Hana v. Ill. State Med. Inter-Insurance Exch. Mut. Ins. Co.

• Decision Date: 16 March 2018
• Docket Number: No. 1–16–2166,1–16–2166
• Citation: 105 N.E.3d 35,2018 IL App (1st) 162166
• Parties: Alizabeth HANA and Elvin Hana, Plaintiffs–Appellees, v. ILLINOIS STATE MEDICAL INTER-INSURANCE EXCHANGE MUTUAL INSURANCE COMPANY, Defendant–Appellant.
• Court: United States Appellate Court of Illinois

2018 IL App (1st) 162166

105 N.E.3d 35

Alizabeth HANA and Elvin Hana, Plaintiffs–Appellees,

v.ILLINOIS STATE MEDICAL INTER-INSURANCE EXCHANGE MUTUAL INSURANCE COMPANY, Defendant–Appellant.

No. 1–16–2166

Appellate Court of Illinois, First District, FIFTH DIVISION.

Opinion filed: March 16, 2018

Stamos & Trucco, LLP, of Chicago (James J. Stamos and Benjamin F. Klimek, of counsel), and Law Offices of Michael T. Reagan, of Ottawa (Michael T. Reagan, of counsel), for appellant.

Law Offices of Michael W. Rathsack, of Chicago (Michael W. Rathsack, Elizabeth A. Kaveny, and Michael L. Gallagher, of counsel), for appellees.

JUSTICE ROCHFORD delivered the judgment of the court, with opinion.^*

¶ 1 Plaintiffs-appellees, Alizabeth Hana and Elvin Hana, filed this suit against defendant-appellant, Illinois State Medical Inter–Insurance Exchange Mutual Insurance Company (ISMIE), seeking to recover for ISMIE's alleged bad-faith failure to settle an underlying lawsuit. A jury ruled in favor of plaintiffs, entered a multimillion dollar verdict against ISMIE, and ISMIE thereafter appealed raising a host of issues. For the following reasons, we reverse and remand for a new trial.

¶ 2 I. BACKGROUND

¶ 3 Because of the limited number of issues we address in this opinion, we recite here only those facts necessary to our resolution of this appeal.

¶ 4 A. Underlying Medical Malpractice Litigation

¶ 5 The underlying medical malpractice suit (Hana v. Chams, No. 05–L–7692 (Cir. Ct. Cook County, Nov. 10, 2015) ) was brought by plaintiffs against, inter alia , ISMIE's insureds, Dr. Albert Chams and Dr. Joyce Chams—as well as their joint-obstetrics practice group, Chams Women's Health Care, S.C.—in addition to Rush North Shore Medical Center (Rush North Shore) and two of Rush North Shore's emergency room doctors. The underlying suit sought to recover for deficient prenatal care provided by the defendants, which resulted in physical injury to Alizabeth and the death of plaintiffs' child, Mary. Alizabeth was appointed as the special administrator of Mary's estate, and a wrongful death claim was included in the complaint. ISMIE accepted defense of the underlying suit without reservation and retained an attorney to represent the Chamses.

¶ 6 Prior to trial, a number of the defendants were either dismissed from the case or were awarded summary judgment in their favor, and three of the defendants settled with plaintiffs. Specifically, the trial court approved a $1.5 million settlement among plaintiffs, Rush North Shore, and two of Rush North Shore's emergency room doctors. These three defendants were then dismissed from the underlying suit. As a part of this settlement, payments were made to plaintiffs' health insurers to settle any liens they might have on plaintiffs' recovery in the underlying case. This matter thereafter proceeded to a jury trial in May of 2009, involving only plaintiffs' claims against Dr. A. Chams, Dr. J. Chams, and Chams Women's Health Care, S.C.

¶ 7 Following the trial, the jury returned a general verdict in favor of plaintiffs and against the three remaining defendants. The jury awarded a total of $6,171,118.67 in damages, which included (1) $621,118.67 for Alizabeth's personal injuries; (2) $4.55 million for Mary's survival claim; and (3) $1 million for the wrongful death claim. Pursuant to a posttrial motion, the trial court reduced this amount by $1.5 million to account for the pretrial settlement. The defendants' subsequent posttrial motion for a new trial was denied, and on appeal we affirmed. Hana v. Chams , 2011 IL App (1st) 100146-U, 2011 WL 10068775.

¶ 8 After ISMIE paid its policy limits on the underlying verdict, the Chamses were personally responsible for the $1.35 million balance. In exchange for a covenant not to enforce that excess judgment against the Chamses, plaintiffs were assigned whatever rights the Chamses might have with respect to a bad faith claim for ISMIE's failure to settle the underlying litigation within the policy limits.

¶ 9 B. Bad Faith Lawsuit

¶ 10 Plaintiffs, thereafter, filed this suit seeking both, $1.35 million in compensatory damages for ISMIE's bad faith refusal to settle in count I, and $10 million in punitive damages for ISMIE's allegedly willful and wanton breach of fiduciary duty in count II. In count II, plaintiffs also sought an award of costs, attorney fees, and penalties pursuant to section 155 of the Illinois Insurance Code. 215 ILCS 5/155 (West 2016). Plaintiffs also filed a jury demand. Pursuant to Public Act 98–1132 (eff. June 1, 2015), which amended section 2–1105(b) of the Code of Civil Procedure (Code) ( 735 ILCS 5/2–1105(b) (West 2016) ) to provide for six-person juries in civil cases, and over the objection of ISMIE, this matter was tried before a six-person jury.

¶ 11 That jury ultimately found in favor of plaintiffs on both counts, awarding plaintiffs $1.35 million in compensatory damages and $13 million in punitive damages. In addition, the trial court awarded plaintiffs over $1.5 million in costs, attorney fees, interest, and penalties. ISMIE timely appealed.

¶ 12 II. ANALYSIS

¶ 13 ISMIE raises a constitutional issue as to the size of the jury in this case, as well as a number of other issues on appeal. However, because we conclude that this matter must be remanded for a new trial due to the denial of ISMIE's constitutional right to a 12–person jury, and because we find that issue to be dispositive, we need only address that issue. Nevertheless, we will also address three issues related to the admissibility of evidence and the appropriateness of jury instructions that are likely to recur upon remand.

¶ 14 Thus, we begin by considering ISMIE's argument that the trial court improperly rejected its contention that it was entitled to a new trial because of the denial of its constitutional right to a 12–person jury.

¶ 15 In considering whether a motion for a new trial should be granted, the trial court should set aside a jury's verdict only if it is contrary to the manifest weight of the evidence or a party has been denied a fair trial. Maple v. Gustafson , 151 Ill. 2d 445, 454, 177 Ill.Dec. 438, 603 N.E.2d 508 (1992). The trial court is in a superior position to consider errors that occurred, the fairness of the trial to all parties, and whether substantial justice was accomplished. Smith v. City of Evanston , 260 Ill. App. 3d 925, 932–33, 197 Ill.Dec. 810, 631 N.E.2d 1269 (1994). A trial court's ruling on a motion for new trial will not be reversed unless there is an affirmative showing that it clearly abused its discretion. Gustafson , 151 Ill. 2d at 455, 177 Ill.Dec. 438, 603 N.E.2d 508.

¶ 16 As noted above, Public Act 98–1132 (eff. June 1, 2015) amended section 2–1105(b) of the Code ( 735 ILCS 5/2–1105(b) (West 2016) ) to provide for 6–person juries in civil cases and to eliminate the ability of either party to request a jury of 12. It was pursuant to the amended version of section 2–1105(b) that this matter was tried before a 6–person jury.

¶ 17 However, in Kakos v. Butler , 2016 IL 120377, ¶ 28, 407 Ill.Dec. 469, 63 N.E.3d 901, our supreme court found that "[b]ecause the size of the jury—12 people—was an essential element of the right of trial by jury enjoyed at the time the 1970 Constitution was drafted, * * * jury size is an element of the right that has been preserved and protected in the constitution." Our supreme court therefore found the portion of Public Act 98–1132 amending section 2–1105(b) and reducing the size of a jury in civil trials to be facially unconstitutional under the Illinois Constitution and therefore void ab initio . Id. ¶ 29.

¶ 18 Thus, because ISMIE was denied its constitutional right to a 12–person jury, it is apparent that it was denied a fair trial. This matter must therefore be remanded for a new trial. Gustafson , 151 Ill. 2d at 454, 177 Ill.Dec. 438, 603 N.E.2d 508. In reaching this conclusion, we reject three specific arguments raised by plaintiffs on appeal.

¶ 19 First, plaintiffs contend that ISMIE failed to preserve this issue for appeal by failing to obtain a ruling from the trial court on its objection to seating a 6–person jury. However, the record clearly reflects that ISMIE filed a pretrial written motion, asking the trial court to declare Public Act 98–1132 unconstitutional and to seat a 12–person jury. Moreover, and contrary to plaintiffs' assertions on appeal, the record reflects that this motion was discussed on the record and specifically denied by the trial court. This issue was thereafter included in ISMIE's posttrial motion. Therefore, we find that ISMIE properly preserved this issue for appeal.

¶ 20 Second, plaintiffs argue that ISMIE is not entitled to a new trial because no prejudice can be established where "it is pure speculation to say the verdict would have been different if there had been more jurors." However, as noted above, our supreme court concluded that the portion of Public Act 98–1132 amending section 2–1105(b) and reducing the size of a jury in civil trials was "facially unconstitutional and void ab initio ." Kakos , 2016 IL 120377 ¶ 29, 407 Ill.Dec. 469, 63 N.E.3d 901. Thus, "the statute was constitutionally infirm from the moment of its enactment and is, therefore, unenforceable. As a consequence, we will give no effect to the unconstitutional statute." People v. Blair , 2013 IL 114122, ¶ 30, 369 Ill.Dec. 126, 986 N.E.2d 75. Our supreme court's decision in Kakos with respect to the amended version of section 2–1105(b) thus "stands as an impediment to the operation and enforcement of the statute." Id. Therefore, the trial court had no authority to try this matter before a six-person jury, nor did it have any authority to enter a judgment upon the verdict reached by such a jury. The verdict and judgment simply have no legal effect, and may not now be affirmed on direct appeal. See Heastie v. Roberts , 226 Ill. 2d 515, 535, 315 Ill.Dec. 735, 877 N.E.2d 1064 (2007) (decisions of our supreme court apply retroactively...