Illinois Tool Works, Inc. v. INDEPENDENT MACH. CORP.

• Decision Date: 31 December 2003
• Docket Number: No. 1-02-2163.,1-02-2163.
• Citation: 280 Ill.Dec. 707,345 Ill. App.3d 645,802 N.E.2d 1228
• Parties: ILLINOIS TOOL WORKS, INC., Plaintiff-Appellant and Cross-Appellee, v. INDEPENDENT MACHINE CORPORATION, Defendant-Appellee and Cross-Appellant.
• Court: United States Appellate Court of Illinois

802 N.E.2d 1228

345 Ill. App.3d 645

280 Ill.Dec. 707

ILLINOIS TOOL WORKS, INC., Plaintiff-Appellant and Cross-Appellee, v. INDEPENDENT MACHINE CORPORATION, Defendant-Appellee and Cross-Appellant.

No. 1-02-2163.

Appellate Court of Illinois, First District, Fourth Division.

December 31, 2003.

Sanchez & Daniels, Chicago (John D. Daniels, Mark E. Winters, Nilgun Aykent Zahour, of counsel), for Plaintiff-Appellant and Cross-Appellee.

Joseph P. Postel of Meachum, Spahr, Cozzi, Postel, Zenz & Matyas, Chicago, for Defendant-Appellee and Cross-Appellant.

Justice GREIMAN delivered the opinion of the court:

This contribution action was brought by plaintiff Illinois Tool Works, Inc. (ITW), against defendant Independent Machine Corp. (IMC) to recover damages allegedly in excess of its pro rata share of liability in an underlying lawsuit. After a bench trial, the trial court apportioned responsibility for the plaintiffs injuries and then entered the judgment from which both the plaintiff and the defendant appeal. For the reasons that follow, we affirm and modify the trial court's decision.

On May 8, 1998, Armando and Patrizia Lucas (Lucas plaintiffs) filed a four-count complaint against ITW and IMC sounding in strict liability and negligence. In that underlying complaint, the Lucas plaintiffs alleged that while Armando Lucas was employed by Tapecoat Co. (Tapecoat), he sustained injuries as a result of an incident that occurred during his operation of a "hot melt coating line," which was manufactured in part by ITW and in part by IMC. On August 17, 1998, ITW filed its answer to the Lucases' complaint and denied all material allegations against it. ITW and IMC then cross-claimed against each other for contribution of all sums that were to be assessed against them individually in excess of their relative proportionate share of fault and equitably attributable to the other. In addition, ITW and IMC both impleaded the employer, Tapecoat, for contribution.

On March 1, 2000, Tapecoat filed its answer to ITW's and IMC's complaints for contribution in which it denied all allegations and, alternatively, asserted that any liability it owed in contribution was capped by the amount of its statutory liability under the Workers' Compensation Act (820 ILCS 305/1 et seq. (West 2000)) stated in Kotecki v. Cyclops Welding Corp., 146 Ill.2d 155, 166 Ill.Dec. 1, 585 N.E.2d 1023 (1991).

Just before trial, ITW and Tapecoat— but not IMC—settled with the Lucas plaintiffs. ITW agreed to pay $2 million, and Tapecoat waived the worker's compensation lien it had on the Lucas plaintiffs' claim pursuant to section 5(b) of the Act (820 ILCS 305/5(b) (West 2000)). The value of that lien was $234,421.97, which to 10.5% of the total settlement, Thereafter, ITW and Tapecoat filed motions for good-faith and settlement findings which indicated that the Lucas plaintiffs had accepted ITW's and Tapecoat's settlement offers. Both motions were granted, and the Lucas plaintiffs' claims against ITW' IMC TaPecoat were all dismissed.

Accordingly, the only remaining causes of action were ITW's and IMC's cross-claims against each other for contribution, and those claims proceeded to a bench trial. After hearing all of the evidence presented, the trial court apportioned responsibility as follows:

"Pro rata share Amount already paid Independent Machine Corporation 30% $ 0 Illinois Tool Works 35% $ 2,000,000 Tapecoat Company 35% $ 234,421.97."

After that judgment, ITW argued that the trial court could not find Tapecoat any more than 10.5% at fault, because its liability was capped at that percentage by the supreme court's decision in Kotecki. The trial court rejected ITW's argument and entered judgment against ITW for $782,047.69, which represents 35% of the total settlement. The court also entered judgment for contribution in favor of ITW and against IMC in the amount of $670,326.57. The focus of both cross-appeals is the amount and proper calculation of the judgment award.

The issues presented on appeal involve statutory construction and waiver, and the core facts of this case are not in dispute. "Where there is no dispute as to the material facts and only one reasonable inference can be drawn therefrom, it is a question of law whether the facts proved constitute waiver." Liberty Mutual Insurance Co. v. Westfield Insurance Co., 301 Ill.App.3d 49, 53, 234 Ill.Dec. 578, 703 N.E.2d 439 (1998). Similarly, an issue of statutory construction is a question of law, and all questions of law are subject to a de novo review. Health Professionals, Ltd. v. Johnson, 339 Ill.App.3d 1021, 1026, 274 Ill.Dec. 768, 791 N.E.2d 1179 (2003).

By way of background, the Illinois Joint Tortfeasor Contribution Act (Contribution Act) (740 ILCS 100/1 et seq. (West 2000)) provides in pertinent part:

"(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.

(b) The right of contribution exists only in favor of a tortfeasor who has paid more than his pro rata share of the common liability, and his total recovery is limited to the amount paid by him in excess of his pro rata share. No tortfeasor is liable to make contribution beyond his own pro rata share of the common liability." 740 ILCS 100/2(a),(b) (West 2000).

And, as the supreme court has noted, the Contribution Act promotes two important policies:

"First, the Act encourages the equitable apportionment of damages by allowing for a right of contribution among joint tortfeasors when one tortfeasor pays more than his pro rata share of common liability. (740 ILCS 100/2(b) (West 1992).) The Act also ensures the equitable apportionment of damages between settling and nonsettling tortfeasors by providing that the amount that the plaintiff recovers on a claim against any other nonsettling tortfeasors will be reduced or set off by the amount stated in the settlement agreement between the plaintiff and the settling tortfeasor or the actual amount paid by the settling tortfeasor in consideration for the release of the settling tortfeasor from liability, whichever is greater * * *. (740 ILCS 100/2(c) (West 1992).) Second, the Act encourages tortfeasors to settle with an injured plaintiff by providing that a tortfeasor who enters into a good-faith settlement agreement with an injured party is discharged from contribution liability to any other tortfeasor. 740 ILCS 100/2(c), (d) (West 1992)." In re Guardianship of Babb, 162 Ill.2d 153, 171, 205 Ill.Dec. 78, 642 N.E.2d 1195 (1994).

We note that calculation of the amount of the contribution is also mandated by statute:

"The pro rata share of each tortfeasor shall be determined in accordance with his relative culpability. However, no person shall be required to contribute to one seeking contribution an amount greater than his pro rata share unless the obligation of one or more of the joint tortfeasors is uncollectible. In that event, the remaining tortfeasors shall share the unpaid portions of the uncollectible obligation in accordance with their pro rata liability." 740 ILCS 100/3 (West 2000).

However, while an employer may be subject to contribution, its liability is strictly limited to the amount of its worker's compensation liability. As the court in Kotecki remarked:

"Limiting the amount of contribution of an employer to its liability under workers' compensation:

`allows the third party to obtain limited contribution, but substantially preserves the employer's interest in not paying more than workers' compensation liability. While this approach may not allow full contribution recovery to the third party in all cases, it is the solution we consider most consistent with fairness and the various statutory schemes before us.' [Citation.]" Kotecki 146 Ill.2d at 165, 166 Ill.Dec. 1, 585 N.E.2d 1023.

Consequently, in the present case, the maximum amount that Tapecoat would be responsible for compensating the Lucas plaintiffs' alleged injuries would be the amount of its statutory worker's compensation liability, or $234,421.97.

At the outset, we remark that we are in agreement with a proposition made by IMC in its reply brief that Minnesota law is instructive in addressing this issue. In fact, because the supreme court's decision in Kotecki is based almost entirely on the Minnesota Supreme Court's decision in Lambertson v. Cincinnati Welding Corp., 312 Minn. 114, 257 N.W.2d 679 (1977), we find Minnesota law to be particularly didactic in addressing the interplay between the Contribution Act and the Workers' Compensation Act. See Schachter, Kotecki v. Cyclops Welding Corp.: A Judicial Balancing Act, 42 DePaul L. Rev. 741, 762 (1992) ("The Illinois Supreme Court based its decision in Kotecki on the Minnesota Supreme Court's decision in Lambertson v. Cincinnati Corp. Therefore, the foregoing discussion of Lambertson and its progeny lends insight into the Kotecki decision").

ITW's main argument on appeal is that because it settled with the Lucas plaintiffs for $2 million and was to receive only $670,326.57 from IMC plus the $234,421.97 amount of Tapecoat's statutory worker's compensation liability, ITW then became solely responsible for the amount that was uncollectible from Tapecoat, i.e., the difference between Tapecoat's pro rata share of responsibility and the amount at which its liability was capped under Kotecki In other words, ITW argues, the trial court's decision essentially made ITW liable for its pro rata share of $782,047.69 (35% of the common liability) plus the amount that was not collectible from Tapecoat because of its liability cap, $547,625.72, for a total of $1,329,673.41, or nearly 60% of the common liability.

ITW argues that the trial court's judgment award is contrary to both of the stated public policies of the Contribution Act...