Hartley v. North American Polymer Company, Ltd., 120320 ILCA1, 1-19-2619

Docket Nº1-19-2619, 1-19-2620
Opinion JudgeGORDON PRESIDING JUSTICE.
Party NameWENDY HARTLEY, as Special Administrator of the Estate of Kevin Hartley, Deceased, Plaintiff-Appellee, v. NORTH AMERICAN POLYMER COMPANY, LTD., an Illinois Corporation, and SAMAX ENTERPRISES, INC., a New York Corporation, Defendants and Third-Party Plaintiffs-Appellants Tony Hartley, Individually and d/b/a Hartley's Painting, Third-Party ...
AttorneyAttorneys for Appellant: Michael D. Krause, Rachel D. Kiley, and Patrick W. Etchingham, of Bollinger Connolly Krause LLC, of Chicago, for appellant North American Polymer Company, Ltd. James P. McCarthy, Paul Van Lysebettens, and Paul B. O'Flaherty, Jr., of Gunty & McCarthy, of Chicago, for appel...
Judge PanelGORDON PRESIDING JUSTICE delivered the judgment of the court, with opinion. Justices Hall and Lampkin concurred in the judgment and opinion.
Case DateDecember 03, 2020
CourtUnited States Appellate Court of Illinois, First District

2020 IL App (1st) 192619

WENDY HARTLEY, as Special Administrator of the Estate of Kevin Hartley, Deceased, Plaintiff-Appellee,

v.

NORTH AMERICAN POLYMER COMPANY, LTD., an Illinois Corporation, and SAMAX ENTERPRISES, INC., a New York Corporation, Defendants and Third-Party Plaintiffs-Appellants

Tony Hartley, Individually and d/b/a Hartley's Painting, Third-Party Defendant-Appellee.

Nos. 1-19-2619, 1-19-2620

Court of Appeals of Illinois, First District, Fourth Division

December 3, 2020

Appeal from the Circuit Court of Cook County. No. 18 L 004262, The Honorable Melissa A. Durkin, Judge Presiding.

Attorneys for Appellant: Michael D. Krause, Rachel D. Kiley, and Patrick W. Etchingham, of Bollinger Connolly Krause LLC, of Chicago, for appellant North American Polymer Company, Ltd.

James P. McCarthy, Paul Van Lysebettens, and Paul B. O'Flaherty, Jr., of Gunty & McCarthy, of Chicago, for appellant Samax Enterprises, Inc.

Attorneys for Appellee:Mathew K. Hargrave, of Best, Vanderlaan & Harrington, of Chicago, for appellee Tony Hartley d/b/a Hartley's Painting.

Eric D. Jones, of Tarpey, Jones & Schroeder, LLC, of Chicago, for appellee Wendy Hartley.

GORDON PRESIDING JUSTICE delivered the judgment of the court, with opinion. Justices Hall and Lampkin concurred in the judgment and opinion.

OPINION

GORDON PRESIDING JUSTICE.

¶ 1 Plaintiff Wendy Hartley filed a wrongful death lawsuit based on products liability and negligence after her son, Kevin Hartley, died from inhaling fumes from a product manufactured by defendant Samax Enterprises, Inc. (Samax) and sold by defendant North American Product Company, Ltd. (NAPCO). Defendants, in turn, filed third-party complaints for contribution against Tony Hartley and his business, Hartley's Painting (collectively, Hartley), decedent's uncle and the owner of the business where decedent was working at the time of his death. Plaintiff and Hartley entered into a settlement agreement, settling any claims between plaintiff and Hartley for $50, 000, and sought a finding that the settlement was made in good faith. The trial court initially declined to enter a good faith finding but, after granting a motion to reconsider, entered an order finding that the settlement between plaintiff and Hartley was made in good faith. Defendants appeal1 and, for the reasons that follow, we reverse.

¶ 2 BACKGROUND

¶ 3 On April 26, 2018, plaintiff was appointed as special administrator of decedent's estate and, on the same day, filed a complaint against defendant NAPCO; defendant Samax was added as a defendant on June 29, 2018, when plaintiff filed an amended complaint. The amended complaint alleged that Samax manufactured, and NAPCO sold, a product called "NAPCO White Lightning Low Odor Stripper," which was used in bathtub refinishing and which contained a volatile chemical known as methylene chloride. Decedent, who performed rehabilitation and construction work, was 21 years old and used the product on April 27, 2017, while refinishing a bathtub at an apartment complex in Nashville, Tennessee. Decedent was wearing a respirator mask and gloves, but was overcome by fumes from the product and was rendered unconscious; he died the next day.

¶ 4 The complaint set forth two causes of action against each defendant: one for strict products liability and one for negligence. Both alleged that the product was unreasonably dangerous and toxic, and that defendants did not adequately warn users about the danger and did not adequately test the product to ensure that it was safe for its reasonable anticipated use.

¶ 5 On July 24, 2018, NAPCO filed a third-party complaint for contribution against Hartley, alleging that, at the time of decedent's death, he was employed by Hartley. NAPCO alleged that Hartley was negligent in failing to properly train or supervise decedent with respect to working with products containing methylene chloride and failed to provide decedent with proper protection equipment. NAPCO alleged that, to the extent that any judgment was entered against NAPCO in plaintiffs litigation, it was entitled to contribution from Hartley for any damages in excess of NAPCO's pro rata share of liability.

¶ 6 On December 11, 2018, plaintiff filed a motion for a good faith finding, claiming that Hartley, through his insurance carrier, had offered $50, 000 to settle directly with plaintiff in order to extinguish any potential liability. Plaintiff accepted the settlement offer and requested a finding that the settlement was made in good faith as a result of arm's-length settlement negotiations. Plaintiff claimed that the settlement was reached after an arm's-length negotiation between plaintiffs counsel and counsel hired by Hartley's insurance carrier and was for a substantial sum of money. Additionally, plaintiff claimed that Hartley had "numerous defenses to [NAPCO's] claims against him, including jurisdictional defenses, choice of law defenses and liability defenses."[2]

¶ 7 On January 4, 2019, Hartley filed a motion to dismiss the third-party complaint pursuant to section 2-619 of the Code of Civil Procedure (Code) (735 ILCS 5/2-619 (West 2018)), based on the settlement or, alternatively, based on Tennessee law. Hartley claimed that the settlement with plaintiff was made in good faith and that there was no evidence of any fraud or collusion. Hartley also claimed that he had an insurance policy with Ohio Security Insurance Company, which "has taken the position that the Third Party Complaint is not covered under Tony Hartley's CGL policy because it contains (as is typical), an employer's liability exclusion." Therefore, if Hartley was found to be the employer of decedent, as alleged in the third-party complaint, Hartley's insurance policy would not apply and Hartley would not be able to pay any judgment that was entered against him, meaning that "NAPCO has a real possibility of recovering $0 on its third party claim against" him.

¶ 8 In the alternative, Hartley claimed that the third-party claim should be governed by Tennessee law, as the alleged negligence occurred in Tennessee. In that case, Hartley claimed that the third-party complaint should be dismissed because there was no third-party contribution available under Tennessee law under the circumstances set forth in the complaint.

¶ 9 On January 14, 2019, Samax filed a motion for leave to file a third-party complaint against Hartley, which was granted on January 17, 2019. Samax's third-party complaint was similar to NAPCO's, in that it alleged that decedent was employed by Hartley at the time of his death and Hartley was negligent in failing to train and supervise decedent with respect to the use of products containing methylene chloride and failed to provide the proper safety equipment to decedent.

¶ 10 On January 17, 2019, defendants filed a joint motion for limited discovery, claiming that they needed discovery concerning the settlement, given that Hartley was decedent's uncle and was "attempting to settle with Plaintiff for peanuts compared to his potential exposure." Defendants claimed that the discovery propounded so far showed that Hartley had settled with the Tennessee Occupational Safety and Health Administration (TOSHA) for 13 violations of regulations in connection with decedent's death, 12 of which were marked as" '[s]erious.' Additionally, defendants pointed to the familial relationship between plaintiff and Hartley, and noted that plaintiff had not sued Hartley directly. Defendants claimed that "[t]he parties and the court need to ascertain the relationship between the parties, the extent to which that familial relationship impacted any settlement negotiations, the limits of any applicable insurance policies, and the conduct of the parties." Accordingly, defendants sought limited discovery in the form of interrogatories, requests for production, and the depositions of plaintiff and Hartley.

¶ 11 On the same day, the trial court entered an order granting defendants "leave to issue written discovery limited to insurance held by Tony Hartley and communications among the parties relating to settlement." Defendants issued written discovery to Hartley and three insurance companies. On February 27, 2019, Hartley filed a motion to quash, claiming that he had responded to any appropriate discovery requests and that defendants' remaining requests, as well as their subpoenas to the insurers, were overly broad and irrelevant to the issue of the good-faith finding.

¶ 12 Attached to Hartley's motion to quash were copies of his discovery responses. In his answers to interrogatories, Hartley indicated that the only discussions concerning settlement occurred between plaintiffs attorney and Hartley's attorney, and Hartley did not have any communications with plaintiff himself. Hartley also indicated that he had an insurance policy with Ohio Security Insurance Company that had a limit of $1 million for each occurrence. However, Hartley "is aware that Ohio Security Insurance Company has taken the position that the Third Party Complaint is not covered under Tony Hartley's CGL policy because it contains an employer's liability exclusion." Hartley's response to defendants' requests to produce indicated that he produced e-mails between the attorneys regarding settlement and a copy of his insurance policy.

¶ 13 On March 19, 2019, defendants filed a joint motion for additional discovery, which requested the depositions of plaintiff and Hartley, and an in camera inspection of documents responsive to the subpoenas issued to the insurance companies. On March 20, 2019, Hartley filed a response to the motion, objecting to any additional discovery. Hartley claimed that defendants had "an abundance of discovery in their possession," totaling...

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