BHI CORP. v. Litgen Concrete Cutting and Coring Co.

• Decision Date: 10 February 2004
• Docket Number: No. 1-02-2296.,1-02-2296.
• Citation: 346 Ill. App.3d 300,804 N.E.2d 707,281 Ill.Dec. 742
• Parties: BHI CORPORATION; Sazama-Brauer Gallery, Ltd.; The Rowe Company Fine Arts, Inc.; Klein Gallery, Inc.; Wesley-Jessen, Division of Schering-Plough Corporation; Zolla-Lieberman Gallery, a Partnership; Peter Miller, d/b/a Peter Miller Gallery; Ivy Associates, Inc., d/b/a Objects Gallery; Van Straaten Gallery, Inc.; Stephen Wirtz, d/b/a Stephen Wirtz Gallery; Gwenda Jay Gallery, Inc.; Habitat Galleries, Inc.; East-West Contemporary Art, a Partnership; GTD Corporation, d/b/a Greendoor Tavern; John Welzenbach, Inc., d/b/a Welzenbach Production; Thomas H. Boland, d/b/a Thomas H. Boland & Paul and Robbie Klein; Harold M. and Victoria Rowe; William Lieberman; Jack and Sandra Guthman; Robert S. Lubin; Naomi Donnelley; Bryan S. Reid; Mayer, Brown & Platt, A Partnership; Richard And Roberta Lieberman; Bruce And Ann Bachman; J. Ira Harris; Daniel Cotter; David B. Heller; Ben W. Heineman; Gwenda J. Klein; Fawbush Gallery, Inc.; Walter And Ann Nathan; Stephen And Mireille Morency-Lay; Lorence-Monk, Inc.; Scheele Gallery; Helen Getler; Grayson Gallery, Inc.; Carl Ripoli; John Pappajohn, d/b/a Equity Dynamics, Inc.; James Graham & Sons, Inc., d/b/a Graham Gallery; Tynedale Investments, Ltd.; International Contemporary Prints, Ltd.; Robert Winslow; Joardis B. Davis; Debra Van Tuinin; Charles Stewart, II; Andre Ferrella; Greg Gummersal; Pat Hammerman; Susan Hostetler; Carol Haliday Mcqueen; Laura Nicholson; Joe Price; Eve Sonnerman; Michelle Stuart; Mary Teichman; David Umholtz; Marjorie Allegretti; Fredric Goodman; Mary Lou Zelazny; Michael Dubina; Aetna Casualty & Surety Company a/s/o Jupiter Industries, Inc.; National Ben Franklin Insurance Company a/s/o Brady Mechanical Services; Aetna Casualty & Surety Company a/s/o Alfred Cahen and Mary Cahen; Royal Insurance Company a/s/o Lillian Zevin; Maryland Casualty Insurance Company a/s/o 368 Condominium Association; Centennial Insurance Company a/s/o Brett Mitchell Gallery; Centennial Insurance Company a/s/o Diane Villani Editions; Centennial Insurance Company a/s/o John Szoke Graphics, Inc.; and Aetna Casualty Company a/s/o Powell Kleinschmidt, Plaintiffs-Appellants, v. LITGEN CONCRETE CUTTING AND CORING COMPANY, Defendant-Appellee.
• Court: United States Appellate Court of Illinois

804 N.E.2d 707

346 Ill. App.3d 300

281 Ill.Dec. 742

BHI CORPORATION; Sazama-Brauer Gallery, Ltd.; The Rowe Company Fine Arts, Inc.; Klein Gallery, Inc.; Wesley-Jessen, Division of Schering-Plough Corporation; Zolla-Lieberman Gallery, a Partnership; Peter Miller, d/b/a Peter Miller Gallery; Ivy Associates, Inc., d/b/a Objects Gallery; Van Straaten Gallery, Inc.; Stephen Wirtz, d/b/a Stephen Wirtz Gallery; Gwenda Jay Gallery, Inc.; Habitat Galleries, Inc.; East-West Contemporary Art, a Partnership; GTD Corporation, d/b/a Greendoor Tavern; John Welzenbach, Inc., d/b/a Welzenbach Production; Thomas H. Boland, d/b/a Thomas H. Boland & Paul and Robbie Klein; Harold M. and Victoria Rowe; William Lieberman; Jack and Sandra Guthman; Robert S. Lubin; Naomi Donnelley; Bryan S. Reid; Mayer, Brown & Platt, A Partnership; Richard And Roberta Lieberman; Bruce And Ann Bachman; J. Ira Harris; Daniel Cotter; David B. Heller; Ben W. Heineman; Gwenda J. Klein; Fawbush Gallery, Inc.; Walter And Ann Nathan; Stephen And Mireille Morency-Lay; Lorence-Monk, Inc.; Scheele Gallery; Helen Getler; Grayson Gallery, Inc.; Carl Ripoli; John Pappajohn, d/b/a Equity Dynamics, Inc.; James Graham & Sons, Inc., d/b/a Graham Gallery; Tynedale Investments, Ltd.; International Contemporary Prints, Ltd.; Robert Winslow; Joardis B. Davis; Debra Van Tuinin; Charles Stewart, II; Andre Ferrella; Greg Gummersal; Pat Hammerman; Susan Hostetler; Carol Haliday Mcqueen; Laura Nicholson; Joe Price; Eve Sonnerman; Michelle Stuart; Mary Teichman; David Umholtz; Marjorie Allegretti; Fredric Goodman; Mary Lou Zelazny; Michael Dubina; Aetna Casualty & Surety Company a/s/o Jupiter Industries, Inc.; National Ben Franklin Insurance Company a/s/o Brady Mechanical Services; Aetna Casualty & Surety Company a/s/o Alfred Cahen and Mary Cahen; Royal Insurance Company a/s/o Lillian Zevin; Maryland Casualty Insurance Company a/s/o 368 Condominium Association; Centennial Insurance Company a/s/o Brett Mitchell Gallery; Centennial

Insurance Company a/s/o Diane Villani Editions; Centennial Insurance Company a/s/o John Szoke Graphics, Inc.; and Aetna Casualty Company a/s/o Powell Kleinschmidt, Plaintiffs-Appellants, v. LITGEN CONCRETE CUTTING AND CORING COMPANY, Defendant-Appellee.

No. 1-02-2296.

Appellate Court of Illinois, First District, Second Division.

February 10, 2004.

Stephen T. Mikus and Terrence J. Madden of Bryce, Downey, Murray, Jensen & Mikus LLC; and Edward B. Ruff, III, Robert Marc Chemers and Scott A. Howie, of Pretzel & Stouffer, Chtd., Chicago, for Appellants.

Michel T. Reagan of Herbolsheimer, Lannon, Henson, Duncan and William E. Spizzirri of Kralovec & Marquard, Chtd. (Michael T. Reagan and William E. Spizzirri, of counsel), Chicago, for Appellee.

Justice CAHILL delivered the opinion of the court:

We address an issue raised by the same litigants who were before our supreme court in Dubina v. Mesirow Realty Development, Inc., 197 Ill.2d 185, 258 Ill.Dec. 562, 756 N.E.2d 836 (2001). In that case, the supreme court held that the settlement agreements reached by the parties violated the good-faith requirement of the Joint Tortfeasor Contribution Act (Act) (740 ILCS 100/0.01 et seq. (West 1994)).

The case before us has a long procedural history. Earlier opinions were: Dubina v. Mesirow Realty Development, Inc., 283 Ill. App.3d 36, 218 Ill.Dec. 551, 669 N.E.2d 694 (1996),rev'd,178 Ill.2d 496, 227 Ill.Dec. 389, 687 N.E.2d 871 (1997); and Dubina v. Mesirow Realty Development, Inc., 308 Ill. App.3d 348, 241 Ill.Dec. 681, 719 N.E.2d 1084 (1999). The litigation arose from a fire in 1989 that destroyed a building that housed several art galleries in Chicago's River North district. The original plaintiffs were artists and gallery owners, including BHI Corporation and Michael Dubina, who suffered losses in the fire. The original defendants were companies, including Mesirow Realty Development, Inc. and Litgen Concrete Cutting and Coring Co. (Litgen), that were renovating the building at the time of the fire. The 35 separate actions were consolidated for discovery and trial. The plaintiffs settled with all of the defendants, with the relevant exception of Litgen, before the trial. The settling defendants entered into 29 separate agreements with the plaintiffs, each requiring the plaintiffs to assign their claims against Litgen to the settling defendants.

Under the terms of the agreements, the settling defendants paid plaintiffs $9 million—$4.5 million for the release of plaintiffs' claims against the defendants other than Litgen, and $4.5 million for the assignment to defendants of plaintiffs' claims against Litgen.

In July 1994, the trial court found all 29 of the settlement agreements to be in good faith under section 2(c) of the Act. 740 ILCS 100/2(c) (West 1994). As a result of its good-faith finding, the trial court dismissed the contribution claims between Litgen and the settling defendants. See 740 ILCS 100/2(d) (West 1994) (a tortfeasor who enters into a good-faith settlement is discharged from all liability for any contribution to another tortfeasor); 740 ILCS 100/2(e) (West 1994) (a tortfeasor who enters into a good-faith settlement is not entitled to recover contribution from a tortfeasor whose liability was not extinguished by the settlement). The trial court also granted the plaintiffs' motion to voluntarily dismiss their direct claims against Litgen. After the voluntary dismissal, Litgen appealed, contending that the trial court erred in finding that the settlements had been made in good faith and in dismissing Litgen's contribution claims against the settling defendants.

While Litgen's appeal was pending, the original defendants, as assignees of the original plaintiffs' claims, filed a single complaint against Litgen (95 L 2491) on February 16, 1995, in the circuit court. Based on this filing, the settling defendants filed a motion in the appellate court, arguing that Litgen's pending appeal of the circuit court's good-faith finding must be dismissed because the refiling (95 L 2491) transformed the final orders into nonfinal orders and divested the appellate court of jurisdiction. The appellate court agreed (Dubina, 283 Ill.App.3d at 40, 218 Ill.Dec. 551, 669 N.E.2d 694). But the supreme court reversed and remanded the cause, concluding that the orders from which Litgen appealed were final and appealable (Dubina, 178 Ill.2d at 506, 227 Ill.Dec. 389, 687 N.E.2d 871).

On remand, the appellate court considered Litgen's appeal on its merits and concluded that the trial court erred in finding the settlement agreements were in good faith. The appellate court reversed the dismissal of Litgen's contribution claims against the settling defendants and remanded the cause to the trial court for further proceedings. The supreme court granted leave to appeal and on July 26, 2001, affirmed the decision of the appellate court: "[W]e find that the settlement agreements at issue in this case violate both the terms of, and the policies underlying, the Act. Because the settlement agreements violate both the terms of and the policies underlying the Act, the settlement agreements do not satisfy the good-faith requirement of the Act." Dubina, 197 Ill.2d at 196, 258 Ill.Dec. 562, 756 N.E.2d 836.

Following remand to the trial court, the settling defendants, acting now as assignees of the original plaintiffs' claims under the settlement agreements, refiled their complaint against Litgen under a new case number (01 L 14327) in December 2001. Litgen filed a motion to dismiss the renumbered action in February 2002, arguing that the plaintiffs could not pursue this action because their claims were predicated on settlement agreements deemed "not in good faith" and unenforceable by the supreme court. The trial court on May 13, 2002, granted Litgen's motion and dismissed the case numbered 01 L 14327 with prejudice. The plaintiffs' motion to reconsider was denied. On July 30, 2002, plaintiffs filed the present appeal. The question before us is: when the settling defendants' assignments of a cause of action are found to be not in good faith under the Act, may the settling defendants recast the complaint, abandon the protection of the Act and sue the nonsettling defendant as an assignee of the settling plaintiffs' cause of action? We answer in the negative and affirm the trial court's dismissal of plaintiffs' complaint against Litgen.

Under the Act, settling defendants in a negligence action cannot recover contribution from a joint tortfeasor, such as Litgen, whose liability was not extinguished by a "good-faith" settlement agreement. 740 ILCS 100/2 (West 1994). Section 2(c) of the Act provides:

"When a release or covenant not to sue or not to enforce judgment is given in good faith to one or more persons liable in tort arising out of the same injury * * * it does not discharge any of the other tortfeasors from liability for the injury * * * 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 release or the covenant, or in the amount of the consideration actually paid for it, whichever is greater." 740 ILCS 100/2(c) (West 1994).

On appeal, plaintiffs' main arguments against dismissal of the complaint are: (1) this action predated and is separate from the "good-faith" question answered by the supreme court in its 2001 Dubina opinion; (2) the supreme court could not have intended that its "not in good faith" finding would conclude litigation because the cause was remanded for further proceedings; and (3) the denial of the settling defendants' rights to prosecute their claims against Litgen as assignees is fundamentally unfair because it relieves Litgen of liability. Instead, the settling defendants contend they should be allowed to pursue the assigned claims against Litgen even if they are subject to restrictions preserving Litgen's right to a setoff and allocating to Litgen its proper pro rata share...