Hopkins v. Holt, s. 1-87-1900

• Decision Date: 21 February 1990
• Docket Number: 87-2069 and 87-2078,87-2025,Nos. 1-87-1900,s. 1-87-1900
• Citation: 194 Ill.App.3d 788,141 Ill.Dec. 407,551 N.E.2d 400
• Parties: , 141 Ill.Dec. 407 William HOPKINS, Plaintiff-Appellant, v. Roger F. HOLT, M.D., Defendant-Appellee. William HOPKINS, Plaintiff-Appellee, v. JACKSON PARK HOSPITAL FOUNDATION, Roland Lim, D.P.M., Robert J. Sawchyn, M.D., and Roger F. Holt, M.D., Defendants-Appellants.
• Court: United States Appellate Court of Illinois

Page 400

551 N.E.2d 400

194 Ill.App.3d 788, 141 Ill.Dec. 407

William HOPKINS, Plaintiff-Appellant, v. Roger F. HOLT, M.D., Defendant-Appellee.

William HOPKINS, Plaintiff-Appellee, v. JACKSON PARK HOSPITAL FOUNDATION, Roland Lim, D.P.M., Robert

J. Sawchyn, M.D., and Roger F. Holt, M.D.,

Defendants-Appellants.

Nos. 1-87-1900, 87-2025, 87-2069 and 87-2078.

Appellate Court of Illinois First District, Third Division.

Feb. 21, 1990.

Paul B. Episcope, Ltd., Chicago, for plaintiff-appellant William Hopkins.

Wildman, Harrold, Allen and Dixon, Chicago, for defendant-appellant Roland Lim, D.P.M..

French, Rogers, Kezelis and Kominiarek, PC, Chicago, for defendant-appellant Robert J. Sawchyn, M.D.

Seyfarth, Shaw, Fairweather and Geraldson, Chicago, for defendant-appellant, Jackson Park Hosp.

John J. Kakacek, Stack and Filpi Chartered, Chicago, for defendant-appellee/cross appellant, Roger F. Holt.

Presiding Justice CERDA delivered the opinion of the court:

Plaintiff, William Hopkins, brought a medical malpractice action against defendants, Jackson Park Hospital Foundation, Roger F. Holt, M.D., Ronald Lim, D.P.M., Mercy Hospital and Medical Center, and Robert J. Sawchyn, M.D. After the action was dismissed because of a settlement, plaintiff was informed that Dr. Holt's insurer had declared bankruptcy. Plaintiff brought a declaratory judgment action against Dr. Holt in an effort to obtain the settlement amount from him personally but summary judgment was granted in favor of Dr. Holt. Plaintiff then obtained a vacatur of the dismissal of the malpractice action. Defendants have appealed from the vacatur of the dismissal and plaintiff has appealed from the granting of Dr. Holt's motion for summary judgment.

Plaintiff alleged in his medical malpractice action that he had been a patient at Jackson Park Hospital where Drs. Holt and Lim performed two surgeries on his foot. Subsequently plaintiff was treated at Mercy Hospital by Dr. Sawchyn. Mercy Hospital filed a motion for summary judgment which was granted. The action against the remaining defendants was settled for $101,000, and on February 21, 1985, it was dismissed with prejudice.

On May 14, 1985, plaintiff filed a complaint for declaratory judgment seeking a judgment against Dr. Holt for $100,000 of the settlement. Plaintiff alleged that he agreed to accept in settlement $100,000 from Dr. Holt and $1000 from Jackson Park. Plaintiff, Jackson Park, Dr. Holt, and Dr. Holt's insurer, Bercanus Insurance Company ("the insurer") were the parties to the written settlement agreement. In the settlement agreement in consideration of "the payment by the Insurance Carrier for and on behalf of Holt and Jackson Park Hospital to and on behalf of Hopkins," it was agreed that an order dismissing the malpractice action would be obtained. The agreement further stated that upon execution, the insurer "for and on behalf of Holt" would deliver a check of $50,000 to plaintiff and to his attorney. Jackson Park on its own behalf would deliver a check for $1000, and the insurer "for and behalf of Holt" would deliver a check for $50,000 45 days after execution of the agreement.

The declaratory judgment complaint also alleged that on April 8, 1985, plaintiff was advised by James Murray, Dr. Holt's counsel, that Dr. Holt's insurer was in liquidation and that no settlement payment would be made. Dr. Holt denied in his third amended answer that he personally offered plaintiff $100,000 in settlement. Dr. Holt alleged that on January 24, 1985, Murray informed plaintiff's attorney that the insurer would tender its policy limits of $100,000 to plaintiff in return for a release of all claims against Dr. Holt. He also alleged that the parties and their attorneys intended that plaintiff would be paid the $100,000 only by the insurer and that Dr. Holt would not contribute any of his personal funds to the settlement.

Plaintiff moved for summary judgment in the declaratory judgment action. Plaintiff's attorney stated in his supporting affidavit that he was not informed of any limitation or restriction on Murray's authority to negotiate a settlement for Dr Holt. Dr. Holt swore in his affidavit in opposition that he did not expect, intend or knowingly agree to pay any portion of the settlement. He expected and intended that only the insurer would be responsible for the settlement. He would not have settled if he had known that he could have been responsible for paying any portion of the settlement.

Plaintiff's motion for summary judgment was denied apparently at the hearing on November 13, 1986, although the order was entered on November 21, 1986, and on December 8, 1986, Dr. Holt filed his motion for summary judgment and argued that an attorney could not bind a client to a settlement agreement unless the client knew of and specifically agreed to the terms of the settlement. Dr. Holt argued that he never authorized Murray to bind him to pay the settlement amount but specifically directed him to settle the matter on terms providing that he was not to be bound to pay the settlement amount. Dr. Holt's motion was granted on May 22, 1987, and plaintiff appeals from that order.

Plaintiff filed a petition pursuant to section 2-1401 (Ill.Rev.Stat.1987, ch. 110, par. 2-1401) to vacate the order of February 21, 1985, dismissing the malpractice action. The petition in the record does not show the date of filing but the parties apparently agree that it was filed November 19, 1986, which was six days after the denial of plaintiff's motion for summary judgment in the declaratory judgment action. Plaintiff alleged that he had not received any of the settlement funds and argued that therefore there was no consideration for the dismissal order. Plaintiff's attorney's supporting affidavit stated that after 30 days from the dismissal, plaintiff's attorney was advised for the first time that the insurer was in liquidation and that the settlement funds would not be paid. Jackson Park alleged in its response to the petition that it drew a $1000 check payable to plaintiff and his attorney and mailed it. On May 22, 1987, plaintiff's petition to vacate the order of dismissal was granted and the case was reinstated as to all parties.

Plaintiff appeals from the entry of summary judgment in favor of Dr. Holt in the declaratory judgment action. He argues that: (1) the settlement agreement was valid and Dr. Holt should be bound by it; (2) Murray had the authority to settle the malpractice action as Dr. Holt's agent and no limitation on his authority was communicated to plaintiff; and (3) no mutual mistake of fact existed upon which the settlement agreement could be reformed.

The plaintiff relies on Hill v. Chicago Housing Authority (1974), 17 Ill.App.3d 65, 308 N.E.2d 45, to support his argument that an attorney of record for a defendant can enter into a settlement and dismissal of a case that binds the client to pay the amount of the settlement even though the client never gave prior approval and the insurer became insolvent. The C.H.A. in that case argued that the settlement was not binding because it never authorized settlement nor subsequently ratified it and that a subsequent "change in circumstances" (the insurer's insolvency) required that the settlement be set aside. The C.H.A. from the beginning, however, did not say anything to its attorney and allowed the attorney a free hand to handle and settle the case any way the attorney saw fit. In the instant case, Dr. Holt hired a private attorney to protect him. His private attorney notified his attorney of record to settle only on the condition that Dr. Holt would not be personally liable. The holding in Hill therefore would not be binding in this case.

Plaintiff alleged that Dr. Holt's attorney of record, Murray, had apparent authority to bind Holt personally to pay the settlement. Where attorneys negotiate settlements containing terms their clients did not approve, Illinois courts hold that the clients are not bound by those terms. In the case of City of Des Plaines v. Scientific Machinery (1972), 9 Ill.App.3d 438, 292 N.E.2d 154, the defendant never agreed to a term in the oral settlement which required it to discontinue its business. The court held:

"In the case at bar, we believe that the discretion of the court [to refuse to vacate the decree] was substantially limited by the established rule of law that an attorney employed to defend a suit has no authority to compromise, to give up any right of his client, or to consent to judgment against his client without the express consent or authorization of that client." Des Plaines, 9 Ill.App.3d at 444 .

In the instant case, Murray, the attorney of record, had no authority to bind Dr. Holt personally to pay the settlement amount of 100,000.00. The entry of summary judgment in favor of Dr. Holt was proper.

In addition, the settlement agreement clearly stated that the action would be dismissed in exchange for the payment by the insurer. It did not provide that Dr. Holt personally was to pay the settlement and did not make him a guarantor of the insurer's promise to pay. Plaintiff agreed to release his claims in exchange for $100,000 from the insurer and $1000 from Jackson Park.

Drs. Lim and Sawchyn argue that plaintiff failed to act with due diligence in the malpractice action because he did not vigorously pursue claims against them, because he did not attempt to settle with them, because they were not parties to the settlement agreement, and because there was no inquiry by him regarding the insurer's financial security prior to the settlement.

All defendants argue that plaintiff lacked due diligence in filing his section 2-1401 petition because he chose to enforce the settlement agreement in the declaratory judgment action and did not file the section 2-1401 petition until about 18 months after the dismissal. Drs. Lim and Sawchyn argue that a section 2-1401 petition may be granted even where there was a lack...