Wreglesworth v. Arctco, Inc., 1-99-2662.

• Decision Date: 29 September 2000
• Docket Number: No. 1-99-2662.,1-99-2662.
• Citation: 738 N.E.2d 964,316 Ill.App.3d 1023,250 Ill.Dec. 495
• Parties: Nicholas WREGLESWORTH, by his mother and legal guardian, Barbara WREGLESWORTH, and Barbara Wreglesworth, individually, Plaintiffs-Appellees, v. ARCTCO, INC. d/b/a Tigershark Watercraft, a Minnesota corporation doing business in Illinois now known as Arctic Cat, Inc., a Minnesota corporation, and Arctco Sales, Inc., a Minnesota corporation doing business in Illinois, Defendants-Appellants.
• Court: United States Appellate Court of Illinois

738 N.E.2d 964

316 Ill.App.3d 1023

250 Ill.Dec. 495

Nicholas WREGLESWORTH, by his mother and legal guardian, Barbara WREGLESWORTH, and Barbara Wreglesworth, individually, Plaintiffs-Appellees, v. ARCTCO, INC. d/b/a Tigershark Watercraft, a Minnesota corporation doing business in Illinois now known as Arctic Cat, Inc., a Minnesota corporation, and Arctco Sales, Inc., a Minnesota corporation doing business in Illinois, Defendants-Appellants.

No. 1-99-2662.

Appellate Court of Illinois, First District, Second Division.

September 29, 2000.

James Conte, Lee, Mann, Smith, McWilliams, Sweeney & Ohlson, Chicago; Scott Olds, James E. Olds, Ltd., Co-Counsel, Grangeville, for Appellants.

Michael Svanascini, Kedzie & Svanascini, Chicago, for Appellees.

Justice GORDON delivered the opinion of the court:

Defendants Arctic Cat, Inc., and Arctco Sales, Inc. (hereinafter referred to collectively as the Arctco defendants), appeal from an order of the trial court dismissing their counterclaim for indemnity against plaintiffs Nicholas Wreglesworth (Nicholas), a minor, by his mother and legal guardian, Barbara Wreglesworth, and Barbara Wreglesworth, individually (Barbara). Plaintiffs' lawsuit against Arctco arose from a 1995 accident in which Nicholas was injured while riding as a passenger in a Tigershark personal watercraft in Indiana. Arctco filed a counterclaim for indemnity based on a release and indemnity agreement executed by Barbara. In dismissing the counterclaim, a ruling which was made appealable pursuant to Supreme Court Rule 304(a), the trial court concluded that defendants were barred from enforcing the release provision. Arctco argues on appeal that the trial court erred in applying Illinois law to the release, adding that if the court had correctly applied Indiana law, Arctco would have been released from liability and indemnified for future liability for the accident. For the reasons set forth below, we affirm the trial court's decision dismissing defendants' counterclaim.

BACKGROUND

According to plaintiffs' complaint, the accident occurred on July 22, 1995, while Nicholas and his father, James Wreglesworth, both Illinois residents, were vacationing at Cedar Lake, Indiana, with other Illinois residents including Vera Ortega. Nicholas sustained severe and permanent injuries on that date when the Tigershark personal watercraft in which he was riding as a passenger collided with a pier. At the time of the collision, Vera Ortega was driving the watercraft, which was manufactured by defendants and owned by Timothy Lawrence, an Indiana resident. In their three-count complaint, filed July 21, 1997, Nicholas and Barbara allege negligence, product liability and breach of warranty against defendants based on a number of factors including that the watercraft could not be steered unless it was under acceleration and that it was difficult to control and maneuver at high speeds.

Defendants subsequently filed a counterclaim for indemnity against plaintiffs, based on a Parents' Release and Indemnity Agreement executed by Barbara on August 16, 1997, in Illinois. That agreement, a copy of which was attached to the counterclaim, released Timothy Lawrence, Vera Ortega and the Allstate insurance company (Lawrence's insurer) from liability arising from the accident, in exchange for a payment of $100,000 (the limit of Lawrence's Allstate policy). The agreement also purported to release "any other person, firm or corporation charged or chargeable with responsibility or liability" in connection with the July 22, 1995, accident. Similar language in the agreement's indemnification provision purported to require the repayment of "any additional sum of money that any of [the releasees] may hereafter be compelled to pay on account of the injuries to said minor because of the said accident."

Plaintiffs filed a section 2-619 motion (735 ILCS 5/2-619 (West 1992)) to dismiss the counterclaim, asserting that the release applied only to the joint tortfeasors specifically identified in it (Timothy Lawrence and Vera Ortega) and not to defendants. Plaintiffs alleged in their motion that they had settled with Lawrence and Ortega as to Nicholas' cause of action, pursuant to which the foregoing release and indemnity agreement had been entered into. Attached to plaintiffs' motion are copies of their petition in probate to settle this matter which involved the minor's estate, and of the probate court's order approving the settlement. The petition states that "[t]he minor has a cause of action against [the] Estate of Vera Ortega, deceased[,]¹ and Timothy Lawrence for injury to the minor on July 22, 1995," and that "[a] settlement of $100,000, policy [l]imit" had been offered and Barbara recommended that it be accepted. In its September 2, 1997, order, the probate court ordered that "[t]he cause of action be settled for $100,000 and, upon receiving that sum, the guardian execute and deliver to the party against whom the cause of action lies a release and discharge from all liability * * * on account of the injuries." The court also approved the distribution of the proceeds as stated in the petition. As noted, although the probate court directed that the release be granted prospectively, the release and indemnity agreement had already been entered into the previous month, on August 16, 1997, but not submitted to the probate court for approval.

Following a hearing on June 24, 1999, the trial court granted plaintiffs' motion to dismiss the counterclaim, concluding that the probate court neither looked at the release nor interpreted it, nor did the probate court consider anything beyond "what was presented," i.e., a settlement as to the two parties identified in the petition. The trial court also held that it was Illinois and not Indiana law that applied. In July 1999 the court added Rule 304(a) language making the June 24 order appealable.

DISCUSSION

We first consider plaintiffs' contention that no settlement with defendants was ever approved by the probate court, and therefore that nothing in the release purporting to discharge defendants from liability as to the minor's claims could be valid. We agree with that contention.

Under Illinois law, a minor is a ward of the court when he is involved in litigation, and the court has a duty and broad discretion to protect the minor's interests. See Ott v. Little Company of Mary Hospital, 273 Ill.App.3d 563, 570-71, 210 Ill.Dec. 75, 652 N.E.2d 1051, 1056 (1995); Burton v. Estrada, 149 Ill.App.3d 965, 976, 103 Ill.Dec. 233, 501 N.E.2d 254, 262 (1986). That duty to protect is reflected in section 19-8 of the Probate Act of 1975 (Probate Act), which requires that the court approve or reject any settlement agreement proposed on behalf of a minor. See Ott, 273 Ill.App.3d at 571, 210 Ill.Dec. 75, 652 N.E.2d at 1056; 755 ILCS 5/19-8 (West 1992) ("By leave of court * * * a representative may compound or compromise any claim or any interest of the ward * * * in any personal estate * * * upon such terms as the court directs"). Thus neither a guardian nor a next friend can effectuate settlement of a minor's suit without court approval. Ott, 273 Ill. App.3d at 571, 210 Ill.Dec. 75, 652 N.E.2d at 1057. "Similarly, a parent has no legal right, by virtue of the parental relationship, to settle a minor's cause of action; and court review and approval of a settlement reached by a parent also is mandatory." Ott, 273 Ill.App.3d at 571, 210 Ill.Dec. 75, 652 N.E.2d at 1057.

The Rules of the Circuit Court of Cook County contain a similar requirement. Rule 12.15 provides that:

"(b) If no proceeding is pending before another Division or another court for a recovery on a cause of action for personal injury or wrongful death, the role of the Probate Division shall be as provided in this subparagraph.

(i) To settle a cause of action for personal injury to a minor or a disabled person, the guardian of the estate of the ward shall file in the [Probate Division] a petition for approval of the settlement of the cause of action." Cook Co. Cir. Ct. R. 12.15(b)(i) (eff. September 3, 1996).

Thus under Rule 12.15, in order to settle a minor's suit for personal injury the guardian must file a petition for approval with the probate court.

In the instant case, the only settlement that was approved by the probate court was the agreement reflected in plaintiffs' petition to settle, and in the September 2, 1997, order approving that settlement. As noted, the petition stated that there was a cause of action against Timothy Lawrence and the estate of Vera Ortega arising from Nicholas' injuries in the July 22, 1995, accident, and the petition recommended acceptance of a $100,000 settlement. The September 2 order approved the settlement as presented in the petition, and directed the guardian to "execute and deliver to the party against whom the cause of action lies a release and discharge from all liability * * * on account of the injuries." (Emphasis added.) According to the petition, the parties against whom the cause of action lay were Timothy Lawrence and the estate of Vera Ortega. There is no mention of the Arctco defendants in either the petition or the order.

Therefore, if the release operated as a settlement with the Arctco defendants, it was without court approval. We have found no Illinois case which deals directly with the effect of such a settlement, but courts in jurisdictions with statutory provisions similar to Illinois' have held that absent court approval, any settlement of a minor's suit is of no legal effect. In Scruton v. Korean Air Lines Co., 39 Cal.App.4th 1596, 46 Cal.Rptr.2d 638, 641-43 (1995), the California Court of Appeal construed section 372 of the California Code of Civil Procedure, and held that without court approval, a proposed compromise of a minor's claim could not be valid or binding. The court noted that contracts of minors are voidable, adding that such a proposed compromise "is always voidable at the...