Dixon v. Northwestern Pub. Co.

• Citation: 117 Ill.Dec. 581,520 N.E.2d 932,166 Ill.App.3d 745
• Decision Date: 03 February 1988
• Docket Number: No. 4-87-0420,4-87-0420
• Parties: , 117 Ill.Dec. 581 Hobart DIXON, Plaintiff, v. NORTHWESTERN PUBLISHING COMPANY, an Illinois Corporation, d/b/a The Commercial News; Gannett Company, Inc., a Foreign Corporation, Defendants-Third Party Plaintiffs-Appellants, (McDowell Construction Co., Inc., an Illinois Corporation, Defendant, v. George R. Hall, Inc., Third Party Defendant-Appellee).
• Court: United States Appellate Court of Illinois

Page 932

520 N.E.2d 932

166 Ill.App.3d 745, 117 Ill.Dec. 581

Hobart DIXON, Plaintiff, v. NORTHWESTERN PUBLISHING COMPANY, an Illinois Corporation, d/b/a The Commercial News; Gannett Company, Inc., a Foreign

Corporation, Defendants-Third Party Plaintiffs-Appellants, (McDowell Construction Co., Inc., an Illinois Corporation, Defendant, v. George R. Hall, Inc., Third Party Defendant-Appellee).

No. 4-87-0420.

Appellate Court of Illinois,

Fourth District.

Feb. 3, 1988.

Rehearing Denied April 6, 1988.

Sebat, Swanson, Banks, Garman & Townsley, Danville, for appellant; Robert J. Banks, Jr., of counsel.

James C. Kearns, Michael E. Raub, Heyl, Royster, Voelker & Allen, Urbana, for appellee.

Justice McCULLOUGH delivered the opinion of the court:

Northwestern Publishing Company, defendant third-party plaintiff, appeals an order granting George R. Hall, Inc. (Hall), third-party defendant, summary judgment. Northwestern Publishing Company argues: (1) a direct settlement between an employer third-party defendant, and his employee is not in good faith; thus, does not release the employer from third-party liability pursuant to the Contribution Act (Ill.Rev.Stat.1985, ch. 70, par. 301 et seq.); (2) the trial court erred in finding no justiciable cause of action remained concerning the express indemnity provision after the settlement; and (3) the Contribution Act does not abolish implied indemnity in situations such as the instant case.

We reverse and remand.

In July 1982, Northwestern Publishing Company, d/b/a the Commercial News and Gannett Company, Inc. (Commercial News), contracted with Hall, a contractor, for the installation of several printing presses at the Commercial News plant in Danville. As a part of the general terms and conditions of the contract between Hall and Commercial News, Hall agreed:

"to indemnify, defend and hold harmless the Owner on account of property damage, property liability or personal injuries, including death, due solely to any act or the admission [sic ] of any act, negligent or otherwise, by Hall, Hall's subcontractors, Hall's employees and/or agents."

In order to install the presses, a temporary entrance was made into the building. To secure the opening, Hall installed doors. Hobart Dixon, plaintiff, was planing the top of the door while standing on a scaffold erected by Hall. While he was sawing the top of a door, the boards of the scaffold slipped. Dixon fell and was injured. Dixon filed an application for adjustment of claim, seeking benefits pursuant to the Workers' Compensation Act. (Ill.Rev.Stat.1985, ch. 48, par. 138.1 et seq.) On February 7, 1983, Dixon filed a complaint against Commercial News, alleging Commercial News had wilfully violated the Structural Work Act. Ill.Rev.Stat.1983, ch. 48, pars. 60 through 69.

On March 19, 1984, Commercial News filed a three-count, third-party complaint against Hall. In count I, Commercial News sought indemnification based upon express indemnity provisions. In count II, Commercial News sought indemnity on an active-passive negligence theory. In count III, Commercial News alleged it was entitled to contribution pursuant to the Contribution Act. Ill.Rev.Stat.1983, ch. 70, par. 301 et seq.

In August and September of 1986, Hall and Dixon entered into a settlement in his workers' compensation claim. Dixon executed a release and agreement to indemnify Hall. Dixon received $110,000 in addition to the amount he had been paid as benefits through the Workers' Compensation Act. The settlement was approved by the Industrial Commission. The settlement terms stated that Hall agreed to pay Dixon $110,000 as full settlement of all claims arising out of the injury. Dixon, for the payment and a waiver of the workers' compensation lien to the extent of $70,000, agreed to indemnify Hall from any claim, judgment, or demand in any action or suit brought against it because of the accident. Further, Dixon agreed that should he obtain any judgment against Commercial News and Commercial News obtain contribution, indemnity, or any judgment against Hall, Dixon would not execute the portion of his judgment for which Hall would be responsible.

Hall filed a motion for summary judgment on January 21, 1987. The trial court granted the motion. The court had previously granted, without objection, summary judgment on the implied-indemnity provision. In a letter to the parties, the court stated the express indemnity provision was valid under Illinois law. However, Dixon agreed not to execute any judgment against Commercial News which would require contribution or indemnity from Hall. Therefore, the court found no justiciable controversy existed as to count I.

As to count III, the court discussed the purpose of the Contribution Act, noted factors used in determining good faith, noted that the court may determine good faith without a separate hearing, and determined Hall could avail itself of the discharge provision of the Contribution Act.

Section 302 of the Contribution Act states:

"Right of Contribution. (a) Except as otherwise provided in this Act, where 2 or more persons are subject to liability in tort arising out of the same injury to person or property, or the same wrongful death, there is a right of contribution among them, even though judgment has not been entered against any or all of them.

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(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.

(d) The tortfeasor who settles with a claimant pursuant to paragraph (c) is discharged from all liability for any contribution to any other tortfeasor." Ill.Rev.Stat.1985, ch. 70, par. 302.

Initially, Commercial News argues that since Hall did not have a legal liability to compensate Dixon, outside of the Workers' Compensation Act, the settlement lacked consideration. Thus, it was not a good-faith settlement.

The purpose of the Contribution Act is to encourage settlements. (Rakowski v. Lucente (1984), 104 Ill.2d 317, 84 Ill.Dec. 654, 472 N.E.2d 791.) In LeMaster v. Amsted Industries, Inc. (1982), 110 Ill.App.3d 729, 66 Ill.Dec. 454, 442 N.E.2d 1367, plaintiff was injured when he fell from a roof at Amsted. He sued Amsted pursuant to the Structural Work Act. Amsted filed a third-party complaint seeking implied indemnity and contribution from plaintiff's employer. The employer and plaintiff entered a settlement conditioned upon dismissal of the third-party action. In the settlement, plaintiff released his employer from all liability in tort in exchange for a waiver of the workers' compensation lien and an additional payment. The trial court dismissed the third-party action against the employer pursuant to section 2(d) of the Contribution Act. (Ill.Rev.Stat.1981, ch. 70, par. 302(d).) On appeal, the court found the implied-indemnity count should not have been dismissed. The appellate court also held that the settlement was not in good faith for purposes of the Contribution Act because the employee had no rights outside of the Workers' Compensation Act which he could relinquish in exchange for the lien waiver and cash payment.

Commercial News asks this court to rely on LeMaster and find no consideration existed in the instant case for the settlement between Hall and Dixon. It asserts Dixon did not have any action to relinquish, and Hall was not liable to Dixon. However, several cases have diminished the precedential effect of LeMaster. In Doyle v. Rhodes (1984), 101 Ill.2d 1, 77 Ill.Dec. 759, 461 N.E.2d 382, the supreme court held an employer's immunity from suit by his employee did not bar an action for contribution by a third-party against the employer. The employer argued it was "not subject to liability in tort" for purposes of the Contribution Act as a result of the exclusive remedy provision of the Workers' Compensation Act. The supreme court recognized that many jurisdictions do not permit contribution actions against employers who are subject to workers' compensation.

However, it felt the intent of the legislature in enacting the statute in Illinois was to reach anyone who was culpable for an injury, regardless of an immunity from direct court action provided by a special defense or privilege. The court in Doyle found the Workers' Compensation Act provided an employer with an affirmative defense to an employee's tort action against it. The affirmative defense could be waived if not asserted by the employer at trial. (See also Vickrey v. Caterpillar Tractor Co. (1986), 146 Ill.App.3d 1023, 100 Ill.Dec. 636, 497 N.E.2d 814; Walker v Midwest Emery Freight Systems (1983), 119 Ill.App.3d 640, 78 Ill.Dec. 266, 461 N.E.2d 1373.) Therefore, the potential for tort liability exists until the defense is established. The court noted that liability is determined at the time the injury occurs.

In Ballweg v. City of Springfield (1986), 114 Ill.2d 107, 102 Ill.Dec. 360, 499 N.E.2d 1373, a products liability action, the supreme court found a good faith settlement had been reached. Ballweg was a passenger on Phillip Henrici's sailboat, which hit a power line over Lake Springfield. Ballweg's estate sued the manufacturer, seller, and designer of the boat. He settled with the city, and Henrici. The city and Henrici were third-party defendants in a counterclaim brought by the manufacturers and sellers of the product. The third-party plaintiffs, manufacturers of the boat, argued the settlement lacked consideration and therefore was in bad faith because the statute of limitations had run on the direct action prior to the settlement.

The...