Blagg v. Illinois F.W.D. Truck and Equipment Co.

• Decision Date: 28 March 1991
• Docket Number: No. 69158,69158
• Citation: 143 Ill.2d 188,572 N.E.2d 920
• Parties: , 157 Ill.Dec. 456, Prod.Liab.Rep. (CCH) P 12,782 William BLAGG, et al., Appellants, v. ILLINOIS F.W.D. TRUCK AND EQUIPMENT COMPANY, et al. (The Village of Winthrop Harbor, Appellee).
• Court: Illinois Supreme Court

Page 920

572 N.E.2d 920

143 Ill.2d 188, 157 Ill.Dec. 456,

Prod.Liab.Rep. (CCH) P 12,782

William BLAGG, et al., Appellants, v. ILLINOIS F.W.D. TRUCK AND EQUIPMENT COMPANY, et al. (The

Village of Winthrop Harbor, Appellee).

No. 69158.

Supreme Court of Illinois.

March 28, 1991.

Rehearing Denied June 3, 1991.

DeSanto & Bonamarte, P.C., Waukegan (Michael F. Bonamarte III and James J. DeSanto, of counsel), for appellants.

Heineke, Burke, Healy & Bodach, Chicago (Mary Beth O'Brien, John C. Healy and Thomas D. Diver, of counsel), for appellee.

Kenneth J. Sophie, Jr., of the Law Offices of Gerard Facchini, and Bruce Robert Pfaff, of Corboy & Demetrio, P.C., Chicago (Pamela S. Menaker, of counsel), for amicus curiae Illinois Trial Lawyers Ass'n.

Williams & Montgomery, Ltd., Chicago (James K. Horstman and Barry L. Kroll, of counsel), for amicus curiae Illinois Ass'n of Defense Trial Counsel.

Justice MORAN delivered the opinion of the court:

On February 7, 1984, William Blagg (William) brought suit for personal injuries in the circuit court of Lake County against defendants, F.W.D. Corporation (F.W.D.) and Seagrave Fire Apparatus, Inc. (Seagrave), manufacturers of a fire truck, and Illinois F.W.D. Truck and Equipment Company (Illinois F.W.D.), the manufacturer's distributor. At the same time, Marilyn Blagg (Marilyn), William's spouse, brought an action for loss of consortium.

The manufacturers then brought a third-party action for contribution against the Village of Winthrop Harbor (Village). Thereafter, the Village brought a fourth-party action for contribution against William, who had been awarded $426.44 per week for life in workers' compensation benefits. On March 14, 1988, the Village filed a petition asserting a workers' compensation lien pursuant to section 5(b) of the Workers' Compensation Act (Ill.Rev.Stat.1987, ch. 48, par. 138.5(b)) for $282,251.18, which increased by $426.44 each week.

Trial was set for Monday, September 19, 1988. However, on Friday, September 16, 1988, William and Marilyn agreed to settlements with F.W.D., Seagrave, and Illinois F.W.D. William was to receive $100,000 for his injuries and Marilyn was to receive $350,000 as compensation for her loss of consortium. The Village objected to the apportionment of the settlements, arguing that they allowed the parties to circumvent its workers' compensation lien. After the circuit court held a hearing, it upheld the settlements, determining that they were made in good faith. As a result of the settlements, the Village was able to collect only $71,698.48 of its lien.

The Village appealed the trial court's order approving the settlements, and the appellate court reversed and remanded for a new hearing (186 Ill.App.3d 955, 134 Ill.Dec. 787, 542 N.E.2d 1294). William and Marilyn petitioned this court for leave to appeal (107 Ill.2d R. 315(a)), which was granted. Amicus curiae briefs from the Illinois Trial Lawyers Association and the Illinois Association of Defense Trial Counsel were also filed.

William and Marilyn raise three issues on appeal: (1) whether the appellate court erred in reversing the trial court's approval of the settlement agreements; (2) whether the comparative negligence of an injured spouse reduces the damages recoverable for loss of consortium; and (3) whether an employer is entitled to subrogation under the Workers' Compensation Act.

The relevant facts are derived from allegations in the complaint as follows: that William was a volunteer fireman for the Village; that on October 3, 1982, while en route in response to a fire call within the Village, William was forcibly ejected, or thrown, from the cab area of a fire truck known as the rear cab jumpseat area; and that William sustained serious physical injuries due to his fall.

The first issue that William and Marilyn raise is the propriety of the trial court's approval of their settlements. Section 5(b) of the Workers' Compensation Act provides, in part:

"(b) 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 or his personal representative and judgment is obtained and paid, or settlement is made with such other person, either with or without suit, then from the amount received by such employee or personal representative there shall be paid to the employer the amount of compensation paid or to be paid by him to such employee or personal representative including amounts paid or to be paid pursuant to paragraph (a) of Section 8 of this Act.

* * * * * *

If the injured employee or his personal representative agrees to receive compensation from the employer or accept from the employer any payment on account of such compensation, or to institute proceedings to recover the same, the 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.

In such actions brought by the employee or his personal representative, he shall forthwith notify his employer by personal service or registered mail, of such fact and of the name of the court in which the suit is brought, filing proof thereof in the action. 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. No release or settlement of claim for damages by reason of such injury or death, and no satisfaction of judgment in such proceedings shall be valid without the written consent of both employer and employee or his personal representative, except in the case of the employers, such consent is not required where the employer has been fully indemnified or protected by Court order." Ill.Rev.Stat.1987, ch. 48, par. 138.5(b).

In reviewing the settlements in the instant case, the trial court relied on Page v. Hibbard (1987), 119 Ill.2d 41, 50, 115 Ill.Dec. 544, 518 N.E.2d 69, which held that an employer is not entitled to reimbursement from an injured employee's spouse's recovery for loss of consortium and that an action for loss of consortium is not a derivative claim, "but is an independent action to recover for injuries the spouse has suffered." (Page, 119 Ill.2d at 48, 115 Ill.Dec. 544, 518 N.E.2d 69.) The court in Page remanded the cause to the trial court to determine if the value of the loss-of-consortium award, which was equal to the value of the employee's personal injuries, was proper in light of the total settlement. (Page, 119 Ill.2d at 50, 115 Ill.Dec. 544, 518 N.E.2d 69.) Also, the trial court noted that the standard set forth in Dearing v. Perry (Ind.App.1986), 499 N.E.2d 268, 272, which held that a claim for loss of consortium will be given legal effect only when fully and fairly determined by an impartial trier of fact, or where the insurance carrier is invited to participate in the settlement negotiations, is instructive.

Page did not set forth clear guidelines for trial courts to use in determining whether an allocation of settlement proceeds is fair and reasonable. However, it was noted that the holding was in accord with Rascop v. Nationwide Carriers (Minn.1979), 281 N.W.2d 170, 173, where the court found that a $30,000 allocation for loss of consortium, in light of the $100,000 total award to the employee and his wife, was reasonable. Additionally, in DeMeulenaere v. Transport Insurance Co. (Wis.App.1983), 116 Wis.2d 322, 342 N.W.2d 56, the court cited Rascop and stated that a trial court should "closely scrutinize settlements * * * which appear to circumvent the effects of the [statutory] distribution formula." DeMeulenaere, 116 Wis.2d at 327, 342 N.W.2d at 60.

In approving the settlements in the instant case, the trial court relied heavily on the Contribution Act requirement that a settlement by a joint tortfeasor be made in good faith (Ill.Rev.Stat.1987, ch. 70, par. 302(c)). In full, section 2(c) of the Contribution Act provides:

"(c) 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 or the same wrongful death, it does not discharge any of the other tortfeasors from liability for the injury or wrongful death 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." (Ill.Rev.Stat.1987, ch. 70, par. 302(c).)

In interpreting section 2(c), this court has stated:

"As a matter of public policy the settlement of claims should be encouraged. If we were now to add limitations not expressed in the general language of the settlement instrument or in the provisions of the Contribution Act, we would make those who desire to end litigation wary and uncertain of what they would accomplish by settlement." (Rakowski v. Lucente (1984), 104 Ill.2d 317, 325, 84 Ill.Dec. 654, 472 N.E.2d 791.)

Furthermore, this court has held that the entire circumstances of the settlement need to be examined in determining whether or not the settlement was entered into in good faith. Ballweg v. City of Springfield (1986), 114 Ill.2d 107, 122-23, 102 Ill.Dec. 360, 499 N.E.2d 1373.

In the case at bar the trial court focused almost exclusively on section 2(c) and its requirement of good faith. The trial court virtually ignored section 5(b) of the Workers' Compensation Act. In regards to section 5(b), this court has stated:

"The plain meaning of section 5(b) imposes the duty of protecting the employer's lien upon the court. The statute...