Senate bill 1296 proposes to amend section 2-1117 of the Joint Liability Statute to apportion fault only to defendants still remaining in the case at the time of judgment. The fault of any defendants who have settled or been dismissed from the case would be ignored with respect to the remaining defendants’ liability.
Current case law in Illinois is split on whether or not to consider dismissals and settlements in the final apportionment of damages. The 5th District Appellate Court of Illinois and 7th Circuit US Court of Appeals align with the proposed amendment and disregard dismissed and settled defendants. These courts argue that the term “defendants sued by the plaintiff” in section 2-1117 was clearly intended to mean only defendants who remain in the case when it is submitted to the fact finder. They also claim that considering the fault of absent defendants will encourage use of “empty chair” defense.
Conversely, the 4th District Appellate Court of Illinois and 1st District Appellate Court of Illinois maintain that including settled and dismissed defendants in determination of liability promotes more equitable outcomes and prohibits plaintiffs from manipulating defendants to find the deepest pocket. A 1st District case decided along those lines is currently pending before the Illinois Supreme Court. However SB 1296 is currently waiting for a House vote, and if it is enacted, the point will be moot.
Monday, July 2, 2007
Spoliation of Evidence
A recent decision in the 5th district discussed an insurance carrier’s liability for spoliation of evidence. Generally, a duty to preserve evidence only exists if the duty is imposed by an agreement or contract, if the duty is imposed by statute, or if a duty is warranted because of a special circumstance. In this case, a wheel flew off of a truck which struck another car, resulting in the death of the driver. The truck owner’s insurance carrier asked that the owner retain the tire as evidence, yet later when the truck was repaired, the wheel was discarded. The plaintiff sued for spoliation of evidence, and the court found that the carrier was liable.
The contractual agreement between insurance carrier and insured party does not create a duty to preserve evidence, but the court held that once an insurance carrier has voluntarily assumed a duty to preserve evidence, the carrier may be liable for spoliation. In addition to having voluntarily assumed the duty, the court must also find that the carrier had enough control over the evidence to be able to preserve it. In this case, by asking the insured to keep tire, the carrier had assumed a voluntary undertaking, and because the insured agreed to do so, the carrier had control.
The contractual agreement between insurance carrier and insured party does not create a duty to preserve evidence, but the court held that once an insurance carrier has voluntarily assumed a duty to preserve evidence, the carrier may be liable for spoliation. In addition to having voluntarily assumed the duty, the court must also find that the carrier had enough control over the evidence to be able to preserve it. In this case, by asking the insured to keep tire, the carrier had assumed a voluntary undertaking, and because the insured agreed to do so, the carrier had control.
Change in Premises Liability Jury Instructions
In October 2006, Scott Britton tried a case which changed the law in premises liability, drawing a key distinction between property managers and owners or occupiers of the land.
The plaintiff tripped over a pneumatic hose and fell in the driveway of her residence, a shareholder cooperative. She brought suit against the property manager and co-op for personal injury, claiming that the defendants breached their duty to maintain the premises in a safe condition. At trial, the court found that the property manager was an agent of the co-op, and the jury returned a verdict for the defendants. However, plaintiff appealed claiming, among other things, that the use of Illinois Pattern Jury Instruction, Civ., No. 120.08 was inappropriate for the property manager and that the instruction itself was defective.
IPI 120.08 is a newer instruction on premises liability which requires the plaintiff to meet a higher standard of proof than IPI 21.02, the ordinary negligence instruction. The appellate court decided that while IPI 120.08 is a valid instruction, it does not apply to property management. The court determined that regardless of whether or not the property manager was determined to be an agent of the co-op, IPI 120.08 does not apply because there is no question that the property manager did not own or occupy the land. Furthermore property manager’s duty is common law, arising out of an agreement with the co-op, and is amenable to an ordinary negligence instruction.
The plaintiff tripped over a pneumatic hose and fell in the driveway of her residence, a shareholder cooperative. She brought suit against the property manager and co-op for personal injury, claiming that the defendants breached their duty to maintain the premises in a safe condition. At trial, the court found that the property manager was an agent of the co-op, and the jury returned a verdict for the defendants. However, plaintiff appealed claiming, among other things, that the use of Illinois Pattern Jury Instruction, Civ., No. 120.08 was inappropriate for the property manager and that the instruction itself was defective.
IPI 120.08 is a newer instruction on premises liability which requires the plaintiff to meet a higher standard of proof than IPI 21.02, the ordinary negligence instruction. The appellate court decided that while IPI 120.08 is a valid instruction, it does not apply to property management. The court determined that regardless of whether or not the property manager was determined to be an agent of the co-op, IPI 120.08 does not apply because there is no question that the property manager did not own or occupy the land. Furthermore property manager’s duty is common law, arising out of an agreement with the co-op, and is amenable to an ordinary negligence instruction.
Illinois Wrongful Death Damages Can Now Include Grief, Sorrow, and Mental Suffering
It has been 140 year since Illinois has allowed recovery for bereavement, but as of May 17, 2007 that will change. The Illinois General Assembly amended the wrongful death statute to include damages for grief, sorrow, and mental suffering of the surviving spouse and next of kin in addition to the current pecuniary damages available. Juries may now award these grief damages for any cause of action accruing on or after May 31, 2007 in any wrongful death case. The amendment also removed some outdated limitations on recovery for deaths occurring before 1967. The administration Office of the Illinois Courts determined that this amendment will not have any fiscal impact on the judiciary. Undoubtedly it can have a substantial fiscal impact on the parties.
Jeff Hebrank, president of the Illinois Association of Defense Trial Counsel, testified against the dramatic increase in liability because it will make plaintiff’s lawyers richer, create millionaires out of grieving spouses and children, encourage big employers to leave Illinois, and raise insurance premiums. He also laments that it is only a short jump to allow personal injury victims and family members to claim grief, sorrow, and mental suffering.
Jeff Hebrank, president of the Illinois Association of Defense Trial Counsel, testified against the dramatic increase in liability because it will make plaintiff’s lawyers richer, create millionaires out of grieving spouses and children, encourage big employers to leave Illinois, and raise insurance premiums. He also laments that it is only a short jump to allow personal injury victims and family members to claim grief, sorrow, and mental suffering.
Wednesday, April 4, 2007
Mohanty v. St. John Heart Clinic
Slip Opinions dated Dec. 21, 2006
Contracts – health care provider restrictive covenants
The plaintiffs argued that they should not be held to the terms of their restrictive covenant in their contracts because defendants materially breached the employment contracts by improperly billing for a certain medical procedure. Because the case was before the court on an interlocutory order from a TRO, the appellate court refused to review plaintiffs’ claim of material breach, and stated the plaintiffs must wait for a hearing on the merits to determine if the defendants breached the employment contract in a material way. The Supreme Court addressed the issue of material breach because its determination could render the restrictive covenants unenforceable.
The determination of whether a material breach of contract has been committed is a question of fact. Evidence was presented on how the specific test alleged to have been inappropriately billed should have been billed. Based on that evidence, it was not against the manifest weight of the evidence for the trial court to determine a material breach of the contract was not established.
The plaintiffs also argued that the restrictive covenants were unreasonable because they caused undue hardship to plaintiffs, were injurious to the public, and were excessive in temporal scope. Here the practice was located in Chicago, the restrictive covenants were for 3 and 5 years, and the location was limited by 2 and 5 miles. Further the measure of the potential harm to the public caused by the restriction is whether there exists a sufficient number of cardiologists in the area to meet patient needs, which was not contested by defendants. The court found that the time and geographical limits involved would seriously diminish the number of cardiologist to provide the necessary patient care, and were therefore deemed reasonable and necessary to protect the Clinic’s interests.
Finally, the plaintiffs urged that court to hold all restrictive covenants in physician contracts void as against public policy in Illinois. The plaintiffs urged the court to treat restrictive covenants for physicians the same as that of attorneys, and cited an AMA provision which discouraged such covenants in contracts. The court said that while the AMA Opinions was informative it was not the equivalent of an Illinois statute or rule of professional conduct, and therefore does not provide a clear expression of the public policy of this state.
** Justice Garman concurrence could be persuasive for future arguments by doctors.
Contracts – health care provider restrictive covenants
The plaintiffs argued that they should not be held to the terms of their restrictive covenant in their contracts because defendants materially breached the employment contracts by improperly billing for a certain medical procedure. Because the case was before the court on an interlocutory order from a TRO, the appellate court refused to review plaintiffs’ claim of material breach, and stated the plaintiffs must wait for a hearing on the merits to determine if the defendants breached the employment contract in a material way. The Supreme Court addressed the issue of material breach because its determination could render the restrictive covenants unenforceable.
The determination of whether a material breach of contract has been committed is a question of fact. Evidence was presented on how the specific test alleged to have been inappropriately billed should have been billed. Based on that evidence, it was not against the manifest weight of the evidence for the trial court to determine a material breach of the contract was not established.
The plaintiffs also argued that the restrictive covenants were unreasonable because they caused undue hardship to plaintiffs, were injurious to the public, and were excessive in temporal scope. Here the practice was located in Chicago, the restrictive covenants were for 3 and 5 years, and the location was limited by 2 and 5 miles. Further the measure of the potential harm to the public caused by the restriction is whether there exists a sufficient number of cardiologists in the area to meet patient needs, which was not contested by defendants. The court found that the time and geographical limits involved would seriously diminish the number of cardiologist to provide the necessary patient care, and were therefore deemed reasonable and necessary to protect the Clinic’s interests.
Finally, the plaintiffs urged that court to hold all restrictive covenants in physician contracts void as against public policy in Illinois. The plaintiffs urged the court to treat restrictive covenants for physicians the same as that of attorneys, and cited an AMA provision which discouraged such covenants in contracts. The court said that while the AMA Opinions was informative it was not the equivalent of an Illinois statute or rule of professional conduct, and therefore does not provide a clear expression of the public policy of this state.
** Justice Garman concurrence could be persuasive for future arguments by doctors.
Bagent v. Blessing Care Corp.
Slip Opinion dated Jan. 19, 2007
Hospitals – breach of patient confidentiality
In this case, the plaintiff sued her hospital and a phlebotomist the hospital employed because the employee disclosed information regarding the plaintiff’s pregnancy to the plaintiff’s sister. It was disclosed that the defendant was friends with the plaintiff’s sister and disclosed the information while they were talking at a tavern.
Section 228 of the Second Restatement of Agency identifies three criteria in determining whether an employee’s acts are within the scope of employment. The Supreme Court held that all three criteria must be met to conclude that an employee was acting within the scope of employment. The main criteria at issue in this case was the first, whether it was the kind of conduct he/she is employed to perform. The ultimate question, therefore, is whether or not the loss resulting from the employee’s acts should justly be considered as one of the normal risks to be borne by the employer. Here, as a phlebotomist, Defendant’s duties included drawing blood and keeping records not to divulge confidential patient information while off duty and after hours in a tavern.
The court also addressed the third element of Section 228, whether the conduct was actuated at least in part for the purpose to serve the master. Rather than the needs and requirements of the employer, it is the state of mind of the employee that is material. Here, the defendant said she disclosed the information because they were friends and because she thought the sister already knew, which was in no way based on motivation to serve the hospital.
Hospitals – breach of patient confidentiality
In this case, the plaintiff sued her hospital and a phlebotomist the hospital employed because the employee disclosed information regarding the plaintiff’s pregnancy to the plaintiff’s sister. It was disclosed that the defendant was friends with the plaintiff’s sister and disclosed the information while they were talking at a tavern.
Section 228 of the Second Restatement of Agency identifies three criteria in determining whether an employee’s acts are within the scope of employment. The Supreme Court held that all three criteria must be met to conclude that an employee was acting within the scope of employment. The main criteria at issue in this case was the first, whether it was the kind of conduct he/she is employed to perform. The ultimate question, therefore, is whether or not the loss resulting from the employee’s acts should justly be considered as one of the normal risks to be borne by the employer. Here, as a phlebotomist, Defendant’s duties included drawing blood and keeping records not to divulge confidential patient information while off duty and after hours in a tavern.
The court also addressed the third element of Section 228, whether the conduct was actuated at least in part for the purpose to serve the master. Rather than the needs and requirements of the employer, it is the state of mind of the employee that is material. Here, the defendant said she disclosed the information because they were friends and because she thought the sister already knew, which was in no way based on motivation to serve the hospital.
Forsythe v. Clark USA, Inc.
Slip Opinion dated Feb. 16, 2007
Corporations – direct participant liability of parent company
Here, the issue was whether a parent corporation could be held liable under a theory of direct participation liability for controlling its subsidiary’s budget in a way that led to a workplace accident, and, if so, does the exclusive remedy provision of the Workers’ Compensation Act immunize a parent company from liability. The plaintiff alleged that defendant’s strategy of capital cutbacks forced its subsidiary to have unqualified employees act as maintenance mechanics, which led to the fire that killed the decedents. Plaintiffs allege that this “survival mode” strategy was mandated, despite the fact that defendant knew or should have known that the only feasible budget cuts would come from safety, maintenance, and training expenses, which constitutes direct participation by defendant in the harm caused. Defendant owed them a duty based on the direct participant theory and not on the legal relationship of defendant to its subsidiary.
The Court recognized the direct participant theory of liability, but held this theory of liability gives rise to a duty only in limited circumstances. Budgetary oversight alone is insufficient, as is a parent company’s commission of acts consistent with its investor status. If there is sufficient evidence to show that a parent corporation directed or authorized the manner in which an activity is undertaken, however, a duty arises. Specifically, the duty to utilize reasonable care in directing or authorizing the manner in which that activity is undertaken. Accordingly, a parent corporation can be held liable if, for its own benefit, it directs or authorizes the manner in which its subsidiary’s budget is implemented, disregarding the discretion and interests of the subsidiary, and thereby creating dangerous conditions. In such situations, parent-defendants will not be protected by the exclusive remedy provision of the workers Compensation Act. It was the subsidiary, no defendant, who paid workers compensation benefits to the decedents’ families. It was the subsidiary, not defendant, who actually employed the decedents. As such, it is the subsidiary, not the defendant, that should enjoy the exclusive remedy provision of the Workers’ Compensation Act.
Corporations – direct participant liability of parent company
Here, the issue was whether a parent corporation could be held liable under a theory of direct participation liability for controlling its subsidiary’s budget in a way that led to a workplace accident, and, if so, does the exclusive remedy provision of the Workers’ Compensation Act immunize a parent company from liability. The plaintiff alleged that defendant’s strategy of capital cutbacks forced its subsidiary to have unqualified employees act as maintenance mechanics, which led to the fire that killed the decedents. Plaintiffs allege that this “survival mode” strategy was mandated, despite the fact that defendant knew or should have known that the only feasible budget cuts would come from safety, maintenance, and training expenses, which constitutes direct participation by defendant in the harm caused. Defendant owed them a duty based on the direct participant theory and not on the legal relationship of defendant to its subsidiary.
The Court recognized the direct participant theory of liability, but held this theory of liability gives rise to a duty only in limited circumstances. Budgetary oversight alone is insufficient, as is a parent company’s commission of acts consistent with its investor status. If there is sufficient evidence to show that a parent corporation directed or authorized the manner in which an activity is undertaken, however, a duty arises. Specifically, the duty to utilize reasonable care in directing or authorizing the manner in which that activity is undertaken. Accordingly, a parent corporation can be held liable if, for its own benefit, it directs or authorizes the manner in which its subsidiary’s budget is implemented, disregarding the discretion and interests of the subsidiary, and thereby creating dangerous conditions. In such situations, parent-defendants will not be protected by the exclusive remedy provision of the workers Compensation Act. It was the subsidiary, no defendant, who paid workers compensation benefits to the decedents’ families. It was the subsidiary, not defendant, who actually employed the decedents. As such, it is the subsidiary, not the defendant, that should enjoy the exclusive remedy provision of the Workers’ Compensation Act.
Virginia Surety Company, Inc. v. Northern Insurance Company of New York
Slip Opinion dated Jan. 19, 2007
Insurance – “insured contract” policy exclusion defined
At issue was whether the subcontract between the subcontractor and its general contractor was an “insured contract” thereby triggering insurance coverage under the subcontractor’s commercial general liability policy which included liability assumed by the insured under an “insured contract.” The injured employee instituted a third-party complaint against the general contractor and the general contractor filed a third-party complaint for contribution against the subcontractor.
A contribution lawsuit wherein a third party seeks contribution against the employer of an injured employee presents a second type of liability exposure for the employer (in addition to workers compensation). In Kotecki, the Court held that an employer’s maximum liability in a third-party suit for contribution is limited to its liability to its employee under the Workers’ Compensation Act. Thereafter, Illinois courts held that an employer may waive its Kotecki protection by contract and thereby be liable for its full pro rata share of contribution.
The defendant, in this declaratory judgment action, urged the court to follow Hankins v. Pekin Insurance Co., 305 Ill. App. 3d 1088 (1999), a Fifth District case, which ruled that an “indemnity provision” did not constitute an “insured contract” under the policy’s definition of that term because by agreeing to be held liable for unlimited contribution, the employer was simply agreeing to accept the full share of its “own negligence” and was not accepting the “tort liability of another party.”
The Supreme Court agreed with the Fifth District and found that the language of the defendant’s CGL policy with the subcontractor, and the agreement between the subcontractor and its general contractor could not be an “insured contract.” The policy provides that an insured contract is one where subcontractor assumes the tort liability of another party to pay for ‘bodily injury’ or ‘property damage’ to a third person or organization.” The plain language of the agreement required the subcontractor to indemnify the general contractor only for the subcontractor’s own negligence.
The subcontractor enjoys the option to limit its common law liability to its injured employee by asserting the affirmative defense provided by the Workers’ Compensation Act for the amount of its negligence up to the Kotecki cap. This leaves the portion of the subcontractor’s liability due to its pro rata share of the common liability above the Kotecki cap. Both the sub and general contractors are jointly and severally liable for the portion of the subcontractor’s liability above the Kotecki cap. The Contribution Act says the right exists only in favor of one who has paid more than his pro rata share of the common liability, and therefore allows the general contractor to sue its subcontractor for the subcontractor’s remaining pro rata portion of the common liability because the general is not liable to make contribution beyond its pro rata share of the common liability.
Absent any contract or agreement, the subcontractor’s portion of the common liability above the Kotecki cap is not imposed by law upon the general contractor, but remains with the subcontractor. Both parties are primarily liable for the employees injuries; neither party is secondarily liable. The policy’s definition of “insured contract” has not been met. The subcontractor did not assume the general contractor’s tort liability, which the policy defines as liability that would be imposed by law in the absence of any contract or agreement. Therefore, the defendant was not under a duty to defend or indemnify its insured (subcontractor) under the CGL policy.
Insurance – “insured contract” policy exclusion defined
At issue was whether the subcontract between the subcontractor and its general contractor was an “insured contract” thereby triggering insurance coverage under the subcontractor’s commercial general liability policy which included liability assumed by the insured under an “insured contract.” The injured employee instituted a third-party complaint against the general contractor and the general contractor filed a third-party complaint for contribution against the subcontractor.
A contribution lawsuit wherein a third party seeks contribution against the employer of an injured employee presents a second type of liability exposure for the employer (in addition to workers compensation). In Kotecki, the Court held that an employer’s maximum liability in a third-party suit for contribution is limited to its liability to its employee under the Workers’ Compensation Act. Thereafter, Illinois courts held that an employer may waive its Kotecki protection by contract and thereby be liable for its full pro rata share of contribution.
The defendant, in this declaratory judgment action, urged the court to follow Hankins v. Pekin Insurance Co., 305 Ill. App. 3d 1088 (1999), a Fifth District case, which ruled that an “indemnity provision” did not constitute an “insured contract” under the policy’s definition of that term because by agreeing to be held liable for unlimited contribution, the employer was simply agreeing to accept the full share of its “own negligence” and was not accepting the “tort liability of another party.”
The Supreme Court agreed with the Fifth District and found that the language of the defendant’s CGL policy with the subcontractor, and the agreement between the subcontractor and its general contractor could not be an “insured contract.” The policy provides that an insured contract is one where subcontractor assumes the tort liability of another party to pay for ‘bodily injury’ or ‘property damage’ to a third person or organization.” The plain language of the agreement required the subcontractor to indemnify the general contractor only for the subcontractor’s own negligence.
The subcontractor enjoys the option to limit its common law liability to its injured employee by asserting the affirmative defense provided by the Workers’ Compensation Act for the amount of its negligence up to the Kotecki cap. This leaves the portion of the subcontractor’s liability due to its pro rata share of the common liability above the Kotecki cap. Both the sub and general contractors are jointly and severally liable for the portion of the subcontractor’s liability above the Kotecki cap. The Contribution Act says the right exists only in favor of one who has paid more than his pro rata share of the common liability, and therefore allows the general contractor to sue its subcontractor for the subcontractor’s remaining pro rata portion of the common liability because the general is not liable to make contribution beyond its pro rata share of the common liability.
Absent any contract or agreement, the subcontractor’s portion of the common liability above the Kotecki cap is not imposed by law upon the general contractor, but remains with the subcontractor. Both parties are primarily liable for the employees injuries; neither party is secondarily liable. The policy’s definition of “insured contract” has not been met. The subcontractor did not assume the general contractor’s tort liability, which the policy defines as liability that would be imposed by law in the absence of any contract or agreement. Therefore, the defendant was not under a duty to defend or indemnify its insured (subcontractor) under the CGL policy.
Tuite v. Corbitt
Slip Opinion dated Dec. 21, 2006.
Defamation – innocent construction rule.
In this suit alleging defamation per se, false light invasion of privacy, and intentional infliction of emotional distress arising out of certain statements contained in nonfiction book about organized crime activities in the Chicago area, the Illinois Supreme Court was asked to abandon the innocent construction rule. The Court declined to do so.
The innocent construction rule applies only to per se actions. The preliminary determination of whether a statement is capable of a reasonable innocent construction is a question of law to be resolved by the court in the first instance. Whether the statement was in fact understood to be defamatory is a question for the jury if the initial determination is resolved in the plaintiff’s favor. In explaining the rule, the Court stated, the courts should not balance a reasonable innocent construction of a statement with a reasonable defamatory construction. The innocent construction rule does not require courts to strain to find an unnatural innocent meaning for a statement when a defamatory meaning is far more reasonable.
Expressions of opinion are constitutionally protected. A false assertion of fact can be defamatory even if its couched in terms of an opinion. A statement is constitutionally protected only if it cannot be reasonably construed as stating actual facts. Statements reasonably capable of an innocent construction should be interpreted as non-defamatory. Only reasonable innocent constructions will remove an allegedly defamatory statement from the per se category.
Defamation – innocent construction rule.
In this suit alleging defamation per se, false light invasion of privacy, and intentional infliction of emotional distress arising out of certain statements contained in nonfiction book about organized crime activities in the Chicago area, the Illinois Supreme Court was asked to abandon the innocent construction rule. The Court declined to do so.
The innocent construction rule applies only to per se actions. The preliminary determination of whether a statement is capable of a reasonable innocent construction is a question of law to be resolved by the court in the first instance. Whether the statement was in fact understood to be defamatory is a question for the jury if the initial determination is resolved in the plaintiff’s favor. In explaining the rule, the Court stated, the courts should not balance a reasonable innocent construction of a statement with a reasonable defamatory construction. The innocent construction rule does not require courts to strain to find an unnatural innocent meaning for a statement when a defamatory meaning is far more reasonable.
Expressions of opinion are constitutionally protected. A false assertion of fact can be defamatory even if its couched in terms of an opinion. A statement is constitutionally protected only if it cannot be reasonably construed as stating actual facts. Statements reasonably capable of an innocent construction should be interpreted as non-defamatory. Only reasonable innocent constructions will remove an allegedly defamatory statement from the per se category.
Tuesday, January 9, 2007
The Brenner Blog First Post
Welcome to the Brenner Ford Monroe & Scott Insurance Defense Blog!
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