Ericksen v. Rush Presbyterian St. Luke's Medical Center

• Decision Date: 02 May 1997
• Docket Number: No. 1-95-3490,1-95-3490
• Parties: , 224 Ill.Dec. 518 Danuta ERICKSEN, Administratrix of the Estate of Bozena Bajaj, both in that capacity and as the assignee of certain rights of Kenneth Moore, M.D., Plaintiff-Appellant, v. RUSH PRESBYTERIAN ST. LUKE'S MEDICAL CENTER, Defendant-Appellee.
• Court: United States Appellate Court of Illinois

Page 79

682 N.E.2d 79

289 Ill.App.3d 159, 224 Ill.Dec. 518

Danuta ERICKSEN, Administratrix of the Estate of Bozena Bajaj, both in that capacity and as the assignee of certain rights of Kenneth Moore M.D., Plaintiff-Appellant, v. RUSH PRESBYTERIAN ST. LUKE'S MEDICAL CENTER, Defendant-Appellee.

No. 1-95-3490.

Appellate Court of Illinois First District, Fifth Division.

May 2, 1997.

Rehearing Denied June 24, 1997.

Feiwell and Meenan, Chicago (Daniel C. Meenan, Jr., of counsel); and Kralovec, Jambois & Schwartz, Chicago (John B. Kralovec and Monica L. David, of counsel), for Plaintiff-Appellant.

Davis, Miner, Barnhill & Galland, P.C., Chicago (George F. Galland, Jr., of counsel), for Plaintiff-Appellee.

Presiding Justice HARTMAN delivered the opinion of the court:

This appeal involves one of three successive and distinct Cook County Circuit Court actions. The initiating litigation by plaintiff was for medical malpractice, followed by supplementary proceedings in which she sought assets of the judgment debtor, and the last being a contract action by plaintiff as an assignee of the judgment debtor. Although only the contract action is presently being appealed, each will be explained briefly for purposes of understanding the nature of the present controversy.

Plaintiff, Danuta Ericksen, as administratrix of the estate of Bozena Bajaj (Ericksen), appeals the circuit court order in 94 L 13645, the contract action (contract action), in which her claim as assignee of her judgment debtor's, Dr. Kenneth L. Moore's (Dr. Moore) employment contract rights for indemnity against his former employer, Rush Presbyterian St. Luke's Medical Center (Rush), was dismissed.

The circuit court's basis for dismissing Ericksen's contract action was that a preceding court order in the supplementary proceedings (84 L 13737) (citation action) had ruled that a release signed by Ericksen and Rush barred Ericksen from proceeding any further in her pursuit of Dr. Moore's indemnity claim against Rush.

Ericksen sued Dr. Moore, her decedent's treating physician, and Rush, in 84 L 13737, a medical malpractice action (malpractice action), after her decedent died on January 7, 1984 in Rush's emergency room. Decedent first saw Dr. Moore in 1980, complaining of severe headaches, which Dr. Moore diagnosed as migraines. He treated decedent for her headaches during the time he worked as a resident physician for Rush, a period which extended from November 5, 1980, to June 30, 1981. Dr. Moore continued treating her thereafter as his private patient until January 5, 1984, when she was taken to Rush's emergency room. An autopsy revealed that she had suffered from hydrocephalus, a treatable brain condition.

The record reveals that when he began working for Rush, Dr. Moore entered into an understanding with Rush under a "House Staff Officer's Agreement," in which Rush promised to pay for legal obligations incurred by the doctor during the course of his Rush employment. The House Staff Officer's Agreement provided Dr. Moore with potential coverage under another document entitled, "Amended and Restated General/Professional Liability Loss Fund Trust Agreement" (Trust Fund). These documents evidenced up to $2 million in indemnification coverage per occurrence, and excess insurance of $5 million, or more, for liability resulting from malpractice claims. The Trust Fund was a private resource fund Rush established to insure itself and its employees against malpractice liability claims. Continental Illinois National Bank and Trust Company of Chicago (Continental) served as its fund trustee.

Ericksen was not apprised of the Trust Fund's existence or its potential benefit to Dr. Moore at the time of her settlement with Rush in the malpractice action in 1989, nor until after the jury's verdict against Dr. Moore and judgment on that verdict had been entered on June 12, 1991, although Ericksen previously had made inquiry of Rush as to potential malpractice coverage for Dr. Moore. Ericksen was not advised of the existence of the House Staff Officer's Agreement until Rush attached a copy of it to Rush's motion to dismiss the present contract action.

Ericksen's malpractice action against Dr. Moore was tried to a jury in 1991. At trial, Dr. Moore was represented by attorneys employed through his private malpractice insurance carrier, Medical Protective Company of Fort Wayne, Indiana (Medical Protective). Expert witnesses testified that Dr. Moore deviated from the standard of care during the entire time he treated decedent between 1980 and 1984, asserting that Dr. Moore could have diagnosed the cause of decedent's headaches correctly as early as November 1980 by running a CT scan, and could have treated her condition, which might have prevented her death. A jury returned a verdict against Dr. Moore, awarding Ericksen more than $5 million in damages.

Meanwhile, Rush had retained its own attorneys after the initial lawsuit was filed. Although Rush did not participate in Dr. Moore's malpractice trial, counsel for Dr. Moore kept Rush's attorney informed of the status of the case, without telling Ericksen's attorney about these discussions. Rush's legal department also sent written confirmation of Dr. Moore's indemnitee status to Medical Protective, acknowledging Dr. Moore's coverage by Rush for any suits arising from the time he worked at Rush.

As previously noted, in July 1989, two years before trial, Ericksen and Rush entered into a release agreement. In return for a cash settlement, Ericksen agreed to release Rush in the malpractice action, "its agents, servants, employees, officers, insurers, successors and assigns, * * * from all claims and demands * * * arising or growing out of an accident, casualty or event which occurred on or about the 5th day of January, 1984 * * *." (Emphasis added) (E-R Release). The circuit court approved the settlement, in which Rush would pay Ericksen $36,123 and her attorney $12,000, and dismissed her claim against Rush.

In a post-trial motion before the trial judge, Dr. Moore argued for the first time that the E-R Release also released him from liability as a former Rush employee, and was given leave to file an affirmative defense based upon that release. In September 1991, the circuit court denied Dr. Moore's motion, holding among other things that Ericksen's settlement agreement with Rush did not release Dr. Moore from liability to Ericksen and the Estate. The court made this order final and appealable.

Ericksen and Dr. Moore subsequently entered into a Covenant Not to Execute Against Certain Assets (Covenant) Dr. Moore authorized payment by Medical Protective to the Estate of $1,030,000, the maximum amount of coverage provided. At the same time, Dr. Moore assigned his indemnity claim against Rush to Ericksen as partial satisfaction of the remainder of the $5 million judgment, in exchange for her promise not to pursue Dr. Moore's personal assets.

When Rush learned of the Covenant, it moved to intervene in 84 L 13737, the initial litigation. The circuit court then attempted to clarify its previous order, denying the post-trial motion, but explaining that it "did not determine and was not intended to determine" whether the E-R Release barred Ericksen from recovering against Rush as an assignee of Dr. Moore's indemnity claim. The court declined to rule or make any findings regarding a potential indemnity claim against Rush, determining that this issue was not properly before the court.

After Ericksen learned of Rush's Trust Fund, ostensibly covering Dr. Moore, she filed supplementary proceedings under section 2-1402 of the Code of Civil Procedure (735 ILCS 5/2-1402 (West 1994)) (section 2-1402) and caused citation notices to issue and be served upon Rush and Continental (citation action) in 84 L 13737. That supplementary proceeding must be revisited here because the circuit court order in the present contract action appeal was based upon its reading of the order in the citation action, in finding that Ericksen was collaterally estopped from proceeding in the contract action to enforce Dr. Moore's right to indemnity from Rush and satisfy the balance of her judgment against Dr. Moore with the excess insurance. Continental and Rush jointly moved to quash the citation and, in the alternative, moved for summary judgment. Ericksen also moved for summary judgment.

Rush and Continental argued in the supplementary proceedings that they could not be liable to Ericksen for two reasons: first, the E-R Release barred the contract claim; and second, the money in the Trust Fund did not constitute assets that could be reached in a section 2-1402 citation action.

At a hearing to decide these supplementary proceeding motions, the circuit court made separate findings regarding Ericksen's claims against Continental and Rush. First, the court granted Continental's motion, ruling that Continental had no obligation to satisfy the Estate's judgment against Dr. Moore, because Ericksen, as Dr. Moore's assignee, had no rights in the Trust Fund greater than Dr. Moore, and Dr. Moore had no individual right in the Trust Fund administered by Continental except as directed by Rush under terms of the trust. Then, the circuit court dismissed the citation action against Rush, holding that it did not have jurisdiction to decide whether Rush was obligated to indemnify Dr. Moore or his assignee. The court explained that Dr. Moore's indemnity claim was unliquidated and not a section 2-1402 asset that could be reached in supplementary proceedings. Because Ericksen, as assignee of Dr. Moore's claim, stood in Dr. Moore's shoes, the court had no jurisdiction over her indemnity action against Rush. The court correctly concluded that Ericksen's claim was "an unliquidated claim based upon [Dr. Moore's] contract rights in [sic] which they may feel free to pursue in any other court at any other time in any other place that has proper jurisdiction but not here."

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