Chicago, of counsel), for plaintiffs-appellants.

Hinshaw, Culbertson, Moelmann, Hoban & Fuller, Chicago (John L. Kirkland and D. Kendall Griffith, Chicago, of counsel), for appellee Allstate Ins. Co.

James J. Hoffnagle and Alfred C. Tisdahl, Jr., Chicago (Taylor, Miller, Magner, Sprowl & Hutchings, Chicago, of counsel), for appellee State Farm Ins. Co.

DRUCKER, Justice:

Plaintiff, an attorney, brought this class action on his own behalf and on behalf of all persons similarly situated against defendants, State Farm and Allstate Insurance Companies. He is seeking to recover reasonable attorney's fees which were denied him by defendants after he had allegedly obtained a recovery for State Farm on its subrogated medical payments claim. Defendants filed motions for summary judgment based on the pleadings and plaintiff's deposition, and after a hearing the court entered summary judgments against plaintiff. Plaintiff's motion for reconsideration supported by affidavit, was denied on July 31, 1972.

On appeal plaintiff contends that (a) a genuine issue of material fact existed as to plaintiff's consent or waiver, and (b) defendants were not entitled to the entry of a summary judgment as a matter of law.

The pertinent evidence which was before the court is as follows: Plaintiff was retained by Richard Kinkaid to represent him in a claim arising out of an automobile accident with one Soren Jensen, on November 30, 1967. Plaintiff and Kinkaid agreed that he would receive as his attorney's fee a contingent fee of one-third of all amounts which might be recovered in settlement or trial in any action against Jensen.

At the time of the accident Kinkaid was driving a car owned by Marge Burridge and insured by State Farm. Pursuant to its policy State Farm paid Kinkaid the full amount of the medical coverage provided by the policy, or $1000. This sum did not cover all of Kinkaid's medical expenses. In obtaining the $1000 Kinkaid also signed, on November 21, 1968, a document entitled 'Loan Receipt Under Medical Payments Coverage.' This document provided that Kinkaid acknowledged the receipt of $1000 from State Farm as a loan 'repayable only in the event and to the extent that any net recovery is made' by him from a third party on account of his personal injuries sustained in the accident.

On June 3, 1968, plaintiff filed suit for Kinkaid and against Jensen in Lake County, Illinois. He also allegedly did extensive work on the case including answering interrogatories, appearing at four depositions, reviewing records and otherwise preparing the case for trial. After making the medical coverage payment and after the Lake County litigation was commenced, State Farm notified Allstate, Jensen's insurer, that it had a subrogation agreement with Kinkaid and asserted a lien to the extent of its payments to Kinkaid.

On about September 2, 1969, plaintiff began discussions of a possible settlement with Allstate. Eventually Allstate agreed to settle the case for $12,000 but demanded that $1000 go to State Farm for its lien. Plaintiff informed State Farm of the settlement negotiations. He called State Farm to determine whether they were going to insist upon the full $1000 or whether they would waive or compromise their lien. State Farm insisted on the full $1000. He then, both before and after settlement, requested a reasonable fee for the work he had done in getting Allstate to pay $12,000. State Farm refused these requests. Kinkaid told plaintiff to accept the $12,000 offer. This was done on September 15, 1969. Allstate issued two drafts, one to the plaintiff and his client for $11,000, and the other to State Farm for $1000. Although plaintiff thought it was Allstate's idea to issue the drafts in this manner, he raised no objection.

Plaintiff took his fee of one-third of $11,000 from Kinkaid. No one from State Farm ever requested that plaintiff represent it. Plaintiff never had a contract of employment with State Farm. Plaintiff knew Allstate's position was that $1000 had to go to State Farm.

Opinion

During oral argument plaintiff conceded that Allstate should not be held liable. We have reviewed the record and the pertinent law and agree with plaintiff. Therefore, the summary judgment in favor of Allstate is affirmed, and the remainder of our discussion will deal solely with State Farm.

In their briefs all parties agree that the lower court rested its decision on the finding that plaintiff agreed to the method of settlement and thus waived any further compensation. Plaintiff argues that a genuine issue of material fact existed as to waiver or consent, precluding summary judgment, while defendants argue that waiver or consent was demonstrated as a matter of law.

The principles controlling Section 57 of the Civil Practice Act (Ill.Rev.Stat.1973, ch. 110, par. 57) are well defined. Summary judgment in a proper case is a procedure to be encouraged for it benefits not only the litigants but the community as well. (See Allen v. Meyer, 14 Ill.2d 284, 152 N.E.2d 576.) 'However, it is a remedy to be awarded with some caution so as not to pre-empt the right to a trial by jury or the right to fully present the factual basis for a case where a material dispute may exist.' Lumbermens Mut. Cas. Co. v. Poths, 104 Ill.App.2d 80, 87, 243 N.E.2d 40, 44--45.

When presented with a motion for summary judgment, the court must first determine if a genuine issue exists as to a material fact. If one exists, summary judgment is improper as the court may not summarily determine a material fact issue. If, on the other hand, the court finds no genuine issue as to any material fact, then the court must proceed to determine whether or not the moving party is entitled to judgment as a matter of law. (Applicolor, Inc. v. Surface Combustion Corp., 77 Ill.App.2d 260, 222 N.E.2d 168.) The right to summary judgment must be clear beyond question (Patterson v. Stern, 88 Ill.App.2d 399, 232 N.E.2d 7), and when making this determination, the court must construe the pleadings, depositions and affidavits most strictly against the moving party and most liberally in favor of the opponent. Lumbermens Mut. Cas. Co.

Defendants argue that a number of facts demonstrate conclusively that plaintiff agreed to a compensation of one-third of $11,000 and waived any further remuneration. They point out that plaintiff was aware of the existence and nature of State Farm's claim and also that he was aware that defendants considered the loan receipt a valid subrogation lien. Plaintiff also knew that Allstate would not settle unless State Farm's lien had been taken care of. Plaintiff's request for an attorney's fee was also denied prior to settlement. With all this knowledge plaintiff agreed with Allstate to an aggregate settlement figure of $12,000. Plaintiff raised no objection to the way Allstate issued the settlement drafts, even though the one draft for $1000 was made payable only to State Farm and sent directly to it. Thus, defendants argue, '(b)y settling with knowledge of the dispute, he waived any claim which he might have had to the proceeds of the settlement.'

The question for this court is whether an issue of fact exists as to plaintiff's consent to and waiver of any additional compensation. In National Bank of Albany Park v. Newberg, 7 Ill.App.3d 859, 868, 289 N.E.2d 197, 203--204, the court stated:

'The principle of 'waiver' will be recognized whenever a party intentionally relinquishes a known right or as in this case acts in such a manner to warrant an inference of such relinquishment. (A-1 Cleaners & Dyers v. American M.L. Insurance Co., 307 Ill.App. 64, 73, 30 N.E.2d 87.) It is an equitable principle invoked to further the interests of justice. (Kaluza v. North American Co., 110 Ill.App.2d 474, 249 N.E.2d 714.) The fact that Albany was not a party to the supplementary proceedings is not relevant since waiver (as distinguished from estoppel) depends upon what one himself does without regard to its effect upon the party benefiting from the waiver. See Adam v. Columbian Nat. Life Insurance Co., 218 Ill.App. 54.'

After reviewing the record before us, we feel that a genuine issue of material fact does exist. A distinction must be drawn between the settlement of the tort suit against Jensen and any discussion of plaintiff's compensation. When plaintiff settled the suit with the manner of payment in two separate drafts, he was acting on behalf of Kinkaid, his client, and following Kinkaid's directive. If plaintiff had done anything else, he would have violated his attorney-client relationship with Kinkaid. Furthermore, plaintiff never expressly disclaimed taking a reasonable fee for securing the $1000 but rather at several junctures in the proceedings specifically demanded such compensation.

Further, plaintiff is not foreclosed by his settlement with Kinkaid for one-third of $11,000. He could not have taken one-third of $12,000 and charged it to Kinkaid for his client was only entitled to $11,000. (See State Farm Mut. Auto. Ins. Co. v. Geline, 48 Wis.2d 290, 179 N.W.2d 815, 821, and General Exchange Ins. Corp. v. Driscoll, 315 Mass. 360, 52 N.E.2d 970, (where attorney was held to be liable to subrogated insurer when he paid full amount of settlement to his client.)) Therefore, we find that waiver or consent was not proved as a matter of law, and that this factual issue must be decided by the trier of fact.

Defendants next argue that '(e)ven if the plaintiff did not waive his claim by his actions, it is clear under...